Denise Schull advice
|January 21st, 2010, 05:56 AM||#1 (permalink)|
Futures Experience: Advanced
Broker/Data: IB and Kinetick
Favorite Futures: ES
Posts: 114 since Jun 2009
Thanks: 58 given, 458 received
Denise Schull advice
The following from Denise Schull has really helped me focus on what it really is to be a trader.
I have been a broker, analyst, software developer, educator, and trader. I have seen absolutely no one increase the odds of success. It still stays at 95% fail. The blind still think they can lead the blind.
The best traders have the strength of their convictions and can sit thru the pain until proven right or wrong. Most of the rest just fail to make a proper analysis of the market and reach a conviction and then back it till it is proven profitable or totally wrong.
Here's the story from Denise.
Ever heard a hedge fund guy talk about "conviction"? Ever heard some very well known trading coaches also talk about "conviction". It is a common concept in both hedge fund strategy, tactics and performance coaching. For example John Paulson of Paulson and Co went short the subprime mortgage market starting in at least 2005 if not 2006. He lived through a LOT of "pain" as that market kept rising at least through late 2006 if not early 2007 before he started counting in the billions on his tax form!
Yet how does that jive with the ubiquitous advice given to independent traders to "have no opinion"? Furthermore, how does it work with the idea that you have to be confident, have no opinion and just trade "what you see, not what you think"?
Does it ever occur to you that these supposed pieces of accepted trading wisdom conflict with each other? And then does it become obvious that by trying to act/behave/trade under the cloud of conflicting messages actually decreases your confidence?
Is it any wonder that 95% of independent traders can't make a living off of their trading results when the foundation of doing the job is so off kilter?
So where does this leave us? How about a reality check - and then a commitment to trade within reality? But "what is that" you say?
1. The markets are always uncertain (anything can and will happen!) and never give you the exact confluence of factors in exactly the same way twice.
2. This makes us nervous and we try to deny it (ambiguity aversion). If we accept it, however, we can work and profit within it.
3. The brain knows that it is in the jungle of the markets and not solving an algebra problem so it tries desperately to use context to understand what is the best thing to do.
4. This means that a trader's perception of what is happening and the judgment required to make a decision is going to have a feeling/sensory element - the very dimension of your psyche that for the most part you have been taught to avoid.
5. The illusive solution to being in the 5% (or 2.5%) and to solving the riddle of conviction, confidence and "trade what you see" lies in learning the SPORT of trading... in developing the muscles, the judgment, the reflexes of trading... NOT in becoming a computer who does the same thing every time over and over.
Deliberately and systematically working towards increasing your skills in perception, judgment and decision making will improve your bottom line. We are 100% convicted and confident of that!