3/25/2026 - We've seen it in recent markets: traders have trouble adjusting to markets that display high volatility. Their training is grounded in a particular volatility regime and they are accustomed to holding positions for a certain period of time. When volatility expands greatly, there is much more movement during each time period. Unable to make the adjustment, traders who were doing well in one volatility regime now find themselves whipped in and out of positions.
As I've shared in the past, a breakthrough in my own trading has been to track charts and indicators where each bar represents a unit of volume, not a time period. Thus, for example, we might draw open/high/low/close candles for each 50,000 contracts traded in the stock index futures. When markets get busier/more volatile, we draw more bars; when markets slow down, we get fewer bars. That means that, for a given pattern (such as a moving average crossover), we will get more signals in busy markets; fewer when markets slow down. This allows us to not get whipped around in the volatile markets, and it prevents us from overtrading slow periods.
For training purposes, we can make use of replay platforms where we can replay a market day bar by bar--and we can change the speed of the replay. This also helps us to adapt to slower and busier market conditions. The volume-based bars help us perceive in real time when a market is picking up volume, when buying or selling is drying up, etc. Those volume bars also help us see how well volume is able to move the market. Small bars for a given volume unit mean that the volume is not able to move the market very much. Range expansion on a bar--on a breakout, for instance--tells us that control of the market has changed.
We achieve a positive training psychology when the patterns we follow make sense to us. Seeing volume and price interacting in real time trains us to see when control of the market is expanding, contracting, and changing. Replaying those scenarios again and again is the most lasting way of building confidence and conviction in our trading.
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3/24/2026 - A valuable aspect of the training exercise described below is that, over time, you can categorize market conditions and see how trading opportunities set up in volatile markets, quiet markets, range markets, trending markets, morning markets, afternoon markets, etc. Just as a general will employ different strategies in mountain warfare than in desert warfare or ocean warfare, we want to be prepared to win in unique market environments. Many, many times traders fail to perform because they are employing the tactics successful in one environment long after that environment has changed. Adaptability of mindset and trading style is key to the mastery of the active trader.
Once we have a scheme for categorizing various market environments, we can then review our trading and identify what we do right and what we do wrong in each environment. By studying winning and losing trades as a function of market condition, we grow our adaptability and create a grounded sense of confidence in shifting market conditions.
When I first learned trading, I printed out charts of the market and categorized those by market condition, marking up each chart to identify the opportunities and also highlighting mistakes I had made. I grouped these printed charts by the type of market we were in and, over time, built an encyclopedia of charts to study best trades in each environment.
Traders who understand market condition and how to adapt to market condition don't go on tilt. They are prepared.
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3/23/2026 - In any performance field, professionals are always in training. It is not an activity limited to new, developing performers. From football teams to musicians, there is always practice and there is always new and different performance. A trading process without a training process cannot adapt to new markets and conditions.
The exercise I have found most helpful in my development was to track, at the end of each day, the one or two best opportunities in the market I was trading (stock index futures). I diagrammed and summarized how those best trades set up with respect to time of day, volume, movement relative to moving averages, larger contexts of time frame, overbought/oversold indicators, indicators of supply/demand (such as NYSE TICK), etc. Day after day, market after market.
Clearly this is training in pattern recognition. It's a bit like the radiologist reading one X-ray after another with feedback to gain a sense for the nuances of each. What I found is that the clearest patterns did not necessarily occur at absolute market tops or bottoms. Rather, we would rally after making a low or sell off after a high and then the next round of selling or buying would be unable to push the market to new lows/highs. In other words, the most reliable entries occurred after an absolute low or high had been established. That provided an excellent risk/reward entry, because there was a logical stop out level if the market made a further low or high.
Tracking indicators for each of these opportunities gave me a sense for which ones worked best in slower markets, busier markets, trending markets, range markets, etc. By grouping the best trades of the day by market condition, I found the best signals for different market conditions, different times of day, etc. By tracking these best trades going forward, I could also identify the best signals to exit trades under different market conditions. For instance, it was here that I found the anchored VWAP described by Brian Shannon to be particularly useful in staying in trades and logically exiting them.
What happens when we train ourselves in pattern recognition is that we become more familiar with patterns, more comfortable trading them, and more confident in our trading psychology. There is no room for FOMO, revenge trading, and impulsive trading if we're grounded in pattern recognition.
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3/22/2026 - For the developing trader, a positive trading psychology begins with a positive *training* psychology. How we approach our development shapes our developmental path.It's amazing how many traders recognize the need to follow a trading plan, but don't structure their development along a training plan. It's like going to the gym and randomly working on various stations and weights. Are we really going to achieve an aerobic fitness integrated with our fitness of strength and flexibility? Notice how professional athletes invariably work with professional trainers. The goal is to get the most from each session--and to get the right things from each session.
Left to our own devices, are we truly going to test and push our limits? Will we even keep score and know if we're getting better?
A platform such as TradingSim allows a trader to replay a market bar by bar, track relevant indicators, make trading decisions, and see how those decisions work out--all without risking any money. It is a kind of gym where we can work on selecting the best opportunities, finding the best risk/reward entries, managing risk and positions, etc. This is especially helpful for day traders, who can practice identifying the kind of day we're in and figuring out how to best trade it.
Notice how this is practice in pattern recognition, but also practice in executing trading skills. We can track our simulation P/L and identify--specifically--the parts of our game that we need to work on. Maintaining a positive training psychology--coaching ourselves for progressive improvement--is key to maintaining a positive trading psychology. Through practice trading, we can practice the skills we need to coach ourselves to success.
How we learn determines how we perform.