The monthly S&P500 Emini futures candlestick chart has not had a pullback in 14 months. This has...
Don't Stare at the Market
03/25/2014 9:37 am EST
Staring at the market all day long can make you go crazy, says Deron Wagner, who shares his "Set it and Forget it" trading philosophy instead.
SPEAKER 1: Most of us are used to doing our planning and trading near to or during market hours. I’m here with Deron Wagner. You do your planning and your analysis in a lot of times outside of market hours.
DERON WAGNER: Yes, that’s correct, Rob. I’m actually not an intra-day trader. The stocks and ETFs that I buy generally look to hold for several weeks to actually several months. As a result, it’s not necessary for my strategy of trading to sit and stare at the market all day. In fact, I used to do that back in the day trading days and it made me crazy. As a result, what I tend to do is I do most of my research outside of market hours, one to two hours a night scanning the market. I have my own stock scanner and then I have some other things I look for. Then I create a watch list outside of market hours, either that night or early in the morning and I set price alerts. Then if anything hits my price alert during the day, I actually have automated orders, buy/stops or sell/stops to trigger, if I’m not around to watch the market. Now, most of the time, I’m around anyway but with my style of trading, I can completely automate it without needing to be necessarily present all the time.
SPEAKER 1: How do you deal with the emotions that accompany holding trades for the longer-term? Do you find that that’s a lot of pressure?
DERON WAGNER: Actually, on the contrary, I find that it’s a lot of pressure to hold very short-term. When holding long-term. I use what I call “a set it and forget it” approach to stops. Once I get in a trade, I have a predetermined stop/loss. I set a physical stop. Either the trade goes in my favor and I make money or it hits my stop and I’m out but I don’t think about it once I’m in. As the trades move more in my favor, I raise the stop higher to protect profits but I find it much less stressful than intra-day trading because in intra-day trading I’m constantly watching every tick, every movement. It’s interesting that you ask that but on the contrary, I find it to be less stressful.
SPEAKER 1: Do you find the transition from short-term trading to long-term trading was difficult or did it feel like you were freeing up your time and your emotions?
DERON WAGNER: At first, I felt like a little bit guilty like I’m not watching the market all day but after I got over that, then I found that it definitely gave me freedom. It actually really reduced my stress level too which I think is really important. If a trader’s going to be doing this many years it’s important to make sure you have a system that’s not going to burn you out.
SPEAKER 1: If you stop yourself from burnout and reduce your stress level, you’re going to make more money. Thanks, Deron.
DERON WAGNER: Thank you, Rob.
SPEAKER 1: You’re watching the Money Show Video Network.
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