Is There A ‘Right’ Way To Trade?

For the week, the S&P gained 32 while the Nasdaq added 57. Intraday trend guides
were pretty decent throughout the week, with the hourly and 13 doing double duty
to provide some nice short-term safety nets.

Yet let’s hit the charts and then talk about how I use the posted charts below
as a short-term trader, along with some talk on the “right” stuff.

Here’s a question that — while never asked — would be totally appropriate:
Don, if you’re a short-term trader, often seeking high-probability short-term
trades, why do you post charts in your column that are 13 minute and above? 
As it’s never been asked, let me ask the question and explain how I use them.

First, when we migrated to a weekly Friday piece many moons ago, it seemed
pretty ridiculous to post anything less than a 13-minute chart.  Yet the charts
do reflect my own “weather” check of what the longer term bias may be heading
into each Monday. In fact, every evening I print 13-minute through weekly charts
and post them alongside my monitors, in addition to live versions that I can
glance at throughout the day. Obviously, knowing the prevailing wind — if there
— is critical for occasionally stretching even short-term gains.

Second, traders reading this trade a variety of timeframes depending on their
style, or as is the case at this end, which trend is currently “in play”. 
Frankly, you could remove the timeframe labels altogether as every chart tells a
similar story, whether one or 60 minute, and glancing at them at week close can
provide even scalpers another opportunity to strengthen chart reading skills,
which is critical on the lesser timeframes during those fast moving markets
where decisions must be made quickly.

The “Right” Stuff?

Once of the things I mentioned on
Thursday’s conference
call was the important recognition that there’s no “right” way to trade,
something that I also mention during the

three days of taping we did in early August. For example, I prefer to be a
singles and doubles hitter, with the objective of achieving positive cash flow
on the vast majority of days. Doing so suits my personality as well as my
business plan, both of which require consistency to maintain a positive frame of
mind during every trading day — and here’s the important aspect —
regardless of market rhythm.

You see, I’m not a home run hitter, or perhaps said another way, I’m not suited
toward the “common” strategy of a small win, small loss, large gain that
you read about in all those trading books, although it is certainly a component
when you look at much longer P&L timeframes.  Yet I’ve never cared that much for
the term “common”, which is about as relevant to success as the color of your
trading office wall — just ask Rick Barry, who remains one of the best free
throw shooters ever by shooting underhanded.  Ask yourself how many how-to
basketball books preach that??

Yet my point is that personal style is just that — personal. At this end, my
style strives for consistency which means more to me than anything, for it keeps
me coming into the office with a good frame of mind knowing the next day is full
of potential and the probability of having a profitable day is strong. Plus, I
don’t take strike outs very well — just ask my old high school coach and a few
lockers.

Is it the right way?  There’s no such thing … just ask Mr. Barry. Yet perhaps
the best way to answer that is to simply look to your results, for it has no
ego, bias, or motive to speak anything other than the truth.