The mind is the root of all our experience, both of ourselves and of others. If we perceive the world in an unclear way, confusion and suffering will arise. It is like someone with defective vision seeing the world as being upside down, or a fearful person finding everything frightening. We may be largely unaware of our ignorance and wrong views, yet at present the mind can be compared to a wild tiger, rampaging through our daily lives. Motivated by desire, hatred and bewilderment this untamed mind blindly pursues what it wants and lashes out at all that stands in its way, with little or no understanding of the way things really are.

Akong Tulku Rinpoche - Taming The Tiger, Tibetan teachings for improving daily life.

There are many great lessons on life in this book, and of course lots of parallels to trading psychology and the mental strength.

Tags: buddhism, learning to trade, lessons, Living, mental, tibetan, trading mindset, trading psychology, zen

I doubt it. There’s an interesting letter from a reader published at TraderFeed. Two things popped up for me, which I disagree with.

TraderFeed: A Trading Performance Insight From Ziad Masri

I remember early last year I’d sit there and watch the market for hours as it moved in a 6 point range with nothing happening. Now it’s almost non-stop action. The effect of all this extra exposure has been accelerated learning.

and he goes on to say:

And from that point of view, there’s never been a better time to learn and grow as a day trader… this market, far from just offering ample opportunity, is offering a crash graduate course.

Well sure there are opportunities to learn, but learn what? I’ve seen many times in the past people trading something that moved like crazy and then when those conditions were gone they crashed and burned. The key point being that abnormal market conditions teach us.. about abnormal market conditions.

I certainly don’t wish this experience on Ziad who sounds like a nice guy. But a reality check is in order. People learning to trade now in this market environment will have, in my opinion, quite a hard time when volatility goes back to normal, which is where it spends the majority of its time, for months and years. This post also reminded me that I’ve heard from a number of friends recently who got really interested in trading all of a sudden, the scoup? They managed to catch and ride a couple of shorts in the financials and now they feel like market geniuses. Profits are nice, but starting out in this environment and with outsized winners means their learning curve is only just beginning. Whether they make it or not and adapt and thrive in more “normal” stock market conditions, only time will tell.

Tags: learning to trade, stock market conditions, trader development, trading

Now this is my kind of sysetm for Getting Things Done :-) Actually there is some order to my “perfect mess“, I usually have a few temporary, on-the-fly, to do lists for trading work, errands etc. I use just to get my thoughts organized and then I go ahead and do things non-linearlily off memory. (Usually) works fine for me.

H/T maoxian.com

Extract from Malcolm Gladwell’s Outliers: Is there such a thing as pure genius? | Books | The Guardian

The Beatles ended up travelling to Hamburg five times between 1960 and the end of 1962. On the first trip, they played 106 nights, of five or more hours a night. Their second trip they played 92 times. Their third trip they played 48 times, for a total of 172 hours on stage. The last two Hamburg stints, in November and December 1962, involved another 90 hours of performing. All told, they performed for 270 nights in just over a year and a half. By the time they had their first burst of success in 1964, they had performed live an estimated 1,200 times, which is extraordinary. Most bands today don’t perform 1,200 times in their entire careers. The Hamburg crucible is what set the Beatles apart.

Interesting facts, and we all like to believe these type of hypothesis and that we can all “make it” out there and become whatever we want. It’s a good attitude to have. Nevertheless, on top of the X% perspiration there’s an another unknown Y% pure talent, and Z% of luck.

H/T to Andy Swan via his Twitter.

I’m getting fairly comfortable with my DAX trading style, particularly with timeframe, risk, entries and expectancy profile. One thing I am ’struggling’ with, i.e. tinkering and not really happy with much is exits. Which just reminded of something I wrote 3 years ago almost to the day. It was valid back then for stocks and is still valid now for futures. That’s because it’s just a sign of a developing trading style, one where there’s not enough experience and data yet to conclusively convince the trader to have faith and confidence in the rules. Many traders obssess with their entries, coming up with a gazillion indicators that will give them the ‘best’ entry. I have 4 short lines of rules written in a notepad text file. Exits though are tough, both to design and execute diligently.

Stops and Exits : Trader Eyal

The more I trade the more I find myself obsessed with stops and exits, it is an endless guesswork of what makes a better exit strategy, particularily for trailing once your initial stop is safe. One of the most annoying things as mentioned in an earlier post is to see a position reverese immediately after your stop was hit. But then instead of just getting upset about it the real value is in figuring out that if this is a repeated pattern then something is wrong with the stop strategy.

Have I become wiser since that post and is it easier now? Well yes and no. I have no problems at all taking a loss, you get used to that :-) especially with a 40% hit rate. A hard stop is always in place, position size is accordingly, stop is never widened, if it’s hit I’m out and that’s it. If it sets up again, I may re-enter. End of story. But exiting with a profit, now that’s a tough cookie especially on small intraday timeframes where end-of-day, end-of-week etc. are irrelevant. So, what are my general guidelines for designing my exits? I try to follow these rules:

1. Keep it as short and simple as possible (but without sarcificing quality)
2. Make it unambiguous, straight forward and easy to follow
3. No one can predict future prices, so let the market price tell you when to get out instead of guess when it’s “extended”
4. It’s never going to be perfect and you’ll almost never get out at the best place so (try to) stop fussing about it
5. You don’t need to get out at the top/bottom to make good money
6. Execute it consistently

Quite basic and simple, but oh-so-hard to do sometimes. I try to remind myself and keep in mind that if I followed my rule and got out too early, it’s a bummer but I accept it as part of the game/rules I set. But if I didn’t follow my rules and got out too early/late then that’s seriously disturbing for me, definitely something to avoid.

It’s been a while since I wrote an update so here’s a quick one. Trading has been going slow the last several weeks, opportunities are very limited and not much has been working. A very different environment from earlier in the year and of course last year. Part of it is the summer time I guess and another part just changing market conditions. June for example was flat which means my broker is happy collecting their commissions, I burn my time daily on the screens, alas the account stays the same, less withdrawals of course. Sure, it could have been worse as the whole of wallstreet is bleeding but I always strive for better so that’s not much consolation.

Nevertheless, I’ve been busy as a bee. I finally settled on a particular futures trading style and I’m working to hone it, test it, sim trade it, playback trade it, measure, tweak, enhance, re-design, throw new ideas at it, old ideas, write and re-write the rules etc. etc. NinjaTrader has been an instrumental part of it. I’m really enjoying the process and not only that but I know this is a far better way to spend my time than to try and squeeze whatever profit I can from my stocks trading style in this current environment. I also considered adding a longer term stocks strategy but I’m really a short term trader by nature, not much sense in going against that, at least for now. Scalability is a critical consideration so another short-term stocks method isn’t at the top of my priorities. Another consideration is timezone, at some point I may want to move back to living like a “normal” person (yeah right) instead of a vampire (despite my Transilvanian roots) so being able to employ a strategy on something like the DAX or even Asian sessions such as the HSI or STW is a big plus.

So all in all it’s exciting and boring times simulatenously, depending on which kind of instruments I’m looking at :-)

For those who can read Hebrew, here’s some good stuff about trading as a career, the challenges, rewards, achieving life balance and self fulfillment. If you look carefully around the internet you’ll find all the information about trading you’ll ever need, for free from people who’ve been-there-done-that. Of course it’s not easy to separate the gems from the mud, but as someone said before, nothing that’s actually worth something in life comes easy.

Here’s a really quick translation I hacked together, just for Lionel ;-) No editing or re-writing, just trying to convey Astral’s wise words to the best of my translation ability. Any glaring errors are (probably) my fault ;-)

It’s true that you’re in fact working in a systematic way - a routine that repeats itself, but I would say that’s very different from boring and ‘paying a price’.

Personally, I find the markets fascinating on a regular basis. The markets are the most interesting thing in the world, constantly changing , evolving and dynamic, where conditions always change.

I’m generally fascinated by the process of finding a great stock, a really good stock I know I’m going to make money on. It’s like finding a needle in a hay stack.. it’s like finding a treasure and the reward is accordingly.

I also love going over charts (I do it in a very high speed - I barely analyse charts - my brain just absorbs the chart and decides for me in half a second if there’s a desired pattern or not) and then it’s all flowing and quite fun. And when I do find a good stock I love checking its fundamentals, and learn about how things work and develop a concept.

I find this profession very fun and fulfilling, because you’re working on your own and you’re in a kind of a journey with yourself where you need to reach higher and higher standards and strive for perfection. And you know you can always reach higher levels of trading, there are no boundaries - and there’s nothing that’s not really up to you. Whether you make money or not in the markets, is entirely up to you, your skills and your mental ability.

When you work alone it can indeed be boring, and even exhausting, and it has a negative impact if you don’t maintain a balance. But these are things you learn with experience. And after the initial ‘enslavement’ and total concentration on the market - you learn to work with balance towards life - and then everything just flows and trading becomes another aspect in your life and a tool for achieving your financial goals.

My work routine is actually just the first half hour after the open, and the last hour before the close. In between I’m at home, and recently more often than before since it’s cold, and it gives a feeling I want to stay warm and cosy at home. So I check the screen every now and then, write in the forum like I’m doing now.

When you go through the market learning phases, and reach a situation where you have several work methods ingrained in your thinking - and you apply it very often - they become second nature, and trading becomes part of who you are. It’s like running without thinking about the action of running, just run.. and occasionally you’ll hit a stone, and you need to re-balance yourself, but as long as you’re running you’ve got momentum and you don’t think about how you’re doing it, you just do it.

As for creativity - there’s a lot of room for creativity, such as developing new trading methods and/or building systems. But I agree that it’s a different kind of creativity. It’s not like managing a hitech company or some business. It’s satisfaction of a different kind.

It’s also a very personal matter, some people are more suited for working on their own, and some are meant to work in a group and be a part of a group.

Personally I like working both on my own and also as part of a group, but if I’m part of a group then I’ll head it, manage and lead it.

Loving what you’re doing is the most important thing. When you do what you love doing you do it of your own free will and self fulfillment. And then your work is not your job, it’s what you are. And when you’re doing what you are then you’re in a state of balance. And when you’re in this state of balance you’re happy.

Astral

מאמר מקורי נמצא כאן

זה נכון שסה”כ עובדים באופן סיסטמתי - ויש רוטינת עבודה שחוזרת על עצמה,
אך מכאן ועד למשעמם, ו”מחיר” שצריך לשלם - העניין רחוק..אני אישית מרותק מהשווקים על בסיס קבוע, השוק זה הדבר הכי מעניין בעולם, הוא כל הזמן משתנה ומתפתח, הוא כל הזמן דינמי והתנאים בו משתנים..

בכלל מרתק אותי התהליך של מציאת מניה שהיא ממש על רמה, מניה ממש טובה שאני יודע שאני הולך להרוויח עליה כסף, וזה כמו למצוא מחט בערמת שחט..זה כמו מציאת מטמון - וה-reward מתקבל בהתאם..
אני אוהב לעבור על גרפים (אני גם עושה את זה במהירות עצומה - אני בכלל לא מנתח את הגרפים כמעט - המוח שלי קולט כזה את הגרף ומחליט בשבילי תוך חצי שניה אם קיימת תבנית רצויה או לא)…אז הכל כזה זורם וכיף,
וכשאני מוצא מניה טובה, אני אוהב לחקור את הפנדומנטלס שלה, וללמוד על איך שהדברים עובדים, ולפתח קונספטס,

ואני מוצא את המקצוע הזה מאוד כיף ומספק, כי אתה עובד פה אל מול עצמך - וזה למעשה מעיין מסע עם עצמך שאתה צריך להגיע בו לרמות יותר ויותר גבוהות ולשאוף לשלמות,,,ואתה יודע שאתה תמיד יכול לשאוף לרמות מסחר יותר גבוהות, ואין גבולות - ואין עניינים שלא תלויים בך. אם תעשה כסף בשוק או לא - זה הכל תלוי בך, ביכולת ובמנטליות שלך.

וכשעובדים לבד זה באמת יכול להיות משעמם, ואף מתיש, ויש לזה השפעות שליליות אם לא שומרים על באלאנס. אך אלו דברים שלומדים עם הניסיון, ואחרי שעובר שלב ה´השתעבדות´ והריכוז המוחלט בשוק - לומדים לעבוד עם באלאנס ביחס לחיים - ואז הכל זורם, והמסחר מהווה לך רק אספקט נוסף בחיים שמהווה כלי עבורך להשיג את המטרות הפיננסיות שלך.

רוטינת העבודה היומית שלי היא למעשה רק חצי שעה על הפתיחה, ושעה אחרונה על הסגירה. בין לבין אם אני נמצא בבית (ולאחרונה אני נמצא יותר כי קר, וזה נותן לי יותר תחושה של כזה לרצות להיות בבית בחמימות נעימה כזו), אז אני מסתכל במסך מידיי פעם, וכותב הודעות בפורום כמו עכשיו

כשעוברים את שלבי הלמידה של השוק, ומגיעים למצב שיש מספר שיטות עבודה מובנות בחשיבה - ומיישמים אותן הרבה בפועל - הן נהיות לטבע שני, והמסחר נהפך לחלק מהמהות שלך, כמו לרוץ ולא לחשוב על איך לרוץ, אלא פשוט לרוץ - אז מידיי פעם נתקלים באבן, וצריך לחזור חזרה לשיווי משקל, - אך כל עוד אתה רץ, אתה בתנופה, אתה לא חושב איך לעשות את זה - אתה פשוט עושה את זה.

לגבי יצירה - יצירה יכולה להיות דווקא המון, באספקט של פיתוח שיטות מסחר חדשות, ו\או בניית סיסטמים.
אך אני מסכים שזה סוג שונה של יצירה. זה לא כמו לנהל חברת הייטק או עסק כלשהו. זה סיפוק מסוג שונה.

זה גם עניין אישי, יש אנשים שיותר מתאימים לעבוד עם עצמם, ויש כאלו שנועדו לעבוד בקבוצה, ולהיות חלק מקבוצה.
אני אישית אוהב לעבוד גם עם עצמי וגם כחלק מקבוצה, אך אם אני חלק מהקבוצה - אני בראשה, מנהל ומוביל.
אז כל אחד מה שמתאים לו,
לאהוב את מה שאתה עושה, זה הכי חשוב. כשאתה עושה את מה שאתה אוהב לעשות - אתה עושה את זה מתוך רצון וסיפוק עצמי. ואז העבודה שלך היא לא עבודה, היא מה שאתה. וכשאתה עושה את מה שאתה, אתה ב-Balance
וכשאתה בבאלאנס - אתה מאושר.

אסטרל