The 5 Fundamental Truths Of Trading

If you hold these core trading beliefs you will tend to do well in trading:

I. "Anything can happen" – the market can go up, down or sideways from any point and negate my edge;

II. "You Don`t need to know what is going to happen next in order to make money"
III. "To win in the markets you need an edge" - an edge is nothing more than an indication of a higher probability of one thing happening over another
IV. "There is a random distribution between wins and losses for any set of variables that define an edge"
V. "Every moment in the market is unique" – so the last trade is independent from the next

This is a short version of Mark Douglas` studies on how to be a successful and consistent trader. It`s very important to know what our beliefs about the market are so I suggest you sit down for a couple of hours and start writing your trading beliefs, the way you think the market works. It`s the first step to write a concise business plan that will structure your trading business.

If you want to know your trading personality type you can also try this short quiz, available on Dr. Van Tharp`s website: Trader Profile.

On other topic, the market is still volatile and a down open was bought on the first hour of trading. Ben Bernanke will speak later today, so stay tuned. I am holding long positions on Yahoo (YHOO) and Domtar USA Corp (UFS). I am bullish on Nvidia (NVDA) and still picking it as long intraday plays (I have been doing it for a couple of sessions) and also structurally bullish on Mosaic (MOS) and CF Industries (CF). CF is more of a momentum play and I will be looking to buy both on weakness.

Finally, I am still eyeing natural gas. September`s seasonality is strong and Natural Gas has been following the seasonality script pretty well since early in the year. It`s just trying to go through 4.000 USD. (United States Natural Gas Fund (UNG) is trading at an important level, breaking 10.00 USD).

Have a great trading day and I hope you enjoy the new layout. Blogging is a very intense experience and from time to time we just need to redecorate the saloon...