Grow More

I digress a bit in this post as I think I've outlined some really great trading principles that if followed, will help you and me become much better traders/investors. This post is about becoming bigger in a holistic way because if you only focus on one thing in life with your head down, that very thing you eventually accomplish may not bring you the happiness or aliveness you think it will.

When I finally started making some good money, I got excited, very excited. I literally jumped for joy on certain days when it seemed as if the future was looking very bright. I was so happy I finally found an approach that stood the test of time and was going to change my life. Soon after I hit my first two financial milestones,  I was left thinking...  what's next? Although hitting financial goals was great, each time, it didn't have the same excitement it did when I first made my first breakthrough. Now I'm not saying making money isn't great, but there are also other areas of your life you should focus your attention on as well. What good is all the money when you're sick, stressed, and fat? Health, education, entertainment, friends and family are all equally as important as finance. Find the time to be present and enjoy life, read a book, take a walk, play a sport, take your partner out on a date, increase the amount of greens you eat and reduce the sugar, dairy, and wheat in your diet. You'll ensure that you will be in tip top shape, happy, connected, and well educated for the world of tomorrow, all while slowly becoming financially independent.

Shut Out The Noise

Tonight I was watching TV while my wife was sleeping on the sofa and when I got up to get something to nibble on, the business news came on which flashed many breaking stories and business reports. While admittedly I stopped what I was doing to listen to what was being said, I soon realized it was mostly noise and wouldn't benefit me or my business in any way. Don't get me wrong, it may have a place for certain people in industry, but for me, a trend following trader, it would add noise and confusion to my life and that's not allowed. Lets be honest, all the news does is report on things that have already happened and/or consists of speculation on future trends, and are usually wrong. I quickly picked up the remote, and changed the channel.

As a technician and follower of the market, it's your duty to unemotionally take buy/sell signals, without bias. This is how you separate yourself from the average trader who typically falls apart taking long or short positions on oil, or the dollar, or the Dow Jones Industrial Average, simply because of the "fundamentals". Your job is to listen to the market itself, the price action, react swiftly, and monitor its progress. My advice is to not listen, read, or watch any piece of business news, hoping to gain insight on future investment decisions. Your charts are all the data you need in order to make good, valid decisions. At least then you will be basing them on actual market movement, happening at that moment in time, rather than projecting your preconceived beliefs on the market.

Be like the fly fisher who travels out into nature, where he/she can be alone, with their own thoughts, and simply listen and follow what nature itself is telling them. Be calm, relaxed, and breathe. Focus only on what you see and avoid the noise from others. That's your best chance for success in this business. Go catch those fish.

Keep It Simple, Stupid

Raise your hand if you've ever been "stupid" in your trading... come on, raise it. We all have made stupid mistakes, a lot of them. It comes with the territory. It's a tough game and between our emotions, lack of experience, and/or lack of a good strategy, it's hard to garner sustained success. Well I'm here to help and today, I give you a very powerful concept to absorb and own from now on. Simplify simplify simplify. The more simple your approach in the markets, the more success you will experience.  The most successful traders in the world (professionals, market makers, floor traders, super traders) are the most simple, focused people when it comes to making investment decisions.

My mentor, who traded his own account for 40 years, traded almost exactly the same way, day in and day out, for 35 of those years, up until his death. The first time I ever spoke to him, he asked me what I liked to trade and what time frame I use. I responded, "I like to trade currencies, the majors mostly, and I trade the 15 minute charts, the 30 minute charts, the hourly, and sometimes, the 4 hour charts." He abruptly and politely told me I was off track and I needed to be more focused. What he wanted me to do was choose only one market to trade and use only one time frame. This took me back a bit because every image I've held on to for years is one of traders being dynamic, with multiple computer screens in front of them, screaming and yelling at people, trying to ride any market they think that is trending. When he told me that all he trades is the S&P 500 E-mini futures market on a 2 minute chart, using a 30 minute chart for reference, every day, looking for the same occurrence over and over, I was shocked! What he had learned over the years was that having a great system and approach is good but it also should be applied and catered to a specific market and time frame. If you keep these variables the same over time, after a while, you get in rhythm with that specific market and the way it moves and certain details become clearer. You begin to understand more and get in the minds of the other players.

For example, if you were to trade the S&P 500 E-mini market long enough, you'd notice at the exact moment the market opens (9:30am EST), volume surges and the price tends to jump around a lot and/or move very swiftly in one direction. During lunch time, around 12:00pm-1:00pm EST, the market tends to ease up a bit and move slower. From 2pm -4 pm EST(market close), price action tends to flow in one direction or the other and trend a bit better. Now this is very important information. I used to be stubborn and think that information like this didn't matter but it does. It so very does! Specific information about how each market moves throughout a day is some of the most vital information one can have. There are many professionals who are very successful and only trade from 2pm-4pm EST each day, every day, and make a lot of money doing so, doing the same thing over and over.

Remember, this is a competition. You are competing against other people out there to earn profit. The only way it gets easier is to simplify the game. If you wanted to beat people at a game of one on one basketball, practicing on the same court and at the same time of day, day after day, how successful do you think you might be after awhile when different people stop by and challenge you to a game? How confident do you think you would feel that you could beat the other person before you even start each game? I'm sure over time you would feel extremely confident and with good reason. You'd understand the playing surface and how slippery it may be in certain areas, which side of the court receives the most direct sun light and how much, how tight or loose the basketball rims are, which way the ball may veer when the wind picks up, or even which areas of the court that have bumps or holes. Point is, you'd have an advantage. All those little things give you an edge. In the game of money, the super successful use every edge and advantage they can because sometimes, those are the things that differentiate the winner from the one who loses.

Take it from me, trade one market, use the same time frame(s), over and over, and you'll not only become much more successful, you'll be more relaxed doing so and that is just as important. It's also very liberating to know you can be more successful using one laptop screen, over the guy somewhere else in the world, in front of 8 screens, salivating at all the "opportunity" in front of him but only manages to lose in this game we call trading. Stay focused on the big picture while doing the same thing over and over, using the same frame of reference. It's not sexy, it's not as fun, but it's smart and it makes money. You do like money right?