Lessons from the Pros

Education Resource

Profile of an Online Trading Academy Graduate

Inside the Mind of a Mastermind Trader: Words of Wisdom from Senior Trader Ed “Cash” McCall

Ed “Cash” McCall is a charter member of the Mastermind Community on Power Trader Nation, an elite group to which only the most accomplished traders are admitted. He previously ran his own website and Skype chat room with 3-400 traders participating, and continues to encourage new traders by sharing his knowledge. Here he shares a bit of his story and philosophy:

WHAT I TRADE: The Russell 2000 and I’ve recently added crude oil. I used to trade all over the place, then got advice from my OTA advisor to stick with one product, learn it, then add size as you get consistent. I chose the Russell because its movement at that time was similar to Apple.

TRADING PHILOSOPHY: I have a favorite Bruce Lee quote, “I fear not the man who’s done 10,000 kicks; I fear the man who’s done one kick 10,000 times.” Choose one thing and learn to do it well. I only make 1-2 trades a day. I look for a swing low or swing high and a potential movement of 5 points with a risk to reward that is flattering. Gaps on the Russell close 71% of the time the same day so if it gaps up in the morning, I’ll look for it to move down.

ENTERING AND MANAGING MY TRADES: I will use a 50 moving average on any time frame to find a trend. If I want to short, I’ll look for all green candles representing solid buyers, then a wick at the top as it enters a zone. That’s where the last buyer is at that moment in time. If you take it down to a five minute time frame, you will see a wick there too. That’s what opportunity looks like, when momentum has dried up and sellers are about to enter the market. I market in, not limit in, to make the most of the trade. If the trade goes against me, I use the top of the wick as my stop.

Once I get into the trade I have a trade plan that defines how to manage this trade. For the Russell it’s typically two points. That’s my first target and if I have four contracts I will take two off after a 2-point move. I’ll typically use a 20 and a 50 moving average against a 377 tick chart to manage my trade and let the trend do its thing and use the 20 moving average as my trailing stop. Once it closes above the 20 (uptrend) I’ll take the third contract off, then take the fourth off once it closes above 50.

This methodical and conservative approach quiets the beast in me—the fear and greed that says I should take it off here and lock in more profit. I’m trying to be a intraday trend trader and have found this calms my nerves. But if I’ve gone past five point of profit, I’ll take it down to the 8 and 20 moving averages with a ballistic move. The whole idea is to get the majority of the move without giving too much back.

MASTERING THE MENTAL GAME: I talk about the three M’s of successful trading: methodology, management and mindset, doing the basics consistently. Online Trading Academy gives you the first two, but you have to develop the third on your own. The biggest problems traders have are that they get in their own way… this still happens to me about 15% of the time.

Put another way, OTA has given me the tools and sharpened the tools, but ultimately it’s up to the trader how they use those sharpened tools. You can’t blame education for not making a trader successful because the ultimate power is in the hands of the individual.

ON LEARNING THROUGH LOSING: The first two years of my trading were losing years. I assumed that, because I’d been in business supervising 30 people, I could dictate to the market. I started with $50K and was down to $15K. I could blow the rest on a really nice vacation or bleed it dry. I realized it was time to submit. When we get frustrated enough, we can make changes and that’s when I started getting better. I came up with a trading plan—not a good one but a start. And I’ve continued to refine it from there.

To learn more about Online Trading Academy education, visit www.tradingacademy.com.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

Join over 170,000 Lessons from the Pros readers. Get new articles delivered to your inbox weekly.