Sunday, March 28, 2021

Ask The Trading And Trading Psychology Questions Top On Your Mind

It's been a busy few weeks, and I've largely taken a break from social media and educational programs in order to focus on my own trading.  Among the areas I've been working on are:

*  Using the trading psychology of market participants to read intraday and longer-term patterns in the stock market;

*  Refining the use of market cycles for the timing of trades;

*  Refining the use of quant studies to look for market edges;

*  Using relative performance to identify the next market themes in play.

This work was rewarded on Friday with one of my best trading days in a while.  Trading is always a work in progress and that is a big part of what keeps it fascinating and challenging!

If you click the graphic at the top of the post, you'll get the details on a webinar I'll be doing with and Morad Askar this coming Wednesday at 4:30 PM EST.  The format of the session will be that participants can bring any trading or trading psychology question for Morad and me to answer.  Participants can ask their questions anonymously and it will be open kimono on my end.  Happy to share my latest work, as well as general ideas re: trading psychology.

The idea is provide free coaching and mentoring to developing traders and allow everyone to learn from each other's questions.  

In order to participate in the live session and ask questions, you'll need to use this link to register:  

Because it's a virtual session, attendance will be limited.  Hope to see you there!!


Friday, March 12, 2021

Tracking Sentiment And Market Impact

If you click on the chart above, you can see one thing I was tracking in the afternoon of Friday, March 12th.  (Data and chart from Sierra Chart).  In the top panel, we see the futures market for the S&) 500 Index (ES), where each bar represents 50,000 contracts traded.  The second panel shows the proportion of volume during each 50,000 contract period that was transacted at the offer price (green color) vs. the bid price (red color).  What we see with the yellow arrows is that the trend of ES continues higher, but there has been recent hitting of bids during the recent period.  In other words, sellers have been more aggressive lately, but they have been unable to push price meaningfully lower.  That has kept me long the market, with a tilt toward large cap value, which has been outperforming the NASDAQ tech names.  

Knowing the sentiment of the market through tracking which side is more aggressive and then seeing how this is impacting price action provide a helpful perspective on the market.  In this case, it has kept me in my position despite some price pullback and opens the door to my adding to the position should I see fresh lifting of offers taking price higher.

The most recent Three Minute Trading Coach video describes two ways of improving our trading that also improves our trading psychology.  The overarching point is that trading well--and grounding ourselves in market data that we have studied and reviewed so often that we have confidence in their value--is one of the best ways of improving our mindset.  If we are patient enough to wait for those occasions when we truly understand what is going on, that understanding provides us with the security to take proper risk in the idea.  Working on your trading ultimately *is* working on your head.  Understanding the psychology of other market participants is excellent grounding for your own psychology.

Further Resources:


Monday, March 08, 2021

Should High Achieving Traders Try To Live A Balanced Life?

A developing trader with a real passion for markets recently asked me about the psychological benefits of a "balanced life".  I'm sure he noticed, as I have, that many of the most successful traders put an unusual amount of time and effort into their work.  Is that setting them up for burnout, however, or undue stress during periods of drawdown?

It's an issue that I am intimately familiar with, as I typically wake up quite early in the morning and often work into the evening, including on weekends.  I have multiple work responsibilities--teaching in a medical school, working with traders from different firms, and helping college students who are doing overseas internships--and I have a wonderful family to keep up with.  On top of that, I'm taking several courses and writing a book.  Time is tight.  Sometimes too tight!

Do I have a balanced life?  In one sense, no, if we measure balance in terms of hours per week.  In another sense, my time spent with family, in my marriage, in learning, and at work provide real variety.  Per the quote above, I seek a balance among my passions; I don't balance time.

A large body of research in the field of positive psychology finds that we perform best, feel best, and are physically healthiest when we maximize our well-being.  Psychological well-being comes from doing things that make us happy; doing things that are meaningful to us; doing things that give us energy; and doing things that bring us closer to those that we care about.

We want to be firing on all four of those cylinders frequently every week, preferably every single day.  If we balance our passions in that way, we're most likely to broaden our sources of well-being and make ourselves as fulfilled and productive as possible.  If you're looking to balance your work life, the best place to start is maximizing non-work passions.

I've often pointed out that trading has to fit into our lives; our time can't be hostage to markets.  If all we have in life is trading, we will feel empty, stressed, and depressed when trading isn't paying off.  When we cultivate multiple passions, we always have things in our lives that keep us energized and engaged.  

What in your life sustains you outside of markets?

Further Resources: