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A Trader's Grind: Success Comes Slowly


Hard work and determination are directly correlated with account performance.


The alarm clock goes off at 5 AM and slowly I roll out of bed. It is dark, it is cold and my 9 month-old had a pretty good night only waking up once, when he found himself crammed in the corner of his bed and stuck. I make my way down the hall and towards the den. Passing through the kitchen I extend my hand methodically and press what should be labeled the relief button but is actually the switch to activate the coffee maker, brewing this morning's extra bold blend of caffeinated delight. I plop myself on a big chair, relax for a bit and then dive into the morning headlines. I am a stock trader, and this is my life.

Growing up, I always envisioned stock traders as guys in pinstripe suits, holding three phones in an office full of order takers, cutting out early after a fantastic trade to hit the golf course by 3. Today, I know better and have learned that stock trading, like anything else takes hard work, dedication and is ultimately a slow grind towards success.

This morning I see that today's top headline is the unveiling of the FOMC Mortgage plan. Without yet reading the details I know that it must somehow help Fannie Mae (FNM) and Freddie Mac (FRE), who were springing yesterday in an otherwise terrible tape. I ponder how to play this and log into my trading station to see if by any chance the two are active this early and can be picked up near their previous day's close. No such luck. I read on and gain some insight into the Goldman Sachs (GS) report that is coming up later this morning before the bell. This news doesn't interest me all that much considering I don't have a dog in the fight either way, however judging by the relative strength in the financials yesterday, as noted by the Select Sector Spiders (XLF), my guess is that this group is due for another bounce soon and the catalyst may be one or both of these two events.

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I'm not a news guy as I find most of it to be just noise, so I don't spend too long digging into headlines. After a quick scan, it's onto other things. My first task is a quick run through of my previous trading day to reconcile my performance. I pull up my broker page on-line and scan through my previous day's trades. It was a rough day, but just about every trade followed my rules, which makes me happy as I know that over time my rules produce exceptional results. I do, however, ponder why I didn't load up on the QQQQ at the $50.05 gap and hold shares overnight. Oh well, hindsight in this business isn't worth much, that's for sure. It's time to hit the charts.

I start by going through each and every position I own, pondering the technical health, and revising my mental game plan for each stock. I always find it helps me throughout the day, if I already know what I am going to do, rather than having to act on the fly. Here are a few snippets from this morning's notes.

  • Intercontinental Exchange (ICE) fell pretty hard in a tough tape but seems to be holding where it needs to. I am looking to add in this area with a stop below $174.
  • NASDAQ Stock Market (NDAQ) acted very well yesterday, finishing green on the day, which is speaking volumes considering the nasty sell off across the board. I want to build this one and will set an alert for $48.11 as my next point to add.

As I continue to go through these positions one by one, I note the relative strength I am seeing from the exchanges and make a mental note to hop on over to the others when I am done with this part of my routine. A few minutes later, I start pulling up the others.

  • CME Group (CME) pulled back to the recent pivot and if it holds in here could be setting up for another big run. I would want to see this consolidate a bit more or take out the $710.00 area on a volume surge.
  • NYSE Euronext (NYX) not that attractive sitting under the 50 day and definitely the weakest of the bunch. While the weekly chart looks appealing the stock needs to rebound into the $87 area before I would be interested. I'll revisit this one another day.
  • Nymex Holdings (NMX). Man, this one has been a dog but it seems to be trying to come out of the recent base. I'll set an alert for $128.70 and see what it looks like should this trigger.

I take a moment to ponder why some of these exchanges look decent. If the market were going to fall apart, wouldn't these stocks be breaking down significantly? I log that thought and continue on my way.

The next step in my routine is to start going through my master list of stocks. I keep an updated database with 500 or so of my favorite trading names. One by one I go through them to see what is moving, shaping up, breaking down or marking time. I always find that by going through numerous charts, not only do I know what is moving, but certain themes pop out to me that tend to offer up excellent opportunities. It is how I found the solar names many moons ago and subsequently played names like Ascent Solar (ASTI), First Solar (FSLR), Sunpower (SPWR) or Suntech (STP). This morning I run through the list and am not convinced one way or the other. None of the fundamentally sound stocks I follow look to be setting up so I switch my attention to what could be in play on a decent Goldman number and follow through from the Mortgage plan. I see that Merrill Lynch (MER) could have put in a double bottom in November and may be ripe for a bounce on a move over $57.68. After pondering, and running through charts, I see there just isn't much to do regardless of the big jump in futures and so my plan of action for the day is to once again sit back and remain patient. A quick shower, some breakfast and I am ready to start my day.

In a better environment my morning continues by setting a good amount of alerts and digging into companies after finding charts that intrigue me, but at this moment that step is lacking.

Many have a warped view of trading when in reality success comes from a slow grind. I have found that hard work and determination are directly correlated with account performance and 3 PM tee times are the farthest thing from my mind.

Traders often get discouraged as they inherently believe their trading should come easier or that over time they will develop short cuts to success when, in reality, it is only the slow grind that over time makes up significant ground. It is hard work and it is not sexy, but it still is the greatest business in the world.


Position in ICE, NDAQ.

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