By: Joe Taylor | January 12, 2009
(bettertrades) - The goal of the daily Afraid to Trade blog is to provide a foundation of education designed to give you a clearer picture of the various markets and provide you with the knowledge needed to overcome fears and anxiety you might experience in active trading.
We desire to provide a resource for you to gather information, build your pattern recognition skills, apply new techniques, and challenge the boundaries that may be keeping you from achieving your highest potential as a trader in the broad, ever-changing marketplace.
We place an emphasis on Technical Analysis and Quantitative Research principles and build our world-view combining foundational concepts from the early masters while incorporating cutting-edge concepts designed to unite new knowledge with the old. We build our perspective from the top-down, starting with Inter-market analysis concepts, sector rotation strategies, and take them down through multiple-time frames and price structure analysis across various branches of Technical Analysis and trading strategies.
Corey Rosenbloom is the sole author of Afraid To Trade.
My interest in the stock market began as a junior in High School where my team won an investment challenge which spurred my interest in investment using fundamental/company analysis. Later, the Bear Market of the early 2000s challenged these assumptions and forced me into deeper study of market concepts which is where I came across Technical Analysis.
I then began trading active momentum strategies in small-cap stocks that led both to stellar and destructive results after overconfidence got the best of me. Many of my 'fears' developed from this time and I became a hyper-conservative trader. Luckily, it also gave me a deep respect for the market and led me to a more academic route to give me better perspective. From there, I traded options strategies then developed a hedged-style strategy of stocks using sector rotation principles. Upon becoming a full-time trader, I was able to use more active, intraday strategies which fit my personality better than longer-term strategies.
From an educational perspective, I obtained a dual-bachelor's degree in Psychology (emphasis on Cognition) and Political Science and later finished my Master's Degree in Public Affairs. I successfully completed the three-level Chartered Market Technician's examination in December 2008 which was a grueling journey through virtually all aspects of technical analysis.
I currently serve as an independent trader, consultant, analyst, author, and educator.
(interview with Afraid To Trade)
Initially, it was just a catchy phrase I came up with that was sort of humorous but also captured the vast number of people who were literally "afraid of trading" because of significant loss or the high risk. It was a way for me to combine my background in Pspchology with my interest and analysis in the Markets as I began to write publicly and the name has stuck. It's designed to attract those who trade from a fear mentality rather than a greed one which is perhaps far more common in newer traders.
Actually, no, my biggest obstacle was Greed, Overconfidence, and Lack of Knowledge/Experience. I had a stellar initial entry in the market and was successful, but looking back it was just Beginner's Luck. Eventually, I overplayed my hand and was dealt a staggering loss which set up the "fear cycle" of over-conservatism, etc. It took quite some time and it's still a struggle, knowing how much the market can both give you and take from you, but I would say I overcame fear through knowledge, networking with other traders, research, experience, and staying committed - never giving up. I knew I had initial success and so that was motivating for me to work through the fear.
Yes, it typically holds people back from their potential. We must balance Fear and Greed at all times - Overconfidence with Uncertainty. Most people look only at Reward/Profit until they're burned - then they hyper-focus on how much they can lose.
Breathe deeply. Realize that the emotions will pass and are temporary. Keep a stop-watch and document them if needed - realize that the fear in a trade is temporary. Write free-flowing journal after any major experiences. Keep focused on the Market. Focus on objective Stops and Targets & take both when hit.
I'd been keeping a private website for friends/family who suggested I make it public. When I started trading full-time, I felt so much isolation of trading all day without human contact - which made me overfocus on the market. The blog was initially a way for me to formalize my strategies and provide a flow of creative thought to reach out to others perhaps who had experienced similar things as I did and share experiences together.
I place a large emphasis on education/explanation/examples which is designed to build the reader's awareness and thus confidence through seeing certain patterns and structures repeated. I try to teach readers "how to fish" rather than "give them fish." I tend to focus on larger picture concepts of Inter-market Relationships to keep the smaller picture in focus, which provides content for both short and long-term traders. Furthermore, it's not a personal trading journal but is more of a collective resource of information. I also emphasize addressing emotions in trading and have a specific section for overcoming fear.
I hope they'll realize they're not alone and that, with time and effort, most can become a profitable trader, and perhaps have a healthier respect for the market in the process. Also,
I tend to avoid controversy at all times and focus on objective education and ideas. I stay out of political discussions or name-calling and tend to focus more on building up other sites and referring readers to additional quality resources rather than tear others down.
Revealing my answer here would stir up controversy!
After the first year, I learned that traffic wasn't my #1 goal but that the quality of experience/reader was.
My interest started around 1998 when my team won a highs school Stock Picking Contest which got me into company evaluation and stock selection. That didn't work in 2001 and I turned to Technical Analysis around 2001/2002 and did quite well in 2003's recovery year using rudimentary technical analysis methods that later became more complex.
I've traded them all except bonds but I have gravitated now to intraday futures trading while running a hedged-style swing strategy using stocks and ETFs with occasional option strategies, particularly credit spreads.
I most enjoy the hedged-swing strategy because it allows me to play stocks and sectors - as well as markets - against each other but I often don't have the patience to let those strategies play out, preferring instead to take advantage of quick intraday movement which led me to ETFs then to Futures, particularly Dow-Mini. I focus mainly on trading the Dow-Mini and Mini-Gold on the 5-min charts each morning and will continue that until the volatility subsides a bit and I can raise my timeframes back higher.
I analyze them all but I trade most frequently off the 5-min charts and Daily Charts.
Read as much as you can. You won't actually ?learn' what you read until you put it into practice and find out what works specifically for you but you really need to have a broad awareness of how different trading strategies and set-ups work and then narrow down into specifics. Despite all you're told - there really are hundreds of ways to make money in the market but so few retail traders actually do for a variety of reasons. Hand-annotate your charts and keep a journal of "ideal trade set-ups" to build experience
Overconfidence after initial success. Trying to overlay too many indicators Seeing trading as a "get rich quick" scheme and treating it as such - no work Not willing to put in the work and research/time commitment needed. Trying to do too much at once.
Possibly in Commodities if we find a bottom soon. The leverage of futures can lead to explosive gains or disastrous losses. The Equities Markets should calm down their volatility which should allow for slightly longer holding times and a return to swing trading opportunities.
We may see a decent sized counter-rally back to the upside that could eventually take us above or around 1,100 on the S&P but that by the end of the year if not probably sooner, we will have broken beneath the November 2008 lows. This analysis is based on Elliott Wave Interpretation with a bit of fundamental analysis awareness. The Market will bottom ahead of the Economy, but that both most likely still have further downside.
For me, I tend to focus on the next probable ?swing' in the market and try to avoid long-term forecasting. It's a lot easier to manage risk when you're looking right in front of you than two or more years into the future! Most of my trading is quite short-term in nature.
There's quite a fair chance we'll go above 1,000 to 1,100 on the S&P 500 early on in the year, but the odds still seem to favor lower prices yet to come.
Many Elliott Wave analysts agree we're completing Wave 3 down which began May 2008 but that would assume we have a 4th Wave Up yet to come and then a large-scale 5th Wave Down also to come, which would complete the ABC Corrective Pattern that began in 2000.
Also, on the day of this interview, the Jobless Report announced Unemployment Rate reached 7.2%, a 15-year high. Many analysts are predicting it will go to 9% or higher before we find a bottom. All these unemployed workers will not be spending money to stimulate the economy which could lead to further lay-offs and company bankruptcies. Further, the Fed has done about all it can do in terms of cutting rates and easing capital. Also, what could be on the horizon is a Credit Card Default ?crisis,' or the "Sub-Prime Mortgage" Crisis hitting "Prime" mortgage holders, further weakening the economy amid many other fundamental reasons as well.
We're probably looking for 2010 for a stock market and then economy finally bottom. I don't think this will turn into a Depression at all, but it could be a difficult Recession.
That's the main focus of my work.
My favorite indicators are:
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