Playing by the Rules

Thank goodness I have a system with 'rules' to trade by.

Hard as I try, I tend to get caught up in the latest action of the market.  I'm an emotional person, and most likely always will be.  So when the market advances 12% in one day, I tend to start feeling 'bullish' and could get carried away.

That's why it's so important for me to trade within the context of clearly defined rules or guidelines.  Without them I would most likely get caught up with the lastest movements of the market and get whipsawed into a zero balance.

Instead, I know that I don't buy stocks until we get a follow through day signalling a new rally (not all succeed, but this is the time to test the waters).  Meanwhile I have a small watchlist of stocks that have held up well within the context of the current market volatility.

I'm using this time to continue my studies and have begun the Van Tharp book 'Trade your way to Financial Freedom' - this may be why I'm focused on the idea of a system right now.  Though I haven't read much yet, the book is intriguing in it's study of psychology and the development of a trading system like a business.

I look forward using what I learn in this book to refine and document my trading system; for although I follow the CAN SLIM methodology, each of us has our own unique way of interpreting and implementing the same information.  It's important that I 'mold' this method to fit my style, personality, and goals.  Through this process I will make someone else's method into my system.

-Geoff