cover GMCR

short IAG

cover GENZ

bot FAZ

short FSLR

shorted GENZ earlier in the day after some nice moves in the morning

short GMCR setup now

Visualization for victory.

This is the 4^th installment on how to prepare for the trading day. You’ll find no technical analysis mumbojumbo here, I focus on what is really going to make or break you as a trader – your attitude. I’ll most likely record another MP3 that goes along with this shortly.Here it is

Fear & Greed Day Trader: New MP3 link

I’ve outlined steps to take to prepare your mind for the situations you are likely to encounter during the trading day. I like to emphasize getting to the point when your trading decisions are instinctive based on what the markets are showing you and not what you hope/wish/pray/fear. Being able to trade free from emotional baggage will result in you being able to execute your trading plan to the highest degree possible. When fear and greed no longer hold sway over you, trading becomes the simple task you thought it was when you looked at your first chart. It’s these emotions, pre conceptions and expectations that make trading difficult. By focusing on the following program, you can free your mind and concentrate on the mechanics of trading success.

Let’s start off with how you perceive the market. Let this concept be the center from which our attitude toward trading and the market spring from.

Is it a battlefield, a war, a contest to see who can kill the other, a fight in the trenches? If so who is your enemy? The market. All the other traders? To me this would seem to be putting yourself in a very exhausting situation minute by minute, day by day, month by month.

Is it a shooting gallery where you are the target, running scared from trade to trade, thankful to escape with a small profit sometimes, fearful of what’s around every corner. How stressful!

How about we turn it around and think about the markets as a force bigger than all of us, like nature, like the ocean, a friend. A great provider who doesn’t know or care we exist yet can provide all that we can take as the opportunities of chance and our abilities work together.

Getting into the flow of a partnership, a less intense and more cooperative relationship can set your mind in a comfortable place where you can then concentrate on the business of mechanical trading and harvesting good results. This can be a place of never ending opportunities in various time frames, constantly flowing towards you. Think of the wind and waves on the ocean pushing your sailboat along, working with them as you change direction yet always going in concert with them using their force to power you along. This point of view is very relaxing compared to the warfare example. A relaxed mindset is one that will be able to reproduce results based on a proven edge time after time.

As I explained in part 1 of Prepare for the day, I start my visualization program the moment I wake up, still lying in bed. I’m already relaxed. I have no other distracting thoughts roaming around in my head. It’s quiet and dark.

Begin by acknowledging the area where your computer screens are as your work area, the place that the business of trading takes place. Until the markets close this is the place you the trader occupy. It is never where you check emails, surf the web, take phone calls or do anything other than focus on trading. Separate yourself as you the person from you the trader. Identify why you are sitting in the chair. You are there to work with the markets and trade your plan.

See in your minds eye the tasks which you will be doing during the trading day. Getting into the market flow. See the red and green candles, the volume bars, the price action. See yourself identify your edge. See how it looks long or short. See what factors it’s comprised off. Go through your checklist in your mind. See yourself placing the trade. Pressing the button. Hear the click of the mouse. See/hear the order confirmations appear on your desktop. See yourself placing the stop.

Now imagine it going where the probabilities suggested it would. See the momentum carry it along. See the signals that the run is coming to an end. See yourself clicking the sell or cover button. Canceling the stop. See yourself taking profits.

Now imagine the next trade going against you. Taking out your stop. See yourself taking the small loss. See that being wrong or right doesn’t matter on separate trades in the big scheme of things.

Now imagine immediately getting into another successful trade. The clicks of the mouse, the candles on the screens. See that getting it right was just a matter of trusting yourself and playing the possibilities.

Repeat these visualizations over and over and over and over until you know without a shadow of a doubt or hesitation exactly what you need to do. Think about the confidence you have in knowing what to do as situations arise. Your good performance comes without effort, it’s natural, you don’t have to think about it. This is your system.

Think about having a renowned trader sitting next to you. They are there to help you if you need it. Give you back up. They have seen it all. They also know what to do and when to do it. They aren’t saying much, maybe just a tip here or there to guide you along.

Now imagine years from now you are the experienced trader helping your protégé. You have seen it all. You know what to do.

Step into the mental picture of the future where your trading success has provided you with the lifestyle you wish for. Imagine how your days are spent. Think about what is important and the goals you strive for. Tell yourself you have arrived at this point in life because you have what it takes to succeed. You applied yourself and learned what you needed to. You did what you needed to do. You have the skills and resources to perform at a high level. Create the future projection of yourself. Resolutely strive for this new you. Don't let anything stop you from becoming what you desire.

Think of any other success you have had in the past. It could be hitting homes runs, making a perfect dive off the high board. Writing a collection of poems. Anything. Associate this success to the now moment in time. Remember what you did, what you saw, how you felt. Know that you can do the same thing again with trading.

Watch yourself as if you are on a movie screen. You are watching yourself making the correct moves, getting the results. See the process. See how you work with the markets and not against them. See how you work with yourself, your strengths to make life play out like you want it to.

Believe that you are a success and you will become one.

Visualize these scenarios repeatedly. Use your will power to focus on what you want and eventually you will get it. You become what you think about most.

The HFT hex.

A recent comment from a reader got me thinking about HFT, expectations and trading technique. I said all those together because I think if you are believing HFT, market makers or the bulls/bears are responsible for your losses then you really need to wake up and deal with the fact that only you are responsible for your losses. Blaming someone or something means that you don’t understand risk and probabilities well enough. If your edge is suddenly not working first confirm that your expectations and trading technique are still being adhered to in the way brought you success in the past. Has anything changed on your part? Are you sure? Is your ego making the decisions?

The market, like always is currently at a point where many things could happen. What are your expectations? A big drop/a rise/flatline? Are you staying in trades too long? Are you adding more size and getting beat up? Are you having many trades getting stopped out?

There is a time and place when probabilities are greater of one event happening over another. Are you gathering the information available and getting on the correct side of the trade? If you are not of the correct side of the trade, do you recognize it and act appropriately? Remember there are always two sides to every trade and your job as a successful trader is to be on the winning side. Are you being inflexible due your expectations?
Are your expectations of direction and profit targets colouring your judgement? I don’t go into a trade thinking how much money I’m going to make due to thinking that I know where a stock will go to. I don’t know what direction a stock will move. However I do know when my edge is present and that probabilities exist and manifest themselves all trading day long. That’s what I go into a trade thinking about, after I account for the possible downside and set my stop.

Have the HFT programs taken the psychological stop setting pain thresholds of traders into consideration? Well the market makers have always known the likely places for stops to be set so this is not a new idea. Has all the recent talk about HFT put the idea of a big bogeyman on the other side of your trade? Has it affected you thinking about what you may be up against?

Are the HFT in every trade, every stock? What about the stocks that are not doing millions of shares a day? Can you adjust your style so that you can grab the excellent trends you still see every day?

Or can you forget that you ever heard of HFT in the first place and focus on and I really mean focus on your trading instead of wondering/worrying about things you can’t control. The market can’t be predicted or controlled so this is best way to think about it anyway. What you can control is your trading technique. Your plan. Your execution. Your focus and concentration. Your edge. Your profit taking. Your fear. Your greed.

Call me naïve all you like but I know that the less I think about what the markets will do and the more I apply my technique, the more success comes my way. That’s because I can see, acknowledge and act on it, That means trading my edge , taking losses as they happen, taking profits as they are offered and changing directions on a dime. One mind-trade my plan.

Market conditions and factors will make it easy to make money soon enough like they always have in the past. Support or resistance levels will be broken, news events will affect the markets. Trying to force something or getting mentally beat up and vowing to work harder through analysis won’t get you farther ahead…until the markets themselves are ready to go.

In the meantime have patience and take what the markets are giving at the moment. It’s the attitude and what you should always be thinking anyway.