1. Need to internalize lots of trading simulation of specific set-ups in real-time to trade effortlessly
2. Need to trust money management system to weather +10 losses in a row
3. Tuff to internalize that its the 5-6 huge monthly runners that is the big pay-off days
4. Must master +3 trade set-ups to make money consistently month to month.
5. It takes considerable time to mathematically think and act like a trader
6. Trading is a performance skill which requires mastery of every element of trading
7. It requires time capital and considerable effort to achieve the experience to make it effortless and automatic (more…)
Archives of “real time” tag
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Being disciplined
This is probably the most recurrent concept mentioned in trading literature, but what does it mean exactly? “Discipline is any training intended to produce a specific character or pattern of behaviour, especially training that produces moral, physical, or mental development in a particular direction”*, i.e.: to be disciplined you need a specific set of rules to follow. Without rules, discipline is an empty concept!! In order to be disciplined, a trader first needs to set the rules that he will need to follow. Here we come back to the necessity of first working out a methodology, and then applying the rules to make the most out of it. This is usually called the “Trading Plan” and it is the foundation of any successful trader. Many would-be traders find it hard to write down a specific trading plan since it is very far from the typical “easy money” illusion that many people have about trading. Being able to articulate a precise, step-by-step plan is the result of intensive (more…)
Thought from Peter Brandt
“The irony is that in real time, I never fully feel like I am trading successfully because I am always aiming for performance that is higher than I am attaining. I am generally my own worst critic and constantly set the bar higher than my last jump. The result is that it is difficult for me to crow about the “successes” of my trading career.
But, to the degree I have been consistently successful through the years, I believe it is due to three factors. First, I am obsessed with risk management. I spend more time and mental energy focusing on risk control protocols than on anything else. Managing losses and losing periods is my number one priority. If I can just tread water during the inevitable tough periods, sooner or later I will find myself caught in a favorable tide.
Second, my trading approach is overly simple by design. The result is that I know with as much certainty as is possible with a discretionary approach when there is a trade entry in my program. It does not mean that the trade will be profitable – only that the trade is there.
Third, I have tried to engage market speculation systematically, breaking down the process of trading into every conceivable component. What flows from this is an understanding of what components of trading are controllable and measurable and what components are uncontrollable. By the way, whether the next trade or series of trades will be profitable is not a controllable factor. Once a trader learns this — it is then possible to remove ego from the equation.” – Peter Brandt
Money solves all of your problems.
It is often said, trading introduces you to yourself. I was in my second year of trading when I heard that phrase. She would go on to ultimately teach me much about life and myself. The benefit of being in my early 20′s and teaching people in their 40′s and 50′s. I helped them with trading, they helped me grow up.
What that phrase means is that who ever you are that day will show up in your trading. This of course comes in varying degrees.
In many professions your emotional state may not effect your earnings or employment. In trading, a “bad” day can create a cascading effect. You lost when you should have made money. You created a bad habit. Losing doesn’t trigger the right response, etc.
A trader views the market through themselves. Now, most of the time it is little things that can be easily passed over. Human beings are always going to have to deal with things they rather would not have to. Every person has a bad day. (more…)
Why Trading is Difficult
1. Need to internalize lots of trading simulation of specific set-ups in real-time to trade effortlessly
2. Need to trust money management system to weather +10 losses in a row
3. Tuff to internalize that its the 5-6 huge monthly runners that is the big pay-off days
4. Must master +3 trade set-ups to make money consistently month to month.
5. It takes considerable time to mathematically think and act like a trader
6. Trading is a performance skill which requires mastery of every element of trading
7. It requires time capital and considerable effort to achieve the experience to make it effortless and automatic
8. It takes several attempts at different trading methodology to sync with a trader’s personality and cognitive strengths
9. It takes time to set and internalize specific rules that embed a sense of mastery
10. To survive in trading requires weathering the lengthy learning curve
How To Improve
Turn off the noise – Information may be the world’s most precious commodity, but 99% of the information at your disposal is not. In today’s age of real-time information, opinions, analysis, etc. it is my strong belief that information overload and noise is hindering performance far more than it is helping. The first step is to stop watching all TV and to place severe restrictions on all media. In addition, to perform better this year you must stop wasting time on seeking out advice and opinions that only serve to confirm what you really want to hear in order to justify your positions. If anything, what time you spend in social media should be devoted to looking for ideas that challenge your positions and/or offer unique insight you can really learn something from.
So turn off that Blue Channels crap. And stop reading those silly Websites/Blogs.
Money solves all of your problems.
What that phrase means is that who ever you are that day will show up in your trading. This of course comes in varying degrees.
In many professions your emotional state may not effect your earnings or employment. In trading, a “bad” day can create a cascading effect. You lost when you should have made money. You created a bad habit. Losing doesn’t trigger the right response, etc.
A trader views the market through themselves. Now, most of the time it is little things that can be easily passed over. Human beings are always going to have to deal with things they rather would not have to. Every person has a bad day.
Money solves all of your problems, till it doesn’t. The difficult part about trading is the problems start and the money (win or loss) CAN come at different times. Think about this concept another way, a headline comes out and the market reacts to it (or it is reasonable to think it is a catalyst). Well it turns out the headline is old and everyone already knew about it. The story/money and what it bears can often come at the “wrong” or different times. You are rewarded or punished just not always easy to connect the actions in real time.
Money does not necessarily mean your actions are correct. Yes over time it evens out but some run out of money, patience, emotional currency before it corrects. They weren’t honest about who they were that day. It is prudent to always look a gift horse in the mouth.
Think More, React Less
Yesteraday finally watched Inception over the weekend and found it to be the most enjoyable movie so far of the summer. Of course, that’s not saying much as we continue to despise much of the garbage coming out of Hollywood these days, but we both found the movie fascinating.
One of the things in the movie that got me to thinking is the concept that when we sleep our minds keep working through problems at a higher level in order find and create solutions. I don’t know about you, but I immediately identified with this. In fact it caused me to remember something I use to do many years ago while in college but haven’t been doing lately due to my early-morning “up at 5″ work schedule. That is, whenever I ran into a difficult impasse in my research and work, I would often spend the last 30 minutes before bed simply thinking and studying the problem I was facing. Then after going to bed while I was asleep my mind would continue working on it so that when I would awake the next morning I’d have a new angle or approach to work on.
While the process didn’t always work and sometimes resulted in an unrestful night’s sleep as I tossed and turned throughout the night, by taking time out of my day to think about a problem without distractions before bed at times did enable me to find creative solutions that seemed to work more often than not. Although I’ve done the same thing for years through daily meditation (20 minutes each and every day), I must confess I think there is something to the process of preparing your mind to work on problems while you sleep and completely free from distractions, especially if you’re faced with a particularly cumbersome or complicated challenge.
Many of you are probably not surprised to hear me say that I think time spent to concentrated thought without any distractions is something I think many traders lack these days. As all of us continued to be constantly bombarded with real-time information, I think many have become far more reactionary than “thought” driven. At some level that is ok for some strategies (like day trading for example), but it wreaks havoc on others.
It has also been my experience through working one-on-one with members in the mentorship group that most are not devoting enough “think time” in their daily routines. In my experience, the average person only takes less than 5 minutes a day (if that) to actually think through their trades, strategies, and plans. That’s not enough! Not by a long shot!
For that reason alone, mixing up your routine to enable your mind to think without distractions while you sleep may be at least something you’ll want to try. While I know from experience that I always receive dubious feedback whenever I recommend utilizing meditation and breathing techniques to help clear the mind, boost productivity, and overall performance, you may want to at least try mixing up your work schedule a little bit in order to gear and ramp up your mental state more effectively. In addition, if you’re not devoting some time every day (at least 30 minutes) free from all distractions to think about your strategies, positions, and performance, then I truly believe you are not really giving yourself the best chance for success.
The more the world speeds up and becomes even more reactionary, the more important I think it will be for those of us engaged in the markets to think more and react less.
To lose Money :Just follow 6 points
Here is some common advice that I see all the time, that if you follow it you will lose.
Don’t fall into the trap of accepting it or following it.
Here are 6 of my favorites:
1. Day trading is a low risk high reward way to trade
How many writers do you see talk about day trading and how successful they are at it?
Lots!
Now:
How many of them can show a real time track record of profits over the long term?
None.
This is simply the dumbest way to trade there is. (more…)