Authored by: Larry Benedict
The trader's road keeps going, around the corner and out of sight. So, put one foot after the other. It's all you can do. Because you never know what'll happen next.
It’s taken 35 years to be a successful trader, but I’ve finally cracked the secret to becoming a world-class, highly profitable trader. Ready? The secret is hard work and consistency. Who could’ve seen that coming?
That might sound boring to you. You might think that the world’s best trader(s) owe it all to one big home-run trade or a fancy algorithm they invented. But the reality is success requires dedication.
Everyone has a different approach, but I’ll show you exactly what I’ve done for 35 years that’s made me a success and unveiled a critical market event in the coming year that I want you to be ready for. But first, it all starts with a breakdown of a typical trading day.
For most trader(s), the trading day starts when the market’s opening bell rings at 9:30 a.m. E.T. (USA). For me, a typical trading day starts the day before when the market closes.
The only way to get a leg up on the countless other market participants is to be as prepared as possible. So as soon as I hear the closing bell, I’ll look at how the stocks on my watchlist closed, compare charts of trades I’m in or looking to get into, and how the market finished overall.
This takes anywhere from one to a few hours, depending on how many trades I’m in. Regardless, I spend at least 30 minutes reviewing what I did right, what I did wrong, and what I might need to improve on for the next trading day.
Then, I’ll leave my office around 5:30 p.m., get home, and wait for the Japanese market to open at 7 p.m. E.T. Intermarket relationships are huge because markets can impact each other drastically. I also watch the futures market, which is open from 6 p.m. on Sunday to around 5 p.m. on Friday.
But my prep the night before the next trading day is more about paying attention to the news and market action than anything else. I usually watch the market action, on and off, until I fall asleep.
Sometimes, I’ll even trade through the night. But when I don’t, I’ll still put in call levels just in case something big happens. (A call level means a firm will call me and wake me up if the market makes any big moves, so I don’t miss it.)
Depending on how things look, I might get up at 2 or 3 a.m. to trade the European markets. But I don’t do that often unless it’s active and busy. The next day, I get up around 6 a.m. and prepare for the U.S. market opening. That’s mainly reading through research and news headlines.
Today’s market is a very reactive one. It can move off of the slightest bit of positive or negative news. And it doesn’t matter if that news is factual or not.
The trading day is executing the plans I put together from the previous day – occasionally overnight. I’m in and out of at least 50 positions a day. That might sound like a lot, but I trade differently from many people.
I take small gains on a large number of positions throughout the day. This slowly grows my capital, so when I see a home run lining up, I can make a big, profitable bet; however, those don’t come around often.
Most days, I’m just taking those small gains over and over. But when they come around, I pare down the number of positions I trade each day and focus on the big one. Then, the preparation continues again after the close of the U.S. trading day.
All that’s left is analyzing my current positions, ensuring our P&L (profit and loss) from the day before is proper, and adjusting where we need to: Then, the cycle repeats.
This habit of constantly consuming market information is why I’m successful today. But a big part of that success also relies on my insistence on taking small profits as soon as I see them. It’s all about having the proper mindset.
I’m not focused on getting the home run. I want to capture gains when I have them. Home runs aren’t necessary if you’re slowly, consistently letting profits trickle in. That might not sound as exciting as hitting doubles and triples on every trade you make, but it’s realistic.
Here’s what works for me: Have a number you’re not going to go past on the upside or the downside and execute – no matter what. Don’t let your emotions interfere with that plan.
With this strategy, you’re slowly pulling in profit after profit. That’s how you size up your pile of capital, eventually, take on larger and riskier position sizes, and see exponential growth in your trading account.
And when you start trading, the gains might look small on a percentage basis. But when you have a big enough cash pile, those small percentages can amount to millions of dollars.
Bottom line: It’s all about using the money you have to produce more.
This article was printed from TradingSig.com