Share This letter with Friends on Twitter, Facebook and Other Social Networking Sites:
Some Characteristics of Successful Traders -- By: Bill Kraft
Copyright 2009, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor |
My observations and interactions with various traders, seminar
attendees, and coaching students has led me to conclude that there
definitely are certain characteristics shared by successful traders that
are not shared by the unsuccessful, at least in their trading activities.
Successful traders almost always have a plan for their trade -- and
they follow it. Those who fail generally have no specific plan, but
tend to enter and exit on an almost whimsical basis or they enter and
then don't exit until losses have become quite significant. In other
words, the unsuccessful have no exit strategy, or if they do, they
simply don't follow it. The old refrain "it'll come back" becomes their
mantra.
Successful traders wait until the trade comes to them rather than
trying to force the trade. They exercise discipline in their trading
and generally are able to ignore that "little voice" in their heads that
may suggest they let a loss run just a little more. The loss that runs
just a little more often runs a whole lot more. The successful traders
don't rush to cut profits while the unsuccessful frequently grab the
profit as soon as it appears because the "little voice" suggests that
the price could turn down. The successful trader employs some strategy
that results in following the move up with an exit that is only
activated when some pre-determined turn down (for a bullish play) occurs.
The unsuccessful traders are almost universally impatient. They
may jump in without waiting for a good entry (such as one where there is
a nearby exit in the event they are wrong on direction). They might
pull the plug on the slightest adverse move, apparently failing to
realize that is the natural action of the market for stocks to move up
and down. If they buy a stock that is trending upward, for example,
they may abandon ship on the first little downward move even though the
stock price has remained comfortably above the uptrend line. Anyone who
offers subscription services sees this impatience with great
regularity. The service may have demonstrated 80% winners or more, but
subscribers often quickly run the other way on the first loss only to
see some other service. They then repeat the process, evidently failing
to realize that some losses are a part of trading.
In that same vein, good traders don't keep their eyes glued to the
money. They concentrate on making good trades, knowing that making good
trades will ultimately result in success. By good trades, I mean trades
in which the trader enters at an appropriate point, has an exit strategy
in place before entering the trade, and follows his plan for both entry
and exit. That trader knows that some trades will inevitably lose, but
if he has set an appropriate exit strategy and followed that strategy,
the losses will be cut and they will be cut at acceptable levels.
Similarly, the successful trader will not exit prematurely. He will have
a strategy that permits his gains to continue to accumulate until and
unless the pre-determined exit strategy takes him out of the play. In
that fashion, he will have let his profits run instead of cutting those
profits as many of the unsuccessful so often seem to do.
Yet another difference between the successful and the not so
successful is that the former take it seriously in the sense that they
continue to add to their knowledge. They read, watch DVDs, study other
successful traders, learn nuances, attend seminars, and utilize a coach
or mentor. The successful are not the ones who say coaching or a seminar
is too expensive because it may cost a couple of thousand dollars or
more. They realize that they can recoup costs like that in a single
trade. The unsuccessful seem to have just the opposite outlook. They shy
away and criticize the cost of trading education. I frankly confess I
started out just that way. Finally, I did take a seminar that cost
$3,500 in 1999. I made that cost back by the Tuesday following the
seminar and learned a valuable lesson that changed my whole life for the
better.
In summary it should not come as a big surprise that a plan,
discipline, patience, learning to make good trades, and education are
all elements that can help us become better traders.
Good Trading!
Bill Kraft
Success Trading Group -- by the Success Trading Group Team
Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.
Here is a play from the Success Trading Group:
McDonald's Corp. (MCD)
Our Success Trading Group members scored another winning trade this week when we closed out a position in McDonald's Corp. (Ticker: MCD). We are watching several stocks and are looking forward to trading next week.
Have a great weekend and we'll trade next week.
Success Trading Group Team
Trade Quality
Stocks Over and Over Again
Over 320 winning trades and only 9 losses!
Register Now
and Get $50 off our Normal Website Rate
Option Trader -- by Bill Kraft
Our Option Trading Service is for conservative traders that understand leverage principles and enjoy the challenge of options trading. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on always minimizing our losses!
The Option Trader service utilizes standard trading in Puts and Calls as well as strategies using Leaps, Straddles, Credit Spreads, Calendar Spreads, and Naked Puts. But no matter how sophisticated a strategy may be, we ALWAYS know our downside potential on every trade.
Here's a look at a trade Bill is currently working on:
KLA-Tencor Corporation (KLAC)
This chart has been showing some strength and now has both a
trend support in addition to an old double top resistance that I would
now consider to be a price support level. I am looking at the
possibility of selling some near term naked puts, probably at the $30
strike early next week if I don't see a quick price reversal.
Good Trading!
Bill Kraft
Try our Option Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
Achieve returns with us like
16.48% return in 5 days!
Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
Hawaiian Electric Industries Inc. (HE)
HE has been in a short term uptrend since mid-month. If it
can break through the $18 level it will have completed a little reverse
head and shoulders. If I see that break, particularly on some decent
volume, it could suggest a bullish entry with an initial exit just below
that old resistance.
Good Trading!
Bill Kraft
Try our Trend Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
AgFeed Industries, Inc. (FEED)
This stock is one that I have been following for a while.
This past week I made and entry on Monday and exited on Tuesday with a
6.1% gain before the small commission in a day. Interestingly, the chart
shows a reverse head and shoulders and I am considering a re-entry on
the next turn up if it does not move too far too fast.
Good Trading!
Bill Kraft
Try our Under $10 Trader Real-Time Alert Service!
Dividend Investor -- by the Dividend Investor Team
Our Dividend Investor service focuses solely on the "best of the best" dividend paying stocks. We attempt to buy these stocks for their powerful dividend producing income; and we will also buy these with a purpose to make capital gains as the stock increases in value. Our Dividend Investor service is a perfect fit for an IRA account.
Register Now
and Get $50 off our Normal Website Rate
