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How do *your* coping efforts work for you?

  
  Education
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Take a look at how well you trade after a position has gone against you. Do you trade better after a drawdown or worse?

How about after you have a few winning trades, days, or weeks in a row? Do you trade better or worse? Breaking down your performance as a function of recent performance will tell you a great deal about how effective you are in coping with risk and reward.

The other excellent indicator of whether your coping is working for you is your emotional experience during trading. If you find that anxiety, overconfidence, frustration, and stress are pushing you into poor decisions, you know that you’re not coping well with the uncertainties of markets.

Finally, it is helpful to identify the sequences of coping behaviors that you utilize when you’re making good decisions and the sequences when you’re trading poorly. Knowing how your individual coping responses come together to form coping strategies can help you cultivate your coping strengths.

Tracking how you deal with challenges when you are at your most effective enables you to create a mental model of that coping that you can call upon during periods of high stress. We cannot avoid the stresses of trading, but those do not have to generate distress and biased decisions.

How do *your* coping efforts work for you?

  
  Education
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effortTake a look at how well you trade after a position has gone against you. Do you trade better after a drawdown or worse?

How about after you have a few winning trades, days, or weeks in a row? Do you trade better or worse? Breaking down your performance as a function of recent performance will tell you a great deal about how effective you are in coping with risk and reward.

The other excellent indicator of whether your coping is working for you is your emotional experience during trading. If you find that anxiety, overconfidence, frustration, and stress are pushing you into poor decisions, you know that you’re not coping well with the uncertainties of markets.

Finally, it is helpful to identify the sequences of coping behaviors that you utilize when you’re making good decisions and the sequences when you’re trading poorly. Knowing how your individual coping responses come together to form coping strategies can help you cultivate your coping strengths.

Tracking how you deal with challenges when you are at your most effective enables you to create a mental model of that coping that you can call upon during periods of high stress. We cannot avoid the stresses of trading, but those do not have to generate distress and biased decisions.

Essentials of a Winning Psychology

  
  Education
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winningFour fears that block a winning psychology:

  1. Fear of Loss
  2. Fear of being wrong
  3. Fear of missing out
  4. Fear of leaving money on the table.

Realize that trading is based on probabilities, as such, every trade is unique. In other words, the past does not equal the future.

Probability thinking manifest other states and beliefs:
  • Because we know that we will succeed in the long run and because we know we will protect ourselves no matter what the market does, we acquire the state of “self trust” and the state of being “carefree”.

In turn these states allow us to remain…. (more…)

Are you a successful speculator ?

  
  Education
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If you never trade, can you be a successful speculator?
If you dollar cost average, and are disciplined, are you a successful speculator?
If you compound at 50% per year for 10 years, and then lose everything in an afternoon, are you a successful speculator?
If you lose everything in an afternoon, and then learn from your mistake, and then compound at 50% for the next 10 years, are you a successful speculator?
If you compound at 6% per year for 10 years, and never have a meaningful drawdown, are you a successful speculator?
If the risk free rate is 6%, and you are making 12%, are you a more successful speculator then if the risk-free rate is 0% and you are making 6%?
If you think you are a successful speculator, can you really be a successful speculator?
If you think you are not a successful speculator, can you be a successful speculator?
Who are the most successful speculators of the past 100 years? Who are the least successful speculators of the past 100 years? 

Three Best Practices For Traders

  
  Education
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*  Keeping risk-taking down until you see markets clearly– Losing small and gaining big is what makes for excellent risk-adjusted returns.  Accepting that you’re not seeing things well is half the battle.  By continuing to actively engage markets in small size, you give yourself an opportunity to regain perspective.  Trading larger or more often out of the frustration of losing is a recipe for disaster.
*  Focusing on yourself – Very often, losses occur because market patterns have changed.  Slumps occur because your mindset has changed.  By working on yourself before you go hard at markets, you place yourself in an optimal mindset to press your advantage when things line up.  Stepping back from trading, renewing your energy, getting back to core strengths–all can help create the mindset to see markets freshly.
*  Searching and re-searching – Stepping back from trading doesn’t mean you step back from markets.  When times are tough, great traders double down on research and idea generation.  It’s that pipeline of ideas that will produce the next winning trades.  Research and development is what ultimately keeps your trading business alive; turning the search for trades into trading re-search turns a losing period into an opportunity for advancement.
Drawdowns are inevitable.  Slumps are not.  Your job in coaching yourself is to learn from the drawdowns and use them as opportunities to make yourself better.  A drawdown only becomes a slump when it gets inside our heads and takes us away from our core strengths.  Drawdowns become business opportunities when they focus us on those strengths and prod us to expand them.

Avoid these Mistakes

  
  Education
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Common-Mistakes-Don’t trade to trade. Understand that there are 3 positions you can take as a trader: a long position, a short position and a position to NOT be in a position. There will be plenty of trading opportunities that will come along. Don’t give money to the markets simply because you are bored! .

 Avoid trading a strategy without having a good understanding of how the strategy works. What is the typical winning percentage? What is the largest drawdown? In general, high winning percentage strategies have smaller average profits per trade. Lower winning percentage strategies might not have as many winners, but when you are a winner, you typically win big. If you expect your strategy to bring big profits without losses, you can also expect a check made out to “REALITY” to come your way any day.

Learning through failure

  
  Education
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failureVery often we learn more from our failures than from our successes. The  path to success travels inevitably through certain failures.

 A look at successful traders and entrepreneurs shows that they have been  able to survive failure as many times as they have had to. They use failure  as feedback. They learn from it and make changes and go on. Many super  traders have experienced crushing loss in their  early trading years. All of  them picked themselves up, made adjustments, and with the sure belief that  they could make it back through better trading, did just that.  (more…)

1+11 Reasons Why Traders Fail

  
  Education
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  1. They have inadequate capitalization.
  2. They are using someone else’s system.
  3. They lack knowledge of the system’s performance.
  4. They are unable to sit through flat periods or drawdowns.
  5. They are unable to handle stress.
  6. They lack commitment.
  7. They experience drawdowns that are greater than their hypothetical testing.
  8. They override the system’s signals.
  9. Their ego prevails.
  10. Their system is overoptimized; they make additional rules to take out losing trades.
  11. They lack parameters for spike performance in markets.
  12. They lack diversification between systems and/or markets.
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