From my Disciplined Mentor:
The following observation applies to traders of ALL
markets... Stocks, FOREX, commodities, options, and
bond traders...
Nothing replaces experience in trading.
Over the course of experience, you make all your mistakes,
and hopefully learn from them without repeating them
too many times.
You have dramatic wins that have you yelping, "Why
haven't I done this all my life!"..
and dramatic losses, having you mutter, "This whole
trading thing...is it really for me?"
Over the years, you learn not to take the highs so elatedly
and the lows so devastatingly... but more than that, you
learn that you need a trading plan that avoids, the highs
and lows and gives you results you can count on.
Here are 3 thoughts to ponder... all of which... I hope...
will give you sense of the truly advantageous place, you are,
RIGHT NOW, in your trading... and how to profit from it.
THOUGHT ONE...
"Be aware of the general trading "surroundings" and
employ your trading resources to take advantage of
where you are."
You are in a safer trading environment if you go with
the flow.
As traders, we learn to look at longer time-frame
charts for the underlying current of the market and
then take action using shorter time-frame charts...
and make our moves "with the flow".
I'm mostly a position trader and I'm always consulting
the monthlies and weeklies to measure flow and then
use the daily formations to act.
A day trader may take the 15-minute chart as the
flow gauge, then take action on the 5-minute chart
formation.
Now, pull back... way back.
Take a big, macro view of your surroundings.
We are in a historic place in time. We've just
experienced one of the biggest stock market
declines in history.
To the trader, this is setting up a MACRO-opportunity.
But HOW do you take advantage?
When the technicals have confirmed that the
move down is over and the recovery is beginning,
those who go with that flow, will make "dream" money,
some enough to take care of their families for generations.
That's the kind of "flow" we are talking about in
a recovery of this size.
I'm not going to go through each "market recovery
after a major drop" , but suffice it to say, those who went with the
flow, in each case, were WELL rewarded.
Those who fought the flow suffered.
The new macro-flow is about to be upon us... if
it isn't already.
Will YOU be ready?
WARNING: You're going to need to be disciplined.
Tomorrow, I want to share with you a brief statistical
history of major market turnarounds and specific thoughts
how to apply that history.
Observation #2 (of the 3 I'll be sharing).
THOUGHT 2
"History repeats itself. There is little, if anything,
new in trading action that we haven't seen before."
The trader who's long term goal is fortune building
looks for a major moment in time and sees how the
market acted in a similar time and uses that history
as a macro-guide.
With this in mind, I did some homework.
My form of "doing homework" in this case was
consulting with a friend and well-known W.D. Gann
Analysis expert about the situation.
For those who don't know, Gann Analysis is all about
studying the history of technical market movement.
One of it's uses is to look back and try to find a market
situation with the same "DNA" as the current market
conditions.
Here are a few things I found with respect to our
current stock market situation:
ONE:
There are 5 market environments in the last 120 years
that are exhibiting similar DNA to the our current
market conditions...1908, 1932, 1974, 1987, and 2002.
1974 is the closest "DNA", like a brother market
(and I don't mean "Oh, brother!" :) ). The others are
half-brothers or first cousins, but their in our family.
Of the 131 "first legs" up in a bull market in history, the
above 5 markets are the 5 greatest first legs in history when
you measure velocity of the advance.
Our current market is up about 38% in 2 months. Only
the 1934 advance had a higher velocity.
Looking at it another way, our current market reflects
a .60% per day advance. The 1974 market is the closest
with a .59% per day advance.
TWO:
"The Greater The Bear, The Greater The Bull"
If you care to look back the at the above market time-
frames, you'll see that they all reflect hugely oversold
markets that resulted in violent rallies.
The lingering question is ... Are we now experiencing
the first leg up in a bull markets, or a big rally in
an even bigger bear market to come?
Time will tell... although in doing further "DNA"
analysis, it's becoming more and more likely that
we ARE experiencing the first leg of a bull market.
I can't go through those supportive figures here, but
we are in, in MY opinion, the 80 percentile range that
we are experiencing the first leg up.
But you may want to wait for confirmation... and
that, of course, will take patience.
THREE:
If we truly are in the first leg of a bull market, then
compared to the other markets of similar DNA, we
are within days, weeks, or a month or two of the
top of this rally, time-wise and distance-wise.
As the market matures, the risk gets smaller as
we follow the new trend. And the great thing
is that the moves that are about to come could be
VERY profitable for us as traders.
But be EXTREMELY careful (more patience
involved)
In looking further at history (the markets with
our current DNA), we can expect with high
probability that when this market corrects from
the first leg up, it will be a DEEP correction.
I will not break to new lows, but know that the
average percentage correction of the 5 years
with like-DNA was $62%.
(interestingly enough... a Fibonacci number!)
FOUR
For we traders, the up move after the correction is
where our big money should be made.
Again, paying attention to the like-DNA markets
of the past, the advance AFTER the correction
from the first leg is not only big, it's VERY big,
and very predictable (of course, if we're right
about the DNA match).
So, one high probability, fortune-building
plan, may be to start by WATCHING.
Watch this first up-let high be made,
Watch the correction of the first leg up. When
it gets to 32% (first Fibonacci retracement number)
keep your eyes peeled for a solid turnaround
signal that the markets done correcting.
It likely won't happen there, based on our like-DNA
analysis, so keep your stops tight if you start to
move in at that level (which I'd do slowly).
Watch for the correction to complete between
the 50% and 70% level, as that's what the like-DNA
markets would be suggesting.
Same thing there... tight stops. You see, at these
low levels, you can be wrong a few times getting
in and make up for it big time when the up move
after the first-leg correction is upon us.
If new lows are made and the first-let up move
was really just a bear trap... all bets are off.
So, caution all the way in this process, but know
that we are with the probabilities and that's all
a trader can ask.
KNOWING ALL THIS, MOST TRADERS WILL FAIL
All the "homework" and great analysis does no
good...in fact does harm... if you are not ice-in-the-
veins disciplined in following your trading plan.
Have a great trading day everyone!
Now take a deep breath because I'm about to
challenge you. More specifically, I'm about to
challenge your honesty.
It's time for "Trading Observation #3"...
"Only a trader with a solid, tested trading plan
and the total discipline to execute that plan,
in all it's aspects, will be equipped to take
advantage of market opportunities and be
a consistently successful trader. All others
will fail."
Now stay with me here!
QUESTION 1:
How many times have you did a little chart
work and you just "knew" that market was
going to take off? ... only to hesitate, for
whatever reason, to pull the trigger and the
big trade slipped away... again!
Problem: You don't have a solid trading
plan you could trust and feel confident in
enough to make your move when you should
have.
Solution: Learn what a "solid" trading plan
IS... which includes a style of trader that
fits you, a heavy dose of money management
and risk management (two separate things!),
and a tight entrance and exit strategy... then
build yourself one... test it... run it lightly...
expand upon success.
QUESTION 2:
Have you ever had a nice little winning
streak, where you had 3 or 4 nice winners
in a row, only to put on that "final" trade
where you watch all your profits go down
the tubes... and more!... leaving you slapping
your head like an idiot?
Problem: You're out of control when things
go "too well". Your overconfidence gets
the better of you and you put on a trade that's
not an "A" trade because "you're on a roll",
or worse, you "load up positions" so you can
really take advantage of your "streak".
Solution: Train your mind (and I mean change
your subconscious patterns, because your
subconscious beliefs control your actions) to
stick to the "A" trades and to honor your
solid, tested trading plan. Treat your trading
like a business, not a game.
Maybe the above two "scenarios" are a little
bit too much "Tough Love" for your taste.
But unless you get honest ... and I mean
BRUTALLY HONEST with yourself and
where you are mentally and emotionally
with your trading... and equally as honest
with the "tightness" and quality of your
trading plan...
then you will NOT BE READY to take
advantage of the opportunities that will
soon be upon us in the markets.
Know This:
The volatility that is likely to accompany
the upcoming historic recovery move, will
"shake out" those without a tight trading plan
and solid discipline.
THE GOOD NEWS...
Like most traders, I struggled in my first
few years of trading... in fact, my first
5 years.
I was not willing to admit that the problem
with my trading was not the market and
that the problem was me and my lack of
discipline.
I even got to the point where I "personified"
the market ... and felt that it was "out to get
me"... even aiming for me!
Geez!
Then I did something that most traders are
not willing to do... I looked in the mirror.
I got honest with myself.
I realized that by going around thinking that
I had 5 years of trading experience and all I
needed was more "experience", I accepted
the TRUTH...
I was a trader with 1 year of experience
repeated 5 times!
I wasn't changing. I wasn't improving.
I was lying to myself!
That realization changed EVERYTHING.
Well, not the realization, but the ACTING
on the realization.
So I implore you...
We are in a time in history where the generations
after us will look back on "NOW" and speak of
it as a time investors made fortunes in one of
the greatest market recoveries in history.
Look.. you're here. You're in the game.
Play it to win!
FIRST:
Understand and appreciate moment in history
that you are in.
SECOND:
Do your homework to define how these historic
opportunities are likely to lay out.
THIRD:
Develop and tight plan of action (if you don't
know how, learn how).
FOUR:
Understand that if you are not TOTALLY disciplined
right now, you CAN be in a matter of months, if
trained properly.
YOU CAN DO THIS!
Big opportunities require big commitments.
And if I'm right... you may very will build the
fortune you have been dreaming of. The timing
is right.
PS: If it makes sense for you, know that we'll be
opening registration for our next "The Disciplined
Trader Intensive Program" very shortly. You'll get
all you'll need to tighten your trading plan and
train your mind to become the "ice-in-the-veins"
disciplined trader to run your plan. I'll keep you
posted.
My best,
Norman Hallett, CEO
Subconscious Training Corp.
Be THE DISCIPLINED TRADER
; ; 
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