Veteran Traders Share Some Wisdom by Jim Wyckoff

Veteran Traders Share Some Wisdom
(NOTE: I write this story many years ago, but it still hold its value today.)

An elite group of traders and technical analysts gathered in Las Vegas last weekend to educate and enlighten several hundred attendees of the 21st annual TAG (Technical Analysis Group) conference. For two and one-half days, these respected market watchers shared their trading secrets and strategies.

Following are some trading and technical tidbits this writer picked up from this year's TAG 21 conference, which was put together by Tim Slater, a respected technician in his own right, and was sponsored by INO.com.

* One of the themes coming out of this year's conference was the increased volatility in the stock market, and how traders with a futures-related trading background have used their experience with volatility to obtain better entry and exit points in stock trading. Most agreed that whether one trades stocks, or financial futures, or commodity futures, there are key trading techniques and tenets that apply to all three.

* All the speakers heard by this writer pointed out that successful traders must have a specific trading plan before they execute a trade--and show keen discipline in following through on the plan. This includes entry points and potential exit strategies--including setting stops. Always set a stop when trading.

* Keep a diary when trading. This helps identify any trading mistakes, or trading successes, in future decision-making on trades.

* Have a money-management plan. This is a must. Know what your financial risk tolerance is and trade accordingly.

* Don't add to a losing position.

* If you are in a trading slump, take a break for a few days or weeks, in order to reflect upon your trading methodology.

* Do not overtrade. This is a common mistake among many traders.

* Take advantage of market trends. "The trend is your friend" saying rings true. Use extra caution when trading against the prevailing trend of the market. Don't try to pick tops or bottoms.

* Let your profits run and cut your losses quickly.

* The fundamentals in any given market are always most bullish at market tops and most bearish at market bottoms.
This is where the "buy the rumor, sell the fact" anecdote sometimes comes into play.

* There is no Holy Grail in trading. There is no "free lunch." Trading successfully is hard work.

* Most speakers said their methodologies should be used as one "tool" amid a variety of tools in your own trading "toolbox."

Jim Wyckoff