Confidence in Trading: The Approach

Have you ever seen a gorgeous goddess?  A woman so magnificent you just are beeming energy inside to go talk to her?  But as you walk over you start to notice how you’re walking, what facial gestures you’re making, where your hands are, confidence fading… You’re becoming self-conscious and that wonderful feeling of excitement has now turned into fear.  Do you remember the last time you talked to a woman in this energy? In this self-conscious / fear mentality?  Didn’t go so well did it?  Why is a stock any different?

It’s all about the approach and mental confidence prior to the trade.  When you approach an event with fear that energy gets transferred into it.  I’ve talked about how The Energy of Fear is Consumption in this prior post.  So if you’re feeling nervous before a trade take note of this.  Where is this fear coming from? Is it related to money? Lack of confidence in yourself? Lack of self worth? It could be a million different things but you need to find and focus on the one that resonates with you.  I’m currently working on a meditation that will assist you through the process of finding this fear and making it your ally.

Remember the emotion will come during the “approach.” Keep track of how you feel, as this will set the course of how the rest of your interaction with the trade will go.  Keep in mind that magnificent woman: Do you approach her as nervous, not confident, and fearful of reject or strong, confident and full of love?

confidence

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Traders Edge: Trust in yourself Mantra

Everyday in the office everyone is bombarded with negative thoughts, feelings, and energy from other traders.  Whether you’re sitting next to them, reading their messages in a chat or hearing their irate voice over your headset.  How do you stay within yourself  and  trust in yourself so you aren’t effect? How do you continue to trust your instincts and your ideas rather than being influenced by outside forces in a negative way?

I’ve discovered a simple Mantra in the morning works for me. I tell myself and the energy around me the following “Let my ideas come from within my divine self and let all negative energies trans-mutate into positive energies that serve my idea.”  I can’t tell you how much of a difference this has made for me in two areas:

1) I am no longer influenced by nay sayers unless their idea is able to serve mine.
2) I am able to stay within myself and be confident in my idea.

Here is a fun example I like to tell.  A great trader has been on tilt recently.  Everyday we hear “I should just go home, Down 500… Down 1,000… F*&k it. I’ll trade to 1,200 nothings working today. Who cares.”  Because this individual has had a solid reputation and track record for over 5 years his opinion is respected.  When he says, “There is nothing going on, there is no opportunity today,” unfortunately people listen.  He then goes on to cite who else is down today to confirm that it’s the market making the mistakes not him…  There is a great amount of cursing himself and the market.  Hearing this rant everyday can be draining, not to mention exhausting.  It can also pull you out of your space (whatever that may be).

Using a simple mantra in the morning can help your mind stay focused on YOUR ideas and learn that trusting yourself is where success comes from.  I’ve wrote about trusting yourself here in The Holy Grail of Trading.  Remember learning to trust in yourself is a great traders edge in a any market.

mandala


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The Energy of Fear: Consumption

Fear is a tricky emotion to understand, but when it comes to trading I see it perform a very simple task; consume.   It makes the trader hyper focus, trade without logic, and live inside a world that is extremely narrow.  Have you ever been sitting at your console, beginning to lose money and feel worried? Feel scared you’ll lose the money you made for the day or scared to lose more?  This is where the energy of fear takes over and begins to consume.  For that is its sole purpose.  An example of this is revenge trading.

In all the psychological literture there is a technic that has been proven again and again: Exposure Therapy.  However, you’re sitting there saying I am exposed to this everyday!  It is not getting any better!  You’re correct cause you have been consumed by this energy and have yet to step outside of it to see it for what it is. I am currently working on a meditation which will allow you to greet your fear, understand it and let it become your ally, no longer your enemy.

In the mean time when you begin to have this feeling step back, step outside yourself and have a laugh!  Look at what you are experiencing.  Does it feel like truth that you should be so afraid?  Take 3 deep breaths.  On the first breath tell your physical body it’s OK to relax.  On the second breath tell you emotional body it’s OK to relax.  On the last breath tell you trading mind that it’s OK to relax.

Fear is here to consume, it may serve a purpose while defending  yourself or the ones you care for, but even in that it’s purpose is still the same.  Let your body & mind feel what is truth & know that it is OK to relax.

energy

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The Holy Grail of Trading

Recently I started at a prop firm in NYC.  Some of the best traders in the country reside in this office and I have the privilege of hearing their insights everyday.  I’ve also been exposed to less “popular” traders but those who have turned this “casino” into a consistent cash generating business.  They have also achieved a position few have been able to actualize: the ability to withstand the test of time in the market.  However both these peoples have one similar characteristic that I feel encompasses all others.

 

While listening to these traders everyday, hearing their comments, their dissatisfaction and happiness when a trade nears its completion. I do not listen to their words as much as the structure to what they say.  Listening between the lines.  Their trading style is not mine nor am I them, so to imitate them would be foolish.  It would most likely lead to my own demise. There is one quality that we can learn from them that will propel us in our trading and take our lives to a higher vibration… TRUST IN YOURSELF.  It really that simple!  These top traders do not doubt their trades, they trust the moves they make, they trust their abilities to adapt their strategies to current market conditions, they trust themselves.

My experience with a friend was that he had great intuition on where the stock was likely to move next.  7/10 times he was correct, but he always scared himself out of the trade early.  Once he started to recognize and trust his intuition he began to increase his profit and in my opinion I hear him cursing a great deal less.  This quality of self should never be overlooked in trading, in whatever profession you choose, or in life. 

How do you develop trust in yourself?  Start to meditate on the concept of self trust and what it means to you.  Write this down.  Next keep a detailed log of what your true self is telling you to do. Take a “snapshot” of the feeling.  If you are correct reinforce that feeling.  Most of us are programmed not to see the trust & power we hold inside.  Once you begin this practice let it flow naturally cause all the truth you need you already have.  This idea finally clicked after a good friend / guide told me flat out, “you don’t trust yourself.”  It imprinted itself on my psyche and I knew what it was these top traders possessed.  These top traders didn’t have a super mechanical trading system, they had a SUPER MENTAL SYSTEM!  

 

Good Luck with trading & finding your Super Mental System 🙂

http://nurturingyoursuccessblog.com/want-to-build-trust-in-your-relationships-start-with-yourself/

http://mysuperchargedlife.com/blog/learn-to-trust-yourself-to-climb-to-greater-heights/

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Why Being a day trader is so F-en Hard

Once again, I was inspired by one of Bella’s post entitled So you want to be a pro trader. To summarize his post he spoke about how having experience propels further success. That as the manager of a team, he looks for prior experience and/or success in a candidate. He stated, “Be that candidate who walks into an interview and drops a few profitable years of trading records on the desk of a partner. Then sit back and wait for him to pitch you.” Unfortunately, most of the traders I’ve meet both successful and possible in debt from trading activity have one consistent environmental factor in common. They were alone, without expert help.

 

To take a math example… Most mathematical concepts are very intuitive such as the pathageon theory (a^2 + b^2 = c^2). Socrates, the great philosopher, explained this very concept to a uneducated slave boy in his dialog with Meno. However, without Socrates how long would it have taken the slave boy to understand this concept? In parallel, how long will it take you to understand how to be successful in the market without guidance? Some people will be able to do this, but as history demonstrates most will not. How can you be that candidate who drops a few years of successful trades on the table? Here are some basic ideas that I will expand on in future posts.

 

  • Find other traders immediately! There are groups on meetup.com, put an ad in the local paper, and scour the web (craigslist for starts). Find traders interested in improving their trading skills. Where there will be a participatory process of reviewing trades, open honest communication, and dedication to improvement. Remember profitable trades do not always equal to good trades.
  • Be Mindful! Review your trades from one, two, three weeks ago and see if you would make that trade again. Was the Risk/Reward inline with your comfort level? Is this a setup you will be able to find again? Did you make this trade on nerves? Be conscious of how you feel and what you are thinking always. Write these down in your journal
  • Journaling. Keep a journal of your trading history. The thoughts, feelings, ideas that were coming through your head as you took each and every trade. This practice will make you aware of your thoughts and ideas that worked and didn’t work.
  • Having a Plan. Simple put… Where to enter, where to exit, and where you’ll take a loss. ALL three must be present. 2/3 do not equal to a good trade.
  • Play Book. What setups do you have ready each day as you sit down to trade each morning.

 

These are the ideas that I believe are a formula for success. Being a daytrader is so F-en hard because we are usually alone, lack insight into our behavior, and do not have a plan or a plan we truely believe in. Having two arms and two legs that can make fists and kick does not qualify you to fight in the UFC. Likewise having money does not qualify you to trade in the market. Would you fight Wanderlei Silva, Mirko Filipovic, or Fedor Emelianenko during your first year of training? You’re trading against some of the best in the industry we can’t forget that.

 

 

Train hard… cause he/she did

SYDNEY, AUSTRALIA - FEBRUARY 21:  UFC fighter ...
Image by Getty Images via @daylife

smashed keyboard

 

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Occupy Wall St. Taking Action: Stop Violence

If you have been watching youtube videos of Occupy Wall St you are bound to find horrifying videos depicting women screaming who were maced, violent arrests, and American Citizens being captured in nets like fish in the sea (Some videos are posted below)  Though I have not formed an opinion on the movement as a whole. I do believe it is any American Citizen’s right to be patriotic and protest where they please in public space and be treated fairly without violence, if they in fact have been non-violent themselves.  The NYPD has protocol they follow handed down by the higher ups.

Below I have a pre-written letter in which you can send to New York Police Commissioner Kelly and Micheal Bloomberg urging them to reconsider their current policies.  Feel free to edit, personalize, and let your voice be heard.

Send a message to Raymond W. Kelly, Commissioner

Dear Commissioner Kelly,

 

It has brought me great dismay learning the recent tactics of the NYPD to keep protesters away from Wall St.  Violent arrests, barricading public streets and capturing U.S. Citizens, with the right to protest, in orange police nets is never acceptable.  Enforcing injustice and unlawful regulations is not the standard of which the NYPD is capable of.
I ask you to please reconsider your position on these topics, to work with not against this great movement of American people.  For we engender the very spirit of which this country was based on, patriotism.  Thank you for your time.

Send a Message to Mayor Michael R. Bloomberg

Dear Mayor Bloomberg,
It has brought me great dismay learning the recent tactics of the NYPD to keep protesters away from Wall St.  Violent arrests, barricading public streets and capturing U.S. Citizens, with the right to protest, in orange police nets is never acceptable.  Enforcing injustice and unlawful regulations is not the standard of which the NYPD is capable of.
I ask you to please reconsider your position on these topics, to work with not against this great movement of American people.  For we engender the very spirit of which this country was based on, patriotism.  Thank you for your time.

Thank you for taking the time to send this letter! You are helping the thousands of protesters and NYPD officers build a safer more peaceful protest environment.  Remember personalizing the letter always makes a difference 🙂

YouTube.com Videos
NYPD Police Pepper Spray Occupy Wall Street Protesters (Anthony Balogna)
Occupy Wall Street Police Abuse
Arrested For Talking to a Cop
Unbelievable protest footage. NYPD drag girl across the street

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Earnings Seasons Q4: My Love Hate relationship with Gap Data

It was 2 years ago I created a profitable fade strategy. However, as my risk tolerance shrank so did my use of the strategy. The strategy was simple: find stocks that were up a huge percentage relative to themselves and the market. Most importantly, they had to have no news. No catalyst that drove them up. These stocks were more likely than not to fill their gap. However, in some cases it took up to 3 months with 100% draw down of investment capital to receive a 20% gain. It was not worth it.

I took the next best thing Earning Season Gap Data. These couple of months out of the year are packed with gaps that fill, run, or simply stagnate. Version 1.0 of the Gap Bot grabbed data from yahoo and analyzed the gap of a given stock. By the end of 2010 Q4 I had 1000+ data points. As I was using this technique to analyze earnings gaps, my data set lacked individual stock robustness. In other words, I only had two data points for Amazon, Apple, and the like. This was not sufficient (though profitable) to achieve a robust algorithmic procedure for trading earnings gaps. After 1k + lines of new code and scarping the internet I now have 50,000+ points of data dating back to 1998. With all this new data more challenges arose.

Below you will see 6 graphs. It’s obvious they provide very little value at all! Big data sets from unknown distributions will produce data in which you can not use most statistical tools (ANOVA, Regression, etc) because they are based on assumptions of a normal distribution. Looking at the histograms you can see how the outliers distort the picture, but you can’t just take them out! Take MAA on 5/6/2010 for example. It created a $0.05 downward gap (it opened below the previous days close). It ran $0.94 from that open, closing the gap by a huge margin. That margin is 1880% and an extremely important piece of information.

Luck for me data can be transformed. By transforming the data you can make non-normally distributed data normally distributed. The glory of this is that now we can go back to our arsenal of statistical tools and begin to play 🙂 Below is the data after it has been transformed. As Earnings Season 2011 Q4 approaches I will be posting most data and more results. Happy Trading.

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Trader Emotional Trading

I’ve turned into somewhat of a self help junkie within the past month.  The reason is simple: the audio and or books are so positive! How could I resist!?  They have also helped me a great deal in creating better more vivid visualizations during meditation.  These are so helpful in mastering everyday activities I thought why not apply this concept to trading!

I was inspired to make this video last week and yesterday I was over come by this inspiration and ran with the idea.  The video is a guided meditation with real trading involved in order to help you become mindful of your emotions then be able to overcome them.  It’s the first video and I hope there can be more.  Feedback is always welcome.

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Contributing to Society as a Day Trader

Lets face it, day trading isn’t the most beneficent job in the world.  Even the most popular saying involves comparisons to farm animals, “Bears get rich, bulls get rich and pigs get slaughter.”  We’re often assicated with the pursuit of one goal, to aquire that which is “the root of all evil,” money.

After being in the red for nearly than 8 months.  Then oscillating between above and below water for 2 months I finally starting to turn consistently profitable after reading One Good Trade by Mike Bellafiore from SMB Capital (That’s another post).  I felt a great sense of accomplishment but it was pinned to a lack of contribution to a greater good.   So I devised a way to give back. To take the greed, the karmic “debt,” and try to give day trading a new name.

Any day I make equal or greater than 2 standard deviations of my average net profit in a day (about 500 – 1000 for me) 10% of all earnings before taxes gets donated in one of two ways.  I give to my favorite charity or “donate” the amount of time I spent trading that day to an organization through volunteer work. I donate to organizations dedicated to helping/saving animals and “donate” my time to Forgotten Friends of Long Island.

If the market and I were in such flow that my hard work was rewarded with a statistically improbable return it makes sense for me to pay homage and give thanks for this.   I felt a great sense of accomplishment after my first donation because I had traded hard, stuck to my plan, had an above average pay day, and help one of my favorite charities.  I can’t think of a better way to feel happy about the work I do.

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How to Ace Calc 2

Introduction to Math: It was 2 years ago that I started my journey back through the mathematical landscape.  My GRE’s were no where near competitive and hours of studying for them seemed to produce little to no results.  In June of 2009 I took remedial math at Nassau Community College (001 & 002 Preparatory math).  I learned how to add and subtract fractions.  As if my ego wasn’t damaged enough, challenging problems consisted of calculating percentage discounts on a grocery bill.  As I progressed through each course from remedial math to calculus, my grades represented my knowledge base accurately (of course I got all A’s).   Then Calculus 2 came.  The “Organic Chemistry of math,” so to speak.  It was this class that I earned the most accurate, humbling and most deserved B in my academic career .

The Calculus Myth: Every math professor spoke of the horrors of Calc 2 as they had uttered about all other math classes in which I quickly picked up the material.  In hind sight, it was naive not to believe them.  The Professor, Dr. Philip Cheifetz, talked of the same folk tale the first day of class.  Going as far to pulling students outside asking them if they were ready for this class (I know because I was one of them).  “I had a Master’s Degree,” I chuckled. “I have taken ANOVA, Multiple Regression / Multivariate Analysis, and Factor Analysis. This can’t be harder,” I gloated.  No matter what he said, it would not have produced the courage nor strength for the emotional, intellectual and spiritual challenge I was about to face.

Part 1 Integration: I had inquired with my Calc 1 professor, “If Calc 2 is so hard, how can I prepare?”  His response, “Learn the basic 8 integrals.  Know them by heart.”  Again, my arrogance reared its contorted view.  I had already done this, how much harder could it be?  Within the coming weeks Dr. Cheifetz hit us with integration by parts, then substitution, partial fractions, trigonometric substitutions, completing the square and problems that incorporated more than one of these methods to solve it.  The first exam approached like antelope trying to outrun a leopard.  In all, I did some 200+ problems in preparation, not including all the assigned homework.  I thought I was ready… 77 that’s what I earned and knew after all my practice.  I thought, “Where are the other 15 or 20 points?  Did he miss them?”  I began to question my resolve. Was I really not good at math?  Would this be the class that proves to everyone I’m not that “smart.”  How, after studying so much could I be so dumb…

Part 2 Measuring Solids: Dr. Cheifetz described this section as the “love part of a relationship.”  While integration, mainly mechanical, was “flirtatious.” Triangles turned into pyramids, circles into spheres and donuts, and cones twisted into shapes I had never seen before.  It was our job to calculate the volume of these objects, but why stop there!  In the proceeding weeks these objects began to take on densities and water pressure.  We now needed to discover “work” calculated in joules!  The antelope again fell to its predator.  100 problems later including redo’s from homework ( I ran out of problems in the book), I sat down to take this exam on Wednesday night with an emotional set I won’t ever forget.  Contempt and a fierce, burning sense of competition.  It was me Vs. Calc 2. On Monday two letters branded themselves onto a now fragile ego… 76

Part 3 Sequences & Series: I had never heard of either of these before calc 2.  The first week wasn’t very hard, but this old dog learned a new trick.  Look ahead, be prepared because you will not expect what’s coming.  I was right!  Sequences and series with the same formula perform differently.  There are over 7 ways to test for convergence!  Ratio tests, Limit comparisons all working against once another to create this beautiful cacophony of confusion! I did every bit of homework assigned, but something shifted in me.  Emotionally, I was readying for a humbling defeat, but could not stop marching on.  Nor guns, nor atom bombs let alone Taylor’s Series would stop me from the journey I had started 10 weeks ago.  Every exam felt like a battle losing pieces of myself and class mates too.  This time it would be different though. It was take home 🙂  Three numbers danced upon the war torn battle field… 100.  I smiled, rejoiced and ran forward in a mad dash, like the brave soilders at Piket’s Charge, for the war had yet to be won.

The Final Exam: I took stock of my ammunition.  Over 500+ problems completed.  I peered over my shoulder, only half the class remains.  I asked myself, “Why do you care so much?  It’s just Calc 2.  You’re here to learn not to get a grade.  You already have 2 degrees!”  I wasn’t able to answer that question then.  It rattled inside my head replenishing and stealing confidence, but I can answer it now.  I was challenged.  Every exam produced a flow state because I wanted to learn.  Dr. Cheifetz challenged us fairly and was a man of his word.  Unlike some professors he told you exactly what was expected.  Not only was I intellectually challenged, but emotionally as well.  Calc 2 retaught me about humility, preparation, and most importantly how I perform under adverse, difficult conditions.  When my own confidence becomes weak, the ego attacks and feedback through grades is in opposition to my success…  I keep pushing forward.  I had thought I was the antelope waiting for the exam to strike, but I truly was the leopard.

I believe calc 2 for me represented a great motif; that of life.  Do you give up? Do you march forward?  Whether it be calc 2, another course, or an event in life.  Perseverance is key.  As my Mix Martial Arts coach says, “Leave nothing in the ring, I’ll carry you out if I have to.”  What I received on the final exam I will never know, nor do I care.  In the end, I earned a B in Calc 2.

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