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View additional market commentary on InsideFutures.com


In This Issue:
Larry Levin, Founder & President of Secrets of Traders, shares his thoughts about the importance of staying objective. After all, "anything can happen at any time in the market."

April 19, 2007
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How Is Staying OBJECTIVE Important to Your Trading?

(The following is an excerpt from Larry’s new book, How I Made 1,900,336.82 Trading Commodities… )

Do you believe anything can happen in the market at any time? If you do, good for you--this is what being objective is all about. A profitable trader needs to be thinking constantly that the market can do whatever it wants, whenever it wants. Many people get into trouble by thinking the market cannot or will not do certain things.

Many traders put mental limits on where they think the market should go, often yielding bad results. I remember a time a few years ago when I was in the S&Ps, and there were about five minutes left until the market closed. One trader told me he thought the market was going to break another 5.00 points in the S&P futures. I said there was no way this was going to happen with only a few minutes left until the market closed. He said that it didn’t matter if there was only one minute left; for the S&Ps (or any market) to move, all it had to do was be open. And he was right. In the next four minutes, the market dropped 5.00 points, just as he had predicted. If I hadn’t limited my beliefs, I could have made money on that trade. But unfortunately, I was not objective enough to believe the market could really break that far in such a short amount of time. My limited beliefs prevented me from making money that day.

But in the end, that situation helped me to be more objective in the future. It was definitely one of the stepping-stones for me toward realizing that anything can happen at any time in the market. All it has to do is be open. So what does it take to remain objective?

(continued below...)


Special Message From Our Author:

Larry Levin wasn't always a successful trader, in fact, before he reached the top, he began his trading career at the very bottom... find out how he overcame his fears, learned to stick to his rules, and became one of the most successful traders in the S&P.

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To be objective, you can’t put your demands and expectations on the market. First, you’re cutting yourself off and distorting vital information that the market offers to help you decide which way it is going. Second, as an individual trader, you don’t have enough power to control the market and to make it live up to your expectations. Thus, you must learn to be objective in your market observations.

This doesn’t mean that you can’t have an opinion about the market. It only means that your opinion just as easily can be wrong as it is right. In other words, you need to be completely ready and comfortable for it to be wrong. You need to release yourself from having to be right about market direction. The more objective you are, the less you will distort the information you receive.

Mark Douglas, the author of the book The Disciplined Trader, states that there are seven characteristics of an objective person:

  • You feel no pressure to do anything
  • You have no feeling of fear
  • You feel no sense of rejection
  • There is no (absolute) right or wrong
  • You recognize that this is what the market is telling you
  • You can observe the market from the perspective as if you were not in a position
  • You are not focused on money but on the structure of the market

 

Can you see any of the above qualities in yourself? Great! You’re on the right track. Again, you need to release yourself from that burning need to be right. If you constantly need to be right, this is not the business for you. To be a successful trader, you will not always be right, but you will always need to be objective.


About Today's Author:

Larry Levin is the Founder & President of Secrets of Traders- a commodity trading educational firm dedicated to helping traders succeed in the futures markets.

Larry trades the S&P 500 at the Chicago Mercantile Exchange, the world’s largest and most diverse financial exchange. Larry has been trading his own account or his company's proprietary accounts since 1993, trading an average of 2500-3000 E-mini S&P contracts a day.

He has been in and around the S&P 500 futures pit at the CME for almost 20 years, where he started as a runner for Lind-Waldock. Larry moved up through the ranks from runner to phone clerk to desk manager of the S&P desk. He began trading his own account in 1994.

In 1998 he formed Trading Advantage, a publishing company enabling him to distribute his self-authored trading course, The Secrets of Floor Traders. In 2000 he sold the rights to the course Secrets of Floor Traders to Secrets of Traders, LLC to market his products for him. This transaction has allowed him to trade for a living full time while continuing to distribute his message. He recently developed his newest trading course, 'The Secrets of an Electronic Futures Trader' designed to give the electronic futures trader the competitive edge needed to succeed.

Larry appears regularly on CNBC, Bloomberg Television, Rob TV, BizRadio, as well as various other media outlets, providing his expertise and insight on the current market.

Larry’s lifelong vision is teaching people to learn how to trade the right way.