So, now I was on the main road just outside the supermarket, heading back, when suddenly a silver car pulled out from a side road and almost slammed into me side on. He braked suddenly and pulled back into the side street. He also had the wretched nerve to honk his horn at me!

So I’m thinking stuff like, “You idiot! Why don’t you look the heck where you’re going? And then YOU honk at ME?!”

But I’m also thinking, how could this happen? It’s as if he didn’t even see me. Is he totally blind or am I invisible?

Then I noticed something very interesting. My gaze flicked to my dashboard. My headlights were completely off! Yes, I could see the road ahead just fine because there were streetlights. But I guess that nobody could see me coming so very well!

It was night and I was driving like a bullet in the dark, unseen.

Hmmm. So who’s the idiot now, I wonder?!…

I have to admit I felt more than a trifle guilty about it. There could have been a really bad accident if I had carried on much longer. Luckily, I had only just left the supermarket, and even more luckily, my attention had been immediately alerted to the problem by this incident.

So, what's this story got to do with online trading, you might ask? Well, nothing and everything!

The fact is, it's a very good life lesson. Many traders trade like this – absolutely certain that what they are doing is right, and MUST be right because it's them doing it. And that's totally irrespective of what the markets are plainly telling them!

We get negative feedback from the market, e.g. it moves against our position. So what happens? Instead of having a stop that gets hit and takes us out for minimal loss, we have no stop at all. Or worse still, we actually ADD to the position. That's kind of like saying to the market, "You IDIOT!"

It's just like when the guy nearly hit me and had “the cheek” to honk at ME. We carry on all the same, just swearing that we are RIGHT! Then one day, we crash and burn and scratch our heads and wonder why?

Is it any wonder that 95% of online traders crash and burn when it's like they're driving without their headlights on! They're just asking to crash.

It's a great analogy that I want you to think about for your life and especially for your Trading. What is your blind spot? What is it that you are just refusing to see in your method?

We can drive along in our lives, not examining what we are doing, not being as AWARE as we should be. Then one day, reality collides with our fantasy and we are left to pick up the pieces, and wonder what the heck happened. This happens ALL the time in Trading.

Rather than think “Idiot” about the other guy, I was left asking, “SO who’s the idiot now?” And that's what we need to ask ourselves (in a constructive fashion of course, i.e. "What can I learn from this?") when we get our noses bloodied in the markets.

In fact, the guy who nearly hit me was symbolic of all those people who warn us we are in danger when we take a wrong path, but who we filter out and ignore because we don’t want to hear what they have to say. Luckily for me, he appeared on the scene and awakened me to something I would not have seen otherwise until perhaps it was too late.

Maybe the lesson is, switch on your headlights BEFORE you have the crash! In Trading this means, examine what you are doing in full awareness and make sure that it is what you really want to be doing. Do you have a method and is it PROVEN to work?

Realize that what you do has financial consequences for your trading account. Every lapse, even momentary as mine was, can have enormous results.

So, make sure that when it comes to your Trading, you too are not a dark bullet in the night, heading for a certain crash and burn. Switch the lights on, and shine the bright light of Awareness onto your Trading and your life in general.

___________________________________________________

Get the FREE Report, The 7 Deadly Mistakes Of Online Trading. Which of these critical errors do YOU make… and you don't even know it?…

That’s not a big deal. After all, you win some, you lose some.

Maybe I should say, I FINALLY took off a losing trade. It’s one of those things. You learn something. You know it. You even teach it to others. And sometimes, you let your discipline slacken and don’t do it yourself!

We’re all prone to this which is why we must maintain our discipline when doing online trading. The financial markets are not forgiving.

So what did I do? Well, the market opened yesterday morning a little outside of my stop-loss level but it was just drifting (this was an options trade so it’s not so easy to enter the stop at the time of the trade). I told myself that I would let it drift a little more in my favour and then take the trade off.

But you know what? A stop is a stop. If you’re wrong, you’re wrong. And what you invariably find if you play this sort of game is that you lose more than you ever win.

So it was yesterday. When I finally took the trade off, the loss was substantially larger than it needed to be.

Now, it’s no big disaster because it was a really small trade size. However, it is the principle that counts. I don’t think we should ever tell ourselves that we can “afford” a trade, i.e. the present loss level. If you do, you find that all too often, it will get to a point when it really DOES hurt!

Besides, if you play this game, when ARE you ever wrong on a trade? After all, if the market were to then improve in my favour, and maybe even go all the way back to breakeven, isn’t that less reason to take the trade off?

No, the answer is always to know your stop, i.e. when you are definitely wrong, and exit once it is hit or passed.

I shall make sure that I never make this mistake again. How about you?…

Asoka Selvarajah

Dow Jones Stock Market Long-Term Trendline Support

A closer look at the recent price action shows a down-ward sloping channel in place. There was also major support derived from three coincident Gann levels derived as price projections from recent tops. These came into the region of 6468-6474. All of THIS put together is why I was able to go long the Dow Jones at 6474, just four points off the major bottom! (If you don't believe me, see my post on March 6th Twitter calling that bottom within just minutes after it had been made!)

Gann Support Levels Giving the 6470 Bottom On Dow Jones

However, the overall long-term picture is NOT bullish at all. We can expect to see these markets rally for maybe a couple of weeks at best, enter the usual sideways consolidation range and then resume the bear market in earnest to take out the bottoms and trade much lower still.

S&P Long-Term Bearish Double Top Chart Formation

On the S&P500, for example, we can see a Double Top in place and completed so enormous that that its price target would be negative prices, i.e. the price would have to go below zero to fulfill it! Be that as it may, the point being made is that the bear market is in place and set to continue for far longer. The rallies we see at present are bear market rallies. Enjoy them while they last, but be prepared to reverse to the downside once more. Obviously, from an investment standpoint, this is STILL not the time to be buying into the stock markets.

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This is all very nice. Moreover, the rallies are set to continue to still higher levels over the coming week or two. However, bear in mind that these are BEAR MARKET RALLIES. Although they are strong, these stock index rallies do NOT indicate that the equity markets have bottomed. Not at all.

Instead, what is happening is that they are finding very long-term technical trendline support and are rebounding from them. Hence, traders can certainly trade the rallies with confidence over the next few weeks. However, do expect the whole picture to turn bearish again quite soon. As for investors, this is STILL not the time to be getting back into stock markets!

For pro secrets and strategies on all aspects of Online Stock Trading, visit Stock Trading

This is what happened to me today, but I am glad to report that
it nonetheless had a happy ending.

So, there I was having done a Dow Jones trade that I had every
reason to be proud of. I had bought the Dow Jones at 6474 last
Friday night, just 4 points off the low of 6470 prior to a major
rally. I had watched it retrace to the 76.4% Fibonacci
retracement level, while having added a slightly misguided
pyramid to the position at the 61.8% retracement.

Nevertheless, good fortune sometimes favors the bold and the
market roared, as had been expected when I put the trade on in
the first place. I was well in profit, and that pyramid was
helping very nicely. All good so far.

So, here I was booting up my computer about 35-40 minutes before
the market opens. My intention was to let it trade to the next
major high, and take profits on the whole position and then
reverse to a short position for the inevitable correction.

Well, you can imagine my horror when I found that my router was
not connecting to the Internet. Thinking it was a temporary
error, I rebooted the computer only to find the exact same
thing!. I tried again with the same result (and my computer takes
AGES to come back fully into operational use after a reboot).

So now what? I have a major position on, I need to take action
maybe immediately on market open, … and I can't see it!
Thoughts of having to physically telephone the broker to take the
trade off blind, without a live chart, came into my mind.

There were only twenty minutes before the market opened. A
desperate idea came to me. I went up into the attic to retrieve
the DSL modem to see if I could possibly install it in time. At
least I was keeping a cool head, but the clock was ticking me
down.

I fiddled around in the back of the computer and switched wires
from the router to the modem, and connected it up. Of course,
the damn thing would not install properly. I had to try several
times, hunting for the specific driver, and the specific way to
connect online.

Just a few minutes left before the market opened. I logged onto
the Internet, opened my trading software, and no sooner had it
opened than it gave the "Market Open" clang of the bell. I had
made it with literally not a second to spare!

So what is the morale of this story? Why am I telling you all
this?

Be prepared! The things that you think could not remotely happen,
the things that would have to defy the laws of probability to
happen, DO happen! Who could have guessed that at precisely the
moment when I needed to access the screens to take profits on one
of my best trades in recent times, this kind of conspiracy of
events would present themselves to thwart me and potentially
screw up the trade?

If you use a router, make sure you have a modem handy too and
ensure that the software is installed! Make sure that you have
the number of the broker handy and that you KNOW how to actually
call in an order manually (do you?).

Basically, think ahead and try to picture what might go wrong and
come up with a solution to it beforehand. Maybe you need a spare
computer too? What happens if there is a total power cut in your
area (it WILL happen one day, you know).

Above all, when the crisis strikes, keep calm and try to think
clearly. That is what I was doing although it was getting ever
harder as the minutes ticked by, I was fooling around with
unresponsive hardware and cables and did not think I would make
it. It never helps to panic though.

Overall, remember that an ounce of good preparation beats a ton
of remedial action after the event. Remember, these things affect
your trading. There is no point blaming the universe when they
happen, as they will eventually.

So, BE PREPARED! You have been warned!

Copyright 2009. Asoka Selvarajah. All Rights Reserved.

Do YOU Know The 7 DEADLY Mistakes OF Online Trading?…

The forex chart below shows a monthly bar chart all the way back to the lows in 2001, along with Fibonacci retracement levels. As is clear, the market has penetrated even the 76.4% Fibonacci level on a monthly close basis. In general, when this happens, the market will virtually always make the entire 100% retracement. In this case, it means that the British Pound is looking for a target of at least 1.3680.

In addition, if we perform a longer term Elliott Wave analysis, commencing from the high of 2008, we see a clear 5-wave sequence in progress with the fifth wave still to come, again making it highly likely that the specified target of 1.3680 will definitely be reached, if not actually exceeded…

We are seeing a cluster of alternative wavecounts being projected out on the right-hand side and they all give bearish targets.

Finally, if we look at Gann angles, we can see one technical reason for the temporary sideways movement that has halted the seemingly unstoppable collapse….

In the area from the highs to the recent lows, it is clear that the Gann angles are spaced very far apart, giving the market plenty of room to fall without support. Nevertheless, we see that is WAS supported briefly on the 1X1 Gann angle before finally breaking through. Thereafter, further collapse ensued before finally coming to what seems to be a temporary resting place between the 1X3 and 1X4 angles. Clearly, even from this perspective, the market remains weak and a revisit of the low from which the Gann angles originates seems extremely likely.

Asoka Selvarajah, OnlineTradingRebel.Com

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