Today's Quote: “To begin to think with purpose, is to enter the ranks of those strong ones who only recognize failure as one of the pathways to attainment.” James Allen

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…

Trading is one of the most exhilarating activities one can undertake. Each day, each hour, and even each price tick can dramatically increase, or diminish, the financial well being of the active market participant. The winnings can be swift and enormous, while the losses, if you are careless, can just as quickly take you out of the game, forever. The potential to acquire fast and enduring wealth, coupled with the strangely exciting possibility of economic ruin, makes professional trading one of the most desired activities in the financial world. However, most who make a go at this demanding profession fail. And they fail miserably. This hard, cold reality is due to several reasons, but I’d like to point out one of the most damaging of all those reasons.

What has guaranteed the failure of countless trading novices is the inability to see the difference between a “gamble” and a “professional trade.” Loading up on a stock just before the company releases what is “expected” to be positive earnings, and buying into issues that are crashing at the speed of light are just two of the actions that fit the criteria of senseless gambling. While these “shoot- from-the-hip” approaches can score big at times, their greatest value is in their fleeting entertainment, not in their intelligent approach. They have no place in an intelligent, well-planned trading program. If you want to be entertained, it is better and cheaper to go to the movies. If you want to make consistent money in the market, your methods had better be professional and extremely disciplined.

Smart trading involves executing a plan. Gambling is nothing more than buying and selling with little more than the hope that you are right. So it is of paramount importance that you trade smart. You can never lose sight of this fact: In order to win, you must last. Those who trade smartly last, and those who gamble don’t last. Every trader must learn to recognize which is which.