Today's Quote: “This above all: to thine ownself be true…..” William Shakespeare, Hamlet, act I scene III

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

“12 Trading Laws of Success” –

LAW #1: KNOW THYSELF (Part Two)

Knowing the answers to the following questions will determine if you should primarily focus on the micro, short-term or intermediate to long-term time frames.

1. What is my comfort level for risk? If being down $250 on a trade makes you feel like a failure, your correct style of play is short term. If you can be down $1000 in a stock play, and still feel good about its prospects, playing longer time frames is best for you.

2. Am I one who is willing to take a bigger hit (loss) in exchange for potentially scoring bigger? If so, playing over longer time frames is better for you. Do I tend to be more comfortable going after smaller, less significant price moves, while keeping my losses at a minimum ? If the answer to this question is yes, you are a short-term trader by nature and playing the micro time frames will work best.

These questions will help the trader determine which techniques and tactics to focus on.

1. Am I a gambler?

2. Do I like to put my stake on the line in a big way?

3. Am I the type who likes to score in tiny bits and pieces?

4. Am I cheap?

5. Does price or quality mean the most to me?

6. Do I hate even small losses?

7. Is the thrill just as important as winning?

We can go on and on. But we're sure you get the point.