One of the best traders I know:
Smokes weed all day and takes Modafanil
Uses Tradingview and Excel to do all his trades on Interactive Brokers
Walks for 2-4 hours /day listening to Audible/Podcasts
Sleeps >8 hours /day
Lives in a 1 bedroom basement apartment in San Francisco
I've seen him make >$1M in 1 day
All of that sounds weird to most people, but he is more focused than anyone I know. We constantly discuss morning routines, types of meditation, breath work, workouts, books we are reading. Everything is an experiment until he finds success with an idea, then he goes very deep on that idea, fanatically.
The stack of ideas that he has tested is massive. The stack of ideas that have been proven successful are few. But of those few, they have been impressive in the results they bring.
Let's focus on trading ideas that work: Statistical advantages Price Action setups
Now let's look at what ideas are in the pile of garbage: News based strategies/analysis
How to make trading your career
I’m going to break this down step by step, from day 1 of “I want to be a trader, but I’ve never traded, I don’t know markets, who is this Chris guy”
Trading successfully for a living
Scroll along until you find where you are now and jump in there….
Step 1 - Follow and retweet everything I say or do LOL
Step 2 - get your hands on a copy of “Idiot’s Guide to Making Money on Wall Street”
I know it seems old, lame, cheezy, but this book does a great job of explaining the basics if you don’ t know anything
Step 3 - Consume Consume Consume
Your job here is to learn as much as you can, broadly, and focus only on the surface level
Don’t worry about the details yet, just get comfortable with the jargon and understanding what is what
Step 4 - Take notes of all that you are discovering so that you can come back and explore some of those ideas later
By taking notes you can know that any random...
Let’s talk indicators
Indicators are helpful but if you are using indicators with no knowledge of what the underlying price action is telling you and how to exploit edges
Then it’s just a matter of time before you blow up
I constantly see traders sharing charts with a dozen indicators on them and the rest of the internet gets all shiny eyed agreeing with them because, well the RSI is up at the top of it’s range so we are obviously overbought and the market will drop from here
RSI, MACD, Stochastics, Elliot Wave, Gann, Fibonacci, Wycoff, Bollinger Bands, Keltner Channels, ATR, VWAP, MA, EMA, SQN, Ichimoku Clouds or whatever are worthless
Without an understanding of price action and position sizing, the above indicators will wipe you out
In the hands of someone who understands price action and position sizing any of the above indicators or philosophies are damn useful
Indicators are like stop signs, green lights and lanes on the road
If you don’t...
What would happen if you only allowed yourself 1 trade per week?
A thought experiment for you
Here’s the rules:
You have $100k account of my money
You can only do 1 round trip trade per week, but you don’t have to exit that week
You don’t have to do 1 trade per week
You can only risk 1%
You get to keep 90% of all profits
You can only trade the following assets:
$DIA/$YM, $QQQ/$NQ, $IWM/$RTY, $GLD/$QO, $USO/$QM, $TLT/$ZB/$ZN
$BTCUSD, $EURUSD, $GBPUSD, $USDCAD, $USDCHF, $USDJPY, $AUDUSD, $NZDUSD
Any of the Dow 30 components
Every time you close the month >1 penny higher than the previous month, I will increase your account by 10%
Any month that the balance ends less than $100,000, you have to pay me the difference to bring the account back to 100k
If you lose more than 5% in one month you are on 3 month probation, no live trading and we spend time together restructuring your system
There is no limit to how much money I will give you to trade with, if...
What are trading mistakes?
Enter the wrong position size
Enter the wrong direction
Account is live and you thought it was demo
Enter the wrong symbol
Enter the trade based on a hunch vs trading plan
Enter off of someone else’s idea
Not a mistake:
Getting Stopped out
If I don't follow this list perfectly, it's a mistake
First let’s define what a consistently profitable trader is…
A consistently profitable trader makes money consistently
That’s about as broad and narrow as I will make it.
Notice I didn’t say “makes money on every trade”
I leave it broad for swing traders, day traders and long term position traders
Consistently profitable could mean you have a 20-30% win rate, but you happen to make big money on the winners and cut your losers short
Or you have a high win rate, 60-75% and you only make a little bit more than you lose, but you end up profitable
A consistently profitable trader has a really good idea how much money they will harvest from trading each day month & year
A struggling trader doesn’t know if they are going to be profitable on the next 10 trades
A struggling trader doesn’t know how to size their positions
A struggling trader doesn’t know if they are having a normal drawdown or if...
Being able to identify the current market regime is a very important part to trading. As a systems trader I have a very quantitative approach to things, in fact testing typical Wall Street “known” wisdom against itself is a common hobby of mine. Not to be Señor Snarkypants on Twitter but because there is all sorts of opportunity in finding flaws in areas that gets constantly repeated in financial news, or the aforementioned FinTwit.
The common Wall Street accepted requirement for a Bear Market is down 20%, which did not officially happen but we got within a few ticks of it on a closing basis, and currently down a bit over 14% from the highs.
This is more for a record keeping sense than it is for any trading advantage but I constantly hear people quoting that, we aren’t in a bear market yet because of that mystical 20% number.
There is another saying about bear markets and that Bear Market rally’s are the most violent. That certainly seems to be the...
As the new year, 2019, has come amidst a rather angry global selloff in 2018 I had some time to contemplate the two biggest angry markets that I’ve participated in directly, the 2000-2003 Dot Com Recession and the 2007-2009 Global Financial Crisis or the Great Recession. Within the 20 years, or so, that I’ve been an active participant in markets, those two were the most painful for nearly everyone whether you were a market player or not. They effected everyone.
On this first day of 2019 all global markets, with the exception of Brazil, Russia and India (3/4 of the BRIC’s) are down since Jan 1, 2018. The S&P 500 for its part is only down 6% on the year, but that doesn’t tell the whole picture of the carnage, from top to bottom the S&P was down 26% at December’s low and currently down 16%. Look here to see the carnage.
As a systems trader, none of this really matters to me to inform my trading, however when market regimes change and we get...
The S&P 500 was down, really down, down hard, and then I heard the news on CNBC behind me.
“Another plane just crashed into the World Trade Center.”
I was short the S&P 500 E-mini futures, the charts had me short, my analysis. I had no idea what was causing the S&P to fall so much up to that point, and it had been falling since the may highs of 1320 but more importantly to me, I had really agressively been short selling since $1209 on August 8th, 2001.
The market had been selling off since March of 2000, the dot com bubble had burst, we were generally in a bear market, trending lower and lower. By summer of 2001 we had already sold off about 30% from the highs, thus officially entering bear market territory. But the buzz from the roaring tech bubble bull market was still a star in everyone’s eye, we all wanted that big dip buying momentum to return.
Spoiler it didn’t.
When the news hit CNBC, and we started to have an idea what was actually...
You should really make your inbox a better place and sign up for my random musings, If you want a different perspective on extracting capital from the markets, I definitely offer that perspective!