Rule #1: Don’t trade in a closet!

The Opening Print, Trading Rules

Our No. 1 rule, both on the floor and at our desk, is “Don’t trade in a closet!” What do we mean? It’s not literally being in a room alone, though many traders do that. It’s about needlessly avoiding the help of others. We all need solitude at times, but it’s easy to go from solitude to being isolated in your own mental closet.

Lehman Bros. CEO Richard Fuld arrives for Congressional testimony (NY Daily News)
Lehman Bros. CEO Richard Fuld arrives for Congressional testimony (NY Daily News)

People seem drawn to the myth of the lone trader sitting in front of his bank of computer screens, intently studying his charts and quotes and news feeds, brooding and bending his genius towards unraveling their mysteries in ways ordinary mortals cannot.

He’s the 21st century successor to the legendary trader Jesse Livermore, who had a vast office on Park Avenue, accessible by a private elevator, with staff who weren’t allowed to say a word during trading hours.

Lehman Brothers CEO Dick Fuld had a private elevator as well, with an operator under strict orders not to make conversation or eye contact. It took him up to a private helipad, which is how he often came to work.

He ended up so isolated from people and from reality that he believed his own fantasy math about collateralized debt obligations and couldn’t see what even a beginner at technical analysis could: Lehman was going to crash.

The rest of us without helicopters can still fly off into our own fantasy world while staring at quotes and charts. That’s when you need a good trading buddy or several to bring you back down to earth.

A good trading buddy can remind you to set your stops, can tell you what she sees on a different time frame—that maybe the “crash” you’re seeing is just a dip relative to a long-term uptrend.

[pullquote]Above all, a good trading buddy can tell you when it’s time to stop trading, cut your losses, and live to fight another day.[/pullquote]

If you listen.

Bear Sterns stock price (Seeking Alpha)
Bear Stearns stock price (Seeking Alpha)

Remember Jim Cramer’s over-the-top pleading with CNBC viewers to hold their Bear Stearns stock and buy even more? He said he had a proprietary stochastic oscillator that told him it was a good idea. Bear stock quickly went to nearly nothing until JPMorgan Chase bought them out under orders from the Bush administration.

If Cramer couldn’t find anyone at CNBC to tell him to think again, why should we expect the TV to be a reliable trading buddy and not just background noise? Maybe this is why most traders watch business news with the sound off.

We’re spoiled in that our trading buddies are on the S&P floor and among some of the best fund managers and individual traders, people like Marty “the Pit Bull” Schwartz, who helps us see the market in a new way. Find a trading buddy, share ideas, and most of all: be patient.

Algorithms and program trading may make up 75% of the trading volume, but human beings are still the ones writing the programs. No indicator or proprietary system can replace the wise judgment of a trader with experience, a quality network of people to share ideas with, and above all, the ability to master ego and emotion.

Here at MrTopStep we’ve worked for years to assemble one of the world’s best trading mastermind groups, the MrTopStep Trading Room, formerly known as IM-Pro. You can literally look over the shoulders of professional traders as they work before, during, and after the trading session. Ask your questions, share your trading ideas, offer your advice to the group. And hear traders call out their trades and setups in real time, as they make them.

You also get free access to the MrTopStep Imbalance Meter (MiM™) as part of your package. Plus live updates from the CME trading floor, with inside information you won’t get on the news, but only from traders on the floor. In other words, from your trading buddies.

Try the room for a month and see if it doesn’t become a daily, trusted part of your trading and education. Some of our members have been there for years, because they make back the $350 monthly fee many times over. And they find friends.

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