Timing Market Turns - 01/18/2006

Market Timing for Traders and Investors


I was asked about books and trading by a young chap at the Elite Trader forum where I post a journal of my observations, if time allows.

Here is my response to him today below and at http://www.elitetrader.com/vb/showthread.php?s=&postid=955600#post955600


Quote from bgp:

W.B. I AM WORKING ON TRADING THE E-MINI S&P ON A 5 MIN. AND 60MIN. CHART. I HAVE ALWAYS BEEN INTERESTED IN TIMING . YOUR TIMING IS VERY ACCURATE .

BARRY
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Hello bgp

You mentioned books before.
I believe I have mentioned some in a previous post here. I can't find the post with a speedy look through.

Edwards and Magee book - learn the technical language and tool basics

John Murphy's books

Bill Williams book on Chaos

Linda Raschke's book

Neely on Elliott Wave for how markets are structured - not for trading EW ( Prechter's book is ok)

Futures Magazine

Active Trader Magazine

Stocks & Commodities magazine

Market Technician Association's Journal

The goal of every trader and investor should be to find something that yields winning trades at least 50% of the time in real live trading. Back testing is helpful, but it's as if you were learning to milk a Guernsey by reading a manual. Your pail is still empty. And, your knowledge is still untested.

That 'something' may indeed work in real time, but it may not work for you and your mental state/personality/self discipline/self confidence etc. This is a bloody business, not for the faint, the sheepish or the underfunded.

Before you master technical analysis, you must become proficient at, and then, a master of "risk management and bet size". Knowing all the TA blarney won't make you successful at trading. Only risk management will keep you "alive" as a trader or as an investor.

Only 3-5% of traders survive - some of those make a living at it. They are fully capitalized, know how to bet, know when to not trade, know how to take profits, and know how to take losses.

Off hand, I'd say this is a deadly pitched battle between the smart money and their band of green clad hitmen versus the rest of the universe. The smart money wins 90% of their bets due to staying power, the size of the bets and hedging power.

They accept small percentage gifts from the market every day. Would you take a profit if the emini moved up half of a dollar? They do every day, dozens of times with 50 to 600 contracts.

It's not easy and most of the time it isn't fun. This is a solo business, in an amoral industry where nobody cares about how you are doing. That's the reality. Few people will know whether you blow up or make lots of money - unless you write a book about how you lost or made money.

I know many good traders. Not one trades like another, even if they use the same "system". So, you must venture out on your own and expect to stay that way, even if you make friends in places like this forum.

You should also incorporate yourself, do your own bookkeeping and tax submissions, and learn the tax focus on traders.

To my mind, trading is gambling. Period. There's a much marketed slogan here in NV, "What happens in Vegas, stays in Vegas!" Similarly in trading and in Vegas, the real facts are more often this: The money you bring to Vegas and the money you bring to the market, stay in the market.

Broke is normal for Vegas visitors leaving, and broke is normal for traders, eventually.

That is why I always try to end my posts with

Good trading and God bless

W. B. Busin

http://www.elitetrader.com/vb/showthread.php?s=&postid=955600#post955600