Trading for a Living Is All About Trade Entries
Let’s face it, if you can’t enter a trade without a major drawdown, trading for a living is not possible. And despite the fact that there are many different types of trading rules, all trading rules have one thing in common: they all share the same common goal of entering a position, and having it quickly move into profitable territory.
If you can’t accomplish this one simple task, Trading for a Living is not possible. With that in mind, let’s talk about trading rules and how we can apply them to meet this goal. First, let’s discuss the difference between trading rules and a trading strategy. Some trading strategy examples might be a swing strategy, a scalping strategy or spread strategy. However, none of these examples address how you will get into the position without drawing down. For that, we need Trading Rules. Trading Rules say: “I will take this long position but will not stay in the trade if price breeches a certain level.” This may sound simple, but it’s not.
Most novice traders with the goal of Trading for a Living fall into the same trap. It starts when they set trading rules to exit a trade if the price goes below a certain level. However, when the price goes below this level, they convince themselves to stay in the trade until price recovers. This process can be emotionally draining and usually leads to adding to losing positions to make the average price look better (known as dollar cost averaging).
I’m not going to lie, I did this for years! Most of the desire to do this comes from your personality. There is a way around it and it involves actually learning how to trade. I don’t mean understanding support and resistance and I am not talking about fundamentals either. I am talking about identifying real support and resistance levels using Inter-Market Analysis. This process is not that difficult and it involves a mathematical approach to trading which identifies levels where professionals took large positions.
We do this by analyzing the price of an instrument, not by itself, but with the most common hedge that a large trading firm might use to hedge that particular trade. When you see money flowing into an asset, while you see simultaneous hedging activity, it will change your trading forever.
Trading for a Living will not seem so far out of reach. If you haven’t guessed it yet, I’m a guy who has a unique ability to explain complicated things in an easy to understand way. I’ve always been great with words and enjoyed teaching people. Then I discovered my passion for trading. Having a passion for teaching prior to having a passion for trading is what makes me such a unique trading educator.
If you’ve thought about Trading for a Living, but lacked the right set of Trading Rules, follow the links in this sentence to learn more about Inter-Market Analysis or call me at the number below.
Make it a Profitable Day!
Shawn Cooke
Email:insidethetrade@gmail.com
Ph: 410-489-6747