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Showing results for tags 'trading performance'.
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Some traders, possibly the ones who need to address what I’m saying the most, will flat ignore this. People often seem to be much more interested in exciting new systems and charting techniques than in addressing the critical aspect of themselves and their ability to apply said techniques. Any system in the wrong hands will always fail. It’s my argument that if you are a discretionary trader, it’s the trader that makes or loses money. Not the market. Not the system. THE TRADER. Realistically of course, market behaviour and chosen strategy have bearing on performance but unless you take every ‘signal’ or have programmed the strategy, it is the trader who selects what and when to trade. I sort of view it like sports. Take your favourite football team. You might watch a game and see some really exciting things happen. But to get to the position where a player or team can do that takes a great deal of unexciting training. I can virtually guarantee that if you put someone into the team who hadn’t done that level of training, the results wouldn’t be good at all and probably would be quite embarrassing. Like sports, trading might seem glamorous to some yet it requires a great deal of effort to get to a desirable end result. If you’re a new trader still searching for a strategy that will work, don’t think this doesn’t apply to you. It especially applies to you and will help you avoid a wild goose chase in pursuit of that perfect system. By building a foundation of yourself, you will ultimately enjoy consistent (although not guaranteed good ) results and be in a position to improve on them day by day. These are the basics for performance which imho you should address:- Motivation If you aren’t thoroughly motivated, it’s almost not worth the bother. It’ll waste your time and almost certainly your money. Making sure you put the work in come rain or shine is a must irrespective of whether or not you have a boss breathing down your neck. Half-arsed effort in trading is not like slacking off in other jobs. It will cost you financially and emotionally. Emotional Balance Trading when you’re tired, upset, unsettled, angry or whatever else is just nuts. In my own experience, it’s a sure-fire way to line the pockets of guys who are focused and mentally fit to trade. It’s not always easy to hold back from trading when you’re in an emotional state. But it’s important you do. It’s also important you try to balance yourself and your life to limit the frequency and impact of emotional triggers. Regular physical exercise and meditation are things I find useful personally. Preparation Failure to prepare in trading is imho the route of all evil. It is where the chaos starts. It’s where emotional self-deprecation begins and it often puts you in the hole before you really ‘begin’ to trade. Yet it’s just not hard. If you’re too lazy to prepare you shouldn’t trade and quite frankly you don’t deserve to make money. Actually, if you do trade and make money when you haven’t prepared, it could be damaging in the long run. Lucky outcomes to poor trading practise can be a real set back to trader development. If you haven’t got the time to prepare for some reason, you must have the discipline to not trade. Plain and simple. Focus and Attention To execute any plan it is of critical importance to remain focused at all times when you are trading. The very worst trades often happen when you just sit down or glance back at your screen after doing something else, you see something you were interested in and take a trade without even thinking. There’s something to be said about trading without ‘thinking’, but in this case it’s not a positive thing to do. You’re not thinking, but also here you haven’t been watching the market as it develops. This is just one example of why focus is important. It’s also important to focus in the ‘right’ way. Becoming so focused that you are blinkered to the broader reality of a situation is for example, a dangerous thing. When you’re ‘on it’ so to speak, trading almost seems too easy at times. Review You must review your strategy and your trading. Whether you do back-testing or journaling or you simply do a mental replay of your trades for the day, doing so will allow you to assess your and your system’s efficacy and build upon it. Without doing any reviews, your development as a trader might be no better than trying to play darts drunk, blindfolded and with your weak hand! Seriously. I’m not writing this as if it’s ‘gospel’ and truly believe that even the best of traders can always learn something from themselves, the markets and other traders willing to share. So I encourage anyone who has fundamental underlying principles for trading which they have found effective for them, to post them here. -
Trading can be a lonely game. Especially when you are trading on your own. Moreover, the lack of accountability to others, for many traders is a particularly difficult hurdle to overcome particularly in the early days and before consistent profitability is reached. Not only can a trader be less compelled to do what they really know they should, but also they're more likely to convince themselves that highly questionable tactics are reasonable in the pursuit of profits or evasion of loses. Just ask Jérôme Kerviel once of Soc Gen, or Nick Leeson of the now non-existent Barings Bank. Hell, if Nick can bring down Britain's oldest investment bank, a retail trader is more than capable of bringing down their relatively tiny account right? Once that objectivity is lost and trading the 'right' way is thrown out the window, it's a slippery slope to dollar zero hour. The harder the trader fights, the worse it can get. No accountability to anyone but yourself and your broker- who in most cases won't give a monkey's unless you get a margin call. It is my opinion that it is every right minded trader's duty to ensure a reasonable amount of accountability. My question to you is, how do you do this?