Trading and Affiliate Marketing Strategy correlations (4)
Was reading an interesting book called "Getting Started in Commodities" the other day. Commodities is something I've been a bit fascinated with several years. Fascinated enough to pick up a book on it, but not fascinated enough to try it as a career. But, I like to read about these sort of things regardless.
Anyways, what caught my eye and had me jotting down notes was the last section of this book on basic trading strategy fundamentals.
I wrote down these notes, and I figured I would share them because I felt like there were a lot of correlations between what the author was saying and what I've read here in the last week or so since I became a member. I know that nothing is ever a direct correlation, and there’s no doubt that some of this will be common sense that you’ve heard before, but I found it beneficial and relevant so I thought I would post it. If someone thinks it belongs in another forum section, feel free to move it or delete it.
I'll post the direct quotes (there is some paraphasing due to context), and my comments are in the brackets:
On new traders:
Over many years of teaching people to trade, I have learned that the main tendency is to overcomplicate the markets.
Too much information too quickly often leads to analysis paralysis. It encourages traders to look for that perfect trade when everything just lines up and there is no way they can lose. This just doesn’t happen too often. If you wait for the moon and the stars to create the perfect pattern then you’ll probably be waiting forever.
On the most important element for success in trading:
Specialising in one market is the most important element for success in trading. You will most likely need to test-drive a few markets before finding a specialty. Kick a few tires and see what excites you. If you can get information that others can’t readily find, you may have an edge in trading that market. Most important, specialize in markets you can get excited about when you wake up each morning. Loving what you do is the key to excelling at it.
On setting realistic expectations:
If you set overly optimistic expectations for your trading results, you run the risk of being disappointed and making unwarranted changes to your trading approach, even though you are actually doing well.
On risk:
If you focus the bulk of your efforts on minimising risk and controlling losses, the winners will take care of themselves. Your primary responsibility to yourself as a trader is to make sure that you can continue trading tomorrow.
On the five important questions that you should answer when formulating your trading plan:
1. How much do I have to invest?
2. How much will I risk per trade?
3. What criteria will you use to enter a new long or short position?
4. What criteria will you use to exit at a profit?
5. What criteria will you use to exit at a loss?
[1. It’s crucial to know exactly how much you can invest in your business. Too many people waste time using free tools, or not paying for services because they haven’t realised that they actually have the funds to invest in things that will save them considerable time. On the flip side, other people invest more money than they have and end up in financial trouble.]
[2. It’s crucial to know how much money you can risk on buying traffic. People who say it’s risky buying traffic and that you can lose a lot of money typically haven’t calculated how much money they’re willing to risk. Once you know the number, it’s easier to put the money on the line. People will willingingly gamble away $200 at a casino, yet they’ll stay clear of paid traffic opportunities because they’re scared. It’s usually because they haven’t written down $200 on a piece of paper and said “this is what I’m willing to risk”. Instead they just think “I could end up spending a lot of money on this” and since that seems like a lot instead of a small and specific figure, they don’t risk a penny.]
[3-5. I found these points relevant to selecting opportunities and offers, diversifying, and allocating how you’ll spend your time.]
The primary tenets of a trading method:
1. Go with the trend
2. Cut your losses
3. Let your profits run
4. Don’t let big winners get away
5. Maintain trading discipline - follow your trading plan
[1. Model success, go where the market’s headed]
[2. Maintain your ability to “trade tomorrow’]
[3. Don’t get a small win and then cut and run]
[4. Scale, upsell, and expand on wins]
[5. Stick to your strategy, don’t let fear takeover, don’t change a good strategy just because of a set back]
Trading boils down to essentially three steps:
1. Identifying the opportunity
2. Selecting the trade (matching the market scenario and pricing to the right strategy)
3. Managing the trade
[Points 1 and 2 of this part of the book were a little too trading specific to expand on, but point 3 was relevant enough to…]
On managing the trade:
1. How long will I be in this trade?
2. Do I have a profit objective?
3. Do I have a stop loss to get me out of the trade if I am wrong?
4. Can I adjust the trade and lock in some profits by adding or subtracting new positions?
5. Are there any technical or fundamental reasons why I should exit the trade?
[How long can you expect this offer or opportunity to last? When will you start diversifying?
A stop loss in terms of both money and time. How long will you devote to an opportunity before moving on if it doesn’t show promise?
Technical and fundamental reasons for exiting an opportunity could be long-term potential, volatility of the traffic source or offer, etc.]
There was a lot of other gold in this book, but these were the best nuggets I thought I would share. Hope you find them helpful.
Originally Posted by horatius
i realize this is not the point of your post but you may want to reconsider the credibility of that book if that's the kind of advice you are reading
Thanks. Your point is valid and it all depends on the interpretation of what a trend is. Some people swap it around with "momentum" a little too frequently, so delving deep into the idea of what a trend constitutes isn't of interest to me. Most people know the biggest money is in seeing and being able to act on a trend other people fail to notice. I think the better rule is to be a student of trends.
Disagree. Ive made good money in trends. Just long term ones, not short term ones. Regarding CL - with commodities you can lose from the roll loss - different story.
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