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Eleven Rules for Traders

  
  Education
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Trading in the markets is a process, and there is always room for self improvement. So as we start the new year, here are my 11 rules that help me navigate the markets. By no means is this list exhaustive or exclusive.

Rule #1
Be data centric in your approach. Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

Rule #2
Be disciplined. The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

Rule #3
Be flexible. At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle room or discretion is ok, but I would not stray too far from the data or your strategies.

Rule #4
Always question the prevailing dogma. The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings. But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1.

Rule #5
Understand your market edge. My edge is my ability to use my computer to define the price action. I level the playing field by trading markets and not companies. (more…)

5 Ideas for Traders

  
  Education
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1) You can’t take your trading to the next level if you don’t know the level you’re playing at. It’s not just P/L; it’s also knowing how you manage risk, how you take advantage of opportunities, how well you execute ideas, etc. Self-improvement starts with self observation;
2) Improving risk-adjusted returns is as important for a long-term career as improving absolute returns. If you take half the trades and make 90% of your previous income, you’ve meaningfully improved. If you take twice as many trades and make 110% of your prior income, you’ve moved backward;
3) Learning to diversify your trading (and income stream) can be as important as improving your core trading. Diversification can be by market, by strategy, by time frame, or by some combination of those;
4) Many times, the best improvements come from doing more of what you’re good at. It helps to make fewer mistakes, but doing less of what doesn’t work is not in itself going to make you a living. It’s crucial to know what you’re really good at;
5) Improving your preparation for trading can be as important as directly working on your trading results. So many outcome results follow from improvements in one’s process. 
Most of all, you elevate your trading by always working on your craft. A day without goals is a day without forward movement. And life is too precious to settle for standing still.

Personal Strengths and Weaknesses

  
  Education
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We all have different personal strengths and weakness.  Many people focus on transforming a weakness into a strength. While that is admirable, the reality is that it’s not always possible. Although I agree with the basic idea of brain plasticity, and I whole-heartedly agree with the idea of always striving for self-improvement, I also know that as humans we have a certain degree of natural-born temperament and not everything about us can be changed.

Although we can’t always build or change every weakness into strength, the good news is that we can always leverage our strengths, if we know how. And that is mighty powerful. It’s so powerful that if you leverage the right strengths in the right way they can do an excellent job of not just counter-balancing your weaknesses, but can propel you so far ahead  that those weaknesses pale in comparison.

One of the most powerful things you can do for yourself is identifying your natural strengths and then work to see how you can build on them.

We all have different personal strengths, and knowing how to leverage them is an important part of successful trading. A major consideration here is that you try to identify and leverage your own personal strengths, and not simply copy someone else’s. All too often I see struggling traders running from one style to another style whenever they see someone else’s success. One of the primary reasons why copying someone else’s trading style doesn’t always pay off in trading is because of different personal strengths.

Personal Strengths and Weaknesses

  
  Education
#  #  #  #  #  #  #  #

We all have different personal strengths and weakness.  Many people focus on transforming a weakness into a strength. While that is admirable, the reality is that it’s not always possible. Although I agree with the basic idea of brain plasticity, and I whole-heartedly agree with the idea of always striving for self-improvement, I also know that as humans we have a certain degree of natural-born temperament and not everything about us can be changed.

Although we can’t always build or change every weakness into strength, the good news is that we can always leverage our strengths, if we know how. And that is mighty powerful. It’s so powerful that if you leverage the right strengths in the right way they can do an excellent job of not just counter-balancing your weaknesses, but can propel you so far ahead  that those weaknesses pale in comparison.

One of the most powerful things you can do for yourself is identifying your natural strengths and then work to see how you can build on them.

We all have different personal strengths, and knowing how to leverage them is an important part of successful trading. A major consideration here is that you try to identify and leverage your own personal strengths, and not simply copy someone else’s. All too often I see struggling traders running from one style to another style whenever they see someone else’s success. One of the primary reasons why copying someone else’s trading style doesn’t always pay off in trading is because of different personal strengths.

GEMS from :The Daily Trading Coach

  
  Education
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The Daily Trading Coach covers just about any psychology or behavioral issue  the trader may face.  I cannot help but recommend it.  There are 101 lessons here divided into 10 chapters.  Let’s dig into each chapter and uncover a gem within.

Today again completed reading this Book…Yes 5th time !!

1. The Process and the Practice:  “Confidence doesna’t come from being right all the time: it comes from surviving the many occasions of being wrong” (27). 

2. Stress and Distress:  “Thinking positively or negatively about performance outcomes interfere with the process of performing.  When you focus on the doing, the outcomes take care of themselves” (56). 

3.  Psychological Well-Being:  “We can recognize the happy trader because he is immersed in the process of trading and finds fulfillment from the process even when markets are not open” (72).

4.  Steps Toward Self-Improvement:  “Your trading strengths can be found in the patterns that repeat across successful trades” (105).

5.  Breaking Old Patterns:  “Many trading problems are the result of acting out personal dramas in markets” (133)

6.  Remapping the Mind: “When we change the lenses through which we view events, we change our responses to those events” (168)

7.  Learn New Action Patterns: “Find experienced traders who will not be shy in telling you when you are making mistakes.  In their lessons, you will learn to teach yourself” (203)

8.  Coaching Your Trading Business:  “Long before you seek to trade for a living, you should work at trading competence: just breaking even after costs” (230)

9.  Lessons From Trading Professionals:  “If you don’t trust yourself or your methods, you will not find the emotional resilience to weather periods of loss” (267)

10.  Looking For the Edge: “The simplest [trading] patterns will tend to be the most robust” (311).

And a final admonition:  “Know what you do best. Build on strengths. Never stop working on yourself. Never stop improving. Every so often, upset the apple cart and pursue wholly new challenges.  The enemy of greatness is not evil; it’s mediocrity.  Don’t settle for mediocre” (341).

My 11 Trading Rules

  
  Education
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Trading in the markets is a process, and there is always room for self improvement. Here are my 11 rules that help me navigate the markets. By no means is this list exhaustive or exclusive.

Rule #1
Be data centric in your approach. Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

Rule #2
Be disciplined. The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

Rule #3
Be flexible. At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle
room or discretion is ok, but I would not stray too far from the data or your strategies.

Rule #4
Always question the prevailing dogma. The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings.
But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1. (more…)

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