Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important. This is not rocket science. However, it’s much easier to learn what you should do in trading than to do it.
By: William Eckarddt
Kerry,
I have been reviewing your new videos (particularly on market view). These are really very succinct and much easier to follow. The short format of the videos is excellent, because attention spans can be relatively short for some people. I am now getting a far better understanding of what daily bearish divergences mean in a market with strong upward momentum (on weekly) and I take particular notice of the McClellan Summation, McClellan Oscillator and NH-NL. Previously, I was looking to sell everything on the first sign of negative divergences, but it is now clearer what the daily bearish divergences mean (caution, and sign of potential correction, which is healthy), but definitely much more significant if they appear on weekly data. The McClellan Oscillator is at a very low level right now, so it will be interesting to see indices action over the next day or so.
I am also seeing the benefit of your patience waiting for the right setup and focus now on a small number of trades with better setups. This has made a significant improvement to my trading, and is a particularly important discipline as I progressively take larger positions relative to what I was doing 12 months ago. You may recall that we discussed gold on our last conference and I have been accumulating Ozzie gold stocks on weakness over the last 8 weeks and today was significant payback day for them (or the first of a few more?). I have become much more selective about what I trade and when I enter/exit and don’t mind waiting for a bigger pop, particularly if my risk margin is small. Although we don’t talk every week, you will be pleased to hear that the benefit of your experience is rubbing off on me, although I haven’t bought a sports car yet!
It has been a real challenge to learn to trade in a variety of different markets and I get the impression that a lot of American traders just stick with their own market, or use ETF’s that hold foreign content if they feel adventurous. I see real benefits in trading the US and ASX markets because of the benefit of knowledge that you get from one market which can be applied to the other in trading strategies. The Australian market, while not exactly an emerging market, is much less mature than the US markets and fires particularly well when the greenback weakens and commodities rise. Not sure if you are still interested in trading the ASX or using CFD’s, but if so, I can show you a lot more when we meet. CFD’s are a magic tool provided you apply the same risk management rules for normal equity and I will use them more and more as my trading develops.
Keep up the great work.
Regards
Graham
Everyone has a Top Ten….. Here is top ten ways to lose money trading. Add some additional ways if you like.
1. No Specific Trade Plan or System, trading impulsively.
2. Trading a New System/Strategy without knowing its expectancy. Do not back test or forward test, trading on blind faith.
3. Un-realistic expectations, looking for get rich quick systems and searching for the Holy Grail. Looking to trade for the wrong reasons.
4. Trading too large a size for the account. (#3 feeds #4)
5. Making too many trades for the account size. Trading is boring many times and most people want to be entertained.
6. Trading on hope rather than accepting the markets actions. The market will do whatever it is going to do, regardless of your thoughts, hopes, and dreams.
7. Un-willingness to accept a small loss. All large losses begin as a small loss.
8. Letting winners turn into losers. Only believers in Buy and Hold strategy should never sell. A profit cannot be taken unless you are willing to potentially leave some money on the table.
9. Un-willing to scratch a trade when the trade is not working as planned, the trader switches to #6.
10. Not reviewing past performance and learn from mistakes. Do not expect different results if you keep doing the same mistakes over and over. Keep doing what you are doing and you will most likely keep getting what you are getting.
