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10 Minute Toughness

If you’re looking for a simple program to develop the mental skills necessary to be a successful trader, then check out 10 Minute Toughness – The Mental Training Program for Winning Before the Game Begins. Jason Selk works with many of the worlds top athletes to develop the mental toughness needed for sports success and his program translates perfectly to trading. I’ve been working with the book for a few months now -its easy to read, easy to implement and the program is excellent! As the book says “No psychobabble, no self-help cliches, no touchy feely theories. 10 Minute Toughness is the simple and effective mental-training program to help you get focused, stay on target and find a competitive edge.” The program contains short impactful exercises to help you

  • calm your heart-rate and maintain a relaxed state of mind
  • stay focused on the aspects of your trading that will most help you succeed
  • build confidence
  • perform mental run-throughs that prepare you for the market day

What I particularly find helpful is the emphasis on process goals.  Many of us focus on goal setting in terms of performance goals like making so many points a week. A process goal shifts the focus to concentrate on the specific aspects of trading that will help you achieve the performance you are looking for. It helps you keep your attention each day on the one or two things that will improved your trading. The book is very consistent with what Brett Steenbarger teaches and yet somehow I found it more accessible and easy to implement.  The detailed examples of top athletes, baseball, basketball and football players makes the book fun to read and easy to get. This book will make a great addition to every traders library

Visualizing The World's Greatest Fears

What are the greatest fears by country? Throughout the world, people are concerned about very different things – from inequality to AIDS and from nuclear war to religious hatred…

By region, North Americans and Europeans are generally most fearful of inequality. However, each other region had their own number one perceived fear. Africans, not surprisingly, were most afraid of AIDS and other diseases. South Americans were most afraid of nuclear warfare and Asians were most afraid of pollution and environmental concerns. Lastly, people in the Middle East were most concerned about religious and ethnic hatred.

Culture and history also makes the fears of specific countries to be more heightened. More than half of Lebanese people (58%) fear religious and ethnic hatred the most. 49% of Japanese people most fear nuclear weapons. In Spain, where 51.4% of youth are unemployed, it is not surprising that 54% of Spanish people fear inequality the most. Spain is also where the fear of inequality has grown the fastest – it has increased 27% in the last seven years.  (more…)

Make Your Own Luck With Consistency

  • Don’t make decisions based on the outcome of 1, 2 or 3 trades. Start thinking in big sample sizes.
  • Accept randomness. The outcome of a trade is completely random and independent of the one you took before.
  • You are never suddenly a better trader. Therefore, always apply the same tactics to your money and risk-management.
  • Love your trading journal and start analyzing as much of your own data as possible.
  • Streaks are normal. Next time you are about to change your trading strategy think twice and stick to it a little longer

The Tortoise and the Hare

Once upon a time, there was a young hare, a hotshot rabbit investor who would always brag to anyone that would listen and that he was the smartest, fastest, best performing investor in the world. He would constantly tease the old tortoise about his slow, solid investment style.

Then, one day, the annoyed tortoise answered back: “There is no denying that you are very aggressive in your investment strategy. You take very high risks and get high returns. But even you can be beaten.”

The young hare squealed with laughter. “Beaten? By whom? Surely not by you. I bet there’s nobody in the world that can win against me, because I’m so good. If you think that you can beat me, why don’t you try?”

Provoked by such bragging, the tortoise accepted the challenge. Each of them put an equal amount of money into a new account and the race was on. The hare yawned sleepily as the meek tortoise trudged slowly off.

As might be expected, the tortoise invested in high quality blue chips, companies with household names.

The hare, as anticipated, invested his money in dotcom stocks and options.

You know the story. The aggressive hare jumped out to a big early lead. In a rising market, the highest risk stocks perform the best. This is called momentum investing. Money flows into the investments that are performing the best.

The hare, having jumped out to such a large early lead, stopped paying attention to the market environment. Basically, he fell asleep. He thought to himself, “I’ll have 40 winks and still remain way ahead of that stupid old turtle.” (more…)

Margin Call-Movie

 The movie Margin Call is an outlier in any number of ways.  The financial blogosphere has been abuzz ever since the trailer came online.

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Have A Plan

It’s interesting to see that at a time like this, a time of economic concern, a time of confusion, that many people (including traders) get caught up in information that doesn’t serve them in any way helpful.  What do I mean by this?  Well, if you look at most financial news networks or most financial news services out there, how often of the time are they serving us information that is helpful in any way to our trading?  I listen and talk to traders on a daily basis and it amazes me how much overwhelming economic information they know.  However, when I ask them how it’s serving their trading, I never seem to get a clear answer.

I’ve been lucky enough to talk to some of the most successful legendary traders out there and really pick their brains to see how they think.  If you’ve ever had the chance to read Market Wizards and New Market Wizards, there is some real wisdom in those books that most people don’t seem to pick up on.  In New Market Wizards, Jack Shwager interviews a very successful trader.  During the interview he asks him:

“Can you tell who will be a successful trader and who will not?”

The traders response is very interesting.  He goes on to say:

“Yes, on a less technical level, I can say that after years of studying traders, the best predictor of success is simply whether the person is improving with time and experience.  Many traders unconsciously acknowledge their lack of progress by continually jumping from one system or methodology to another, never gaining true proficiency in any.
As a result, these people end up with one year of experience, six times, instead of six years of experience.  In contrast, the superior traders gravitate to a single approach-the specific approach is actually not important-and become extremely adapt to it.”

Now, most traders would read that and think nothing of it.  But look at how he talks about how most traders jump from system to system, never really gaining true proficiency in any.  This is something I have come to observe as well within most traders.  When I try to understand why this is happening it seems that it’s the same reason each time.

As traders learn more and more about different indicators and patterns  in the market, they become more and more desperate to find this “holy grail” system that will produce some astronomical winning results.  Not only that, but they continuously jump from doing one thing to another.  One day they’re trading moving averages, the next day they’re trading a bear wedge pattern, the next day a double top; they’re just all over the place.  Why is this?  It goes back to the quote up top.  Instead of focusing on ONE methodology and mastering it, what happens is as soon as a losing streak comes along or a trade doesn’t work out the way they would have liked, they begin to think that something is wrong with the system, when in fact the real problem is the trader himself. (more…)