Saturday, June 27, 2009

Learning How to Trade: Picking Up the Market's Lessons

One of the things I'm trying to accomplish with the real time Twitter posts (follow here) and the intraday blog posts is help traders with the reasoning processes that can lead to successful trade ideas. Too often traders become self-focused (and focused on P/L) rather than market focused. I've archived these posts to help with the market focus: figuring out how we're trading, so that you can then infer likely movement to come:

Every day in the market should teach you something about how markets move, how trades set up. I've been trading since the late 1970's; the market is still teaching me lessons--sometimes the hard way! I'll be posting those lessons along the way.


Jorge said...

Dr. Steenbarger,

OK, I think I have almost figured this thing out. I've narrowed it down to only 3 possibilities:

1) You have developed a performance enhancing drug (no, not that kind of performance enhancing) and have been testing it on yourself for the last couple of years.

2) You are the one behind the mysterious disappearance of several analysts and traders in the Chicago area and keep them locked in your basement where you enslave them doing research and writing that you just sign.

3) You are part of some secret army program to create über-soldiers that need no sleep and are in the final stages of development.

The early bird, laser-focus, self-hypnosis, etc. explanations don't cut it anymore: we want the truth! ;)

I hate it when people make me feel lazy after putting in 60-hour weeks :D

Best trading,


. said...

Agree. Thank you so much for sharing your insight AND continually providing practical measures to remind and help us improve.
You put in so much effort and don't ask for anything in return!

I've bought TDTC and plan to get book 2 (although the book is available on the net, buying it is the very least I can do to show support.)

My Trading Edge said...

Hi Brett - my latest "ah-ha" thought on learning to trade....
with all the interest in Michael Jackson's life there is overwhelming anecdotal evidence that he personified someone who was truly committed and dedicated to his craft. So it only stands to reason that all of the musicians who performed with Michael for his live tours would represent the cream of professional musicians.
So that got me thinking....I work professionally as a musician each week, but it’s a part-time job because most of the week is spent on trading. So despite approaching each gig with enthusiasm and professionalism, the fact is my level of commitment and dedication does not prepare me to play at the same level as those who have worked alongside Michael Jackson.
The band I play with always gets paid; we even receive our fair share of bonus payments and continue to be re-booked on a consistent basis because we perform to the expected level for the "grade" we are working in. But, I can admit, I would never have received a call to fill-in for Michael Jackson's band.

But in the world of trading, there is only one grade. New traders go straight to "A- grade" or "Division 1". Without preliminary levels to develop and work through is it any wonder so many new traders never make it! And how many traders realize that their "opponents" are the cream of the cream, who continue to train and work exhaustively at their craft? After all, to compete and win, doesn't one need to be equally skilled and prepared?