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Keywords:

better trades, bettertrades, investing, investments, finance


I like maxims and quips. Small sentences that say a lot. I like the Bible's parables because a child can understand them and an older student can say, "Oh, now I get it." Keeping things simple is a good rule of thumb for most things in life, including trading. And trading skills are not easy to learn, but they are based on simple ideas.


In most areas of life, you have to learn to move and work as little as possible. When done right, it looks easy, and people who watch often say, "Well, I could do that." But the "want to be" soon finds out that it's not as easy as it seems. Trading can be frustrating and make you feel like you'll never get it, but remember Sean Connery's famous line, "Impossible, but doable."


Too often, traders have highs and lows that are both real. Even though this is normal and expected, big swings usually happen when someone changes their stride or technique in the wrong way. Finding your "sweet spot" or "strength" can make your trading life a lot more steady and smooth, and therefore more profitable. Getting to know a few great trading stocks is better than collecting all the possible candidates from recommendations and scans, which can make a trader feel overwhelmed and turn a rifle shot into a shotgun splatter.


So, in a Trader Talk Live training a while ago, a student wrote: "- The last seven days of trading have been amazing. I've learned again how important it is to keep an eye on just a few stocks and learn as much as you can about how they act. PD is one of my favorite things ever ". She was talking about a trading principle that I teach once a month at the Trader's Forge two-day trading camp. I tell students to find some good stocks to trade and learn about them. Pick your favorite 6–10 and trade them back and forth many times. Learn to spot patterns in how people act. Does it act the same way when it comes to earnings? Does it turn well or not well? Does it tend to break certain patterns on the chart? By doing this, you get a sense of the traders who affect the stock and increase your chances of making pattern trades with that stock again and again.


The behavior of people is what we see as patterns. Key Traders talk to traders, brokers, fund managers, and people from the general public. Each stock or group of stocks, bonds, commodities, etc. has its own set of players. So, different patterns emerge, which is the key. You don't have to hop from bush to bush like a butterfly to find a new flower. You can find flowers that keep blooming on a regular schedule. You get into a routine and learn the cycle, so you can just stay in one place and keep harvesting.


My friend taught me this lesson in a very interesting way. He focused on a small group of stocks and got to know them well. He not only learned the patterns, but also watched how the companies acted. He knew how they acted when they made money, what products they were putting out, and how their stock reacted to news and events in the economy. He made more than $750,000 trading just one company in one year. When people saw how successful he was, they always wanted to know, "What's it going to do next?" Like the Little Red Hen in the children's story, most of his fellow traders wanted to profit from his valuable knowledge, but not many asked him to teach them how he traded. It was silly to think that if he told them the information, they would also learn how to find it on their own. But that's just how people are.


Most people tend to look for the easiest way to do something. Most people want to find a magic trick or a secret. A big part of this country's GDP comes from selling the flash instead of the meat. We look for the fountain of youth, the short cut, and the edge, but in the end, there is one thing that is always the same. Smart work is better than hard work. And in the end, magic is usually about finding the key or heart of the matter and developing some simple and specialized skills.


If you find a good piece of land that can be farmed and harvested again and again, you have found one of the crown jewels of trading. Most millionaires' secret is that they have a steady stream of income. People are creatures of habit, and the market is made up of nothing but people. With six to ten good pattern trading stocks in the price range you like, there will always be something to trade. When you find a great stock, you can replace the worst one in your stable with it and put it on the bench until it's good enough to start.


When a trader chases after the newest hot stock or lets their field of view get too big, that's when things go wrong. When you find a good account size, a group of stocks, and a couple of trading strategies, stick with them!!! Don't mess with it, and dance with what your parents gave you.


I'd love for you to stay with me for a few days in the Trader's Forge. This is where I can help you the most as a trading coach. I teach people in the Trader Talk Live mentoring workshops every week, but those who have been to the two-day training at the Forge get the most out of it. Last week in Tampa, there was a great training. This month, Denver and then Detroit are on the schedule.