I'm at a trading firm and walk over to Trader G. to see how he's started his day. He's been in a prolonged slump, losing money far more days than winning. Here's what I observe:
1) Trader G. was late arriving to the office and didn't have time to prepare before sitting down to trade. He didn't take time to prepare once he sat down because "I don't want to miss a move."
2) I ask Trader G. what he thought of the recent moves in interest rates and how those might affect stocks. He didn't know what I was talking about. He hadn't read the news reports or looked at the charts.
3) I ask Trader G. whether he thinks the market is leaning bullish or bearish based on what the sectors are doing. He quickly looks to see what sectors are doing; he hasn't been tracking those.
4) Trader G. is long the market; when I ask where his target is, he begins studying the chart looking for a level.
5) I ask Trader G. for a look at his trading journal. Sheepishly, he tells me that he hasn't written in it lately. When I look at his latest entries, they are short paragraphs describing how he should be more patient in his trading. There are no specific goals or assessments of progress toward goals.
If you ask Trader G., he'll tell you that he has a love for trading and a passion for markets. He wonders, with all that motivation, why he's not making money. I wonder why he thinks he possibly *could* succeed. Trader G. is fictional, but he could be any of scores of traders I've encountered in my coaching work. Desire is necessary for success; it is not sufficient.
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6 comments:
Great post, Dr. B.
The market is made up of too many moving parts to trade with tunnel vision.
It's hard work to track all sectors, currencies and rates, but it’s necessary work for a trader. Otherwise we would all just be pushing buttons randomly.
Thanks for sharing.
HELLO BRETT, I think this fellow in this video knows more about trading themes than the fictional fellow in your example! WARNING: EXPLICT LANGUAGE IN THIS LINK, AND BY NO MEANS BASE YOU TRADING DECISIONS UPON SUCH. FOR ENTERTAINMENT ONLY! I wonder if this is a coping mechanism or just stress relief for this fellow! Playing my drums for me, makes quite a bit less mess, when your stressed! LOL, enjoy~~
http://www.youtube.com/watch?v=KWu-efNN8PM&feature=player_embedded
Best, SSK
You're creepy Doc... these coincidences are getting a little odd.
1) I had some matters to attend to in the afternoon, and arrived back a little later, about 1hour after the market opened.
I had already resigned to missing the market open through my discussion earlier and on the way back, decided that like I did a few times before; relax, sit down, grab a coffee and take time going through what I would've done if there wasn't an interruption.
2) I wasn't looking at interest rates, but I was curious at how the LIBOR and TED Spread was doing. I wasn't exactly sure how it might affect the banks, but from my notes yesterday I was wary of a ripper in the XLF since it was so close to the 200sma and getting pretty darn compressed.
(I scan and read a pretty good number of columns and I dont see much on interest rates other than the Fed talking rubbish on raising rates? Or is it the treasuries/yields you're talking about?)
3) I was looking at the broad market after I settled down and tracked the market's movements through premarket and the first hour. Sectors were on the whole, neutral-bullish, with notable weakness in the defensive sectors and strength in the NQ... and crappy volume again; was leaning towards neutral-bullish, but couldn't quite fathom which price levels to use as ranges...
Highs: Overnight? Intraday or Yesterday's?
Lows: Overnight? Intraday? Yesterday's? Yesterday's 'buyers' launchpad'?
4) I did think about getting long at PP, possibly with a move to vwap, but decided against it since I wasn't quite as comfortable about missing the open and losing a 'market feel'.
5) My journal is full of EOD observations and individual trade reviews, missed opportunities, outlook (tomorrow/weekly).
I'm not yet able to pinpoint specific weakness and goals towards improving that, but I am trying to write down those weakness and 'reliving the moments' where the weakness showed itself and how to improve- irregardless of the trading results.
(I know its hindsight analysis, but it does alert me to possibilities)
If you ask me, I would also say that I have a love for trading and a passion for markets and I am also wondering why I am not making money (not up to my expectations).
Is it because of a lack of guidance in channeling the right efforts in the right direction? Or am I spending too much time/effort on 'trial and errors'?
To be one's own trading coach is to basically 'watch one's own mind' (self-conscious), a pretty difficult task for an inexperienced trader, but certainly not entirely impossible.
A little bit of guidance from older hands wouldn't hurt though =)
*plays keyboard cat music*
(Yeah, I heard the darn rhythm on my way back earlier *@#^*#%^@*&)
I concur with you, Brett.
It is easy to desire but ACTION is the complement to desire to make a difference.
Therein lies the high incidence of failures among traders, who have genuine desires but lacking discipline to carry into action.
Happens to us, to most.
Great article! I've translated it to Portuguese:
http://gustavotradesbrazil.blogspot.com/2009/06/desejo-de-vencer-necessario-nao.html
Take care,
Gustavo
Thanks for the feedback and observations, and thanks for the translation and link, Gustavo!
Brett
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