8 Rules to Becoming a Better Trader

This is the transcribed version of the podcast posted above ^^^

[00:00:00] Hello. I would like to talk to you about the One Minute Trader. We are here to take the time strapped trader and turn them into a profitable money making machine with daily ideas, that give you, the trader on the go, a reason to trade with risk defined and profits taken when able. I’m Matt Davio and this is the One Minute Trader.

 

[00:00:57] Matt Davio here with The One Minute Trader podcast. Listen, People ask me all the time for: what’s the best simplest group of rules that I could have to be a better trader?. And it’s really not that easy but I’m going to try to make this short sweet and to the point for our listeners as we always try to do at the one minute trader. So here are eight rules for better trading and you could apply them to investing also the trading process is very difficult. And I would say enormously complex which is probably part of the reason and the appeal that led me to trading as a business I thought it might be helpful to others offer some of these observations that I’ve made over my 28 years in the business and to make the task a little bit easier. I’ve done a lot of the study in the harder and experienced via losing my money and that is part of the process. You must be able to lose well when you’re in the trading business. So these rules really are meant to be applied generally to trading and or investing. And sometimes I do find it difficult to separate the two both either trading from investing or investing from from trading. So even the longest investment starts with some type of trade if you will you’ve got to get into the position. So without further ado let’s talk a little bit about what these eight items are. The list is not meant to be complete by any means and it is actually intentionally brief. I could probably talk about each of these topics in an entire podcast and may do so in the future. But most of the concepts aren’t mine they’re not really brand new but I think they bear repeating because of my experience in doing this business for so long to number one find the trade style that matches your personality. We’ve talked about this quite often in the past but everyone has their own unique attitude towards risk and volatility and you need to trade vehicles that reflect your temperament. So I’ve long maintained that people who are more risk averse probably shouldn’t trade they trade. And if you’re less risk averse you could get anywhere from looking at charts from 60 minutes down to five minutes. But the more trading you do the more risk ultimately that you’re going to assume. So assuming more risk than you’re comfortable with can be stressful and emotional emotionally destabilizing. So and we’ve talked about this somewhat in the past. You need to be able to understand the risks and the psychology around trading and what it can do that due to the individual if you have not considered it. How do you deal with loss. How do you deal with striking out at the plate. Coming up again the next day so you don’t want to make know more dis more poor decisions based upon kind of having a destabilizing and emotional basis. So there’s an old saying that if you don’t know kind of who you are at the poker table you’re probably the shelf. And that’s why I don’t play poker because I really can’t bluff well and I don’t understand that part of the game. So understand your personality match that with the type of trading or investing that you’re going to do position sizing when in doubt go down to the small size possible one share one contract one option. These are the basic these are probably the most rudimentary basic risk control tactics that one can put into place and smaller position sizes reduces your overall volatility and potential losses. And it also gives you some confidence that you could always go back and size up when when the process is really grooving and you are seeing things clearly. When in doubt number two was reduce your position size. Number three I say this all the time don’t trade around if you’re if you’re trading stocks don’t trade around earnings it’s just too much of a risk. Nobody knows what’s going to happen but it’s the same thing with futures don’t trade around the binary events wait for them to happen. You have the Wimsey meeting untap and eight times a year I tell people that’s basically 16 days off because you have the day before the day after and you’re able to really don’t be involved until those announcements happen. We call these binary announcements and there’s no reason to try to frontrunner. You don’t know anything more than the market knows until these events happen. Let them separate themselves. Number four only trade when there’s a sound reason to do so. Today was a good example it was a Friday a month. And I just didn’t want to trade. I didn’t see any real strong edges I didn’t see any trades. So I posted to you know the chat today that I’m not going to trade today. I posted that last night and I’ve learned that over time overtrading or the assumption of marginal poor training is so detrimental to the overall positivity that you’re going to see in your overall returns. So when in doubt make sure there’s a reason to trade and it fits into your game plan. Otherwise don’t trade number five and this is so important I say this all the time. If you’re seeking perfection in your life and your relationships in your businesses stop you will not succeed in seeking said perfection. You need to trade with the odds in life just like you try to align yourself with a partner who has similar thoughts in the way you want to raise children and what religion you want to teach your children. If you want to teach religion so as human beings we are all valuable. We make mistakes every day. It’s inevitable. And even if your analysis is perfect the other person on the other side can make a mistake that can mess up everything and have adverse results. So don’t expect perfection in your training and you will. And I think if you set that expectation from the get go you’re going to be much better off number 6 always trade with a plan. We’ve talked about this ad just you know all the time. Do something well. Rinse and repeat. Understand risk and then do it over and over again before you can go to stage two of finding the next thing to try to do something well have some success use to take the losses with that and then move on. Number 7 trade with the trend. Okay. If you don’t understand when to fade a trend which is a difficult thing to do. We talk about this all the time. Trend days are the hardest days to jump on because by the time if you’re a day trader you even see that trend it’s probably too late in the day at least half the days gone and probably usually about 80 percent of the upside is gone. So trading with the trend. Although I say use a longer time frame versus the shorter timeframe. The trend is definitely your friend but no when that trend changes how you will get out. Also the number of course. Cut your losses and let your profits run again. This is the human psychology that we hear all the time you hear people saying oh you know I bought it for a trade but now I’m in it for the long term. Well that’s just your brain or your ego telling you you’re going to recoup the losses over a longer period of time. So now you become a bag holder and probably that first loss was your best loss. It’s just like in real estate. If somebody makes an offer for your house it’s usually the best offer you’re going to get. Take it. It’s no different with losses that fine now and set your loss from the get go based on your risk parameters and stop right away. If you can do that the profits will take care of themselves in the long run. So that’s it. I meant TVO at the 1 minute trader podcast. If you have any questions drop me a line as always Matt at 1 minute trader TV we’d love to hear them again. Everything in here is just my opinion but I hope that these items can assist you in your growth process and streamline your process in learning and being a more profitable trader. If you have any questions again just drop me a line and thanks again for listening. Like us on iTunes Stitcher Spotify. Soundcloud wherever it is that you’re listening to us please continue to listen and we’ll keep these informational chats going and we hope you are enjoying them very much. Thanks and have a great day. It’s time for the sports to version with athletics investment wagering. Everybody this is from a glottis investments today I want to talk about not placing too many bad in one go. And what that what I mean by that is if you have multiple games identified that are potentially advantageous to you you don’t necessarily have to bet on all of them in order to get a positive return because essentially what you’re doing is increasing your vulnerability surface for the book makers to take advantage of you because if you may have an edge on one or two bets but if you spread it out across ten. Now that gives the bookmaker more chance to basically win their money. And for you to lose your money essentially. So what you want to do to counter this is lower the number of bets based on the total amount that you find advantageous. So if you have 10 total bets you want to lower that amount to maybe one or two really cream of the crop type bets and on those ones you bet one unit only so you can see how quickly this becomes a manage it a discipline and money management issue for many many betters out there. They’ll find 10 potential new lines that they feel that they have an advantage on and they’ll go out and bet on all 10 of them putting 10 units at risk and if they don’t win at least six of them because I can almost guarantee you these are goingto be all favourites and they’re going to be minus money so the juice is going to be high if they don’t win at least six of them they’re going to end up losing money and even if they win six of them are probably just going to break even. Which means that margin of error is very small. You know you could you could potentially lose more than 6 games and now you’re losing you know 2 3 4 units per attempt. So what you want to do is really focus on the cream of the crop lower down to maybe one or two and then only about one unit per bet and that reduces your vulnerability surface and increases your chances of winning because now you’ve further filtered down from a potential 10 down to the No Kidding 1 or 2 that you truly feel there’s an edge on that and we’ll talk about how to identify potential wagers in the upcoming podcast so stay tuned. Come join us at Latics investments dot com where we do an automated service for use and you don’t have to worry about the numbers and the ins and outs and the stress level and make sure when you show up you let them know one minute Traitor’s sent you have a good day.

 

[00:13:31] The one minute trader was developed to bring you fresh trade ideas every day of every trading week. Make sure you go sign up for and are invaluable. One minute trader daily emails along with our five minute video emails to get timely insights into evolving trade possibilities. Let 1 minute trader beers second set of eyes for trade opportunities that may have passed you by. We appreciate you listening today to the podcast and we hope you’ll support the show by leaving us a positive ratings on whichever platform you’re tuning in from. I’m Matt Delio and this is the one minute treater podcast.

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