What I’m Really Risking on a Bad Trade
Ryan Tonking | Black Room LessonsBeing that I am a discretionary trader, I have to make a choice on which patterns to take. Today’s video shows that taking a bad trade or a trade that is out of strategy effects more than just that risk unit. There is a lot more on the line when I jump into a bad trade.
Continue Reading -->Scott Redler: 10 Trading Rules I’ll Teach My Son
The son becomes the father, and the father the son. -Jor-El, father of Superman Last year, I had back surgery to correct a sequestered spinal disc. That pretty much meant the end of my competitive racing career. But as one Redler falls… another rises. I’m winding down. And my son Chace is winding up. On Monday, he ran the 38th annual President’s Cup 5K Run in Millburn, NJ in 20:15.28. Here’s a picture of us after the finish. I ran the race alongside him… until he passed me by. Chace broke the record for 8-year olds for this particular race. And he may have posted one of the top-3 5K finishes EVER by an 8-year old. (official records are a little spotty) I think running and competing can take him far in life. And I’m not just talking about college scholarships. He’s learning the value of discipline and hard work early. But maybe one day he’ll leave running behind. Maybe he’ll follow his old man into another competitive, testosterone-filled career… trading. If he made that choice, I’d drag him into the garage, lock the door, and not let him out until he understands these 10 trading rules: 10) Trading Is a Business People think trading is like hitting the craps table at Ceasars Palace. But it’s a business just like any other. You have to balance your books every month, make it through slowdowns, and most of all, not put yourself at risk of bankruptcy. The average guy on the street thinks trading is really exciting. You lose $10 million one day, and make $20 million the next. NOTHING could be further from the truth. Every successful trader knows that… 9) Trading Should Be Boring Thrill-seekers always fail. Always. Here’s a pretty common scenario: A trader starts his career, and BAM! He has a huge day. Let’s call it $50K. I gotta tell you, $50K all at once can ruin a trader’s life. They start thinking that big money comes easily. They start thinking about making $100K a day… or $200K a day. So they keep taking more and more risk… until they run into a day like the August 24, 2015 flash crash. 5 minutes after the open, the margin clerk’s demanding more cash. The trader doesn’t have the money to put up, so their positions get closed out, right at the bottom. So they’re put out of business just before the rebound. I’ve seen it happen again and again. So if you’re just getting started, I recommend that you… 8) Focus on Execution First, Money Second If you get good at anything, the money’s going to come eventually. So focus on developing your skills, and properly executing the strategies you learn. That’s what’s going to keep you in the game for the long run. Fast money leaves just as fast at arrived. Your #1 goal should be to develop a set of trading strategies that can give you consistent profits, no matter what’s happening in the market. Once your brain gets big, your wallet follows. But let’s not forget about your heart, because… 7) Your Temper Can Kill You Self-control is more important than brainpower. You can have all the intelligence in the world, but if you can’t stay calm when you’re losing money, you’re toast. You need the self-awareness to know when you’re at risk of letting emotions dictate your decision-making process. I just read an article in the Wall Street Journal about a banker that used basketball to judge job candidates: Some employers confessed to weeding out applicants in the gym. John Osbon said when he was a Wall Street managing director he played basketball with job candidates. He would step on their feet or yank their shirt in games, he said, to see how they reacted. If they kept their cool, they passed the test. “They were all fair fouls, and I didn’t hurt anyone,” Mr. Osbon said. “You have to take someone down to size.” Sounds like a pretty effective way to judge a trader’s ability to take pressure! How easily do you keep your cool? And what can you do to work on being even-tempered? But we all know we can’t keep our emotions perfectly on check. So I recommend that you… 6) Use Reverse Psychology on Yourself We’re only human, and we can never perfectly manage our emotions. I’ve been doing this for 18 years, and I still get too excited sometimes. And when I feel that coming on, I know my ego is getting the best of me. So I force myself to trade more cautiously, because I’ve put myself in the danger zone. And when I start every trading day, I try to… 5) Be Naturally Neutral I don’t expect too much at the start of a trading day. And I don’t expect too little. Every day is different, and if I’m in a neutral mood, I’m ready for whatever opportunities present themselves. If you start your day dreaming of piles of cash, or worrying that you’ll go up in smoke, you’re doomed. Now, once you’re out there, not every trade will go your way. You’re going to lose money. But that’s okay, because… 4) Great Traders Are Losers Every trader out there loses money. I lose money all the time. Some of the richest traders I’ve met lose money every single day. But the reason I’m still in the game after 18 years is that I don’t lose big. Say I’m long AAPL from $150, and I get stopped out at $148. I’m not gonna celebrate, but I’m not gonna cry either. You know why? Because small losses won’t knock me out of the game. Now if I rode AAPL down to $130, that’s another story. If you dig a deep enough hole, you may need 10 winners to make up for 1 loser! Understanding this can help you… 3) Start Thinking Like a Pro Like I said, brainpower isn’t everything. You can have a 180 IQ, but you’ve got to adopt the mindset of a pro. Pros don’t think about Ferraris
Continue Reading -->The State of the Market for Options Traders
Options in PlayOptions Trades with Kurt Capra & Daniel DarrowToday’s video is going to talk about the state of the market. The recent weakness is creating opportunities but it’s important to follow the flow of news.
Continue Reading -->Market Timing: What It Really Means, in Plain English
Sami Abusaad | Swing TradingHave you ever entered a great trade that turned into a quick loss? But then watch the trade go on to a large gain, only you are not in it anymore? It is frustrating, and it has happened to all of us. Bad Market Timing is often one of the reasons good trades fail. Market Timing is a concept that encourages trading only when circumstances are optimal for trading.
Continue Reading -->AMD Case Study: Why Trade Management Is So Important with Options
Options in PlayOptions Trades with Kurt Capra & Daniel DarrowToday’s video is going to talk about the ongoing trade on AMD. It is a recent example of why options rolling/trade management is different than stocks and can be so rewarding.
Continue Reading -->The Swing Trades I’m Targeting This Week
Sami Abusaad | Swing TradingSami Abusaad discusses the swing trade ideas he’s targeting for this week, 9-3 to 9-7.
Continue Reading -->How to Set Support and Resistance on a Gapping Stock
Ryan Tonking | Black Room LessonsA lot of times when a stock Gaps there may not be any immediate support or resistance; however, that doesn’t mean that none will form. When we were watching DVA this morning that is exactly what we saw, and we were able to get short at the right location.
Continue Reading -->A Common Trading Setup That I Pass on 100% of the Time
Ifan Wei | Black Room LessonsBuy Low; Sell High. It sounds easy, but that’s because it is incomplete. Trying to apply the age-old axiom in the wrong context can be a recipe for disaster. The low-of-the-day base is a low odds setup that I pass on every time.
Continue Reading -->AMZN: Connecting the Dots on the Road to $2,000+
Amazon (AMZN) has been a big winner for Redler All-Access in the past couple of weeks as it woke up around the $1875ish area to finally break $2,000 today. If you read my 2018 Market Outlook Report back in December or January, maybe you saw my Amazon $2,000 call:I closed out the last of my recent swing long this morning, but let’s go back and see how we connected the dots in Redler All-Access. Monday 8/27 Chart AMZN wasn’t leading the market last week, but it looked ready to get back in the game. We had a potential wedge-type pattern with one of the best companies on the planet. I was long and looking to add if it could get above $1,919, then $1,925. I thought that if it could close above $1,925, then $1,950-$2,000+ would be next. Tuesday 8/28 Chart On Tuesday, AMZN was up $8-9 in the morning so I trimmed some. However, I wanted to stay with some because $1,950-$2,000 was possible for this week.Wednesday 8/29 Chart On Wednesday, Morgan Stanley put a $2,500 target on AMZN, which had the stock gapping up nicely above the descending trendline. I said that $2,000 could be a magnet in the sessions ahead, and AMZN managed to reach $1,998.69 on Wednesday.Thursday 8/30 Chart I sold the last of my AMZN long after the open today. After the big move from the $1,900 area, it felt more like a scalp than swing long. It hit $2,025+. Hopefully it sets up again for move to the $2058 area to celebrate the $1 trillion market cap milestone.
Continue Reading -->Stalking an Options Setup That Didn’t Trigger
Options in PlayOptions Trades with Kurt Capra & Daniel DarrowToday’s video is going to talk about the HAIN earnings trade. It came across our screener as a potential earnings combo trade.We will discuss those points and what to do now that it didn’t trigger the set up.
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