Successful traders realize that as soon as you put in a stop loss order, there's a target on your back. The markets always trade towards the stops and the best traders are always there to take the other side of your stop and get the profit you thought you were going to get. This is how the market shakes out the weak longs and shorts. The best traders understand that there is always a sharp move in the opposite direction before the real move gets under way. So you have to know how and where to use stops to avoid being grist for the mill.
Successful traders understand that what everyone knows is not worth knowing. Consequently they are just as likely to fade popular chart formations and all the well known studies as they are to go with them. After all, popular formations and studies get everyone going in the same direction and then as they panic to get out, the best traders have already taken the other side.
The best swing traders know that once you get into the trade at the right price and the market moves in your direction....."Leave it alone." Trying to trade in and out of a swing trade only reduces your profit if not totally eliminating it.
Top traders know how and when to reverse their position when they are wrong. Since the odds are that many other people are caught the wrong way, a quick reversal of your position can be extremely profitable and run a long way.
The best day traders know how to ensure they have the fewest number of contracts on when the market reverses. The idea is to put on your maximum number of contracts as stops are hit and then feed them out a few at a time as the market quickly runs the other way. Then reverse the procedure when the next group of stops are hit.
Our best traders understand that it is better to make 10 ticks with a 95% certainty than try to make 70 ticks with a 10% certainty. This type of thinking keeps them from over-trading and substantially reduces liquidity costs.
The best traders know how to pick off stops and go the other way. This is a critical tool in a traders arsenal. Its very profitable, quick and low risk. You can learn how to do this in our morning "Currencies, Coffee and Croissants" group where I trade "live" with members explaining each trade as we go.
A wise person once said that "Prediction is very difficult, especially when it pertains to the future." Consequently, top traders don't let their opinions get in the way of seeing the price action, which is what ultimately determines direction.
We hope you've found the above useful. It was gathered from many of our 7300 followers on linkedin plus from our students around the world from the U.S to Canada to the UK to India. And some of it is from my 30 years of trading at the Chicago Board of Trade and later on line.
Like athletes, traders need a coach to get them to the next level and keep them on track
Jeff Wecker aka The Trading Coach CEO Black Belt Trading Ltd.