Newer traders quickly learn that there are a multitude of strategies to employ and a variety of timeframes in which to apply them. And then they make a huge mistake: they try to learn them all simultaneously.

Picking up new plays and honing skills takes time. You start out with one strategy and get better at it until you have an understanding of how and when it works best. And then you add another and keep repeating the process.

But few understand where to begin, so let me simplify it for you. Let market conditions dictate which plays you focus on.

Whatever is working in the here and now is the play you need to be working on. In a momentum tape, naturally it’s going to be breakout plays. In a trading range, you work on trading more reversals from key levels of support and resistance. When a steady trend comes along, it’s going to mean the best way to get involved is on pullback plays. And when corrections kick in like the one we’re currently caught in, you learn to trade the short side after failed bounces back to broken (former) support zones.

Don’t try to perfect a dozen plays simultaneously. You’ll feel overwhelmed and get nowhere.

You don’t acquire an entire wardrobe in a day. You build it over time as weather conditions change. With your trading, it’s the same way. Take it one play at a time based on current conditions, and you’ll grow your skill set with greater consistency over time.

Trade Like a Bandit!

Jeff

Years ago as an aspiring professional golfer, I had a conversation with a veteran (PGA) Tour player. I asked him what he thought some of the differences were between a guy like him and the guys on the next level down. Both might go out and shoot 65 on a given day, but what was the missing ingredient for the guys below the top level? They had plenty of game, but just couldn’t get to the next level. What set him apart?

His response surprised me with how simple it was. He said that a Tour player would almost always find a way. He’d find a way to hit the fairway on the narrowest hole on the course. He’d find a way to grind out a par after a poor shot. He’d find a way. It was about will, about focus, and attitude – not merely gaining distance or accuracy or putting in more practice.

It translates into trading.

Great traders don’t necessarily find better trades than those who struggle. But they do find a way to limit the damage on their poor positions. They find a way to get involved in a move – on some timeframe. They keep learning even though they have plenty of past successes to reminisce about. They have a will about them, a focus, which prevents their mistakes from becoming catastrophes the way a struggling trader might. Their attitude promotes success, not rationalizations for a shrinking account.

Stop accepting excuses for your underperformance. HFT’s are prevalent in today’s markets, find a way to co-habitate with them (pun intended). Elections happen and cause some uncertainty. Terror threats emerge from time to time. Market volume dries up periodically. Find a way in spite of it. Those who are successful always find a way, no matter the conditions.

Trade Like a Bandit!

Jeff

“Quite some time…I been sittin it out…didn’t take no chances…was a prisoner of doubt.” – Straight On (Heart)

In a previous post, I covered some of the steps necessary to recover from deep trading wounds and what it involves to start moving past the pain and toward progress again.

Taking a big hit in your trading often sidelines you, either literally or (even worse) mentally. I know from experience! And while there are times to take a break in order to avoid doing further damage, at some point, you still have to get back on the horse and overcome those doubts.

But how do you go about doing that?

When your account and confidence have taken a sizeable reduction, there’s a ton of doubt to get past, so let’s look at 5 ways to do that.

1.) Take it down a notch. And you know exactly what I mean. When you’re starting out or starting over, you have to start small. Small enough that it’s all about the process and not the result. By doing this, you’re setting the tone for growth again, you’re respecting the market, and each trade takes on minimal significance while you’re getting back into the right habits.

2.) Get specific. By narrowing your focus to that which you should be doing, by default you can eliminate much of the fear you may be facing, as well as a lot of the trouble which comes with a fly-by-the-seat-of-your-pants style of trading. Without a game plan, you’re playing the guessing game. Understand which conditions you’re facing, and go with the strategy best-suited for those conditions.

3.) Set realistic expectations. As much as you might like to, don’t expect to make it back right away. Big expectations may be what got you in trouble to begin with, so curb your enthusiasm a bit and aim to just get the bat on the ball first. The idea is to start a foundation which can support bigger and better results, but right now it’s first things first, so look to start small.

4.) Keep risk in check. As noted in the point above, you can’t just go swinging for the fences. To avoid that, have a risk per trade amount that’s appropriate for the fresh start you’re making. And be careful with how many positions you’ll carry at once, at least until you’re back in the flow.

5.) Hit singles. Early on, the aim is to get on base and establish a rhythm of success that can be built on. By selecting high-probability setups with defined risk, you’ll increase your odds of getting into that rhythm and start marking some results in the black – just what you need the most.

** What are some other ways to get beyond fear and doubts on the road to a trading recovery? What has worked for you recently or in the past?

Trade Like a Bandit!

Jeff

In recent weeks, I’ve had correspondence with several subscribers who have been struggling – not so much in their overall profitability, but in their own personal confidence level in the markets.  Things such as…

Taking trades.  To shoot straight with you, good trading does not boil down to perfection or anything close to it.  So if fear of taking a losing trade is holding you back, get over it!  You’ll be wrong at times, just as you’ll be right at times.  However, when good opportunities arise for you to put capital in the way of risk with a favorable outcome, do not hesitate.  So long as you have a defined exit on an adverse move (stop loss) and the play has potential to move on the profit side in some multiple of what you’re risking, it’s likely a play worth taking.

Trusting setups.  The fact of the matter is that no setup should be trusted.  Stocks shouldn’t be trusted, because they might move in your favor or they might go against you from the outset.  Stocks are neither out to help you nor out to punish you, so it all comes down to your management of trades.  This goes hand-in-hand with the previous point of taking trades, as you simply have to identify plays which look to have good potential with limited risk and go with them.  And even once a trade starts to work, trust is never quite there, because favorable moves should be used to book profits and tighten stops along the way.

Leaving positions alone.  In all honesty, I struggle with this too.  Like you, I know the frustration of playing it too tight, getting stopped out, and then seeing the move occur without being on board.  That’s part of trading.  But when it comes to leaving positions alone, the fine line comes when you find yourself micro-managing trades to the point that they have no real chance to work.  If you’re making adjustments based on your P&L in a trade rather than the price action, it’s your signal that you aren’t leaving the trade alone.  You’re likely too big in it as well, because the purest trades will be when you’re in the position because of the chart and not the green or red numbers in your P&L column.

This post isn’t about getting on your case.  Sometimes I just sense the need to conduct business and get some of this out in the open.  And why not right now as we head into the 2nd half of the year?

I’m here to challenge you to push yourself…to get beyond your limitations….to grow past the fears that are holding you back and start realizing some of your trading goals.

I’m here to help you.  Use me as a resource.  I want you to share your ideas here…leave comments, get 2nd opinions and see if there’s something you might be missing before you send out that next order.  I’m here to encourage you and teach you what I can.

Finally, I want to challenge you openly to make the remainder of 2012 a period of growth – not just in your account, but in your skills and abilities.  Get them if you need them.  Hone them if you have them.  Put in the work and see where it leads.  Getting to the next level won’t just happen to you – you have to go get it.

 

Trade Like A Bandit!

Jeff

Today, I bring you Episode 5 of When The Bell Rings.

In this episode, we’ll talk about some distinct differences among traders regarding their approaches to trading.

It should either give you some added motivation, or a boost in confidence.

I hope you get a lot out of this installment. I’ll have more of these kinds of videos in the days ahead, and of course if you find these helpful, then let me know!

Run time is 3:08.

Trade Like a Bandit!

Jeff

I heard from a Bandit this week with whom I’ve worked for 1 year this month. He’s a class act and quite likeable, making him even easier to correspond with. 🙂

During that time, he’s completed both the Basic Trading Course and the Advanced Trading Course, and he’s been a subscriber of the nightly service. He has truly put in the work, and he’s utilized me and my experience along the way as well (as he should).

One of the things which has made him successful is that he has truly modified everything I’ve given him to fit his own unique needs. I’ve mentioned this to many in the courses and nightly newsletter, but some do it better than others. This guy has done it exceptionally well, so I wanted to share with you what it looks like.

It’s different than mine, and it should be different than yours. But by seeing it, you’ll notice things which spark ideas for your own routine. You’ll identify ways where he has adjusted and you have not, and it may expose a weakness you haven’t previously considered. I’ll tell you the same thing I have told him, which is to take what’s useful to you and then make it your own.

Here’s his routine:

If the indexes have a big gap, I know most of the movement has been sucked out before things have started (unless it is a panic dive out of stocks). I won’t start trading until after 9:30 to avoid the amateurs and HFC causing strange movements and pullbacks, though I sometimes make exceptions, but want to plan them. For instance a sustained pullback on a troubled stock will sometimes be an exception. (Though more often than not I end up regretting it.)

I have personal things I have to watch. My (physical condition) affects how sharp I feel and how confidently I respond to situations, so I take that in consideration on how much or even if I should be trading.

I look at which way I think the market will continue to go (coming back later to see if I was right) opening, and whether it has been going up, down, or randomly/sideways. I honestly look at which direction I am confident in trading. There is no point starting a trade you do not trust – you’ll just pull out too early with a loss.

I decide on my loss level. If there is little juice left in the market I may only let a trade come back a support level or so. I need a strong runner to make it worthwhile in that case.

I look at how long I can trade. I have limits depending on how my arthritis is on how long I can sit, I also may have personal commitments, but decide to see if I can get a good runner that I can leave with a trailing stop when I run out of time. Of course on a weak day where I would use support levels that is out of the question.

Afterwards I come back and look at how much I lost/made.

Great stuff from a guy who has put in the work. He has a routine that suits him – he isn’t trying to mimic someone else. Can the same be said about you?

Trade Like a Bandit!

Jeff

Over the past 10 days, there have been two occasions where I hit my daily loss limit. Sounds like a tough stretch, but on a net basis it’s actually been positive thanks to some other good days.

Mind you, I’m generally a disciplined trader, and in a dozen years of full-time trading I have broken my discipline countless times but have never truly gone on tilt where it’s account life or death.

That said, I do not have a broker-set cutoff. That’s where you specify a dollar amount, which when hit will lock you out of making more trades. It’s still your account and you could call in and override that I suppose, but it’s at the very least a break in the action for you, and a very good thing for some people – namely, developing traders.

Back to my point and the title of this post, what happens when you hit your daily loss limit?

For me, it’s a general dollar amount where I start to understand that barring some really great trades, and with the amount of risk I am willing to take, I’m unlikely to recover. It’s a matter of recognizing that I’m likely to do more harm than good – either to my account or my confidence.

At times, I’ll hit that level and I just need to admit defeat, shut it down, and come back another day. I might leave my platform open and monitor the market or open positions, but I know I don’t need to press any more buttons. Adhering to that has on many occasions prevented deeper wounds to my account.

Knowing when to walk is found in two things: one internal, one external. Internally, you must understand yourself and your tendencies. Externally, you must be able to recognize current conditions and determine if there’s good reason to continue or not.

Over the past week, however, I had two different outcomes when I chose to trade beyond that mental cutoff.

Exhibit ‘A’

The first was a day where my limit had been reached, but I allowed my emotions to interfere. This was the internal element, and I was in no shape to continue. (That, by the way, also prompted this week’s video.)

I didn’t go on tilt, but I lowered my standards in what was ultimately a mild version of revenge trading. That never pays off, and in this case it cost me a little more. As it should have. I hit my loss limit plus another 1/4, which isn’t a ton but it is too much.

The mistake was that I continued to trade because of my P&L. Catch that? Because of it, not in spite of it.

Exhibit ‘B’

The second occasion was similar in that I reached my mental cutoff, but it was different because it was a day where my emotions were settled.

I continued to trade not out of anger or frustration or ego to prove I was right, but because there were multiple stocks in play which warranted my participation. Conditions were very favorable for making good trades, so I continued.

I was accepting risk beyond a normal cutoff amount, but it was with a level head and with some real potential to turn the day around. And I did. It was rewarding, not in the sense of “I told you so” but simply because I kept taking good trades when they surfaced, added it up in the end, and came out slightly ahead.

It’s nice to dig out a bad day, even if it means you barely do better than break even.

On some days, those are wins.

Trade Like a Bandit!

Jeff

Today, I bring you Episode 4 of When The Bell Rings.

In this episode, we’re talking about something that’s paramount to your success as a trader. It’s a mindset, but it’s something that requires intentional planning and not a fly by the seat of your pants mentality.

A weekend sporting event was too pressing to delay this message any further, so here it is.

I hope you get a lot out of this installment. Keep coming back for more in the days ahead, and of course if you find these helpful, then let me know!

Run time is 4:26.

Trade Like a Bandit!

Jeff

Today, I bring you Episode 3 of When The Bell Rings.

In this episode, we’re talking about a common mistake among traders which seems so obvious – yet so few make it a point to avoid.

(Run time is 4:07.)

I hope you get a lot out of this installment, and of course if you find these helpful, then let me know!

By the way, here are links to Episode 1 and Episode 2 in case you missed them.

Trade Like a Bandit!

Jeff

Like sports and business, trading requires the ability and the willingness to adapt. This involves continually learning and growing so that you’re never stagnant with a single approach.

Recently I sat down with Tim Bourquin for a MoneyShow Interview, and we discussed this topic of how Strategic Adjustments can Pay Off Big. The clip is 3 minutes and can be viewed here.

In the segment, we discuss trading biases, contingency plans, backing down when you’re uncertain, and the importance of focusing on a single market while still allowing yourself some ways to diversify within it.

(Other 3-minute videos from this same interview discuss The Trade Plan that Works For Me, as well as Win More by Risking Less, which you may also enjoy.)

Trade Like a Bandit!

Jeff