Archives of “motivation” tag

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Examine Your Beliefs

  
  Education
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There is lot of talk of trading psychology , but what exactly are the 3 or 5 things you can do to improve your psychology.
If you want to increase your muscles you go and lift weight
If you want to improve your stamina, you go and run daily
If you want to reduce weight you eat less and exercise more
What exactly do you need to do to improve your psychology.
First starting point if you want to improve your psychology is by examining your beliefs
You can only trade what you believe in.
Your beliefs drive your behavior. (more…)

How Stress Produces Trading Losses

  
  Education
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  • Nothing is stressful unless it is perceived as being a thread (losing money)
  •  Worry has a great effect on human performance, because it represents conscious mental activity.  Since it is conscious, it takes up processing capacity.
  • Often, the trader is too preoccupied with the potential results of what he id doing, rather than the process of being a trader.
    1. Losses scare me. The model calms me.  Trade your plan.
    2. Concerned about losses.  Preoccupation. Tunnel vision
    3. View losses as negative because fear of not having money.  A loss is a character building exercise that is needed to go through to obtain positive expectancy.
    4. Low Volatility/High Volatility  Multiple Intra-weekly signals
    5. Close at a profit/Close at stop
    6. Nightly distractions (Family, Businesses, Work, Vacation, Lack of Internet)
    7. Greed leads to confirmation bias, other bias in holding position
    8. Money motivated, need results for success, freedom for family
    9. Need to evaluate relationships with parents/money deeper to get to depths of self-esteem
    10. Tasks
      1. Daily Self-Analysis
      2. Daily Mental Rehearsal
      3. Focus and Intention
      4. Developing a Low-Risk Idea
      5. Stalking
      6. Action
      7. Monitoring
      8. Take Profits/Abort
      9. Daily Debriefing
      10. Be Grateful for What Went Right
      11. Periodic Review

The trading curve.

  
  Education
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Initiation-  Every trader comes in thinking they will make money, in fact if they have never traded, they probably have convinced themselves fully. They spend time looking for all the answers in charts but it is in the process. It seems like easy money.  It is not easy but it is probably the best way to make money.  The best of anything takes more work.

Wearing off of novelty– This is a critical time for any trader.  This is where the hole gets deeper or ideally the trader stops and starts to work more efficient.  Process and not charts. This is the motivation to understand what trading really is and who they really are. (more…)

10 Trading Psychology Points

  
  Education
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1) We are most likely to behave in inhibited or impulsive ways, violating trading rules and plans, when we perceive events to be threatening;

2) What we perceive to be threatening is a joint function of events themselves and how we think about those events;

3) A key to gaining control over trading and maintaining consistency is to be able to reduce the threat associated with market events and process adverse outcomes in normal, routine ways;

4) We can reduce the threat associated with adverse market events through proper money management (position sizing) and through proper risk management (limits on losses per position);

5) We can reduce the threat associated with adverse market events by training ourselves to respond calmly to adverse outcomes (exposure methods) and by restructuring how we think about those outcomes (cognitive methods);

6) Optimal skill development in trading will occur in non-threatening environments in which learners can sustain concentration, optimism, and motivation;

7) A proper mindset is therefore necessary to the development of trading skills, but does not substitute for such development;

8) The cultivation of trading expertise is a function of the amount of time and effort devoted to learning and the proper structuring of that time and effort;

9) Proper structuring of learning involves the setting of specific, doable, cumulative goals and the provision of rapid feedback and correction regarding the achievement of those goals;

10) Practice does not make perfect in trading or anything else; perfect practice makes perfect. Training must gradually build competencies and correct deficiencies in a manner that sustains a positive mindset and optimal concentration and motivation.

New Formula For Day Traders

  
  Education
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Most people enter trading with the idea that they are going to make a lot of money. In other words, they have high expectations.  There is nothing inherently wrong with that idea. In fact, we need motivation, and making a lot of money can be a great a motivator. Unfortunately, many traders also have low self-confidence. And are not profitable or not trading at the level they desire or are capable of.

This is a fairly common condition that can be expressed in the simple equation:  High Expectations + Low Self-Confidence = Poor or Inconsistent Performance.

The new formula becomes: Focus on Process Goals + High Self-Confidence = Better and More Consistent Performance. (more…)

Lessons from Hedge Fund Market Wizards

  
  Education
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1. Steve Clark was “brutally honest” in his interview with Schwager. In the opening, Clark describes his background; raised in a council house on the outskirts of London, no father in sight, no university degree, and no initial trading experience. Clark was installing stereo systems when a friend told him about trading jobs in the City.  Sometimes interest and motivation are more important than “pedigree”.
2. He worked a series of back-office jobs and assistant roles before getting a shot at running a market-making book. He got his first chance to trade the book while filling in for a trader on holiday…during the week of the October 1987 crash. Trial by fire situation.
3. Steve learned a valuable lesson making prices on October 19, 1987: the price is where anyone is prepared to deal, and it can be anything. Steve found he had to quote prices so low until sell orders dried up. He still lost several million pounds on his book that day.
4. Eventually he became the most profitable trader in his group. Steve credits this shift to his ability to cut positions that were down or “wrong”. He also traded around news to orientate himself on “the right side of the market”. Plus, he was inexperienced and didn’t have the fear that cripples people who’ve been in the business for a long time. 
5. Traded on order flow info and screened for stocks making moves on big volume. He also used charts to see what happened when stocks reached certain levels in prior periods. Clark cautions that he is not a big believer in predictive chart analysis.  (more…)

Best Practices for Traders

  
  Education
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1) Preparation to start the day and week: Having a clearly formulated strategy to guide trading decisions;

2) Keeping score: Using a trading journal to structure learning, document progress, and sustain positive motivation;

3) Managing risk and maximizing opportunity: Trading with more risk/size when trading well and clearly seeing opportunity and pulling back risk when drawing down, trading poorly, and perceiving little opportunity;

4) Taking breaks: Stepping back from markets periodically to gain fresh perspective, reformulate views, and tweak strategies;

5) Treating trading as a business: Limiting overhead, having a clearly defined plan to move toward profitability, focusing on distinctive areas of strengths and opportunity.

So much of what makes traders great is what they do between market sessions, how they do it, and how much of it they do.

10 Attributes Exceptional Traders possess

  
  Education
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  1. A persistent unquenchable motivation to compete and achieve personal stock market mastery
  2. A personally developed hands-on strategy in writing that fits your personality.
  3. The ability to be brutally honest and objective about your beliefs and weaknesses.
  4. An inner resiliency to weather all market storms with little emotional scar tissue.
  5. Well-defined risk management rules and an ability to accept responsibility for losses.
  6. Unassailable confidence in your system and yourself.
  7. Discipline to follow your methodology and act decisively.
  8. A strong ethic for working hard but also working smart.
  9. Patience and an ability to wait for high probability trades to materialize.
  10. A willingness to embrace change, to modify your thinking, to rewrite your methodology and transform yourself.
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