The market moved up this morning while I am writing this post, at 9:20 am west coast time. It is +80 on the dow and +10 on the S&P. We are getting closer to the point I have been talking about. I have a chart of the S&P 500 daily cash market updated at this point - to show you where we are in the overall market. It may be in the next day or two that we could test the outside line? Will it break through or will it back off and sink? Current trend is still down, but my gut says it will break to the upside. When it breaks that outside trend line, that will clear the way for higher prices. We will see.
On my day trading this morning, I took 5 trades – all winners. They are as follows: +3 ticks, +4 ticks, +2 ticks, +4 ticks, +2 ticks. This represents 3 & 3/4 points in only 30 minutes of trading. Trading 5 contracts that’s almost $1,000 dollars in 30 minutes.
I usually use only a 1 point stop and my default is a 1 point target. Occasionally I trade for a bigger target but that is not the norm. You only need a few points a day to make really good money, but the key is to do it every day. This reduces the chance for human error, like greed and fear, your biggest enemies. Believe me, it is true and every trader faces it in some degree. You need to take steps to safeguard yourself, which comes with time. But if you are knocked out of the game because of low investment capital, “Game Over”.
Be conservative with your daily goal and do it again tomorrow and so on. Each day the market presents itself a whole new set of conditions for you to take advantage of. This is a marathon not a sprint.
Everyone comes to the trading field for different reasons and you have to ask yourself, why are you trading and for what purpose. Is it a hobby or personal interest, is it to make money, is it a form of entertainment, is it a release or escape from the real world? It is something to think about. If it is for the money, then you need to ask yourself, how much is enough for one day? You can always make more money if you slowly increase your contract size as your profit increases but you do it in a way that decreases your risk over time so your stress and pressure goes down.
Trading is a mental game and your need to train your mind to think the right way in order to be able to receive the increase of wealth that will come to you. If you think you are only worth a certain amount of money, then you will sabotage your efforts to match your expectations. So, again, the battle is in your mind.
You do need to know how to trade, that is for sure, but the mental part of trading is just as important as executing the right trades at the right time. I know of many high dollar earners in this business and they will tell you, if you want to make more money, trade for a smaller target and increase your size. The key is to be able to do it every day.
People say, but there is so much more on the table, why not keep trading for bigger targets and trade all day? Well, I understand the bigger target statement, some like a 2-1 or 3-1 risk reward ratio and shoot for 50%+ winning trades, but you have to trade for a longer period of time, sometimes several hours and that is not what I want to do. That is not my style. Each person has to ask himself what kind of trader he or she is.
I won’t go through all the different styles there are, but I know what kind of trader I am: very short term. The shorter the time I am actually in the market, the greater my success. The market has a way to take from you, not give to you, and you need to find a consistent way to put the odds in your favor. When I am trading in my focused, patient and disciplined mode, I usually hit between 80 and 90 % winning trades.
So everyone has some questions to ask themselves. Namely, what do you hope to accomplish by trading? Most people would say to make money. I understand that, but if you follow the actions that those same people take, it would seem to be for different reason’s. Just think about it and ask yourself what kind of trader you are. This will really help in coming up with your trading style. I went through this and I will tell you, it took me years to find this out. No one told me or mentored me, I had to figure it out and it cost me a lot in doing so. You can cut that process down by doing that little exercise.
I hope this helps everyone who is reading this and I wish you all the very best.
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