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3 TRADING COMMANDMENTS

You Learn More From Your Enemies Than You Do From Your Friends.  Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.

Be Careful Who You Get Into Bed With.  Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts.  “Trust and integrity between two people are the most important variables in life and in business” 

Never Operate From a Position of Fear.  “If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision”

31 Precepts for Traders

These precepts are trading and investing guidelines that give a compass heading to trading integrity.

I offer them to you in their raw form. Some may make sense, others not. Please feel free to question, challenge, refine and edit with your responses.

  1. We are who we are and we start from where we start
  2. Each of us brings unique strengths to the markets
  3. Every morning we agree to play as delighted beginners
  4. Reality Pays. The more our minds model the market, the more in synch we get
  5. We build on our strengths and manage everything else.
  6. The outcome we have is the outcome we want
  7. If what you are doing isn’t working over and over again, re-examine your internal models
  8. Our internal process is more important than anything else because it drives everything else
  9. You have the resources to improve your mental trading game. Coaching just helps find them
  10. We begin our trading practice slowly and build it with flow and grace
  11. Lean into fear. Fear is a primary cause of failure
  12. If you are frustrated with the markets, that means they aren’t following the internal model you have projected on them
  13. We increase the level of our awareness rather than the intensity of trading
  14. As we expand our awareness, our interventions will happen sooner and be more creative and effective
  15. We respect ourselves and celebrate our profits no matter how large
  16. If we can experience a new behavior for a moment, we can experience it for a minute, an hour, a week, a year.
  17. Change happens when we experience a new behavior that is aligned with who we are, feels emotionally satisfying in the moment and takes us to where we want to go
  18. Avoidance is buying pain on credit with interest
  19. If self-criticism made us trade better we would all be rich
  20. We allow the markets to breathe through us
  21. The markets are messy, our information is imperfect, our systems will fail and we can still make money
  22. All trading systems are successful in some markets, all trading systems will eventually fail in all markets
  23. The markets don’t care about you or your position
  24. We seek the practice rather than the result
  25. Learn about yourself with the delight of an anthropologist finding a lost tribe
  26. We make internal maps of the market, but our maps are always distorted
  27. Our negative responses are created by our maps, not the market
  28. By changing our map, we change how we respond to the markets
  29. All our trading errors have an ultimate positive purpose or intention
  30. There is no “failure” just feedback
  31. You have all the resources you need, although some may be out of your awareness

Solution focused approach

focusedWhat did we do differently on those successful occasions?

* I have planned the trade well in advance with research; it is not a spontaneous trade, so I’ve had time to think clearly about what I want to do.
* I have a clear profit target in mind based on research and refuse to waver from that target unless the market takes me out with a predefined stop. I consider myself a person of integrity, so I tell myself that I have to show integrity and loyalty to my trade idea and target;
* I don’t follow the position tick for tick. Either the trade will hit my target or it will hit my stop. I make a conscious effort to let go and not micromanage the trade;
* I keep myself calm and clearly focused by purposely getting up from my chair, doing some stretches, breathing deeply, and getting away from the screen. I keep myself in a state that is incompatible with anxiety;
* I rehearse constructive self-talk during the trade. I tell myself that I’ve done my preparation and established my edge. Any individual trade can go against me, but if I take all the good trades I can, eventually I’ll benefit from good odds and a good risk-reward ratio. If I lose money on the trade, I’ll figure out why and what that might be telling me about the current market. (more…)

Damn Algorithms

What more is left to say at this point other than the fact that the hedge fund computers and their damnable algorithms have destroyed the integrity of the US futures markets. The sheer size, extent, ferocity and volatility of the moves that these pestilential computers are creating have rendered these markets basically useless for what they originally came into being for, namely, risk management for commercial entities.

—I am predicting here and now that unless something is done to corral these hedge funds, the futures market is going to become useless as a risk management tool for non-speculative entities.

—Maybe we all should just go the hell to sleep and wake up in a year and see if the chart has actually gone anywhere besides up and down like a stinking yo-yo.