This journal is about becoming clear and focused in my pursuit of becoming an independent, successful trader.
When I graduated from college a year ago, I decided to not immediately enter grad school. Instead I wanted to pursue trading full time. I looked into getting a position at a trading firm. No luck. Then, with some funds that I saved up and with some help from the parental units, I hopped onto a trader trainee Program. While I completed the first month of training, I didn't feel that the next couple of months would further my goal of becoming an independent trader. They traded interest rate futures using spreads (similar to option spreads). To do this, you need a much larger account than I would have. So I left.
In hindsight, this was a mistake. As I am learning, the specific trading method is not the most important factor in making a successful trader. What's most important is the trader's work ethic. This is dependent on his mental psychology, physical endurance, and day-to-day behavior. In order to become a trader, I need to change my work ethic.
I started my first full-time job a month and a half ago. About two weeks ago, I had a really bad day at work. I kept getting things wrong on a report I was sending to my boss. While working on changes for the 4th or 5th time, I felt the same feeling I would get when preparing for a competitive sport. It was a swelling of emotional tension associated with my performance. Most people believe that work related stress is a bad thing. But, in light of this podcast I listened to last month l, I am starting to believe that those emotions are a good thing. They keep us concerned about striving for excellence.
This focus on excellence has been missing in my trading. To be honest, it's been absent in all parts of my life for a while.
Maybe I spent too much time in college. The positive emotional force linked to performance is completely missing in academia. There's no real push to focus and be specific about the outcome of your work. To the contrary, most scholars strive to be ambiguous as that adds to the value of keeping them around. If they were clear and concise, then they would only need to record themselves once and have it replayed for others. Instead, professors ensure job security by making their ideas need constant explanation.
A for-profit business works completely opposite. Brevity, conciseness, and clarity are highly valued. Clear and positive thinking towards a definite and public goal is the name the game. Once again, this journal is about becoming clear and focused in my pursuit of becoming an independent, successful trader.
Last edited by WayneA; August 8th, 2011 at 02:52 PM.
Reason: fix link
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In my first post, I said I graduated from college a year ago. My interest in trading started about a year before that. So two years ago, I began to look into trading as a profession. After being introduced to the ideas of finance, markets, and entrepreneurship, I switched majors from engineering to economics. Up until then, I hadn't really thought about "how stuff gets done".
From the courses I took in economics, finance, accounting, and even philosophy, I began to see the speculator as the entrepreneur's entrepreneur. His role is to take resources from one part of the economy and efficiently move them to another. If he's successful, then he enables other entrepreneurs to produce their respective goods with more economic profit. While many may mock my idealization of trading and speculation, this is a major component of my motivation to be trader.
So then, how do I become a trader?
My first introduction to the trading world was through NinjaTrader. I don't remember how I came across to the platform. But I do remember throwing myself at coding for hours and hours on end. I found the process of figuring out NinjaScript syntax and getting a system to behave correctly immensely rewarding in itself. In the hope of being able to create the holy grail, I added some elective courses in Java programming to my economics curriculum. With what little money I had, I subscribed to MultiCharts for a while. I also installed some versions of Metatrader. I pursued 100% mechanical systems for about 6 months.
Then, I met market auction theory. As an economics student with my particular ideological motivations, I instantly fell for the theory behind volume delta and market profile analysis. The market auction theory talks of equilibrium and an auction process between real-live persons. I searched the internet high and low for everything concerning market auction theory. I even subscribed to MarketDelta for a month or two. For the next 6 months, I pursued purely discretionary systems. I was going to leverage the insights I learned from Economics and become a master trader using auction market theory.
What the heck do I know?
Here in Hawaii, I felt isolated from the world of finance. I wanted personal contact with traders to see if this is really what I want to do. As I mentioned in the first post, after graduation, I hopped on a trader trainee program. The experience was great. I met traders already enjoying success and traders starting out just like myself. I saw that traders are just like anyone else. I saw that successful trading was possible. Moving along in the training, I began to see that I, too, could be a successful trader. Then I made a mistake. I got overconfident and decided to go it alone.
Big mistake. For the next year, I floundered about trying to become a trader. I didn't look for a paying job. I wanted to devote all my time to trading. I kept telling myself, "I get it", "I know what trading is", "I know what it looks like to be successful", "I know I can do it". But that was the problem. I spent all of that year "knowing" and not any of it "doing". I did a lot of thinking and wishing, but not a lot of acting.
What the heck do I do?
As that long year wore on, I made many plans for and promises to myself. All of them have fallen apart. I would try out an idea, encounter a hurdle, and then change ideas. I didn't follow through. I had the notion that because I knew and understood trading, that it should come easy. I believed successful trading could be achieved without hard work. But as my savings continued to dwindle, my confidence slowly turned to despair. I wasn't becoming a successful trader.
As I needed a source of income, three months ago I started looking for a job. I was lucky enough to get one and I've been working full-time for about a month and a half. What a learning experience! I had forgotten what it's like to be a beginner surrounded by the demonstrated competence of your seniors. I had forgotten what it's like to start with the basics and slowly build a skill set of excellence. I had completely forgotten what it means to work hard and then excel at something. That's the process for success. And that's how I am now going to approach trading.
Going forward, I'll be focusing on developing clear and focused processes to build trading excellence.
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You can't learn if you're too tired to think. I am working a regular 8-5. Because I'm in Hawaii, I still have the opportunity too watch the New York morning session before heading out for the day. This means I'll be up in the wee-morning. I want to be able to stay focused for 3hrs.
This may seem trivial and really basic. But when I started working, I didn't have any energy. I was coming off a year long vacation, where my daily routine consisted of playing video games, going on lazy hikes, and day-dreaming about trading. Starting work was a challenge. Well, that's not exactly true. I was 120% excited and enthusiastic at first. But after the first week, that started to wane and my sustainable energy level was much lower than expected. Over the following month or so, I slowly increased my capacity to for sustainable energy. The only time I'm really out of it at work is when it's boring. I don't really get fatigued.
I expect the same thing to happen with trading. I'm really excited now, but once I get into the routine of trading, I'll need sustainable energy. And so my goal for the next 10 days is build a sustainable work- sleep- trading schedule.
My ideal schedule to work toward to is this:
(all times are Hawaii Standard Time)
0100 - Wake Up
0110 - 30min workout
0200 - Be showered, back at desk, ready to start trading activities
0600 - End trading activities, eat and start getting ready for work
0700 - Be ready to walk out the door
0800 - At work
1700 - Leave work
1800 - Be at home, eat and get ready for sleep
1900 - Be asleep
I'd like to replicate the accountability I face at work. So, I'll be checking in and checking out.
Proposed Daily Action Procedures (DAPs): Check in & Check out to the futures.io (formerly BMT) community. I just came up with the term DAPs. I kinda like it! Credit for the idea goes to Brett Stennbarger and other authors/trading coaches that emphasize process goals over account or trading outcome goals. I'll make another post about this after I've thought more about how I'll put those ideas into practice.
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I spent a few months on Hawaii last year, the hours are rough! Can't wait to go back, though. It's such a beautiful place...
AMT/MP helped my trading tremendously, and gave me several ideas that are still prevalent in my trading. But in today's world, anyone can easily utilize better trading frameworks using more relevant mathematics/statistics. Applying Gaussian distribution to financial time series is inherently flawed, but that does not really matter if it helps one's trading.
I traded profitably with Market Profile combined with an entry chart and market internals... Now I don't really rely much on charts at all...
Yep, the hours can be rough. But, I've found it to be a blessing, as long as you don't need a social life during the work week.
I completely agree with that. There are many ways to represent market events and their causal relationships using mathematics. However, most applications of math in the trading world deal with the relationship between two or more events that are exogenous to the trader, like price points on a time series. I think a more useful employment of math is teasing out the causal relationships between a trader's own, endogenous actions and his/her trading goal.
Last edited by WayneA; July 14th, 2011 at 10:18 PM.
Reason: work work -> work week
Any "system" that gives you a positive expectancy beyond random results, is good in my book. Random is indeed a keyword when it comes to trading, which was the point I was trying to make in my previous post...
Good luck on your trading journey, I look forward to following your journal.
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DAPs (Daily Action Procedures) are processes that I can definitely accomplish and be held 100% accountable for. This is their defining characteristic. They are distinct from trading goals in that I don't know if I can achieve a goal. DAPs are structured so that they are 100% achievable.
What are DAPs for?
Although not goals themselves, I'll be using DAPs to achieve my trading goals. They are used to change and align my daily behavior with the pursuit of a specific goal. They are a way for me to turn an abstract, future goal (of which I have many) into measurable actions that I can perform today.
How to make a DAP?
To make a DAP, I need a goal. My current goal is to build trading endurance and be present in the market during my trading hours. First, what does that mean? Let's try turning that into some more meaningful verbs. It means I can stay alert and take trading setups for 3-4 hours. Second, I take that goal and think about how I can get there. For this endurance goal, I first need to show up. Then I think of actions I can do and propose a DAP. In this case, a proposed DAP is to check in and out. I also want to be able to consistently identify setups. Since I don't have a trading method yet, I'll be proposing something real simple and easy to execute.
Over the week, I'll make several DAP proposals. But, I don't want to implement them right away. I want to give myself time to think it over and find a pretty good way to purse a specific goal. I want at least one weekend to think about a proposed DAP. Then, each Sunday is decision night. Each proposed DAP will be accepted or rejected. I'll then make a list of the new and ongoing DAPs to be implementing during the upcoming week.
How to do a DAP?
Each DAP has a duration of at least 10 days. In the past, I would try something, hit a hurdle, and then get stuck second guessing and changing things. In hindsight and in light of a new work ethic, I think I just didn't get things time. Learning happens over time, not in an instant. Experience takes times. I want to give myself that time to learn, adapt, and prevail.
How are DAPs measured?
The first step and measurement criterion is completion. Did I actually do the DAP? Starting out, I'll grade myself with either an A or F. I want to keep the measurements objective. The simplest way is to eliminate options/ opportunities for lying to myself.
If I have successfully completed a DAP for 10 days, then I want to go back the goal. The second criterion is if the new behavior actually helps in getting closer to my trading goal. I may be wrong. While I may have successfully implemented and sustained a DAP, it may not actually be aligned with my goals. But I need to first implement and test the idea before I know that.
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