Sunday, April 18, 2010

More Coaching Insights for Traders

As a follow up to the recent coaching insights for traders, here's a second round of thoughts and observations:

* Pull out your largest trades--and your most active trading days-- in the past three months and assess the P/L just for those. That will tell you quite a bit about how you are dealing with risk and reward;

* Pull out your top ten winning and bottom ten losing trades over the past three months and compare their P/L. That will tell you quite a bit about your trading discipline;

* If you are much more unhappy when you lose than happy when you win, a 50% win ratio will feel like losing over time, even if you're making money;

* If you are always looking for the next trade, you will ultimately overtrade;

* If you are confident in your ability to make money, you will not fear missing market moves;

* If you are a consistent trend follower or a consistent countertrend trader, you will not consistently make money;

* Dissect your best trades and you will find out who you are as a trader;

* You won't always make money, but you should always expect to trade well;

* You can't control markets, but you can always control when you bet and how much you bet;

* If an athlete spent as much time working on his game as you do on your trading, would the athlete make a living as a professional?

* Great traders work on themselves after a winning streak;

* Confidence when losing, humility when winning: a formula for long-term success in markets.

.

5 comments:

Amol said...

Nice article. Looking at number of winnings, losses , amount lost per wrong trade, amount earned per trade can show very interesting trends. For instance I saw on average I was investing more on loosing trades than winners. Simple fix would be to keep same investing amount. Other thing which i noticed was that some losses exceeded 75%, so I can now have a rile of say 25% loss limit.

I view trading in terms of odds and not naive to realize that odds on average will never be 100%

Rich Harris, Attorney at Law said...

Perhaps your next book can be Proverbs and Aphorisms for Traders? I am currently reading your book, The Psychology of Trading, at the recommendation of Don Miller. Let's just say I am Sue and Ken wrapped up into one person. I am loving every minute of it. Thanks for the great insights.

ClearAir said...

Hi Dr Brett

I wanted to query this point:

"If you are a consistent trend follower or a consistent countertrend trader, you will not consistently make money;"

Assuming you have not made a mistake with this sentance could you elaborate on your thinking a little more?

Markus said...

"You won't always make money, but you should always expect to trade well;"

that`s a very crucial one, you might have made the correct decision upon right, accurate and useful information, but somehow things are not going in your favor.

such situations are quite hard to differentiate from ones where you actually make real mistakes

REAL Market Trading said...

Those bullets go a lot deeper than the surface information they are giving. Really good stuff.

Take this one:

"You won't always make money, but you should always expect to trade well"

Read it. Read it again. Read it again.

Great Post Steenbarger.