Many of you know about Norman Hallett from TheDisciplinedTrader.com, and if you don't you should! Today I've asked Norman to bring us some of his wisdom and insight when it comes to being a full time trader. Norman's been a full time trader, then managed a room of full time traders, so he knows what it takes to be one...and be a successful one! Please enjoy his article today and visit TheDisciplinedTrader.com for a special free copy of his book "Taming Risk", enjoy the article.
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People fantasize about what it must be like to be a full-time trader. The picture is of a relaxed person sitting in a lounge chair on the foredeck of an expensive yacht docked in Newport Beach or somewhere in the Mediterranean. Armed with a laptop, a cell phone and a large pitcher of rum and chilled grapefruit, the trader (who looks remarkably like a buffed version of you) scans a graph that pops up on the screen. The trader then activates the cell phone and places an order. The cell phone is snapped shut followed by the laptop. The trader stands up, stretches and dives off the side of the yacht into clear warm water. Come to think of it, the yacht is in anchored in a beautiful inlet off Tortola. The water is warmer there.
The implications are clear: easy money, independence and unlimited wealth.
Of course, you are still working your way up some corporate ladder and still earning a moderate salary, just enough to keep you from looking for a new job or going into business for yourself. By way of compromise, you decide to develop another source of income. However, you don’t even have enough time for lunch so how are you going to devote time to an outside business?
You know that people of wealth have multiple sources of income, which are mostly involved with passive investing in such things as real estate, stocks, bonds, currencies or becoming silent partners in other businesses. But in your case, you only have about $10,000 to invest. By today’s standards, that’s chump change.
So, what to do?
You understand the power of compounding profits. Your dad always told you that if you start saving and investing when you’re young, you will retire with a nice nest egg. But that is such a long way off and besides who knows what the world will be like when you’re old and gray. You also have heard of some people making large amounts of money by investing actively in various markets. Indeed, small amounts of capital can be wisely invested over and over again and build in to substantial sums. Not only that, once invested, it is just a matter of cashing in at the right time and while you wait you could be doing a regular job. In fact, other than the lottery, passive investing may very well be the default alternative for working folk. If done right and with a little luck,
one’s chances are much better investing than in the lottery. Besides, what other alternatives are really out there?
OK, you decide to start investing. So what do you do? Do you start by reading books or finding somebody who actually is an investor? You may wise enough to know not to go to a stock brokerage because they will just spin you and pump you up and before you can say “snake oil”, you will be opening up an account.
You opt to start by educating yourself and you go online and quickly become overwhelmed by the depth and breadth of the information. This is a key point in your decision to become involved with investing. You see, there is a big difference between investing and trading.
Investing is taking a position for an extended period of time. Investing is based upon the fact that the general trend of most markets-over the long run- have been to increase in value. What to look for in a “good investment” is well known and there is plenty of free advice and a huge industry out there to help guide you in making good selections. This is the normal route taken by most “investors”. Buy some shares and hold them until they prove unworthy of your patience. If you are fortunate, your long term investments will perform equal to the general markets, which is around an average of 12% per year over the past sixty or so years. The key word is “average” because often an investment will under perform or over perform. The supposed attitude to be kept is that patience and a pretty much hands off approach will reward the deferred gratification and the power of compounding profits will make your retirement years affordable so you won’t have to die with your boots on. This has become such a seemingly sound proposition that government and industry have adopted the concept into a social commitment in the form of IRAs, 401Ks and other pension plans integrated into the workplace. But there are other people who take a more aggressive posture towards “investing”.
What is trading?
Trading is in reality short term investing with the potentially illusory safety net of time removed. A trader analyzes an investment in terms of the short run-anywhere between minutes to no more than several months. The concept is that even small gains can compound into eye-popping returns if produced with relative consistency. In a way, the only difference between an investor and a trader is the time frame of the investment period. With investing, the idea is that at some point in time, which is unknown, the investment will appreciate in value and it will become obvious when to sell and capture the gains. Traders don’t wait for randomness but prefer to prognosticate when to expect gains to occur, albeit only small gains.
Thanks again to Adam for having me today, I hope I was able to give some crucial insight! Any comments or questions just ask in the comments section.
Norman Hallett
TheDisciplinedTrader.com
P.S. For a short time, you can grab a FREE COPY of my book, "Taming Risk", which is a must-have for stock, forex, options and futures traders alike..HERE.
I submitted the request for instant access to Norman's free e book and never received anything in my email. I just submitted it for a 3rd time and hopefully it will appear in my email this time.
Thank you.
I also had a problem finding the good kind of stocks, but this time I got so many stocks I want to trade that I am limited by my resources.
For some ideas you can check out the site by clicking on my name, and no it is no commercial site promising you 500% gains or so. Just a both feet on the ground solid site that is free.
Some free advice:
- to trade the Dow Jones you can look at the weekly trade triangles
(only trade in direction of the monthly trend)
- to trade forex, EurUsd
you can look at the montly triangles
- also what works great are the monthly triangles on stocks.
you will have to look for the first triangle in Stage 1 going to Stage 2
(see the article about the stock market stages on my site when you do not know the what they are)
- also when using the montlies for stocks I couple it with fundamentals. I do not buy stocks without knowing if a company has enough money. I like to trade gold mines, silver mines and so on, so also I want to know if they have drilling going on, in which country and so on
- also do not just only look at the triangles
also look at support, resistance, trend lines, Fibonacci, cycles, stochastics and so on, to increase your chances of a good trade
regards
I don't understand! No one here uses the
Trade Triangles from Marketclub???!
In my back testing on their charts, the Trade Triangles
seem to work very well. I would use a 4-5% stop loss and
ride their wins to the moon.
They seem to do very well with Blue Chips.
Apple, VISA, American Express, IBM. But I really
loved their call on Estee Lauder. Almost 100% gain!
Anthony......
As a stay at home mom, I never imagined that I would find a passion in trading stocks from home. And never imagined that I could earn as much from home as I could from my previous career in the financial industry. I LOVE trading stocks!! (Even when I make mistakes.)
I wouldn't step foot into the stock market without education of some kind first, because loosing money is all too easy. I would very highly recommend the trading course called "Train2invest". I have no affiliation with them other than having taken their course. These guys know their stuff and teach you everything from how to properly research companies to how to analyze charts, and don't profit in any way from your gains. (not commission based) Check them out... it can only profit you!
Must add:
And thanks also to Adam's great posts: wonderful insights into the market and into profitable trades, especially for a swing trader like me. I pay for two other sites but I won't buy or sell against Marketclub's algorithms.
Many thanks Adam Hewison.
ralph
Im new to trading and have found market club and Adams vidoes quite usefull to learn more
How do you spell success? Mistakes, mistakes, mistakes, and more mistakes.
Market Club is excellent. I mean you are "here" on their website. Just watching their videos for free will teach you a lot. I've also found thegoldandoilguy.com to be very helpful in learning how to trade. He teaches and does trades that you can follow.
MAYBE I CAN HELP YOU OUT. ITS ALL IN CHARTS CONFIRMS SHORT OR LONG. FORGET THE ANAYLISTS JUST PUSHING THERE SHARES FOR THERE BROKERAGE FIRMS.THATS WHY THEY CALL THEM BROKERS THEY WILL MAKE YOU BROKE.
"THATS WHY THEY CALL THEM BROKERS THEY WILL MAKE YOU BROKE."
Haha. Never thought of it like that before.
I've invested in Norman's product, the Trading Mind CD, getting that CD is a lot cheaper than the $2500 Take My Class and Learn to Trade programs.
Norman tackles the "mental", "psychological" aspect to trading and that is where 90% of challenge lies.
I am relatively new in the stock market started in 2007 when the market was approaching its peak. It was buy and hold strategy until the demise of Lehman where I saw frequent fluctuation and tried to ride on it. It was fun and doubled my investment last year. But when I looked back, if I have done a buy and hold strategy, I could have equally made the same if not more.
I don't, however, regret because I learned to sell, just not the perfect timing. I have always this feeling that when stocks are going up, I have the tendency to hold, or regret very much if I sold them and the stock keeps going up. This emotion is very difficult to overcome. Timing when to get in and out is very difficult. Those are my big problems if going trading.
I think that is a problem many traders face (new and experienced). I always like to think better to sell, take profits, and miss out on a few points here and there, then to lose even a penny.
Wow, Anthony, I'm in exactly the same boat. If you find any help that is truly worthwhile (not all that spam!), send along the information. My contact information can be found at http://www.anitasjazzhat.com. Best of luck to you, and I sure hope you find what I gather many of us are looking for!
Roger
Anthony
Fisrt read this book 2 or 3 times until everything is clear for you.
Then you have to oblige you to a steel discipline: always the same principles, never derive to reach the goal.
Otherwise you let the door open to all the fantasies!
Good work and best wishes for your future results and don't forget:
NOTHING IS GIVEN !!!
Good day, I live and work in Baltimore and am looking for more education opportunities on how to become a successful day trader. I have been trading on ymy own and with more losses than gains and frankly, I am sick of it. But I am fascinated by this industry and want to succeed in it, to the point where I can do it full time and be able to live off of my earnings.
Can anyone help me? I dont want anymore spam emails on day trading, I have had hundreds of those already. I just want to sit down in a seminar and learn for myself and have a mentor I can run to when I don't know how to go forward.
Can somebody please help me?
Anthony
The best bet I could recommend for you to learn daytrading skills would be to join a community (i.e. bullsonwallstreet.com or timothysykes.com) These people have live chat rooms during market hours where you can learn and bounce trading ideas off each other.
From a mental aspect it is all about making one gain at a time. If your losses are already overtaking your gains, then you WILL lose even more money when you start daytrading.
The successful daytraders I know, never intended to be so successful. They just stuck to their normal simple trading strategy, and one by one, as they made more profitable trades and more money, they were able to do more. Eventually turning them into full-time traders.
anthony
your post rang some bells for me in that i could just as easily written it. a couple of months ago i subscribed to dan fitzpatrick's site, stockmarketmentor.com. i and am finally learning how to fish vice somebody throwing me a symbol without any knowledge on how to trade the stock. i have 0 affiliation with the site except being a subscriber. give it a try, he has a free video to watch most nights and a no obligation trial period. best of luck to you. bud gray
Dont know if you will like this but I use the BB band lines. If the RSI drop below 30 and the price drop below bb bottom line with SAR droping below the price then I buy and somtime I wll use the 90% vol rule. I will sell when the price goes above 70 on the RSI, Price goes above the bb top line and SAR goes above the price.
I might be able to help in certain techniques from ssp.Certain requirements to picking stocks for day trading. Just email me if interested
js****@co*****.net
mr anthony...i would like to suggest to you to become serious in this business. you must have a trading strategy. you could create once and implement it in the market.
be careful when you put your position and the hard thing is the pressure that you will face. but after you get the experiences, you can be cool.
trading is very critical. you must enter at the good timing with good indicators. there are a lots of robot to use and they still promote it to you. but robot is using so many technical indicators make you confused. don't used so many indicators. try to make it simple.
remember that the best trade is a real money trade.
the other mistakes is a part-time trader. as a part-time, you will never learned to be a good trader. i am started gaining when i became a full-time trader. but not every one can becomes a trader. trading is self-developments. it is up on your time of interest. if i am saying wrong, please forgives me.
Buy lows sell highs. As trite as this sounds this is what works. Trading is a philosophy NOT a mathmetical application of indicators.
The senior most datum in the markets, all markets is that prices move up and down. But not necessarily in that order. A study of price moves wil provide one with a sense of what is going on. If you get in a trade after it stared moving then much, most of it is over with. Put a set of Bollinger Bands on a chart and watch the volatility. This can be done on any time frame. Price always has this one action in any liquid market. Learn the difference between a trend and a range and how these present on a chart. STUDY IT. Trading is the hardest way I can think of to make easy money.
"I know its everybodys sin...you've got to lose to know how to win." Dream On by Areosmith, from the movie "Miricle".
Analyze your trades. Analyze your trades. And then analyze your trades some more until you see the repetition of your errors and your successes. Then discipline to change your methods. STOP dictating the trend and start following it. Cut the news noise and know your products macro economic, sentiment (personal -v- markets), fundamental and structural position to the broad economy. Don't be the yo-yo of emotions.
USE STOPS. A lot of little losses can be taken. Holding losers in hope of regaining your loss is guaranteed failure! You will inevitably buy high and sell low. Set your trade or investment parameters and stick to them. Flexibility kills.
There is the real world rational and then there's Wall Streets, rarely do they coincide. Stock markets have a built in bias to the upside over time. Longs will prosper more often than shorts. Bearish sentiment is fleeting but dramtic given history.
Some of the 15 years of trading tidbits. Market club presents SOUND investment tutoring and advice. Much of what they say here I've paid for dearly to know.
You will find that, with time, you are your own worst enemy if you can't train the beast.
Mike O
Well said.