Philosophy on Trading

My philosophy on trading has been shaped from the books that I've read and from an understanding of my personality. I am primarily a technical trader (rule follower) coupled with an understanding of fundamental analysis. I will take this moment to clarify that I will from this point onwards refer to myself as a "rule follower". I was exposed to this term after reading an interview by a gentleman who referred to himself as 'the Phantom of the Pits'. I believe that technical trading is basically following a set of rules unconditionally. When a particular set of conditions arises, a trade is made. Hence, rule following should be relatively boring, however, when emotion and money are involved, this clearly changes the landscape. Therefore, in order to be successful in this industry, rules must be followed unwaveringly.

I have chosen to focus primarily on technical analysis as I have a mathematical background and oddly enough find enjoyment in numbers. However, if a person is not mathematically inclined, it doesn't matter - they just have to find a system that works for them. It should be noted though that I keep a watchful eye on particular events such as earnings reports and Fed meetings in order to understand general market drivers. As discussed, I strongly believe in rule following and hence endeavour to adjust my life and thoughts to accommodate this vocation. It is crucial that one doesn't allow personal external influences to govern one's rule following. I am married and have a full time job and at times balancing it all can be challenging. Once my goals and ambitions are achieved, I am certain that the sacrifices endured will DEFINITELY be worth it.

My rule following philosophy has been based on one principle - keeping it as simple as possible. There are hundreds of indicators out there, and I'm sure in specific applications they all have their benefits and are useful, however, by entertaining all of these indicators, one runs the risk of analysis paralysis in an attempt to find 'the Golden Indicator' or system. The indicators I will primarily use are volume and a stochastic RSI. My charting analysis uses candlesticks, trendlines, support and resistance lines, known patterns and Fibonacci analysis.

I currently only trade simple option strategies, straight call and put buying, however with increased knowledge and backtesting this will surely evolve. I don't believe in re-creating the wheel, hence I have no issue in following stocks and setups identified by other authors - why take the time to find them yourself? However, when utilising other author's analysis, ensure that your own rules and criteria are met before placing a position. The authors I follow most include Chris Tyler from the optionetics.com website and various authors from thestreet.com including Jim Cramer.

My next blog will contain my thoughts and techniques on my daily routine.

Have unwavering faith in ABUNDANCE!!!

Condor

PS. As knowledge and experience develop, these thoughts will most likely evolve as I will evolve.