RSS
July 20, 2009 at 9:52 am | | Comments 5

Fill Your Trading Toolbelt

Recently I saw the movie Gran Torino, and really enjoyed it.trader-toolbelt

In case you haven’t seen it, I won’t give away the plot.  But at one point of the movie, Clint Eastwood is with a young man in the garage and the kid is amazed by the amount of tools Eastwood has collected.

Nearing age 80, Eastwood is quick to remind the young man that those tools weren’t all bought at once – that his collection was slowly built over time on an as-needed basis.

Taking the young man to the hardware store, Eastwood buys him a tool belt and a couple of things he’ll need for a new construction job.  Again, he reminds the young man that he will acquire more tools over the years as he comes to need them.

Every Trader Has a Toolbelt

So what kind of shape is your trading tool belt in?  Are you locked and loaded, ready for whatever the market throws at you?

Or do you have just a couple of basics which you’re relying on with plenty of room for more on your hip?

It’s worth asking yourself, and taking a personal inventory as well as a strategic inventory for your trading will let you know which situations you should be involved in, and equally important, which situations you should be avoiding.

I use this analogy because it’s so obvious.  There are many ways to skin the market cat, but you don’t have to know them all at once.  Get really good at 1 or 2, and rely on them for consistency in the early stages of your trading career.  But don’t forget to keep an eye out for new possibilities which are emerging around you – because they will.

And as you begin to notice more opportunities and situations to profit from, figure out how to (1) locate those plays, and (2) trade them in a way so as to appropriately manage your risk and maximize your reward.  That’s crucial.

As you add the occasional new strategy to your tool belt, you’ll find it gets heavier over time, thereby enabling you to attack more and more situations effectively.  Like a veteran.  But don’t pressure yourself to get there overnight – it takes time.

Thanks for stopping by and I’ll see you here soon with more. Until then…

Trade Like a Bandit!

Jeff White

President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

twitter-gray

  • Lisa Woods

    Your timing couldn’t be better – for me anyway. I’ve been trading for 2 1/2 years now and am getting discouraged with myself. I know it can be done…many of you are doing it every day…but I just can’t seem to get my psychology in order. I believe my rules are good but I can’t understand why I don’t stick to them. Yes, I know it’s my psychology that is getting in my way – but then at times I think it might be my plan that isn’t right. I have a form of MD and am a stay- at-home mom/wife. I love to trade and it suits me well. I can stay home and still make some money which in turn makes me feel like I can contribute and builds my self worth – if I could just get to the profit making part. I pray for a trading God to take me under his wing. Until then, I will continue to look for tools for my tool belt. It’s hard working with only a hammer.
    Happy Trading!

  • Hey Lisa,

    Thank you for stopping by and I’m happy to hear about the timing of this post. I really hope you find it helpful.

    The learning curve can take a while, and there are phases of frustration which seem like they might never end. When that happens, I tend to do one of 3 things:
    1. Take a short break (even a few days off can sometimes work wonders for clarity of mind)

    2. Keep grinding (hard to know when to do #1 vs. #2, but if you sense you are nearing a breakthrough go with this one)

    3. Trade smaller regardless (when things aren’t clear, lose small. You can quickly increase your trade size once your confidence and win rate improve again, but when you’re struggling it’s important to do damage control.)

    You sound determined and I really like that – I’m pulling for you!

    Jeff

  • Dmitry

    Hi Jeff! Do you trade sideways (range) market? Or only trend?

  • Hey Dmitry!

    I will trade them all, but different approaches are required. Range-bound markets mean more reversal plays, while trending markets will include more breakout plays. Different price action requires different strategies, but I have been fortunate enough to have traded them all during the past decade. I can safely say we’ll see them all again too (uptrends, downtrends, trading ranges)!

    Thanks for stopping by,

    Jeff

  • Pingback: Momentum Trading - A Different Mindset | TheStockBandit.net()