Self-improvement.

If you are having trouble achieving your trading goals, take time out to examine the real causes of your problems.
Working towards improvement will take a dedicated approach on your part. Identification of the problems are the first step. Attacking the problems one at a time is the first part of the solution. Doing the right thing at the right time based on the information you have should be your goal.

Sit down and have an in depth talk with yourself and ask yourself some hard questions. For example:
- do I have the emotional makeup necessary for this business?
- do I have the financial reserves so that I am not relying on trading to pay the bills while I learn?
- do I really enjoy doing this?

Coming up with honest answers will be the only way to ultimately overcome issues that keep getting in your way.
If you keep doing the same things, you will keep getting the same results, so you’ll need to change. Plain and simple. Best not to delay in sorting things out.

My preaching on the emotional context of trading is rooted in my belief that trading is a simple business. Simple, but it is not easy.
After you have crossed the void between developing an edge and your emotional psychology, trading will become easy for you.
After you have really accepted risk, losing decisions and losing money, trading will become easy for you.
After you have learned that the market only displays neutral information and that it is your psyche that tries to spin it in a positive or negative way can you trade without an opinion.

I try to keep trading as simple as possible:

- I don’t listen to any news, TV, people etc. I am not qualified to disseminate all the information available, take all the known and unknown factors into consideration and all the changes that occur minute by minute. I do however know that when a stock is going up, people want to own it and there are green candles, so I buy. When a stock is going down, people don’t want to own it, and so I short or sell it. Simple!

Waiting for the right moment to enter and exit definitely comes with experience. Correct order execution, taking profits when they are offered and cutting losers are also vital to your success.

My mind is not bogged down by indicators, rumours, conjecture or analyst’ reports. It is much easier for me then to concentrate on what really matters – recognizing what the charts are telling me and acting on this information.
Concentrate on the problems you might have. Hesitation, taking big losers, selling winners to soon, screwing up order entry, racing heart and sweaty palms.
Getting to the root of these may be like a journey of self-discovery. I would bet that most come from being afraid to make wrong decisions and lose money. I make wrong decisions and lose money many times a day. But I am quick to realize my wrong decisions and quick to cut my losers. This is a key ingredient of my trading plan.
Really think about why your problems are occurring. Delve deeply into them so that you can explore the way forward.
Take hesitation for example. Do you hesitate when you see a trading set up that meets all the requirements of your edge? Is it fear of being wrong? Fear of losing money? Fear of being right? Fear of making money? Get right down into it. Speak out loud and admit to yourself what it is. Accept it. Only then after acceptance can you work on improving your lot.
Maybe you view it as an overwhelming amount of work to do. Small steps, day by day can bring positive action to your trading and make it seem that the task is not so big after all.
Strive for a state of mind of ambivalence. The market is going to do whatever it’s going to do with or without your participation. It’s up to you to appreciate the known risk, unknown factors that can happen and just go with the ebb and flow of the markets. Simplify your trading style down to just candlesticks on your monitors. Turn off the TV.
Think about one thing to change today that can bring you a positive improvement.

The risk / reward lie.

One of the biggest lies in the trading world I see is that the experts claim you should only take a trade if the risk / reward is 2,3, 5 or whatever times in your favour. Now, I think that establishing your risk is vital to your success but I have a problem with the reward part. Let me point out why in the clearest way possible - NOBODY KNOWS WHAT A STOCK WILL DO IN THE FUTURE.
All that you are doing when you discard many high probability signals is lose good momentum trading opportunities and hesitate when you on the verge of trading for real. Since you passed on 20 setups previously (16 of which went on to good profits by the way), now that little voice inside your head asks " are you sure"?
In today’s market especially, all the indicators at your fingertips don't work because the market views them as worthless. Anything can and does happen. These days, momentum is king and should be your deciding factor to pull the trigger. And I firmly believe that you must trade every setup your edge says is probable with no hesitation. As a side note to demonstrate anything can happen, I was trading SRS and SKF again today. When they started to drop from their highs of $300 I opened my mind up to if they could end up $100 lower. Certainly a possibility I thought, as earlier in the day the up swings in the market were violent and these 2 stocks would drop fast. Well, SKF went down $60, SRS $80. Pretty easy to make money when something drops $80 and you're short.
Now if you believe anything can happen, then you can also clearly see that predictions, expectations, hopes and wishes are all meaningless to the smart momo trader. If you trade on the probability of a stock moving in a certain direction then the only signal you should use to take profits is one that shows you the stock has stopped moving or profits are large enough that it is prudent to take it instead of bailing out at your hoped for level.

However on the flip side, setting your risk, the point at which the trade will be proven wrong, is of great importance. This is the thing that you need to focus on instead of the reward. You can set this point exactly and prepare yourself for this loss in advance. It's part of your job description to take losses during the day. Get used to it.

When you prepare to withdrawl amounts from your psychological bank before the trading day starts then you can minimize or eliminate any damage those losses would normally inflict on you. In a sense you can put a step between you and your losses. They become just a cost of doing business like damaged inventory in a store. If you trade your edge 20 times a day and 5 trades are going to be losers and you know you can set the losses at .25 each, you know exactly what to expect. When you balance that against the winners that you typically produce, it becomes much easier to take every trade that comes your way.

These are days of unparalleled opportunities. Don’t let them pass you all day as you wait for the perfect setup. The perfect set up can just as easily fail as a dog.

How I trade reversals

Todays market had another great example of the signals I look for that a reversal is probable.
The markets were weak on the day so being on the short side or playing the inverse ETFs was the smart play. Both the QQQQ and S&P 5 minute chart showed a slowing on the down trend with dojis, so I sold and went short. 15 minutes later both indexes showed another doji along with dropping volume. That said to me the pop is probably finished and to trade it the other way.
Chart #1 shows dojis on S&P and QQQQ after the market pop has stalled.

SO I covered my inverse ETF shorts and went long. It was a bit choppy so I was long, short then long again. This time the trend carried right to the end of day.
Chart#2 shows SRS about the same time. Red line notes my entry

Chart#3 show where the QQQQ ended up for the day.

Chart# 4 shows SKF end of day. Red line entry, green line is my exit, $18+ run

Chart #5 shows SRS end of day. Red line entry, green line is my exit, $21+run. I took advantage of the huge volume to sell my position in milliseconds.