Next week we’ll be releasing the new The Disciplined Trader “Mastery Kit”, Your Millionaire Mindset In A Box…

… and I wanted to give our blog readers a chance to WIN the first TWO COPIES of the Mastery Kit that come off the press!

OK…Since journaling your trades and your emotions are such a critical part of BEING the successful, disciplined trader, and one of the main 5 areas covered in detail in the Mastery Kit, I’d like you to answer one of the two following questions…

1. IF YOU ARE NOW JOURNALING CONSISTENTLY:
How has journaling helped me to be a more successful trader? (be as specific as you can)

2. IF YOU ARE NOT YET JOURNALING CONSISTENTLY:
How will journaling help me in my desire to become the long-term successful disciplined trader? (again, be as specific as you can).

One Winner will be chosen from the answers to each of the questions, based on honesty, originality, and other factors. Bottom line… we’ll choose the winners from answers that strike us in some way!

By taking a chance, and contributing your answer to one of the above questions, you’ll be helping other traders to be honest with themselves, as well as encourage them to really take journaling seriously.

It’s all good!

So don’t be shy… let’s hear from you! You could EASILY win one of the first “The Disciplined Trader Mastery Kits”!  Just take a few minutes, click on the Comment Link below and write your answer!

PS: The Mastery Kit is a COMPLETE training, containing 12 Asset-Packed CDs, a leather journal and more. If you’re ready to not miss those profitable trades… avoid the ‘blowout’ trades… and trade with confidence and success… then you’re ready to BE The Disciplined Trader!

So take a shot at answering one of the above two questions by clicking on the Comments Link below…you could be a winner!

Are you a technical trader using long term fundamentals or looking to introduce a fundamental element into your trade plan? Then this week’s 4-Minute Drill is for you. In this week’s video I talk about the dos and don’ts of fundamental trading.

Do you use fundamentals in your trade plan? Tell us how… just click the comment link below.

Today we’re talking about that ugly word…GREED. You know that feeling that an entire market move belongs to you and you alone.  I’ll talk about how to avoid this feeling and I’ll give you an example right out of my own trading plan in this week’s 4-Minute Drill for Traders.

How do you deal with feelings of greed?  Share you thoughts… just click the comment link below.

The Forum is an important feature of The Disciplined Trader Training & Support Program. It is the place where our students can share training experiences with others and ask questions to our Expert Advisors.  By limiting discussions to “all things trading discipline”, we can help our students stay focused on getting results.

In this section of the newsletter we’ll pull one pertinent question asked by one of our students on the forum and give you our expert response, so YOU can benefit from what our students are learning.

This week’s expert is Vadym Graifer, who is know as an expert Tape Reader (it’s an old-school art) … but we know him as an expert in Trading Plans …

“Vad” as I know him (and you will, too), is the author of several trading books, including “The Master Profit Plan”, on the topic of Trading Plans…  http://www.realitytrader.com/masterplan

I own it and you may want to, as well.

Take a look at this week’s question from our student and the response from Vad:

The Question:

Hi Vad,

I have been paper trading 6 months followed by live trading micro account for 6 months now I lose, I win using the alerts sent to me (which I mostly double-check). All in all I lose. I know that I need to place, more high probability winning trades. Now, for trading plan’s purpose, how can I determine a realistic ROI. I am not too happy with one of the methods I use, the other one is ok but comes with higher risks. How do I determine ROI?

Thanks in advance,

Helene

The Response:

Helene,

I don’t think the very concept of ROI can be applied to trading. It was intended as the name implies for investment, and fits naturally in investment concept – you put $1,000 in, you get $100 back in a X months, your ROI is 10%. Now, how do you apply that to trading where you can turn your capital over a few times in a single day?

Extreme example but it illustrates the idea: I know a guy who trades for a living, believe it or not, with merely $5K. He has 1:20 margin from his broker, so his intraday buying power is 100K; he is extremely experienced and controls his risk tightly; his day consists of a few scalps and he averages about $300 a day after expenses. He extracts about 60-65K a year from the market. Whatever his results look like form the point of view of your expectations and objectives, think of how ridiculous they look if you try to apply ROI concept to it: is it 1200%?? (60/5 x 100).

I would approach it differently. Formulate your objectives: what is it you expect from trading? Is it supplementary income, making a living, replacing some other revenue stream? How much do you need to fulfill those expectations? Now, evaluate every system that comes your way to see what it can produce and what risk do you have to take? See, there are no averages here really – some traders make enormous numbers percentage wise while their dollar intake is modest (see example above); some make minuscule percentages while monetary gains are more impressive (imagine someone with much bigger capital and position size, going for bigger moves); then some just lose money.

IMO, don’t start with this kind of projecting. Learn to make money first. Then learn to scale it up by increasing your position size, or changing parameters of the trade (time frame, risk/reward, partialing etc). Increasing your profits will be a good problem to have, and there will be quite a few ways to do it – they will become obvious to you almost by default when you arrive at that point.

Did Vad’s Response hit home for you?  Can you apply his advice?  Let us know… comment below!

As with any balanced force… ying and yang… pleasure and pain… etc., it’s OPPORTUNITY and DANGER that confronts the trader in extremely volatile times.

Since our purpose here at The Disciplined Trader Blog is to keep you mentally and emotionally strong in your trading, I thought I’d offer 4 ‘structural’ tips to stay focused to run your trading plan.

“Structural” tips are things that you can do mechanically in your trading to better keep you on the side of calm, cool and collected, as opposed to “inner mind” tips that you should be engaged in all the time anyway… training your subconscious mind to hold the values of The Disciplined Trader (which is a big part of our TDT Training and Support Program, where registration just closed).

OK.. here are some structural tips from ME… a teacher and trader who has been trading for over 30 years and have navigated through 6 or 7 markets in that span as we are experiencing now.

TIP 1 AND TIP 2

These two tips go together. Engage in fewer positions and widen your stops.

Highly volatile markets have a great tendency to run through stops, interday, and then continue in the dominant direction. Witness the 280 point rally in the Dow off the bottom which occurred about 2/3rds into the trading day. Many ‘profit protection’ stops were triggered in that reactionary move, taking out (with short profits, likely) all those who entered the day short… only to see big money left on the table as them market made new lows into the close and traded 300 lower in the evening session. It’s tough to get back in once you’re out. If you had a smaller position, you could give these wildly volatile markets more breathing room and you’d still be in. The Big question is always, when is a reactionary move really the start of a reversal? That’s for you and your trading plan to decide. Have this answer in place before you enter the trade. You may want to consider a special “volatile situation” section of your trading plan to guide you through times like we are seeing currently. By taking on fewer positions, and widening your stops to let the market gyrate, has, for me, proven to be a good strategy. I stay in control.

TIP 3

DECIDE: Faster profits or Bigger Profits?

In highly volatile markets profits come (and go) quickly.. sometimes within seconds. Also, volatile markets mostly result in big overall moves (big profit opportunities). I have found that if you trade to take advantage of both types of opportunities, you will not be successful. Why? Because trading for short term profits (interday) and trading for longer term profits (day to day in the case of highly volatile markets) rely on two different philosophies. You must choose. If you choose the quick-profit interday route, your greedy-mind may suggest that you ‘hold on’ just a bit longer to that ‘quick trade’ to take advantage of what you see a big wave down (or up) coming. That’s a mistake. Follow your plan… whichever it is… and don’t hop from one type of trading to another.

TIP 4

If you have been trading for less than 3 years, consider standing aside.

It took me 3 ‘high-volatile-market’ experiences over my first 15 years of trading to finally come to grips with the fact that ‘everything will be ok’ when it’s over. In the period we are in RIGHT NOW, in the equities markets, your mind can hop from strong snap-back ideas to the end of the modern world as we know it. Whatever the ‘grand’ picture is, it won’t happen overnight. You’ll have time to adjust to a catastrophe… that’s what the best traders do… they adjust. Consider standing aside and ‘watching the show’, from a non-emotional standpoint. What you will learn about human nature (demonstrated by those who have money at risk) will serve you greatly when the next highly volatile situation occurs… and you’ll know ‘this, too, shall pass’ and you’ll enter with greater control. Standing aside IS taking a position… a neutral one… and often that’s the best place to be for a less experienced trader.

Hope these tips help you!

I’d love to hear your comments ... just click the COMMENT link below this post and let’s hear from YOU!

I answer another pressing question from one of our subscribers in this week’s 4-Minute Drill for Traders.

Mark asks: “I sometimes find myself not respecting the money in my account. I know I am not alone with this but if I had greater respect for my money I don’t believe I would trade foolishly. Maybe it is the speed and realtive ease a winning trade can put a bigger number on my balance screen. Or conversely take it away. I feel I earn the money with my job but take a different attitude with trading. It’s stupid.”

Watch the video to hear my response!

If you’d like to submit a question for me to cover in the next 4-Minute Drill for Traders visit out blog post at:
http://www.thedisciplinedtraderblog.com/mind-issues/newsletter/newsletter-contest-what-would-you-like-to-see-norman-cover-in-his-next-4-minute-drill-for-traders

Mark won a stylish The Disciplined Trader baseball cap for having his question chosen from the list of questions posted here on the blog. You could be next!

Share your thoughts below.  Don’t be shy!

Just hit the COMMENT link!

Forget Trading Gurus… Your Experiences Are The ONLY Ones That Count. I’ll explain why in this week’s 4 Minute Drill for Traders.

Is anyone out there? I can’t wait to hear what you think of this week’s 4 Minute Drill for Traders.

Just hit the COMMENT link below!

“Need Help with Your Trading? Talk to yourself.” I’ll explain why you need to talk to yourself and trust your tested trading system in this week’s 4 minute drill for traders.

I get a thrill when I hear from you! Let me know what’s on your mind and what you think of this week’s 4 Minute Drill for Traders.

Just hit the COMMENT link below!

“Manage Your Workspace Correctly And Good Things Happen!” Any experienced trader will tell you that being successful is, in large part, a matter of overcoming all the hurdles that get in your way. I’ll explain what those main hurdles are and how to overcome them in this week’s 4 Minute Drill for Traders.

Your comments were great last week! Keep ‘em coming. Let me know what you think of this week’s video.

Just hit the COMMENT link below!

“The Force is Within You, Luke. It’s Not The Trading System.” There are only a handful of people who give a darn about supplying traders with a way to be more disciplined and focused in their trading. I explain more in this week’s 4 minute drill for traders.

I would love to hear from you. Your comments are what keep me going every week!

Let me know what you think. Just hit the COMMENT link!