Each day at the opening bell, Mr Market opens up and there are thousands of stocks in individual companies reaching out and saying "Trade me!".
To compound matters, traders receive a barrage of economic data, earnings reports and other news releases and the like. Each piece of news can be confusing and contradictory and the sheer volume can be overwhelming.
Some of the most profitable days I and other traders have had is when you do....nothing.
My typical trading day is simply to watch the market open, adjust my trailing stops on profitable positions (strictly based on my system rules), run my scans to identify any potential new trades, place those trades (providing I do not exceed my risk management parameters), and then switch the PC off for the day. The whole thing takes about 10 minutes. I do this for the UK and Europe opening, and during the evening (UK time) to look at US stocks. This leaves the rest of the day free to do other things, update the blog, correspond with other traders etc.
Sure, I could look at my scans throughout the day and find other stocks to trade, but I limit myself to a certain number of positions, in accordance with my system rules, and I can find more than enough stocks to trade.
The other benefit is that I can ignore, or be oblivious to, any short-term adverse price moves, which means I avoid any knee-jerk reactions and emotional trading decisions. Stops are there to exit me from a trade - I do not want to manually exit a trade - ever. I also pay absolutely no attention to all the fundamental data that is available, nor the talking heads on Bloomberg or CNBC.
In this way, I take full responsibility for my own actions and trades, and therefore cannot blame anyone else when a trade does not generate a profit.
All I do simply place rational bets based on trends I can find in the process of starting, that are in line with the general market trend. It is that simple, and that's the way I like it.
i have found my best results come when im not at the screen all day agonising over every tick in the index. this makes you do something stupid which is in disregard to the systems rules. often if you look at the morning and close you wander what the fuss has been about during the day... as was always drilled into me plan the trade and trade the plan.. its hard sometines of course due to human nature.....
ReplyDeleteI like your point when you turn the computer off for the day..... By doing that you are eliminating human feeling in your decision... Very Smart!
ReplyDeletekeep up the great work
Thanks for the comments guys. It's difficult to eliminate emotional decisions, especially when you have sharp down days like yesterday, but that's what your stops and your risk management is for - as well as the off switch on your PC :)
ReplyDeleteAre you running spreadbetting positions or buying 7 selling shares through a stockbroker. I ask because i have only found trailing stops availlable on spread betting sites.
ReplyDeleteHi Senan, All my positions are traded via spreadbetting.
ReplyDelete