Stock Trading Advice: Separating the Wheat from the Chaff
July 16th, 2009 | 
Author: Article published courtesy of David at www.thecrosshairstrader.com
When making a decision about whether or not to read a trader’s advice via a blog/website, I believe a few qualities can help you separate the wheat (the good) from the not so good (chaff).
When I say “advice” I do not necessarily mean recommendations to buy and sell. I mean insight from a “trading partner” who can help lead you along the path of success. You will understand later exactly what I mean.
THE REALITY
Everywhere you look there are purveyors of trading information ready to sell this system or that system, this technique or that one. Every weekend I turn on my TV (the weekends are about the only time I watch TV) there is an infomercial on how to trade a trend or how to trade better, followed up by dates for you to attend local free seminars in your area. By the way, seating is limited so reserve your space now! Then you have the internet-or shall I say infonet-where stock trading sites are available 24/7. For instance, type in the keywords “how to trade stocks” and you get 25,900,000 results as of today. In case you missed it THATS OVER 25 MILLION RESULTS! Is it any wonder why professional traders who have found their way make so much money on those who have not?
WHAT NOT TO LOOK FOR
For most novice traders the search for what works is elusive for three reasons: 1) they have no idea what to look for, 2) they usually believe the first choice is the best choice, and 3) they believe that what looks the most sophisticated is the right choice. It just does not have to be this way. Just as in trading, patience is the key.
A sites rank (whether it shows up on the first page of search engines), how well designed the site is, the past trading record of the site’s author(s), how many times the site gets linked to, the ease of navigation around the site, the number of topics covered, whether it is free or members only, etc. has very little, if anything, to do with the quality of the information provided and its ability to help you successfully navigate the trading battlefield. These really have more to do with selling ad space. What really matters is the character of the site. Let me explain.
WHAT REALLY MATTERS
The qualities I look for when choosing to follow a trader is his/her consistency, passion for the market, focus, and honesty. Now, how do you do this?
1. Consistency. I believe this is the most important quality because without consistency all else fails. In other words, who you read should practice what is preached. If a trader preaches consistency with a particular setup yet you find he uses one indicator one week to make a trade then uses another the next that he has not previously mentioned then he may be consistently inconsistent. He either has a set of rules or he does not. This will take time (a little longer than the “free trial” period associated with members only sites) and a little effort on you behalf, bu the time and money (if members only) will be well worth it.
2. Passion. How can you tell if a trader is passionate about her site? Answer: the content is original and insightful, not mostly filler from other sites. And the content is up to date, not last week’s news. There are not a few sites out there that do nothing but steal posts from popular sites and re-post them with no rhyme or reason for doing so. These sites are usually full of ads, pop-ups, and annoying bells and whistles. Do not get me wrong, there is nothing wrong with a LITTLE advertising, just not so much that it takes away from the real purpose of your visit.
3. Focus. Let me give you a personal example. I trade options with a simple technique while adhering to certain psychological principles that I believe to be vitally important to a trader’s success. With that in mind, I enjoy reading sites that focus on options trading, technical analysis, and the psychology of trading. If you find a site that majors on nothing and minors on everything, then you have a recipe for majoring on the minors: not good when it comes to trading.
4. Honesty. How can you really know if the trader on the other side of the screen is completely honest about her trades and the way she trades? You can’t. But the first two factors above really go a long way toward establishing a sense of honesty. You can only deceive but for so long. Another way to know is to ask yourself: Does the trader reveal the mistakes and bad trades along with the good ones? Does the trader recognize that things can and do go wrong? Or, does the trader focus only on being right and all the trades that worked. What about the ones that did not? Admission of failure is a very good sign of honesty because even professionals make mistakes, just not as often.
SITES IN THE CROSSHAIRS
So what sites make THE CROSSHAIRS cut? I read both free and members only sites and really do not distinguish between the two. I will not comment on the following as I do not want to influence your decision, but suffice it to say all of the following exhibit, to one degree or another, the qualities listed above and are well worth a look.
I am sure my list will expand but just as in trading it is important that you make wise decisions about the blogs/websites you read. Keep your focus and keep it simple. Separate the wheat from the chaff.
It is my hope that you find in my site the same qualities I look for in others. If so, then I really do have something worth writing about. I will never feel alone waging wars on the battlefield as I am comforted knowing trading partners are there with me.
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