Nasdaq Q’s (NASDAQ: QQQQ) and S&P SPYDRS (AMEX: SPY) Traders – Being Right, Or Making Money?
When a market timer trading index funds such as the Rydex Nova Fund and Rydex OTC Fund makes a trading decision based on a news event, fear of losing out on a rally or of losing money in a sell off, or even the stock broker neighbor’s trading tip, he or she is trading on emotions.
Wishing Your Were Right
Trading on emotions, news events, market rallies, etc. is basically trading on a WISH.
There is no basis for the trade, at least none that can be counted on to last. There is nothing but “the moment.” The trader wishes he or she will be right.
Odds of winning? Slim.
Trades made on wishes have no plan behind them. There is no exit strategy. Invariably, the trade is held until losses become painful enough to force the trader to emotionally sell at a loss.
Making Money
No one makes money on Wall Street without a trading plan. No One! There is only “one way” to be certain of being profitable.
Market timers and traders who have a strategy for entering and exiting positions, and who follow their rules, on a timely basis without hesitation, make money.
Those who trade by daily news events, daily or weekly rallies & declines, and TV hype, will “always” end up losing money. Remember, for every winning trade in the stock market, there is a losing trade on the other side. Only those who follow a plan consistently make the winning trades.
One of the most important questions you must ask yourself is:
Do you want to BE RIGHT for a short time. Or do you want to MAKE MONEY for a long time.
Ignore the news. Ignore the daily ups and downs. You have no control over them anyway. No one knows what the next day will bring. No one!
Wishing will not help. Watching the financial news religiously will not help. There is just no way to know what will happen tomorrow, or even what will happen next week.
But a successful trading plan that creates unemotional buy and sell decisions will, over time, make even the most emotional person, a successful market timer.
Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer. Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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March 21st, 2010 at 9:32 am
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