Finding Your Niche In The Markets

Patterns for Profits Newsletter - December 4, 2007

Live online trading is an involved and often rather time consuming task. There are many sectors to the various securities and futures markets, and within those a great number more industries which may or may not relate to each other. A excellent way to make the best of the time you spend researching and trading online, as well as greatly increase your potential for earning sizable gains through your securities and futures contracts trading activities, is to focus on a particular niche in the markets that suites you.

Most people who day-trade securities and futures contracts online are not traders or analysts by profession. Like you, others are simply trying to maximize their income by taking advantage of the thousands of daily opportunities presented in the fluctuations of various markets each day. For those who often find themselves bored at work or stuck at home during any given time of any day, and want to make their money work a little overtime for them. However, like all activities worth doing to try and capture some unrealized earnings potential, this trading has both a degree of risk and a cost in time. One of the best ways to reduce this risk and make the most of the time you spend trading is to trade within a particular niche that directly relates to the rest of your life and that you understand how to trade.

Properly understanding how to trade a specific sector or industry is a key part of daily live online trading, and so we will first discuss the lessor focused on concept of how your daily investment activities should relate to the rest of your professional life. As a professional you have a certain field of expertise and an obligation, to yourself and those you serve, to maintain and grow your knowledge of your field. This means that when trading in your spare time, it only makes sense to be focusing on sectors, markets, and specific futures that have to do with your field of specialty. Doing this has a two-fold benefit for you.

First off, concentrating your research efforts will mean that you have a better understanding of each of the companies, products, and industries that you are trading. You will be able apply your years of training and professional experience to your trading, which is going to make you more effective and net you a higher return on investment. You will be much more aware of external factors such as the current effect of the legal environment on anything you are planning to trade. You probably even have direct experience with particular companies, products, or commodities being traded, and therefore better understand what opportunities and threats exist. When trading something as complex as SP 500 E-mini contracts this can be extremely helpful.

Secondly, trading within your field of expertise means that all the time you spend researching and trading is actually professional development. Now, you're not going to be getting any CE credits for your day-trading, but you will be growing professionally. This means that even if during a particular day or week you do not make much money in your trading activities, at least you kept current on the state of your profession.

Finding a niche that you are able to trade effectively in will be made easier by focusing within your field of expertise. If you focus on a few specific markets and futures that relate to the rest of your life, you should be able to increase your return on investment while at the same time decreasing the amount of time you spend researching. Furthermore, your trading activities will become a means of professional development as well as providing extra income.

Patterns for Profits Market Watch

We have been posting charts for the last several weeks in our live trading room and on our website of the large support areas and an AB=CD buy pattern that completed in all indexes the last week of November. The market has been rallying from these support levels. There is much resistance above for the market to get through for any meaningful increase in price or new highs for that matter.

The August lows on all indexes are very important to keep an eye on. If these lows are traded through with decisive action then it will confirm the double top pattern on the SP 500 Daily charts. This could certainly bring in much lower prices.

We will continue to post updated longer term charts in our live trading room and on our website.

Time Is On Your Side
Excerpted from the book ‘Essentials of Trading: It’s Not WHAT You Think, It’s HOW You Think'
By Larry Pesavento and Leslie Jouflas

Available at www.traderspress.com

Many people are drawn to trading for many different reasons. Out of the vast numbers a large percentage seem to want to speed up the learning curve sacrificing learning valuable pieces of information on the way. Trading is a skill that is developed and fine tuned over a lifetime. It would be helpful to the novice trader to resolve with themselves that the process can be lengthy and that no one can put a specific time on how long it will take.

Mastery of anything requires time, perseverance and a strong desire to know the subject inside and out. As with anything there are two sides to learning trading; the approach or method that will be used and second; the correct mindset to apply that approach or method. There are hundreds of small steps involved in learning to trade well that add up to a larger picture.

Here is a thought that I hope will encourage a novice trader to enjoy the process and realize that all the steps are necessary, even the painful ones, and resign themselves to however long their personal journey takes them: Trading is a journey, if you miss one step or several steps in the process one of them just might be the key for you that would put it all together. Think of it in these terms, if you were putting together a jigsaw puzzle and decided to randomly remove several pieces of the puzzle that puzzle would never be complete without those pieces. Each piece no matter how small must be in place in order for the larger picture to be viewed in full.

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Leslie Jouflas
Kelly Hill