c02 JWBT016-Busby September 30, 2008 13:33 Printer: TBD
34 A FOUNDATION FOR SUCCESS
Prices fluctuate, and at times they fluctuate quickly. When a trade is made,
have a profit target or a time limit. When that boundary is reached, exit
the trade. Sometimes you may leave a little money on the table, but that is
okay. Making money is a good thing, and playing it safe is far better than
being foolhardy.REVIEWTiming is a critical aspect of successful trading. Execute a trade on one
day and make money. Take the same trade a few days later and lose your
shirt. Or, for a day trader, go long at 9:00AMand reap the rewards. Take
that same trade at 11:00AMand live to regret it. Prices move up and down,
and making money entails knowing when to take the trade and when to
let it go. During my many years of trading, I have identified times when my
trading strategies have the greatest odds for success.
By using a global approach to trading, I add insight to my trading de-
cisions. Trading is a 24-hour occupation—at least it can be if one wants to
trade around the clock. I do not trade every minute of the day, but I use
information from other geographical areas to enlighten my decisions. Cen-
ters of active trading follow the path of the sun as it makes its way across
the sky from east to west. When folks in the central time zone are at home
and relaxing for the evening on Sunday night, the trading pits of exchanges
in Asia are alive with activity. Monday’s trading day opens and closes in
Hong Kong before the first trader ever steps into the pit of the NYSE. Euro-
pean traders also have a chance to place their trades before most traders in
the United States make their first play. Before I trade each morning, I check
the Hang Seng in Hong Kong and the Nikkei in Tokyo. I also want to know
how exchanges in London, Paris, Germany, and Switzerland ended their
sessions. Once I have that knowledge, I have a sense of world sentiment. I
am then able to use that information and add it to my market analysis.
Over the years, I have noticed how the patterns of most traders affect
the markets. When the exchanges open for business, there is a flurry of
activity as traders take on their daily positions. The volume and volatility
continue for a couple of hours until traders head for lunch. Then there is
usually a lull, and prices stagnate for a couple of hours. Once they return
to their offices, they add to or reverse their positions and there is usually
another flurry of action followed by another lull. Then, as the session draws
to an end, volume returns as traders exit the market for the day or cut
their losses. Using this information, I trade only during certain times of the
day. I have three trade zones when volume and volatility are best for my
strategies.