High Heeled Traders

Entering The Water

January 14, 2011


Jump in! photo by Noel Abejero

I had a hard time deciding what to write after the last article. I am considering a logical sequence to the topics but somewhat didn’t have creative juices flowing or that I didn’t felt enthusiastic at all about any topic. Today I realized that it’s because I am trying to do so many things, read with my children, teach my son to write, bring them to the park, learning a new system at work, chores around the house,  analysing a trade, planning a menu, reading market news, playdates for the kids,  going outdoors while it’s summer,  catching up with family and friends overseas in Facebook, losing weight, shopping for fresh food etc…..! (Also known as Life 🙂 )

Anyway, when I started the blog, I meant to share what I learned to my friends interested to know about trading. It is a responsibility I do not take lightly and I have been blessed that writing it reinforces what I have learned . Foremost though, I want the blog to be based on the success or progression I feel I am having in Trading. Now considering that we are cruising through the new year and it’s already middle of January, I was fidgety that I haven’t been trading! Yes I watch the markets but I haven’t done any trade! Thankfully, one of the latest articles I wrote about was Self-Mastery so I didn’t just trade ( I have self-control woooo hooooo) 🙂

I’m glad it was the VERY first one I wrote for the year as it helped me when I was analysing a potential opportunity. The opportunity looks good however I did not trade it. I guess coming from holidays, I just did not feel good about my trading preparation overall. At the last article, Oceans of Opportunities, I said a trader doesn’t have to explain what is going on in the markets , you just have to know how to ride the waves. First order then in the “How” is to “be prepared” before you enter the water…

These are some of the things I thought I should sort out first:

1) Objectives — Sure I have Objectives long before my trading, but thanks to the break during the holidays, it got me thinking of what I want in my life. I kind of just plunged into Trading because of some need (to earn income to replace job and focus on role as mother to my 3 kids), however I find that my energy to do it is low sometimes. (with 3 kids it is actually low sometimes … everyday). Anyway, I discovered new, exciting ideas that helps to boost my energy and “Self-Mastery” in Trading. Thus, my Life Goals are somewhat different now, here are some of mine:

a) Happiness by fulfilling God’s Plan for me
It was said, “money can’t buy you happiness”, then someone said “you just don’t know where to shop”… well I know my Happiness . Do you know yours? I realized that Trading led me to know my Happiness… it also changed where I shopped 🙂

b) Trading Success based on Self-Mastery in every Trade
i) Do Trading Tasks Daily

ii) Follow Trading System

iii) Performance Review Weekly, Monthly

c) Being Organized to fulfil the above.
i) Schedule – this change as situation change e.g. start of school
ii) Healthy Diet
iii) Note taking and filing

As you begin to Trade, it is very important to know your Goals. After all, if you don’t know where you want to end up, how can you get there? Take the time to reflect and write them down. Dr. Van Tharp’s book “Trade Your Way to Financial Freedom” has a comprehensive section on Objectives.

2) Funds position
– I suffered some losses on my trades before the break so considering the many projects I have lined up (also known as Life), I want to make sure that I am able to preserve my capital and take only Low-Risk High Reward trades. Based on these Objectives I would need different strategies, systems and products. For example:

a) Preserve Funds – I currently hold Oil stocks by Santos (STO)
i) Strategy : Hold Stock, write Call Option to receive income from premium payments
ii) Concept : Band Trading
iii) Stock : STO an oil stock which I have observed to fit the above concept
iv) Timeframe – 1 to 2 months expiry on Option

b) Low-Risk High Reward — that fit Risk I can afford
i) Strategy : Buying Option to take more opportunities/higher frequency trading
ii) Concept : Trend Following
iii) Stock : BHP a mining / commodities stock which fits above concept
iv) Timeframe – 1 to 2 weeks to expiry of Option

How about you? What is your Funds position? I strongly recommend that your Funds is separate to any Savings or Expense account. Though to keep yourself motivated, I think it is alright to use some profits to give yourself a special treat 🙂

Also learning to trade is also like “WINDOW SHOPPING” — it’s free to look! How many shoes do you try and fit before you buy 1 pair? I’d say I’ve never bought the very first shoe I ever saw when out shopping.   When I already have something in mind,  I survey the display for the shoes available to see the trend.  Right now, gladiator or military-inspired shoes are popular, so are peeptoes and wedges.  I am not too keen on wedges and glad to try gladiator shoes.  However,  some that really show attitude have chunky straps that make my legs look like a tree trunk.   I go and try something else.  I could visit 3 stores and fit 7 shoes and still come out empty-handed, it’s time well spent if nothing seems right.

So even if you are still building up your fund for trading, you can start gathering knowledge, analyzing trades, study behavior of a stock, study your behaviour and feelings. If it helps to make it bit more “realistic” – use a substitute for money to be aware of your feelings about Profits and Losses – —  something you will miss. Like coffee or chocolate 🙁

3) Trading Knowledge —  preparing to trade I have to review and familiarize myself of my Trading Tasks, System and Daily Procedure. For readers – this is a big topic and would differ to each Trader. I mentioned above examples of Strategy and Trading Concepts that form part of your System. Trading Tasks and Daily Procedure will help you run your business correctly – things you should know to learn “how to ride the waves”. I will discuss them in the next articles. (So Help Me God! 🙂 )

If you are feeling a little bit overwhelmed, (or you are a bit worried – very normal and that’s OK) just remember “The Little Engine That Could”…. I think I can, I think I can, I think I can…. 

The Little Engine That Could
(Pulled this Children’s story from Wikipedia in a minute – don’t we live in amazing times!)
A little railroad engine was employed about a station yard for such work as it was built for, pulling a few cars on and off the switches. One morning it was waiting for the next call when a long train of freight-cars asked a large engine in the roundhouse to take it over the hill “I can’t; that is too much a pull for me,” said the great engine built for hard work. Then the train asked another engine, and another, only to hear excuses and be refused. In desperation, the train asked the little switch engine to draw it up the grade and down on the other side. “I think I can,” puffed the little locomotive, and put itself in front of the great heavy train. As it went on the little engine kept bravely puffing faster and faster, “I think I can, I think I can, I think I can.”
As it neared the top of the grade, which had so discouraged the larger engines, it went more slowly. However, it still kept saying, “I–think–I–can, I–think–I–can.” It reached the top by drawing on bravery and then went on down the grade, congratulating itself by saying, “I thought I could, I thought I could.”

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