June 3rd, 2010 | 
Author: Very Superstitious
There’s little controversy over the idea that trading is largely a head game. Throw in the spectrum of emotions which ranges from pure elation (home-run trade) to all-out fear (blown stop-loss), and there’s a lot of ground to cover. Somewhere in between the extremes is the topic of superstitions, and traders have a LOT of them! Those with risky jobs are the most likely to have superstitions or rituals in an effort to maintain emotional stability, so traders certainly fit the mold! What about you?
As a rule, I’m not a superstitious person. I’m not afraid to step on sidewalk cracks or walk under a ladder. I don’t carry a rabbit’s foot or consult my daily horoscope. I really just do my thing each day and try not to worry about the things which are out of my control, even though it sometimes rains after I wash my car 
.
When it comes to trading, there are lots of opportunities to think that our actions lead to certain results. The only one I can think of for me is that early on in my trading career, I’d set my dream car of the week as the wallpaper on my PC. It was completely unrelated to trading, but somehow I found that about every time I’d do that, I’d go on a losing streak! I think it probably just made me overly aggressive in an effort to make the money to buy the car, but the result seemed to be poor trading. These days, you won’t find a sports car as my PC wallpaper, which is probably ironic coming from the guy who just claimed not to be superstitious! (Traders know when to break the rules, right?)!
I’ve seen and heard of some interesting trader superstitions:
- I knew one trader who insisted on using the same keyboard he started trading with, no matter which PC he happened to be using. There was nothing special about the keyboard of course, he just felt it was his connection to good trading mojo.
- One trader avoided the number ‘13′ at all costs. He wouldn’t bid or offer at the .13 level, he wouldn’t take a 13-cent winner or loser when he wanted out, and he traded more carefully when it was the 13th of the month.
- Jim Cramer has mentioned wearing a lucky green shirt to snap out of a losing streak back at his old hedge fund.
What about you? Do you have some funny trading rituals or quirks like refusing to wear red when you’re long? Do you avoid specific restaurants because of the “poor track record” it’s left you with on trading days after eating there?
Let’s have a little fun with this…..if you’ve got some trading superstitions, post them in the comments section below and let the rest of us know if we’re missing out on something that works for you!
Posted in 
Preparation
There’s a great post over at Invest2Success Blog about Winning Trader Traits which I wholeheartedly agree with and recommend reading.
I’ve discussed trader preparation before, and to the Winning Trader Traits post I would only further submit that the mental preparation involved in good trading is every bit as important as the physical side of being at the PC and studying results and methodologies.
The idea that “the great ones cultivate a work ethic that is superior to those in the good camp” is particularly true in almost every arena. Consider Michael Jordan or Tiger Woods or Lance Armstrong – three of the most successful athletes of our time. Although they may have had some talent to begin with, their desire to outwork their competition and prepare themselves for success undoubtedly elevated their skills, and almost certainly added the mental edge needed to compete and win on the highest levels.
Trading is the same way – a little talent helps but a lot of hard work and determination will definitely get you to the next level.
5 Expensive Words
Rarely do they pay off, and yet we’ve all said those 5 costly words……
“just a little more room.”
Whether it’s been on the winning side of trades where I’ve tried to squeeze the last $0.50 out of a stock, or it’s a losing position that has been trying to tell me I’m wrong (those numbers are RED for a reason!), I am guilty!
Oddly enough, as cheap as it is to enter trades with commission structures so affordable, have you ever noticed just how expensive it can be to stay in a trade?
We all know the rules….
• Obey thy stop!
• Never Believe in your stock!
• Don’t let a trade become an investment!
…..yet it is so easy to break them. It’s a solitary job, and the only person to prevent you from compounding your mistakes is the one you see in the mirror.
So, be your own ally. Have a trading plan in place before you login to your account. Do your homework. Set hard stops as soon as your orders are filled, and let those safety nets keep your losses small (we all know how easy it is to blow a mental stop).
Be smart! Trading is about real money, not just flickering numbers on a screen. Be prepared and protect your capital at all costs. That guy in the mirror will hold you accountable the next time you see him!
How I Select Trades 1
Successful trading is about managing trades once you are in them, regardless of where they came from. I think a great trader could probably turn a profit taking random trades, as long as he manages them well. Now I do believe that finding quality chart patterns is essential, mostly because trading good setups in liquid stocks allows for the best risk/reward relationship on the front end. That is why I run my swing trading website – to highlight the best charts in the market for potential trades. My trade selection process is based on my ability to manage those trades; therefore I want to find only the best. Why not predetermine your stop in case you are wrong by taking the trades with a natural stop-loss nearby?
Having said that let me touch on the last comment regarding stops. One of the first things I want to know before I take a trade is how much I am likely to lose in case I am wrong (and I will definitely be wrong some of the time). This helps me to determine two things: position sizing and profit expectation. If I am willing to lose $1000.00 on a trade and the natural stop is 1 point away, then a position size of 1000 shares will be obvious. Furthermore, if I want to keep my reward-to-risk relationship at 3 or 4 to 1, then I would look to pull at least 3 times my potential loss out of the trade on the profit side. This would be a 3 point profit for this example.
Now, how do I go about finding those trades? Each night I begin with all the stocks in the market and run some basic scans on them which filter out the low-dollar stocks and the low-volume stocks. Once I have the remaining list, which is typically about 1600 stocks, I sort that list by their close relative to that day’s range. This simply means the stocks at the top of the list finished the day near their highs, and the stocks at the bottom of the list finished near their lows. Sorting by this helps me to first find my likely long candidates and then move on to the short candidates, as I typically like continuation plays. Once the list is sorted, I use the spacebar to screen each stock in pretty rapid succession. Going through the list takes me about an hour. Simply scrolling through so many stocks each night also helps keep tabs on the overall market health.
As I move through the list, I keep a finger on the “F” key and “flag” the stocks which are good enough for a closer look. After screening the big list, I am left with about 50 flagged stocks which I look closer at to determine my trade candidates which will be in the swing trading newsletter. It is at this point that I separate the good from the great. I want stocks which are able to move. A stock like MSFT which sees daily changes of only a few cents is just not a candidate. I want potential for a good, quick profit. I also want to find tight setups where my stop is nearby. A wide, sloppy chart will add slippage and make it more difficult to know when to exit. This is why I often overlook momentum stocks which have already broken out. Why make trading any more difficult than it already is?
Volume is the next thing I will really key in on, as it is the best true measure of activity and just what the “big boys” are doing. Does volume support the overall look of the chart? Has there been more activity lately than normal which may indicate a move is about to occur? If so, then that stock makes my list.
When looking for shorts, I want to see lower highs, downside volume and relative weakness to either the market or that particular stock’s sector. This indicates to me that pressure remains on the stock and the path of least resistance is still down. Any stock that is unable to participate in market strength gets my attention quickly.
The next morning, I set alerts in my trading platform which will trigger when the stocks from the newsletter meet their breakout prices. Most of the time, I set these alerts to actually get me into the trades automatically for at least a partial position. I also set up my watch lists which helps me to gauge momentum and relative volume.
As the day progresses, I keep a close eye on market activity (or inactivity it has seemed to be lately). If buying is strong and the futures are holding up well, I will add to longs in expectation of strength (vice versa for shorts). If the futures are flat and choppy, then I cut way back on my activity and grab a good trading book. Watching the market action with this in mind helps me select which trades are worth adding to and which are not.
From there, it is all a matter of execution and sticking with a good, disciplined trading plan. Cutting losers and keeping winning trades on my screen is the only remaining part of my job once I have found the trades, which is also the most important part!
When Trading Stocks, a Ripoff Report Comes in Handy
There are many ripoff scams and rip-off artists surrounding Wall Street these days. Everyone seems to have a plan and an agenda and few have the investors’ best interest in mind. Even when building a diversified trading strategy, there are risks of being a victim of a rip off. Of course, there are many solid and professional advisory firms and financial services out there, but even their best interests tend to lie with their own. This may not seem like a ripoff in the traditional sense, but make no mistake, any time you lose money on bad advice, it’s a rip-off.
A ripoff report filed with state securities regulators is a great tool to have when entering into the trading world. A ripoff report filed with state or federal regulators basically offers comments and opinions from previous rip-off victims about companies and advisory professionals. Some financial services firms scoff at ripoff reports filed with regulators, but just think about their motivation. If they are protecting their own interests, and seeking to play the ripoff scam on their clients, they may appear in a ripoff report filed with regulators.
Why focus on a rip off?
No one wants to talk about the elephant in the room. It’s human nature to avoid the negative, and a ripoff is certainly a negative. When you’re in the market for an advisory professional, you want to feel comfortable and confident, not second-guessing decisions and choices when it comes to your diversified trading strategy. You may not want to think about a rip-off, but a ripoff is certainly a possibility. So how do you avoid becoming a victim of a ripoff? By educating yourself.
The first step in educating is understanding Chuck Hughes
One name you won’t find in any ripoff report is Chuck Hughes. The reason is simple. He has built an industry on a simple formula that works. It’s known as the Chuck Hughes Advisory service. It has another name as well, which is the GPS Advisory Service. If you want to avoid the ripoff, then the Chuck Hughes Advisory is the answer. Log on to www.chuckhughes.com to obtain 25 years of Chuck’s actual trading results which total more than 4 million dollars of real time profits.
Chuck Hughes built his reputation with simplicity. He started trading with a $4,600 trading account, a mortgage, and kids back in the eighties and the Chuck Hughes Advisory service developed from there. Chuck’s 25 years of actual trading profits prove that Chuck Hughes is not a ripoff. Very few advisory professionals have a 25 year record of actual profits. If you are looking for a profitable advisory, check out Chuck’s GPS Advisory Service.
Think about simplicity for a moment. And a ripoff. What is important to an advisory professional who wants to make you a victim of a ripoff? Complication. When things are complicated, people tend to stop asking questions. If an advisory professional is talking circles around you, stop them. Your diversified trading strategy is too important for you to be confused about any of it.
How does the Chuck Hughes Advisory tie into a diversified trading strategy, or a ripoff?
The question about the Chuck Hughes’ GPS Advisory Service is an important one, especially when it comes to your diversified trading strategy. After all, this is about avoiding a ripoff. The basic premise here is that by knowing about Chuck Hughes and the GPS Advisory Service he has developed, you will be equipped to ask the right questions of your advisory professional. Information is king in the modern world. When you understand that the Chuck Hughes Advisory service and the GPS Advisory Service are very profitable then you have useful information at your disposal.
Advisory services are in abundance throughout the world. But few have the track record that Chuck Hughes has built with his GPS Advisory Service. So why would other advisory professionals avoid talking about Chuck Hughes and the GPS Advisory Service? It’s simple.
Other advisory professionals want to make money. They want to make money fast. These advisory services will often try to talk you into the gamble, the high risk. After all, it’s not their money, it’s yours. They don’t measure risk when it’s not their money. Chuck Hughes only uses limited risk strategies with his advisory services.
The Chuck Hughes Advisory service and the Chuck Hughes GPS Advisory Service both utilize trend following systems and are simple in nature. The Chuck Hughes Advisory only uses limited risk strategies. There are no margin calls, so you will never owe more than you invest, no matter what happens in the market.
But more importantly, the GPS Advisory Service follows the price trend and does not rely on predictions. The Chuck Hughes Advisory service follows the trend. When the price trend is up you buy and when the price trend is down you sell short. A diversified trading strategy can be utilized with the GPS Advisory Service by investing in non correlated diversified global markets with good profit potential and low risk.
Is the Chuck Hughes Advisory too good to be true?
It may seem that building a diversified trading strategy on the Chuck Hughes Advisory service would be too good to be true, but it’s not. The fact is that any advisory professional worth his salt will tell you that simple is better. Chuck Hughes understands this well.
With this information in mind, and the ripoff reports maintained by state and federal regulators, you will have everything you need to build a sound financial future for yourself and your family.