Focus (on what is important)
You must focus for extended periods of time to become the best trader possible. And that is your goal. To be as good a trader as you can possibly be. One skill you must develop is that of being able to focus. You must focus on what is important. There is so much information on your trading screens when you start. It can be overwhelming. Focus? Focus on what? How can I follow all that is going on? I can’t follow everything.
And you get lost in all the information. You will watch AGA and Mr. Spencer and ask what the hell are they watching so intently? How can they follow all that nonsense? The answer is they aren’t watching everything. They are focusing on what is important. They gather the information on their trading screens that help them make money. They sort through all the data and concentrate on the data that is important for their trading style.
Ohhhhhhhhh! Well that makes sense. So what is this information exactly that they are focusing on?
1) Search for intraday support and resistance levels on your intraday charts
Often an interviewee wants to know “our system”, “our strategy”, “our edge”. And I can sense that some are getting ready for a response as complicated as “Advanced Linear Dynamics and Chaos” offered at MIT’s Graduate Math Department. And then I say, “We trade off of levels, we trade the stocks in play”. And then I pause. Sometimes there is an awkward pause in the air because the interviewee is expecting me to continue. And I have nothing else to say, and I am not gonna add anything else, thus the air of silence. And you know if the interviewee is unsatisfied with that answer, then I know they will never be a good trader on our desk. I am a trader not a Quant Analyst. If you want to make money trading with us then find important intraday support and resistance levels and trade off of these levels. Above resistance and we are long, below resistance and we are short. Above support and we are long and below support and we are short. It is really not that difficult.
2) Watch for repeating prints at the same price
We love this information. We are looking for repeating prints at the same price. The more repeating prints at the same price the more interesting for us. When we see unusual volume at the same price, we trade off of these levels.
3) Watch the corresponding futures
We try and determine the relationship between a stock’s corresponding futures and the stock. We wait for times when there is a disconnect between the two that was not present earlier. And when we spot this disconnect, we pounce.
4) Watch the Inside Market/Box
We watch for big orders. We watch for changes in the Inside Market/Box that might offer an edge. Most importantly, we attempt to identify large buyers on the inside market, then we follow that buyer.
5) Discover a stock’s trading pattern
Again we are looking for an edge. If we watch the way a stock is trading, we may discover a stock’s trading pattern. If we do, we trade off of this information. Perhaps, there is a catalyst that makes a stock trade higher that we discover. So if we see that catalyst reappear then we get long.
6) Search for Catalysts
Did I just see that? No she didn’t. Well anyway we are searching for a catalyst.
Things that I do not spend time on:
a) How anyone around me is doing
I am concentrating on my own trading. I want to know what others are trading. But I do not concern myself with their success. I do not get concerned if my neighbor is making more money than me. All successful traders concentrate on their own trading.
b) Predicting the direction of the markets or my stock(s)
We had a really smart trader with us awhile back. Loved the markets as well. But he was obsessed with predicting the markets 6 months out. For example, he would ask me where the price of oil was gonna be in 6 months. I would answer, “I have no idea”. And he would look back at me funny as if I ought to know that. And then he started asking me essentially the same question but phrased differently. And I would answer, “I have no idea”. And he would look at me funny. After awhile when he asked me the same question, I would look at him funny. I wanted to beat him to looking at me funny. And he would respond by looking at me even funnier. That is just not what we do here. It is essential to focus your energy on what is important for what we do. And where the market will be in 6 months or where the stock you are trading is gonna be in a few months, just isn’t gonna help you make money on our desk.
c) Personal issues
We all have them. But trading is our sanctuary. It is just us, those on our desk, and the markets. I do not spend time contemplating issues related to my girlfriend, family, or other personal matters while trading.
d) My results
I am not consumed with my trading results. I concentrate on One Good Trade. And then I concentrate on One Good Trade. I don’t coast if I am up 1k early. Today might be a day for me to make 3k. I do not pack it in if I am down 1k on The Open. I am a good trader this is just a bad start to the trading day that will soon improve. I stay in the present. I spend my day trying to make as many One Good Trades as I can. At Duke after a good play Coach K yells, “NEXT PLAY”. When you trade, after One Good Trade then you should think One Good Trade.
e) Anything other than trading during the first and last hours of trading
I am a trader. I am not a professional e-mailer. I don’t get paid for sending e-mails. I don’t e-mail when I am concentrating on my trading. And I would never accept a phone call when I am trading during The Open or The Close. I don’t check out ESPN when I am trading during The Open and The Close. I focus on the six things above. And nothing else. It is me and the inside market/box, prints, corresponding futures, intraday levels on my charts, a stock’s trading pattern, and catalysts….and nothing else.
