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we believe that there must be a reason that the market moves. In reality, there are millions of reasons at any given moment why a market moves. The market is in constant motion, as is the information that drives our opinions. Always remember that for every buyer, there is a seller, and both have determined at that moment that their action is the correct action. In the long run, you'll find that news has very little lasting effect on the market, and ultimately the market will move in the direction of least resistance. The best lesson we can learn is to spend our time listening to the market rather than rationalizing the market. |
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Neal: Trading the Chicago markets means a system to you? |
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Doug: A trading system or method, in effect, creates an objective, consistent frame from which to make your trading decisions. Emotion and lack of discipline are the primary reasons that most traders fail. The market doesn't know us personally, nor is there a conspiracy by some secret organization to take our money away. In reality, we as humans are our own worst enemy when it comes to making informed decisions. Our emotions tend to dictate our judgment. A system will bring our actions into sync with the reality of the moment. A good system obviously will. |
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Neal: Look, why not use stop-loss orders and forget the system? |
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Doug: Stop-loss orders are designed to keep a small losing trade from becoming a large losing trade. This falls under ''preservation of capital" and money management. First, what is a stop-loss order? A stop-loss can take many forms, but some of the more common ones are money management, trailing, break-even, and % trailing. A money management stop is nothing more than determining a price below your entry price where you would sell your position if reached. With a trailing stop, your goal is to lock in a profit by taking yourself out of a trade if the |
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