Futures Market Blog

http://www.msnbc.msn.com/id/29237750/

By: John Paul  President and trader www.daytradetowin.com

There are a few common mistakes committed by educators, that don’t trade, and in my opinion misguide many traders who want to become full time traders and trade for a living.
Sometimes I think that most educators just want to sound politically correct, and so they seek to give advice that is rather sounds good instead of being practical.
Here are some common myths that are being thrown around:
1) The trade with the trend myth. 2/3 of the time the markets is not trending, and by the time one recognizes the trend, there is a violent correction that most traders get caught in. Trading with the trend requires large amount of money that most traders can’t afford to risk on one given trade. So is the trend is your friend? YES! Practical advice?, nope.
This is why I choose to day trade and deal with each day as it comes.
2) Brokers are bad myth. Find a good platform, cheap commissions and a broker that knows your name and you found a friend. Brokers are not dime a dozen! A good broker is one that is there when your computer malfunctions, or one that could alert you to potential mistakes.
3) Don’t listen to the news myth. You can’t trade on the news, but you should know when the major announcements come up, like CPI, housing report, etc. you should be careful not get caught up in a trade where news has influenced the market.
4) Diversify. What a load of ^&*%$!!! I trade Emini S&P and that is all I need to make a living.
How could one look at different instruments and applying the same methodology to all?
5) Risk to Rewards Ratios myth. Some say you must trade 1:3 or 1:2 as a risk reward ratio.
For every dollar you risk, you need to make two to three dollars? Right?
WRONG!!!
Some trades have such a set up that it could have an 80% success, but the stops are larger than the reward. If I had skipped trades like that I would have been out of business.
6) Technical analysis is the only method there. Well, what if I told you I can trade with a chart.
If you don’t believe me, see how I apply price action daily Click here: http://www.youtube.com/user/daytradetowin

To your trading success,

John Paul