The Dimensions of a Successful Trading Entity

Many considerations go into creating and running a successful trading entity. We’ll look at the most popular which get the most attention, right through to the most important, which usually get the least attention.

Here is the list:

1. Entry signals
2. Risk management
3. Exit signals

4. Reliability
5. Reward to Risk
6. Opportunity
7. Capital management

8. Objectives
9. Familiarity with Markets
10. Resources
11. Mindset
12. Style
13. Management

Most, and by most I mean probably close to 80-90% look at number 1 and that is it! That is a startling reality, but a reality nonetheless. But there is a reason this happens. Most new traders are unaware that such a large number of traders ultimately fail in this business, and more importantly, this fact is well known by the very people who market trading in this way.

But enough of that, let’s look at some serious considerations you should make and the order in which you need to do it.

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The index futures trader…

I received an interesting email recently from a 11+ year experienced index futures trader who wanted to know if a particular program would enable him to take his trading to the next level.

At first I wasn’t sure which program he was referring to and also at what level he was trying to get to, let alone which level he was currently at.

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Which one are you?

Some traders will go through system after system, teacher after teacher, wasting thousands of dollars not only in useless systems but in lost trades before they realize they’ve been approaching the markets from the wrong standpoint because they’ve been trying to trade the wrong type of system.

The two types of traders are the mechanical type trader and the discretionary type trader. Therefore, there are two types of trading systems, a mechanical system and a discretionary system. The difference between the two is quite large not only in the way the market and possible trades are analyzed but in the psychological make-up of the trader themselves.

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I have spent an awful lot of my personal time putting together a 69 minute video for traders that I believe will open the door to understanding how to trade successfully.

This video is a trading system I call the 4 T’s trading system, and in this video you’ll learn the trading system itself, the rules and how to trade it. It will also show you I apply leverage to it, but more importantly how to use leverage with the trading system to achieve a goal or objective.

However it doesn’t end there. By the time you have watched this movie, I believe you will be able to take any trading system, not just the 4 T’s system and use it to achieve your goals. If you already have what you believe is a work-able system but are unable to make it work, this may answer your problems.

If you do have any questions after watching the video I urge you to send them to me, via the question form link which you’ll also find on my blog. I plan on answering any questions regularly so do send them along.

It is quite long, so make yourself a cuppa and enjoy
http://financialmarketfisherman.com

To your success
Dean Whittingham

Your Exit Strategy Should Be A Function Of You and Your Trading Needs

In my last post I spoke about getting back to the basics of trading when you find yourself struggling. I also mentioned that it was not the complete picture and that an exit strategy is more a function of the trader themselves. In this post I explain why.

There are many ways to formulate an exit strategy. Other than an initial stop loss, which is there to get you out of a bad trade, exit strategies are used to achieve a goal. A lot of traders don’t understand this concept and therefore pay little attention to it, spending more of their time worrying about entries.

Those that do consider the exit strategy important may still place more importance on finding the exit strategy that proves to be the most rewarding when back-testing. Although this is important it is only half the picture. An exit strategy also needs to support you the trader and help you achieve your goals.

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For the beginner or struggling trader

All professions whether it be sport, business, or trading have what are called the basics and if you’re starting out in a new profession, the basics form the foundation or the core. However if you’ve been practicing your profession for quite some time and feel you’ve gone off track or are not hitting your goals, usually the best thing to do is just get back to the basics: and trading is no different.

This is not an article based on emotional discipline or psychology, it is based on the basics of a trading plan, and it really doesn’t matter if you’re long term or short term, the basics apply to most market participants. Some may have trading plans that are quite different to the basics however for the majority who are relatively new to trading or are struggling, the basics are by far the best approach to adopt.

The basics are split into three and are:

1. Determine the trend
2. Wait for a pullback
3. Enter on an event or pattern

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and learn to sit on your hands; for example, how do I quit chasing a stock etc?

I remember someone asking me once, how on earth do you remain detached from your emotions when it is emotions that cause you to want to become a trader anyway? In actual fact it’s more like; emotions cause you to want to find financial freedom, but it means the same thing.

I agree, emotions do play a huge role and it’s even more pointless if you set out to achieve a financial goal in trading, so that you could enjoy a lifestyle goal, such as going on a cruise, only to not enjoy the cruise! All that work for nothing.

But let’s get serious.

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I am dedicated and have discipline, is that enough to succeed? Also I have problems with exits, it’s not fear or greed it’s just when to exit.

If we look at the first question, the name of the game is definitely discipline. When the Turtle experiment occurred several decades ago only some of the team chosen was able to satisfy the founder’s targets. The rest failed and it was a simple matter of discipline, nothing else.

As cliché as this sounds nowadays, I think we need to make sure we don’t see trading as the fun filled theme park it can sometimes appear to be. If you get the results you want from trading, then you can go spend that money at a fun filled theme park. Trading is just a means to get there and I have never found the act of trading itself exciting, I have always found it boring (as opposed to analyzing which I find quite exciting).

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Trading the markets is a learning game

Are you one of those traders who always needs to be right? Maybe you’re like that in most areas of your life. Novice traders fall into this category more so than any other level of trader. The need to be right stems from not being able to accept criticism, and this stems from having an emotional attachment to criticism.

Think about this for a second; our desire to be right all the time most likely came from our earlier years where we were taught that mistakes are wrong. The biggest problem with this way of thinking is that there is an emotional attachment to the mistakes such as feeling inferior or inadequate. Because of these undesirable feelings, we strive to be correct all the time.

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What are you going to do now?

This morning I woke up to the news that in the US the Dow had fallen 2.8% (387 points) overnight, along with falls in other markets. The ASX XJO, the Australian top 200 index has lost 3.7% today in a 229 point fall.

Having been a member of a private forum that focussed on put credit spreads, I know there are going to be many traders that will have found the last two weeks of trading particularly stressful.

The posts I dreaded reading from members of that forum time and time again after falls like this can be paraphrased in five words; “What should I do now?”

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