I want to thank readers for their insightful comments and reactions to my post on learning how to trade. A number of respondents rightly noted that an unmoderated discussion is a recipe for chaos and simply calling out one's own trades does not, in itself, teach traders how to trade.
This is where the concept of "decision support" is important. Traders need to develop ways of seeing markets that are unique to them, that make sense for them, that fit their risk tolerance and lifestyle, and that best make use of their skills and talents. Simply giving traders ideas could actually stunt their development, much like doing a child's homework for them.
An important challenge in trading is that there is typically more valuable information streaming from markets than a single individual can reasonably process on their own. This is why portfolio managers at hedge funds and mutual funds typically hire analysts and assistants. A number of informed, disciplined eyes watching markets expands the trader's cognitive bandwidth.
The kind of blog I envision is interactive, but in a moderated fashion that focuses on decision support. Backtested signals from trading systems and historical studies of market patterns provide potential ideas to trade, but it remains the trader's job to filter these ideas, execute them, and then manage them as trading positions. The signals and studies support decision making, but do not substitute for skill development.
By reviewing successful and unsuccessful trades after hours, however, a comprehensive blog could advance that skill development, helping traders identify and cultivate best practices in timing entries, managing risk, etc.
Think of a basketball coach working with players before the game to prepare for the opponent; calling time outs during the game to make mid-course adjustments; reviewing tapes after the game to build on strengths and identify weaknesses: that is what a comprehensive, interactive blog could provide.
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10 comments:
I was very interested in your first post on the subject. I am very distracted throughout the day trying to gather all the information to piece together the puzzle. And having limited experience (1 year) it is still way overwhelming. And I also think that this is not considered 'the easy way out'.. why should one person even have to keep track of it all? That is what information sharing and technology is supposed to be used for. We pay lawyers and doctors and mechanics and so forth for all the things we can't do ourselves or have time for. As so should it be accessable for 'market support'.. :) So we can stay focused on our task, which is executing.
Hi. There are so many instruments to trade, but I think the index futures may be the best example for teaching and learning because of a few reasons. Liquidity is high; action is pretty constant; very low capital required for day trading (no $25,000 minimum); nearest to the general market conditions if not identical most of the time; And can be used as in indicator for the market in other instruments, especially the component securities. So if you are commenting and teaching the NQ, then one of the components is MSFT in the Nasdaq 100 and may help a trader in MSFT in determining market conditions.
I think one group with one focus and one 'thread' all the time is the better way to organize a learning experience. Especially with available archives so that there is one track for all to be kept current.
Also, the focus would be on learning and experience not any one specific market since the skills transfer and one would want to learn to use them on their own rather than depend on help in their specialty, thus fostering maximum absorption and future independence and self-reliance. - NQ Trader Jay
I don't doubt you can provide value, you already have good info on your site. Your psych stuff is great - even if it says I'm psycho.
I guess I still find the whole idea of sharing everything in the open a little strange.
Maybe a small team, but that is it. But what do I know... I just run a smoke and shoe shine shop.
Yes, the concept of decision support is where it's at. So many of the viciously circular problems which haunt mercilessly many budding traders are due to the lack of decision support. If anybody can pull this rather unique approach off, it will be you!
As far as I know, nothing like this at present is available on the net. No wonder some of us have a hard time even understanding where you are coming from. However, if one has been following you for years (like me), this is just you pushing the envelope. Why? Because it is there to be pushed and the pusher in question has a fantastic foundation from other fields to apply and adapt to not only a different field, that is, the one of trading, but via a relatively new vehicle, the Net.
Anyways, fairly soon, I will be able to stop muttering to myself that Brett should do something about the structure of his blog (it ain't easy to comment here). The excellent content of this blog can be used in such way that the value of the content works smarter (so its followers do not have to work harder) than it is presently.
This is the kind of (future) blog that I need to further my own learning Dr. Brett. That's why I created my own blog because I can't find one that suits my "development". Looking forward how your "envisioning" blog will help us.
Brett,
Someone commented on your 9/4 post introducing this initiative that people should "figure out the trading side of it on their own". It's my opinion that there are likely few successful traders who have not been exposed to countless other people's writings and strategies. By reading or watching how many different people trade is how you develop your own strategy bag over time. Most, if not all of us, read other sites that have contributors that share specific trade alerts that we don't take. However, sometimes, if I do pull up a chart of the instrument they're highlighting I may find a sector that is exhibiting conditions that I look for, or I become aware a divergence within a sector, etc. Heck, learning about new tools and websites from others can be extremely valuable. Personally, I'm most looking forward to: "integrated backtested trading signals with updated market information: intraday sentiment (how large traders are leaning), sector and intermarket themes, relative volume/volatility, etc.", and " highlight original research based on historical patterns, methods for executing trades effectively, and successful strategies for money management--not just trade "setups". Also, since this is the kickoff weekend for college football, kids playing Pop Warner football can learn alot about how the game is played (different ways of executing plays/game plans, what works and what doesn't work, etc.) just by watching college and pro ball on TV.
"figure it out on your own" is not intended to imply isolating yourself in a room without any input. It refers to taking responsibility for your own actions, trading ideas and ultimate success or failure with trades. My bookshelf is full of trading books some of which have been extremely useful and many others hardly worth the paper they are written on. The list you refer to does not include one piece of research you are conducting on your own. This is exactly what I believe is the potential problem. "Figure it out on your own" means getting your hands dirty, putting trades on based on your convictions not others and at times getting your arse handing to you by the markets so you as an individual can learn and improve.
Happy Labor Day Weekend!
The original post on this was very interesting and exciting to me. The idea of a kind of virtual group to counter the isolation of remote trading is an alternative to trading with a prop firm that seems attractive and practical. I trained with a prop firm some time ago, but did not join them because it would have required moving my family to an area that was not appropriate for us at the time. BUT, in the time I was there it seemed very clear to me that the benefits of sharing observations and ideas as well as the opportunity for exposure to the diversity of trading approaches was far superior to remote trading IMHO. There were spread traders, scalpers, arbitrageurs and several who traded a high probability MOO (market open only) strategy that often provided an excellent day's profit before breakfast time (Pacific time zone). StockTwits is fine, but tweets have limitations, not to mention that to get max benefit from them one has to sort out the best, i.e. The Data Junkies from the rest and follow the tweets continuously to act in the most timely manner when a quality trade idea tweet shows up. AND, if you want to do much DD on the idea, you may miss the better part of the move.
Working together with Doctor Brett's direction we should be able to establish a high level of order and minimize any 'noise' that could hamper the success of this endeavor. I have only been following this blog for a short time. The combination of market savvy and psychology in a consistently informative and educational presentation is not to be found anywhere else that I know of. The diversity of followers from beginners to veterans can be an asset as long as a degree of mutual respect is required for continued participation. I consider myself to be a perpetual student who looks for concepts and strategies with value where they are most likely to be found. I often feel it would be great to be able to discuss possible edges in trading indexes, specific stocks, SECTOR ROTATION, option spread strategies, pair trades or ideas that are in the theoretical phase. If subgroups evolve based on common interests, trading styles, strategies, systems, theories, etc., that might not be a bad thing.
I use Tradestation, and have yet to see a negative response to a reasonable request for help in the Trader Wiki Forum. In my observation, the most knowledgeable traders, platform users and Easy Language literate members are always willing to help a fellow member who is striving to advance on the learning curve. It's beneficial to all except those who know everything already, but they usually post on the Yahoo message boards ;-). The sharing of ideas, development of new strategies and review of what's working and what isn't during and/or after market hours looks like a home run for the home team to me. Best wishes with this new venture Doctor Brett.
zircon wrote:
The list you refer to does not include one piece of research you are conducting on your own. This is exactly what I believe is the potential problem. "Figure it out on your own" means getting your hands dirty, putting trades on based on your convictions not others and at times getting your arse handing to you by the markets so you as an individual can learn and improve.
Your objection may be a straw man (As I may be misunderstanding your point). If you are trading with your own money, you will get 'your hands dirty' regardless if you working on your own or in a group.
Working in a group can cement your individual approach, not kill it. Anecdotally, my experience is that the more common problem is that people attracted to trading are too friggin' individualistic, they want to re-invent the wheel -- they have a hard time being humble and learning from their mistakes, hence slowing down their own progress because apparently if something is not dug out of earth, hard and raw, it is worthless to one's individual development. Their very strength can become an liability. The individual nature of traders need to be intelligently harnessed.
In addition, Brett is keenly aware that successful traders are the ones who have found their own niche, that is to say, their talents and passion are expressed through their approach to the markets.
For example, my forte is buying weakness, selling strength. It is nice to know that there is an historical edge to this approach. Capitulation plays in particular is one kind of weakness play that uses many of my abilities and talents. And yet, because of tape reading, my win rate has gone further up. The historical edge and tape reading are aspects I learned from a group (via links from Brett's blog to historical edge blogs and to prop traders' blogs).
And I won't even mention the increased availability of possible trades is expanded because I can do range and reversal trades due to info that Brett lists daily. I can assure you my individuality remains intact as I have backups to much of the info that Brett lists, and that my hands will continue to get dirty. But before his explaining over and over again the kind of tools one can use to identify trending versus range/reversal trading days, I would never even have known to search out backup sources of info or to be on the lookout for patterns/tools I can identify/create myself.
My point is that you can have the best of both worlds, the individual and the group, if it is done right, and it done right in the field of elite sports and medicine. And that is what is so captivating and unique regarding what Brett is trying to accomplish, to apply what does work in other fields to trading and further more, applying that tried and true approach via the Net, tapping an international group of traders in the process.
I think the market hours are very busy and require my focus on the market. However I would be very interested in pre markket strategy discussion and post market review.
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