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Sunday, 21 August 2016

Head first, ladders later?

Regular readers of this, rarely updated blog, will know I am part of Steve Howe's MG World, an excellent trading community centred around swing trading the nag markets but taking all sports into account. This community continues to grow and being part of it means engaging with traders at every level of experience. As you might expect, a good number are novice traders.
Over the last year and over the last few inductions into MG World, my attention has been particularly drawn to the psychological approach of new traders. If you've been trading for at least a year, you'll already understand that the method comes first, after which, you learn the battle with your own mind and emotions is not only a much bigger foe to defeat but a war that has to be won in order to achieve success.
Now, we all know there are a few well known traders, some famous for being genuine, others just infamous, and some of them do blog, tweet, record etc about psychology (notably Caan Berry who's YouTube channel is very good), offering insight into overcoming your own psyche and a lot of it is good, helpful stuff. However, whilst all good training/e-book providers deliver something around a pragmatic approach or mindset, none that I have seen (I've seen pretty much all of them) offer anything in depth to assist the novice trader in identifying their personality traits and how they might help or hinder in the early stages of their trading pursuit.

During a Skype chat this week, a MG member confirmed he'd reached the point of being a scratch trader, after just 18 months of discovering trading. Impressive, I think. But how much further forward might this trader be had he known his personality in more detail?

What am I getting at? Well, in simple terms, I'd like to rectify the above. So, over the next 6 months my trading will be scaled back, to focus on a non-related project, but also to really understand how examining personality, at a very early stage in the trading journey, might highlight areas of focus and, potentially, shorten the journey.
Ask yourself this, if someone had told you, right at the beginning, your personality lends itself to taking unnecessary risks or risks that are out of balance with reward, would you have taken steps to remove the chance of these traits creeping in?
I happily and readily admit, after taking a trading specific test, that my personality type sits in conflict with that of the ideal trader. So, fear not. There is hope...

I would very much like to hear from traders of all experience levels to understand the difficulties, past and present, who are happy to help identify, not common mistakes but the personality traits that lead to them

Friday, 29 January 2016

Are you your own worst enemy?

After posting so regularly for so long, I took the decision to post only when something really poignant either occurred or came up. This is one of those occasions.

So, yesterday I was in the markets as normal, pre-race and in-running. It was a strange day pre-race, moves looked likely but never really materialised. Patience is key, as you know, sitting and waiting for the opportunities to present themselves is a large part of the game. This patience was eventually rewarded with two large moves, one an absolute stonker from 3.95 - 6.4, in the bumper.
Knowing the later AW markets are not as solid as the afternoon cards, I carried on trading at Chelmsford City. Started off with a solid green then, not only did I make a poor entry, a long way from where a safe exit would have been possible, I got trigger happy with the entry too, making multiple entries. Of course, the position reversed massively leaving me with a £100+ red. This was more than a schoolboy error, this was discipline disappeared, forgotten, lost. Why am I so damning at this foolish act? Because I did it again in the next race. Not to the same size red but, this time, I went past tilt and massively increased my liabilities when trading in the run - the classic increase in stakes.
The in-running trade resulted in a scratch overall, though it's debatable if that's a good thing...
Almost 10 years I've been trading, 6 of them full time, and still I'm prone to such ridiculous errors.
After taking time out and clearing my head overnight, the analysis. We ask ourselves so many questions when we do this and the answer is always the same "I didn't stick to the plan". The plan is so simple, there are just a few qualifying aspects to take into account. What's worse is on Monday this week, to get a refresher, I re-attended Steve Howe's excellent Racing Workshop, where the plan was drummed into me over and over. A plan that works exceptionally well - when implemented effectively. After telling Steve about my stupidity I requested his wisdom;

 "Knowing when enough is enough is something we all struggle with. When it comes to trading there HAS to be a line. 
Having an exit plan, and implementing it is as important as your entry, if not more so. I have an exit plan built into my entry position and if that exit point is reached it’s game over. I close the trade and reassess my position. Not to chase any loss, but as a completely different trade. This takes a few key skills; discipline, confidence, practice. 
The less experienced you are the less flexible you should be. Experience enables me to see a bigger picture, so occasionally I let my planned exit lapse. I will need to see the reasons for this. A good example would be; I have a Back bet on a favourite, it’s drifted to the point of my planned exit (or Stop Loss position). There is no strong opposition and the favourite looks to be at the front of the line-up. Armed with this information, I make a judgement that the drift is temporary and the odds have a better than average chance of coming back. If I can see the reason for the drift, maybe the 2nd fav that was drifting has reversed and is now opposing the favourite, the a swift exit is called for. 

The absolute Golden Rule for any trading is “Protect your bank”. If you don’t lose then you win by default."

Steve's reference to a lack of experience is relevant here. Though my experience of trading the exchanges is lengthy, my experience with pre-race is relatively short. Though you'd be forgiven for suggesting I should still know better. 

The day ended with a profit overall but there were times when my liabilities were far too high and the trading was woeful. 
It's back to basics for me with pre-race and much-reduced stakes until the errors are equally reduced. 

NB: Steve's Racing Workshops are the best pre-race training available. I can say that with impunity because I've done them all, sometimes twice, and it's only Steve's that have ensured consistent profit.