Back when I used to work out with martial arts legend Bruce Lee, he constantly emphasized three important concepts to me….
1. Be like water (my friend), be like water.
2. Chuck Norris is a wuss.
3. Always use every tool available in order to be a successful trader.
It’s not well-known, but Master Lee was a pretty bad-ass trader himself. Often, after a long night of nun chucking the vast minions of some evil warlord, Bruce would spend the day arbitraging index options on the floor of the Pacific Stock Exchange. The locals used to call him Bruce “Alpha” Lee.
Being a retail trader back then was hard work as well, not so much because of the markets, but because of the lack of tools you had access to.
When I bought my first stock in 1985 there was no such thing as real-time quotes or charting software for a retail trader. If you wanted to get a chart on a stock you had to subscribe to a service and they would actually mail you a paper chart.
These services were so expensive that most families could only afford one chart, and once you got it, that was your chart for life. Parents would pass the family chart down to their children, and if you wanted to trade another stock, you had to make enough money in your stock to afford another chart.
Traditionally, it was the eldest son’s responsibility to update the chart by hand every night, which was a tedious job that could lead to big problems if you were not careful. One of my best friends, Eric Phillips, actually spilled a Slurpee across a chart during this process, ruining it and causing his family to miss a cup-and-handle breakout in Xerox that could have moved them into a higher tax bracket. He has never entered a 7-Eleven since.
Information flow on most stocks was non-existent as well since there was no Investor’s Business Daily, no StockTwits, and no CNBC (perhaps a good thing).
Nor was there online trading, and it was a 50/50 shot to even be able to reach your broker via his single line, land-based phone. And if you did get through, you were charged what was then considered a “reasonable” 2% of the total trade amount as commission. By the way, you were lucky if you could get a trade confirmation back in a few hours.
Back then, when I wanted to trade a stock, I would have to brave the harsh Southern California weather and drive to my local Sears where the Dean Witter offices were located. Just in back of the Craftsman tool section was the office of my first broker, Randell Woodworth. Randell would take my order, hand write me a receipt, and then ask me if I wanted to look into whole life insurance from the Allstate rep at the next desk.
But the worst thing of all about being a retail trader at that time was that there was no way to communicate with other traders, especially those with experience.
These days, with the click of a mouse button, you have at your fingertips an unending array of tools with which you can use to be a profitable trader. And the number one tool as far as I am concerned is a subscription to a quality trading service.
When I made the transition to full-time trading I had the luxury of time; time to sit at my computer and review 100’s of charts, run scans, and read all the news flow…..but I hated doing it. There I said it.
I HATED DOING IT…!!!!
Call me lazy, call me a slacker, call me handsome, it doesn’t matter, that’s just the way I have always been wired. When I was learning Spanish, I didn’t like sitting in a classroom conjugating verbs, I wanted to be down at the cantina, drinking cervezas and actually speaking the language.
It’s the same with trading; I love finding the setup, figuring the risk/reward, stalking the entry, managing the trade, and then trying to exit at the best possible point. But back then I didn’t have the choice, I had to do the “homework.”
In 2008, I was asked to join a start-up, and that, combined with the fact that I now had two young children, created time constraints that meant doing the homework was no longer just an annoying necessity, but a virtual impossibility.
That was when I slowly started to add subscription services to my tool bag. I say “slowly” because since I was in essence handing over the analysis part of my trading to a third party, I needed to be sure that I felt totally confident in their capabilities, as well as their ability to communicate information and ideas in a way that I could relate to.
Now these services are an indispensable part of my trading, and I wouldn’t have it any other way. And to be totally clear, I am talking about a trading service, not a trading system. I have already covered why as a retail trader you will never be able to purchase a viable trading system.
I’m sure that there are some hardcore purist neo-Luddites who think that because of this I canmno longer call myself a “serious” trader. Okay Jebediah, here’s an idea; why don’t you grab your typewriter, your telegraph, and your Victrola, throw them on your mule, and come join me here in the 21st Century?
If you really think about it, using a service to find trade candidates is no different than using a scan to do the same thing. You are filtering down the universe of tradable instruments into a more focused and actionable list; the only difference being that the “filter” is not a bunch of code or if/then variables, but an experienced trader. The bonus here is that you can also interact with that trader in a real-time way via social media.
Most of these services clock in at about $49.00 per month, so for basically the price of a Saturday night bar tab with your buddies you can get a tool that I would have killed for back in the day. And I will tell you now, if I ever go back to full-time trading, I would keep every one of the services I currently use, and maybe even add some.
The real question then is “why wouldn’t any serious trader subscribe to a trading service?”
The list of quality services out there is long, but if you want a head start on finding one, check out my list right here. I am not associated with any of these services nor do I get any compensation for mentioning/listing them. However, I can tell you that with every single of them, I either subscribe myself or have followed their trading close enough to feel comfortable recommending them.
Once you have a few trading services as tools, the only thing you are missing is access to a witty, intelligent, and insightful blog about the markets and life in general.