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The Intelligent Trader; "The List"
I’ve been a trader
for more than 25 years. The good news is that I have done a few things
right along the way to have stayed in the game this long. One the other
side of the coin, I’ve also had to dig myself out of a hole every once
in a while.
I am a big proponent
of having systems, reminder lists, and rules for my daily trading
activity. Even with all of this and more experience that most traders, I
am still prone to a losing streak.
All traders have
losing streaks – period. What separates professional traders from
amateurs is that the pros stick to their guns and are not quick to
change their systems or their trading rules.
When I find myself
behind the 8-ball, I pull out “my list” and spend a few minutes with it.
What follow is by means all-inclusive. It is simply what it is – a list
of tips and tricks that I have learned over the years.
As a disclaimer, this
is a list that I use – you should take some time and make your own. And
remember, your list takes into account your financial goals and your
trading personality. In the end – the question you must answer is this:
“Do I want to eat well or sleep well?”
-
Don’t fight the trend.
- The market is always right. We are
only observers of what is going on.
- If you put all of your eggs in one
basket, never take your eyes off that basket.
- You create wealth with
concentration – you preserve wealth with diversification.
- The first and last half hours of
the trading day are for professionals only. Venture into this at
your own peril.
- Losing trades are going to happen.
If they aren’t, you’re not trading. Nobody is perfect.
Know why you are making
a trade. I keep notes on my order tickets to remind me.
- Always know your best case and
worst case scenario. This is how much I expect to make and this is
how much I expect to lose.
- Hunches are not an investment or a
trading strategy.
- Hope is not an investment
strategy.
- “Buy and Hold” is “Dead and
Buried”
- Don't bottom fish and buy a stock
just because it is low priced. It could go lower and most likely
will.
- Don't be afraid to buy a stock
that is making new highs. In all likelihood, it is going higher.
- Don’t sell a stock just because it
is high priced. It could go higher and will as soon as you sell it.
- Map out your trading plans ahead
of time. I do mine the night before. If you wait until the market
opens, it’s too late.
- Don’t make trading decisions in a
vacuum. Good research is confirmed by tapping into many different
sources. Don’t rely on a single source such as newsletters, brokers,
websites or the financial media.
- Do not trade emotionally.
-
Sell in advance of the event. The
smart money is smart for a reason.
-
I will only enter a trade where the
upside is $2 of return for every $1 risked.
-
Never trader with scared money which
means the money that you need to live on. Scared money always loses.
-
Those who predict need to make a lot
of predictions. Most gurus aren’t traders. Venture forth forewarned.
-
The financial media has an agenda and
that’s to make money off those who advertise in their medium.
Anything that’s a “gotta buy” or “gotta sell” may have been written
months ago – that means it is old news.
-
Your trade confirms are you’re
responsibility. When I was a broker, the first thing I did every day
was to match confirms from the day before. It’s the only way you can
find an error. Errors cost money.
-
You must learn from your mistakes.
They happen for a reason, so learn from them. Dwelling on them
doesn’t help – just don’t do it again.
-
If you’re sick, tired or not on the
top of your game, turn off the computer. I learned this the hard
way. I’m a baseball umpire when I am not trading and it exacts a
physical toll if you’re not careful. I trade only when I am fresh
and rested.
-
Have confidence and believe in
yourself. Traders feed on fear and doubt just the way sharks do.
-
If you must performance goals, make
sure that they are realistic and attainable otherwise, you are
wasting your time.
-
In the end, you have to be happy – if
it isn’t fun, do something else – like get a real job.
That’s about it. When
I am having a rough spot, I pull this out and spend a few minutes with
it. It’s the best way I know to get rid of any stinkin’ thinkin’.
Have a great day.
RAC
The Intelligent Trader
Robert Christy is a
professional trader and the President/CEO of the
Christy Investment
Group, a fee-only Long/Short equity management firm whose goal is to
make money in ALL market conditions regardless of the direction of the
stock markets, interest rates or the dollar.
Over the past 25
years, he has spoken and written frequently for national publications
about business, finance and investing. He advises, educates and mentors
traders through his trading service,
The Intelligent Trader. He lives in
Roswell, Georgia, with his daughter, Ashley and his dog, Coach.
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