I am a big advocate of the “keep it simple method” when it comes to my trading. Less is totally more. In this article, I will cover specifics regarding my trading to hopefully help those who might feel stressed and overwhelmed when it comes to trading.
HOW TO PICK STOCKS
Let’s begin with stock selection simplicity. I get asked on a daily basis “how do you pick the stocks you trade?” That’s one of the simpler answers. I respond “imagine you are traveling down the busiest road in your city. The main drag, if you will. What are some of the companies you see? Likely, WMT, BBY, SBUX, F, GM, HD or maybe LOW.
What companies do you interact with on a daily basis? MSFT, INTC, HPQ, NFLX, AMZN, AAPL, GOOG, YHOO? These are all perfectly acceptable stocks to trade and or track. As a trade, you also want the stock to have volume and liquidity. So, first, make sure the stock or company you are trading has over 1,000,000 shares daily. Also, make sure what you are trading is optionable. Meaning, it has options. This will add insane leverage to your trades and really make it much more exciting when you combine stock with the leverage of options.
HOW MANY TRADING SCREENS?
Since I trade professionally, the question also comes up, “how many computers and monitors do you use?” I figured for educational purposes, I would upload a picture of my trading and work desk. I’ve got a desk phone for use when I call and chat with my students. I’ve got my voice channel compression. That is for the videos I create on a daily basis. It helps my voice sound magical. And obviously, my MacBook Pro with my second screen. I will have my charting software open. I use Trade Navigator and Motive Wave. I use TN 99% of the time right now. I am beginning to get much better using Motive Wave. It’ a MAC friendly software and has some really snazzy features.
Photo source: Jerremy Newsome, used with permission
HOW MANY TRADES PER DAY?
Another question I get asked a lot “how many trades do you place in a day?” The answer may shock you. My personality isn’t a true day trading personality. I can day trade, I find it easy and exciting. However, I had to come to terms with the fact that my attention span is rather small. I often shift my focus elsewhere after just a few minutes. Day traders have incredible discipline, focus and the emotional fortitude of a General “Stone Wall” Jackson. I salute and applaud day traders it’s just not for me.
The answer to the above question is about 5. However, that’s not 5 trades a day, that’s 5 trades a month. Yep, I said it. In 30 days I may only place about 5 trades. It’s not because there aren’t trades out there. Remember, every single day, there are more opportunities than any one of us could take advantage of in a life time. I understand the fully how many trades I could be taking. However, great traders find reasons not to take trades. There’s nothing wrong with letting money sit idle while you wait for the perfect trade. Many traders feel like the money should be doing something and often go out and force a trade. Overtrading is one of the main reasons traders struggle, get stressed and lose money. And trust me, if you’re reading this, you know if you are over trading. I know many full- time day traders, who might only place 10 trades a week!
KEEP IT SIMPLE
The truth is, ladies and gentleman, you don’t need 6 monitors, 6 computers, 5 cell phones, 167 charts, 4 brokers, 6 scanning softwares and 9 stock picking services to be successful. Slow it down, focus and understand that if you simply do for a little while, what most people won’t, you will be able to do forever what most people can’t. If you truly want to spend tons of time on something, make sure it’s educating yourself.
Find someone successful. Ask and find out what they did and are currently doing to become successful and then copy that. Until next week, friends!