Great trading is never easy but it should not be difficult. Some traders may not recognize the difference between something that is “effortful” versus “difficult”. Trading with effort is a state of trading where one is fully focused but able to accurately read and respond to the changing market. Trading becomes difficult when (1) the trader fails to recognize that they aren’t reading the market well and stop trading, (2) is reading the market well but executing in such a way that the trades are losses, or (3) doesn’t have enough to capital to withstand normal losses and/or has had significant losses, and (4) is trying to trade at a level that is beyond their abilities.
I think some of the more interesting losses have came when I was reading and predicting the market well but still making bad trades. In most cases, these losses were due to my trading once the market was “out of bounds” for me. Depending on the type of trade, I normally have prices where the market is out of bounds. Once a market moves out bounds, it suggest I either shouldn’t be trading or trading in a different way. As uncertainty decreases, informational and sometimes trend traders tend to gain advantage over technical traders. Market psychology tends to go through stages of uncertainty, disinterest, early recognition, and crowd recognition. During the crowd recognition stage, markets can make extended moves.
The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at firstname.lastname@example.org.
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