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?
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