This post is for Tuesday April 6th and the market is still trading at 10:30 am very slowly.

With Fridays market closed, the unemployment number were out and many took the news as a sign of hope, where we had two months back to back showing jobs being added. I remember seeing, that there were parts to the job report that showed a very negative side to the numbers, but you had to dig just a little to see it. I guess everyone is just looking on the surface and saw a reason to celebrate. Lets all hope for the best, but I am suspect that all is well.

No trading for me right now, the market is trending the last few days, but moving slowly on light volume. Its been a good break for me and am going to just play it by ear. If I can trade the early morning, I will see if I can make up a little ground one or two days this week?

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That being said, while trading, we are all best served to trade what we see and not what we think. I can go back and look at times when I had hung myself up in my own personal trading and saw that when I formed a very strong opinion about market direction, I lost the objectivity I needed to see the price without bias. I know for a fact that I am not alone. I am aware of my faults and always try and read the market as it is, not how I want to see it. Doing this has always served me well. I can still take a loss, no problem, but I will not take repeated full stop outs back to back. If I feel the urge to be right at what ever the cost, I will just walk away and take a walk. Our ego’s to often get in the way and can become difficult to take a lose, we don’t like being wrong. If that is YOU, take steps today to trade only what you know and if you don’t see it clearly, don’t trade it. There are so many good trades to take in the course of a week that we should not feel compelled to trade  anything less than what is crystal clear.

I am going to start applying this more directly to my own trading. At times I do exercise a bit of overconfidence, because I am most often able to capture my trading goal for the day and come back from previous losses if I have them. I at times make it more difficult than it has to be for myself, because I to often trade the slow time of the day, but that is something I am going to change. If traders are trading this slow time of day and looking for extended runs, it will not likely happen but on rare occasion. If you are trading that time of day, I feel, exercising trading wisdom, will say that you have to set very small targets and very small stops. If you can’t do that, do not trade this time of day. It is not worth it, not to mention it takes 3 to 4 times longer to get the same thing if you were to trade the early or after noon sessions.

Trading wisdom point number two; try and be profitable every day if you are a very short term trader and certainly at the end of the week. This will depend on your trading style, because if you are a scalp trader trading stocks or emini futures, you will have multiple opportunities in the course of a morning or afternoon session to pick up a few points, but if your trade targets are larger, you will have limited trades and opportunities to come back if you are wrong and so, being profitable every day is unrealistic.  That is where weekly profitability comes into play, your gains will be larger and over the course of time, moving towards your goals.

The way to ensure this type of goal, is to keep your losses small. That can not be overstated. If you allow yourself to take large draw-downs, you only dig a large hole for yourself and many times it becomes to hard to crawl out. One exercise to help with this is find what ever is within your trading method or system and start out practicing to take small profit target objectives. Everyone wants to go for the monster run and those will and can come, but it is still your timing on those trades and the small ones where it all starts out. If you work on your entries and get it so that you can take 2,3,4 ticks for the S&P emin, 6,8 or 10 points on the Dow and or .06, 08 or .10 cents on a stock and do it often and with confidence all while not risking more than your gains, you will be making progress.

Every 4 point S&P run starts out at being profitable with the first point. Every stock move of $1.00 starts out with a .10 cents move and so, if you can get your timing down to catch those small moves you will then be able to screen out some of the small moves when the time is right and turn those into the big moves everyone likes to talk about. The point is, going for the singles will train you to be able to eventually hit the home runs. You will be cutting your losses quickly if the trade does not work in your favor right away, a good habit.  This is just an exercise to help you work on better timing and get you to cut your losses if you start to loose the trading edge.

Trading wisdom point number three; take what the market gives you. This will work right in line with what I have already mentioned, in that as you get better in your timing and your ability to cut your losses quickly, you will soon  be better able to screen out what trades are likely to have more under the hood and those are the trades you want to ride out. It is a lot easier to ride out a trade once you have locked in some profit and moved up your stop. This gets into trade and money management and a topic for another day, but a successful trader, never lets a good trade go from green to red.

More on the topic tomorrow, but in the mean time, I hope this gives you some idea’s.