What Is A Trader?
I ask the man.
He looks at me.
A trader is not a bystander, nor a mindless member.
Neither is he a selfless servant. No,
A trader is an ecosystem,
Evolving,
Refusing to be categorized or labeled,
Branded or defined.
Not one role,
Not one task,
Not a tool or production line,
Not one idea or small man. No,
A trader is an ecosystem,
Independent,
Challenging all else
To survive and thrive, evolve and change, or
Sink and die. Extinct.
A trader knows existing today is not tomorrow.
Buttons pushed, research tested, markets predicted.
A trader lives for certainty in self and tomorrow’s unknown.
Adapting to survive, evolving to advance, competing to learn.
A trader creates a pulse that connects and propels
An ecosystem he designed to challenge our own.
So the trader returns back to the question,
What am I and who are we?
Consistent, curious, and connected,
Accurate, authentic, and adaptable,
I strive to be.
I am an ecosystem within this unknown we.
Know Thyself,
He says to me.
Archives of “trader” tag
rssWhy 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
20 Naked Truth For Traders
1. You have to have passion for learning to trade; passion is the energy that you need to take you to your goals.
2. You have to have the perseverance to keep going after you want to give up. 90% of new traders quit when they were very frustrated while 100% of successful traders didn’t quit until they reached their goals
3. New traders spend too much time looking for what to trade instead of focusing on who they are as traders. You have to know who you are as trader first then you can start building your trading system.
4. Traders have to be able to manage their stress by trading inside their current comfort zone. Traders have to grow themselves and trade size step by step.
5. The vast majority of new traders fail simply because they did not do their homework before they started trading.
6. A trader has to build a trading system that matches their own personality and risk tolerance levels.
7. A trader that chooses to be master a specific type of trading method or trading vehicles has a much better chance of success than the traders that just dabble in many different things and never make much progress.
8. A trader has to write a good trading plan while the market is closed to guide their trading while the market is open. (more…)
What Does A Trader Do ?
One thing that I couldn’t accept as an attorney (for the five minutes I seriously considered that as a profession) was that I’d be confronted with the temptation to make money from projects and clients with whom I did not want to work. The wealth that is created from doing a law-job is wealth that comes from the support of, allegiance to, and active promotion of a client’s business. (more…)
Over Trader Anonymous : Here's A Great Tip
Over trading is the single most damaging thing to an account. the commissions alone will eventually slowly eat away at capital and that’s not even taking into consideration the mental and emotional drain you will go thru. Your soul goes into a dark place when you over trade and get poor results. Sometimes it made me even angry and i used to lash out at others.It took me years to figure out that trading more ironically meant more losses, (more…)
Michael Lewis’ Flash Boys: A Wall Street Revolt -A Remarkable Read
Michael Lewis has a spellbinding talent for finding emotional dramas in complex, highly technical subjects. He did it for the role of left tackle in American football in The Blind Side (2006), and for the science of picking baseball players in Moneyball (2003). In Flash Boys, he turns his gaze on high-frequency computerised trading in US stock markets.
In terms of sheer storytelling technique, Flash Boys is remarkable. High-frequency trading, although often in the news when things go wrong, as in the 2010 “flash crash”, is hard for a specialist to understand, let alone the average reader. It is as if a violinist, bored with the repertoire, opted to play Paganini right-handed as a challenge.
Lewis reaches a stark conclusion: US stock markets are now rigged by traders who go to astonishing lengths to gain a millisecond edge over their rivals. As the innocent investor presses a button to buy shares, they leap invisibly into electronic markets to profit from the order and thousands of others, siphoning off billions of dollars a year.
The rise of high-frequency trading (HFT) was encouraged by a regulation passed in 2005, which aimed to open large exchanges such as the New York Stock Exchange and Nasdaq to stiffer competition. The idea was to make trading fairer; it instead unleashed, in Lewis’s view and that of other critics, a tidal wave of algorithmic front-running by traders whose superfast connections to stock exchanges allow them to react to buying and selling before others can. (more…)
Why Most Trader Lose Money?
Because they would rather lose money than admit they’re wrong. What is the ultimate rationalization of a trader in a losing position? “I’ll get out when I’m even.” Why is getting out even so important? Because it protects the ego. I became a winning trader when I was able to say, “To hell with my ego, making money is more important.”
OPTIMISTIC & PESSIMISM in Trading
PESSIMISM
Pessimism is defined as a tendency to stress the negative or unfavorable or take the gloomiest possible view. Obviously, the successful trader is not pessimistic. If so, then he would never trade in the first place or if he did, he would only trade short; a “permabear” if you will. A purely pessimistic trader would also doubt his edge, doubt any market direction, only trade after the move has happened, cut his winners short while allowing his losers to run, overtrade, under invest, etc etc. In other words, a purely pessimistic trader would break all the rules.
OPTIMISM
Optimism is defined as the inclination to anticipate the best possible outcome while believing that most situations work out in the end for the best. The unsuccessful trader, especially the beginning trader, is optimistic about getting rich in the stock market. No matter what every trade will eventually make money he reasons. The optimistic trader also loads up on a “sure thing”, seeks to justify every trade via confirmation bias, adds to losers, brags about winners while hiding losers, refuses to develop as a trader, etc etc. Just as with pessimism, the optimistic trader breaks the rules.
The Legendary Turtle Traders
Have you ever heard of the legendary Turtle traders? Millionaire trader Richard Dennis set off to find out if traders were just born to trade, or if they could be trained to be successful in the markets from scratch. The answer? If they could follow rules they could be successful.
“I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught our people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.” –Richard Dennis: Founder of the ‘Turtle Traders’ quoted from the book Market Wizards:
The Turtle system proved that the traders that followed the rules went on to be millionaires and to manage money professionally.
Markets – What to buy or sell
- The Turtles traded all major futures contracts, metals, currencies, and commodities.
- The turtles traded multiple markets to diversify risk.
Position Sizing – How much to buy or sell
- Turtle position sizing was based on a markets volatility using the 20 day exponential moving average of the true range.
- The Turtles were taught to trade in increments of 1% of total account equity,
Entries – When to buy or sell (more…)
Essentials of a Winning Psychology
Four fears that block a winning psychology:
- Fear of Loss
- Fear of being wrong
- Fear of missing out
- Fear of leaving money on the table.
Realize that trading is based on probabilities, as such, every trade is unique. In other words, the past does not equal the future.
Probability thinking manifest other states and beliefs:
- Because we know that we will succeed in the long run and because we know we will protect ourselves no matter what the market does, we acquire the state of “self trust” and the state of being “carefree”.
In turn these states allow us to remain….
- Focused, confident and carefree when we are experiencing the inevitable prolonged drawdown.
- Because at the micro level we know that the market is random, we will not allow euphoria to set in and lead us to reckless trades. Each trade will only be one in a series of probabilities.
- We will view market information not as a source of pleasure or pain but merely as data providing us with opportunities.
Personal Attributes Essential to a Winning Mentality
- Awareness – the ability to step outside ourselves and observe. The more effectively we can do this, the easier our progress to “Acceptance”.
- Honesty – the ability to seek to perceive reality in spite of our filters.
- Courage – the willingness to bear the pain brought about by our awareness and honesty.
- Commitment – the willingness to do whatever is necessary to achieve our goals
To succeed, a trader must have a vision about where he is heading, and must internalise that a winning attitude is total submission to the trading outcome.
This means managing Fear and Euphoria. To do this, we need to ACCEPT, with every fibre of our body, the belief that at the micro level the market is uncertain and unpredictable and at the macro level it is relatively certain and predictable.