Profitable ETF trading strategies: the power of focus

I have a good friend who has been struggling for years to become a professional trader in the stock market. He is well-capitalized, smart, a quick learner, humble, energetic, self disciplined and passionate about his desire to be a full-time trader. And yet, after years and years of trial and error he has not made enough progress towards his goal to feel confident that his goal is realistic.

I told him that I was willing to be his coach provided he put in the effort and was willing to go beyond his beliefs which may have been the source of his limitations.

The good news is that in a matter of weeks through rigorous self-examination and brutal honesty and a great deal of personal work, he has made major strides after all these years in realizing his goals.

After several weeks of observing his trading patterns in real time, together we concluded that his curiosity and eagerness were not really strengths at all in the way he was  applying them.

He was more than willing to pull the trigger on ideas that seemed to make sense in the moment, but what he lacked was disciplined focus to master and implement a strategy that was most suited for his personality and strengths.

Once we had enough trades to establish a statistically significant population to examine, we focused on the patterns and targets where he had performed to the highest levels with the least amount of effort.

In his case, it turned out that the best thing that he was doing was trading Coca-Cola on an intraday basis, because he found himself able to tune into its normal price patterns and find price levels of support and resistance that gave him favorable reward to risk ratios when traded at his level of capitalization.

By sticking to a couple patterns that were simple and robust, he was able to develop new levels of mastery in a remarkably short period of time on his favorite target. His performance statistics were so outstanding that there is every reason to believe that he could trade just that symbol for living forever.

Coca-Cola is a marvelous company and its stock behaves in a way that makes short-term trading and swing trading very accessible to the beginning trader.

It is liquid, smooth and orderly, and  sufficiently volatile to allow outsized gains for measured risks. Because it is a large-cap US stock, it must be owned by large-cap mutual funds so there is always a population of people who are ready to buy Coca-Cola, which as a certain degree of fundamental safety to the stock.

Human nature being what it is though, it is a daily task of management to keep my friend focused on what’s working for him because the very success he experiences in Coca-Cola encourages him to go back to his old ways and try on other new ideas. If those don’t work, the negative emotions he feels find their way back into the way he trades Coca-Cola.

This is the insidious nature of human emotions in the trading arena. It must be monitored and guarded against daily basis. Each new day brings its own new challenges and you cannot let down your guard.

The results though speak for themselves. If my friend has the will to do it, he already has the skill to be a full-time professional trader Coca-Cola.

Maybe the most important quality in a coaches the ability to remind us to remember and apply the things that we already know.