Traders from all around the world have been feeding me a steady diet of questions over the years, and they seem to be getting more and more concerned about what the future holds. Many people just like you are just trying to survive in today’s markets, and they don’t know what to do.
If more people traded in line with these plans, not only do I think more traders would be surviving today’s markets, I think they’d be prospering. What you are about to read is more valuable to you than what you will find in many trading courses that you’d have to pay for.
Profit Plan #1: Become an Independent Trader
Over the years, I’ve observed that there are two types of “traders”. Now, I realize these are generalizations, but they illustrate two very common mindsets. Which one are you?
The Dependent Trader: This type of person is usually looking for the easy way out, looking to make a quick buck, or wants to strike it rich. They think it’s possible to “follow the crowd”, blindly place trades pumped out by a system that “can’t lose”, and quit their job. The bottom line is that this type of trader is dependent on someone else for their financial success – forever, for life. Yes, The Dependent Trader can be successful with this attitude, but I believe the odds of success are low (probably around 5%).
The Independent Trader: This type of person wants to have as much control of their financial destiny as possible. They understand that when they know how the markets work, they’re empowered to place informed trades without having to rely on someone else. Someone who is an Independent Trader knows they are maximizing their odds of success in the markets, which can make their financial and lifelong dreams come true that much more quickly. The bottom line is that this type of trader holds the keys to the kingdom, and has control of their financial future for their entire life, no matter what happens.
That’s why one of my goals with this report is to help make you an Independent Trader. Will this report alone do it? No, of course not. However, it should give you a “fast track” toward discovering the right way to trade the stock market for you.
Here is a typical scenario that plays out in the markets over and over again that is particularly harmful to the Dependent Trader.
The prevailing view of the Financial Media Stars, back in April, 2008 might have been that the financial related stocks (including the bank stocks) have bottomed out and are on their way up and that the worst is over for these companies. And so blasting over the airwaves are almost emotional appeals to “Buy, Buy, Buy!” the bank stocks including Citicorp.
Now on this recommendation, Citicorp initially moved up a few dollars but then abruptly stopped in its tracks and began a long slide down, dropping another 50% from the April, 2008 highs to the July, 2008 lows. At that point, it was obvious to one and all that buying in April was not a good thing to do. And right about at that time, in the midst of the July lows, what did the Financial Media Star do? He through in the towel on the financial stocks including Citicorp and said, “Sell, Sell, Sell!” But it was too late – the damage had been done. So the cry by the media to “Buy, Buy, Buy” Citicorp was too early, and the cry to “Sell, Sell, Sell” came only after a drop of 50% from the April 2008 highs; of course, much too late.
Enter the Independent Trader, who is not influenced at all by what the Financial Media Star is saying, for one thing, because the Independent Trader doesn’t even listen to or know or even want to know what the Financial Media Star is saying. Instead the Independent Trader is guided by good trading methods that he has mastered, that screen for good high-probability, low-risk trading opportunities, with precise setup conditions, entry rules, stop loss protection to limit risk, position size rules, and an exit strategy to exit trades profitably.
Profit Plan #2: Trade Short-Term Trends
So what should today’s investor do as well as all you traders out there?
I believe the key to taking advantage of the foundational change that we are undergoing in the economies of the world is to:
1. Wait for a new trend to develop
2. Get on board AFTER the new trend becomes apparent
3. Stay on board as long as possible
4. Get off at the right time
5. Go on to the NEXT trend
I am talking about swing trading trends that occur in the equities markets over and over again with a relatively short duration from start to finish. I am talking about trends that last from weeks to months as opposed to years.
Identify the trend, get on board, ride it, and get off before the trend changes.
Now, of course, this is easier said than done.
And so I believe it is indeed possible to identify these short term trends, and again with a good trading method get on board at high-probability, low-risk entry points, ride that trend and then get off before it ends. This is how the buy and hold investor as well as current traders can take advantage of these volatile times – by swing trading these short term trends.
Profit Plan #3: Use a Good Trading Method
Since there have been markets to trade, traders around the world have been looking for the holy grail of trading – a system or method that tells them exactly what and when to buy and sell to take maximum profits.
The truth is and always has been that the holy grail of trading simply does not exist – never has and never will. That’s the bad news. The good news is that the holy grail of trading is not required to trade successfully in the markets.
What is required are good trading methods that point you in the right direction to take advantage of higher-probability, lower-risk trading opportunities that set up in all markets over and over again.
So by definition, there will be losing trades; in fact, losing trades are quite common when trading. Just because a trading method puts the odds in your favor does not mean you will not experience losses. And that fact leads to one of the keys to trading success. That is, you must control losses.
Controlling losses is referred to by different names such as risk management, money management, account risk management, stop loss orders, portfolio risk management, limit position size, etc. But they are referring to the same thing – keep your losses relatively small in relation to your account size so you have the opportunity to trade over a series of trades that has a positive expected outcome where any losses are more than covered by the profitable trades.
Once you understand how to control losses, you still need good trading methods that will guide you in scanning the universe of stocks to find the very best trading opportunities at any given time. A good trading method, using primarily technical analysis, will define fairly objective setup conditions, entry rules, stop loss rules, and exit strategies as well as the scanning criteria necessary to find those stocks that are likely to meet the method’s setup conditions.
Again, there is no way to know ahead of time what will happen, but you can see by applying this simple strategy in this example, you would have known what to do no matter what the market did, and in this case both legs of the trade would have paid off handsomely.
Profit Plan #4: Know When NOT To Trade
Trading first and foremost is about managing risk, and one of the key secrets to successful trading is knowing when and what not to trade. As successful traders know, you have the advantage over the markets if you pick your points and if you’re patient – if you wait for your trading method to setup for those stocks that give you the best chance of success where the opportunity for profit is high and the risk of loss is lower.
You might ask, “What do you mean by deliberate trading?” Well, I am going to define that for you by showing you 5 different cases where a market is either not trading deliberately or is at high risk of not doing so. Where it will become clear to you that if any one of those cases occurs, or more than one at the same time, you should stand aside and not trade that market. There is simply no reason to do so when there are so many good opportunities out there. Also, if you have a good trading method, that method will help you screen out the stocks that are inappropriate for trading, and zero in on those few that are the very best for swing trading.
So, in summary, you can think of the five stand aside cases covered in this section as your own personal trading Risk Shield. This Risk Shield should minimize your exposure to higher risk markets and consequently should put the odds in your favor from what they would otherwise be.
And with that Risk Shield, you’ll be able to identify those markets that are appropriate, that are trading deliberately, that set up high-probability, lower-risk entry points when the markets are quiet and greatly enhance the opportunity for trading success. The Risk Shield will help you in your trading regardless of what trading methods you use.
Profit Plan #5: Control Your Emotions
WARNING: Do not ignore this section, or think it is not as important as the other sections in this report. The mere fact that you’ve read this far should be a clear indication that you’re still searching for ways to improve your trading. Otherwise, why were you even interested in this report in the first place?
The trader’s mindset is about controlling fear and greed. Fear and greed are what drive the markets, and to be a successful trader you must control these two feelings and the resulting emotions that they drive.
Greed can cause the beginning trader to jump in and begin trading before having had the appropriate trading education only to make mistake after mistake with unhappy results. Fear, on the other hand, can cause a would-be beginning trader to never take the first step towards getting educated about trading.
I believe that by following these practical tips, that your ability to develop and maintain the right mindset, keeping fear and greed in check, is greatly enhanced and a prerequisite to successful trading.
Stock Trading FREEDOM in Just 20 Minutes a Day?
… And there was also a stretch of time when I’d get home from a long day of work, see my wife and kids at dinner and then disappear into my trading “lair” with a pot of black coffee, as my wife put the kids to bed and fell asleep without me. These are some of the events that drove me to discover trading methods that only required no more than 20 minutes a night to apply. And when I began sharing them with the world in 2001, I found out I was not alone. There were thousands of traders out there who felt just like me.
However, that’s just my experience, and my story. You need to look at your story and decide what’s right for you. You may love staring at charts for hours on end all day long. If that’s you, I really hope it works out for you. All I know is that’s not for me.
But however you decide to trade the stock market, you need to do one of two things to be successful based on my experience:
1. Dedicate years of your life to test, experiment, tweak, try, invent, etc. a good trading method on your own.
2. Invest in a good trading method developed by someone who’s already gone through everything described in item 1 above.
You’re going to spend the money one way or another learning how to trade; either in losing trades over time, or upfront in good trading education.
Let me be clear. This report is not a trading method. It’s merely a collection of ideas and plans you can use to put together your own trading regimen. Yes, I believe it contains some very good information that can be used with any trading method on the market, whether it’s your own or someone else’s. But this information is only one piece of the larger trading puzzle.
Personally, if I can learn just one new insight or one new nugget of information when I’m evaluating a new easiest trade to learn the trading method, then whatever time or money I invested in it was totally worth it to me.