Six Ideas To Help Your Trading In 2004

For once, I'm going to pass on the charts and technical narration as we close out the year by looking back at 2003 successes and blunders to help draft a trader New Year's Resolutions List. And if you're interested, I'm offering for you to join me in incorporating them into your own trading in a manner that provides at least a small degree of individual trader accountability. More on that in a bit.

Now before we start, let me say that this isn't pie-in-the-sky, theoretical mumbo jumbo meant to provide content for a sappy year-end piece. Rather, it reflects my own experience over the past year which I've turned into early-year resolutions, in most cases as reinforcement. I also certainly realize that we're all wired differently and what works for one person may not work for another. Yet while one or two tweaks won't turn a novice into a pro, sometimes they can help push in the right direction, and trading -- like patterns -- is often all about momentum.

So my challenge to you if you're struggling as a scratch or negative trader is to incorporate the following trading resolutions into your trading in early 2004. Heck, worse case is you continue on your current road. Best case is it may be enough to push you to that other side as they have from time to time in my own trading.

1. Don't discuss your trading results with anyone -- not your trading buddy, chatroom friend, significant other, or beloved pet. Why? Simply put, to maintain focus, continual humility and complete absence of complacency so that the market can dictate the terms each and every day. Here's a concrete recent example. I made the mistake of briefly mentioning some Q4 performance statistics with a close industry colleague two weekends ago. And although it wasn't planned (I know better and make it a hard rule to keep personal trading discussions strictly to the educational front), I could have literally projected Monday's trading result once the conversation ended. Result? A 17-week streak momentarily interrupted by an ill-advised morning sequence during a shortened Holiday week that had complacency written all over it. Simply put, I know better … yet I still fell into the trap. Don't means don't.

2. Don't look at your P&L before noon ET. Now for those that have mentored with me, you'll know this one actually reflects a loosening of the "all day" restriction, yet the resolution is designed for a wider audience -- many of whom will likely require help in gluing blinders to their temples each morning. I won't go into all of the reasons that have been discussed by others for decades, except to reinforce the comment that the market doesn't give a hoot in terms of future action and opportunity, so why should you. At this end, since I can't eliminate the view on my current order entry screen, I literally have post-it note (reinforced with white-out tape) covering the figures.

3. Don't trade between 9:30 A.M. and 9:45 A.M. ET unless your pattern triggers a major signal. At this end, one potential trigger might be on a morning pullback to major support as defined by a strongly sloping Moving Average, high ADX, or similar indicator, and preferably with a one-minute turn. Otherwise, if it isn't crystal clear, and despite what others around you may be doing, no trading! Observe.

4. Never trade against the current trend "in play". OK, I know we've heard this one a thousand times, but I continue to see too many traders trying to get cute playing the retracements -- and yes, as a short-term trader I go there from time to time, sometimes prudently, sometimes not. Now for this resolution, you of course have to be able to determine what longer-term trend is in play. Many of you know I like to follow the 30, 60, and 120 timeframes on an intraday basis, to see which one is predominantly trending, any or all of which may be in play. And while some may be able to loosen this one later to reflect clear out-of-control market conditions, never means never for now.

5. Stop looking at the market depth after executing your entry! It means nothing, nada, zilch in terms of market strength. A best, it's irrelevant aside from a slight peek into market liquidity, and at worse, it reflects 180 degrees from the true picture and, more importantly, can take your visual focus off the charts. Charts rule, market depths drool. Any market depth info at this end is purposely relegated to an ancillary monitor which is separate from my charts.

6. Work like heck to establish, maintain, and/or or improve a strong relationship with your broker or FCM. As a trader, I've been blessed over the years to have worked closely as a trader with a few outstanding entities, and the comfort they provide as on online trader in terms of system reliability, cost, and personal assistance is as important to me as my capital. Trading may not be a team sport, yet this particular team aspect is paramount.

No, these ideas admittedly aren't rocket science and we've all heard at least a few before in one context or another. Yet, one problem may have is that while we've read these over and over and over, we sometimes try to outsmart them, with some folks continuing to do so during their entire trading career. Or we lack the discipline to stick to what we know works. Or we try to avoid taking a loss on a stupid entry by averaging to try to make it a winner. For as there is no perfect system, I still haven't found the perfect person.

As a related aside, when I was felled by the flu over the holidays, I watched the World Poker Tour marathon on Spike TV. Here's a trading reinforcement take-away - Don't like the trade you've been dealt (this could be a stupid entry or simply additional market discovery once in a position)? -- Fold it without hesitation! In fact, picture yourself literally throwing it back to the market dealer. For unlike poker, the market will always call your bluff.

Since most of these resolutions have nothing to do a particular trading method, they're easily incorporated into any "strategy". Ah, but easily incorporated does not mean easily done … been there, and still visit the neighborhood from time to time. So this time, if you're struggling as the result of falling into one or more of these traps and think the suggestions may help, I'm giving you an opportunity to be accountable.

Pick a timeframe, be it a week, month, quarter, or whatever and email me at the beginning of the period that you're going to do it. Then plan to email me at the end of the period when you tell me you've completed the assignment. And while it's of course on the honor system, if I don't hear back, I promise I will email you back and try to track you down to see how it went! If it helps just a few traders, it will be more than worth the virtual ink and in-box flood. No year-end "selling" intended … just an offer to help as we all clean the slate.

Good Trading and May You Have a Wonderfully Prosperous 2004!

Don Miller