In Trading Routine and Psychology

Well the day is here, and I am no doubt leaving 2010 in silence as this office complex is virtually bare boned empty today. I always thought about the idea of taking off this long winter stretch, mimicking the actions of a bear in hibernation but then again it wouldn't really serve me much value. While everyone was running around during the month of September, getting “back into gear” I took my vacation and I think I made a wise choice. There is a certain peace of mind gained knowing that everyone is back home going nuts and there I sit enjoying the company of my wife in beautiful surroundings and careless as to what's happening. Likewise, there is peace of mind as I sit here today while many people are taking time off. Call me a contrarian, I suppose.

I work a lot…..but it never seems to bother me. Sunday afternoons I'm digging through data while many people are at WalMart, brunch or taking a stroll through the park. I'm in darkness at 3 o'clock in the morning looking for opportunities around the London open. Noontime rolls around and I've got the look of a solitary confinement inmate in my eyes from staring at monitors all night. My long workdays seem offset by a certain level of independence and the week tends to fly by without me even noticing. While I am far from alone in terms of my work ethic I tend to complain much less than I used to, no matter how much money comes in for the week – zero or more.

So for 2010, I'm thankful of a number of things: that I'm able to work independently, able to put my creativity to good use, all the while being surrounded by like minds across the globe who, thanks to technology seem to be at arms reach. For whatever reason people get into this or any other business, there are always bonuses that accompany the underlying “protocol”. Choice in this world is thankfully something that we all have. Some decisions are of course much bigger than others but regardless we usually have the option to explore other routes if we are not satisfied with one.

Managing a portfolio is not something that you can simply walk into a classroom, learn and do without hindrance. Those that excel at it or any other business tend to go through a great deal of trial and error before any standard route of success takes hold. Looking through posts this year, I find that I have subconsciously chosen to write a number of “theoretical” articles geared towards nothing more than to get any readers to look at the right things, exercise a high level of independent thinking and gain self confidence in their actions. I have come off as more of a psychologist this past year than a technical trader.

While I might have lost a few heads along the path by doing this, I find that these are areas that become ignored or quickly overlooked by people getting back into the jungle of information. It is an area that gets brushed under the carpet for a slew of utterly useless data whose only purpose is to stand as the “error” in “trial and error”.

Leaving the world of corporates I was immediately exposed to the retail trading mindset. Words like “Short Term Alpha Opportunities” were replaced by “Daytrading”. Strategies that I was always told were unsuccessful and based purely on public data (risk reversals, etc.) I found everybody writing about and looking at. A different world it is indeed, and going down the right path in this world is about as easy as finding your way through a forest with bad directions. It is why I have been stressing a focus on the fundamentals, and interpreting the most basic of all trading models:

Focus in on what the majority can see/interpret/understand, discover the typical reaction and trade along with it.

It is not price we forecast, but human reactions to events.

While the events themselves are always 100% unique they share similar characteristics with those in the past. Observation is you best friend and control over your actions is usually the next step in line. There is a great deal of how-to information on this site now geared towards technical analysis, but as I have previously mentioned, these are your guide, not your tell-all. Now for 2010, we have a new archive geared towards this other rarely discussed component.

The premise of this blog has not changed but rest assured there's a new string of information coming into it in the near future. Thank you all for your support and loyalty to this site and entertaining yourself with these random ramblings. I wish you all the best for 2011 and thank you for taking time out of your days to be here.

All the best,


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Showing 5 comments
  • arsa

    Hi Steve,

    been good year learning wise. Especially after reading your blog on FF and then moving to this website. Your insights into trading and trading mentality are very helpful.

    After all, a man is made to reach goals.

    I thank you for this initiative that you're doing here of providing quality information and ways of thinking onstead of ways of trading and I wish you really good 2011 in all the affairs you want to succeed.

    Happy new year all!


  • David

    Thank you for putting your time in this blog. It's rare that a person with such great knowledge and wisdom, takes time of his schedule to inform the people that know less.

    I wish you health, wealth and happiness and have a fantastic 2011.

  • nobrainertrades

    I would never say "less" 🙂 just yet another perspective, of which there are millions! Thank you both for the comments and it seems like time to rock out the New Year.

  • King Singh

    Happy New year to u too Steve..:)
    Wish u health, wealth, joys and a peace of mind..:)

  • mids99

    Happy New Year for 2011 to you as well Steve. I was late in finding this website but I spent the 'holiday' reading every article in the archives and the pdf from the FF thread so hopefully am up to speed now. Bring on 2011.

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