Trade to Win - Proven Strategies to Make Money

c02 JWBT016-Busby September 30, 2008 13:33 Printer: TBD

Time Is Money 33

uniformly. Then the “Grim Reaper” stepped onto the stage and the trend

stopped. The series of short up and down bars on the far right of the chart

were formed during the “Grim Reaper” time frame.

If I am in a trade and the “Grim Reaper” is about to begin, I exit the

trade and move to the sidelines. It is very rare, indeed, for me to execute a

trade or take on a position during this time. I just do not do it because it is

so treacherous. Bond pits are about to close, and for some reason this just

spooks the market.

One of the biggest mistakes that many traders make is overtrading.

Overtrading is the Achilles heel of electronic exchanges. Traders feel that if

they are “traders,” they must continuously be getting into and out of market

positions. Such a view leads to overtrading and losing money. To be a con-

sistently profitable trader, it is necessary to select trading times with care.

Only take those trades when market conditions are ideal for the particular

strategy being executed. One of the easiest ways to make more money is

to stop overtrading.

SPECIAL TIMES TO WATCH

In addition to trade zones, there are some other special times when I en-

joy trading. Economic news moves prices. If consumer confidence is ex-

ceptionally weak or strong, if consumer prices are rising uncontrollably,

if home sales are in the dumps, the financial markets will likely respond.

Therefore, I often trade news. I advise novices to stay clear when news

reports are scheduled because prices are too unpredictable. However, I

have been trading for nearly three decades. I know how to execute trades

and get into and out of the market quickly. For experienced traders like

me, the news brings the chance to make some quick money. Many regu-

larly scheduled news reports are aired at 7:30AMor 9:30AMcentral time.

Sometimes the markets respond quickly and violently to news; at other

times, they only yawn sleepily. A later chapter gives some strategic advice

for trading news.

The mother of all news events is the Fed. When the Federal Reserve

speaks, the markets listen and prices move. At DTI, we love the Fed and

use it to make money. Again, strategic advice for trading the Fed is given

in Chapter 8.

KNOW WHEN TO CASH OUT

As the Kenny Rogers classic goes, “Know when to hold ‘em and know when

to fold ‘em.” Good traders know when to get into the market and when

to get out. If a winning position is held too long, it can become a loser.