All Entries Tagged With: "Confidence"
Consistency Over Time
March 30, 2011 at 1:19 pm
It’s been said that good trading is a marathon – not a sprint. I’ve said it too, because I agree. Overnight riches come to very few, but the truly successful usually earn it over time.
Think about it…it takes some time to learn this game, to get comfortable, to evolve to where you’re agile enough and have the discernment to switch styles or approaches when the situation calls for it. A newbie only does that out of desperation. In this game, experience pays.
Truth be told, March has been a tough month for me. I’ve been whipped out of some trades, bought some highs and sold some lows. Naturally, it has elevated my frustration level. The good news is that I’ve been here before. I’ve had those months where I have struggled, and every time I’ve been able to battle back – thankfully. This time should be no different.
I’ve looked over some trading results today, and it was a good exercise. I was reminded that there are occasional stretches where I give some back to the market. But they’re just little phases, and they’re inevitably followed by good runs – so long as I keep after it. I don’t have to make huge bets and get it all back in one trade, and I also don’t have to force trades in order to see my account back at highs. I simply need to keep a level head and persist.
Ask any distance runner, and they’ll tell you it’s all about maintaining a steady pace. The hills hurt, like losing trades, but you maintain your tempo and push through it. Cadence is important to cyclists, so they shift gears along the way in order to maintain that rhythm.
Similarly, you and I size up when we’re in the groove, just a runner takes longer strides going downhill or a cyclist shifts to high gear. When the road gets rougher or tougher on us, we scale back our size but we keep taking One Good Trade – that’s our job.
Trading at times feels like a fun run…achievement comes easy and you get the t-shirt as a bonus! At other times, it feels like an ultramarathon for which you aren’t prepared. Fortunately, we have the chance to rest along the way, and improve as we go. Attitude is key, as is taking a long-haul approach with our career as traders – even if we love short-term charts!
How are you running your race?
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Walking Away
March 3, 2011 at 3:31 pm
I caught Joey Fundora’s post today called It’s Okay to Take a Break From Trading. He brings forth some excellent points, so go check it out. And while Joey primarily addresses backing away when you feel you lack an edge (rightfully so) or when going on vacation, it got me thinking about the times when trading just becomes a little too important, and perhaps even a self-imposed staycation might be warranted.
When the Scales Are Tipping…
Trading is one of those activities that can put you on top of the world, or completely bury you – if you allow it. And by “if you allow it,” I’m not referring to making or losing money. After all, every one of us will have some good trades and some bad trades – that’s not what I’m talking about. I’m talking about allowing trading to be the all-important activity in your life. If it’s sitting on that throne for you, then unfortunately, your daily satisfaction will hinge upon the color of your P&L.
That’s a really tough spot to be in. It magnifies your mood swings from day to day, and honestly, it’s not healthy. It’s no fun either. If you’re driven (as I am), the up day’s don’t carry near the weight in satisfaction as the down days tend to carry in dissatisfaction – regardless of if you’re making more than you’re losing. (Go back and re-read that sentence, because it’s a little confusing if you breeze through, but it’s of utmost importance.)
Stated otherwise, if I’m making good money on my up days and giving back only a portion of it on my down days, I’m net positive. But if I’m allowing my personal happiness to be based upon my performance today (or yesterday or tomorrow), I’m in for a world of hurt. I’m experienced, and I’ve been at this since the 90’s, so I have high expectations. Taking the aforementioned personal-satisfaction-based-upon-P&L approach, when I make money, I’m pleased but I expect to. When I lose money, I’m upset and the mood pendulum swings too far in a detrimental direction.
That’s a mistake which every one of us will at times make – but do not let it become a habit.
Work Hard & Let Go
Trading is hard. Really, truly difficult. Getting paid from your positioning takes real skill and experience, and that means you have to apply yourself to acquire those things. You don’t acquire them without true desire and hard work, which means you’re invested…with your time, your money, and often times your esteem on the line.
Just this week I had a day where I hit my peak of frustration. I didn’t smash any keyboards or scream at my computer or kick the dog, but I was running hot – and I hated it. I carried it with me, and later realized I’m giving trading too much weight. Yes, trading is what I do, and yes I have as strong of a desire to be successful at it as anyone else, but when I let a bad day bring me down the way I did, I’m giving it too much weight. Trading’s an activity, it’s not who I am. I have far too many other blessings in my life to place trading above them, but sometimes I need a reminder.
Maybe you need that reminder today as well – and here you go! Work hard with your trading, aim high, but keep it in its rightful place. As my buddy Bella says, Move On After a Trading Session. If you’re struggling to do that regularly, just walk away until you’re ready to return with a clear head and the proper perspective.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Lessons From a Life-Long Speculator
January 26, 2011 at 11:43 am
I caught a clip from a recent 60 Minutes interview in which a Las Vegas gambler named Billy Walters was profiled. This is a man who, at 64 years old, understands risk and edge as well as anyone. As a result, he’s been dubbed “the most dangerous man” by Vegas sports books.
Walters has been a life-long speculator, betting on golf courses and in pool halls, and of course he wagers regularly on football and basketball games. He’s no stranger to streaks, having mentioned he’s been broke more times than he can recall, and yet the show stated he’s currently worth “hundreds of millions.”
The interview is embedded below, and you’ve got to see it, but before we get there I just want to point out a few things Walters clearly does exceptionally well. As traders, and therefore speculators in a different realm, we can all learn from him.
Success isn’t about making one big bet. Note in the clip below how Walters never lets it all ride on one game, instead he spreads out his capital across multiple opportunities. He’s confident in the outcomes, but by operating in different games and even different sports, he also helps to protect his outlay from unforeseen events. For the trader: don’t put your entire account into one idea.
Success goes hand in hand with passion. Walters’ net worth is said to be in the hundreds of millions, so why does the show depict him placing more bets of a few hundred thousand or mention he’s up $1M that week on his games? Because he’s passionate about it, he loves it. For the trader: if you don’t love the game, it’s going to be hard to get through the tough times and persist.
Get bigger when you have an edge. Over the years, Walters has increased his bets along with the expansion of his bankroll. But beyond that, when Walters sees a line that’s vastly different from his own, he bets very aggressively. He trusts his edge, and looks to exploit it most when that edge is biggest. For the trader: when your home-run setups come along with defined risk, size up.
Be creative. Walters used to be small enough he didn’t move the lines in the sports book when he placed his bets, but over time, he’s become a major player. That’s required him to adjust his system along the way, utilizing his team of associates to place bets for him. He also may push a line one way, then bet big on the other side. For the trader: don’t get stuck trading only one way, keep looking for a better approach.
Be persistent. A guy who claims he’s been broke many times clearly exemplifies persistence to not only still be in the game, but to be such a huge success. When the proverbial (or literal, in his case) chips were down, Billy Walters hung in there and kept fighting. He expected success, and he kept working until he got it. For the trader: stay in the game and don’t give up.
Surround yourself with sharper minds. Walters admits his team is made up of people who are all smarter than he is. That doesn’t mean he isn’t confident, but rather that he relies on others to provide assistance where he feels his skills are lacking. He’s no doubt the biggest success among them, but he attributes that to the bright people on his team. For the trader: if you’re not getting where you want to be on your own, get some help.
Play for meaningful stakes. One doesn’t amass a fortune by accident, and Walters hasn’t gotten rich by nickel-and-diming it along the way. He recognizes an opportunity, gauges the size of his edge, and then puts his capital at risk in expectation of a sizeable payout. For the trader: once you understand how to trade, allocate capital in such a way that you stand to make a fair amount when you’re correct – and never overtrade.
Here’s the clip:
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Succeed by Not Failing
January 13, 2011 at 12:53 pm
Too many traders think a winning trade is a good trade, and a losing trade is a bad trade…a failure. I disagree.
The result of a trade is either a profit or a loss, but not a success or a failure. Good trades can end up being losses, and poor trades can sometimes result in a profit. For example, jumping in front of a big move on a whim in hopes of getting lucky timing a reversal is a poor trade, but it may still make you money. Good luck repeating that over time.
So, rather than focus on losing trades as the definition for ‘failure’ in trading, let’s take a look at 3 common ways traders fail:
To fail in trading is to not have a plan. Failing to plan is planning to fail, according to John Wooden, and he knew a thing or two about success. Great traders know what they’re doing when they go to execute an order. They have an expectation for the trade, a reason behind it, and an exit strategy which they will absolutely follow. Even beyond a per-trade basis, you should have a plan in place for your style, your goals, and when you’ll be cautious. Plan for dull phases in the market, plan for volatility, and plan which strategies you’ll employ and when.
To fail in trading is to abort your plan for something beyond your current ability. I’ve made this mistake many times, and I’ve witnessed it in others. It usually happens something like this… Consistent money has been made, confidence has grown, but greed sets in. Rather than increasing your size incrementally, you double it overnight and start adding new plays to your repertoire. Not a good combination. You lose money, you lose confidence, and now you’re unsure of what to do next. Stick with what you know. If your buddy makes a certain play look easy but you struggle with it, learn it slowly – don’t try to make your week with it on the first shot. Keep growing, but don’t rush your development.
To fail in trading is to have an inconsistent process. A good golf swing is one which repeats (doesn’t matter what it looks like — ex: Jim Furyk). If you aren’t repeating your process over time, how do you know if it really works? Suppose you focus on news today, charts tomorrow, and your favorite chat room the next day…where will your consistency come from? This also happens when you show up on Monday morning with a revised strategy, give it a day to prove itself, then move on to whatever method you think you should try next on Tuesday. It’s throwing the proverbial spaghetti against the wall to see what sticks, and that’s no way to grow as a trader. Start simple, add a little to your work load as you get more efficient, but be consistent with what you do day in and day out – at least until you can single out certain areas which need adjustment.
Avoid failure as a trader by taking action only when you have a game plan, and only when you realize the risk you’re putting on. Avoid failure as a trader by abiding by your stops, which pertains to each trade as well as your daily, weekly, or monthly loss limits. Walk away when you’re wrong, and place your ego aside. Those who fail to submit to the market are only here for a little while.
Choose to stick around…only those who stay in the game will be ready to capitalize on the best periods of opportunity when they arrive.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
When Goals Impede Progress
December 30, 2010 at 11:10 am
Like it or not, it’s that time of year where goals enter the picture again. This is of course a time for family, gifts and bowl games, but it’s also a time when each of us are compelled to take a look back and a look forward.
Reaching the finish line at the end of the year leads us to consider how things went, and most all of us know whether we exceeded or fell short of the goals we set a year ago. In turn, we evaluate where we are and take a good hard look at where we want to be a year from now.
Goals have some excellent qualities and they serve a real purpose when used correctly. They can make us think bigger and cause us to grow. They can drive us to consistently work toward an objective, helping to bring purpose to our daily activities. And goals can boost our confidence when we achieve them, helping us to realize that we’re capable of striving for higher levels. Goals are great, and I’m a goal-setter. I’ve discussed goals here numerous times over the years, but there’s one take on goals I’ve never before mentioned…
Goals aren’t always good, and they can actually hold us back when they’re set in the wrong manner or approached in the wrong way.
What Bad ‘Goals’ Look Like
As an example, years ago I would periodically update the wallpaper on my PC’s desktop with a new dream car that I’d want to go after with my trading profits. Inevitably, my trading would go almost instantly in the toilet! The new ‘goal’ was a distraction to me from what I should have had my focus on, which was the market action…not something I wanted to buy with my trading profits. (Realizing this, I’ve since kept pictures of my family as my desktop wallpaper!) My goals now involve processes I need to go through for good trading, rather than cars or destinations (duh). First things first!
3 Ways Goals Can Stunt Growth:
1. If goals are too high, we sometimes force trades in an effort to reach them. Lofty goals are good, but they can’t lead you to take on outsized risks or overstep your bounds in terms of risk. Set goals that will require growth on your part and get you outside your comfort zone, but which are still attainable for your style of trading, account size, and risk tolerance.
2. If goals aren’t practical, we may prematurely dismiss hope for achieving them. I’m not referring to quitting, I’m talking about not pushing oneself the right way. Suppose you have a profit goal for the month and you’re down to the final week and miles away from your goal. It’s easy to dismiss that goal and wait for the next month to come around, yet there’s opportunity you’d be missing out on now if you did that. Grow your account every chance possible, even if you’re lagging on a goal.
3. If goals are distracting, they don’t help us. Like the car example above, my ‘goal’ was merely an aspiration and therefore not something that directed the focus of my trading. Instead, it detracted from it, and took me farther from where I’d have been without it. Make your goals process-oriented, and the results will take care of themselves.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Trade Like You Don’t Need the Money
December 3, 2010 at 8:07 am
The post title says a lot, and we could probably all tape the phrase to our monitors and come away better traders.
But let’s spend a few minutes digging a little deeper to find what it would mean to “trade like you don’t need the money.” What does that look like? What are the advantages and disadvantages of approaching your trading with this mentality?
Let’s start off by looking at some examples of people who have experienced massive success in their respective fields. That isn’t by accident, and they sure didn’t quit once they got “rich.”
Professional athletes in general make a lot of money. Many of them spend more than they make, so we’ll discard those for the sake of this discussion. There are a few superstars in every sport though, and with the global coverage most sports tend to get, they’re household names. Kobe Bryant, Derek Jeter, Peyton Manning, Tiger Woods, Roger Federer, and the list goes on. Having an 8- or 9-figure net worth is not what drives them…it’s greatness. They find fulfillment in preparing and performing in such a way that they’re the best.
There are musicians who have had the same kind of success. One of the most popular bands in the world is U2, and they had “arrived” many years ago in terms of popularity and revenue from album sales and concerts. But they kept going, kept evolving, and kept on succeeding. It’s not the money that pushes them, or else they’d have walked away long ago.
Think Record Books, Not Scoreboard
As traders, it’s so easy to become motivated by the money. Our P&L is the scoreboard that’s always right in front of us…during the day, and once the closing bell rings. We know where we stand at any moment, and that’s actually more of a hindrance to many than it is a help.
Some platforms allow you to hide profit & loss numbers, and that’s a band-aid solution which some choose to do in order to focus better on the price action and less on profits. But rather than try to treat the symptoms, why not go right to the source of the problem – your mindset.
To trade like you don’t need the money, your goals and passion have to be centered on something much bigger than money…and bigger than what that money can buy you. Your satisfaction from trading needs to be rooted in the process of attaining success.
That means you care about digging for great ideas more than booking a $1500 winner. You know if you do the former well, the latter will take care of itself.
It means you love turning off your screens at the end of the day knowing you followed your rules with discipline.
It means your undivided attention is on the market when it’s time to trade, and distractions aren’t allowed to interfere.
It means you’ll spend time doing things others won’t, like watching trading film (hat tip to @smbcapital) in order to recognize your mistakes as well as reinforce and mentally rehearse your strengths.
It means you follow other traders’ blogs and StockTwits streams only when their ideas are suited to your trading style, and you avoid all else because it becomes noise.
And it means you fuel your competitive drive day in and day out to focus on winning and nothing else. That brings with it a host of other issues, like staying out late or treating your body well, because you care about peak performance.
Trading like you don’t need the money requires passion for what you’re doing that exceeds all hopes for monetary gain. It’s a mentality of maturity whereby you realize that truly great trading will provide you with all you need and then some, and once you’ve fully accepted that, you’re able to let go of the monetary concerns and completely center your efforts on improving your process.
Put your strengths to work today with total focus, and just see what happens. If you’ll do it for a week, then a month, and build on it each day, you’ll be implementing habits which deliver all kinds of ongoing success – including money.
** If you’ve got something else to add, please share it in the comments.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Trading Up from Mediocre to Great
November 8, 2010 at 12:28 pm
Can you imagine working hard for insignificant results? Or setting your standards so low that you need not put forth effort in order to attain your goals? Never, right?
A competitive drive pushes many traders from the inside, causing them to take on risks others wouldn’t accept. They shun the security of a regular job, opting instead to speculate in an arena filled with financial danger but unlimited upside potential. Long hours are often recorded in an attempt to gain an edge. Tedious tasks like sifting through hundreds of charts nightly, religiously reviewing results, or poring over statistics of trades past are done with the sole purpose of improvement by traders who are hungry for success.
In other words, they want it.
Those kinds of things are what it takes to get better in trading, and many are willing to pay the price. Yet far too often – unfortunately – some traders settle for less.
I’ve encountered many of them. They say things like “I’m not really trading right now because I’m waiting for XYZ to bounce back and let me out of a pretty big paper loss I’m facing.”
What’s interesting is that the ‘paper loss’ they’re referring to is quite real. Even more noteworthy is what they fail to see, which is that other trades could put them back on the right track and actually get them turning a profit again – if they’d free up their account to allow themselves to actually take those trades. Sadly, they’re just unwilling to turn loose of a mistake, so they cling to hope and wait for a miracle.
Are you one of them?
Trading Up
Often times on the road, I’m looking for an opening in the left lane to get around that slow lady ahead of me who is too busy talking on the phone to go (at least) the speed limit. In the mall, I’m amazed at how many people walk aimlessly, without a clue, as if there’s no purpose or destination to move towards. Yes, I am a bit impatient, but the point I’m making here is that it’s a habit I’m in of continually looking for ways to improve my situation.
That’s particularly true in my trading. I don’t mind putting on risk, and I realize plenty of trades will fail. What’s most important to me is to monitor how those trades move and how the stocks are behaving.
Let me be clear… It’s unrealistic to think I can foresee the moves before they happen, but it’s not difficult to recognize price action that’s outside the recent norm. And that is the key.
Studying the price action closely allows you to identify when outlier moves begin to occur, and subsequently when an exit needs to be made.
Always Think In Terms of Gain
We just sold our house. The real estate market is still soft, and for about two months we had a lot of showings but no sale. The price was too high, and we had to come off the price a bit in order to sell the house. But we’re upsizing, so what we had to concede on the last house we more than made up in the new house.
Once I thought of a price reduction in those terms, it became a no-brainer. It was less personal. Understanding that giving up $1 here might mean I save $1.50 on the next home (because it’s larger and higher-priced), logic dictated that I think in terms of what I’d gain on the other side, not solely what I’d be giving up.
Why doesn’t everyone trade this way? Why not dump an average name for a better one – one that shows more promise, more potential? Why not put in the work to get to the next level and leave mediocre results in your rearview mirror?
Make it a habit to think this way, especially if you’re gunning for improvement. OR…be complacent and stagnate, because that’s the only other option.
What has helped you learn to dump losing trades in favor of new names with better potential? Share your thoughts in the comments…
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
