THE PHILOSOPHY OF EQUITY TRADING
Stock Trading is like baseball. Teams win by scoring runs on singles and doubles and an occasional homerun. If every player went up to the plate and swung for the fences to hit a homerun, the team would find it extremely difficult to win the games with any consistency. The same is found to be true in the trading arena. Those traders who seem to always have the best results are the traders who take what the other team throws at them hit singles and doubles, (this can translate into .20 – .40 per trade) with the occasional homerun (.75 or better) when market conditions and the stock warrant it.
Far too many traders, especially novices go for that long ball and the big money which more often than not ends in poor results. Listen to those who came before you. They lost money, so you may not have to.
For the new trader it is always wise to learn from a trader who is getting the results you want to achieve. An experienced trader has honed his craft over the years, and as a day trader he or she has learned to adapt his style to any new changes in technology, regulations or economic environment. And as you evolve you will see what techniques work for you. Once you identify these trading techniques, you can exploit them and expand them. This may be as simple as identifying a particular time of the day that just seems to work best for you.
Understanding your trading environment brings you the wisdom that is necessary to succeed as a day trader or swing trader. Reducing those things that detract from your profits and sanity and enhancing the positives will go along way in shrinking the learning curve. You must learn where to focus your energy, such as more on the market and on winning positions and less on specific losers.
Remember, the money you want to earn trading is currently in someone else’s pocket, and they have no intention of giving it away.