10 Trading Gems M-ined from Alan Farley’s Mind

What’s going up ELEVATORS?!

As you know, we’ve been reading the book “The Master Swing Trader Toolkit” by Alan Farley as part of our first quarter reading list.

It’s an amazing book filled with all sorts of valuable information for anyone looking to up their swing trading, or trading game in general.  From understanding market trends to finding the right stocks, Alan Farley pretty much covers it all with this follow-up toolkit to the first book “The Master Swing Trader” (which is also on the KBWS Reading List).

Whether you’re already a seasoned trader or just looking to find your way into the market, you’ll still pick up a few actionable tips and tricks for the arsenal.

So, get comfortable, grab a pen and paper, and let’s dive into the 10 most important gems we M-ined from “The Master Swing Trader Toolkit.”

First, the list:

  1. Have a clear and well-defined trading plan
  2. Understand market trends and Learn technical analysis
  3. Manage risk and Losses
  4. Be Disciplined and patient in trading
  5. Trade with a long-term perspective
  6. Develop a deep understanding of markets and economic forces
  7. Stay informed and up-to-date on global events
  8. Diversify one’s trading portfolio
  9. Stay focused and avoid distractions
  10. Stay committed to ongoing learning and improvement

Any combination, if not all of these 10 things will put you on a path to much more consistent trading results, but…

By now you know we rap from a Djed High View…

“I shall… PROCEED…”

As we continue on…

4-Bar Setup | The Master Swing Trader Toolkit

1. Have a clear and well-defined trading plan

Having a clear and well-defined trading plan is essential for success in the world of trading. Without a plan, traders are more likely to make impulsive and emotional decisions that can lead to losses, and miss out on opportunities to achieve their goals and objectives.

A trading plan serves as a roadmap for making informed trading decisions. It outlines the specific steps that will be taken in different market conditions, reducing the risk of emotional and impulsive decisions. Furthermore, a trading plan should include risk management strategies such as stop-loss orders and position sizing to limit potential losses.

Sticking to a consistent trading plan can also lead to more consistent results over time. 

By following the plan, traders can stay focused on their objectives and avoid distractions that can lead to poor decisions. In addition, a trading plan allows traders to track their performance and make adjustments as needed, helping to continually improve results.

2. Understand market trends and How to Use Technical Analysis

The ability to understand market trends and use technical analysis is a crucial aspect of successful trading. Technical analysis is the process of using charts, graphs, and other tools to analyze past market data and identify patterns and trends that can be used to make informed trading decisions.

One of the primary benefits of technical analysis is that it helps traders identify potential trades. By analyzing market trends and patterns, traders can identify signals that suggest a potential trade, allowing them to make informed decisions. Technical analysis can also be used to set stop-loss orders and take-profit levels, helping to manage risk and limit potential losses.

Another benefit of technical analysis is that it can help traders determine the direction of the market. This information can be used to make trading decisions and capitalize on market trends. Furthermore, technical analysis can also help traders identify market sentiment, providing insight into the motivations of other traders and investors.

Finally, technical analysis can help traders identify key levels of support and resistance, which can be used to set entry and exit points for trades. By understanding these key levels, traders can better manage risk and maximize their returns.

3. Manage Risk and Losses

Risk management and managing losses play a vital role in the world of trading.

Without proper strategies in place, traders are at risk of losing their capital, succumbing to emotional decision-making, and ultimately, not being able to succeed in the long run.

Effective risk management helps to limit potential losses through the use of tools like stop-loss orders and position sizing. These strategies allow traders to protect their capital and preserve their ability to continue trading.

By managing losses, traders also ensure that they are in the game for the long-term, with the opportunity to capitalize on profitable trades in the future.

Furthermore, having a plan in place to manage losses helps to control emotions during trading. Traders are less likely to make impulsive and emotional decisions that can lead to further losses, and instead, can focus on making calculated and informed decisions based on their risk management strategy.

In addition to protecting capital and controlling emotions, effective risk management can also lead to more consistent results over time. By minimizing losses and maximizing gains, traders can see more consistent success in their trading endeavors.

4. Show Discipline and Patience in Trading

Discipline and patience are essential qualities for any trader looking to achieve long-term success in the markets. With discipline, traders are better equipped to stick to their trading plan and make informed, rational decisions even when faced with challenging market conditions. Patience, on the other hand, allows traders to avoid impulsive decisions and wait for the right opportunities, reducing the risk of taking unnecessary losses.

The Rap-up

Together, discipline and patience provide a foundation for managing emotions and controlling risk in the markets. By having the patience to wait for the right opportunities, traders can avoid the all-too-common temptation to chase short-term gains, which can lead to impulsive and ultimately costly decisions. And by sticking to their trading plan and remaining disciplined, traders can manage emotions like fear and greed, which can cloud judgement and impact trading performance.

Have these steps been helpful?

What are your key takeaways from The Master Swing Trader Toolkit?

Let’s discuss them in The ELEVATOR Lobby!