Matrix :

I Asked Dan to join me over a bottle of red while I asked him what approach he has used to be a successful trader, I’ll post his answer here because my post is now a page behind and some readers may miss his reply.

Trader Dan:

– there is a lot that goes into answering that question but the first thing that comes to my mind is that I try to understand the markets I trade. I do not generally trade those things which I am completely devoid of the fundamentals. That just goes back to my earlier days of starting trading in the livestock and grain markets. I like to know WHY something is moving.

Then, I check to see whether the chart action CONFIRMS my fundamental view. if it does, I generally will make some money on those trades. If it does not, I never fight the technicals, because in the short term they ALWAYS WIN. My pockets are simply not deep enough for me to wait around for the big funds to come around to my view of the fundamentals. That means I do not trade that market but wait for a sign that my understanding of the fundamental picture is now being accepted by the markets at large. That gives me confidence to press that trade.

Another thing – when in doubt, stay out! If I am unsure about a market, I simply will not trade it as I am more fearful of losses than of missing a profit.

Another thing – I generally try to avoid overtrading for the size of my account. By that I mean I never use all the available margin at my disposal. I have seen guys with sizeable trading accounts who will sit there and calculate the maximum number of positions that they can hold based on that number and then actually put those on. That is a recipe for disaster. There is nothing quite like getting margin calls from the clerk.

I try to keep my losses small and would rather get out if the market moves against me and the charts shows me something that I do not like instead of losing money. I figure I can always get back in again.

I guess you would say that I HATE LOSSES and try to keep them as small as possible and avoid as many of them as I can by taking trades that I feel comfortable with instead of chasing everything in sight.

WE can pick this up a bit more soon… I ran out of time today buddy…

I am sure the readers would love to hear your views as well. Survivors in these markets can teach us all something. That is what I try to be – a survivor. If you can do that, when most everyone else is getting hammered and losing, the odds favor that you will still be around when the really BIG opportunities do finally present themselves. That is what we live for but until then, we need to be smart and not get goofy or let our emotions get the best of us..

Managing fear, greed and anger is a huge part of being successful as a trader.