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1. DisciplineTraders need to maintain a consistent approach to the markets. No matter how much preparation goes into trading, if you do not practice a consistent level of discipline in trading, then you can become lost. All the planning in the world will not help if you fail to use it. Before trading every week, it is important to develop a strategy to help guide a trader through the trading week. This game plan alerts a trader to economic news, trading strategies, support and resistance, and any other factors that can cause the markets to move. Going into a trading week blind can cause losses that could have otherwise been avoided by simply spending an hour analyzing current events and economic data. Trading is a business and a business cannot operate without some sort of plan. Taking the extra time to make a game plan for every week can make a trader more successful.2. Adapting to Changes in the MarketThe markets change and you need to be prepared to change with them. The markets are fluid and dynamic. Patterns that may be easily identifiable from one year ago may not be recognizable in the market today. Discipline is a virtue, but stubbornness is a vice. You need to be able to change with the market, and be prepared to trade as the market is telling you to trade it without having a bias.When it comes to trading, having a market bias is not necessarily a bad thing. It can be a good thing if it is used correctly. For example, if one's research, market analysis, and bias support a bullish position but the market briefly heads south, the bullish bias may keep one from falling for the short play that would not pay. Or, the bias may temper an impulsive urge and keep one on the sidelines and out of the market until further analysis. Having a market bias becomes a problem when and only when one acts on the bias alone, behaving as if he has a crystal ball.How then does one form an opinion of market direction without being shackled to that opinion and misled by it? How does one hold one's bias in check so that one can adapt to constantly changing market conditions and read correctly the true course of the market? It's not always easy, but it can be done by letting the numbers lead the way. Let us explain with some specifics.During much of 2005, many traders had a bearish bias. There were a number of good reasons for having a negative view including a bull market that is overstaying its welcome, war and political unrest, natural disasters, a soaring national debt, rising interest rates, escalating oil prices, and a housing boom that shows signs of cooling or maybe even bursting. Nevertheless, in spite of these troublesome issues, throughout much of the year prices on Wall Street have remained strong and the futures indices have been positive. The Dow hit 10983.00 in March and in late July the S&P Futures hit 1255.00. Within days the Nasdaq touched 1648.50 and in early October the Dax Futures hit 5167.00. In fact, the Dax Futures, a German index that is traded on the Eurex Exchange, exhibited the greatest strength of any of the futures indices and rose over eight hundred points from its yearly open. Clearly, for almost half of the year, in spite of anyone's bias, many financial areas were exhibiting strength. So, how did a profitable trader respond when the S&P hit its high in July or the Nasdaq in August? Did he defy logic and stay short as the S&P rose above the 1250.00 price just because he had a bias? Not, if he wanted to make money.3. Using Major Market Indicators to Manage Your PortfolioThe S&P is the standard by which the professionals are judged. An accurate estimation of the market's direction should also show the direction of your portfolio. The Stock Market is a mirror of society and reflects the economic pulse of the world. Most traders and investors are inundated with too much information and have no way to take advantage and profit from the input.
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