At the risk of sounding like a broken record, I'll start the new year off by expounding on some of my favourite subjects, momentum, simplicity and mental preparation.
Hopefully you took some time off in the last couple of weeks to get your head out of the market stream and into the thought stream of mental preparation.
Having the ability to focus on what is happening in the market and making the correct adjustments is vital to your trading success. Getting into the zone that allows you to execute your trading plan unaffected by emotions is the most important thing that you can do for yourself.
Your plan should call for you to be on the right side of the momentum, ride that momo until it exhausts itself and trade it the other way or wait for the original trend to show itself again.
Your plan should set out the point at which your decision will be proven wrong and you will take the loss.
Review some of my "best of" articles and practice the techniques I mention to strengthen your focus and mental toughness. Focus, visualize, think.
This is what will separate you from the other traders who are stuck in the perpetual loss, blame cycle they are in. Become machine like in your actions.
Keep things simple. Forget about tops, bottoms, vix, fib lines, market levels, analysis calls. None of that matters to the momo trader. You see, the charts tell me when things are happening. I don't need multiple indicators to tell the same thing. All they do it clutter up your decision making ability making you hesitate as you wait for the holy grail to speak. Meanwhile, guys like me have made the trade seconds or minutes earlier based on the probability of something happening instead.
Momentum and probability are the things that make you money. Riding on the coattails of the trend and taking the view that you do not know for sure what is going to happen in the future but will take the likelihood of it happening instead are the features of a successful trader.
Keep striving to be better everyday. Attack your problem areas as one would attack an engineering problem. Identify the root cause through observation, list practical solutions, come up with a plan that you can implement to counter your problems. Little steps forward can give you a sense of accomplishment and that the problem is not so big after all.
When you can break your trading plan down to the simplest bits it becomes much more manageable and easy to live with day to day.
I have found this is an easy business when you have no expectations. I buy into an uptrend and sell or short a downtrend because probability has shown me this to be where the easy money is made.
This is what I focus on. Nothing else.
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