OPENING POSITION November 1998
The STOCKS & COMMODITIES interview this month is with the editor of Commodity Traders Consumer Report, trader Courtney Smith. Smith has considerable experience in the markets and in money management. I want to mention two key points from the interview. First, Smith stresses the importance of writing up each night his plan of action for the following trading day. This may seem especially challenging in today's volatile stock market, but that just makes it all the more important. Determining your game plan in the evening when the market is closed and not making your decisions under duress helps you take the emotional element out of your trading. Already having your key price levels, indicator setups or whatever it is that you follow waiting for you puts you in the driver seat for knowing when and what to do. An added value of a trading plan is that you can track your own performance of following your plan as well as the plan's level of success.
The second interesting point that Smith makes concerns his return to more classical charting techniques. He uses chart formations as part of his work. This is something that I would have expected, because based on my own work and experience, the value of charting patterns cannot be overemphasized. If you learned everything you could about triangle patterns, including using indicators as a guide to managing breakouts, you could build a nice trading system. In fact, in this issue, another Smith -- William Q. Smith -- offers us a nice piece on this very subject. Test any idea you may have over a considerable amount of time to make sure it will do what you hope it will; turn it into a set of rules, create a trading plan, and once you do, you have put yourself into the best possible position for your trading account. An example of this process can be seen in Alex Saitta's article, "Reversal formations: Predictive power?" This is the kind of research every technician should strive to do.
On another note, many of you technically based souls are interested in writing about technical analysis -- hopefully for us! -- and perhaps you've even considered writing a book. But then, you wonder, how to get your book published or how can you even self-publish? Over Labor Day weekend, I attended what has to be the finest writers' conference in the world, the Maui Writers Conference. It is a four-day affair for both fiction and nonfiction writers, and it is held at one of the best hotels in the world, the Grand Wailea Resort in Maui, Hawaii. World-famous authors attend this conference to discuss their work and writing in general; this year, the list ranged from Miami Herald columnist Dave Barry to psychological thriller writer John Saul. Editors, agents, screenwriters, and self-publishing market professionals are on hand to explain, dissect and disseminate information on how to advance in this field. Check out the conference's Web site at http://www.mauiwriters.com to see what this year's agenda was, and keep it in mind for next year. It's great fun and educational -- not unlike reading STOCKS & COMMODITIES.
Trade well!
