Thursday, August 27, 2009

A lot of being a trader involves patience more patience and the ability to mentally survive slow periods in the market. Being a trader one can become almost addicted to trading, you can not for the life of it tear yourself away from the computer even in the slowest times for fear you will miss "the special trade". I felt this way today, as AIG made another monster run i was away from my computer thinking, "if i was only at my computer i would have crushed it". I cannot dwell on this, every trader needs time off to refresh and regroup. Sitting a computer for 6 hours a day sometimes churning 100 tickets can become maddening when things are not trading like you expect. As fall approaches more and more 5 star trading opportunities will present themselves, we will probably not see trading like last fall (in the back of my mind i hope we do), but any increase in volatility will help fire up the motivation to trade aggressively. Aggressive trading is where the money is made, knowing when to be aggressive is almost as key as knowing what to be aggressive in. The only trade i have really seen this summer which has paid to be aggressive in is AIG. Other than that you would get burned over and over trying to capitalize on names you have convinced yourself were 5 star when in reality they were 1 star. The mystical false 5 star has burned many a traders, this is the trade that looks like 5 star just because its the only thing trading in a stagnant market, but in reality is really 1 star. A good trader should know about this phenomenon, and eliminate its influence on the traders mind. This brings me back to trading psychology, if you want to be successful as a trader you must know when to let off the gas, step back and refresh. Whatever that maybe, a vacation, two days off, a half day off, or even a week, when you come back to your desk you will be refreshed and ready for the next move. Frustration should hopefully be released, if it is not then you probably should take more time off collecting yourself. From my own personal experience you can convince yourself through negativity you cannot win when the market presents no opportunity. I have seen this in myself, and through other people on the floor, traders who sit next to each other on the floor can feed off each others negativity, this cannot go on for long or you will convince yourself every trade is a bad trade. If you do this you will never win and will nickel and dime you account down to nothing.

Traders what i want you to take away from this is, you do not always have to be in the market, you must get over the fear of missing the big trade while you are away from your trading desk. It took me quite sometime to figure this out the hard way, as i at the did not have very supportive superiors who would not tell us to take time off, come back refreshed and ready to take on the second half of the year. My current superiors (which are great BTW) have really pushed us on the floor to take advantage of slow trading by refreshing ourselves. Hopefully this will convince you as a trader to no listen to the demons in your head telling you not take that break you so very much want. My break is over Monday, i will post an update on my mood, I'm sure it will be much more motivated to go out and make the right trades.

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