Trade The Journey

Trade The Journey

Trading as a Professional!

What does it mean to trade as an Professional?

(No, those aren’t my charts)

Like many, I thought of trading as an intuitive endeavor that would lead to quick riches. With the right stock selection, I’d be able to retire from the 9 to 5 lifestyle and work full-time as a trader. I planned to trade based on how I perceived the price would move. My basis of confidence was the indicators, news, tape reading (price action), and comments of the analyst I had displayed on my platform trading screen.

Feeling your way through the market was my choice of strategy. It’s a more relaxed and more comfortable way to profit from stock selection, although it seldom works. Well, it rarely works for the average person. The truth is that trading is a business, and like any other business, it demands your full attention.

Yes, you can be intuitive or lucky and maybe go on a winning streak. However, the streak won’t last, and what will you do when your only two strategies fail you.

 

What if a radical movement occurs and your sense of direction is unclear?

What will you do next?

I learned this the hard way, and luckily, I didn’t have any money on the line. Caught in a move that I could not have predicted, my winning streak hung in the balance of a stock in which I could no longer predict its direction.
I was confused; the only reasoning I could come up with was that someone or entity decided it was a perfect price to buy. A large order did show up, over 2,000 shares were purchased.

The reversal happened so fast I had no time to react. In fact, within seconds, my fortune had changed. Not only did the stock reverse directions, but it also proceeded higher and higher.

So, I closed my short position on the way up and reversed my position on the stock by buying. I was able to catch the movement on the second half of the way-up and close the upward position on a small profit recouping my losses. Being this was a paper trade (fake account), I had enough capital to reverse my position.

Why is this important to a trader and their professionalism?

Have you seen a professional before? Many people get up and go to work and come back home to repeat the next day, but are they professionals?

A professional handles their profession with the utmost care and preparation.

A professional knows that their craft demands their full attention. They inherently understand the world is full of people vying for their position because a professional well paid.

Going back to the scenario, my goal was to handle the trade based upon my perception and forecasting skills.

What would a professional have done?

A better plan for the trade– I had some idea of how the stock might have moved based on the research I had completed the preceding night. This stock was on my radar due to its high dividend yield. However, the dividend yield could be a cover-up for a fallen stock.

Identify the timeframe to trade in– Trading in the proper timeframes is essential to providing you with an accurate picture to forecast upon. Looking at the long term charts help but not as much as the hourly and daily timeframes would.

Identify the highs and lows of the previous day– This I did do the day of, and that is inexcusable. Not having enough time to strategize left me with little foundation to stand on. Had I truly reviewed the charts the night before and then revisited the overnight markets in the morning, I would have been better positioned.

Wake up before the opening– Allowing my ego to overrule commonsense is not the way to success. I mistakenly thought that I could enter the market when I wanted and catch small profits. I had been doing this for the last couple of weeks and thought it would continue to work.

Am I a trading professional?

No, not yet.

Dwelling in the realm of theory has been a wonderful escape for me. The reality of trading caught me by surprise. It’s a sport even though the game is entirely mental.

But then again, preparing a trading business plan and tracking my progress in a journal shows commitment. Adjusting my budget to allow for saving, investing, and trading takes effort and means sacrifice.

So I would say I am an aspiring professional.

I can hear some say that that’s a paper trading account. That is true. However, I still feel the same emotional swings when the price moves counter to my forecast. This isn’t about the money, it’s about outperforming the competition, accurately forecasting the success of a business and the publics’ psychology towards the market, and making money.

Oops! I said it wasn’t about the money.

Of course, it is about money. It’s just not all about the money.

Thoughts? Corrections?

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