Market Master: Lee Gettess’s Trading Advice

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Lee Gettess is one of the leading market timers in the market. His accurate short-term techniques have made him a very successful trader in the financial futures arena. Lee is the author of the very popular market-timing book Marksman Trading the Turns Profitably. Additionally, Lee is the system author of the Gettess 30, which is a trading system for the S&P. Lee recently wrote a new book called The Five-Step Guide to Trading Profits, which has just been released.

Here is what Lee has to say about about the one piece of advice for trading..

 

”I think a good trader has to be a pessimist, at least as it relates to every individual trade. Too much positive thinking starts morphing into wishful thinking, and that is just no good for a trader. What I focus on, and what I believe every trader needs to focus on, is the risk.

I’m a very positive person. I got into trading to make money as I’m sure virtually every trader does. It is rather illogical to get into trading to lose money, isn’t it? I expect to make money over time and I’m very optimistic about the long term results. Trading with the expectation and intent to make money is a given. Now that we know that… all I ever focus on is how much I can lose. 

Why? Because anyone who believes they can control over any other aspect of their trading is just kidding themselves.

We all spend hours and hours researching and analyzing price charts attempting to find what markets we should buy and what markets we should sell. But after you are done with all of the analysis and have actually put a trade on, is there anything you can do about the profit? You root for the market to go your way. You shout and curse in your own chosen language, and you question the parenthood of the market as if the market were a living being. You often even pray. But you are absolutely powerless to make the market move in your direction by any given amount. You can only hope you have done your research correctly and chosen the proper direction, but even then you have to accept that you are dealing with probabilities and not certainties. Even when you do everything right, you are going to be wrong and have to take a loss sometimes. Once you put that trade on, the amount of money you are capable of making is completely out of your control.

On the other side, we do not have a modicum of control over how much we lose. There are execution costs, slippage, overnight gaps, and possibly even planes crashing into buildings that can cause losses to be larger than we expect, but within reason we do have the ability to control the size of our losses. Whatever total amount of risk you decide to limit yourself to can be adhered to the vast majority of the time. Since risk is the only aspect of your trading that you actually really have any control over, it just makes sense to me that risk is what a good trader should focus on. That is what I do. That is what I suggest you do.

I wan the probabilities in my favor, and I want the risk to be both quantifiable and controllable. If any of those factors are missing, I would prefer not to trade.”

 

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