3/16/2025 - Thanks to a very smart market strategist for this quote: "Following your passion is a very “me”-centered view of the world. When you go through life, what you’ll find is what you take out of the world over time — be it money, cars, stuff, accolades — is much less important than what you’ve put into the world. So my recommendation would be follow your contribution. Find the thing that you’re great at, put that into the world, contribute to others, help the world be better and that is the thing to follow." — Ben Horowitz, “Don’t Follow Your Passion” advice to the Columbia class of 2015.
3/14/2025 - There are five key personality traits that spell the acronym OCEAN:
* Openness to Experience - Our curiosity, creativity, and openness to new ideas;
* Conscientiousness - Our attention to detail and process-based organization;
* Extraversion - Our interest in social interaction; also relates to risk taking;
* Agreeableness - Our ability to get along and work well with others; relates to teamwork;
* Neuroticism - Our tendency to experience negative emotion and stress
These traits are basic to who we are. Our job is to find the ways of trading that best play to our personality strengths. A great way to see how your personality contributes to your trading success is to study your best trades and how you succeeded. Across many winning trades, you'll see how you best engage markets--and that says a lot about who you are.
===
3/13/2025 - Key question: Are you a generalist in your trading, trading multiple markets and strategies, or are you a specialist, who does one or two things really well? I work with portfolio managers who are generalists, covering world economies and markets and finding themes and opportunities, and I work with PMs who are specialists, finding opportunities in rates markets in terms of directional movement (due to shifts in economies and central bank policies) and relative movement (due to abnormal movements in one part of yield curves vs. others). Are you a broad thinker? A deep thinker? How are you wired that makes you special as a person and as a trader?
===
3/12/2025 - Here's another issue for trader self-assessment: How do you best process information? Are you spending the majority of your time in the information processing modes that work best for you? Many traders process information through social interaction: talking ideas and hearing ideas. Trading in isolation isolates them from their strengths. This is why being part of a team and
prop firm like SMB, where there is constant interaction on the trading floor, can be so valuable. Note that the training classes at SMB conducted by
Jeff Holden are via Zoom and feature presentation, discussion, and chat. Research in psychology is clear: processing information more actively and in more ways leads to deeper, more effective learning. If you process information best by reading, then read many things and even read aloud. If you process information best visually through charts, then have a chart review process and others you share charts with. Make it active. Make it interactive.
===
3/11/2025 - PM - Here's another thing to think about re: the kind of trader you are: Do you have a sound, well-thought out, tested process for making money in markets that you sometimes fail to follow or do you need to refine your processes for generating ideas, sizing positions, managing risk, etc? In other words, do you need to do a better job of following your ideas or do you need to generate better ideas and trade them better? Is your psychology interfering with your trading, or are your trading weaknesses interfering with your psychology? It's difficult to make improvements in trading performance if you're not clear on what needs to be improved.
===
3/11/2025 - AM - Before I respond to the questions of those who attended my recent webinar, I would like to share the fruits of a discussion I had with an experienced and insightful trader. The basic idea is that we experience emotional disruptions in our trading, not because we lack discipline or are overcome with greed or frustration, but because we are trying to trade in a way that doesn't leverage who we actually are. When we don't play to our strengths, trading can be frustrating and unfulfilling. The best path to wealth in trading is to draw upon the wealth of talents, skills, and interests we bring to markets.There are basically two types of traders. The first generally trades very short-term and places many trades per day. This fast trader excels in pattern recognition and also excels in the ability to maintain high levels of focus and flexibility of perception within and across trading days. Often these traders are quite competitive and love finding and pursuing opportunities that set up on the screens or in the order books. For instance, the fast trader will notice volume expanding on a break out of a short-term range and may quickly jump aboard that move, with the idea of stopping out on a return to that range.
The second type of trader typically holds for longer periods of time: intraday or multi-day/week swings. The ideas being traded are typically less about short-term pattern recognition and more about themes that are emerging within and across markets. For example, the bigger picture trader will see selling in stocks at the same time that there is buying in bonds, driving yields lower. The trader identifies this as the start of a risk-off theme in the market and might buy defensive stocks and sell growth shares. The intellectual challenge of finding and exploiting themes is a major motivator for these traders.
When the fast trader attempts to trade longer time frames, the near-term pattern recognition (a strength) can actually pose distractions. When the bigger picture trader attempts to trade short time frames, the intellectual curiosity/creativity of finding themes (a strength) can actually interfere with timing. In other words, problems with our trading may not occur due to our weaknesses, but because of a misapplication of our strengths.
What we do well and what speaks to us is our surest path to success.
Further Reading:
Mastering the Positive Psychology of Trading
.
Posts
