It is the time when we all make resolutions for the upcoming year.  I only have two.  They are the same two that I embrace every year.

·         #1.  Don’t lose money.

·         #2   Don’t violate rule #1.

The only way that this can consistently happen in the stock market is to employ a hedging strategy.  Professional traders hedge their positions.  You must consider doing the same.  The hedging strategy should have embedded in it, the flexibility of adjusting the position to accommodate trend changes yet maintaining the hedge.  If the market breaks out either bullish or bearish or for that matter merely remains flat, the trader still has the ability to optimize the market condition and maintain a protected position.

As you continue to develop as a trader, you will likely begin to develop the ability to call short term trends in the market.  Even when you add that ability to your tool kit, it continues to be crucial to remain hedged.  Unforeseen events can happen that can dramatically affect stock price and when that occurs; you want the ability to preserve capital. 

Learn to follow the market.  Don’t buck the trend but rather, go with it.  Life will be a lot easier if you do that.  It seems that many traders want to pick pivot points.  Having that ability can be profitable but not necessary to be effective in the market.  If you lost a lot of money in 2008, do not try to get it all back in one or two trades.  I call that “Revenge Trading” I used to coach football and when we found ourselves 1^st or 2^nd and long it was important to realize that we didn’t have to make the 1^st down in one play.  So goes it with the market.  If you are down, get it back a little at a time.  If you plunge, more than likely you will regret it.  Remain diversified and pay attention to position sizing.

If you want to trade like a professional, I encourage you to look at the free lessons at www.marketamer.com.  Best, Robin