trend trading stock, trading strategy

When I first prepared to give seminars, one of the things I learned about adult education was that we adults think we know more than we do. I believe that phenomenon carries over to our trading. I have been a full time trader for many years now and have devoted a great deal of time to my own trading education. One of the things I have observed is that many newer traders are constantly seeking a "holy grail" of trading. They often jump from service to service and from strategy to strategy, seeking something that does not exist. For example, I once received an e-mail asking whether any trading service gave consistently good trades. The question, itself, suggested that the writer was a neophyte trader. Trading involves ups and downs. The key is to prevail over the long haul. Any expectation that every trade will yield huge profits is doomed.

Experienced traders who utilize alert services know that they are starting points only. I am afraid that the neophyte or inexperienced trader does not approach it in the same fashion. I suspect that the new trader is motivated completely by greed and is expecting the miraculous when they sign up for a service. Instead of using the information as a starting point from which to ultimately make their own decision, they have a tendency to follow mindlessly. While that may be a severe criticism, I understand that it is human nature to attempt to get rich quick. Trading rarely has that result. If anything, success in trading, consists of a few steps forward and a couple steps back. The question then becomes, how does a new trader get themselves on the path to success?

One of the ways in which new traders can increase their chances for success is to use an appropriate brokerage. I have had questions from subscribers who clearly do not understand how to place even a relatively unsophisticated trade. While my purpose is education, I cannot give each individual investing advice. When it comes to specifics, the traders need to take steps to educate themselves. I can set forth a trade that I am making so that a subscriber is exposed to a specific strategy, but the subscriber needs to understand that strategy himself or undertake to learn it before ever actually throwing money into a position. As I have written many times, the new trader has many avenues available to increase his knowledge. Among them are seminars, books, DVDs, and, very importantly, their own broker. I am not a financial adviser; the broker ordinarily is. I urge those who are new to trading to select a broker to whom they can speak on a regular basis. Unfortunately, there is a tendency with new traders to select the cheapest brokerage firm. If you know what you're doing, that is fine. However, if you are inexperienced, an internet brokerage service offering no one to whom you can speak does you little good. In that case, you are getting what you pay for. I have always suggested that the selection of a brokerage firm is a critical step in good trading. Call several brokerage firms and ask to speak to the broker most experienced in the strategy you wish to undertake. Ask them whether they trade that strategy in their own account. Ask them whether they are trading in that strategy in any clients accounts. Ask them whether they are successful in trading that strategy. See if you feel as though you have a rapport with the broker. Find out if they are willing to help you and "hold your hand" as you go through the learning curve. In option trading, for example, you may have a great deal of difficulty finding a knowledgeable broker. Believe it or not, many firms do not allow the majority of their brokers to trade options. If you want to trade options, make sure that the broker with whom you are dealing has option trading experience. Take the time to ferret out a broker who meets your personal needs. Understand that an alert service can only provide a general education. Rely on a professional financial adviser to help you make your decisions if you have not yet reached the stage where you can competently make them for yourself. Always remember the money you trade is your own and the risk you take is yours. It is definitely worth the trouble to learn what you are doing.

Good Trading!
Bill Kraft

Mr. Kraft's past articles are posted on our website for your review.

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