The most important part of trading is to make money

I was over at Ickos' Alsi-Trader blog and came across a pretty recent post from him about "Becoming a better trader".

One of the comments that he made was: "To become a profitable trader one must invest time. First on to do list is to read as many books as one can."

My personal opinion is that this idea of becoming a good, better, best trader is questionable at the best of times and the one thing that is more important than reading books is to make a profit and retain it!

Simple example - a trader starts with R1000 - he makes a 15% profit - what does he do with that profit?

A) Bank it and trade up with R1150 next time?
B) Put the profit in the bank?
C) Invest the profits in an index tracker or a blue chip share?
D) Put their profits into their bond and settle debt / grow other asset classes?

To me, knowing how you are going to protect your profits is something only you can learn and decide and too often it is left till last in order of importance while traders pursue larny systems.

I'm a big believer that many traders spend way too much devising, back-testing and developing systems and spend far too little time working out how they are going to protect

How many traders are cussing and cursing that they were stopped out of long gold trades on Friday? (Or will be on Monday). I am pretty sure that few people or systems could fault you being long gold until WHAM! that jobs number comes out and you are blown out the water.

(Yes you should remember the rule that it is dangerous to trade around data but if that were the case then most of you would be out the market 75% of the time.)

No trading system in the world is going to protect you from random events (9/11 for example or a "whopping" jobs number) - but you can certainly protect yourself by making sure you know what you are going to do with your profits as you make them.

THE POINT OF TRADING IS TO MAKE MONEY - IF YOU DON'T KNOW WHAT THE SCORE IS THEN YOU'RE A GAMBLER.

NinjaTrader

Following a number of the local trading boards in South Africa, I've been hearing a lot of talk about this NinjaTrader platform.

I haven't used it but from the feedback I've received and the things I've read, I believe that it is extremely successful.

If you are a user of NinjaTrader please put your comments below about how successful this platform is and some of its strengths and weaknesses.

About NinjaTrader
Founded in 2003, NinjaTrader, LLC is a leading developer of high-performance trading software for the active trader. The company’s NinjaTrader software is a complete end to end trading platform serving discretionary and automated traders of futures, equities and forex markets. NinjaTrader is available at over 100 brokerages worldwide and is promoted by the industry’s leading trading educators and providers of 3rd party technical indicators and trading systems. The NinjaTrader platform is free to use for advanced charting, analytics, system development and trade simulation.

NinjaTrader sets the benchmark for trading software and continues to invest in new product development. Based in Denver, CO, NinjaTrader serves the global trading community with locations in Grand Rapids, MI, Rotterdam, The Netherlands, and Bamberg, Germany.

Stop losses

Stop losses - those bloody things we love to hate.

Today reminded me why we had them and why they need to be there even if we 'think' we know better.

As mentioned yesterday, I exited my Impala Platinum calls after they took a bit of a pasting in early morning trade. The moment I sold out, I had this 'sellers remorse' and was certain that the US bailout would all be approved and the market would turn around and fly.

Bailout occured
Market bounced... A bit
The next day market lost momentum
Impala started trading down even further

Nobody likes selling at a loss and feeling like they called it wrong. But we all do it and the sooner we get over ourselves and admit that we made a mistake the better it is for our trading sanity.

It might not feel like it at the time but stop losses really are there to help you preserve your capital. Find your system and stick to it.