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-----Original Message-----
From: Linda Raschke [mailto:swm@xxxxxxxx]
Sent: 30 August 1999 01:25
To: Ronco Riccardo
Subject: Linda Raschke - Trading Information
Dear Fellow Trader:
Moore Research Center, Inc. has been tracking an amazing correlation
detailing the
sequence of daily bar patterns that clustered around the 1987 August market
top. I thought that you would find the research quite interesting to
review,
since last week's action unfolded with 100% accuracy. They have been
gracious
enough to publish a link sharing their work at:
http://www.mrci.com/special/dj87.htm
Secondly, if you would like to join us online during the day, our real-time
trading room (LBRTrading Room) is open for free on the first day of the
month,
which is this Wednesday. To log on, go to:
http://www.mtrader.com/linda.htm, or hit the Chatroom at:
http://www.mrci.com/lbr/.
When it asks for a password, type in any 5-digit word. We post our market
commentary, analysis, and the trades we make for our own office during the
day, in addition to noting things of educational interest.
Lastly, Mark Cook and I have been working on producing a joint trading
seminar devoted to short term trading in SP futures and the bond markets.
I thought this brief article hit upon some basic points for successful
trading. (For information on the seminar, go to:
http://www.mrci.com/lbr/daytrade)
WHAT MAKES A TRADER SUCCESSFUL - Mark Cook
Many people have asked me over the years what it takes to be a successful
trader. The answer is not clear but here are a few thoughts to ponder and
apply. First, you must have a complete commitment to trading and do it
full-time. If it is a hobby or a secondary pastime, I know how the
bottom line will be - a big minus. Trading must be addressed as a
profession
because if you do not treat it as such, let me assure you, those who do
treat
it this way will separate you from your money very quickly.
Secondly, you must fit your trading habits to your individual personality.
If
you are an impulsive individual, your style will reflect more trading than
a calculating individual who waits for all the indicators to fall into
place.
The personality factors more than any other factors I know will determine
success or failure. If you are an emotional person, admit that you are and
structure your trading habits to make emotions a positive influence, not a
negative one. If you are either greedy or fearful, that will affect your
decision making on a position and without recognizing the governing emotion,
your decisions will tend to be wrong.
When I experience emotions in the market, they tend to be fear. Whenever I
am the most fearful of the market, I recognize that at these times there can
also be some of the best opportunities. Whenever my fears become
overwhelming, my discipline tells me to buy or sell, and discipline
must win out or you are doomed to failure.
The work ethic can never be overstated. I watch the market all day long
from the opening bell to the closing bell. I have kept diaries on every day
in the market for the last nine years, sometimes having over 40 entries in
my diary per day. If I do not do my work, my profit suffers. There is no
short cut in trading and the market will quickly find if you are lazy.
Planning is the objective part of trading. Start with the worst case
scenario and work from there. You will never be more objective than before
you execute a trade. Once you are in a trade, emotions take over. The plan
must be in place before the activity takes place. Determine a plan that
tells you when you are wrong and admit it. Get out, retreat, and live to
fight another day.
As the day progresses, know how much money you have made or lost. It is
much like knowing the score of a basketball game at every instant and you
are the coach. Trading is a job and your paycheck is determined by your
ability. You can only maximize your ability if you have all the
information.
The key to S & P trading is to live by the rule that "a dollar made should
be kept." This means that profits should be guarded like Fort Knox to keep
losses from stealing your net worth. Enter every trade with the
understanding
of your risk, not your profit potential. If you can honestly answer to
yourself that this risk is acceptable then the trade should be implemented.
What happens is that human nature causes greed to become a focal point in
minds. This thought of "how much money can I make" dominates the mind set
and blots out the negative of "how much money can I lose". Until your focus
is entirely comprehending the negative, or losses, the positive, or profits,
will allude you. Many times I have seen people trading the S & P Futures to
have a very profitable run of short duration. The 'walk on water'
conviction
does one thing, it enables you to get to deeper water before you drown. The
mistaken air of confidence is just an emotion that precedes the consumption
of humility.
Let's look at one last rule - a must do. Have complete faith in your
indicators. Many times your indicators give a buy or a sell signal and you
don't follow it because you just don't have the confidence that this time
the signal is right. Successful traders believe in their indicators but are
also very aware that nothing is 100% foolproof. Not taking a trade that is
set-up using indicators you have developed is like calling yourself a liar.
The indicator is a product of you telling yourself to do a trade and you
respond by saying, " Indicator, you are not giving me a true signal." Grade
yourself a 'red F' and go sit in the corner.
The best advice I can give to anyone who aspires to become a trader is to
observe those who are successful. Any information that you can procure on
trading philosophies, trading mechanics and trading techniques of the pros
is well worth your while. If learning from those who have experience cuts
down on your learning curve time, isn't it worth it? I have heard persons
say that they were going to learn by themselves. Learning for yourself will
work if you have the time and the financial resources. Stubbornness and
pride can be hazardous to your wealth. If you do pursue learning from the
'masters' do not be surprised to find that there are many different ways
to trade profitably. Do not try to clone another individual because your
personality is never exactly the same as theirs. Observe, learn and test
the waters to arrive at the confidence level you will need to achieve
consistent success.
Finally, and most importantly, trading is a long-term commitment. I
fervently believe that it takes several years to become a true professional.
Each year you should become more consistent in your profits and enjoy more
confidence in your indicators. My final daily rule is to take every trade
and dissect it. This will provide a road map for success by knowing where
you have been and what mistakes you can learn from and which to avoid.
..................................
Mark Cook and I have been sharing our daily trading statements with each
other for the last 20 months. During this time we have been comparing not
only our own trading styles and execution methods, but even more
importantly,
the ways that professional fulltime traders have been able to structure
their
trading environment to enable them to achieve CONSISTENT success.
The joint, real-time trading workshop that we are giving is based on our
collaborative efforts to extract the best material from our combined 40
years of FULL-TIME trading experience. Mark will also be revealing his
bond trade setup that he publishes on his daily advisory service. He has
achieved an astounding 85% published win/loss ratio with this trade over
the last 2 years.
For more information on material covered in the workshops, go to:
http://www.mrci.com/lbr/daytrade/
Space is restricted and the September Ft. Lauderdale workshop at which
Marty Schwartz will also be speaking, has only 7 spots left. If you have
any further questions on the seminar material, Mark will be available by
phone between 5 - 7 PM, EST, at: 330-484-0331. Weekdays through Sept. 10.
He will be happy to twist your arm if you are sitting on the fence!
For registration information, contact Laura at LBRGroup Inc., 888-LIMITDN.
Trade smart and prosper!
Best Wishes, Linda Raschke
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