This Is What The Best Traders Do…

  • April 21, 2004
  • Rob Hanna


The market managed to bounce on good volume today. 
I’m not convinced that means anything.  As a trend-trader, I’m having trouble
finding one.  (Maybe because there isn’t one.) Pick your favorite index — from
the beginning of the year, they’ve basically all moved violently sideways.  In
the last few weeks I’ve seen tons of growth names break out of nice basing
patterns and then fall apart.  I’ve also seen a large number of good-looking
bases fall apart before even attempting a breakout.  In other words, many of the
reversal players are having a ball.  If you’ve been looking to take advantage of
some nice steady trends lately, you’ve likely been disappointed.  Follow-through
is key.  Until I see convincing evidence that a good move is developing in one
direction or the other, I’ll continue to look to play both sides.

 

One of the most
significant traits of successful traders is their never-ending thirst for
knowledge. The best traders are always looking for an additional edge.  While
their core methodologies may remain the same, their style and techniques will
change over time.  Some will look to trade new patterns.  Some will look to
incorporate new indicators into their arsenal.  Some will adjust the time-frame
they trade in.  Others may begin to trade in entirely new markets.  Just look at
a few of the TradingMarkets contributors and you’ll see this is true. 

 

Dave Landry recently
published

a new book with some additional patterns he likes to trade. While some of
you may think he was holding out on you in the

first book, Dave claims the new patterns were developed later through
continued research. As far as indicators go,

Larry Connors is king.  When he discovered his CVR I indicator, he sure
didn’t stop there.  I believe he’s now in the mid-teens based on the VIX alone. Dave
Floyd is an example of a top trader that has adjusted to trading an entirely
new market.  As successful as he was with HVT, he felt he could do even better
by focusing some of his energy on the FOREX market.

 

Most traders have a
few books on their shelf that they will go back to again and again. They are the
books that helped them develop their methodologies in the first place. Whenever
they feel frustrated and in need of fine-tuning or inspiration they will review
them. The best traders, though, also study methods of different kinds of
traders. They study different markets. They look for new ideas that they hadn’t
considered before.  And over time a few of these ideas may appeal to them enough
that they will find a way to incorporate them into their trading. 

 

A trader’s
strategies are like fingerprints. No two traders trade exactly the same way. If
there was only one way to make money in the market, then there wouldn’t be any
liquidity. Just because you consider yourself an “Intermediate-term growth
investor” or an “index day-trader” doesn’t mean you should pigeonhole yourself
to that one definition. The more you learn about trading, the better you’ll be
able to refine your techniques and improve your results over time.

 

Good Trading,

Rob Hanna


robhanna@rcn.com