Syncing with the markets

This is a great post by Brett Steenbarger on how trading time frequency can impact our performance. The key point is that the trading frequency or the chart we trade must be in sync with our speed of decision making. 

25 things to improve next year

1. Be comfortable with being uncomfortable in trading. The best trades are the most difficult to make.
2. You have to have an edge that you can explain to your mother.
3. Making money is important and not being right.
4. Profit is the objective, but not the sole measure of trading quality especially when drawdowns are taken into account.
5. Maintain your mindset after a row of losing trades.
6. Trade aggressively when you do well and modestly otherwise.
7. Don't only watch the markets be participant even if with very small position size.
8. Stop thinking about the market being cheap or expensive.
9. Be very flexible in changing your opinion if market tells you so.
10. There will be opportunities every day. 
11. Prices very often lead the news. 
12. Trade the reaction but not the news.
13. Be patient with winning trades and enormously inpatient with loosing trades.
14. One or two trade in a month make up the profit, but you must do the rest to be able to do these winners.
15. Try to keep your charts as naked as possible focusing on the support and resistance zones.
16. Try to anticipate the right side of the chart and do not be bogged down in the left side.
17. Study chart to figure out where traders are lining up to buy or sell and where people are stopped out.
18. Before entering into a trade you must know exactly where (Profit Target) or how  (Trailing Stop) you will exit. 
19. Don't try to pick tops and bottoms.
20. Stop loss must be wide enough to absorb the chart noise.
21. Be patient with entries to improve payoffs.
22. Improve self talk. Talk as a trading coach talks to a novice trader. This should improve responsibility and help detach from thinking about money.
23. Focus on making a lot of small profits rather to find the big trade.
24. Focus on fine tuning the daily and weekly routines and tasks, define each task in details and also their timing.
25. Don't even think to fight the trend, fight the sideways only!

Anticipate your trades

There is a great post by Nial Fuller about anticipating our trades rather just be reactive to market moves. A lot of wisdom is baked in this approach. In order to be able to anticipate market moves, we have to have a good understanding of the underlying market drivers let them be fundamental or technical in nature.  

Interview with John Carter

This is a great interview with John Carter by Aaron Fifield. 

For me the key points are:
- Difference between good and bad traders is patience.Patience to wait for the right setup and patience to sit in a winning trade. "I promise you that the markets are gonna be open tomorrow and there's gonna be another opportunity.
- "When you get emotional and you chase (a missed trade) you get yourself into a mindset that you really miss what's going on, when a real opportunity comes along you're just not ready. You're chasing and emotionally vested in something that really wasn't a setup. You usually end up to be the last to get in."
- "I went from 10k to 100k so I thought wow I could go from 100k to 1m. Instead of focusing on trading I started to focus on the 1m. That changed the trading approach. I can't afford  taking this loss I have to make it to break-even.'" This was distractive. Don't try to make 1m!
- Books: Mark Douglas The Disciplined Trader and Trading in the zone. 
- The biggest problem with being too fearful is that you wait for the confirmation. The problem with waiting for the confirmation in trading is that by the time something is confirmed and all the indicators are aligned that is usually the time to take profits. Everybody is looking at the same chart and if everybody thinks that it looks good than everybody is in position so nobody else is left to jump into and move the prices in your way. That coincide with the saying that the best trades are the most uncomfortable to make.
- "Sooner you get to the point when you focus on probabilities and you let go the emotional attachment to the outcome the sooner you become consistent."
- There are three type of trading: scalping/day trading, swing/position trading and investing. "The best thing I've done I took my 5min charts and throwed them away."
- "The best traders I've met they don't care what's going on, they don't watch the news, the don't look at the latest tips", they just focus on their setups. "The less information you have the better you will do." 
- "You don't do the same trades all the time. Markets are changing. There are three positions to have, you can be long, short and flat. Longer I do this I more realize that flat is one of the best positions. Because if you are flat your mind is neutral. If nothing you can do go away and just do something else, be patient. If you can be patient in the course of a trading year, there is gonna be one or two days in a month where if you are focused and you have a neutral state of mind you can dive in and have a larger than normal position and make a killing. Then get out and go flat again. Don't trade just to get read of boredom.
- "Out of the money options are designed to expire worthless."
- "I don't look at a chart more than a split second." Good setups are right there in front of your face. You look at a chart longer it means you're trying to force something onto that. 
- I would rather have three or four larger positions than 18 smaller ones. "Diversification is for people who don't know what they're doing." If you see something you like get in and focus on it instead of shotgunning an hoping for the best. Focus is the key.
- "In early years I had a pressure to make a  big trade. The main difference now is the confidence in my skills."If I don't make money today that's fine, markets are gonna be here tomorrow". 
- "This is the only profession on planet where you have to develop confidence in a situation where the result is always uncertain. When you feel comfortable to be uncomfortable then you are there. "

"Price itself should also be regarded as a fundamental"

There is a great post on macro-ops.com in the LESSONS FROM A TRADING GREAT series. Now they talk about Amos Hostetter. The most important idea for me is that the price itself can be regarded as a fundamental. This simply results in a feedback loop in the market. The big question is whether this feedback is positive or negative.The problem is that it can be both. If the price breaks out and there is a strong follow through, the feedback is positive and a trend is forming. If the breakout is muted that results in a false signal the feedback is negative. I think this is the most important is to asses time to time.