If you're just banging away all day, you're not learning to be selective in your trades.
It's also important to know you're not meant to trade all markets. You need to have the patience, experience and discipline to look at a market and say, 'is this market good enough for my money?' That only comes from experience. So, if you're a new trader, don't get too discouraged if you aren't able to identify your favorable markets. In time, you need to realize there are certain situations where you should be in the market and more situations when you probably shouldn't.
By nature, I'm a technical trader. I favor Elliott Wave analysis. What that's done for me is bring about disciplined pattern recognition. So I know when I should be in a market and when I should be out.
I take it a step further: With pattern recognition, I should be able to see the trade at least three hours before I put the trade in the fund. And it's a rule I have—if I haven't committed my trade to paper, I'm not allowed to trade more than 50 percent of the allowed size of the fund on a particular idea.
Plan your trade, trade your plan literally means see the trade in the future, realize this is a value area where you want to be involved in the market. Then, once you've had time to digest the trade, let it come to you and execute without hesitation.
The world got pretty 'bulled up' on dollars. And then all of a sudden, China was off about 20 percent from its highs, crossed into bear market territory, and the world was buying dollars for the risk aversion trade. Then the oil inventories number on Wednesday just blew the dollar out of the water.
People might be second guessing that game plan, but I'm saying probably another 2 to 3 percent down on the dollar, around 77, 77 ½ on the dollar index, but I'm going to be looking for that value area to start buying dollars again.
Remember, says Gordon, identify value areas based on your style of looking at the markets. And have the patience to let the market come to you. Don't chase a market, there's an opportunity right around the corner if you miss this one.
Think better, invest smarter.