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The
following trading lesson is the shortest one I’ve every written. It
doesn’t contain any charts, patterns, systems or money management techniques.
However, for me, it was the most valuable revelation for my personal trading.
I began writing my
book on swing trading a few months after my first child was born. She was and is
a wonderful child but was very colicky in the first few months. During this
time, I found myself awakened numerous times throughout the night. Often, I
found it difficult, if not impossible, to get back to sleep. In fact, I’d say
that the majority of the book was written between midnight and 4 a.m.
Obviously, the lack
of sleep began to take its toll. Trying to keep up with my personal trading, my
TradingMarket commentaries and my responsibilities with the hedge fund began to
wear on me. I knew that something had to
go. Therefore, I decided to scale back on my personal trading. This wasn’t a
difficult decision for me because the lack of focus seemed to be creating a
string of losses anyway.
What happened next
was the most valuable trading lesson for me, ever. Not being a participant, I
found myself observing the markets very objectively.
I saw stocks, sectors, indices all set up. Further, I saw market timing
signals beginning to kick in. I reached a point where I simply couldn’t stand
it anymore. I stepped in and was immediately rewarded with nice profits. I got
too busy to actively manage the positions, so I let trailing stops take me out.
To my surprise, I ended up staying with the positions longer and was able to
ride out larger moves, because I wasn’t trying to micromanage the trades.
I once again focused on all the tasks I was juggling until finally, I couldn’t stand it anymore. Sectors, indices, stocks and timing signals were all there. I placed my trades and was, once again, immediately rewarded with profits. I began to repeat the above process over and over again. It reminded me of the line in Market Wizards where a trader stated that he simply waited until there was money lying in the corner and then walked over and picked it up.
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The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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