Tricks of the Trade

[SIUYA 11]

On reading a lot of posts about the psychology of trading, the struggle between full automation and discretionary trading and the arguments between teaching trading v actually doing it, it seems that the majority are in agreement that there is a certain "art" to trading that can either not be taught or can only be learnt through direct experience. Additionally while the basis for a lot of the problems traders face are similar the solutions seems to be unique to the individual.

 

With that prelude I thought a thread welcoming people to post their personal tricks of the trade so to speak.

These tricks maybe things designed to overcome a fear, a hesitation or a recurring problem. They may be tricks designed to be a time saver, a money saver, or to eliminate a boring and tedious yet crucial task. They maybe merely what works for you in a particular situation. They might help discipline or focus, or might help eliminate distractions. They maybe be something you use everyday but it just developed and you often dont know you are doing it, or implemented it years ago and dont really consider it a quick tip for others, but it might not be so obvious to them unless its mentioned.

Even for automated traders, they must have quick tips, time savers, data management tips, mental tips to keep the systems working, so it does not have to be just for discretionary traders

 

I for one seem to always be coming up with variations of them, or things that work in certain circumstances - sometimes I stray and these help get me back on line.

 

 

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While I enjoy a good discussion, as these are entirely personal, there is clearly no right or wrong in any of these and are what works for each and everyone of us in order to either succeed as a trader, improve as a trader or open new doors of opportunity in trading. Remember these are meant to be tips - not full analysis discussions.

What will work for you may seem insane or a little nutty to others - hence the requirement for artistic licence. (on that note, while I am sure questions will be asked ....if you feel the need to name call, abuse, think someone is bonkers and you have this overwhelming urge to let them know then while you have every right to do so, however in a thread such as this which is completely subjective it probably explains a lot about yourself that might require professional help....so keep it nice and arty with expressions of thats so fabulous darling, marvelous, completely insane but I love it!, the boys a genius I must have it on my wall)

 

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On that note a few examples from me to start....

 

1....dont watch a PL, or risk or reward or other numbers in dollars and cents. Watch it in terms of percentages. This makes everything a relative value from pips, to dollars, to risk of equity, to costs of doing business. It focuses the mind on whats important and eliminates the desire to then convert those dollars into what they can buy in the real world which can cause problems in taking profits too early to lock in what the trader imagines they can buy, to not taking losses as they thought of what they no longer can buy.

 

2...three times a charm.....when I am looking at a breakout of something, I use this trick to make me wait and have patience. Often I find the first time something tries to break it fails, or it becomes merely and alert that something is going to happen. The second time, I might take it depending on the context, the third time - I am a complete idiot if if dont go with it. How often do we take the first break, get chopped out, make a little on the second, but then dont take the the third. (completely discretionary but this little mantra works for me when I am feeling like i have twitchy fingers to get into a trade)

 

3....While I dont do any fundamental analysis, I do read the papers etc. Before I do any analysis in the morning of the charts, I dont read these. If anything I only look at what the major indicides did overnight, and what the moves were....then I look at the charts, then I read the headlines - it allows my train of thought to focus first on what the market is doing and what I am seeing, before some journalist or broker poisons my mind with an opinion.

[MightyMouse 12]

Learn how to hold em learn how to fold em. Learn when to walk away and learn when to run and don't count your money while you are trading. - thank you kenny rogers.

[jpennybags 11]

Back in the days of the 8 to 5 workday, I got up very morning, gobbled down a breakfast, hit the shower, dressed, then off to work… in the time span of about 30 minutes. After all that ended, and I had a job where I didn't need to do these things (trading), I tended to slip into the "relaxed as you wanna be" mode. The problem with that is, there is a fine line between "relaxed as you wanna be" and being a slob… my trading reflected that.

 

This is my routine now:

 

Up at 5:00ish (no alarm)

Prepare breakfast… usually something light... fruit and toast, but sometimes I go for the bacon and eggs.

Read the morning news… while taking breakfast.

Make the bed

Do the morning dishes

Crank up a pot of coffee and continue with the news

Shower / shave

Dress (the bathrobe is not allowed at the trading desk anymore)

Power up the computer… off to a new workday (7:00 ish)

 

This is a simple routine that I adopted, that prepares me for the day. It sets up a mental attitude that says: nothing will be rushed, no tasks will be dropped, everything in it's own space and time. The trick is: that during this "morning time", I understand that the routine was adopted for a reason, and that is in the back of my mind as I do these simple ordinary tasks… everything gets done in a purposeful and calm manner (just as I want my trading to be).

[FXGirl 10]

Trading may be a mental game, but managing the physiology is essential to a good mental and emotional performance.

 

Sleep: Get to bed on time – there is nothing like a good night’s sleep (eight hours minimum for me) to set me up for a good trading day. No sleep – no trade!

 

Emotional balance: Because I’m on the west coast, up at 4:45 AM. Savor the quiet – everyone else in the house is sleeping. I take time to look at the stars if it is winter. In summer, I watch the sky lighten. Feel gratitude for the peace and beauty, for my family tucked safely in bed, for living a charmed life – not necessarily everything I want, but certainly everything I need.

 

Food: English breakfast tea, strong, hot, with cream. Avocado on sprouted wheat toast (hey, this is California) and a hardboiled egg. Need that protein for brain function. Second cup of tea, time to turn on the computer.

 

Physiological arousal: When trading gets tense, breathe. Look away from the screen and breathe some more. Keep breathing deeply until calm. Think about surfing. Remember the way the ocean talks to you, tells you when to dig in and paddle, when to kick out. Some waves are good rides, some aren’t. Remember there will always be another wave, wait for the right one. It’s the same with the market. Breathe more. Now look back at the screen.

 

Low physiological arousal: When bored, get on the rowing machine, pull hard until alert and out of breath.

Edited August 2, 2011 by FXGirl

[Avarice 10]

I wear my watch on the right arm. This makes using my computer mouse a tad uncomfortable, reminding me of the watch.

 

The watch in turn reminds me of the fact that time passes by and that it is me that needs to react to what the market does and not the other way around. It tells me that I have to be in charge of my position instead of letting the market do its thing to it. It reminds me of my own accountability and that blaming bad performance on the market is a loser's game.

 

It was Phantom of the Pits, with his slider rocker office chair and talking clock, that inspired me here. Credit where credit is due.

 

A

[SIUYA 11]

TURN YOUR CHART UPSIDE DOWN

 

a couple of people in the office were looking at the equity market meltdown yesterday (markets down 5%) saying whens the bottom, is this good bargain hunting territory, what do you think on the chart.

As they are natural bulls and generally long only, I took the chart (ASX equity market) printed it out and turned it upside down, and asked them - looks like a bull market to me where you want to buy dips, and hang on doesn't it.....they all agreed.

 

If you have a natural inclination to want to be bullish or bearish, and hence are always looking to go long or short and excuses to do so - turn the chart upside down and see if you have the same opinion - see what your reaction is.

 

(note this is not my idea - its an old one, but a great one for getting the mind out of looking for what you want to see, v what is happening)

 

CAPITULATION SIGNS

 

on the same note - yesterday showed signs of a market in capitulation mode - these are rare events and if you are the wrong side you know it. These are the puke in a bucket days - It is the time you feel like puking in a bucket and if there was one there next to you you probably would. ( If on the other hand you were on the ride side, the giddiness is fantastic, and you have to control yourself from thinking that you are a genius and then stop yourself from thinking you can then pick the bottom).

 

These are the days margin calls are sent out and there a clean outs. So on such days, call your trading mates - ask them if they are giddy or vomiting. ring your broker and ask them about the margins.

Then either sit back and wait, or apply a strategy on these days that you know works....as they can be very frustrating if you get it wrong and look back thinking there was opportunity a plenty.

 

(Personally I have been on both sides of the ledger previously and the only strategy I know that woks for me is to decide to close winners at either the start or the end of the day, but not to try and trade intraday - it does my head in an I loose my focus on the big picture. When it comes to the looses - just get out by the end of the day.)

Edited August 5, 2011 by SIUYA