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Success Has a Price to Pay
If you are a futures trader, or for that matter a stock trader, we are influenced greatly by our success if we have any at all. Having a string of winning weeks and/or months sometimes causes a successful trader to have difficulty. It is possibly a subconscious suggestion from the success that says quietly to you, "You made profits doing this last week, last month, better stick with that method." Perhaps things have changed.
When we have had a roaring bull market such as we have from 1995 to late 2000 many traders made great sums of money buying stocks. Anyone could have done so, unless his or her dart landed on the "dog of the year" like Montgomery Ward, but who would have done that? No glitz, no hype. They're just a stogy old order taker of goods for consumers.
When the market turned kinda' bearish in early 2000, it was nip and tuck for the bullish trader, as first one section and then another went through profit taking by those that wanted to be in cash looking forward and seeing many changes on the horizon.
The bullish trader kept right on buying and then buying lower yet. Needless to say he or she was not making any money. But what they were doing was continuing to do what had made them money in the first place. They could not see the distribution. They did not want to see the distribution. And they have been taught it always goes back up! Does it?
I myself started offering the Nasdaq Signals with the Daytraders Bulletin in mid-Sept. of 2000 just as we had started a pretty sharp decline. Making money was easy. You merely waited patiently for a rally intraday and then found a point to sell into, or a pivot to sell under.
But along would come the "one-day wonder" when someone of size would decide to buy some stocks "on the way down" which is not too awfully bright, in my opinion, but then down we would go some more.
The days that caught a buyer of stocks, of course, caused the indexes to go up. But did I want to see that? No! I made profits going down. I would get in there and aggressively sell anything that made the slightest sense, and in many cases have a losing day. My motto was, "you do not buy stocks on a down day," a day with a lower low, but I have never considered for months not selling stocks on an up day, a day with a higher low. Why? Because my gratification for trading recently has been to sell into the days at some point. The rally will fizzle soon and the longer term down trend will re-assert itself.
It is like the monkey that is taught to ring the bell, as when he does, it is banana time! Anyway, it comes to me tonight, January 12th, 2001, that I have had three lousy days, the worst of my efforts to demonstrate how to day trade by offering this service to you.
We go to great lengths to explain we are educational only. We have certainly demonstrated the last three days of how not to trade intraday. Sometimes we give both types of lessons for the price of one.
There also is the longer-term view. I am happy that I have a "good sense" or "feel" for the next few weeks. But, since I am expecting much lower prices in the future, at some point I carry a bearish view into the trading each day.
I need to teach myself that it is of little matter to me where we may be in two days, two weeks, or two months or years, we must go with the flow today.
My purpose in writing this is so we do not reinforce each other with the lame brain excuses that we can make as traders for not doing something. We must have rules that we can follow and we must not deviate from those rules as best we can.
Many will say an intraday system would solve that problem but in trying for 10 years I have just recently been able to come up with intraday systems that work at all. Futures Truth states they seldom test a system that is sustainable, so there may be wisdom in those words for us that trade basically discretionarily.
Anyway, these thoughts come to my mind at this point and since we are educational in nature, we offer these comments for what they might be worth.
Ralph Russell copyright 2001.
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