Four Things To Consider If You Want To Be A Professional Trader

As we all know, trading
has been quiet lately, and, shall we say, a bit frustrating
. If
your time frame is much longer, say a buy-and-hold type person, this market is
right up your alley. The same cannot be said in the daytrading arena. The
fact is, the markets are cyclical, every style has its hot and cold periods. I
cannot stress how important it is to look at the market as a means to make
money, not as a source of entertainment. Too often traders simply do not
realize that sitting idle is perfectly fine.

Everyone has different reasons as to why they
became a trader — for me it was and still is, to make a living. I have done
well over the years but it does not change my motivation. I show up each day
to make money, period. While that may sound obvious, too many people I have
come across over the years are looking to be entertained. Who has the new
“indicator”, the new holy grail etc? I like to think I tell it like it is,
trading is one tough business. Trading will expose every weakness you have
and at times elate your emotions to levels you rarely, if ever, experience.
The fact is, a trader’s life is somewhere in the middle, and learning to
effectively deal with them.

A friend of mine describes professional traders
as fighters, they will do whatever it takes each day to pull money out,
assuming it does not violate their risk/reward tolerance. Many days that may
require approaching the market from a slightly different angle, where the
rules are bent ever so slightly. Other days it may require their years of
feel and experience to simply take a trade that just “feels right” but if
asked to illustrate the trade step by step, could not. You see, trading is
part art, part science. Personally, I think it is more the former. If in
fact that is true, the creative aspect cannot be initiated at ones command, it
is a reflection of your approach and mind set. A few quiet sessions, a few
more losing trades than winning and you can easily lose your edge. A day or
two away from the screens always restores the clarity for me.

So, if you truly want to be a professional
trader look at the facts:

1. There are no easy answers

2. Not every day will unfold exactly the way
you want it to or expect it to

3. Trading, while entertaining at times, is
more a game of patience and discipline, certainly not real sexy when taken at
face value.

4. It will be the hardest, yet most rewarding
thing you ever do.

As I complete these thoughts on Sunday evening
the markets appear to have hit a speed bump, a decent size one at that. The
dollar is selling off hard across the board (remember my comments from a couple
weeks back on this possibility) and the Nikkei is experiencing its’ sharpest
sell-off in some time. This will likely translate into our markets as well,
currently the S&P’s are down 8 points, a sizable move given the range
experienced lately.

So, what do we do? For me, I sense that the gold
stocks will be the natural beneficiary, gold the metal, is up over $4 and many
of the gold stocks broke out on Friday (see a daily chart of
Newmont Mining (NEM)). So, other than
looking to Fade the Gap on a few issues on
the opening, my strategy is to play the gold stocks intra-day and add to
existing longer-term positions. With any luck this sell-off may develop into
somewhat of a disorderly period for the market, the most opportune time for
HVT, however, I cannot make that assessment
just yet. Keep it simple and focus on the gold stocks, that is where the decent
trades should be.