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January 1997
Everyone who reads STOCKS & COMMODITIES magazine has one goal: To develop better trading and investment skills to take advantage of the opportunities in the markets. Their skills are acquired through education and practice and then acting on both. If the acting is executed successfully, confidence grows and trading becomes easier. Yet, along the way to becoming a better trader, the act of executing your trades can become complicated: Opportunities are missed, decisions not followed through, and suddenly, issues other than the market begin to take center stage. What issues? you may think. What could possibly be more important than the market itself?
It's as obvious as -- well, the thought itself. The mental aspect of trading can be surprisingly difficult. Anyone with trading experience can tell you that the mental part of trading takes on a very important role, especially when trading leveraged vehicles such as futures. That's why the topic is such a popular one, and that's why each month we try to make sure that there's an article pertaining to trading psychology.
It comes down to this. There's more to trading than just drawing trendlines or buying breakouts or following this system or that method. Toward this end, this month we have as our interview subject an individual who has certainly earned his stripes when it comes to the emotional side to trading. Mark Douglas of Trading Behavior Dynamics discusses his own early struggles with the mental side of trading, and then goes on in detail about the issues that most traders face at one point or another. I'm sure most of you will find some truth to his discussion about how fears cloud our judgment and the importance of trusting yourself, as well as other topics. All in all, his comments are thoughtful and germane to what makes traders tick.
Also this month, we have Contributing Editor Dennis Meyers's latest article, which uses advancing issues, declining issues, advancing volume and declining volume as a basis for a trading system for timing the stock market. As always, Meyers uses proven strategies to develop his timing model. He defines his rules, uses in-sample and out-of-sample testing to ensure the viability of the method over different time periods, and either keeps the system or discards it. Whatever method you're developing, reading Meyers's work will help you. I understand his October 1996 article, "The siren call of optimized trading systems," generated some lively discussion on the Internet. If you recall the article and it piqued your interest, then be sure to take a look at our Letters to the Editor column. See if you agree or disagree with the various comments on the subject therein.
This issue marks the start of another year. As I write this in November, there is no shortage of predictions about interest rates, the stock market, commodities and so on for the coming year. I really don't know what's going to happen, but I can tell you what I'm going to do. I'm just going to follow my favorite methods and watch the markets unfold -- and then act as my methods dictate I should. I'm also going to do my best to continue to bring to you articles that educate, articles with techniques you can use, and articles that help you, our readers, do the fun part: execute your plans in the markets!
I hope 1997 is a prosperous year for you, and that you go the way the markets do.
Trade well!
