Six Ideas To Help Your Trading In 2004

For once, I’m going to pass on
the charts and technical narration as we close out the year

by looking back at 2003 successes and blunders to
help draft a trader New Year’s Resolutions List. And if you’re interested, I’m
offering for you to join me in incorporating them into your own trading in a
manner that provides at least a small degree of individual trader
accountability. More on that in a bit.

Now before we start, let me say that this isn’t pie-in-the-sky, theoretical
mumbo jumbo meant to provide content for a sappy year-end piece. Rather, it
reflects my own experience over the past year which I’ve turned into early-year
resolutions, in most cases as reinforcement. I also certainly realize that
we’re all wired differently and what works for one person may not work for
another. Yet while one or two tweaks won’t turn a novice into a pro, sometimes
they can help push in the right direction, and trading — like patterns
— is often all about momentum.

So my challenge to you if you’re struggling as a scratch or negative trader is
to incorporate the following trading resolutions into your trading in early
2004. Heck, worse case is you continue on your current road. Best case is it
may be enough to push you to that other side as they have from time to time in
my own trading.

1. Don’t discuss
your trading results with anyone
— not
your trading buddy, chatroom friend, significant other, or beloved pet. Why?
Simply put, to maintain focus, continual humility and complete absence of
complacency so that the market can dictate the terms each and every day.
Here’s a concrete recent example. I made the mistake of briefly mentioning some
Q4 performance statistics with a close industry colleague two weekends ago. And
although it wasn’t planned (I know better and make it a hard rule to keep
personal trading discussions strictly to the educational front)
, I could
have literally projected Monday’s trading result once the conversation ended.
Result? A 17-week streak momentarily interrupted by an ill-advised morning
sequence during a shortened Holiday week that had

complacency
written all over it. Simply put, I know better …
yet I still fell into the trap. Don’t means don’t.

2. Don’t look at your P&L
before noon ET
. Now for those that have
mentored with me, you’ll know this one actually reflects a loosening of the “all
day” restriction, yet the resolution is designed for a wider audience — many of
whom will likely require help in gluing blinders to their temples each morning.
I won’t go into all of the reasons that have been discussed by others for
decades, except to reinforce the comment that the market doesn’t give a hoot in
terms of future action and opportunity, so why should you. At this end, since I
can’t eliminate the view on my current order entry screen, I literally have
post-it note (reinforced with white-out tape) covering the figures.

3. Don’t trade
between 9:30 A.M. and 9:45 A.M. ET unless your pattern triggers a major
signal.
At this end, one potential
trigger might be on a morning pullback to major support as defined by a strongly
sloping Moving Average, high ADX, or similar indicator, and preferably with a
one-minute turn. Otherwise, if it isn’t crystal clear, and despite what others
around you may be doing, no trading! Observe.

4. Never trade against the
current trend “in play”.
OK, I know
we’ve heard this one a thousand times, but I continue to see too many traders
trying to get cute
playing the retracements — and yes, as a
short-term trader I go there from time to time, sometimes prudently, sometimes
not. Now for this resolution, you of course have to be able to determine what
longer-term trend is in play. Many of you know I like to follow the 30, 60, and
120 timeframes on an intraday basis, to see which one is predominantly trending,
any or all of which may be in play. And while some may be able to loosen this
one later to reflect clear out-of-control market conditions, never means never
for now.

5. Stop looking at the
market depth after executing your entry!

It means nothing, nada, zilch in terms of market
strength. A best, it’s irrelevant aside from a slight peek into market
liquidity, and at worse, it reflects 180 degrees from the true picture and, more
importantly, can take your visual focus off the charts. Charts rule, market
depths drool. Any market depth info at this end is purposely relegated to an
ancillary monitor which is separate from my charts.

6. Work like heck
to establish, maintain, and/or or improve a strong relationship with your broker
or FCM.
As a trader, I’ve been blessed
over the years to have worked closely as a trader with a few outstanding
entities, and the comfort they provide as on online trader in terms of system
reliability, cost, and personal assistance is as important to me as my capital.
Trading may not be a team sport, yet this particular team aspect is paramount.

No, these ideas admittedly aren’t rocket science and we’ve all heard at least a
few before in one context or another. Yet, one problem may have is that while
we’ve read these over and over and over, we sometimes try to outsmart them, with
some folks continuing to do so during their entire trading career. Or we lack
the discipline to stick to what we know works. Or we try to avoid taking a loss
on a stupid entry by averaging to try to make it a winner. For as there is no
perfect system, I still haven’t found the perfect person.

As a related aside, when I was felled by the flu over the holidays, I watched
the World Poker Tour marathon on Spike TV. Here’s a trading reinforcement
take-away – Don’t like the trade you’ve been dealt (this could be a stupid entry
or simply additional market discovery once in a position)? — Fold it without
hesitation! In fact, picture yourself literally throwing it back to the market
dealer. For unlike poker, the market will always call your bluff.

Since most of these resolutions have nothing to do a particular trading method,
they’re easily incorporated into any “strategy”. Ah, but easily incorporated
does not mean easily done … been there, and still visit the neighborhood
from time to time. So this time, if you’re struggling as the result of falling
into one or more of these traps and think the suggestions may help, I’m giving
you an opportunity to be accountable.

Pick a timeframe, be it a week, month, quarter, or whatever and email me at the
beginning of the period that you’re going to do it. Then plan to
email me at the end of the
period when you tell me you’ve completed the assignment. And while it’s of
course on the honor system, if I don’t hear back, I promise I will email
you back and try to track you down to see how it went! If it helps just a few
traders, it will be more than worth the virtual ink and in-box flood. No
year-end “selling” intended … just an offer to help as we all clean the slate.

Good Trading and May You
Have a Wonderfully Prosperous 2004!


Don Miller