April 28th - Morning

I had a chance to log into the markets this morning for a moment before doing some work on my construction project. I had a day-job appointment set up and after arriving at my customer's home at 8:15am, she promptly received a last-minute call to report to work on her day off. So, my appointment was postponed. But, there is plenty to do on my home construction project today... drywallers are finishing up on Friday and the insulators finish today. I have a multitude of things to do before the Mid-June deadline.

With regard to yesterday's EOD trade in TV, my trade idea continued successfully into the open this morning, in concert with the market overall. It is further validation that attention to and an understanding of the overall markets pays dividends when playing individual stocks; restating the utterly obvious.

This morning, it was back to the practice account with a momo trade in FAZ. I took a short in the direction of the prevailing move and exited when I felt the momentum change. Too bad I didn't reverse and go long, from what the chart shows now... That tactic will come later, one must learn to crawl before learning to walk.

Now, it's back to "real" work :-)

Saw it, Liked it, Reprinted it...

Ove at FNG, I mentioned in the comment section of one of Scott's recent posts about how important his posting of successful trades is in terms of allowing us to associate with excellence by reading them and visiting his and other traders' sites. A much more eloquent and valuable post at Dr. Brett's site ( http://traderfeed.blogspot.com/ ) today emphasizes the same idea in the final two paragraphs... I am seriously going to miss him when he stops posting soon.


Tuesday, April 27, 2010
What Competent Traders Need Most
I've written quite a few posts to attempt to guide beginning traders. But what if you're a trader who has reached the stage of competence? Now you can consistently cover costs and sustain modest profits. How do you get to the next stage of expertise, where you can make a solid living from your trading?

What many competent traders do is try to magnify their modest profits by trading more instead of by trading larger. Because they have modest account sizes, they cannot size their trades significantly, so they try to put on more trades. Such overtrading takes them out of their niches of competence and leads them to lose money.

Those traders don't recognize that they may already have the skills to become excellent traders. After all, a trader who can make $200/day trading 5 lots in the ES futures could be making $2000 a day trading 50 lots, not a bad six figure income. Given the liquidity of the market, the trades that work with 5 lots by and large will work with 50 lots. It's just a matter of growing into that size. The actual trading doesn't have to change significantly.

Probably, this issue occurs in other areas of business. The successful local restaurant might have all the makings of a powerhouse chain of eateries, but without access to capital and a managerial talent pool, that growth never happens.

That is why access to capital is key for the competent trader: either capital one has saved up or that one can access through trading for deep-pocketed firms.

The second thing that competent traders need is access to expert traders. A beginning trader, like a Little League ball player, can benefit from coaching from a more experienced person. It doesn't take an expert to coach a rookie. But once athletes becomes college stars, they require hands-on mentoring from coaches and mentors with expertise. It is not too unusual to see self-made competent golf players, traders, or singers. It's rare to see expertise develop in relative isolation.

That is because expert coaches and mentors help to mold and accelerate learning curves, to make the most of a person's talent. If you've reached a stage of competence, it is vital to use online resources, personal networking, and/or access to trading firms to learn from pros. Look at the history of great achievers in business, the arts, sciences, and sports: even the self-made greats stood on the shoulders of giants.

April 27th

I had a few minutes near the end of the day to have a look in on the markets. I was trading in my live account today for the first time since last fall. I found TV had dropped significantly throughout the day and watched it for a rebound at end of day. It hit a spot where I felt a pullback might occur and traded a mere 250 shares manually(limit order without using the quick entry, preset button). I was about 5-6 minutes early on the reversal; I sold the minor gain in the last minute when it felt like it had run out of gas. Unfortunately, because of my infrequent use of this live account, I had forgotten that the short-cut "button" was preset to 500 shares. So, what ended up happening when I closed the 250 share long position was an additional trade going short for the same # of shares. I bailed on that when I realized my error, losing most of the tiny, single-digit gain I had. Oh, well. NBD. This was never meant to be a money-maker to begin with.

This was more or less a practice-trade to test my reversal instincts with real money on the line, even if it was only a $5,000 position. I'm satisfied with the result. I didn't add to the position when it was losing money, and I waited for my idea to develop. My entry was based on study of chart and momentum, as was my exit. As mentioned earlier, the entry was a bit quick but the exit was dead-on.