The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don’t. It’s just that simple. Charlie Munger The edge on a trade can vary significantly from trade to trade. As a trader you need to adjust your bet size to match your confidence in the outcome of the trade. From time to time the markets will offer up opportunities where the odds are…
Too often the negative aspects of trading are shielded from those entering the industry. There’s a lot of disingenuous marketing going on from those selling the next hot trading course. People are getting lured into the industry under false pretenses of riches, glory and easy lifestyles. Hopefully this article will act as a counter balance to some of the false information out there. If you’re considering becoming a trader you should understand the true reality of trading. You should understand…
Bare with me on this one because I’m aware that this can sound a bit clickbait-y. Some of the best traders I’ve known only know how to trade one setup. One. That’s it. They know that setup intimately, they know the nuances of that trade and when that trade really sets up they smack that trade with an ungodly amount of size. They epitomise Bruce Lee’s famous quote: I fear not the man who has practiced 10,000 kicks once, but…
You are bombarded with information as a trader. Markets are constantly moving. You are always monitoring them for the best setups. You monitor your tweet deck, there’s a hell of a lot of good information from the good folk on twitter that you like to keep an eye on. Or perhaps you’re just waiting for the next Trump tirade. You’ve an inbox full of research reports, economic analysis reports and technical analysis reports. You’ve a squawk on in the background…
Whenever I hit a rough patch my initial reaction has historically been to double down on my workload. Hard work has made me a profitable trader, so that clearly must be the solution to my rough patch, right? What I do is I hit the research hard. I look to develop new trade setups. I look into trading new markets. I buy the latest Artificial Intelligence course and get my nose to the grindstone. Every time I do this I…
Lack of market liquidity keeps me up at night. I’ve got scars from underestimating the markets liquidity and the impact my trading size can have on market price. When you increase your trading size, you very quickly learn to appreciate the importance of liquidity in the markets. You learn things like you only get out when the market let’s you and not when you want to. Eventually you will reach a trading size where your positions start to move the…
I’ve been asked a few times to give an overview of a typical day in the life as a trader. As you will see, the hours are long and there is a significant amount of work required to maintain a basic competency. Hopefully this will give you an idea of the level of hard work and the hours that must be put in to remain a consistently profitable trader. The hours are not long just for the sake of…
As any seasoned trader knows taking losses is part and parcel of trading. If you trade long enough you will face your fair share of trading losses. Whether it was a lapse in discipline, a breakdown in your technology or an unexpected news event, no trader is immune to taking a trading loss. The markets can be extremely unforgiving and from time to time you will end up dealing with big trading losses. Predictable Response Trading losses trigger a predictable…
Traders often underestimate the effect a change of environment can have on their trading. The mind gets used to processing information in a certain way and any small change in your trading setup can lead you to process the information differently. Processing information differently leads to suboptimal decision making. When I was a trainee, my desk was moved from one side of the trading floor to the other. From a dark corner of the room to right beside a ceiling…