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So, tell me why you think you can trade ...


i don't currently trade full-time. i have a full-time (non-trading related) job. due to the hours i work (off shifts only) i usually have a lot of time available during RTH. i'm even in the midst of a courtship with another company in the same field i currently work in. again, i will be working an off shift. well, this whole process got me thinking ...

everyone knows that anyone can trade. all it takes is some money to get going, and not very much at that. it takes no schooling, experience, screening, apprenticeship, mentorship, licensing, or anything else soooooo many other professions require. asisde from the money, getting a job at any restaurant requires more prequalification (i.e. you have to have a food handler's license). my recent (current) experience triggered this post, so let's go with it:

1. review job posting
2. submit a resume
3. initial pre-screening phone interview (via the HR recruiter)
4. invitation to complet 4-page application
5. pre-screening phone interview (via hiring manager)
6. face-to-face interview (via hiring manager, group supervisor, and project manager)
7. 100 question technical screening
8. 10 question technical essay screening
9. post-interview phone interview
10. submit for approval (via hiring manager's director and HR)

that's where i am at right now.

i didn't have to do any of that to trade. and i think it would be useful had i approached it that way. but it's not too late.

what i will do is put together the folowing:

1. job posting for Trader
2. my trading resume
3. application
4. interview questions / responses

it is important to know what the job requires and what your responsibilities are as a trader. it is important to know why you want to trade and why you think you can trade. it is important to know your 'stuff'. it's important to discover whether you can do the job at hand or if you are just bluffing your way along until the hammer falls.

anyway, it may take a bit for me to complete this project, so a lapse between this and the next post does not indicate a lack of interest or followthrough.

this'll be fun
Looking forwared to it...
i've been thinking about this stuff and have some more to add. but first, ...

i will in no way minimize or relegate a positive expectancy trading strategy. nor will i underestimate the necessary ability to 'read' and 'hear' the market's messages. no matter how pyschologically ready a person is to trade, if the person doesn't have a positive expectancy method, he'll never come out of this game a winner. so everything i discuss already assumes a positive expectancy strategy exists. i happen to really enjoy analysis, the why of everything, so that's why the psychology of trading gets so much of my attention. anyway, having said all that, on with the show ...

okay. as i thought about this topic, i realized how challenging it can be to really get a good start in this business. the challenge is that as an independent, retail trader you are your own boss. that means you work for you. this sounds so simple but, as usual, it gets twisted. let's say you are the type of person who prefers to work in an environment where your boss praises your work and is still encouraging when you make mistakes. okay, now suppose as a boss you don't say much about the good stuff and really dig in on errors. as a trader you would not want to work for you as a boss, and as a boss you wouldn't want the hassle of having you as a trader.

it probably sounds a bit Cybil-ish, but the fact remains: the trader doing the trading may have a personality type incongruent or noncomplimentary with the boss running the trading business. if the trader doesn't recognize and address the issues, both the trading and the business can be severely and negatively affected.

along with the useful knowledge that traits evident in trading may not mesh with traits evident while managing the business, the trader does have a great freedom: let the trader trade and let the boss run the business AFTER THE TRADING IS DONE. i think all too often the trader becomes micromanaging boss and tries to run the business DURING TRADING. bad news. the market could care less about the business. you can see it when you read people asking things like "How much per day ...?" or "What is a good goal for ...?" or "What kind of stop ...?". all these questions are coming from the boss, not the trader.

it reminds me of (hold on, here comes a shock) professional sports. media, press, and reporters are always very aware of points, records, and so forth. but what about the players? nope. they are focused on the win. they are focused on doing the right thing to get the "W". they endlessly practice plays designed to propel them into a win. they are not oblivious to the stats, but they keep their eyes on the goal - the win. who cares if i got a triple-double if we don't win? what good is throwing my 49th touchdown pass if we don't finish with a superbowl ring? they don't measure their success a pass or basket at a time. it's a necessary part of the process leading them to a greater goal. trading is no different. am i doing the right thing (as a trader)? am i following my plan? am i staying focused on the trade? am i executing at 100%? if so, i am doing a lot to improve my chances at winning the big game - and making my boss's job easier.


more to follow ...
Good little read that. Needs to be revisited every now and then.

When you talk about boss and trader, are you talking existentially about that? i.e. There might actually be a boss there running a trading business and you might be the trader but if you were by yourself trading for yourself then you would wear both hats but need to keep them separated and only "boss yourself" at the end of the day when trading is over?

If you are both the boss and the trader then that might make it easier to take on a new role at the end of the day and look at the books from a different point of view. Critique the closeness to which the rules were followed etc. As a trader you're trying to follow the rules but also trying to "win each play" so that at the end of the match you have enough "plays" to win the game.
quote:
When you talk about boss and trader, are you talking existentially about that? i.e. There might actually be a boss there running a trading business and you might be the trader but if you were by yourself trading for yourself then you would wear both hats but need to keep them separated and only "boss yourself" at the end of the day when trading is over?

bingo
separation is key.

quote:
If you are both the boss and the trader then that might make it easier to take on a new role at the end of the day and look at the books from a different point of view. Critique the closeness to which the rules were followed etc. As a trader you're trying to follow the rules but also trying to "win each play" so that at the end of the match you have enough "plays" to win the game.


exactly. i think that is a key component too often overlooked or never considered. as you stated, multiple hats are worn, but when trading the trading hat has to be worn. when that task is (temporarily) complete, then you can switch to the boss hat and look into your trading business. as usual, you are right there brotha, right on point!

ya know, i'd be curious how many successful traders were small-business owners prior to being an independent trader. my guess is that they stand a better chance at surviving than the non-business owning beginner.
Have you read Edward de Bono's Six Thinking Hats?

It's an interesting read. He basically assigns 1 of 6 different hats to the specialist skill that is required during a meeting and only when that specialist skill is required and otherwise shuts out the other hats when they are not appropriate.

I agree that a small business thinking mentality is required for successful trading. Many skills needed there - and to blend them at the right time.
From the back cover:

Six Thinking Hats can help you think better-with its practical and uniquely positive approach to making decisions and exploring new ideas. It is an approach that thousands of business managers and corporate leaders around the world have already adopted with great success.

"The main difficulty of is confusion," writes Edward de Bono, long recognized as the foremost international authority on conceptual thinking and on the teaching of thinking as a skill. "We try to do too much at once. Emotions, information, logic, hope, and creativity all crowd in on us. It is like juggling with too many balls."

The solution? De Bono unscrambles the thinking process with his "six thinking hats":

# White Hat: neutral and objective, concerned with facts and figures
# Red Hat: the emotional view
# Black Hat: gloomy and negative, the "devil's advocate" hat
# Yellow Hat: sunny and positive
# Green Hat: associated with fertile growth, creativity, and new ideas
# Blue Hat: cool, the color of the sky, above everything else-the organizing hat

Through case studies and real-life examples, Dr. de Bono reveals the often surprising ways in which deliberate role-playing can make you a better thinker. He offers a powerfully simple tool that you-and your business, whether it's a start-up or a major corporation-can use to create a climate of clearer thinking, improved communication, and greater creativity. His book is an instructive and inspiring text for anyone who makes decisions, in business or in life.
i have not read any of De Bono's work ... yet


thanks for the heads up. from the reviews, he seems like a colorful fella:
(from Boris's review at http://www.amazon.com/gp/product/0316178314/ref=pd_sim_b_1/102-2792501-6914535?%5Fencoding=UTF8&v=glance&n=283155):
quote:
Edward de Bono does not suffer from a small ego. The first sentence of the preface to his book is: "The Six Thinking Hats method may well be the most important change in human thinking for the past twenty-three hundred years." Digest this and two more pages of obnoxious self-advertisement that follows. Then put the book down. After an hour continue to read the rest of the book. It is worth while.

with some innovative ideas. sounds like a good mix for a good read.
This hat's concept goes to the idea of focus which is a prerequisite to having genuine discipline. Mark Douglas wrote in his steps to success chapter: step one is to stay focused on what you need to learn.

It has been my experience many traders suffer from information overload, which includes indicator overload. Douglas observes unlike most professions, in trading more data/information/indicators leads to confusion (via. conflicting signals). Doug Zalesky in his 25 point mantra speaks to this in his "Be a Bricklayer" analogy, ie. keep your method simple and efficient, and focus on executing it over and over. In #18 "Make a little bit everyday" he relays his own experience "When I was a young bond trader, my goal every day was to make 10 tics." So his focus (as a pit local) was to execute a very simple scalping method on the trading floor with the goal of making his 10 tics each day. So how many hat's does it take to do that ?

Here are a few "job interview" questions I would pose to a prospective trader...
When your trading what are you focused on ? What distractions occur regularly ? Do your trading signals conflict or contradict each other ? If so, how do you resolve the conflict and make a quick decision and act with confidence and without hesitation ? How long does it take you to work all that out before you feel comfortable enough to actually place an order in the market ?
quote:
Originally posted by pt_emini

This hat's concept goes to the idea of focus which is a prerequisite to having genuine discipline. Mark Douglas wrote in his steps to success chapter: step one is to stay focused on what you need to learn.

It has been my experience many traders suffer from information overload, which includes indicator overload. Douglas observes unlike most professions, in trading more data/information/indicators leads to confusion (via. conflicting signals). Doug Zalesky in his 25 point mantra speaks to this in his "Be a Bricklayer" analogy, ie. keep your method simple and efficient, and focus on executing it over and over. In #18 "Make a little bit everyday" he relays his own experience "When I was a young bond trader, my goal every day was to make 10 tics." So his focus (as a pit local) was to execute a very simple scalping method on the trading floor with the goal of making his 10 tics each day. So how many hat's does it take to do that ?

very good points, pt. i agree. every charting program boasts 100+ indicators. there are dozens of commodity and currency markets, plus thousands of individual stocks, etfs, and so forth. exabytes of data available. too bad information overload doesn't lead to insight overload. also, regarding DZ, here are a couple links for anyone interested:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1058+18520,00.html

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1058+22485,00.html

http://chuckhays.net/trading/25%20rules%20of%20trading.pdf

quote:
Here are a few "job interview" questions I would pose to a prospective trader...
When your trading what are you focused on? What distractions occur regularly? Do your trading signals conflict or contradict each other? If so, how do you resolve the conflict and make a quick decision and act with confidence and without hesitation? How long does it take you to work all that out before you feel comfortable enough to actually place an order in the market?


good questions, pt, i like where you are going with it.