Here is a checklist that might be useful for self-evaluation:
1) Have you experienced one or more recent large losses in markets that shook you emotionally?
2) Have you experienced a recent painful loss in your personal life that has left you feeling more vulnerable in your finances and/or your personal sense of security?
3) Have you experienced a recent threat to personal safety that shook you emotionally, such as a violent attack or a serious accident?
4) Do you find yourself emotionally “overreacting” to what should be normal trading stresses and losses? Are you experiencing significant anxiety, frustration, anger, or depressed feelings when trades don’t work out?
5) Do you find yourself “overreacting” in your trading behaviors during what should be times of normal stress? Are you freezing up and not acting on your ideas or impulsively lurching into trades after losing periods in markets?
6) Do you look back on your trading and feel confusion, shame, or puzzlement over actions that you took that run completely contrary to your plans for the day?
7) Have you tried to reduce your emotional and/or behavioral reactivity to markets, only to see the same destructive patterns return during times of stress? (more…)
Archives of “Human Interest” tag
rss10 Cruel Rules of Traders
I) You will not buy low or sell high.
II) You will cut your winners and let your losers run.
III) You will wish you owned more of what’s going up and less of what’s going down.
IV) You will be fearful when others are fearful.
V) You will fight the trend.
VI) You will not buy when there is blood in the streets.
VII) You will spend too much time worrying about low probability outcomes.
VII) You will invest for the long-term, or until we get a ten percent correction, whichever comes first.
IX) You will go broke taking small profits.
X) You will not just sit there, you’ll do something.
How to teach yourself to focus
“Focus cannot be underestimated. I think that is a reason why some of the smartest people don’t become successful; they have a hard time focusing.” – Cyrus Massoumi
When Google’s Larry Page asked Steve Jobs for advice before he passed, his advice to Page was, “Don’t get distracted. Focus.”
Every day we must face so many distractions and each one has the potential to take our focus and profits away. Learning how to focus is not a skill that many of us have – you must teach yourself how to do it.
From now on, start each work day by asking yourself one simple question – what is my top focus today? Write your answer down (I recommend using this free template as a starting point) and remind yourself every hour through a timer (like on your phone) to focus on that one thing through the entire work day.
Do this exercise every single work day for a full six weeks and you will not only improve your focus tremendously (and see the benefits from doing so) but you will also realize how unfocused you have really been. When traders I have been privileged to closely mentor have done this exercise, each and every single one have reported back that it was a worthwhile endeavor.
If you want to be rich, first stop being so frightened
- If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand little chance of ever getting rich.
- If you care what the neighbours think, you will never get rich.
- If you cannot bear the thought of causing worry to your family, spouse or lover while you plough a lonely, dangerous road rather than taking the safe option of a regular job, you will never get rich.
- If you have artistic inclinations and fear that the search for wealth will coarsen such talents, you will never get rich. (Because you fear, in this instance, is well justified.)
- If you are not prepared to work longer hours than almost everyone you know, despite the jibes of colleagues and friends, you are unlikely to get rich.
- If you cannot convince yourself that you are “good enough” to be rich, you will never get rich.
- If you cannot treat your quest to get rich as a game, you will never be rich.
- If you cannot face up to your fear of failure, you will never be rich
10 Signs Your Trading Is Getting Better
Your losses are getting smaller and smaller.
- Your losing streaks are not as long as they use to be.
- Your draw downs are not as big as they use to be.
- You are very picky about entries and only take the ones with the best probabilities of success with good risk/reward skewed in your favor.
- You have become much more patient with holding winning trades and very impatient with holding losing trades. (more…)
10 Motivational Thoughts
1. You’re going to kill it today
I love this phrase because it puts you in the right mindset. You will kill it today. Youcan push yourself harder and finish that monumental task you’re facing.
2. Think outside of the box
There’s a reason this phrase exists. Creative thinking is what can help you form a strategy in business that actually works, rather than relying on the same old approach.
3. This is your moment
What does it mean to say this is your moment? For starters, both you and Mark Zuckerberg or Elon Musk have exactly 60 seconds to spend in a minute. You are equals. Make the most of the time you have.
4. The issue you are facing is not insurmountable
Most of us don’t face the challenge of how to get to Mars and back or invent a new mode of transportation. The challenge you are facing today is likely not as insurmountable as you think it is, especially in comparison to other tasks.
5. You are surrounded by a smart team to help you achieve great success
Look around you. Make sure you take account of your employees and co-workers and the skills they offer, because they can help you press ahead and succeed.
6. Dig hard, and you will find the right answer
Stress is often caused by not having an answer to a burning question. Start your day with the attitude that you will find the answer. Make the assumption you will solve problems.
7. You are the only person with your exact blend of talents and skills
Questionnaire for Traders
The following questionnaire asks you to assess your emotional experience during your trading. Specifically, you’ll be rating how often you’ve experienced the following feelings over the past two weeks. Below, I’ll explain how to score the questionnaire; please complete the items before looking at the scoring. My next post will explain how to interpret your results.
Please use the following scale for your responses:
1 = rarely
2 = occasionally
3 = sometimes
4 = often
5 = most of the time
1) I feel happy when I’m trading _____
2) I feel stressed when I’m trading _____
3) I feel alert and energetic when I’m trading _____
4) I feel discouraged when I’m trading _____
5) I feel capable of succeeding at my trading _____
6) I blame myself when my trading doesn’t work out _____
7) I feel satisfied with my trading results _____
8) I feel edgy and frustrated when I’m trading _____
9) I feel in control of what happens in my trading _____
10) I make impulsive decisions when I’m trading _____ (more…)
A FAIR APPROXIMATION FOR A SUCCESS FORMULA
A fair approximation for a success formula would be:
- Pursue multiple sources of well-being and success;
- Express those through activities that bring favorable returns with minimal wear-and-tear;
- Stay flexible and rebalance your life periodically as needs and circumstances change.
In other words, life success requires savvy asset management. It’s not about pouring yourself into the next big opportunity or going with a consensus flow. Rather, success hinges upon deeply understanding the factors that create returns and finding the right expressions and blendings of these.
Life is more than a succession of unconnected trades. At its best, life is a portfolio of investments that generate positive and meaningful returns. That can only happen, however, if we take the reins and thoughtfully manage our life’s assets.
Paul Tudor Jones Trend Following Wisdom
Paul Tudor Jones was featured in Market Wizards and is one of the successful trend followers. In the Market Wizards book there are some interesting quotes & trading tips that are important for all stock traders & trend followers.
Quoting Paul Tudor Jones
“I become quicker and more defensive. I am always thinking about losing money as opposed to making money.”
“Risk control is the most important thing in trading.”
“Don’t be a hero”.
“Don’t have an ego.”
“Always question yourself and your ability”.
“I am more scared now that I was at any point since I began trading, because I recognize how ephemeral success can be in this business. I know that to be successful, I have to be frightened. My biggest hits have always come after I have had a great period and I started to think that I knew something.”
“One of my strengths is that I view anything that has happened up to the present point in time as history. I really don’t care about the mistake I made three seconds ago in the market. What I care about is what I am going to do from the next moment on. I try to avoid any emotional attachment to a market.”
“I never apologize to anybody, because I don’t get paid unless I win.”
“When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion.”
“Advice: don’t focus on making money; focus on protecting what you have.”
“Trading gives you an incredibly intense feeling of what life is all about.”
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
Learn 5 Things From Charles Darwin
[1] Human brain jumps to conclusions based on vividness and recency of events. It ignores things that cannot be easily recalled however important that fact may be. Darwin understood this and avoided availability bias.
[2] You can’t really know anything if you just remember isolated facts and try and bang ‘em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. Darwin understood this and organized his body of knowledge so that it was available to him when needed.
[3] Darwin is assiduous and he does not give up on things very easily.
[4] You can’t come up with theory of evolution by following the wisdom of crowds. Darwin avoided social proof and instead relied on his own thinking faculties.
[5] He does not fall in love with his own ideas. He pays special attention to evidence that disconfirms his belief. This is one of the greatest qualities to have. I have not seen many people (including myself) with this quality. It is really hard.
The takeaway lesson is that even people who aren’t geniuses can outthink the rest of mankind if they develop Darwin’s thinking habits.