Martial Trader
Alright, here's the deal. Over the past week I've been working on implementing my rules and discipline to a higher and higher degree. The bonds haven't reacted to anything with great force since January and the indices have been pretty indecisive as well. All this combined with low volume is a difficult trading environment (and for this I am glad), because I have been happy to see that where my old aggressive undisciplined strategies would've lost upwards of 15 grand (or more!) I'm keeping my losses to a minimum and even making some profits. Overall I'm breaking even in this environment.
I have realized that OVER aggression can really kill you (at least over aggression where there's no aggression in the market), so I have a new style that changes with the volatility of the market. In essence when the market is being aggressive I try to be also and vice versa.
Here's an example. Let's say I feel the 10 year is going to make a bearish move, I will place 1 order to sell and figure out a good stop loss point as well as an appropriate exit point (remember the 2.5x rule). If the 10 year rises against me I won't do anything, but if it moves, with volume in my direction I start place new orders behind it to catch retracements. If the market moves against me with volume I delete orders and tighten stops. This dynamic strategy seems to work well in minimizing losses and taking advantage of big money making opportunities.
I have a theory that I was telling Todd Jones when I saw him last: Trading is essentially like martial arts...I know you are thinking, but wait...kung fu...what?
The correlation:
1) In trading, the market is like an enemy. You should never underestimate your enemy; you should study him, understand his motives, his history and take advantage of his weaknesses. (Recall Sun Tzu, “The Art of War”)
2) A market can hurt you in many different ways, you should always been ready to defend yourself against any of this attacks and possibly use the momentum of these attacks for your own gain (that’s straight up kung fu right there).
3) Trading takes discipline, patience, lack of emotion, intelligence and a great deal of practice…show me a martial art that doesn’t impart those very ideals.
4) Remember the famous quotes by Bruce Lee. "Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way round or through it. If nothing within you stays rigid, outward things will disclose themselves. Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot it becomes the teapot. Now, water can flow or it can crash. Be water my friend." If anything is constant it’s the inconsistency of the market. Be ready for anything and be willing to change (like water) to any environment. Never be married to a contract, strategy or position.
5) “Do not be tense; just be ready, not thinking but not dreaming, not being set but being flexible. It is being "wholly" and quietly alive, aware and alert, ready for whatever may come. The danger of training with the heavy bag is that it doesn't react to one’s attack and sometimes there is a tendency to thoughtlessness. One will punch the bag carelessly, and would be vulnerable in a real situation if this became a habit.” The heavy bag is similar to a simulator, it is no replacement for actual trading and the mental attitude he describes is just as important.
I can give 10,000 more examples on why trading is a martial art. These are just a few. In the mean time…”Be water my friend.”
...
Monday Final P/L $2500
I have realized that OVER aggression can really kill you (at least over aggression where there's no aggression in the market), so I have a new style that changes with the volatility of the market. In essence when the market is being aggressive I try to be also and vice versa.
Here's an example. Let's say I feel the 10 year is going to make a bearish move, I will place 1 order to sell and figure out a good stop loss point as well as an appropriate exit point (remember the 2.5x rule). If the 10 year rises against me I won't do anything, but if it moves, with volume in my direction I start place new orders behind it to catch retracements. If the market moves against me with volume I delete orders and tighten stops. This dynamic strategy seems to work well in minimizing losses and taking advantage of big money making opportunities.
I have a theory that I was telling Todd Jones when I saw him last: Trading is essentially like martial arts...I know you are thinking, but wait...kung fu...what?
The correlation:
1) In trading, the market is like an enemy. You should never underestimate your enemy; you should study him, understand his motives, his history and take advantage of his weaknesses. (Recall Sun Tzu, “The Art of War”)
2) A market can hurt you in many different ways, you should always been ready to defend yourself against any of this attacks and possibly use the momentum of these attacks for your own gain (that’s straight up kung fu right there).
3) Trading takes discipline, patience, lack of emotion, intelligence and a great deal of practice…show me a martial art that doesn’t impart those very ideals.
4) Remember the famous quotes by Bruce Lee. "Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way round or through it. If nothing within you stays rigid, outward things will disclose themselves. Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot it becomes the teapot. Now, water can flow or it can crash. Be water my friend." If anything is constant it’s the inconsistency of the market. Be ready for anything and be willing to change (like water) to any environment. Never be married to a contract, strategy or position.
5) “Do not be tense; just be ready, not thinking but not dreaming, not being set but being flexible. It is being "wholly" and quietly alive, aware and alert, ready for whatever may come. The danger of training with the heavy bag is that it doesn't react to one’s attack and sometimes there is a tendency to thoughtlessness. One will punch the bag carelessly, and would be vulnerable in a real situation if this became a habit.” The heavy bag is similar to a simulator, it is no replacement for actual trading and the mental attitude he describes is just as important.
I can give 10,000 more examples on why trading is a martial art. These are just a few. In the mean time…”Be water my friend.”
...
Monday Final P/L $2500
posted by Shiptastic at 9:47 AM
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