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LEARN FROM GENERALS OF THE MARKETS – PART 18
“Many times I’ve tried to run away from unpleasant circumstances only to discover that the problem was not the situation I was in but me.” – Julie A. Link
Tim Knight is a highly proficient and experienced trader. He founded Prophet.net, which was taken over by Investools in 2005. Between 2005 and 2010, he was senior vice president for that company. He wrote a book titled: Chart Your Way to Profit (published by John Wiley). He’s a very wide audience on his blog; Slopeofhope.com. What makes him popular is the fact that he’s very skilled in making money from bear markets. For example, he made a great fortune in the weak markets in 2008. As an expert funds manager, he uses mainly technical analysis for making his trading calls. He’s technical analysis addict. Tim has been interviewed by many media, including Traderinterviews.com.
Lesson
Here are some lessons that can be learned from Tim Knight:
1. Tim is a great bear – a bear that makes money on bearish instruments. While some languish in falling markets, Tim thrives. You simply have to be a bull in rising markets, and be a bear in falling markets, otherwise, your portfolio pines away. Many people, when caught in falling markets, would be reluctant to smooth their positions. Instead, they’d hope that the markets would come back to their entry levels. And you likely know the probable result of that.
2. Based on skills and experience, one can manage multiple positions at a time. For example, it’s not uncommon for a proficient trader to have up to 10, 15, 20, 25 even 40 open positions at time. With risk control and money management, one would manage an individual position successfully. Tim can manage up to 200 positions at a time – diversifying his portfolios. One who manages trades poorly can even lose if they open only one trade at a time; whereas a good trader can manage tens (even hundreds of trades) at a time. Interestingly, Tim has a stop loss for each position. In addition, his exit rules are mainly discretionary.
3. Tim is another living proof (apart from Dr. Alexander Elder) that one can be a permanently successful trader based on chart analysis alone.
4. Tim’s charts are extremely simple; not complicated, and he makes money from that. If you make your charts complicated and intricate, you’re simply making life difficult for yourself (and that won’t even guarantee higher hit rate or success in the long-term). Please be successful with very simple but effectual trading methodologies, and thus make life easy and comfortable for yourself.
Conclusion: Did you lose a lot of money in recent bear markets? Well, some made fortunes. What you, perhaps failed to acknowledge is that bulls suffer in downtrends, but lots of gains can be derived in downtrends. Just have it in mind that you too, like Tim Knight, can make money when the markets fall. Focus on that possibility. Focus on the present and let go of the past. Yes, we can’t change the past, but we can certainly learn from it.
A quote from Tim ends this article:
“…I’m very dedicated to having a stop on every single position at all times. And the whole idea of a mental stop is just anathema to me. They must have stops the moment the trade is on…”
