* From working alongside developing traders, I'd say that 90% don't/can't sustain the procedure of keeping a noun journal. Among the grouping that does journal, good over 90% of the entries are virtually themselves together with their P/L. I almost never run into mag entries devoted to figuring out markets.
* H5N1 sizable proportion of traders who remove hold been having problems are trading methods together with patterns that used to work, but are no longer operative. The inability to alter alongside changing markets affects traders intraday (when volume/volatility/trend patterns shift) together with over longer fourth dimension frames (when intermarket patterns shift).
* It's a mutual observation that traders neglect because they don't stick to their plans. My sense is different. Traders prepare plans together with merchandise patterns that precisely don't work; they're based on randomness. When the patterns don't work, traders learn frustrated together with abandon their plans. So it looks similar lack of plain of written report causes trading failure. But planning doesn't do success; audio planning does. Sticking to plans based on randomness is no virtue.
* I mentioned inwards my mass an of import constabulary of performance: In every functioning plain of note--from Olympic athletics to Broadway--performers pass to a greater extent than fourth dimension inwards exercise than inwards formal performance. That is how expertise develops. The ratio of "practice" fourth dimension (time spent on markets exterior of trading) to trading fourth dimension is a worthwhile indicator of a trader's prospective success.
* Among the predictors of trading success, a "passion for trading" is grossly overrated. The successful traders remove hold a passion for markets, which is real dissimilar from a passion for trading. Indeed, a passion for trading inwards the absence of passion for markets is a fair Definition of addiction.
* Some traders habitually expect for tops inwards a rising marketplace seat together with bottoms inwards a falling one. There's much to survive said for countertrend methods, but non when the involve to survive correct exceeds the involve to brand money.
* An underrated chemical ingredient inwards trading success is mental flexibility: the mightiness to shift views together with perceptions equally novel information learn inwards the marketplace. It takes a sure lack of ego to degree a rigid thought together with thence modify it inwards the confront of novel evidence.
* H5N1 trader I spoke alongside lately told me he was going to merchandise to a greater extent than aggressively yesteryear putting on to a greater extent than trades. Trading to a greater extent than oft is non necessarily trading to a greater extent than aggressively, together with it for certain isn't necessarily trading prudently. Trading to a greater extent than aggressively agency allocating to a greater extent than run a endangerment upper-case missive of the alphabet to item (sound) merchandise ideas. H5N1 considerable component division of traders would do goodness from trading less oft *and* to a greater extent than aggressively.
* Nice litmus examination for whatever website devoted to trading education, coaching, together with the like: If the site spends to a greater extent than fourth dimension promoting the mortal than promoting ideas, y'all remove hold a goodness sense for the site's priorities. Caveat emptor.
* Many traders neglect because they're focused on what the marketplace seat *should* survive doing, rather than on what it *is* doing. The stock marketplace seat leads, non follows, economical fundamentals. Some of the best investment opportunities compass off when markets are looking yesteryear news, positive or negative.
* Success inwards trading requires the capacity for personal investment. Too many traders unopen out their efforts, along alongside their positions, at the terminate of the day.
RELEVANT POSTS:
What Trading Teaches Us About Life
Three Steps Toward Trading Improvement
.
Showing posts sorted by relevance for query trading-and-mental-flexibility. Sort by date Show all posts
Showing posts sorted by relevance for query trading-and-mental-flexibility. Sort by date Show all posts
Tuesday, August 29, 2006
Friday, June 26, 2020
Info!! A Few Trading Psychology Observations
* From working alongside developing traders, I'd say that 90% don't/can't sustain the procedure of keeping a noun journal. Among the grouping that does journal, good over 90% of the entries are virtually themselves together with their P/L. I almost never run into mag entries devoted to figuring out markets.
* H5N1 sizable proportion of traders who remove hold been having problems are trading methods together with patterns that used to work, but are no longer operative. The inability to alter alongside changing markets affects traders intraday (when volume/volatility/trend patterns shift) together with over longer fourth dimension frames (when intermarket patterns shift).
* It's a mutual observation that traders neglect because they don't stick to their plans. My sense is different. Traders prepare plans together with merchandise patterns that precisely don't work; they're based on randomness. When the patterns don't work, traders learn frustrated together with abandon their plans. So it looks similar lack of plain of written report causes trading failure. But planning doesn't do success; audio planning does. Sticking to plans based on randomness is no virtue.
* I mentioned inwards my mass an of import constabulary of performance: In every functioning plain of note--from Olympic athletics to Broadway--performers pass to a greater extent than fourth dimension inwards exercise than inwards formal performance. That is how expertise develops. The ratio of "practice" fourth dimension (time spent on markets exterior of trading) to trading fourth dimension is a worthwhile indicator of a trader's prospective success.
* Among the predictors of trading success, a "passion for trading" is grossly overrated. The successful traders remove hold a passion for markets, which is real dissimilar from a passion for trading. Indeed, a passion for trading inwards the absence of passion for markets is a fair Definition of addiction.
* Some traders habitually expect for tops inwards a rising marketplace seat together with bottoms inwards a falling one. There's much to survive said for countertrend methods, but non when the involve to survive correct exceeds the involve to brand money.
* An underrated chemical ingredient inwards trading success is mental flexibility: the mightiness to shift views together with perceptions equally novel information learn inwards the marketplace. It takes a sure lack of ego to degree a rigid thought together with thence modify it inwards the confront of novel evidence.
* H5N1 trader I spoke alongside lately told me he was going to merchandise to a greater extent than aggressively yesteryear putting on to a greater extent than trades. Trading to a greater extent than oft is non necessarily trading to a greater extent than aggressively, together with it for certain isn't necessarily trading prudently. Trading to a greater extent than aggressively agency allocating to a greater extent than run a endangerment upper-case missive of the alphabet to item (sound) merchandise ideas. H5N1 considerable component division of traders would do goodness from trading less oft *and* to a greater extent than aggressively.
* Nice litmus examination for whatever website devoted to trading education, coaching, together with the like: If the site spends to a greater extent than fourth dimension promoting the mortal than promoting ideas, y'all remove hold a goodness sense for the site's priorities. Caveat emptor.
* Many traders neglect because they're focused on what the marketplace seat *should* survive doing, rather than on what it *is* doing. The stock marketplace seat leads, non follows, economical fundamentals. Some of the best investment opportunities compass off when markets are looking yesteryear news, positive or negative.
* Success inwards trading requires the capacity for personal investment. Too many traders unopen out their efforts, along alongside their positions, at the terminate of the day.
RELEVANT POSTS:
What Trading Teaches Us About Life
Three Steps Toward Trading Improvement
.
* H5N1 sizable proportion of traders who remove hold been having problems are trading methods together with patterns that used to work, but are no longer operative. The inability to alter alongside changing markets affects traders intraday (when volume/volatility/trend patterns shift) together with over longer fourth dimension frames (when intermarket patterns shift).
* It's a mutual observation that traders neglect because they don't stick to their plans. My sense is different. Traders prepare plans together with merchandise patterns that precisely don't work; they're based on randomness. When the patterns don't work, traders learn frustrated together with abandon their plans. So it looks similar lack of plain of written report causes trading failure. But planning doesn't do success; audio planning does. Sticking to plans based on randomness is no virtue.
* I mentioned inwards my mass an of import constabulary of performance: In every functioning plain of note--from Olympic athletics to Broadway--performers pass to a greater extent than fourth dimension inwards exercise than inwards formal performance. That is how expertise develops. The ratio of "practice" fourth dimension (time spent on markets exterior of trading) to trading fourth dimension is a worthwhile indicator of a trader's prospective success.
* Among the predictors of trading success, a "passion for trading" is grossly overrated. The successful traders remove hold a passion for markets, which is real dissimilar from a passion for trading. Indeed, a passion for trading inwards the absence of passion for markets is a fair Definition of addiction.
* Some traders habitually expect for tops inwards a rising marketplace seat together with bottoms inwards a falling one. There's much to survive said for countertrend methods, but non when the involve to survive correct exceeds the involve to brand money.
* An underrated chemical ingredient inwards trading success is mental flexibility: the mightiness to shift views together with perceptions equally novel information learn inwards the marketplace. It takes a sure lack of ego to degree a rigid thought together with thence modify it inwards the confront of novel evidence.
* H5N1 trader I spoke alongside lately told me he was going to merchandise to a greater extent than aggressively yesteryear putting on to a greater extent than trades. Trading to a greater extent than oft is non necessarily trading to a greater extent than aggressively, together with it for certain isn't necessarily trading prudently. Trading to a greater extent than aggressively agency allocating to a greater extent than run a endangerment upper-case missive of the alphabet to item (sound) merchandise ideas. H5N1 considerable component division of traders would do goodness from trading less oft *and* to a greater extent than aggressively.
* Nice litmus examination for whatever website devoted to trading education, coaching, together with the like: If the site spends to a greater extent than fourth dimension promoting the mortal than promoting ideas, y'all remove hold a goodness sense for the site's priorities. Caveat emptor.
* Many traders neglect because they're focused on what the marketplace seat *should* survive doing, rather than on what it *is* doing. The stock marketplace seat leads, non follows, economical fundamentals. Some of the best investment opportunities compass off when markets are looking yesteryear news, positive or negative.
* Success inwards trading requires the capacity for personal investment. Too many traders unopen out their efforts, along alongside their positions, at the terminate of the day.
RELEVANT POSTS:
What Trading Teaches Us About Life
Three Steps Toward Trading Improvement
.
Thursday, October 3, 2019
Info!! Strategy In Addition To Tactics Inward Trading
Prior Posts inwards This Series:
Breaking Discipline in addition to Sound Trading Practice
Planning in addition to Executing Trades inwards the Real World
Breaking Discipline in addition to Sound Trading Practice
Planning in addition to Executing Trades inwards the Real World
Many trading problems--and misunderstandings--result from a confusion betwixt trading strategy in addition to trading tactics.
First let's beak virtually Grand Strategy. Grand Strategy frames our most of import values; it expresses our broadest aims in addition to thence guides the specific strategies that nosotros follow.
For instance, the Grand Strategy for a concern powerfulness hold out to decease the highest character producer of greenish automobiles inwards the world. "Quality" in addition to "green" correspond key values for the company; "automobiles" represents an surface area of expertise. The companionship volition detect its success past times sticking to its Grand Strategy; non past times shifting its focus to the production of menage goods or past times trying to arrive at depression character SUVs at depression prices.
To realize its Grand Strategy, the concern must engage inwards a diversity of smaller Strategies: production evolution strategies, marketing strategies, sales strategies, etc. For example, the car companionship may focus its marketing in addition to sales strategies on the Asian markets, perceiving odd chance at that topographic point for high quality, greenish vehicles. Strategies tin change--Asia may decease less of a focus if a merchandise nation of war ensues--but commonly non on a dime. Strategies guide concrete, day-to-day, week-to-week activities inwards the service of those Grand Strategies.
The agency the concern implements its Strategies is through Tactics. Tactics powerfulness include a rebate policy to heighten sales or an advertising sweat designed specifically for Asian markets. Tactics are designed to attain specific objectives toward a successful Strategy. When tactics don't work, they are chop-chop modified in addition to fifty-fifty replaced. The successful companionship remains truthful to its Grand Strategies, simply flexible inwards its Strategies in addition to peculiarly inwards its Tactics. If nosotros intend of the acquit of nation of war or the game planning of a entitle football game team, we'll meet the same dynamics of Grand Strategies, Strategies, in addition to Tactics.
The Grand Strategy of a trader represents his or her primal agency of viewing markets in addition to border inwards the marketplace. Trend next is a Grand Strategy, equally is mechanical systems trading, Elliott Wave trading, social club menses trading, or trading 24-hour interval structures from auction theory. Influenza A virus subtype H5N1 trader's Grand Strategy captures how he or she views markets in addition to defines opportunity.
The trader's Strategies volition define how he or she finds chance inwards the acquaint develop of marketplace conditions. For example, my Strategies equally a portfolio director powerfulness hold out to purchase dips inwards the stock in addition to commodities markets because I sentiment this equally a cyclical bull marketplace fueled past times depression involvement rates in addition to increase amid emerging economies. On a day-to-day basis, I stay truthful to my Strategies, simply over the class of the year, I'm probable to modify or fifty-fifty abandon them.
When it comes to Tactics, I equally a trader volition hold out fifty-fifty to a greater extent than flexible. My Tactics may Pb me to accept profits inwards stocks correct here, fifty-fifty though I intend we'll hold out headed for novel cost highs inwards the weeks ahead. My Tactics may too Pb me to hedge my gains alongside around options at these levels, given risks perceived inwards the days ahead. Alternatively, my Tactics could Pb me to add together to positions on a pullback inwards the stock in addition to commodities markets.
Clearly, Strategy volition differ for a portfolio director in addition to a trader; for a 24-hour interval trader in addition to for an investor. My reading of 24-hour interval construction may guide my Strategy equally a 24-hour interval trader. It may guide my Tactics if I'm a longer-term seat trader. Usually, Strategy is the thought or subject that you're trading; Tactics is how you lot execute in addition to limited that thought or theme.
Many traders neglect because they saltation from Tactic to Tactic, without a clearly formed Strategy in addition to without an overarching, guiding Grand Strategy. They are focused on setups, non ideas. More on this inwards my side past times side postal service inwards the series.
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Friday, December 21, 2018
Info!! How Create You Lot Warm Upward For Trading?
What is your trading warm up, together with are you lot genuinely warming upwardly the functions you lot desire to exercise?
Some fourth dimension ago, I learned a unproblematic play a joke on for getting rid of whatsoever nervousness or tightness earlier giving a verbalize to an audience. I showed upwardly to the auditorium early on together with greeted guests equally they arrived. I chatted amongst them earlier the verbalize together with to a greater extent than oftentimes than non had a skillful time. By the fourth dimension my presentation was create to begin, I had already been speaking for a piece together with many people inward the audience were familiar. Exercising sociability equally a warm upwardly helped me hold upwardly to a greater extent than engaging amongst my audience.
So it is amongst all warm ups. We exercise the functions nosotros close desire together with bespeak to employ. That agency dissimilar warm ups for dissimilar performers.
Here are a few warm upwardly exercises that come upwardly to heed for traders:
* Self-awareness activities - Meditation together with visualization exercises assistance us acquire inward a calm, focused, self-aware state. By warming upwardly our self-awareness, nosotros brand it hard to lapse into frustrated overtrading. Reviewing mag entries to mentally rehearse our goals together with how nosotros volition pursue them is an first-class self-awareness warm up.
* Flexibility activities - I honey to mentally rehearse dissimilar marketplace position scenarios equally nosotros approach the open. The scenarios include how I would answer to early on weakness or strength, what I would await for inward a hit or tendency day, etc. Contemplating many marketplace position possibilities helps ensure I don't acquire locked into whatsoever one.
* Aggressiveness activities - Many times the deviation betwixt a decent trading solar daytime together with a keen ane is the mightiness to conduct keep plenty opportunity when enterprise opportunities are present. Pumping upwardly amongst active physical exercises piece mentally rehearsing aggressive trading tactics inward the correct situations acts equally a way of priming skillful opportunity taking.
* Creativity activities - Scanning many markets prior to the opened upwardly and/or watching many stocks inward premarket trading tin many times serve equally an warning to early on influences on the market(s) we're trading. When nosotros await at many things together with position commonalities, nosotros tin discovery of import marketplace position themes that may good persist into the trading day. Conducting these scans inward a squad format, interactively, tin farther warm upwardly our creative thinking.
No serious actor/actress, musician, or athlete considers going into a major surgical operation without warming up. Warm ups practise the functions nosotros close desire to employ. Your trading warm upwardly should position you lot inward the mental, physical, together with emotional the world you lot bespeak to hold upwardly inward to produce your best trading. Many, many trading problems conduct house merely because the correct functions were never warmed up. Your warm upwardly should hold upwardly your way of priming the functions you're employing when you're trading at your best.
Further Reading: Performance Lessons From David Blaine
.Sunday, May 7, 2006
Info!! Keeping Opened Upwards Minds Inwards Roiling Markets: Overcoming Endowment Effects Inwards Trading
Noting that smaller cap stocks held upwards reasonably good belatedly final week together with seeing that nosotros had a prissy overnight bounce inwards stocks thank yous to the annunciation of the government's innovation to back upwards FNM together with FRE, I was leaning to the long side at the laid about of the day. I didn't bring an overnight order together with decided to permit the marketplace verbalize for itself i time trading commenced.
As yous tin sack come across from the distribution of the NYSE TICK above, sellers dominated from the outset. Many to a greater extent than stocks were transacting at their bid cost than at their offers. The blue, five-period moving average of the TICK (which is scaled at left) spent essentially the entire solar daytime below the zilch (pink) line. That is quite unusual. Just seeing that extreme distribution of real-time thought was plenty to continue me out of trouble. My hypothesis close the day's activity was wrong; seeing that quickly--and having the mental flexibility to admit it--was fundamental to the day's success.
Once we're inwards a large position, it is to a greater extent than hard to keep that mental flexibility. Part One, Part Two, Part Three
Attribution together with Bias Among Traders
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As yous tin sack come across from the distribution of the NYSE TICK above, sellers dominated from the outset. Many to a greater extent than stocks were transacting at their bid cost than at their offers. The blue, five-period moving average of the TICK (which is scaled at left) spent essentially the entire solar daytime below the zilch (pink) line. That is quite unusual. Just seeing that extreme distribution of real-time thought was plenty to continue me out of trouble. My hypothesis close the day's activity was wrong; seeing that quickly--and having the mental flexibility to admit it--was fundamental to the day's success.
Once we're inwards a large position, it is to a greater extent than hard to keep that mental flexibility. Part One, Part Two, Part Three
Attribution together with Bias Among Traders
.
Saturday, December 8, 2018
Info!! 3 Ways To Succeed When Markets Change
* Preparation - What a differentiator. Some traders mail me their magazine entries every day. Others to a greater extent than occasionally or non at all. Some journals are detailed alongside extensive reviews of private trades in addition to lessons learned. Other journals are full general in addition to purely self-focused. Some journals incorporate concrete goals in addition to plans for the adjacent day's or week's trading. Other journals are alone backward looking. One successful trader routinely takes breaks during the trading twenty-four hr stream in addition to creates multiple periods of preparation, which practise multiple opportunities to larn from mistakes in addition to conform trading accordingly. The investment inwards preparation--before the marketplace opened upwards in addition to afterward the close--is highly correlated alongside success.
* Flexibility - The successful traders guide maintain moved to dissimilar chance sets since the marketplace volatility. The less successful traders pass considerable fourth dimension bemoaning "choppy" markets. The adaptive grouping sees enough of chance inwards markets. The less successful traders desire the marketplace to tally their manner of trading. Higher thought velocity combined alongside audio run a peril administration agency that traders who sees to a greater extent than chance volition guide maintain improve odds of participating inwards larger trades. It is ofttimes a handful of bigger winners that job organization human relationship for a meaningful proportion of overall profits. The best way to guide maintain few large winners is to generate few worthwhile ideas. The best tool for generating ideas is open-mindedness: looking at to a greater extent than novel things in addition to looking at quondam things inwards novel ways. Bouncing ideas off others is a non bad tool for fresh perception.
* Offense in addition to Defense - The traders who guide maintain had the hardest fourth dimension lately guide maintain had the to the lowest degree staying ability inwards their ideas. They desire their positions to deed significantly inwards their favor in addition to rattling piddling against them. That is a formula for stopping out on noise. I of late spoke alongside a successful trader who spends considerable fourth dimension in addition to assay hedging his positions in addition to making certain he has multiple independent positions at all times. The residuum allows him the liberty to permit his ideas play out. Another successful trader has been careful well-nigh sizing trades initially in addition to aggressive well-nigh adding to them every bit marketplace demeanour confirms the merchandise thesis. The winning traders are able to play criminal offence because they emphasize defense.
In short, the traders who guide maintain performed best inwards the recent marketplace surroundings guide maintain been those most energized. They guide maintain used the altered surroundings to discovery novel opportunities in addition to modify what they're doing. They screen change--in themselves in addition to inwards the markets.
Further Reading:
Friday, August 9, 2019
Info!! Yoga For The Mind
In doing what doesn't come upward naturally, nosotros laid upward mindfulness together with utilization a form of mental yoga.
Might it last possible to educate ourselves for cognitive together with emotional flexibility the means nosotros tin educate our bodies?
And mightiness it last possible that a pregnant subdivision of the effects of aging come upward from failing to retain flexibility: physically, emotionally, cognitively?
Flexibility workouts for the remove heed could last slap-up preparation for the cognitive together with emotional flexibility needed to answer to ever-changing markets.
Further Reading: Cognitive Flexibility together with Trading
Tuesday, February 4, 2020
Info!! Morning Time Grooming For Trading
prepared to act when your marketplace hits crucial cost levels. Note that I emphasize scenarios inwards the plural; the persuasion is to hold out prepared for a multifariousness of situations, non to instruct locked into whatever unmarried one. The destination is to promote mental as well as behavioral flexibility, non to trace out a crystal ball that volition entice your confirmation bias.
A trader I move amongst called me yesterday as well as shared how he profited nicely from the Fed announcement. I was initially surprised, because--going into the announcement--he was leaning the incorrect way. He had played out the scenarios inwards his head, however, as well as was prepared for an annunciation that the Fed would hold out buying Treasuries. Very soon later on the intelligence came out, he flipped his positions and, from that betoken forward, made a really squeamish profit.
The combination of an opened upward hear as well as an mightiness to apace as well as decisively act upon fresh developments is something I've flora inwards successful traders. Much underperformance comes from the inability to proceed the hear opened upward as well as the inability to hold out decisive when markets shift.
Above nosotros run into a snapshot of an hourly nautical chart of the ES futures simply earlier vii AM CT. Recall from it primes us to act on our perceptions.
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A trader I move amongst called me yesterday as well as shared how he profited nicely from the Fed announcement. I was initially surprised, because--going into the announcement--he was leaning the incorrect way. He had played out the scenarios inwards his head, however, as well as was prepared for an annunciation that the Fed would hold out buying Treasuries. Very soon later on the intelligence came out, he flipped his positions and, from that betoken forward, made a really squeamish profit.
The combination of an opened upward hear as well as an mightiness to apace as well as decisively act upon fresh developments is something I've flora inwards successful traders. Much underperformance comes from the inability to proceed the hear opened upward as well as the inability to hold out decisive when markets shift.
Above nosotros run into a snapshot of an hourly nautical chart of the ES futures simply earlier vii AM CT. Recall from it primes us to act on our perceptions.
.
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