The Trader returns! An update about exciting events happening right here!

Hello everyone!

It’s been a long time indeed. There’s quite a bit of news, as so much has happened over the last year.

Since March this year, I have been spending most of my time managing my portfolio of funds, trying to find a better life-work balance, and exploring possible new ventures with regulated London partners.

 

I will continue to focus on my own systems and funds, and am also keen to progress through getting regulated as an individual with the FCA regulatory body.

The first bit of good news is, I now have more time that I did before, and have agreed to join the prestigious company Trade with Precision as a speaker.

The second bit of good news is that I’ve managed to convince two other excellent traders to join this blog. They will be contributing a number of incredible mentoring and analytical pieces for you, aimed at assisting traders in progressing effectively along their journey. More on this soon!

So, be prepared- there should be an increase in content on this page for those of you wanting to improve your skills and see genuine improvement in your confidence and results.

Wishing you all the best,

Adam

London- Canary Wharf

Self-sabotaging behaviour, an article by Brett N. Steenbarger Ph.D.

Could you be sabotaging your own success in trading? Here is a great, and short piece that may feel familiar to you- enjoy 🙂

misc-jackie-chan-l

Behavioral Patterns That Sabotage Traders – Part One

Brett N. Steenbarger, Ph.D.

 

Although I do not maintain a private practice of counseling/coaching for traders, it is perhaps inevitable that traders would contact me for assistance after reading my book on The Psychology of Trading. Once in a while I take on a project of working with a group of traders because of the opportunity to push the envelope and use psychology to improve their trading performance. In the past few years, I would guesstimate that I have gathered personality questionnaire data and assisted over one hundred traders.

That’s a decent-sized sample, and provides me with worthwhile insights into the minds of traders and the problem patterns that interfere with their trading. Below I outline a few of the things I have learned from questionnaires and interviews with individuals who are trading for a living.

  • Most trading problems are varieties of performance anxiety. Performance anxiety occurs when a performance that is usually automatic becomes the object of excessive scrutiny. This attention to the performance creates an interference effect, in which the performance can no longer flow naturally. Such performance anxiety frequently interferes with athletic performance, public speaking, sexual performance, and test taking. Whenever fears about the outcome of a performance dominate the performance, outcomes are apt to suffer.
  • Performance anxiety occurs as much during times of market success as during times of market loss. It is not at all unusual to find traders who are good at taking (appropriate) losses, but who become fearful when they book a gain and take profits prematurely (i.e., prior to reaching their profit targets). Interference effects following strings of losses are no more debilitating than interference effects from pressure that traders feel when they are making money.
  • Traders commonly try to replace negative self-talk with positive self-talk during trading. This is a mistake. When traders are immersed in the market and focused on the screen, they are not engaging in self-talk at all.
  • Perfectionism is the most common source of performance anxiety among traders. Traders tend to be achievement-oriented and often set lofty goals for themselves.These performance goals contribute to tension when the goals are not met. In general, it makes sense to replace performance goals with process goals. Instead of setting a goal of making $250,000 a year, a trader should, for example, set a goal of following a trading plan (entries, position sizes, exits) on 90+% of all occasions.
  • Perfectionism leads traders to overtrade. Overtrading is the most common source of losses among the traders I’ve interviewed. Traders overtrade when they feel internal pressures to make money that blind the trader to what is happening in the markets at the time. Trading when volatility is low, trading outside one’s trading plan or strengths, trading to make up a loss, and trading imprudently large size are examples of overtrading.
  • Traders that master performance anxiety at one level of size (e.g., 5 contracts) frequently re-encounter it once they meaningfully increase their size (50 contracts). We generally calibrate our emotions by the dollar amounts we make or lose. This makes a fifty contract trade much more difficult for traders than a five contract trade, even though the setups may be identical.
  • Traders often think they have worse psychological problems than they actually have. When performance anxiety patterns have interfered with trading for a considerable period of time, traders often become convinced that they have deeply-seated emotional problems that need intensive psychotherapy. Often, the self-perception that one is damaged—that one is emotionally unfit—is a larger problem than the performance anxiety itself, which is a very solvable problem.

To be sure, there are problems other than ones related to performance fears that can interfere with trading. Many of these are described in my book. The unique thing about performance anxiety is that it can afflict highly successful traders every bit as much as rookies. This is because the root of much of the anxiety—perfectionism—tends to be present in the most achievement-oriented and successful individuals. It is truly a double-edged sword.

Somewhere between the extremes of performance pressure and complacent laziness is a happy medium where traders can focus on self-improvement without sabotaging their results. Trading is like dating: You want to keep initial expectations reasonable, enjoy it while it’s happening, and learn from it once it’s over. In the second and final article in this series, I will take a look at strategies traders can use to overcome performance

Brett N. Steenbarger, Ph.D. is Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY. He is also an active trader and writes occasional feature articles on market psychology for MSN’s Money site (www.moneycentral.com). The author of The Psychology of Trading (Wiley; January, 2003), Dr. Steenbarger has published over 50 peer-reviewed articles and book chapters on short-term approaches to behavioral change. His new, co-edited book The Art and Science of Brief Therapy (American Psychiatric Press) is due for publication during the first half of 2004.

 

AUDUSD Sell EOD trade setup – please evaluate yourself

This trade setup is a trend-continuation short. I’ll be waiting for the bar to close and place my order Sunday night, after the market opens. My target is the next key level- 0.9208

 

audusddaily_shortsetup

Update on my coaching role

Hi everyone,

As you may, or may not, have heard, I am moving on to other roles as a trader from the end of May 2014, this month.

I have several new opportunities, all interesting and potentially financially, educationally, and personally rewarding, and have thought long and hard about leaving my current role, which I enjoy thoroughly. I love my colleagues and delegates, but I have to make the choice to move one.

With this in mind, I will be fading out my role as a presenter and coach at Learn To Trade/ Knowledge To Action over the next month, and possibly June as well.

I am going to make myself available for coaching on site at these dates:

Monday 12th May 2014, 9am-5:30pm
Tuesday 13th May 2014, 9am-7:30pm

Saturday 17th May 2014, 9am-12pm (Group only) and 1-3pm (one-to-one)

Monday 26th May 2014, 9am-5:30pm
Tuesday 27th May 2014, 9am-7:30pm

Saturday 31st May 2014, 9am-12pm (Group only) and 1-3pm (one-to-one)

Please note that the group coaching sessions will handle a maximum of 10 people, and is worth 2 coaching sessions. (It costs you 2 coaching sessions, but is 6 coaching sessions long)
In order to register for the group sessions, please email me with the date of the group session you wish to attend, and I will check if you have coaching sessions avilable and book you in if you do.

Regarding the skype sessions in the evenings or weekends, I will only action those next month, in a follow up email this week; I simply cannot give every waking hour up for coaching this month.

Looking forward to seeing you there, and at my Master Trader Bootcamp next weekend!

Best,

Ads

How your behavior can affect your finances – video link

https://anc.yahoo.com/video/behavior-affect-finances-104641031.html

 

[ON THE MONEY] When it comes to finance, it’s easy to work the numbers. Understanding how the brain works on the other hand and how it affects our behavior is a more trenchant task. This understanding is crucial to investing because every decision to buy or sell is secretly affected by biases that are lodged deep inside our minds. On The Money is joined by Larry Cao, a chartered financial analyst from Hong Kong, who will tell us three important biases each investor has to fight.

Strange Trader deaths ongoing 2014

Various stories below:

Trader kills self in finance world’s latest suicide 

Another Trader Commits Suicide, Brings Total Recent Banker Deaths To 10

NYC trader suicide becomes 11th this year in financial community

8th Banker Commits Suicide: JP Morgan Hong Kong & 30 Stories Down!

Banker Found Dead Marks Twelfth Finance Suicide To Date This Year

An NYC-Based Trader Committed Suicide Tuesday Morning

Yet Another Suicide in the Financial Services Industry: Is There Something Going On?

 

 

Why does good news sometimes cause markets to fall?

When Good News Turns Bad

One of the most difficult things to understand about the markets for the uninitiated, is how good news can cause prices to fall. Or vice versa, why seemingly bad news sometimes causes markets to rise. It appears to make no sense – it’s a paradox.

Last week was a perfect example when great economic data for the United States job market was released showing the lowest unemployment since 2008 pre-Global Financial Crisis times. This is a significant sign that the US economy is improving. Companies thrive in good economic times, more jobs are created and more profits are made so this all sounds like good news right? Yet stocks plummeted on the news. How can that possibly make sense?

Early in my career when I had an interest in the markets, yet little understanding of them, I would catch a pre-market headline such as ABC stock profit rises 10 per cent and think that was great news only to see the stock price fall 5 per cent when it opened. Why did this happen? The answer is that the market expected ABC profit to rise more than the 10 per cent announced.

For arguments sake, let’s say the market expected a profit increase of 20 per cent. This market expectation is always priced into the market price; it’s the classic ‘buy the rumour’ situation. However great a 10 per cent increase in profits might be for ABC, it missed expectations and hence the price will fall to reflect the factual evidence versus the market expectations. Buy the rumour, sell the fact.

It’s actually pretty simple and straightforward, you just need to be fully informed and know both market expectations as well as facts.

Quantitative Easing

The current situation with the global markets is a little more complicated but there is a method to the madness. In recent years the US economy has been in bad shape and just a few years back in 08/09 things got so bad and the markets plummeted so fast that the US Federal Reserve stepped in and starting pumping cash into the markets to stimulate the economy. You have probably heard the term ‘quantitative easing’ or ‘QE’ been bandied about but may not have known what it meant. Well in simple terms that’s what QE is… pumping money into the markets to stimulate the economy. When a central bank’s normal policy is not working effectively (like in 2008) and they want to stimulate their economy, QE is one of the tricks up their sleeve.

The US Federal Reserve has been playing this card since late 2008 and to date they have not stopped. The Fed has continued with QE for one simple reason, the economy was not sufficiently recovered to stop it … until now perhaps?

Coming back to the great jobless figure stats in the US last week and the logic behind stocks falling on the news, here goes…

The US stock markets have risen strongly since early 2009 and one supporting reason for these on-going stock price rises is the Fed pumping money into the markets via their continued QE policy. The Fed is likely to continue QE until they see the economy is sufficiently recovered to look after itself without their assistance. The economic data out recently is undoubtedly showing great signs for the US economy, however it is getting sufficiently good that it is also predicted by the market that the Fed will start to slow their QE sometime soon. The Fed slowing or even stopping QE takes away one of the factors supporting price rises in stocks. Therefore, this good news for the economy is bad for the markets in the short-term as the market now prices in the possibility of reduced QE by the Fed and market participants start selling. So the markets will likely continue to fall in the short term on good news as we have seen already. The long-term however is another story.

Just like the good news for ABC stock rising 10 per cent is probably a good thing in the long-term, it can also be a bad thing in the short-term as the market readjusts prices based on the facts in front of them.

Looking Ahead

In the short-term this situation is likely to cause more volatility. We are in that strange situation of markets falling on good news and markets rising on bad news. This will probably continue until we know the Fed’s position and they have made a clear public statement as to their future QE intentions. Until we know the facts, the market will continue to trade based on the ‘probability’ of what is most likely to happen.

At some point in the future QE will stop. I don’t have a crystal ball so I can’t tell you when that will be. What I can safely predict however is that when it happens, the US economy will be standing on its own two feet again and that can only be a good thing.

We will then be back to normal monetary policy conditions and low and behold, the market will start to rise on good economic news and fall on bad news. Just like the good old days before the term Global Financial Crisis was coined.

Credit for this great article goes to Nick McDonald.