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Although many of my previous articles pointed to the act of 'focusing' to some degree, this will be the first time I've written an article that 'focuses' on this very subject. Because of how important I've found this subject to be in my own analysis and trading of the markets, it deserves a bit more consideration than a brief mention within some other topic.


There are many markets one can choose to trade. There are many techniques one can use to trade all these different markets. There are many trade opportunities among these many markets in which to use many different methods and techniques on.

Focus:

 

  1. A center of interest or activity.
  2. To produce a clear image of.


Do you have a clear image in your mind as to what the markets you are trading are doing at any given time, or are they a bit fuzzy in your mind? Do you approach each of your analysis and trades using the same procedure, or tend to address each trade from a different approach? Once you enter a trade, do you later forget the complete reason you took the trade in the first place and start questioning it?

How you answer these questions should tell you whether you have a problem with focusing. If you cannot outline within your mind's eye all the reasons you took the trade in the first place, how you plan to manage the trade, and where or how you plan on exiting the trade, then you are not focused and in danger of failure.

Focusing is much like setting goals. When you place something as your 'center of interest', you will tend to take steps in the direction of making that 'interest' work for you. That 'interest or activity' is 'clear' in your mind's eye and each step required to reach your goal is quite fresh in your mind. On the other hand, if you tend to direct your attention to several points of interest, such as several markets and/or several different trading approaches, your next action is not as clear because you are not focused. To be unclear about anything can lead to indecision and an inappropriate action.

As an instructor to many about the subject of trading, I have come to fully experience first hand the dangers of losing focus. As a trader during the 1990's, my concentration was on my own trading. There were only a couple of markets that I would trade almost exclusively. If you were to meet up with me while shopping or at a restaurant and ask me about those two markets, I could tell you what they did, are doing, and what they were likely to do in the near future. Ask me about any other market and I simply would not have a clue. Needless to say, profits were had quite readily from my focusing on these two markets because each step was very clear in my mind. Because my trading was so effective, in time I started to teach others and a business formed from this. However, because others do not necessarily share my desire to trade the same two markets, it became necessary that I performed my timing magic on many markets. Today, I cover about 20 markets for hundreds of individuals. My focus has turned from trading two markets to analyzing
20. In other words, my focus has turned into not focusing at all!

It has taken a great amount of time and effort on my part to adjust to this situation. Although the adjustment does not return me to the single-minded concentration of just two markets like in the past with all its advantages (and profits!), I have been able to get back some of the benefits of focusing by using the simple technique of making a notebook to cover only the market I wish to trade. I will go into this more later.

While attending to the needs of many traders each day, it soon became clear that my personal trading had to take a back seat. Although I continued to trade, it became evident to me that some of the edge was gone. Did not matter that my timing has never been sharper as it is today. To lose focus on the market you are trading can and usually will result in less than spectacular results, or losses that otherwise could have been avoided if your mind was completely focused on the actions required to manage it. Professional traders cannot afford to lose focus on their bread and butter trades. Novice traders cannot afford to neglect the importance of focusing period.


LEARN TO FOCUS
I cannot emphasize enough on how important focusing is on trading. If you are bouncing from one market to another looking for the next opportunity and find your not moving forward in the success bracket, you may immediately suspect your method of trading. A bad method certainly can hold you back, but to diagnose your trading problems as a method problem when it really is a focusing problem can keep you spinning your tires and opening your wallets for many months (and dollars) to come. If you really want to know where the problem lies, it is best you concentrate on focusing on one market first until you are successfully gleaning profits from it.

To learn to focus requires that you first narrow your 'center of interest'. To do this is to simply pick one market you think you will like the most and that will provide you with some low risk trade opportunities while you are ironing out your approach. The market you decide to 'focus' on I will leave up to you. Look them all over very carefully before choosing. Once you have decided on a single market, make it your goal not to consider any other market no matter what. Lose the focus and you will lose the edge you are trying to gain.

Pick up a new notebook and label it for trading that single market alone. Suppose it is the T Bond market you have chosen. On the cover of your new notebook, write "FOCUS ON BONDS" in big letters. Keep this notebook right on top of your desk at all times. Do whatever else you feel will help you to concentrate on this market alone and no others. After many months of viewing many different markets for my clients, it became obvious to me that I will likely not have the same mental sharpness for my previously two traded markets as I once did when trading solo. However, I have since regained a good measure of that edge since deciding that one market will get my strongest attention. This was by way of creating a notebook and labeling it as suggested above. Now here are some other things I have since been doing to improve my focus even more.

Many of us get our price data electronically and create charts using software on our computers. Because of the business I am in, there is no way I can be without this. However, for the single market I have decided to 'focus' on, I also draw my charts by hand using graph paper and a pencil.

When drawing charts by hand using pencil and paper, you cannot help but to become more in tune with that market. You etched out each movement with your hands and eyes. When the market moved up, so did your hand and eye in
producing this movement on paper. You will be amazed at how more focused you will become to this market in a very short period of time, and you will soon know why you are winning or why you are losing.

The type of charts you decide to draw by hand will be up to you. I like to draw a chart for the weekly as well as daily time frames. Each day, whether I have a trade or not in this market, I still have to update my hand drawn charts. On these charts I can make hand written notes as to what I expect to happen, where I believe exist support or resistance areas, plot trend lines, and other useful jots.

From experience, I can tell you that these techniques really help you to focus. It helps you to keep in mind when there is a trade and when there are none. It allows me personally to do other things on days I know no trade is available on that market. Covering 20 markets as I do each week for my clients affords me lots of trading opportunities, but today I will not consider any of them unless it happens to be the market I have chosen to focus on. Let me say that one market alone will make you a lot of money each year if you only learn to focus on it and be patient. One of the hardest things to learn is thinking Market X is going to make a good trade move yet you have decided only to trade Market Y. The pull can be quite strong, so you need to resolve within yourself never to give in.

By now you should have figured out that focusing on a single market is for those who are not using canned systems that allow trading several markets at once. Obviously if a system requires multiple markets to keep it floating, focusing is not a requirement or issue. However, if you are like many traders who plan and plot their trades using discernment instead of a mechanical approach, and you find success fleeting, then focusing on a single market is likely what you need.

Finally, when you focus on a single market alone, you can monitor your approach to trading more closely. You will soon determine whether an approach you are using is effective on that market or not. You will develop a sense what that market is likely to do, where stop-losses are best placed, and the kinds of profits you can expect for a given time period. Being in tune with a single market will provide you with incredible insights that usually cannot be attained by spreading your attention across several markets.

As I complete this article, I notice that the market I have chosen to focus on has closed and it is time for me to take out my pencil and notebook and update my hand drawn charts and take notes. A tradable pattern is now developing on my paper charts and I know that soon another good trade will be there for me.

Resolve to focus on a single market now. Make that notebook and clearly mark what its purpose is on the cover. Open it each day and update the paper charts you are drawing by hand. Take notes of your thoughts on that market each day, whether you are currently in a trade or not. Soon you will discover a peace within you that comes from knowing each move you make within the market of your choice. You will soon become a specialist on that market. Anyone can stop you on the street and ask you about that particular market, and you will be able to speak from clear and focused knowledge what it is doing at that particular time. You will know that the method you are using is reliable or not, and can concentrate on improving that aspect of your trading without clouding the results by jumping markets.

For many, the key to successful trading will start by learning how to focus.

Note:

About the Author
Rick J. Ratchford is President of ProfitMax Trading Inc. He is a full-time commodity trader for his own account as well as assisting other traders. He has been a computer programmer for more than 20 years and a trader since 1990.

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