Today is a good day to sit around and think about how we will improve as traders. Between the barbequed chicken, Cavs/Magic game, summer beers, and crazy relatives there is some time to reflect. Back in the day I would be someplace like Hilton Head, with a rental on the ocean, on an immaculate course, thinking about a new club I should purchase to alleviate my slicing. These days, there is the two-year-old birthday party, feasting on salad and veggie burgers, and upstate New York. See how I have grown.
Recently, I emailed Dr. Steenbarger about a topic that would be an interesting next book possibility for him: from good to great. Wouldn’t it be interesting, I emailed, if a book was written about how good traders became great. Dr. Steenbarger needs as much help with his writing ideas as LeBron on his basketball game, but I sent the email anyway. Dr. Steenbarger had already bounced around this idea of course and sent back a backboard-busting idea. I am hoping one day he writes that book. But I would like to offer a few quick ideas this AM, how to grow as a trader.
One of our better traders walked into my office without solicitation a few months ago pissed. He shared that he was frustrated that he had plateaued as a trader and wanted to improve. One quick thought before we walk through some ideas on improvement. Traders are often too hard on themselves. They punish themselves mentally when they are not doing as well as their ambition desires. This can be exhausting. If this is you break this habit. Just figure out how to get better, accept your present ability, and expend your energy on all the things you are gonna have to do to improve.
Some quick ideas on how to improve as a trader:
1) Like the pissed trader above, outline three short-term goals that will help you improve as a trader. Work on these goals every day for six weeks. Do you trade on tilt? If so, then schedule visualization exercises to eliminate this mental weakness. Check out TraderFeed for suggestions.
2) What trades work best for you? How can you increase your size with these trades? However you must do so while controlling your risk. If you can exit 1k shares with your best trades, can you also exit with 2k shares? If so then work towards increasing your tier size for this trade to 2k shares. Don’t do this tomorrow. Add a few hundred shares at a time.
If you cannot exit 2k shares with the same loss as 1k shares then you cannot increase your tier size with this trade. It is now not the same trade. You risk is now greater and as such your results will not be the same as with 1k shares. You should consider a similar trade with larger size that accounts for the extra downside risk. But again understand that the trade is different.
3. Move your seat. You can learn from other experienced traders. Good writers borrow from other great writers. I borrow from Aaron Sorkin everyday. And if he isn’t helpful then I borrow from Malcolm Gladwell. If a guy on your desk is better at holding trades for a longer time period, go sit next to him for a month. Try and add some of his longer holding trades to your quiver. If you are a weak momentum trader go sit next to the aggressive momentum trader on your desk.
We are shifting some of our talented traders on our desk Tuesday to expose them to traders who understand the big picture better. This will help these talented traders.
4) Improve your technical analysis. As day traders we make many short term trades. We must always seek traders we can hold longer, easy trades. These trades tend to be technical set ups.
One of the most common underdeveloped skills amongst intraday traders is the trending day trade. Afraid to Trade does a great job with these setups. Go and visit Corey.
5) Incremental Progress. None of these improvements will come quickly. They should be slowly rolled out but rolled out indeed.
6) Are we there yet? There is nothing to get as a trader. You will never achieve a state where progress and growth are unnecessary. Embrace the gift of learning.
As I write my clubs are hundreds of miles away. My egg white omelet smells about done. So I better wrap this up. And of course the toddlers are looking for someone to play with.
You can be better tomorrow than you are today!
Mike Bellafiore
no relevant positions
9 Comments on “Growth”
This is a great post. I was just thinking about ways to improve as I think through my goals for the coming week. My best trades until recently have been trades where I was able to identify the market structure intra day and exploit the momentum or trend. This last week it seems the market volume has dried up a bit. The flat range bound market calls for a retooling of strategy. These longer term plays no longer present good risk/reward.. expecting half point moves when the market only delivers 10-20c is no way to trade the current environment. This last Friday was especially miserable. After trading the recent market I am going to capture better entry prices which will consummate my risk/reward to the decreased reward potential in the marketplace. This will also be my first time trading the summer months, should be interesting. Anyway, Thanks for helping get the creative juices flowing
This is a great post. I was just thinking about ways to improve as I think through my goals for the coming week. My best trades until recently have been trades where I was able to identify the market structure intra day and exploit the momentum or trend. This last week it seems the market volume has dried up a bit. The flat range bound market calls for a retooling of strategy. These longer term plays no longer present good risk/reward.. expecting half point moves when the market only delivers 10-20c is no way to trade the current environment. This last Friday was especially miserable. After trading the recent market I am going to capture better entry prices which will consummate my risk/reward to the decreased reward potential in the marketplace. This will also be my first time trading the summer months, should be interesting. Anyway, Thanks for helping get the creative juices flowing
Thanks for the encouraging post.
I’ve been in a contemplative mode this weekend, thinking about what I’ve learned over the past six months and how I can best build upon that going forward. One thought was that I would do well to increase my tier size on the trades that are working best for me (trades on the open based on my a.m. plan).
I’ve often wished my learning curve were swifter. But lately, I keep returning to the thought that for everything there is a season, and that if I keep drilling down on what works for *me* (something I’ve learned from you and Dr. Steenbarger), and keep making steady improvements I’ll get where I want and need to be.
Thanks for the encouraging post.
I’ve been in a contemplative mode this weekend, thinking about what I’ve learned over the past six months and how I can best build upon that going forward. One thought was that I would do well to increase my tier size on the trades that are working best for me (trades on the open based on my a.m. plan).
I’ve often wished my learning curve were swifter. But lately, I keep returning to the thought that for everything there is a season, and that if I keep drilling down on what works for *me* (something I’ve learned from you and Dr. Steenbarger), and keep making steady improvements I’ll get where I want and need to be.
My pleasure gentlemen. Thxs for reading. We will keep writing if you keep reading and posting.
My pleasure gentlemen. Thxs for reading. We will keep writing if you keep reading and posting.
I have been trading now with a prop firm for 6 weeks. I am a very competitive person and am not satisfied with my results so far. The best way for me to improve is to start taking more setups. I am a little gun shy and am not taking as many setups as I could. This is particularly true on days where I am off to a good or great start. I seem to be content with my gains and dont get more aggressive.
Unfortunately on days when I seem to be trading my worst are when I take the most setups. I know I should be most aggressive when I am trading well and least aggressive when im not but im doing exactly the opposite. How can I fix this mental block. I need a paradigm shift.
I have been trading now with a prop firm for 6 weeks. I am a very competitive person and am not satisfied with my results so far. The best way for me to improve is to start taking more setups. I am a little gun shy and am not taking as many setups as I could. This is particularly true on days where I am off to a good or great start. I seem to be content with my gains and dont get more aggressive.
Unfortunately on days when I seem to be trading my worst are when I take the most setups. I know I should be most aggressive when I am trading well and least aggressive when im not but im doing exactly the opposite. How can I fix this mental block. I need a paradigm shift.
Visualization exercises. See TraderFeed for a description of exactly how to do these exercises. If you can’t find one send me an email and we will send you the right Dr. Steenbarger article.
Visualize taking size when you find your best set ups. If you work on these visualization exercises for 15 minutes every day for a month then you will conquer your mental hurdle. Great question. Good luck! Let me know how it goes.