Trading Again

(c) 2010 F. Bruce Abel



Why "trade" the stock market? Because trading allows you to have a clear mind at every point in time, not burdened with "trying to catch up" or "hoping to get out when I'm even."

Trading is possible because of the low commissions. It involves money management and "feeling comfortable." It can avoid the addictive aspect by artificial restraints.

In January I put on a few trades in an addictive mode. I regretted them almost immediately. I realized what I was doing and decided to step back for some self-analysis. One of the trades was where I got a better execution than the price I had put in. Much better. A sure sign to get out immediately (which I didn't). More on this later.

One of the realizations from studying Schuch and Steidlmayer's work and the rsi method, etc. is that traders start each trade knowing that they do not know which direction the market will go. And they get out and go the other way when the discipline tells them to do that.

http://www.steidlmayer.com/

http://www.tischendorf.com/2009/08/08/steidlmayer-on-markets-profile-of-the-successful-trader/

At the end of the chapter he lists specific observations that have a high enough probability of reoccurring he considers them rules:

If you find yourself holding a winning position, adding up your profits, and confidently projecting larger gains on the horizon, you are probably better off exiting the trade. The odds are that the trade has run its course.
When entering a trade with a market order and your fill is clearly better than expected, odds are it will end up being a losing trade. Good fill, bad trade. Get out!
If all your ‘trading buddies’ agree with your expectations regarding the next big move, it probably will not work out. If everyone’s conviction level is as strong as the consensus, do the opposite.