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Part 1: Envying Other Day Traders
Provided
By Ultimate Trading
Systems
Day Traders Are Victims Of Success
Some day traders spend a lot of energy focusing on what other day traders
do. They become concerned that everyone else is making 30% a week on their
portfolio, that everybody else finds great trades that they miss, and
that other day traders know what they're doing while they don't.
This leads day traders to try to copy what other day traders are doing,
making those trades too late, and making trades that aren't good ideas
in the first place. They get so confused trying to keep track of so many
stocks that they don't understand what's going on with any of them.
Many day traders don't realize that a lot of what people say is at the
very least an exaggeration. Similar to envy is competitiveness. Some day
traders want to show everyone that they're the best, the smartest, the
most successful. The goal of trading isnt to play a competitive game
its to make money. Your focus should be on making money. If you're
in it for the competition, you should play some other game. The only reason
to trade is to make money, and if your mind is on other day traders, you'll
never make money.
Successful day traders ignore hype, rumors, and boasting, and use their
own knowledge and judgment to find trades that make sense and that they
have confidence in. This doesn't ignoring the current public sentiment,
because that sentiment can sometimes lead day traders to good trading
opportunities.
Successful day traders know what is reasonable to expect from trading,
and how to achieve it without worrying about what everyone else is doing.
Some day traders become victims of their own successes. They have good
luck with a certain type of commodity, for instance, that they overexpose
their portfolio to one sector.
Sectors tend to move together, and often one sector will move down as
another one moves up. Sectors are cyclical, which means that they go through
hot and cold phases. No one commodity or type of commodity is hot all
the time, and when a leading commodity in a sector gets into trouble,
it tends to bring all the rest down with it.
Heres an example: Lets say some day traders bought gold futures just
as a huge metals sector run was beginning. They bought silver and platinum
as well, and to do so closed out all of his other positions, which had
been in stocks and currencies.
The trouble was that, two days later, concerns about global terrorism
lessened, and the metals sector fell sharply. Diversification is important
even for short-term day traders. Some market moves can't be protected
against, and if all your holdings are in one or a few sectors, you become
vulnerable and exposed to excessive risk.
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www.meta-formula.com
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