Wednesday, April 25, 2012

Wednesday afternoon

Trading requires patience

One of the problems traders struggle with (I certainly do) is the feeling that we have to be doing something all of the time.  After all, if we're not trading, we're not making any money.

But many times there is literally nothing setting up.  If a market or stock is just bouncing around, there's not going to be any kind of pattern you can base your trade on.  Identify these times by looking for ranges or for a bunch of overlapping bars.  If there's no identifiable pattern, the best trade is SOH (sit on hands).  It's better to watch and wait than to get chopped up and get yourself into revenge trading mode.

Before entering a trade, you need to know why you are doing it, where your stop is going to be, and where your estimated target should be.

As Todd Harrison likes to say ... "Am I trading or am I guessing ?"

Ask yourself that question periodically throughout the day and your results will improve.