Tips For New Traders -

I just found a reference on Don Miller's site to the following interview with Mark Douglas, author of "Trading In The Zone," and "The Disciplined Trader."

http://www.4shared.com/file/96740657/227e2748/Mark_Douglas_-_Mind_Over_Market.html

I HIGHLY recommend this 53 minute interview for beginning and slightly experienced traders. It is eye-opening to those (like myself) who haven't thought deeply enough about the psychology of trading. I am planning to watch it again tomorrow and I'll likely go to Amazon to buy Mark's book, "Trading In The Zone." So much of what's in the interview is akin to what experienced traders on the blogosphere espouse in their writings. For example, his principle of looking at the market in terms of probabilities, etc. Take a look at it, I think you'll like it...

April 22nd

The importance of focus is clear to me now that the market has closed. I came into the markets late after a day-job appointment and found myself trying to paper-trade the choppiness in SKF between 2:15 pm and 3:30. Frankly, I felt like I was being chopped to bits between 2:24 pm and 2:50 pm; stopped out on 6 out of 8 trades. I was still looking for a momentum move though, and it came at 3:35 pm... and what a nice move it was. I was long a double position at an average of $60.95 per share and foolishly sold it into this first green candle. I had been fooled by the prior choppiness and didn't expect the move to continue... I thought it would do a quick reverse as it had been. In hindsight, this was a very costly maneuver. While I took a nice 84 cents per share gain on the trade, the gain would have been up to an $8.48 per share had I held into the market close! And here lies the importance of focus. The choppiness lulled me into my old risky pattern of playing for a reversal into this final big move up in SKF. Sure, it payed off on the next trade; a short on the 3:40 pm red candle, yielding 49 cents per share. This was positive reinforcement and I continued looking for more reversals instead of going long on the "momo train." On my final trade, I went short at 3:51 and, liking the position, I doubled up on it. The reversal never came and I lost all my gains (about$1.30 per share). As good as I felt yesterday, I feel equally lousy right now. I ignored the proper, higher percentage trade of riding with strong momentum and took the riskier approach to fade it. Old patterns die hard. This is why I have not moved to my real-money account. I don't have the mental discipline yet to make the appropriate plays.

I am carrying a large short-position into tomorrow. I am reasonably confident about fading the strong, upward end-of-day move. In other words, I'm sticking to my guns that it will reverse into tomorrow's open, based on the huge volume traded in one direction during the last 15 minutes of the day. My average cost basis is $63.35 per share; the ETF is now trading at $63.81 and has been as low as $63.56 thus far in the after-hours session. I will count this trade in tomorrow's tally. Rest assured, if this trade ends positive as I expect it will, it is still not how I want to conduct business. I am training to be a day-trader not a swing-trader. I don't want to get in the habit of holding an ultra-short ETF overnight.

Without considering my open position in SKF, I ended today up 20 cents ... pretty disappointing considering the action that took place in the final 20-30 minutes of the day.

Focus, focus, focus is critical. I will eventually get it, I have faith.

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ADDENDUM: SKF is now trading as low as $63.07 at 6:35 pm. After further review of my trades today, I noticed that on my six double positions for the day, I was 5 for 6 with a gain of $2.55 per share. I was surprised and pleased at this result; I didn't notice it initially. I have been trying to get in the habit of adding to winning positions when conditions warrant. (as mentioned above, I am counting my present open position tomorrow when I expect to close it, not on todays tally)

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16 for 26, a 61.5% win rate. Gain of 20 cents per share.