Dr. Brett Steenbarger of the TRADERFEED blog is running an excellent series on “what I wish I had been taught when I first began trading” and has asked that others, such as myself, contribute.  For what it is worth what follows are just a few of the things I know now that I wish I knew when I first started trading. Maybe you will find some of the same things on your “wish” list.

1.  START SLOW AND KEEP IT SIMPLE

I know I know I repeat this mantra over and over again but it is true.  Keep trading simple.  When I first started trading I thought I had to know everything there was to know about trading, then a reality set in:  I will never know everything there is to know about trading and neither will you.  That is not to say that you do not go through a

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Michael Mackenzie, Saskia Scholtes and Aline van Duyn (Financial Times): Trepidation as Fed prepares to end easing, October 29, 2009. As the Federal Reserve’s programme of buying mortgage debt edges towards $1,000 billion this week, investors are starting to worry about what happens once the central bank starts to slow down and exit from this key plank of its monetary easing policy.

• Quint Tatro (Minyanvile): Seven lessons from a legend, October 29, 2009. Jesse Livermore was wealthy and broke several times over during his tumultuous life, which ended in his suicide. His ability to make and lose millions garnered him many lessons which the trading community have enshrined over the decades since his death. Yet these lessons and

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SOME THOUGHTS ON THE PSYCHOLOGY OF TRADING

 

ARE TRADERS BORN OR MADE?:  I like this quote, “A lot of the best traders are stubborn iconoclasts who are willing to challenge conventional wisdom, identify an edge and stick to it. The noise of the world doesn’t deter them from their inner convictions.”

PROFESSIONAL TRADERS MAKE MONEY BY PATIENTLY WAITING:  “Independent traders have the luxury of picking and choosing their trades. They don’t have to trade all of the time. This is their edge. They can wait until the market patterns are working for them.”

BUY HIGH AND SELL LOW:  “Our emotions are not our friends when it comes to investing. Relying on emotions is a quick way to buy high and sell low. This is because people give into their greed when they see everyone else

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Great strategies align themselves with vetted and observable themes in the market.divbr //divdivStrategy comes from taking a stand based on what you perceive are demonstrative behaviors in the recent market and then submitting that position to the market's cross examination - you'll come out smelling like a rose or its fertilizer. The nice thing with a href="http://www.trade-ideas.com/Path_OddsMaker.html"The OddsMaker/a backtesting tool, is that you'll know this without risking a penny of capital.divbr //divdivDon't know which behaviors to identify? What cause to fight for? Adopt someone else's opinion - preferably someone you may regard as a mentor or at least a trusted interpreter of the market's various and many signals./divdivbr //divdivI haven't had an original thought since I named our second daughter 2 years ago. So when I want some heavy theme action, I look to another doctor who's good at midwife-ing ideas through delivery and into the world: ...

Brett Steenbarger discussed a bearish a href="http://traderfeed.blogspot.com/2009/08/why-im-nervous-bull-non-confirmations.html"non-confirmation/a for the new high in the a href="http://www.zignals.com/main/quicknav/MenuCharts.aspx?param=VlcxNzMx?end"SP (SPY) with respect to emerging markets (EEM)/a.br /br /a href="http://2.bp.blogspot.com/_WWGUfU1tOjI/SpUT_pHc19I/AAAAAAAAA_A/xKo_EtGMA8A/s1600-h/Stock+chart+Aug25.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 176px;" src="http://2.bp.blogspot.com/_WWGUfU1tOjI/SpUT_pHc19I/AAAAAAAAA_A/xKo_EtGMA8A/s320/Stock+chart+Aug25.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5374223714426345426" //abr /span class="fullpost"Another tick in the nervous bull column is the non-confirmation between the a href="http://www.zignals.com/main/quicknav/MenuCharts.aspx?param=VlcxNzMy?end"transports (IYT) and the Dow (DIA)/a. br /br /a href="http://2.bp.blogspot.com/_WWGUfU1tOjI/SpUWsWv5EeI/AAAAAAAAA_I/_GzImjspvck/s1600-h/Stock+chart+Aug+25+b.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 177px;" src="http://2.bp.blogspot.com/_WWGUfU1tOjI/SpUWsWv5EeI/AAAAAAAAA_I/_GzImjspvck/s320/Stock+chart+Aug+25+b.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5374226681613062626" //abr /Volume patterns between the transports and the Dow are also different; the Dow (a href="http://www.zignals.com/main/quicknav/MenuCharts.aspx?param=VlcxNzM0?end"DIA/a) has shown respectable volume on its new high, while the transports (a href="http://www.zignals.com/main/quicknav/MenuCharts.aspx?param=VlcxNzMz?end"IYT/a) have traded insipid volume since breaking $65 at the start of August.br /br /a href="http://4.bp.blogspot.com/_WWGUfU1tOjI/SpUqLn8aNII/AAAAAAAAA_Q/lqHPqJhYoTU/s1600-h/DIAAug25.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 192px;" src="http://4.bp.blogspot.com/_WWGUfU1tOjI/SpUqLn8aNII/AAAAAAAAA_Q/lqHPqJhYoTU/s320/DIAAug25.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5374248109525841026" //abr /a href="http://1.bp.blogspot.com/_WWGUfU1tOjI/SpUqi9yypwI/AAAAAAAAA_Y/7zNdfzMWiJk/s1600-h/IYTAug25.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 192px;" src="http://1.bp.blogspot.com/_WWGUfU1tOjI/SpUqi9yypwI/AAAAAAAAA_Y/7zNdfzMWiJk/s320/IYTAug25.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5374248510528071426" //abr /Buyer beware.br /br /Follow ...

Let's start with my comment first and then the excellent post this AM from the ever astute and keenly insightful Dr. Brett Steenbarger:divdiv/divblockquotedivGlad to read your emphasis on the importance of 'Relative Volume' in determining how trustworthy market moves really are./divdivbr //divdivIt's the bedrock of much of our analysis at Trade-Ideas as you know. We express the concept as a ratio, placing the current accumulated volume up to any given point in the day over the historical average volume of the same period. A reading such as 1.5 means therefore that a particular issue is 50% above its normal volume. A reading of 7 means its trading 7x more than usual; and so on for readings of 0.6, etc./divdivbr //divdivFull a href="http://www.trade-ideas.com/Help.html#WSF_MinRV"definition of Relative (aka Current) Volume/a./divdivbr //divdivSource: /diva href="http://traderfeed.blogspot.com/2009/08/trusting-market-moves-why-relative.html?showComment=1250691755319#c4900951752302019060"http://traderfeed.blogspot.com/2009/08/trusting-market-moves-why-relative.html?showComment=1250691755319#c4900951752302019060/a/blockquotediv/divdivHere was Brett's original post:/divdivbr //divdiva href="http://traderfeed.blogspot.com/2009/08/trusting-market-moves-why-relative.html"http://traderfeed.blogspot.com/2009/08/trusting-market-moves-why-relative.html/a/div/divdiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/9446784-5370095556124608764?l=marketmovers.blogspot.com' alt='' //div

Welcome back to guest blogger Mo Christiensen of TradingAdviceBlog.com. Mo has been a full time trader of the emini S&P 500 futures since 2003 and through his blog he works with new and developing traders to help them speed up the learning curve to trading profitably. In particular Mo specializes in the important area of emotional management.

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As traders we’ve chosen an intense profession, one with a very high potential for stress. The simple act of putting our money on the line, with an uncertain outcome, creates an emotional force which we need to know how to handle. If we don’t, the emotional excitement of fear, euphoria, anger, disappointment, and other intense feelings, clouds our judgment and affects our ability to stay in the opportunity flow of the market.

Trading with these emotions in play, is akin to driving in a storm without windshield wipers.

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Here at “A Dash” we like the comparisons between analyzing sports and analyzing markets.  There is much more data in sports, and the risk/reward calculations are similar.

When it comes to the NBA, we are zeroed in on the Michael Jordan era.  To celebrate a birthday party for a famed Chicago options trader, one of our friends sent invitations to a party — dinner and Bulls tickets for a playoff game that night.  Attendance was excellent!

Can We Learn from the NBA?

Shrugging off the current Bulls record, we try to remain open to new information.  In particular, is there any relevance for investors?

Investment experts are weighing in on the Shane Battier article by Michael Lewis.  In a reprise of Moneyball, Lewis shows how Battier is more valuable than his obvious stats indicate.  Briefly put, he makes everyone on his team better — …

divHeard this one?/divdivbr //divdiv[Tourist and New Yorker approach each other at the street corner]/divdivTourist: "span class="Apple-style-span" style="font-style: italic;"What's the best way to get to Carnegie Hall?/span"/divdivNew Yorker: "span class="Apple-style-span" style="font-style: italic;"Practice! Practice! Practice!/span"/divdivbr //divThe videos of Trade-Ideas' automation on our a href="http://www.youtube.com/TradeIdeas"YouTube Channel /aoffer views of our practice sessions in the market using real capital and real market situations.  Viewers see the real-time idea generation alerts of Trade-Ideas PRO that's based on the tested, trading plan results modeled in a href="http://www.trade-ideas.com/OddsMaker/"The OddsMaker/a and then ask, "Excuse me, can I buy or receive the strategies shown in the videos?"divbr //divdivspan class="Apple-style-span" style="font-weight: bold;"span class="Apple-style-span" style="font-size: large;"Sure.  But It Will Cost You More Than You Know/span/spanbr /br /Requests like that reveal a weakness in a person's approach to trading and forecast likely disappointment in automated and regular trading.  The reason points to a lack of willingness to develop the safety net of ...

If you have visited my site for very long, you will know that I think very highly of the work from Brett Steenbarger. “Dr.Brett” is has created a new site which is an e-book he updates regularly. The free e-book is called INTRODUCTION TO TRADING it is an excellent resource which he has generously contributed to the trading community.