Wednesday, July 1, 2015

Trading Style: The Results Are in!

Know Your Trading Style


We've been conducting a survey on trading styles over the past few weeks and the results are in!  We collected dozens of responses between my Twitter followers, Blog subscribers, Meetup group members, as well as friends & family.  Read on for insights and tips based on the data we've collected!

Your Mentor


Our 1st question asked respondents to select their ideal trading mentor.  In a previous post I highlighted the key traits of Tom Sosnoff, Jim Cramer, and Scott O'neil who just so happened to be the choices on our survey.  So what's the verdict? Over half of the audience selected Scott O'Neil.  This is a pretty good sign that I've got a lot of relay racers following me! 

Activity During Market Hours


When are you most active, during market hours or after markets close?  According to the survey results, people are overwhelmingly active during market hours.  This one actually concerns me a bit because I'm not convinced this is an effective use of time unless you're a day trader.  

Personally, I don't spend much time monitoring positions during market hours because I pre-plan all of my exits.  In my opinion, it's only worth spending time to monitor a position if there's some action you can take as a result.  Have a look at my week, I rarely do anything investment related during market hours.

Impulsive, Patient, or Analytical?


80% of our responses came back as patient or analytical which is great when you're preparing to trade.  Allocating time to research is critical if you want to make money as an investor.  It's important to make sure that your trading process allows you to take full advantage of your successful characteristics.  

ROI Expectation


Question 4 had to do expected ROI.  About two thirds said they expect results the same quarter they place the trade but about 20% identified as day traders by answering "same day".  

No matter what your expectations may be, make sure that the stocks you invest in are oriented to those expectations.  For example, if you're a growth stock investor, spend your time identifying stocks that are poised to break out in the next 6 to 8 weeks.  If you're a day trader, wake up early and be prepared to do your damage in the first hour of trading.

Reaction Test


Throwing out a few common investor phrases, we rated people's excitement level to each.  About 3/4's of respondents showed indifference to the phrase "uncertainty is my best friend".  I find that a little surprising given that a good portion of my followers are day traders.  This response tells me that my audience may not have fully bought in to the day trading lifestyle.

Fundamentals, Candlesticks, Momentum


What's most important to you?  Momentum is the big winner among our respondents which is good to see.  As the following graph demonstrates, CAN SLIM stocks routinely outperform the field and momentum is usually one of the key underpinnings of a solid CAN SLIM stock!

Risk Management


When it comes to managing risk on a trade, diligent use of stops got over 68% of the results.  That's really a great first step to limiting risk but I'd like to see more people taking the next step by automating their profit exits and timing exits too.  Keep in mind that there are two types of risks, those you can control, and those you can't control.  Using stops allows you to mitigate a risk that's out of your control but if you leave your profit or timing exit up for debate then you're allowing emotions to get involved in your trades.  Do yourself a favor and place a contingent order for profit, loss, and timing every time you place a trade.

How Patient Are You?  


Almost 74% of respondents showed patience.  This is another way to get your emotions out of the game.  The more patient you are, the less likely you are to react to a sudden emotion tied to your trades.  Keep the math in your favor and you're more likely to see success.  Follow the lead of the Tampa Bay Rays and other money ball teams to keep things as favorable as possible for every dollar you're spending.

Keep your eyes peeled during July, I'll have a series of posts on time management and setting benchmarks for investment goals.

Happy trading!  

DISCLAIMER



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.


The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.


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