How can I improve my trading?
- Thread starter qwB
- Start date
in 2007, i moved from stock trading to futures trading. then i spent 3 years where i kept a picture of each chart where i paper/sim traded. along with the picture, i described the price movement that i saw leading up to a trade, the setup where i thought i could enter a trade and where/why i entered the trade. over time, each of these 3 descriptions changed as i tried different ideas for each, until i settled on what/how i wanted to trade. once you have done that, you still have to refine the process until you are consistently profitable.
Stop think of yourself as a trader. You are an investor with a very short term focus.
Contrary to what you might read on internet forums like this, "trader" is not an actual job.
A trade is an exchange of value. It happens only at the exact moment when you click the buy or sell button and get filled. Between entry and exit you are holding an "investment" in a financial contract. Getting filled is not the important part of this process. You need price to move in your direction between entry and exit. Investment research (due diligence) will help you identify the factors most likely to lead an investment to generate a return.
Proper due diligence of this industry will show that 95% of traders fail to earn profits, while 95% of investors succeed. It is that simple.
That is an excellent advice for OP if he is serious about improving his trading skills.
I am going through the same process myself.
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LOL that could be a good thing [10 month old starting trader]
Charlie Munger + Dave Ramey have some good reads '' leaders are readers''=Dave Ramsey.
They both hate bit con-bit coin.
Charlie Munger said his kids laughed @ him for reading so much;
so cant really expect kids these days to read real young LOL.
I maybe should disclose my banker dad took me to + paid for a con , but from the get go it was disclosed as a con \ ''The Sting Movie 1973'' Larry Mint Hite has a good read ''THE RULE''
; dont let his misuse of the word ''bet'' scare you off. He admitted he is mostly blind.
Dave Redneck Realtor Ramsey, said[bluntly] a lotto is stupid tax of people that cant do math.
What was the reason you switched?
Hi ironchef
Its been a while, but the bottom line was, over 10 years, I just couldn’t ever figure out how to make money consistently trading stocks. I was daytrading with ira money and in those days could only trade long and was only able to make money when the market was strong up. During down times, my longs would lose money. The moves seemed to be random each day. It was difficult to decide which stocks were moving, when was the best time to trade, and at what level to trade them. Stocks were priced in quarters, the pit traders kept the spread 0.25-0.75 and I was trading stocks with share values $100-300 with more than 1000 shares on the bid/ask. I used 1000 share market orders and very often, I would get 100-200 shares at the price I expected and then others would pull their orders and the remaining shares would be at worse prices. That ate into daytrading profits a lot. In addition, during those days we were charged $10-20 per trade and fees. so you had to overcome the trade cost/fees, wider spreads and further slippage to make money daytrading. Just a side note… during some of those 10 years I put half of my retirement with a money manager and he charged $300 to buy/sell 100-300 shares in my retirement portfolio. Crazy huh? After 3 years, I dumped him and invested in indexes.
Things were different for futures. The biggest thing that I noticed was that the trends were shorter than stocks, but on the flip side, prices seemed to move more consistently each day rather than randomly for stocks. I could rely on events like news, opens, closes, etc moving prices and at certain levels like high/low of yesterday, etc. these events/times and levels occur each day and i developed my trading plan around them. It took about 3 years to develop a good trading plan for futures and I continue to refine it for more consistency.
Hope that helps
toucan
Its been a while, but the bottom line was, over 10 years, I just couldn’t ever figure out how to make money consistently trading stocks. I was daytrading with ira money and in those days could only trade long and was only able to make money when the market was strong up. During down times, my longs would lose money. The moves seemed to be random each day. It was difficult to decide which stocks were moving, when was the best time to trade, and at what level to trade them. Stocks were priced in quarters, the pit traders kept the spread 0.25-0.75 and I was trading stocks with share values $100-300 with more than 1000 shares on the bid/ask. I used 1000 share market orders and very often, I would get 100-200 shares at the price I expected and then others would pull their orders and the remaining shares would be at worse prices. That ate into daytrading profits a lot. In addition, during those days we were charged $10-20 per trade and fees. so you had to overcome the trade cost/fees, wider spreads and further slippage to make money daytrading. Just a side note… during some of those 10 years I put half of my retirement with a money manager and he charged $300 to buy/sell 100-300 shares in my retirement portfolio. Crazy huh? After 3 years, I dumped him and invested in indexes.
Things were different for futures. The biggest thing that I noticed was that the trends were shorter than stocks, but on the flip side, prices seemed to move more consistently each day rather than randomly for stocks. I could rely on events like news, opens, closes, etc moving prices and at certain levels like high/low of yesterday, etc. these events/times and levels occur each day and i developed my trading plan around them. It took about 3 years to develop a good trading plan for futures and I continue to refine it for more consistency.
Hope that helps
toucan
Thank you for your response. Very helpful.
Stocks are now trading in decimals and often fills could be priced to fraction of a penny. I found, quite often, a market order would split the bid/ask. With zero commission, the slippages of stock trading is a lot less today than even 5 years ago.
Before I paper traded, I backtested a number of stocks and indexes and found individual mid/small cap stocks more consistent. My thesis is index and large caps have numerous MM, institutions and algos, therefore more choppy. It has been my philosophy I rather be a big fish in a small pond than a small fish in a big pond.
I selected one individual stock and have been trading that since August with good results.
Take care.