12 steps you can take to improve your trading

1. Trade in a conceptually correct manner

Trading because Mars lines up with Venus might work occasionally, but there is no real basis for trading in this manner. Patterns you trade should make sense and have some sort of statistical edge. It does not have to be complex. In fact, simpler is better (e.g. I'm known as the trend following moron).  

2. Trade small

Any ONE trade should NOT have a material impact on your life. ANY one loss should be viewed as an “expense”—no different from what you do in any other business. Remember, It’s a marathon, not a sprint! You'll only be smarter in the future. If you're in the learning phase, I can promise you you'll look back years from now and say  "what the heck was I thinking!"

Ever have a stock you're long come out with good news and then you watch in agony as it drops? Every be short a stock that comes out with bad news and then you watch in agony as the stock rises? The news is irrelevant. It's the reaction to the news that's relevant. What is, is. 

4. Forget about logic—Don’t worry about the “whys”

Stocks trade on emotions--period. There often is no logic as to why a stock rises or falls. Again, what is, is. 

5. Know YOUR Methodology 

Each method will have its sweet spot. I can't speak for every methodology, but I can tell you this about momentum based swing trading: It works well in  trending markets (duh!) and doesn't work so well in choppy markets (duh duh!). 

6. Don’t deal in mediocrity 

Pick the best and leave the rest. Stocks should be in an obvious trend (or transition) and set up. The stock should also trade "cleanly." 

 7. Do NOTHING unless there is something to do!

Your performance is based on the good trades less the bad trades. By avoiding the markets in less-than-ideal conditions, you’ll have fewer bad trades hence, better performance! My favorite thing to do is to take the “can’t stand it test." If you can't stand NOT taking a trade because all the signs are there, then you probably should take it. Otherwise, don't trade.

8. Stack the odds in your favor: Market/Sector/Stock

Your odds will greatly improve if only trade when the market, sector, and stock are all trending in the same direction.

9. Let things work

Results in trading (especially momentum based swing trading) are often skewed---most of the gains come from a few big winners. Therefore, it's crucial to catch these occasional homeruns. And, you'll never catch any big winners if you micro manage your trades ( i.e. exit early).

10. Money management

Trade small, use stops, take partial profits when offered, trail stops. 

11. Money management

Trade small, use stops, take partial profits when offered, trail stops. 

12. Money management

Trade small, use stops, take partial profits when offered, trail stops. 

I expanded upon the above, covered current market conditions, did some really poor imitations of Dr. Kissinger,  and answered your questions earlier in my interactive presentation. Click here to view it or Email me if you need a link to this and prior presentations covering a plethora of topics. 

Best of luck with your trading on Thursday!

Dave Landry

dave@davelandry.com

P.S. Reminder: Protective stops on every trade!

P.P.S. If you would like a free trial to my trading service, click here.