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Independent Trading: Pros & Cons

In fact, there’s probably no better time than the present to talk briefly about the pros and cons of being an “independent trader.”

As someone who has worked independently for most of my professional career, you can say I place a tremendous value on “doing my own thing.” As I’ve often said, at least for me it has been a combination of personal choice (what I want in both life and career) and also necessity (as I don’t play well with others). Indeed, there are some tremendous positives for trading independently. After all, I wouldn’t be doing this if there were not some significant advantages from doing so!

Here are a few things that first come to mind:

  • As an independent trader, I set my goals and I’m in charge of my own destiny. I don’t rely on any other person for how much money I make or how I make it. Other people’s opinions of me are irrelevant to my own destiny. At the end of the day, bottom line trading results (not office politics) are all that matters.

  • Most people in “normal jobs” don’t have the opportunity to set out on their own and do something they really want and love to do and also make plenty of money doing it.

  • I spend most of my time every day doing things I really like to do (trading, reading, researching, running screens & mentoring others). These are things I would do even if I were not paid to do them because it is what I like to do the most! Every day I plan my work on things I want to work on, not what others want me to work on. That level of professional autonomy is rare.

  • The sense of accomplishment when you achieve success in the markets independently is unparalleled. There’s nothing like finding and taking a good trade that produces lots of upside gain. This is especially true when that trade is unpopular and unforeseen by the herd.

  • Through my research I’ve been able to learn about many things, many industries, many countries, and many people. At this point, I can have a conversation with just about anyone no matter what they do for a living or where they live because I know something we can probably talk about based on what I’ve learned and know about others.

  • It is always interesting and I’m NEVER bored. It is so true there is no better drama on Earth than following and being a participant in the markets daily.

  • Trading independently offers level of personal freedom that isn’t present in most jobs. If I want a day off to play golf, help a friend, visit with family, I do it. I don’t have to ask anyone for permission! However, offering a paid members-only website places some severe limitations on that freedom!

  • So, now I’ve talked about the positives, what are the downsides to trading independently? (more…)

The C=L U=M Principle

Most people like to stay within a range of relative comfort; a range that is self imposed. This is known as your comfort zone. For most of us, the grand majority of our experiences and daily life’s routines are within the limits of what we already know; the boundaries that we set, the fence that we build around us to feel safe.
We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY ANDUNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M
The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.” (more…)

Life Wisdom – Jim Rohn

Success is both a journey and a destination.
It’s the steady, measured progress toward a goal and the achievement of a goal.
Success is both an accomplishment and a wisdom that comes to those who understand the potential power of life.
It’s an awarenesss of value and the cultivation of worthwhile values through discipline. (more…)

Learn from Rafael Nadal

As I was watching Rafael Nadal put away Novak Djokovich this Monday night to win his first US Open, I couldn’t help but compare the qualities he has leveraged in improving his game to that of an aspiring trader. Nadal has literally willed himself into becoming the best tennis player in the world, amazingly enough, at a time when the best player possibly in history (Federer) is still in his prime. I was at the US Open earlier this week and marveled at how easy Federer positioned himself for each shot, and the best word I could use to describe him is efficient. Nadal however, can be best described as a machine that doesn’t quit. As I broke his game down, I realized that so many of the qualities he possesses have a corollary in the trading world.

  • Expand your playbook: When Nadal burst onto the scene, he was a dominant clay court specialist. Despite the incredible success early in his career on clay, his game needed improvement if he wanted to duplicate his success in other venues. He worked very hard to not only improve his serve, but also his net game to the point each of these areas are now pluses, on top of being the top baseliner in the game. He eventually won Wimbledon which is an incredible accomplishment for a player groomed as a baseliner. With the US Open under his belt, he is also one of the few to accomplish a career grand slam. A trader should not get too comfortable with only one setup, as the market will eventually change and render that setup less effective. Traders should constantly look to expand their playbook in order to have options in adapting to the markets. Being great at one play is very important, and should not be minimized, but traders should be willing to stretch themselves in order to improve as a trader.
  • Eliminate Mistakes: As I was watching the final set on Monday night, they mentioned that Nadal hadn’t made a single unforced error in the final set yet. I think he ended up with a single error in the last set when it was all said and done. This is flat out ridiculous. Nadal was playing someone who was at the top of their game and slugging it out toe to toe for many 20 plus shot rallies. This is probably one of the biggest reasons he is at the top right now. He doesn’t give away points; he makes the other player earn it. As a trader, you must eliminate needless mistakes. It is hard enough to take money consistently from the markets, let alone if you are struggling with mistakes. Common mistakes could include, trading sub par setups, letting stops slide, or not sizing a position properly. Make sure your trading methodology is clearly defined, and then trade it well.
  • Plays every single point: Another amazing quality Nadal has is the unwillingness to give up on a point. I’ve seen Nadal up 40-Love, standing 3 feet behind the baseline when his opponent hits a drop shot. This is a scenario where many players would concede the shot, content to be up 40-15 on the next point. I don’t think I have ever seen Nadal concede the shot. He hustle’s for every ball, which forces his opponents into more errors as they try to hit perfect shots. As a trader, you certainly don’t want to overtrade, but your job as a trader is to take advantage of opportunity when it is presented. You can’t do this if you are not at your desk waiting for each opportunity. Beyond just being there, you must be prepared, whether that entails pouring over charts before the markets open or running through potential market moving news events. It takes a high level of concentration to be able to sit and watch the markets for hours on end, especially when it is dull and lifeless, but all it takes is one single opportunity to make a traders day.
  • He is in excellent shape: Nadal may be in the best shape on tour. He slugs away for hours on end, and may hit the most balls overall on tour. If you think about it, his game is predicated on prolonged rallies which he usually wins. You must be in excellent shape in order to withstand 4 or 5 hours matches several times in a 2 week period. While a trader doesn’t have to be in the same physical shape as a world class athlete, being in good shape helps a trader remain balanced through the day and traders should definitely be well rested. One of a traders most important qualities is the ability to stay focused. Remaining focused is much easier when a trader isn’t dealing with ups and downs of a high sugar diet or dealing with only a few hours of sleep. While a trader can certainly deal with being tired once in a while, they will surely have frequent concentration lapses if they are in a constant battle with their diet and rest schedule.

Traders who are not happy with their performance should take a hard look at themselves and ask are they working hard enough. Nadal could have been content to win a few French Opens and hang around long enough in other tournament to get some decent payouts, but he kept working at improving his game. He has managed to become the best player in the world, and is already on his way to becoming one of the all time greats. When someone is this successful, it is never simply from talent alone. The Michael Jordan and Tiger Woods of this world do happen to be talented, but they also outwork their peers and are never satisfied.

Traders should constantly be looking for ways improve their game as the markets are one opponent that is also constantly evolving. It’s also worth noting, that a traders biggest adversary is themselves, much like any athlete who performs in a non team sport. It is not that easy to have lasting success in this field, but the ones who do have certainly adapted by constantly improving themselves.