Today's Quote: “Discipline is the bridge between goals and accomplishments.” Jim Rohn.

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…

LESSON #2: TIME DIVERSIFICATION MINIMIZES MARKET RISK

One of the questions we're asked very often is, "Should I buy every stock on your daily pick list?" The answer is almost always a resounding no! Here's why. First of all, buying every recommendation would likely take financial resources greater than most individuals possess. Secondly, and far more importantly, buying all your picks today, for instance, will increase your odds of becoming what we refer to as "a victim of the times." What this means is that individuals who deplete all their capital on one day's picks become totally dependent on how that one specific day performs. What if an unbelievably dynamic opportunity presents itself 1 or 2 days later? Where would the money come from, which is now all tied up in say, Monday? Even worse, what if our picks "stink up the joint" on the very day you decide to buy everything? We encourage our swing traders to spread their picks over a 1- or 2-week period. For example, a $30,000 account owned by a developing swing trader might be put to work by investing a quarter, or $7500, twice a week. At the end of a 2-week period, the entire $30,000 will have been put to work. Now here's the beauty of a plan such as this. By the time the trader is investing the final lot of $7500, he or she will more than likely be selling out of the first lot, and maybe even the second, if swing trading. This methodology guarantees that you will always have funds available for those occasional "major" opportunities. And don't you dare think that two plays a week are not enough action during your developmental phase. It should be remembered that every play is comprised of two major actions—the entry and the exit—not to mention the other items involving the management of the trade. In reality, the person who plays four times a week has to make a total of eight decisions. And we're willing to bet that eight decisions will be of a higher quality than say, fifteen. Try it! I think you'll like it.