Second, what would an ideal trader do? 1. Have several low correlated strategies that are rigorously tested and proven with real money, and know how to trade each one all the way from initial setup through entry, position management, exit, and post-trade performance review. 2. Have a rigorous wide-ranging market scanning routine so that he never misses a potential setup, and knows all the potential factors influencing the odds of a given potential trade. 3. Know the trade odds at every stage from entry to exit, and adjust size according to how the odds shift in favour or against. This includes knowing the trigger that turns a potential setup into a trade entry opportunity, and further triggers that improve the odds enough to justify increasing size. Also, knowing when it is time to reduce size due to increased risk (e.g. after a long move in favour of the position, once the hot money has piled in and made the market vulnerable to a reversal; or when some major news event is imminent and could cause huge volatility either way). 4. Know what conditions would prove the trade wrong, and have a plan to exit for a moderate/acceptable loss. 5. Know what would be a 'test' of his position, without proving it wrong, and be trading sufficiently small size, and having enough conviction, to be able to sit through these wiggles. 6. Implement every trade with the optimal trade vehicle that provides the best mix of win rate, risk versus reward, and liquidity. 7. Keep a trading diary with all details of every trade - why it was taken, what mistakes and oversights were made, what went right, what went wrong, what could be done better next time, how to ensure his trading approach is altered to eliminate the bad and improve the good. 8. Keep detailed performance statistics, so he knows which setups and situations to bet bigger on, and which to reduce size or abandon entirely. 9. Monitors continually for new patterns, setups, strategies etc, and creates a new strategy if a sufficiently attractive edge presents itself. 10. Always has on cheap hedges and exit plans for grey swan events like terrorist attacks, resignations, unexpected deaths of key figures, wars, shock earnings misses or beats, central bank decisions, and so on, so that even the worst even is only going to cause an acceptable loss. 11. Monitors correlation between positions, not just in normal times but also in major market-moving 'surprise' events as listed in 11 above. 12. Trades a size consistent with his maximum acceptable drawdown. Reduces size once drawdown reaches half that point, in case his methods are deteriorating. 13. Is aware of the positioning and psychology of other market participants, to get some insight into where they may buy or sell and in what quantity. 14. Contingency plans for all likely (and some 'unlikely') events that can affect his positions or setups, and has a response 'playbook' ready for each one. 15. Has backup and security procedures for his IT, broker & bank accounts, so the chances of being hacked, unable to trade, or making order-entry errors is as close to zero as is feasible. 16. Monitors news in redundant ways so he is never caught napping when a market-moving event happens, but rather is one of the first to react. 17. Communicates clearly and informatively with his clients, if any. Provides them with clear expectations, and either meets or exceeds them. Informs them immediately of any deviation from expected results, and explains why it occurred and what he plans to do to address it. 18. Trades only when he has strong conviction and very attractive trade odds, based on his proven strategies that he is expert at. Does not trade based on other people's recommendations, unless they fit into one of his own strategies. Never trades without a trade plan (even if it's a quick one made in the heat of the moment). 19. Has a proven template for rapid trade planning, to handle fast market opportunities or risks. And a longer plan template for normal trades where there are hours rather than minutes to react. 20. Reviews his strategies, tactics, sizing, risk control, and implementation procedures regularly. Engages in self-training, practise, visualisation, and coaching/mentoring to ingrain good habits and improve his skill set continually. If coming back from a break or a slump, goes back to small size and works on doing the basics well until he feels back at good performance levels. IMO that is what traders should aim for if they want to be good.
Great post Cutten, I mean Ghost of Cutten. If any trader gets thru that gauntlet, they will have the screen time to be considered an expert.
This will sound completely false to some, however try it for one month, and compare your trading with before this and after this : - every morning, 30 minutes of footing + 30 minutes of yoga + shower with reviforating shower gel + breakfast - 5 sessions of meditations during the day. - 3 healthy daily lunch Basically what it will do is , get you to stop and refresh your mind as if it was a completely new day. So you will gain patience and acceptance of the need to be disciplined and methodical.
I wondered if we were talking about the same thing. I have an excel spreadsheet that I input entry, stop and target price into. It mainly calculates Risk/Reward ratios and position size. It also calculates other numbers of interest to me. Dollar amounts and percentages along with Capital at risk. When I see a possible setup on the chart I input the data. The Risk/Reward ratio determines whether or not I take the trade. If itâs a go the position size is already calculated. I use the same spreadsheet as a longer plan template.
Depends on whether you're a scientific trader or a discretionary trader. For both, you have to get healthy and stay healthy. Proper nutrition, proper exercise, proper rest. For scientific trading, you have to figure out something about price movement that isn't common knowledge and then exploit the hell out of it. For discretionary trading, you have to .... idk, gain psychic powers? Whatever. I don't do discretionary, ask somebody else, read some book(s). Most trading books seem to be aimed at discretionary traders, not scientific traders, so you have a wide selection to choose from. Good luck.
Also a lot of it is knowing how to follow a system and finding one that works. Too many traders trade purely based on speculation and emotion. There are a lot of possibilities in the market if you can follow a system.