Wednesday, August 26, 2009

The MOST Important Trading Lesson You Will Ever Need

For my good and for YOUR good, i am not gonna trade today. Clearly Mr. Market has a vendetta against me and doesn't wanna give me anything this week. 7 trades: 5 losses and 2 wins. ALL the setups i think about taking did phenomenally well and the ones that i actually took either treaded water or downright stopped out for losses. I am taking small losses but these small losses do add up and as a result i will ONLY trade with HALF SIZE, until i manage to get my groove back. SO PLEASE NOTE, FROM NOW ON ANY ALERT YOU GET FROM ME, IF YOU DECIDE TO FOLLOW, PLEASE USE HALF OR 1/3 OF YOUR NORMAL POSITION SIZE UNTIL FURTHER NOTICE. I am 100% confident, i will get back my winning ways but in the mean time, it's about bad streak management. In other words, MUCH SMALLER SIZE in trades and SAFER STOCKS. You might see stocks like IBM, CAT or JPM (instead of SOMX, BCRX or SPPI) in my alerts now if you see any alerts at all.

Look, as a trader there will be times when stuff doesn;t go your way and nothing works and i personally have seen these times many many times and know that these times is just like when you are flying in an air plane and you go thru a zone of turbulence. The air plane pilot knows that turbulence is a temperary thing (it's scary, frustrating and it seems like it will never end) and it's about riding thru it but it also needs to be respected and manage thru the zone of turbulence so that when you come out on the other side, you will still be in good enough shape and to ride out smoother times later.

Guys, i am telling you right now, if you are here to learn how to trade then what you are seeing right now, will be the some of the most valuable lesson you will ever learn.

WRITE THIS DOWN SOMEWHERE:

TRADING IS ALL ABOUT MANAGING WINNING AND LOSING STREAKS. THAT'S WHAT TRADING IS ALL ABOUT. THINK ABOUT THESE WORDS I JUST WROTE. TRADING IS ALL ABOUT MANAGING WINNING AND LOSING STREAKS.

The way you mentally handle bad streaks and the actions you take following bad streaks is what successful trading is all about. When you are making good trades and every trade is a winner, LIFE IS GOOD and trading is fun as your piggy bank get bigger BUT how DO YOU handle when the coin flips?? Personally, I TRY(i know it's hard) and stay AS POSITIVE as possible and i try to put things in perspective(i know this is a temperary setback in my trading and every trader goes thru it). I also take proactive action. Go back and read that SOMX trade alert email again and you will notice my tone of voice: It was a tone of caution and i urged to take half positions because i was NOT TRADING WELL LATELY.
How many of you keep trading with BIG or NORMAL SIZE knowing fully well, you are not trading well?? be honest.

This is a classic example of what i do when i am trading poorly, i will trade as little as possible and use much smaller size UNTIL I REBUILD back my winning rhythm. I know i will eventaully but in the mean time, IT'S ALL ABOUT BAD STREAK MANAGEMENT. This is the MOST important trading lesson i have talked about in the 20 weeks of ART OF TRADING service history. Save this email please and re-read over and over again. It took me years of heart ache and pain to realzie what it mentioned in this email.

see you guys tomorrow.

2 comments:

NYC Trader said...

Stewie-You, my friend are a coool cat!

Stewie said...

NYC, you ARE THE DA MAN!!!!!

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