12/30/2025 - What creates success in trading is what creates success in life. Not minimizing life's negatives and avoiding conflicts, but pursuing meaningful opportunity and developing "processes"--sets of life activities--that offer joy, fulfillment, stimulation, and significant connection with others. The psychological well-being that I cover in detail in my upcoming book, Positive Trading Psychology, is something that can be achieved in every facet of trading--and every facet of life. There is a big part of each of us that seeks comfort and that avoids strenuous effort. That doesn't work in the gym, and it doesn't work in life. Psychological well-being represents our personal, psychological fitness and that fitness means that we seek challenges in our work, in our relationships, and in our personal pursuits. We grow through tackling new things in new ways, whether in trading or in romantic relationships.
As we approach the new year, it's worth asking how you will grow in every aspect of your life--including your trading. How will your life become more enjoyable, more meaningful, more stimulating, more connected to those who matter? It's difficult to trade positively if we're not leading positive lives.
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12/29/2025 - The complexity of markets guarantees that no one will ever achieve complete mastery in their trading. Indeed, as I've shared in the past, even the best discretionary, directional traders are not profitable on much more than half of their trades. They have the conscientiousness to limit their downside and the aggressiveness to size up trades as they work. But their trading is always a work in progress. That is why the drive for improvement is essential to trading success.
The drive for improvement shows up in the effort, detail, and amount of time spent in performance review; the seriousness of journaling and pre-market preparation; and the continuous work on finding new sources of edge. Think of all the ways in which the drive for improvement shows up in an Olympic athlete; a winning sports team; a world-class performing artist; or a state-of-the art medical program. Motivation comes, not only from winning, but from becoming better and better versions of ourselves.
There will always be winning and losing periods in markets. The great traders turn both into fuel for development of their craft.
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12/28/2025 - Perhaps nothing is as commonplace--and superficial--as declaring that one has a "passion" for trading. Usually that means a passion for making money. One might have a passion for sex as well, but that is not what makes a lifelong, successful relationship. Still, passion is clearly evident among the world's best traders. It's not a job or even a career. It's a calling. It's what they feel that they are meant to do. And that pertains to every aspect of trading process, from generating ideas through research and collaboration to finding better and better ways to express and manage the positions that come from idea generation. Many traders hope to make money so that they don't have to work from 9 to 5. The great traders track markets and generate ideas well before 9 am and well after 5 pm. We pursue a job; a calling tugs at us.
Nothing is more important to developing traders than figuring out where your calling in markets might lie. Or perhaps in figuring out that your calling is to be found elsewhere in life. All the silliness about controlling emotions and avoiding FOMO goes away when markets call to our highest aspirations.
Callings call to the best of us.
When Margie and I got married, this was our wedding dance song. Not a fun song or an ordinary song of love, but an expression of what a romantic calling is all about. Almost 42 years later, it's still one of the few songs I listen to for inspiration.
May you always live life passionately!
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12/26/2025 - Closely related to curiosity (see below) is insight. Insight into markets comes from intuition and intuition comes from pattern recognition. Our curiosity leads us to observe markets again and again--and in many different ways--and that leads us to observe patterns. Just because we perceive a pattern doesn't necessarily mean that the pattern is uniquely informative, but it does provide us with a useful hypothesis worth testing. Some of the best trade ideas begin with a flash of intuitive insight. Our minds are putting together the information we've been processing again and again in different ways, enabling us to perceive what we would otherwise miss.
The other day I was reviewing my market breadth data and comparing the information from one database (sector specific breadth) with the information from another (overall market breadth across multiple time periods). A thought popped into my head that what is important in the breadth data is "height" and "width". The thought came with the striking clarity that has usually accompanied my best insights--whether about people or markets.
"Height", I decided, meant the vertical component of the spreadsheets, which is time. "Width" meant the distribution of the breadth data across various sectors or various lookback periods. I immediately constructed spreadsheets to capture upside and downside breadth thrusts (which I had been reading about on the
SentimenTrader site) over varying time periods and for various indexes and sectors. From my analysis of the data, it became clear that thrusts that occur in the context of multiple overbought and oversold markets and periods display promising price continuation and reversal. An upside short-term breadth thrust in an oversold market, for example, often begins a short-term trend--particularly when it occurs across multiple sectors.
The point here is not that you should necessarily trade breadth patterns in equities. The point is that, if you true examine enough important information in enough ways, promising ideas will come to you. Creativity begins with creative perception--and that can only come when we look at new things in new ways.
Insight provides us with our greatest market vision.
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12/25/2025 - Reducing and eliminating trading mistakes is necessary for success but not sufficient. Having worked at many successful trading firms, I've been able to see success up close and personal. In these posts, I hope to share what I've learned.The first element in success is curiosity. The really great traders spend a good amount of time screening for opportunity: across the universe of stocks and stock markets, across a variety of strategies and systems, across a range of asset classes. They explore what is happening in the world--and what is happening in markets--and actively looking for what is likely to move next. I spoke with a portfolio manager recently who described scouring the interest rate curves of various sovereign markets to see what might be mispriced within and across markets. This process requires digesting news across the world, an understanding of central bank policies, and a continual updating of economic and geopolitical developments. No one can sustain that kind of curiosity without unusual open-mindedness and a passion for puzzle-solving.
Day traders in the stock market may not be scanning for those global drivers of markets, but will be equally detailed in tracking the prices where volume expands and contracts; the ways in which stocks are moving together or in rotational patterns; and the patterns of shares that are most active and volatile. In my books, I've shared how successful traders I worked with spent all day following and trading the market--and then spent further time replaying the day and examining what happened, how it happened, what they missed, and how they could improve their execution and trade selection. Day after day. That is more than motivation. It is a passion for learning and an undying curiosity. It's what drives world-class athletes to spend hour after hour watching game videos...Their motivation is not just to win, but to live life as a winner.
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