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Spring Training for Traders - Insights from Veteran Trader Dick Diamond
Learn how you can win from the sidelines with tips from a successful 47-year trading career

By Jill Noble
Thu, 03 Jan 2013 09:30:00 ET
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"Defensive behavior as a trader ensures long-term success."
So begins Dick Diamond's "Trading 101" section in his acclaimed Market Mentor Trading Course.
"A good trader plays excellent defense… Handling losses well is a requisite to successful trading."
Diamond should know. With a legendary track record, his hard-won trading knowledge makes him a valued coach to hundreds of aspiring technical traders. Yet his successful 47-year career was not an uninterrupted winning streak: Diamond learned his lesson the hard way.
In the bull market conditions of the 1960s, his portfolio grew remarkably well. In 1968, he made $900,000. But the next year, Dick lost 70% of his capital as the bull market ended.
This near-devastating loss is precisely what helped Diamond develop a new approach to trading that helped him win in the long run. He realized that to trade for a living means that you must play defensively. Markets rise and fall, and while bear markets are not inherently bad, they are inevitable.
Diamond learned that to succeed over time, he had to develop a disciplined and conservative approach: he had to focus on minimizing risk rather than maximizing profit.
Here are a few tips that Diamond shares with his students:
  • Be a "sore loser." Play by your rules or remain on the sidelines. If the current market action is not for you, Don't Play!
  • Develop a core position when trading. This is an amount that you can trade and still sleep at night. Diamond never trades beyond his core position, no matter what the market throws at him.
  • Think in terms of getting on base as opposed to hitting a home run.
Some of his advice may surprise you, especially if you're new to trading or are in the midst of a winning streak. But Diamond warns that "hot-shot" traders won't last long -- which he knows from his own personal experience. 
For those of us with competitive personalities, it seems counter-intuitive to stay on the bench in order to win. It can be even more difficult to force yourself to make base hits -- especially when you know you can hit home runs. But if you don't take a disciplined approach to minimize your risks, you will eventually strike out.
If you are looking to improve your trading, and to stay "in the game" long-term, consider taking on Dick Diamond as your trading mentor. His intensive, real-time trading course will teach you to develop a time-tested analytical approach to both the long and short sides of the market.
Diamond and his assistant, Roberto Hernandez, will host their popular 4-day trading course in Miami, Florida March 17-20.

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