Friday, September 7, 2007

The Trend Is Your Friend?

Everyone has heard The Trend is Your Friend. If you follow the trend you can make money. It doesnt matter if the trend is up or down, if you follow it, you will make money.

This is easier said than followed. If youre like me, you spend a great deal of time poring over charts and graphs trying to find a stock that is in a trend. Ive used candle sticks, moving averages, and just about every other charting trick to try and identify where the trend is going. The secret is to try and find the trend when it is starting and follow it until it changes.

It looks so easy when you read about it in the book, but boy is it ever so hard to actually implement. Ive even tried to design my own trading strategy using technical analysis. It is so easy with the charting software; you can do some back testing to try out your great theory that is going to set the world on its edge. I confess, one of the tricks Ive tried was using the 10 day moving average crossing the 30 day moving average as a turning point. Sometimes it works, sometimes it dont.

One thing that Ive discovered is that what works for one person does not necessarily work for another. It comes down to temperament and discipline more than anything else. If you can follow a system, remained disciplined when everything is moving so fast, and have the temperament to face the losses that come your way, you can be successful trading in the stock market.

There are dozens of systems out there, some are better than others. You have to take the responsibility to research how the system works, learn the ins and outs of it. And then, you have to face the question, do I have what it takes to trade this way. You have to be honest with yourself, because if you arent, you will lose your shirt.

Even the best laid plans of mice and men sometimes go awry. You have the perfect stock. The sector is blasting out of orbit. You find the options priced perfectly. You buy a group of call options and wham, the market tanks. Your options expire worthlessly.

Its happen to me more times than I care to remember. If it hasnt happened to you yet, it will, its only a matter of time. It is the nature of the beast that we are trying to tame.

There is just something about day trading that is so exciting. It just gets into your blood. Some days you cant wait for the market to open, so you can go forth and do battle with market. Other days, you just need to quit while youre ahead.

But if you have a couple of bad trades, it can really sour you on the whole trading game. This is when you just have to step back and take a look at it. Maybe, you just need to get away for a day or two. Relax, do something different. Your unconscious mind will work on the problem and when you come back, you will have a better outlook and can spot the trading opportunities faster than they can come at you.

Ive learned the hard way, if I try and stay in the market when things are going bad, it just gets worse. You need to step back and relax, because tomorrow is another day. If you still have your trading capital you can keep in the game. If you lose all of your trading capital because you are being stubborn and not recognizing that things arent working out, then it is your fault.

John Marston is a self taught trader who has traded online for over 15 years from his home in California. Here is the exclusive Forex Market Trading System that John uses; you can also go to his websites at and which have a wealth of information about various trading strategies.