Trading For A Living Without Living For Trading

 

10/3/2025 - Perhaps the most powerful way of ensuring that trading for a living does not become living for trading is maximizing the quality of our time and experience outside of markets.  Research in psychology is very clear that experiences of happiness/joy and meaning/fulfillment are associated with more energy, better health, and greater productivity.  The connection that is particularly relevant to trading is that, when we live lives of joy and fulfillment, our perception is literally expanded.  We become more creative and more perceptive.  Conversely, when we are more stressed, we lose the capacity to clearly perceive what is happening around us.  

What are we doing each day to bring happiness to our lives?  To do things that are meaningful?  To connect with people who matter to us?  To engage in activities that energize us?  If our trading impoverishes our lives and takes away from these four priorities, we unwittingly cultivate a mindset that removes us from opportunity.  How well we live is intimately connected with how well we trade.

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10/1/2025 - How can you trade for a living without living for trading if you're a short-term/intraday trader?  Don't you have to be glued to screens to find and exploit opportunity?

As noted below, breadth patterns can be found on all time frames, including very short-term.  For those whose greatest talents involve pattern recognition, opportunities with the NYSE TICK and related TICK measures set up frequently--particularly when upticks and downticks across stocks can no longer move price meaningfully higher/lower.  Conversely, we can monitor advances/declines for a given index in real time and see when upticks/downticks are moving the broad market.  

What I'm finding particularly promising is using the longer-term breadth information to identify historical trading edges over periods of days and then using the intraday breadth patterns to identify when those edges are playing out here and now.  That means trading short-term, while being informed regarding the market's bigger picture.  While waiting for the opportunity set to line up across time frames, the market gives us time to engage in other activities, whether they be market research or getting other things done.  We don't have to be glued to screens to keep an eye on the setting up of intraday swings.  Alternatively, I've known traders who limit their trading to patterns that set up in the morning hours and who size those aggressively.  They make their money and then the rest of the day is theirs.

When we own opportunity, markets no longer own us.

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9/30/2025 - The greatest market opportunities occur on multiple time scales:  they set up on the short-term and also on the longer-term.  When breadth patterns show up in the smaller and bigger pictures, it becomes possible to ride the activity of the market's largest participants.

First off, breadth means that multiple stocks/subsectors/sectors are participating in a move.  That can only happen when institutions are allocating capital to the asset class or to one or more themes within that asset class.  When we break breadth down sector by sector, subsector by subsector, and when we break breadth down by factor/themes (growth/value; small cap/large cap; interest rate sensitivity), we can see how funds are flowing and join in that movement.

Second, breadth occurs on multiple time scales.  We can look at the number of stocks giving longer- and shorter-term buy/sell signals on technical indicators such as moving average crossovers.  We can also look at new highs/lows over different time periods.  Breadth can even be tracked effectively intraday through measures such as TICK.  My platform (Sierra Chart) follows real time upticks vs. downticks for the overall NYSE market, but also for small cap stocks, for SPX stocks, and for Dow stocks.  This makes it possible to identify in real time whether a given move is broadly based or limited to a particular group of stocks.

When we require patterns to show up on longer time frames as well as medium and shorter ones, we trade much more selectively, but participate in the most promising opportunities.  This enables us to trade for a living without having to live to trade.  Instead of chasing moving markets, we patiently wait for markets to give us their best setups.  We can also pursue different opportunities on different time frames and in different parts of the market, giving us many ways to win.  

This is an important reason why very talented, successful hedge fund portfolio managers almost never come to me with problems of emotional trading/tilt/frustration.  They are not trying to catch each move.  They are waiting for opportunities to come to them.  I have found the Barchart, Market Charts, Stock Charts, and Sierra Chart resources to be invaluable in collating my own database to track breadth-related themes.

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9/29/2025 - Here is the project I'm working on:

I have been creating a very large database of breadth-related information for U.S. stocks.  The database goes back more than 20 years and includes daily breadth information for the overall market (NYSE, SPX) as well as breadth information for individual market sectors.  It also includes the number of stocks giving daily buy and sell signals across multiple technical indicator systems, as well as breadth data broken down by factor (growth vs value stocks; small vs. large cap stocks; etc.).  The database, when it is completed, will provide a look at forward returns from 3 to 50 days out and identify when returns are statistically significant relative to average returns.

What that means is that I have all the previous days' signals that cover the current trading day, and I have new trading signals created by yesterday's action.  That allows me to identify when forward returns are most promising due to the lining up of different signals and the lining up of signals across different time frames.  

Intraday overbought/oversold criteria are used to time entries in the larger breadth patterns.  There is no intraday trading, however; the breadth patterns are meant to capture short-term swings and longer-term moves in the indexes and stock sectors.  That provides diversification by time frame as well as by market.

Rules define stop and take-profit levels, as well as money management criteria for adding and lowering position sizes based upon the shifting of odds as markets move.  This requires checking in on the market in the morning and afternoon, but does not require ongoing tracking of minute-by-minute action.

It's early in the game, but so far the project is profitable and is showing promise in terms of identifying the parts of the market with the greatest odds of success.  The inclusion of sectors creates multiple ways to win (for example, being long one sector with good historical odds and short another with poor odds and volatility adjusting the pair to be completely market neutral).  The balance of positions--across markets and across time frames--helps smooth the P/L curve.  

The most important finding so far, however, is that this approach has taken all of the drama out of trading.  It has freed me up for my many other life priorities and yet is every bit as challenging and fulfilling as short-term trading in terms of problem-solving and the search for opportunity.  It is possible to trade for a living without living for trading.  So many of the problems identified by trading coaches are a function of the drama created by becoming attached to short-term market behavior.  For me, the best way to work on my psychology is to trade within a framework that draws upon my greatest interests and strengths.  

Life is too short for drama.

Why Do I Sabotage My Own Trading?

 

9/28/2025 - An important change method in positive psychology is the solution-focused approach.  From a solution perspective, asking the question, "Why do I sabotage my trading?" is the wrong question.  What we want to ask is, "What might I be doing right when I'm not sabotaging my trading?"  It's when our negative patterns are not occurring that we might be enacting our own solutions.  For instance, I stopped making poor, impulsive trading decisions once I dedicated a meaningful portion of my profits to causes that I believe in.  That changed my mindset.  I was trading to help others--a powerful motivation for a psychologist!  Just as I would not act on impulse while helping a client in therapy, I won't do so if my trading is designed to help those in need.  By tapping into a new and more powerful motivation, the problem ceases to exist.  

I've seen this dynamic many times among traders who trade in teams:  they become much more consistent and disciplined because their motivation to not let others down is stronger than their need for momentary P/L.  What makes team-based trading so powerful is the opportunity to share many ideas and observations, but also the opportunity to draw upon social motivations that overpower our most negative impulses.  Structuring our trading the right way is the best psychological practice!

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9/26/2025 - A powerful technique for overcoming the patterns that sabotage our trading is to actively mentally rehearse those patterns while we are training our brains to stay calm and focused.  In other words, we vividly imagine drawdown scenarios, missed opportunities, and other situations that can hijack our mindset.  While we're engaged in those visualizations, we can be connected to a brain wave biofeedback device that tells us in real time when we're in the zone and when we're not.  We keep repeating the "tilt" scenarios in our visualizations until they lose their ability to disrupt our mindsets.  Repetition normalizes experience.  When we normalize negative market outcomes, they no longer sabotage our trading.  

Indeed, using breaks from trading to renew our focus through biofeedback work makes us more resilient in our emotional responses.  Rehearsing our trading plans and rules before the start of the market day while keeping ourselves in states of focus builds a resilient performance mindset.

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9/25/2025 - One of the most frustrating issues I hear from traders is that they find themselves not following their own rules.  This creates a double sense of failure in that they miss opportunities and also feel that they have sabotaged their own success.  In my own trading, this has typically occurred when fear of loss overwhelms sound planning.  Although a trade is working out, I may see very short-term price action going against me and quickly exit the trade.  Many times, that short-term countermovement is precisely where I could be adding to my position!

The cognitive techniques discussed in The Daily Trading Coach book have been especially helpful in eliminating this sabotage.  The idea behind cognitive work is that our problems occur because of how we talk to ourselves.  If we can learn to identify and challenge our negative thinking, we can distance ourselves from it and act upon our best judgement.  One variation of this work that I've written about is imagining that the things you're telling yourself are being said to you by a person you hate and who would want to see you fail.  Imagine that this enemy of yours is shouting in your ear to get out of the trade that's working for you because you might lose your profits.

What would you say to that person?  Chances are good that you would tell them to shut the f*ck up!

In other words, if someone you can't stand said to you what you're saying to you, you wouldn't buy into it.  You would clearly see that it's a sabotage.

Cognitive work helps us identify in real time how we're talking to ourselves so that we can decide whether or not to act upon it.  Many of our greatest emotional problems are because we've learned (and overlearned) negative thought patterns.  By thinking about our thinking, we can evaluate our situations more objectively and do what's right--in markets, but also in relationships and other areas of life.

I will offer more on how to change our thought processes in coming posts--  

The Power of Asking New Questions

 

9/24/2025  - On my cat site, I just described a learning lesson from our most recent family addition, Nomi Lyn.  What I suggested is that the best way to raise a kitten is very similar to the Montessori approach to education:  Expose them to lots of different materials, activities, foods, etc. and discover who they are by observing what they gravitate to and how they make use of their environment.  

But, wait.  What if we trained traders that way?  Instead of expecting them to follow a preset curriculum/guru, what if we exposed them to many markets, many ways of trading, many time frames, and many role models?  What if traders spent an extended time playing with markets in order to discover where they excelled and what spoke to them?

Could it be that much of the frustration newer traders experience in markets is because they're trying to fit a mold promoted by others rather than take the time to learn where their talents and passions truly lie?  What might a Montessori education for traders look like?  Perhaps what makes cats flourish is not so different from what nurtures our own development.

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9/23/2025 - Suppose the title of this post was "The Power of Asking Now Questions".  What questions are you meant to be asking in the here-and-now:  at each phase of the trading process?  What questions are you meant to be asking at the start, middle, and end of each day?  Each week?  The purpose of now questions is to align ourselves with our life's priorities, including our own best trading practices.  We can best view opportunities--in life and in markets--if we re-view what we've done and connect with our goals and priorities going forward.  We can't act impulsively or on habit if we're consciously asking ourselves now questions.  The greatest challenge of trading psychology is not the presence of emotion, but the absence of self-awareness.  How can we reach personal goals if we are not setting those in front of ourselves regularly?

One of my best practices is to use real time brain wave biofeedback to enter a highly focused zone and, in that state, review my priorities going forward.  By training the brain for focus and using the focused state to rehearse goals, we create a situation in which our best trading becomes anchored to our best states.  This is known as state-dependent learning.  Connecting to our now questions--and our now answers--every time we calm and focus ourselves allows us to control our trading by controlling our mental and physical states.

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9/22/2025 - Back when I was teaching full time at the medical school in Syracuse, I came across an interesting study about what distinguishes the most successful scientific researchers.  One of the conclusions was that the best investigators were great "question finders".  It wasn't just that they came up with new discoveries.  They asked better questions and those led to the discoveries.  

I believe this applies to trading success as well.  For example, a trader may have flat performance for a while and conclude that they're not trading well.  A trader better at "question finding" will view the flat performance as a mixture of good trading and not-so-good trading.  They will then drill down to the ideas they're trading, the ways in which they are expressing those ideas, the sizing of their trades; their timing in trading those ideas with entries/exits; etc. to find out what they're doing really well and what they need to improve.  

Viewing flat performance of a sector ETF or a stock index as a blend of bullish and bearish components is a similar kind of reasoning.  One trader sees a flattish stock market and sees no opportunity.  Another trader looks at sector performance and the behavior of various market factors (such as small cap/large cap; growth/value) and sees that the flat overall market masks meaningful moves in the components.  Question finding for the trader is looking beneath the surface to see what is moving most--and what is moving most reliably.  A smart trader looks for movement; a really smart trader looks for the consistency of the movement (Sharpe ratio).

The best traders ask more and better questions.

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9/21/2025 - Fresh questions can open the door to new answers and opportunities.  

No trading edge ever came from consensus thinking.

What if how sectors and subsectors rotate anticipates how broad indexes will trend?  What if some of the most important information is not just price and volume, but the price of one asset relative to another?  What if absolute value begins with relative value?

We look for direction on the chart of an asset when it's the lack of direction that alerts us to relative movement within that asset.

What if the most reliable moves occur at time frames higher than the ones we watch?

Are we trading to make money, or are we watching markets to trade?

What if our best trading comes from following multiple, independent positions over longer time frames and not from piling into short-term trades of individual positions?

What if we're focused on playing the game better when there's a better game we should be playing?

What if better trading doesn't come from better trading psychology?  What if a better psychology comes from trading what we see and understand best--and what provides the greatest opportunity?

New questions can take us to new places.

I long ago found that adopting the cat no one wants and no one is looking at provides the greatest opportunity.  Markets are not so different--

Why Successful Traders Fail

 

9/19/25 - Successful traders fail more because of stagnation than because they blow up.  They focus so much on "plan your trade and trade your plan" that they never create new, more promising plans to trade.  What creates a lasting business is thinking outside the box, observing different market relationships, and finding fresh sources of edge.  The excitement of discovery and the reward of doing new things keeps us actively engaged.  Drawdowns of P/L don't have to become emotional drawdowns if we're always exploring, always discovering.

The source of edge I'm currently working on is flat, "choppy" market conditions.  How do we make money when the market trades in a relatively narrow range?  One measure I've found helpful is what I call the momentum curve:  the percentage of stocks in the SPX that trade above their various moving averages, from 3 day to 200 day.  (I find the Market Charts and Barchart sites useful sources for this information).  This tells us when flat markets are occurring in uptrends or downtrends on higher timeframes.

A unique idea that came to me is that we can create momentum curves for each sector within the SPX universe.  Thus we look at the percentage of stocks above the different moving averages within the technology, consumer discretionary, utilities, communications, and other sectors.  What we can clearly see is that "choppy" index markets are hiding sector rotation.  During the choppy period, funds are flowing out of some sectors and into others.  Choppy markets are actually rotational markets.

It turns out that opens a variety of sources of edge.  More to come--

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9/18/25 - It is a challenge to make ourselves, and it's doubly challenging to unlearn what we've absorbed and remake ourselves.  When we fear to lose, we've lost opportunity and that is the great loss of all.  

Successful traders fail because they cannot let go of what has worked in the past to discover and develop fresh opportunity going forward.  All edges in markets have expiration dates.  Eventually they are discovered, exploited, and lose their unique value.  The successful trader is not one with an edge, but one who has developed the ability to cultivate new and different edges.

But that takes the ability to embrace uncertainty as well as the passion for learning new things.  Trading is not a journey to a destination.  It is a continuous process of evolution.  If we don't love change, change surely will leave us behind.  In developing the new, we renew ourselves.  

The Key Role of Emotions in Trading

 

9/16/2025 - Think about the mind state of the Olympic athlete or the Broadway actress or the neurosurgeon.  Above all, they are focused on what they are doing.  They are in the zone of performance, and they experience that zone to be pleasurable.  They're immersed in doing something they love.

The opposite state from being in the zone is being so focused on outcome that we can't enjoy the performance itself.  Imagine a basketball player constantly looking at the scoreboard or the actor anxiously scanning to see how the audience is responding.

When outcome becomes more important than the process of doing, we become attached to our ups and downs and lose the joy of being in the zone.  We learn most effectively when we're in the receptive zone that processes experience deeply.

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9/15/2025 - Hybrid trading is generally considered to be the use of quantitative signals and systems to support discretionary decision-making.  What I'm finding is that, for someone with short-term trading experience, hybrid trading can also be the use of discretionary pattern recognition to best enter and exit trades generated by quantitative signals.  In such trading, emotion actually supports quant trading.  When a signal starts playing out in real time, there is an "aha!" experience that says, "Now is the time!"  For example, a breadth pattern in which funds are flowing away from value and defensive stocks and toward growth shares might be significantly associated with positive market returns over the next two weeks.  When we see the market sell off on a short-term basis and then find support above its prior oversold level, our "aha!" pattern recognition alerts us to opportunity.  Emotion actually helps us get larger in the backtested trade.  The experienced trader often senses and feels when a researched opportunity is playing out, creating very positive reward relative to risk.  

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9/14/2025 - The most important emotions in trading are fulfillment and frustration.  When we tackle challenges that make use of our talents, we experience satisfaction and a sense of meaning and purpose.  When we tackle challenges either in ways that don't make use of our talents--or if we simply lack the talents necessary for success--we experience frustration.

To be sure, skill development is crucial to success and all performance challenges bring their own unique learning curves.  We don't travel those curves successfully, however, if we don't have the basic talents needed for success.  That is obvious in sports such as basketball and Olympic skiing; it's also obvious in the arts.  Traders often want to believe--and unscrupulous vendors are happy to promote--the idea that success is simply a function of learning the right skills.  Without core talents of information processing, pattern recognition, and multiple learning styles, attempts at skill-building will fall short.

When our approaches to markets fits our talents, our skill development is accelerated and that is intrinsically rewarding.  We enter the performance zone when we are aligned with our talents.  Trading can't be profitable if it's not deeply fulfilling.

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9/14/2025 - When traders reflect on emotion in trading, their first thoughts often go to impulsivity, greed, and fear.  What I've emphasized in the upcoming book is that the experience of positive emotion is necessary for trading success.  It is positive emotion that shows up as our first market alerts, as we sense opportunity before we consciously identify and make sense of it.  It is also positive emotion that pushes us to find learning lessons and inspiration even in our losing trades and days, and it's positive emotion that connects us with others so that we can all benefit from teamwork.  

The problem with overtrading and poor risk management is not just that they lose us money.  They also prevent us from the positive experience that we need to energize our trading growth.  Perhaps there is no better trading self-assessment than to ask ourselves whether our trading is giving us energy or draining us; whether our trading is inspiring us or whether it's holding us back from our development.  

If there is no positive emotional P/L to our trading, surely we will not reap the financial rewards of markets.

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9/12/2025 - There is a serious misconception among traders that sound trading is trading without emotion.  I would suggest that sound trading is trading with emotion but without attachment to emotion.  That's an important distinction.  To feel something is information.  We feel because something in life strikes us favorably or unfavorably.  If we become attached to that emotion, then it will dominate our subsequent actions.  If we can observe the emotion and treat it as information, we can use it to make better and better trading decisions.

As I noted in the previous post, my research has been identifying edges that play out over a period of many weeks.  I'll be discussing those in future posts.  As those edges play out, you can identify short-term market situations where traders are getting stopped out of positions that will ultimately play out.  You can feel the traders' panic, and you can use that emotion to enter a longer-term position with very good reward relative to risk.

A therapist feels a client's emotions, but does not become attached to those feelings.  Emotions are information, but only if we can become observers of our emotions.  Our trading problems result, not from the presence of emotion, but from the absence of focus.

(Re)Building Your Trading Career

 

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9/11/2025 - A great framework for building or rebuilding your trading career is the SWOT analysis:  Strengths, Weaknesses, Opportunities, Threats.

In keeping with the positive psychology perspective, I would suggest that the starting point for such an analysis is a clear, detailed assessment of your strengths and how those intersect with opportunities in the market.  Then you can figure out how to navigate your weaknesses and the threats that markets pose.

What are the edges in the market that you see most clearly?  What are the processes that you employ to best execute such edges?  How do you know that the edges you perceive today will be likely to occur going forward?

As I suggested earlier, it's important to know your edges--and your ways of exploiting them--so well that you could deliver an effective elevator pitch to someone who might want to invest in your business.  Tough question:  If you can't effectively pitch your business to others, should you really be investing your time and money in what you're doing?

I've been conducting a detailed analysis of the breadth measures that I track, both overall market breadth for the equity indexes and breadth broken down by stock market sector.  What has been eye-opening is that the edges I'm finding from the breadth measures are most pronounced over longer timeframes:  30-50 trading sessions.

I absolutely did not expect such a finding.

The implication is that I'm greatly underperforming the opportunity sets in markets by day trading.  Even the active investing of many portfolio managers misses such edges.  

Finding new and different edges in markets is the starting point for rebuilding our market careers.

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9/10/25 - An important principle that I emphasize with traders is "getting bigger by getting broader".  By finding and exploiting new sources of edge in markets--new strategies, new time frames, new markets--you diversify your trading business and can make money in a variety of market conditions.  When one strategy isn't working, others can kick in.

Many traders I've spoken with depend upon trending (and volatile) conditions to make money.  If the market trades in a range, they can get chopped up pretty easily.  Adding strategies that identify cycles in "choppy" markets and trading their short-term patterns can be quite profitable.  Often, those rangebound conditions are actually corrective periods in longer-term directional moves.  As I'll describe in an upcoming post, many breadth indicators are quite good at identifying those longer-term moves.  Armed with that information, we can view the flattish corrections as opportunities to pounce on the next directional leg.

Another way of getting broader is to trade relative relationships and take the overall market out of the equation entirely.  When we go long one market sector and short another and balance the positions for volatility, we have a way of making money regardless of what the overall market is doing, as long as our one sector outperforms the other.

When we have a diversified trading business, our income becomes more balanced; our overall P/L becomes less volatile; and we have a positive mind frame based on finding opportunities.  So often, (re)building our business means expanding our business and investing time and energy to create multiple income streams.

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9/9/25 - This series of posts has particular relevance for those struggling with their trading and those who are ready to take their limited success to the next level of performance.  It also has personal relevance, as I will be rebuilding my trading approach and process from the ground up--and will document each of my steps through my blog posts.  The idea is to help traders use their setbacks as opportunities to create success.

One of the first topics I tackled in my first book was manufacturing cars and trading success.  The example I gave was of U.S. car makers who ran assembly lines at a speed that would ensure that flaws would not occur.  That was contrasted with Japanese auto makers who intentionally sped up their assembly lines until problems occurred.  Then they jumped at the opportunity to correct the flaws and run the whole process faster.

For the innovative automakers, things falling apart were a step in success.

If things have fallen apart in your trading--or if you have fallen short of your goals and potential--the idea is to embrace the lessons of your experience and use those to remake what you do.

The first step in (re) building your trading career is conducting a careful assessment of what you've been doing and an equally careful assessment of where opportunity can be found.  That will be the focus of the next post.  Along the way, I'll be sharing my lessons and helping you extract your own.  Let's go! 

How We Live Life Is How We Approach Trading

 

9/8/2025 - I really didn't feel like going to the gym this morning.  I was tired, but I knew that I had to keep up with my workouts.  We get to this choice point often in life, where we know what we should do and part of us just doesn't want to make the effort.  It happens in markets as well.  Conducting that extra analysis; reaching out for more and different information; putting in the time for in-depth review:  all require effort.  Sometimes, we just don't want to push ourselves.

These choice points are points of opportunity.  We learn to expand our free will by exercising it--just like at a gym.  Eventually, what requires effort becomes natural and routine.  At the heart of personal growth is growth of free will.  

This is yet another way in which how we live our lives shapes our trading.  If we train ourselves for free will, we become capable of the efforts that will distinguish our trading--and all our undertakings.

I ended up going to the gym and quickly gained energy that will help fuel my day.  The right doing gives us energy.  When we're tired, the problem is often not a need for rest, but an absence of inspiration.

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9/7/2025 - The most recent post below made the point that how we live our lives shapes the attitudes and behaviors we bring to markets.  If, however, we become what we do routinely, then the reverse is also true:  Our trading impacts the rest of our lives.  If we become obsessive about our trading, can we expect to be sensitive to others and attentive to our personal needs?  If trading becomes an arena for frustration and impulsive actions, can we expect to live the rest of our lives in planned, goal-oriented ways?

How you are trading is shaping the person you're becoming.

That should either inspire you or frighten the hell out of you.

The only path to great trading is your personal path to greatness.  Great trading reinforces the ideals you pursue throughout life.

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9/5/2025 - In the long run, our trading processes can be no better than the processes with which we live our lives.  Can we expect to carefully structure and express our ideas and manage their risk prudently if we're not conscientious in our personal lives?  Can we expect a positive, motivated, energized trading mindset when our day-to-day thoughts are filled with frustration and negativity?  Trading with integrity comes from a life of integrity.  Making the right decisions and taking the right actions each day strengthens our ability to do so in markets.

My recent post about cats and creativity makes the point that finding unique ways to create loving homes for cats who have been neglected, abused, and/or abandoned has made me more creative and loving.  We internalize our daily doing.  Disciplined, creative processes for physical exercise, researching opportunities, and--yes--even feeding cats reinforce the right trading strengths.  

When we live with integrity, we trade with integrity.