10/18/2026 - Two important principles shape best trading practice:
1) Successful trading must be grounded in the strengths of the trader. Very often, the success of the trader is the expression of one or more strengths that have shown up in prior life achievement. Maybe the successful trader was successful previously as an athlete, a gamer, or as a programmer. The talents and skills that created the original success are reproduced in trading by finding a style of engaging markets that maximizes those strengths.
2) Strengths must be exercised or they atrophy. Routine brings consistency, but our strengths--like our muscles--must be actively exercised and challenged if they are to be maintained and extended. A notable finding from my review of the Market Wizards books is that the great traders pursue each day the way an Olympic athlete in training pursues workout routines. A routine workout cannot build our capacity; the workout routine must push us and draw upon our ability to sustain effort. In challenging our limits, we discover new strengths and allow existing strengths to flourish.
Most of the psychological challenges faced by developing traders arise from a failure to engage and build strengths--and a failure to align strengths with an approach to markets that captures our interests and abilities. Great athletes find the right sport for their skills and talents and then develop routines that push the boundaries of those skills and talents. Greatness cannot exist and persist in an environment of comfort. A best practice in trading is cultivating routines that always push our development.
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10/16/2026 - An especially important best practice that I see in the teams that I work with is the ability to coordinate the big picture of the market with the market's short-term price and volume behavior. This is like a battlefield commander who keeps in mind a big picture for achieving victory over an enemy, but who approaches each individual battle with a tactical feel for opportunity. Many traders become so caught up in short-term price action that they are run over when larger themes and trends take over. Conversely, we see some traders who become so caught up with a big picture thesis that they ignore short-term market behavior that chops them up.
I encourage you to check out this big picture article from the Barchart.com site detailing the views of hedge fund leader Ray Dalio. It captures an important reality impacting today's markets: the increasing demand for borrowing that is leading to higher and higher interest rates and impacting sectors of the economy that are interest rate sensitive (such as real estate). With higher government debt and borrowing and unprecedented private sector borrowing to build out AI, borrowers have to offer higher yields to attract capital. This is leading to a situation in which sellers of homes outnumber buyers, for example, at the highest level in years.
When the big picture of the economy lines up with the behavior of macro markets, such as bonds, stocks, and currencies, we see the birth of big trends. The best practice among traders is to have an eye on the big picture to be sensitive to occasions when the markets line up, but not to become so immersed in the big picture view that they fail to take advantage of day-to-day tactical opportunities.
A great sports team goes into a game with a well-developed game plan, but focuses on the unique execution of each play to exploit opportunities in the here and now. Great self-coaching is having a game plan *and* trading each day uniquely.
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10/15/2026 - One of the best practices that I've observed among traders is going beyond reviewing one's trades to review the opportunities that they failed to detect and trade. For example, a trader might have found a good opportunity trading the broad market but didn't see the even better opportunity that set up in a particular sector of the market. By becoming highly focused on the market or stock they were looking at they failed to look broadly for opportunity. A best practice is to track large numbers of related trading opportunities and then focus on the ones that are moving most and moving clearest. In other words, the really good traders work on their scanning ability and thus are able to pursue especially promising trades.
Very often this scanning will reveal patterns of relative strength or weakness that signal an opportunity. The overall market may move to a relative high or low but a particular sector of the market will lag or hold up. This divergence is the beginning of relative weakness or relative strength and often creates an excellent area for entry. This is especially powerful when the patterns of relative strength or weakness reveal a theme within market flows. For instance, growth sectors of the market may show increasing relative volume and price strength compared with value sectors, signaling the early stages of institutional money flows.
Patterns of relative strength and weakness frequently reveal what larger market participants are doing, allowing nimble traders to ride those flows. By studying what moves and how it moves, we can grow our ability as pattern recognizers--and we can place ourselves in greater opportunities.
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10/13/2026 - Over the years I've been privileged to work with a number of highly successful traders in proprietary and hedge fund settings, including several that have been featured in the Market Wizards series. This has provided a front row seat from which I've been able to see what goes into trading success. In this series of posts, I'll attempt to capture some of the best practices in trading that distinguish the best from the rest in the trading world.One of the truly standout best practices of great traders is practice itself. The quality of the review and learning processes for the best traders is quite different from average efforts. The good trader keeps a journal and goes over performance and might write down a few ideas for improvement. The better trader makes active use of that journal to structure specific goals for the coming trading session/week and then holds themselves accountable for progress on those goals in their daily review. The great trader reviews not only performance but also actively reviews the markets, the opportunities that appeared during the day, and how they could have exploited those opportunities. In other words, the best traders are distinguished by the *activity* of their learning processes, as they dig for details about how they could better spot opportunities, how they could better express and size their trades, how they could better manage the risk/reward of the trades, etc.
A best practice in trading is sustained deep learning: not just reviewing, but reliving every aspect of one's trades. This means that the best traders are spending as much time in preparing and learning as in trading, which in turn helps them become highly sensitive to situations when markets change their behavior. When each day of trading brings at least one lesson that is intensively learned and reviewed, the cumulative impact of the development is impressive.
A great way to identify who's great in markets is to observe what they're doing when markets aren't open.