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:

Matrix – 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.

Matrix

We old farts could write a book Dan, that’s why I brought a bottle to the table not a glass, lol

You hate losses!! WTF are you doing in this business……. I understand your meaning

You would have made a great forward currency trader as you very cool, calm and collective in your thought process, Spot Monkeys like myself are trend chasers and I guess I got very lucky early on realizing if I’m going to stick my head out behind the trend bus I’m chasing better to do it on the curb side and not the incoming traffic side, that’s my version of your comment trade what you understand and the size you can truly handle.

We would both be a miss if we didn’t mention Lady Luck but then again that is never factored into a position.

Pressing a trade without confirmation on the chart is a mistake many make, great point.

Thanks Dan……

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Trader Dan

Matrix;

1.That bottle sounds great!

Yes, me and losses are well acquainted. Every good trader has plenty of them. What makes them good is that they do not let them turn from small losses into large losses. I learned that painful lesson very early in my career. I am actually glad I did as it has kept me around for a long time. Too many guys and gals simply do not understand how quickly leverage can finally destroy you.

One thing I try to do is to PLAN my trades ahead of time. I will occasionally react spontaneously to something I see on the news wire but most of the time, I actually sit and look at a chart, study it out a bit to see what is going on, and then figure out where I want to get in and on what side. I also figure an exit point at that time in case the trade does not work out.

I have found that in the heat of the moment, when trading, emotions can take over and I cannot think clearly if a market is making a big move against me. As a result, every single mistake I have made I have always made during such times. Now, before I place the trade, I figure out exactly where i want to get out if it does not work out for me. If it moves to that point, I am out; no questions asked. It may not be the best way to ride Lady Luck, but it keeps me from getting scalped and becoming road pizza on the trading floor. I love my trading account too much to just let it go up in smoke because I was too stubborn to get out soon enough on a bad trade.

That means if I am short, and an upside resistance level gets taken out, so do I. If I am long and a downside support level gives way, I am no longer in that market either. If the market later turns back in my favor, I can and often do re-enter the trade but that also gives me yet another point to recognize if the trade is working or not.
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Matrix

You are so a forward trader Dan and not a trend chaser a planed entry and a planed exit, love it!… like trading 3’s..6’s…9 month currency futures, I can’t sit still that long hence the Tweakers I trade off, I think the NatGas trader many moons ago in that Vancouver bar could smell his fellow kind by the conversation Bobby and I were having so introducing us to a Tweaked indicator was an easy sell.

Well if you can’t be stoned cold unemotional as I am then you better be methodical in your approach as you are or your road kill flopping from sanity to insanity chasing your tail.

How many screens do you run, my radar room is a 6 screen setup mainly because if oil is driving the bus the financials will follow (of late) so long/short oil, the energy stocks and the CDN banks. I like to find sectors that run together…BUT…position amounts will always be greater in the stocks than crude oil or silver / gold bullion as the am gaps can be killers so the company stock ETF’s give one a safer turn as the basket of miners/producers rarely react as fast..

What sector has produced your biggest wins?…mine has been Silver so I know I have an emotional weakness that I must stay on top of before I toss my Lone Ranger suit back on…..Prove The Move!

The biggest challenge for me was going from tossing an average $1Bill around on any given day to trading my own portfolio, oh shit this is my money I’m playing with…thank God I never got into the drugs that so many of my peers did, the movie Wolf of Wall St was basically the FX markets, I got high then and still do by my own achievements picking Mr Markets pockets and enjoying a life of good health!!

Continued success to you Dan the Man…………

CHEER$!