Baseball And Profitable Trading

“I’ve found in life the more you practice, the better you get. If you want something enough and work hard to get it, your chances of success are greater.”Ted Williams

For many traders, myself included, tape reading was the missing piece to the puzzle.

Early in my trading career this type of price action absolutely destroyed my trading account. The “world is ending” headlines made me believe stocks MUST go down and it must happen immediately.

At the time, I didn’t understand the difference between macro economics and trading. Today’s GDP and employment reports will have an impact, and stocks will see a volatile reaction, but they won’t turn the Titanic in one day.

It’s still going to hit the iceberg.

But that has nothing to do with making money today, or this week. And that’s where many smart people have missed the best moves of 2023. You’ll hear things like “I don’t trust this rally. Or Stocks shouldn’t be going up…”

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Yeah I know, but they did. And for traders, that’s all that matters. Leave your investing thesis in your 401K. I’m buying Monday and getting out Friday. If it’s going up this week I’m long. 

Tape reading means you are putting the pieces together, in the moment. It means we are using everything on the dashboard to decide to step on the gas, or hit the brakes. I can’t imagine driving without making adjustments. But some people do that very thing with their money.

They forget, don’t know, or don’t admit that there’s information and decisions the we process to get into the trade, and also new information after we get into the trade. 

I think most people ignore the “after we enter decisions” because it means they need to take responsibility for the outcome. And it hurts when they don’t like the result.

If you don’t make decisions, then if you lose it’s not your fault. At least that’s the story we tell ourselves as our trading account dwindles.

As you gain experience you realize the number one job is protecting your capital. We like to think trading is about pushing for outsized gains. It’s not.

Trading is about probability, managing risk and for those lucky soles, managing winners. Ask any baseball player about hitting home runs.

The best players don’t try to hit home runs. They come as a result of a perfect swing. The same goes for trading.

Good mechanics at the right time. You get into a rhythm and the baseballs appear the size of a watermelon.

Ted Williams, whom many consider the greatest hitter of all-time (he lost 5 years of his prime for the Korean War) created this now famous chart of the best pitches to hit.

You should do the same for trading. What are your best pitches?

Stocks could go down hard with today’s 8:30 numbers. If they do, we’ll read the tape and trade it. If they go up, we’ll do the same.

The only difference will be initial position size and likely profit targets. 

Baseball, opening day and warm memories of being 15. Today’s a special day for us hardball junkies, let’s make it a profitable one too.

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