What You Need To Understand To Be Successful
It’s Patriots’ Day here in Massachusetts,
and it’s beautiful and sunny for the Boston Marathon. I have a couple of friends
staying with me who are running today, and yesterday we went into Boston to pick
up their numbers and walk around a little. At one point we went to this booth so
that they could pick up goal bracelets for themselves. Most marathoners have a
goal of a specific time in mind. These bracelets show you at each mile marker
what your time should be if you want to achieve your goal. (Both of my friends
are engineers and they swore that after 15 miles or so, basic math is not
possible.)Â One of my friends remarked to me that trading is like a marathon.
It’s the long haul that matters, not the short-term wiggles.
I thought about it, and I thought about those
bracelets they wear. I then decided the analogy didn’t fit. Marathon runners
who want to run the race in 3:30 need to average about an 8-minute mile. They
won’t run the first mile in 8 minutes, and the second one in 10 minutes and then
the third one in 6 minutes, and so on. They will try and run at close to the
same pace for the entire 26.2 miles. As nice as it would be to be able to make a
steady return like this in the markets, it’s nearly impossible. Traders’ returns
look more like a series of sprints.
No matter what your style or time frame, there will be times when the market
will be behaving perfectly for you, and there will be times when your methods
simply won’t work. Channel traders like well-defined trading ranges. Reversal
players prefer extreme conditions, and trend traders need a trend. One key to
success is understanding how the market is acting, and what the effect is on
your particular trading style. With this knowledge you can decide whether you
should be trading aggressively, or whether you should be sitting in cash. Dave
Floyd HVT followers normally avoid trading in the middle of the day. As a swing
trader, Dave Landry many times will suggest playing it light, or sitting it out
when market direction is not clear or setups are not abundant. Mark Boucher
demands solid breadth and plurality of markets before investing too heavily
either long or short.
I believe making money in the markets is more like a series of sprints rather
than a marathon, and you need to understand when to rest up and when to go all
out, if you are going to be successful.
That said, the market is starting to remind me of Michael Corleone in Godfather
III. Every time it tries to break out, they drag it back in. ’m still not
getting overly excited until this range is resolved.
Best of luck with your trading,
Rob Hanna
P.S. Congratulations to Ray & Emily, who finished together in 3:35:32, and to
everyone else who braved the 26.2 miles today.