When I lecture, I always ask investors what positions there are in trading. Most respond, “Long” or “Short.” A few understand that being flat is also a position. But what most don’t realize is that being flat can actually make you the most amount of money. It’s the only way to view the market at face value.
I have never met anyone who was long and felt the market was going down, or short and thought the market was going up. If they had, I would have asked why they stayed in their position if they felt the market was going against them. In today’s new world of electronic trading, cheap money, additional algorithms and funds, market moves are much more drastic. That’s why, under certain circumstances, being flat can be the best position to be in.
Whether you are new to investing or have been doing it for years, it’s time to realize that all types of investing markets have changed. This means it’s time to either reevaluate or understand what your risk appetite is.
Many people say they only invest what they are comfortable with losing. Unfortunately, many of my clients come to me after they have had a loss and realized that saying it, meaning it, and living it are very different things.
The Martin B Greenberg Trading Room at Hofstra University
How to Start a Trading Career While in College.
We have all head stories of the guy or girl who said how they made their first fortune while trading in college. I happened to know one of these traders and, like all super stars in any field, they are part of the very small group.
If you want to start your trading career while still in college, this is how I would tell my own children to do it. Continue reading →
Trading Tip #12: Had a Bad Trade? Handle it Like a Bad Golf Shot. It is Your Fault. Deal With it Quickly and Always Move Forward.
One issue that holds back most new traders, and separates the good traders from the great traders, is the ability to move forward after a bad trade. How many times have you heard someone say, “I lost money the market when it went the wrong way. I should not have listened to my broker. This guy said the stock would go up I am so pissed I listened to him, I actually meant to be long”?
As a trader, you need to own your trades. No one has a gun to your head to put on a trade. It is nobody else’s fault if you lose money. When you are out talking to your friends about a good trade, do you then give credit to someone else? No, of course not. At those times, you are the superstar. Continue reading →
Trading Tip #11 You Want to be a Trader? Do Not Paper Trade.
There seems to be many programs for paper trading. As Seen On TV “Backtest your strategies.” Almost every on-line trading system has this. Very few strategies work all the time. I address various Trading Styles in Trading Tip #9. Unless you are in a college trading competition, I think paper trading is pointless.
There are many who might not agree with me. Let’s take the past few trading days as an example. On 2/27/2013 the market was up over 200 points . If you were paper trading, you would feel a sense of pride and, I am sure, at some point you would have said to yourself “I would have nailed it today.” Now let’s back track to 2/25/2013 just a few days before when when the market got slammed. A paper trader would not feel like their guts were being ripped out. The feeling of trying to find the right place to sell. The fear, hoping that it would not bounce back in their face. The over-whelming feeling of “when is this market going to stop going down?” Continue reading →
All traders go through a bad streak now and then. The key is to keep them small and manageable. I started most days in the pit flat. My thought process was there is enough to trade during the day. Staying up all night when there was no electronic system and waiting for a call from London was just throwing the dice. Once NYMEX electronic trading system was on at night, I still felt that coming in to trade after a good night sleep was more important than what I could make staying up all night. Continue reading →
Trading Tip #9 – Trading Styles: Do Not Have Just One
In the late 1980’s, my venture into the trading world began in the Gold pit on COMEX. The first day was the Friday before Memorial Day weekend. I walked in and noticed that being in the pit with a badge on was very different from stepping into it as a clerk to give your broker his position. With my heart beating out of my chest, I made my first trade. I bought one contract (100 oz.) and sold it a dime higher. I made $10. After commission, it was about $8. I realized that, during the broker training practice sessions, everyone was a hero. Once you had real money on the line, trading was decidedly different. Continue reading →
Trading Tip #8 – Recovering After Getting Your Butt Kicked.
The day after getting your butt kicked can be one of the most important trading days of your career. I am not talking about the normal, or slightly above normal, butt kicking. I am talking about one of those days that you just got hammered for whatever reason. Maybe you were stubborn, thinking “the market has to come back.” Maybe you added to a bad position and it just kept going against you. Maybe you said, “I Hope” and she wasn’t around to hear you scream her name. Or maybe, like me, you got caught on the wrong side of a world news event driven market, and the market gapped against you. Continue reading →
Trading Tip #7 Never Trade in Pain and Know When You’re Burnt Out and Need a Day Off
This trading tip is meant more for the day traders and people who trade their own money. I understand the traders that trade for banks or funds are probably not going to be able to walk in their boss’ office and say “I’m not in the mood to trade today” or “I’m in pain today, and I think it’s better for me to stay flat for the day.” Continue reading →
Trading Tip #6 Hit the bid –Take the Offer and Just Do the Trade!!!
I was away from my desk today and I wanted to short NFLX. So, I called one of my brokers and told them to sell ( Short ) NFLX at the market and hung up the phone. NFLX was trading at 175. 25 and I waited for the email on my execution, knowing that it wouldn’t be exactly there, but I had hoped that it would be close. The email came and, yes, I was filled at 173.46. I had to laugh for a moment because it was trading $176.00 when I got the email. In response to my request for times and sales, I received an email showing me that the order was placed at 9:35, along with a note from my broker saying maybe next time I should use a limit order*. First off all, I called to place the order at 9:32. 3 minutes to fill an order in this market is an eternity. In the pit, if an order took 3 minutes to fill the clerk would have 3 as@holes and the broker would have 2 – by getting chewed out by the client. And, most likely, the broker would have to adjust the client from money out of his own pocket. Continue reading →