Over the years the manner in which I trade has evolved in a very unique way. While others may become more ingrained in the daily market activities through fundamental aspects of investing or the economic overlay, I have shifted more towards absolute price movement and the technical aspects attempting to drown out as much of the other variables considered ‘influential’ as possible. My point in doing so is simple in that I believe all one needs to know about a stock and its direction can be found in its present price. Price can never be argued or dismissed it simply is. One cannot say Microsoft (MSFT) is a $40.00 stock when it is being quoted at $34.38 or that Google (GOOG) is a $500 stock when it is trading at $657.00, however this practice is done every day. Those making a statement such as this, are obviously attempting to predict where the stock is going or relay their own personal opinion however regardless of what someone says, it does not change the fact that the price of the stock is set and regardless of where it is going, can be bought for a certain price at that very moment.

Most traders are inundated with market influencing information each and every day and must digest, comprehend and determine what to do with such data before they make their moves. I on the other hand, am much more interested in price action to identify a specific trend and will look to participate in that movement with a clear risk reward strategy in place. Learning of market news or forecasts have never assisted me in making trading decisions and in fact took me a very long time to learn how to deal with. When I first started trading, I was not as confident in my style as I am now, and found myself second guessing trades when data or news suggested my analysis was wrong. Often, out of fear, I would reverse my trade assuming others must know something that is not yet reflected in price, only to see my initial trade pursue a very profitable path. After dozens of similar occurrences, I finally resolved to stick with my style regardless of what the ‘noise’ was suggesting and I have definitely been rewarded for this discipline.

Those that have traded with me for a few years understand and respect my desire to drown out noise and most recently a very respected friend of mine relayed that he had purposely held back widely known negative information on Terra Nitrogen (TNH) as he knew it may negatively influence my trade. Had I known this information, which I still do not, would it have kept me from the successful thirty-point trade? Quite possibly it could have.
Wall Street does a very good job in complicating the simplicities of market movements while most investors would do much better to simply focus on absolute price. Unlike economic predictions or fundamental analysis, price is clear, concise and never lies.
The question is then, what do you do with price? Markets move in cycles or trends that can last weeks, months or even years. When price is viewed as absolute, it can give you the signal of when a new trend is taking place and allow a trader to jump aboard. The key is to have a style or system in place that assists you in knowing when to move in and when to move out. This is where the individual can develop a style that is right for them and correlates with their personality or risk tolerance. Over the years I have seen styles that vary greatly and the success I have seen often correlates with the development and pursuit of a style rather than the stocks or markets traded.

I realize my style is not for everyone nor am I ignorant to the fact that there are many styles that are successful however the common thread among all successful traders is the development of their style and their ability to stick with that style through a variety of market conditions or adverse situations. What is your style?