Looking for a Trading Coach?

When I was at Innerworth, we went to some effort to line up Ruth Roosevelt for our Master Trader Interview series. I don't think we ever used it. We did use Mark Douglas' interview.

 

Read all of Ari Kiev's books.

 

Dr. Suess wrote, "Green Eggs and Ham." You are writing "Green Eggs and Spam."

For a guy who made so much money trading, I can't figure out why you sound so DESPERATE to market your book. I'm not against marketing yourself or the book, but I think you've crossed the line to push it. Just my opinion. Anyone agree or disagree?

Sam I Am.

 

There are many kinds of traders just as there are many kinds of sailors.

If a person has an edge orientation, what does he occupy his time with? When sidelined he looks to enter. When in a trade, he is doing something else.

The consideration of what traders do when they are in the market is a very infrequent consideration on ET. It looks like ancillary things rule when it comes to edge trading. A lot of consideration is given to money management and stops, for example.

Money management makes sure you have very little in the market and stops are there to prevent more than a certain limit of capital losses or to limit profits after the price peaks as the market goes against a trade.

Making money while in a trade, for edge traders, is not something they often consider or discuss.

Before entering a set up, most edge traders are checking off whether the criteria is met. They actually, often, have data sets they require. Think of it as a bit mask of some sort for the bytes they are processing.

Once they are in the market, often they consider things that are not part of what the market is doing. An extreme change occurs for these people. Most often it looks like money management and stops dictate what they are looking at as the market operates. No trade is important since it does not involve much relative capital. I feel that what I read mostly is people talking about a reference point and not market happenings.

It seems that the entry price is far more important than the entry time. So is the stop setting as a price. None of these three things matter in any way relative to making money. All they are is references that do not matter.

Making money as a topic and as a vocation is best done by being a partner with the market and monitoring and doing analysis in order to do good decision making and taking timely action.

Most ET traders do not chat about these things. I just consider where I am, what is next and how fast the market is moving.

Look at these things as data sets. Do not look at these things as singletons. One consideration is taking a data set of NOW. It is a bit mask applied to a stream of data at a given time. Columbus did that. His crew in my example looked at a singleton.

The second bit mask is a mask that examines the contemporary sequences in that part of the trading sample. It is a view of a train of near past snapshots and their repetition over and over is part of a larger train of events. Thus, you know where you are from the last snapshot and you know what the next snapshot will be because you have the whole cycle train available to be able to determine your place in it and what is next.

The snapshots you are anticipating are the few that surround the better place to complete the money making cycle you are in.

You can approximate the timing before it occurs since it happens over and over. So from these three things you can take timely action.

As time passes and this is repeated, "land" comes into view, the picture develops and a great deal of skill is acquired along with the rewards of trading.

What I read shows that people do not have bit masks for market data; they do not have bit masks for sequencing; nor do they have any sence of what is going to occur when. What they have instead is a process of spending time and failing to make money.

One of the most common litanies of the troops is "freak out" over singletons. These people trading in "reaction" to what they see. Bit masks assure no "freakout" and also afford the trader the ability to have the vision to "SEE".

They SEE two things.

They see "differences" from snapshot to snapshot and they see what I refer to as WWT (What wasn't that). This is an unbeatable combination for making money. What is does is shift the trader in time relative to the market.

Two partners are working together. One makes money and the other provides the opportunity to make money by giving data.

The trader sits in a place slightly ahead of where the market sits. This is a pairing of partners in an condition of anticipation.

The trader knows where the market is; what is next and how fast the market is changing. He does this by "knowing the answers to these three items. The market simply delivers data to forward the process.

The timing of things is very slow for the trader and very fast for the market delivering data. It is easy to install a "fast trader" along side you to make your manual job very easy. Anyone who can afford it does just this.

The CO of the edge trader is like a vacuum. There is no partnership nor is the "seating" anything but "reaction" to mostly singleton surprises. There probably isn't even a partnership in place.

All the conversation about choosing an appropiate trading style and edges is just conversation it is not a plan. Money management and stops are not a plan. Reacting to singletons by freaking out is not a plan.

Columbus had a plan; he had skills; he had bit masks and he had bytes that he took over and over. One thing that Columbus did very well was return to his home port so he could sail again and again. He drew capital to himself from others.

All traders can understand when people are offering them money to trade; it is a sign that they know what they are doing. Often people with money get turned down, too. That means that it is not worth it to trade OPM for that trader.

Consider pool extraction (taking out what the market offers) and edge trading with CO. Consider a million dollars or 10 million dollars. Where would you drop this money off to get it traded? How many times the indexes would you want in return for your capital? Social security, insurance pools, pension funds, etc., etc. They don't drop if off anywhere special these days. Maybe someday they will catch on.

Read about the pirates in the straight of Malacca; it doesn't work too well in trading either.

 

Use a managed systems broker. That will keep your finger off "the button" and they will execute your system to a T.

Alternately, put your trading screen behind you (audio alerts for new orders, filled trades, data interruption, etc) and do something else all day. Don't watch it so close and don't try to second guess it.

M

 

if you reduce your size that will help you to be more disciplined

 

If you want it badly enough you will do what many successful traders did and figure it for themselves. Never heard of back and forward testing? You sound lazy ...

 

The issue is not so much one of laziness, but rater psychology, as other traders alluded to.

In all other aspects of our society, we have rules which are in place to control our behaviors and force us to act in a disciplined and responsible fashion, otherwise we will have to suffer the consequences.

For example:

1) If you break the driving laws when driving, you may lose your licesnece, go to jail and/or worst case scenario, have an accident which results in injury to yourself and/or others. So you are forced to obey the driving laws.

2) If you break the spoken/(and unspoken) rules of your job (for those who have/need one) you will be disciplined, and worst case scenario, written-up before being fired, at which point you will no longer have access to the money/perks that the job gives you. So you are forced to obey the rules of your job.

3) If you break socieity's rules (carry an unlicensed firearm, steal, commit violence on another person, etc.) you will be subject to the penal system and be denied your basic freedoms for a very long time. So you are forced to obey the rules of society.

Because the individual trader is completely responisble for their own trading, they do not automatically follow the rules of discipline when trading, and lose money/opportunity as a result of not having those psychological controls in place.

The solution then, is to create, as part of your Trading Ruleset penalties for not following the rules of your trading, along with the practicing and visual conditioning of taking your trades.

This is a very important topic, and one that is not discussed enough amongst traders, but it well known that developing a good trading system is only half the battle, the other half is to instill the correct conditioning ... very much like Pavlov's Dog.

Good trading,

Jimmy Jam

 

here is an excerpt from:

Trade Your Way to Financial Freedom
by Van K. Tharp

PART 1 - The Most Important Factor in Your Success: YOU!
page 10

"Ed Seykota once told me that he taught a college course in trading (in the late 1970s) that lasted 10 weeks. He spent the first week of class teaching basic information about trading. He then spent another week teaching the class Donchin's 10-20 moving-average crossover system. However, he needed the remaining 8 weeks of the class to convince people to use the system that he had taught-to get them to work on themselves enough to accept the losses that it (or any other good trading system) would generate."
***
So, as you see, psychology is a critical part of trading well, and learning how to model someone who already has all the pieces in place (as Mark mentioned) is a useful tool to put your mind in the right framework for being a successful trader.

You've had some pretty good contributions to this thread, hope they help, but more importantly, I hope you use them.

Good trading,

Jimmy Jam

 

Some interesting ideas so far. Hopefully I can provide some useful insight.

Two things come into my mind when I think of trading roadblocks, be it in trading a system or trading discretionarily. One - the idea of "letting go" and not being emotionally attached to the outcome. Two - the amount of psychological energy expended while dealing with the anxiety and/or fear of not knowing the outcome.

In terms of letting go: I've found in my interactions with friends, this concept seems to be extremely difficult for most people. A majority cannot seem to handle the idea of an uncertain outcome, especially those who have had a good amount of success in their lives. My fiancé is an example – she doesn’t understand why I don’t take profits as soon as I get them, the concept of letting winners run is psychologically defeating to her, the fact that there exists a chance of giving up gains causes her an overwhelming amount of anxiety. She admits she could never do what I do for that reason. I find “letting go” to be so incredibly difficult as well – but, through years of training myself mentally to accept this fact, trading has become tolerable. I certainly admit trading takes a psychological toll on me when I enter a drawdown, i.e. knowing there were opportunities to exit at a small profit or breakeven – but that wouldn’t be sticking to my plan – a much more destructive behavior over the long run.

I trade both discretionary and systemically. At the moment, I trade a mechanical system that is right 57% on average – that means 43% of the time I am losing money with this given system. Obviously it has a positive expectancy, but, in the moment while in a trade, this fact doesn’t matter – it’s all about relieving the problem at hand, i.e. the anxiety of being in a position that I do not know the result of. The amount of mental energy this takes can be significant, the fact that the trade may be going counter to your intuition – the fact that occasionally you may want to “outsmart” the system by exiting early or cutting a loss. These facts cause one to use up mentally energy and do stupid things – one just has to let go…

I'd be a liar if I said I didn't struggle with these issues on a daily basis... I overcome them because I am mentally tough. A lifetime of sports has helped, so has emotional intelligence. There is no cure all for the anxiety and fear, simply put – you are either cut out to deal with it or you aren’t. I do believe that with training anyone can get there, but, you have to want to conquer these demons. Ask yourself that – do you really want to conquer these issues? That’s how, just let go… This applies to all aspects of life BTW, relationships, money… (I probably sound like an infomercial about “positive thinking” or some horseshit like that, let me state that all the positive thinking in the world will not make you a successful person). You can’t control if someone will or will not fall in love with you, or hire you for a job, but, you can control your demeanor, your knowledge, your words. Why would it be any different in taking a trade? You can control the entry and you can control your exit… apply some good sense and a bit of skill, and there you go.

The truth is, if you are a control freak in any sense of the word, trading is likely not for you. It will be overwhelmingly difficult to handle the uncertainty. IMO, wanting to control something is akin to believing it will fail.

Mike