I get this question almost daily: Jeff, what are you going to trade today? Or this one, especially in this market: Jeff, do you think we are close to the bottom?
These are both good questions and there is nothing wrong in asking these questions, but what I learned pretty early in my trading career, and it has come in really handy over the past few months as I returned from my retirement from trading, is that I have no clue what I am going to trade or when this market will bottom. I do, however, prepare myself to look at certain stocks that might be in play because of news, certain levels or because of their past price action. Preparation is key and that is something I will expand on much more in future blogging. But what is one of the most important skills that every new, intermediate, and experienced trader needs to do to be consistent is to be as flexible and adaptive both mentally and skillfully as possible. There is a quote that I read many years ago that has stuck with me and always pops into my head when I get asked these questions:
“I came into the morning with a bias and that is a cardinal no-no in this business. When you give up the ability to react to any situation and trade freely, you give up the ability to consistently make money.” Rick Burgess
In any market, especially this market where volatility is absolutely crazy, you cannot have a bias. I have witnessed too many trading careers come to an end because he or she believed QCOM was a short at 100 then 200 then 300 and so on and so on and then a different person thinking it was a buy after it went to 998 and now it was a buy at 500, then 300. Even today, Wednesday, I would have gotten killed if I believed this market bottomed. You get my point.
One on the greatest edges I have as day trader is the ability to get in and out of my positions, to trade any stock, or ETF, to go long or short. I can change my position size from 100 shares to 10,000 shares. I can hold stocks from 1 sec to 1000 days. I am not stuck. I have the tools to make money in any market, at any given time. I let the market tell me what to trade and let the stock show me how and what direction to trade it. And yes… to help confirm what I am seeing I use charts and the box (the inside market), and price action. But the key to being consistent in any market is to allow yourself to accept that to a certain point, we have no idea where this market is going. Allow yourself to trade freely and be as flexible as possible.
4 Comments on “Do This Every Day to Become a Consistent Trader!”
this market can make you look brilliant one minute then like a fool the next. Having the ability to adapt to whatever the market is telling you to do is key. Great advice in this post! I realized my opinion was a detriment to my ability to make money!
this market can make you look brilliant one minute then like a fool the next. Having the ability to adapt to whatever the market is telling you to do is key. Great advice in this post! I realized my opinion was a detriment to my ability to make money!
one methodology I’m working on out of necessity (I’m very prone to the problem you discussed) is to plan for scenarios instead of guessing for outcome. if a set of conditions are met, I go with plan A. if another set of conditions are met, I go with plan B.
one methodology I’m working on out of necessity (I’m very prone to the problem you discussed) is to plan for scenarios instead of guessing for outcome. if a set of conditions are met, I go with plan A. if another set of conditions are met, I go with plan B.