| Home | My photos | Forex | My trading | Contacts |
|
|
You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
|
A superior per-trade tracking system had to be set in placeSUMMING UP THE PREMARKET CHECKLIST I've got a quote on my wall that says, Fortune favors the prepared mind There is a big difference between getting lucky on one trade and being able to consistently make money in the markets. There is also a delicate balance between being prepared and overanalyzing, but the basic set of tools and numbers discussed in this chapter will give traders a huge leg up without drowning them in barrels of information. All this data is available to every trader It's a good practice to take the time to go through and line up this information each day. If you don't have the time or would like supplemental information, this is the same routine I go through each evening, I post the same daily checklist I've reviewed in this chapter in a newsletter that comes out 5 evenings per week (each night the stock market is open). In addition to this information, I also post the swing trades I'm setting up the next trading day, with the exact entry, exit, target, and stop loss levels. There is one newsletter that focuses on the stock indexes, and has plays in the stocks, options and futures markets. There is also a second newsletter that focuses on the forex markets. In addition to these key levels, I also include a nightly video embedded into the newsletter that records my computer screen. With this technology, I'm able to flip through my charts and make comments, discussing the way the vaious markets are setting up and talking about what I think is going to happenand the orders I am placingfor the next trading day. This technology is great as it allows a person to look over my shoulder as I'm doing my research each night I don't rehearseit's all recorded live so you get my first impressions as well as the coughs and telephone interruptions. A trader can just click on the video link, turn up the speakers on their computer, and watch and listen. It's probable that all of these websites will be tied in together by the time this book comes out. As T'm writing this, we are in talks with forex brokers who are interested in picking up the forex newletter subscription costs for clients who trade through them. As this is in the works and not yet finalized, we thus have multiple websites prepared. Information is also available toll free at 888-898-8118 within the United States and +1 512-266-8659 for callers outside of the United States. THE TRADER'S BUSINESS PLAN No one ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country. GENERAL GEORGE S. PATTON WHO GETS TO THE WORLD SERIESTHE TEAM WITH A PLAN OR THE TEAM THAT DECIDES TO WING IT? A two-foot-long Arrowana is a voracious predator fish. A single-minded creature, it has one basic rule of thumb that it follows each and every day: [f it thinks something will fit into its mouth, it will eat it. When traders visit my office to watch me trade, they are often surprised to learn that their first assignment is to feed Martha, my two-foot-long pet Arrowana. They have to take the net, dip ii into the feeder tank filled with goldfish, and choose a victim. Martha is used to this routine by now and begins to shimmer with excitement and anticipation. The goldfish is released. The water boils and chums as rhe predator lunges, and a few seconds later all that remains of Nemo is a few scales and a bit of fin. Steve Patrow, a visiting trader, summed it up succinctly when he said, That just seems really cruel. '*Yep, I replied. Almost as cruel as sending a trader out into the markets without a fully developed trading plan. A trader who is trying to make a living in the markets without a fully developed trading plan is in exactly the same position as the goldfish. Whereas one is merely a meal for an Arrowana, the other is routinely preyed upon by professional traders. At least with the goldfish the pain is over quickly. Traders without a plan can stretch out their torment for years. My first trading plan was created in 1993, eight years after 1 started trading. It was a one-page document that has evolved over the years into the current fifteen-page plan that 1 use today. This evolved out of experience and from having other traders share their plans with me, most notably Mark Cook, who utilizes one of the most detailed plans I've ever studied. I update this plan annually. My plan expanded over the years as 1 realized the following truths: A superior per-trade tracking system had to be set in place. A specific day-to-day money management system had to be set in place. A methodology for holding specific trading setups accountable for performance had to be set in place. A reward and punishment system for myself had to be set in place. My plan had to evolve and take into account the setups and markets that best fit my personality. Not only did 1 have to incorporate trading into my plan, but 1 had to incorporate it into my whole life to really make the plan work. One reality of trading is that this is a profession that can take over a person and dominate their lite. It is important to recognize this and bring a more holistic approach to your overall trading plan. This keeps a trader in the game for the longer term, helping to prevent burnouta com mon occurrence in the trading world. Every trader I've worked with has mentioned that the comprehensive business plan I make them write has been the deciding factor in their own performance. It was when 1 turned the corner, is a common phrase I've heard used to describe the action of writing out such a detailed plan. What's in the plan? I'll show you the questions I make myself answer every year and take you through them step by step. After I'm done with this, I'll share a plan that was developed by one of the traders I've worked with. What follows are the questions and excerpts of the answers from my actual trading plan for 2005. WHY AM I TRADING AGAIN THIS YEAR? The first question I ask myself each year is, why am I trading again this year? Although this might seem obvious, it is important to deliberately choose this occupation over everything else that's available out there. This is applicable to whether you are trading part time while you're holding down another job or are trading full time. Here is my answer: The main reason I'm going to continue trading in 2005 is that I enjoy the financial independence and freedom that trading has to offer. I also love the fact that I can do this from anywhere, because 1 don't like to be tied down to any one location. I've never been good at taking orders, so I appreciate that I don't have a boss whom 1 have to placate. 1 enjoy meeting other traders because they are the most random, eclectic, crazy, and interesting people on the planet. I enjoy the mental challenge and stimulation that comes from trading, and 1 know if 1 stopped, 1 would miss it. HAPPY WIFE, HAPPY LIFE This is where I take stock of everything else that is going on in my life and how it might affect my trading. By doing this, I figured out when 1 needed to hire my first assistant, when I needed to bring on another partner, and whatever else needed to be done to streamline my life for trading. Here's what [ wrote down for 2005: 1 have a lot of activities going on in my life besides trading. I'm actively involved in real estate investing, coin collecting, and traveling, and 1 have a lot of stuff going on with my Web site and other financial market-related programs. I also have a lovely wife who expects me to notice that she is a living and breathing human being, and I've realized how important it is to include her in my plans and keep her involved in the process, as well as being able to leave trading at the door and spend quality time with her. It's good for her, it's good for me, and it's good for us. Happy wife, happy life. My wife and 1 are expecting our first child, and we are considering moving from Boston to Austin, Texas, where most of our family is located. I know that trading is my main occupation, and the only way 1 can continue with these other things is if I'm making profits from my trading. It is possible that I will drop some of these other activities if they become a distraction. 1 will compartmentalize and focus on trading during trading hours. To help with this, I have someone who runs the day-to-day operations of the Web site, have a cook and maid to handle all routine daily chores around the house and office, and someone else who helps manage my other investments. I will focus on writing newsletters that only pertain to my own trading, instead of writing about what I think other people want to know about. These newsletters are mostly for me to help force myself to clarify my own research and continue to find new trading ideas. Do not try to please all the people all the time. I won't try to day trade if I am traveling or on vacation. It's okay to have swing trades on and manage existing positions, as long as I have a stop and target in place and I don't try to out think the position intraday. If I have distractions going on, I will not trade. Get rid of the distractions first. Examples include having uninvited guests over, morning phone calls, people instant messaging you in the morning asking about a trade, and so forth. Take care of the distractions. Ignore phone calls and instant messages until after 11:00 a.m. Eastern. Or better yet, turn them off. Don't be accommodating just to be nice. The path to hell is paved with good intentions. WHAT MARKETS AM I GOING TO TRADE? This is where 1 lay out all the markets I'm going to trade. Beginning traders should be focusing on only a few markets. Once a trader decides, he or she should stick with those markets for a year instead of looking for the next great thing. For day trades, I'm going to trade the mini-sized Dow (YM), E-mini S&Ps (ES), E-mini Russell (ER), 30-year bonds (U.S.), and the major currency pairs in the forex markets. For swing trades, I will trade the E-mini Nasdaq (NQ, 10-year notes (TY), corn (C), wheat (W). soybeans (S), crude oil (CL), gold (GC), silver (SI), single stock futures, individual stocks, and stock options, in addition to swing trades in the major currency pairs in the forex markets ] will allocate my total trading funds as follows: 25% intraday trades (ES, YM, ER, US, forex markets) 2S9e swing trades on futures (NQ, TY, C\ W, S, CL, GC, Slt single stock futures, forex markets) 25& swing trades on stocks 25% swing trades on stock options WHY THESE MARKETS? WHAT SPECIFIC TRADING STRATEGIES AM I GOING TO USE? This is a really important part of the plan. Traders should have a specific setup for each market they are trading. This way the setup can be tracked for performance. Each setup should be independent of itself. This means a trader could have a short on the YM for a gap play and a long on the ES for a pivot play simultaneously, and then track the performance of each setup separately. For intraday trades. I will use the following plays: YM: gap plays, tick fades, and pivot plays ES: squeeze plays, scalper buys and sells, and brick plays ER: squeeze plays and pivot plays US: break of the high/low 15-minute bar, squeeze plays Forex Markets: box plays, squeeze plays, break of the high/low 15-minute bar For swing trades, J will use the following plays: All futures and forex plays; daily squeeze plays, box plays, break of the high/low day, 8/21 EM A for swings (for single stock futures) All stock plays: daily squeeze plays, box plays, break of the high/low day, 8/21 EMA for swings All stock options plays: daily squeeze plays, break of the high/low day, 8/21 EMA for swings The key with this is that if f don't have a specific setup in one of these markets, then I'm not taking a trade. I just wait until something sets up. |
|
|||||||||||||||
Previous Issues
|
| ©2007 Olesia | Home • My photos • Forex • News • My trading • Contacts |