Trading is like playing pro football. What are the things you do to do it well? Preparation is key. The whole week before you go up against the competition, you watch game films of the other team. You start looking at the team, players and down tendencies.

Then, you practice. When it comes to game time: You don’t have to think; all you do is react. I do the same thing when I prepare for trading. I gather information from a bigger perspective. I take a look at some longer-term charts to check the trend and see if there is a longer-term trading opportunity.

I’ll do some Gann and Fibonacci work to come up with some good numbers for support and resistance. The first example chart shows numbers for the day at the time I captured the screen shot.

Because I’ve done my homework, once the market starts trading intraday and the patterns start developing, all I have to do is react intraday. My reactions are guided by my support / resistance numbers and the rule-based trading strategies that present themselves at the time. As a result, it’s easy. This next example chart shows my numbers intraday and the strategy that went with it at the time I captured this screen shot.

The statement shows an actual long position initiated near a 50% retracement, after a 5th Wave low was established at my predetermined levels. I exited 4 contracts at reward / risk levels on the same day and kept 1 contract overnight with a money management stop.

Position trading works the same way, but you have a little bit more time to think about it. You take your trades on a daily, maybe even on a weekly chart, but it’s the same process. You’ve done your homework, the market comes into your targeted areas and you just react: You put your orders and stops in and plan your exits. Maybe you leave some on because you may never see those prices again.

Traders who have seen me in action over the years know that I have kept some core positions in stocks such as IBM and AMGN over the years. What I try to do is to go risk free as soon as possible. For example, with stocks that are at historically low prices, I take profits on a piece of the position and adjust my stop to break even or (in some cases, such as AKS, WMB and SKIL) to zero.

If they die, I still make money. If they continue to live, I have bought in at a price that history may not see again.

If you have some good rules, you get past a lot of emotions that may interfere with trading. Once you get yourself to the point where you’re not thinking too much, and you’re just reacting, emotions are under control. The only way to put yourself into that state is to know your subject. That’s what we try to do with our seminars. If you know your opposing team (in other words, you’ve done a little bit of homework in advance), it just gets easier with time.

I always tell people I have the best job in the world. I continue to trade full time, but I get to do seminars to interact with other traders and confirm my trading. For me, what it comes down to is this: Trading the E-Minis is for pocket change, and my position trades in stocks are generally my biggest winners.