A few weeks back, I kicked off the Intelligent Investor Series as part of my weekly commentaries. Th...
Trading Lessons I Learned the Hard Way, Part 5
08/07/2012 7:45 am EST
Ron Wagner of Revolutionary Trading discusses the lessons he learned from his early days of trading, and how his trading has evolved to become profitable.
After I wrote up my own step-by-step detailed plan of action (not my trading plan), scanning was next up on my list of areas to focus on. I realized early on that if learned how to find the best candidates to trade I would take more ownership and control over my results.
I tried nearly every artificial scanning software program available. In fact, I learned a lot about scanning from an expert who was using TC2000 at one time. I spent hours and hours learning the nuances of different patterns and why some worked and others did not.
After months of developing my own style of scanning, I found that what I had personally developed was working better than any of the other systems I had tried, including those used by other traders. I was thrilled to see how, by putting together some simple elements and manually scanning, my results would become much better.
I found that what I could factor into my scanning was more reliable for me than what any artificial program could do. It was actually pretty easy. I have, over the years, cut my scanning time down from two or more hours per day to just about 45 minutes. That’s going through about 600 or more stocks very quickly. I’m looking for very specific pictures that qualify for my further attention.
At first, I used my newly learned and personally developed scanning techniques to choose swing trades. Then I discovered something totally amazing: in addition to looking at the stocks that were gapping up or down or on a top gainers or losers list, I could now trade some of the selections from my swing scans. For me, this was one of the major turning points for my trading, and especially for my daytrading choices.
The discovery was simply that by trading stocks that others were looking at, that had potential to move in multiple time frames, the probabilities were much higher for my daytrade to work out even better. Of course, other very dynamic opportunities were always available on a day-to-day basis, but this gave me a fantastic alternative.
You see, day trading did not have to revolve around fast, quick-trigger trades. I had never intended nor expected to trade like that. I still enjoy taking a quick trade once in a while, but I didn’t want to be reliant upon that style of trading.
What I discovered next was even more enlightening. Those trading candidates with great potential often provided much larger trading ranges than stocks that were on my favorites list or stocks gapping up or down. By developing great patience, often just waiting even ten minutes for the market to show me direction and a quality pattern to setup, I found my profitability increasing nicely.
Now I had a great many more possibilities to trade. This changed my financial future. This one element alone changed everything for me.
I became so effective at scanning and enjoyed it so much that I then ended up hardly trading. I will tell you what happened, and what I did to correct that, in the next edition.
- Get good at scanning!
- Don’t let anyone tell you that you need to pay for software or specialized feeds for scanning!
- You don’t need to spend much time scanning per day. You can start with a small universe...and I will talk about that in the next edition!
- Learn to focus on multiple time frames to choose candidates that have the greatest potential for the type of trading you do!
- Don’t get caught up in only trading the high flyers or what I call the “Stocks de jour.” It’s OK to trade them when the time is right, with the right pattern, but don’t make that your only emphasis.
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