Stop orders put you in the right place at the right time with the appropriate amount of risk.
Put your Buy Stops in above the market and let the market come to you.
This will help you stop chasing markets that might eventually stall.
And if you don’t get filled, come back tomorrow.
You get to tell the market what terms are acceptable.
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By placing your buy stops above the market, above key inflection points, you put yourself in a place to anticipate the bigger moves.
You are also letting the market come to you as opposed to chasing a trade that you feel regrets about because you feel you missed it.
[Chasing trades will kill you if not now, eventually.]
If you don’t get filled, perfect. It wasn’t worth being in.
Probably random daily noise.
Come back and ENTER THE SAME ORDER tomorrow.
You’ve just created a filter by being patient and waiting for the momentum to hit and trade through your buy stop.
How do you feel now?
Do this enough and you’ll be on your way to calibrating your emotional intelligence with your trading tactics.
If you can’t learn this “feeling tone” of trading, I promise you that you will NEVER catch the moves that Michael Marcus and Ed Seykota do and did.
This is the single most important thing I can teach you.
It’s not about chart patterns.
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A good system will do all the “figuring out” part for you so you don’t have to spend your days going through charts.
Of course, that might not be as much “fun” for you from an economic utility standpoint.
You may very well like the challenge of figuring out a chart, for example.
I myself do not. I’d rather have the computer look back and tell me where the optimal entry is for the risk I’m willing to take.
Then I can lock those parameters in and run thousands of iterations on them to see if they create a positive expected value.
Again, it might not be as much fun, but it takes the subjectivity out of it and gives me hard numbers to work with.
Many who are chart readers are going for the feelings around being smart or figuring things out by hand.
You get to figure out what and why you’re doing it for.
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There’s a great quote I remember reading in The Art of War on Preparedness:
“The victorious warrior first wins, then seeks battle.”
I think that sums up where you want to be Sunday night or early Monday morning – getting ready and being prepared.
I’m a “night before” type of person in terms of my preparation. I feel that by the following morning it’s too late for my style and where I’m at and lack of preparedness puts me at a disadvantage.
For me, preparing the “day of” puts me in an emotional state of “I’m doing this last-minute” and that’s not a feeling I want in my body.
It might be different for you, especially if you trading short term time frames or are trying to daytrade.
The night before might be too early.
Either way, being prepared to win is about Intention, and “Intentions equal results.”
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No matter how much you’re learning and evolving your skills, the market is not always going to be amenable to your trading style or asset class.
That’s not a reflection on you – you can’t take it personally.
I’m certain that you will grow in leaps and bounds and then stall.
It happened to me – it happens to everyone.
In fact, it will happen continually throughout your career.
Your trading will have streaks – up and down – that’s part of it.
You can better manage your drawdown by trading smaller during those losing streaks so they have less of an impact on your equity.
This will help you enjoy the ride a bit more.
System traders have this type of “haircut” built in to their rules.
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