Doing Better

Trader's Mindset

Oct 02

On this blog, you will find a great amount of world class information, in my opinion, on trading. This is knowing. But, doing is what will ultimately determine our success or lack thereof.

Imagine a trader crafts 5 trading systems, all pass his tests for qualifications with flying colors, and very generously 4 of the trading systems are stupendously profitable on a go-forward basis. However, the trader decided to trade the one system that was unprofitable.

Another trader finds on the simulator that he can be very profitable timing reversals. On the simulator, he makes money each day. Sometimes he loses at the start of the day but by the end of the day he’s usually in the green. When he goes live, he decides to shut down at a modest loss level– the problem is he’s shutting down in the red nearly every day. And, he kicks himself because his big reversal comes but he feels like he cannot take it.

Another trader, built a profitable trading system but he takes it out of the live any time it has a little drawdown. It recovers in the sim and then he takes it back to the live. But, he gets hit by another drawdown.

Another trader, gets a long signal and takes it but gets stopped out. He doesn’t take the next signal because he doesn’t trust it and that one is the winner.

Another trader, feels like the market is oversold. He gets very bullish on a short term signal. The market moves in his favor a little before reversing course to take out his stops before moving higher.

Another trader journal journals his or her best insights each day. While the observations are keen, unfortunately, there is no further development. After several months or even years, this trader has expert level understanding but isn’t benefiting from any of it– because it isn’t applied.

While each of these traders seem to have different problems, the root problem in every case is information loss. The system trader, who only trades one of his systems, only traded a quarter of his knowledge.

The frustrating part with dealing with information loss is that there is certainly a stage for each trader that he realizes that he knows how to improve but has not yet realized it.

Four keys I am focused on in my own trading toward that end are:

  1. Maximizing my environment for success
  2. Focusing on methodology and process
  3. Tracking results closely but minimizing emotional attachment
  4. Working to get better at executing

More on these concepts in a future posting.

About the Author

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