As far as I am concerned, it is definitely true that the older you get the faster time seems to pass. I just looked at the calendar and suddenly realized that 2009 is almost half gone. That observation gave me pause to look back on the year so far. It has been quite a year for trading. The Dow 30 Industrials fell almost 2600 points from the first of the year until the March low and then climbed back just over 2400 points to the highs in the first third of this month. Similar violent action occurred on the S&P 500 and the Nasdaq Composite. The S&P fell from a January high of 943.85 to a March low of 666.79 only to rebound to a new high of 956.23 on June 11th. Though volatility as measured by the VIX failed to attain the all time heights achieved in late 2008, they remained uncharacteristically high as the markets fell to the March lows. In short, this year has seen a pretty wild market; one that resulted in very substantial losses for many from January to March.
During that descent, I attempted to trade very cautiously, only to become more aggressive during the run-up. Most recently I pulled back as the market looked like it was turning over. In the alert services I edited, I probably have made fewer trades than in other years. As I write this article on Tuesday, June 23rd, I checked the Trade Tables to see what my percentage of winners has been for trades closed in 2009. I was pleasantly surprised to see that the overall percentage of winners in all the services I edit combined (Option Trader, Trend Trader, and $10 Trader) was 82.8%. Broken down, $10 Trader achieved a winning percentage of closed trades of 86%, Trend Trader 83%, and Option Trader 75%. Those statistics were particularly interesting because both Trend Trader and $10 Trader are essentially designed as bullish services in which I am illustrating situations where I open a position by buying a stock and closing the position by selling. Option Trader uses a variety of strategies designed to attempt to profit on bearish and neutral trades as well as bullish trades.
In the last six months, I was also very fortunate to have my new book, "Smart Investors Money Machine," published and my new DVD "Trading for Keeps" released. I discussed the book in some detail in the article last week. I am really pleased by the DVD that was produced by traderslibrary.com and includes subjects like trend line use, principles of disciplined trading, how to let profits run, the use of collars and protective puts, and the effective use of stop losses. All of those are subjects with which I have dealt in many private coaching sessions as well as in my own trading.
One of the sad things I have noted over the past 6 months is the number of folks who have contacted me regarding coaching sessions who have lost very significant amounts of money in the most recent crash and who are looking for ways to stop the bleeding. In past articles, I have written about concepts that I consider to be critical to successful trading. They include things like money management, establishing exit strategies before entering positions, recognizing reward to risk potential, educating themselves about trading, and having a trading plan in place. Most of those who called about coaching because they had suffered severe losses were unaware of those concepts or failed to put them into practice. Whether they signed on for coaching or not, I encouraged the callers to learn and apply those concepts. In trading and investing ready, fire, aim is definitely not the way to go.
No one, including me, knows what the next six months will bring in the markets. As is often said, we can only trade the right hand side of the chart, but to do so successfully, we must prepare ourselves and we must continue our trading education. As all too many learned in the disastrous market fall from October 2007 until the March low this year, buy and ignore is simply a dangerous strategy. I wish you all good trading and hasten to add that the "luckiest" traders are generally those who work the hardest at learning the craft.
by Bill Kraft, Editor
Copyright 2009, Makin' Hay, Inc.
All Rights Reserved
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