'Trading Systems that Work'

'Trading Systems that Work' is the title of a great book by Thomas Stridsman. He outlines how to 'Build and Evaluate Effective Trading Systems'. I have used his concepts extensively when building, testing and optimizing my 35+ Systemic Trading Models.

TradeStation, the platform I use to model and autotrade my Systems, offers online tutorials (for subscribers) on the following:

• Introduction to Strategy Trading
• Strategy Testing and Optimization
• Strategy Automation
• Introduction to EasyLanguage

Learning how to build robust trading models and then learning how to technically execute them takes a lot of time. And this is just the cognitive part. Learning how to emotionally trade them takes time as well. It doesn't matter if we are discretionary traders or system traders, pressing the buy or the sell button when we are supposed to is a skill set in and of itself.
For anyone interested in using TradeStation, Wealth-Lab or any other platform to build Systemic Trading Models, or even to just build an Indicator, please understand that these platforms are like rocket ships in their capabilities. Let us learn how to effectively use their functions before we take off. We don't need to crash and burn to learn a lesson!
Do your research and testing before putting your hard earned capital on the line. In my view, 'Trading Systems that Work' and the TradeStation online Tutorials are a good place to start.
http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=stridsman
http://www.tradestation.com/default_2.shtm

Odds and Ends

• a very big shout out to Eric and Becky for hosting a great BBQ on sunday for VCM traders and all the other traders Eric is connected with...it was great to meet/see Eric, Becky, Dave, Ralph, Jackie, Jed, Tom, Brian, Eden, Bill and Joey...
• the July 2009 edition of Technical Analysis of Stock & Commodities (TASC) has a very good interview with Ernest P. Chan regarding how to construct System based Trading Models...
• took my own advice, and this past thursday instead of watching my 'SPY Gopher' (http://stbsmb.blogspot.com/2009/06/spy-gopher-generated-entry-signal-for.html) position minute by minute, i went out and had lunch with my wife and son...we had a great time...even shopping at Target was a refreshing change of pace from my usual midday activity of screen staring...
• 150 years for Bernie Madoff is not enough...
• Texas Holdem is a very interesting poker game...just started playing

The Holy Grail of Trading

What is the Holy Grail of Trading?

Is it that one strategy that never loses?

Is it that one Indicator that never fails?

OK, OK, we know (hopefully) these don't exist.

Maybe its the way Warren Buffet invests in companies? He is one of the most successful investors in world, so he obviously knows what he doing.

Maybe its the way George Soros fearlessly trades the FOREX market?

Maybe its the way Bill Ackman of Pershing Capital astutely navigated this historic bear market?

Maybe its the way Jim Simmons works with his team of 50+ PhD's at Renaissance Technologies to scientifically model and trade the global capital markets?

At least we know its not the disgraceful and treacherous way Bernie Madoff went about his business, to the ruin of all those that trusted him.

So if its the way Buffet or Soros or Ackman or Simmons trade, then why don't we just hire them to manage our money?

Well, if you are reading this, then perhaps it never occurred to you to have someone else manage your money. Or maybe we let some hedge fund guy or mutual fun gal do it for us, and they didn't perform up to their benchmark or our expectations?

But ultimately, I say its because we want to trade the market ourselves and have a crazy notion that we can do it as well if not better than these trading masters.

So if we are going to do it ourselves, we better have an edge, a plan so to speak. And we have to be able to execute this plan. If we don't then the capital markets of this world will eat us, eat us alive.

I suggest the key, the Holy Grail of trading, is to have a trading plan that fits our personality. In the end, if we are the ones that are going to push the buy and the sell buttons, then these actions must be derived from our own cognitive analysis of market behavior and then supported by our emotional intelligence of our internal process.

Yesterday, JE wrote in a very personal manner, about the struggle to find a trading strategy that fits his personality (http://myestradingjournal.blogspot.com/2009/06/off-hours-two-year-anniversary.html). In my view, developing a trading plan that fits our personality is the key to trading survival, success and ultimately mastery. For me, 13 years into this game, it continues to be a work in progress.

Here is a copy of my response to him:

*******************************************************************************

JE, great post and follow up comments...

i strongly agree that the key to trading the markets, the holy grail so to speak, is to have a trading plan that fits the trader's personality...

there are hundreds of trading strategies available fully detailed in books, magazines, online, etc...if all we had to do was pick one and trade it, we would all be millionaires in due time...however nearly all of us fellow traders are not...

why?

i think the key is whether or not we can psychologically/emotionally trade the plan....

can we take the trade when the signal is given?

can we exit at the defined profit target?

can we take the stop loss?

can we withstand the periodic drawdown?

can we sleep at night?

can we recognize our fear, our anxiety, our greed when the position is on, and still trade the plan, even if it means continuing to feel these emotions?

can we deal with the uncertainty of an unknown outcome?

i pose these questions because i believe they are essential emotional/psychological markers of our ability to be truly successful traders...

to achieve trading mastery, we have to answer 'YES' to each question...

currently, this is the center of my work as a trader, and it's a bitch...

adam

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ECRI's Weekly Leading Index (WLI) Growth Rate Rises Again

"Following a 28-week upturn, WLI growth has broken into positive territory for the first time in over 22 months -- an affirmation that an end to the recession is at hand," said Lakshman Achuthan, managing director at ECRI.

http://www.businesscycle.com/news/press/1466/

http://www.businesscycle.com/home/

'NYSE TICK Normalized' Indicator for TradeStation

I put together a TradeStation Indicator for a 'NYSE Normalized TICK', such that the High TICK and the Low TICK will be shown as a % of the Total Number Securities Traded on the NYSE that day. This will work for Daily Bars as well as Intraday Bars.

However, the results didn't appear that useful for intraday scalping purposes (at least how I understand how a TICK scalper would use them). My sense is there isn't a meaningful difference between the total number of securities traded day to day, so that normalizing the TICK extremes doesn't yield an edge over using the raw TICK.

If anyone is interested in this Indicator, please let me know and I will send it over. I don't think there is anything useful here though.

'BTD Index' generated an Exit Signal

'BTD Index' generated an Exit Signal for Thursday's Close. The Modeled position (NDX) posted a 1.28% gain, with the actual Trading position (NQU09) posting a 1.15% gain (including commissions). This profitable trade created a new high for this model's Equity Curve (shown above). The position was held for 8 trading days (http://stbsmb.blogspot.com/2009/06/btd-index-generates-entry-signal_16.html).

This was the first position this model has generated since December 2007 and the 'Buy The Dip' (BTD) concept for the NDX was successful (using the specific variable settings for the Long Term Moving Average, the Short Term Moving Average and a Standard Deviation calculation of that Short Term Moving Average; other settings for these variables may lead to different results).

Perhaps doing some research on how the NDX historically performed over the next 3, 6 and 12 month periods after:

• a profitable exit at the Price Target;


• an unprofitable exit at the Price Target;


• an unprofitable exit at the Time Stop

would yield some insight into where the NDX may be headed over the next 1-4 quarters.

'SPY Gopher' generated an Entry Signal for Wednesday's Close

'SPY Gopher' has generated an Entry signal for the SPY at yesterday's Close. This is one of my favorite systems. I have been trading this model since about Trade 65 (Equity Curve chart above). Whenever it goes through a drawdown, it has always gone on to ultimately make new Equity Curve highs. And it has just generated another entry signal.

Model Performance Stats:

• Model Tracking Vehicle=SPY
• Start Date=2/2/1993
• Number of Trades=94
• Average Trade Return=1.2%
• Win Rate=69%
• Average Win/Average Loss=1.4
• Profit Factor=3.18

The caveat with this model is its Money Management Stop is very high, currently about 3.5%. Historically, if I can handle risking that much capital on the trade, the performance of the model over the following year has been very good. The model generates 5-6 trades/year, which on average returns 6-7%/year. Each position is modeled to be open for 5 days unless the Money Management Stop closes the position sooner.

Disclosure: Long the ESU09.

Disclosure: The performance results shown above are for Model analysis purpsoses and do not include commission or slippage. The model is built on data from the SPY, but I trade the model with the ES e-mini. Actual trading results from the ES usually differ from the model results of the SPY, with the ES showing somewhat weaker performance data. Nonetheless, I still trade this model with the ES and when executed according to the plan, it has generated consistent profitability for me.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

Gorilla Business: Roots of economic behavior studied at zoo

I found this video/article regarding the study of gorillas, symbolic thinking, decision making, evolution and economics to be very interesting. Check it out here:

http://www.boston.com/video/viral_page/?/services/player/bcpid14094180001&bctid=23733761001

http://www.boston.com/business/articles/2009/06/08/franklin_park_gorillas_learn_economic_decision_making_in_study_of_roots_of_human_behavior/

'NB #2 SPY' Generated an Exit Signal for Wednesday's Close

'NB #2 SPY' Generated an Exit Signal for Wednesday's Close. The position was held for 1 Day as is directed by the model. The Money Managment Stop was not hit. The position generated a profit of about 0.8%, very close to the average trade return of 0.7%.

The position had been up nearly 2% by late morning but then pulled back prior to the FOMC announcement at 215pm. Market participants found things to dislike about the announcement and the SPY continued to drop and just about filled its opening gap up. A rally during the last 45 minutes brought the SPY back up to close about 0.8% higher than yesterday.

A bit of a roller coaster but with System Trading this is par for the course. Once the model has been built, the 'plan the trade' portion is complete and I can put my IQ on the shelf. Once an entry signal is generated and the position is put on, I have to pull my EQ off the shelf and 'trade the plan'. Now, no matter what kind of ride the market goes on and no matter what my emotions may go through, I have to follow the rules of the plan.

I was not happy to give back the near 2% intraday gain, but there was nothing I could do about it except to 'trade the plan'. Needless to say, I was happy to see the EOD bounce back to decent profitability. Interesting how my 'happiness' was strongly corelated to how this position played out. I bet my 'happiness curve' would have been higher and steeper if I was not monitoring this position minute by minute today, but rather playing with my son and/or hanging out with my wife. I think one of the skills I need to continue to develop is to emotionally detach myself more and more from the outcome of any individual trade, knowing that if my overall System Trading Portfolio is full of robust trading models, then the profitability will come over following 12 months. Currently, I would give my System Trading Portfolio a B+ for robustness. Emotionally digesting the Portfolio's robustness and profitablity is a work in progress.

However, I did greatly enjoy the telephone conversation I had with my trading friend JE (over at http://myestradingjournal.blogspot.com/). He found a unique way of using the ATR Volatility Bands that I developed and have written about. It just goes to show that the creative process knows no bounds, and what one has not concieved of, another has already put into motion. Nice job JE!

'NB #2 SPY' Generated an Entry Signal for Tuesday's Close

NB #2 SPY' Generated an Entry Signal for Tuesday's Close. The position is only held for 1 Day, so unless its Money Management Stop is hit intraday today (Wednesday), the position will be closed at 4pm.

'NB' stands for 'Narrow Bar'. In addition to Tuesday's Daily Bar in the SPY being the narrowest bar for the most recent X number of days, there are two additional price related filters. This model has a Profit Factor=3.14 (which is above the 3.0 that I strive to find and trade), average trade returns 0.7% (excluding commission and slippage) and generates 2-3 trades/year.

At the time of this posting, the position is up about 1.5%. Who knows where this will be by the end of the day, especially since today is FOMC day. But my plan is to hold it until 4pm or I get stopped out.

Disclosure: Long the ESU09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

'ATR (Average True Range) Volality Bands' Indicator is ready!

I have completed the material for the 'ATR Volatility Bands' Indicator and have sent it out to fellow traders and TradeStation Programmers. Also included is my 'ATR Volatility %' Indicator.

If you would like a copy then let me know.

I hope folks find it useful and can perhaps improve upon its functionality.

Having some trouble conceptualizing the Standard Deviation based band width for the ATR (Average True Range) Volality Bands

I am still working on it, but progress has been ssssssssssllllllllllllllllooooooooooowwwwwwwwww...

'SHOE SPY' generated a Short Exit Signal

'SHOE SPY' generated a Short Exit Signal at the 4pm Close on Friday 6/19/2009. The tracking vehicle (SPY) took a 0.4% loss, though the trading vehicle (ESU09), took a larger % loss, perhaps due to the ESU09 trading above fair value or something, which obviously did not work in my favor. I imagine that over a large enough period of time, the periodic discrepancy between the SPY and the ES will even itself out.

So this questionable model booked another losing trade. I will have to revisit the following:

• stop trading the model


• rebuild the model


• reduce the position size even further for future entry signals

When my Portfolio is both Long and Short, what direction do I root for?

Right now, my System Trading portfolio is about 10% long the NQU09 (via 'BTD Index': http://stbsmb.blogspot.com/2009/06/btd-index-generates-entry-signal_16.html) and about 60% short the ESU09 (via 'SHOE SPY': http://stbsmb.blogspot.com/2009/06/shoe-spy-generates-short-entry-signal_18.html). I find myself rooting for the long and then rooting for the short and then rooting for the long and then.... Since the ES and NQ are highly correlated, I should expect them to pretty much move in tandem with each other. If I keep on rooting for both, then I will surely make myself crazy, yet I find that I am doing it anyway.

So if I am going to root, then which direction should I root for? On balance I am net short so I should root for the downside.

By why root at all? This is not professional baseball that has me rooting for the home team (Go Red Sox!). However, the very notion of rooting suggests I am too close to the trade emotionally, too involved in its outcome.

If my models are robust, then the winning trades and their profits will come over the next 12 months whether I root for them or not. While the rooting can be fun, perhaps it is a sign of being too tied up in the trades outcome, of too much ego involvement.

Perhaps this dynamic is also related to my tendency to exit winning trades too soon, specifically if they have not reached the price target or the time stop. Going back to the baseball analogy, if my team is winning, and I can call the game early, then I get to book the win and thus improve my record! But somehow I don't think the opposing team, the umpires and MLB would allow such a thing. Since I trade on my own, I am also my own coach, manager and umpire. Whenever I am inclined to exit a trade early, I should consult my coach, manager and umpire to see if it is an acceptable thing to do. Somehow I don't think they will!

This has been an informative post for me to write. I hadn't previously made the connection between rooting and exiting a wining trade early. Perhaps there really isn't a connection and I just went off on a tangent. But perhaps there is. Since it is a pretty human thing to do, I don't know if I can stop rooting for a particular direction (long/short) or a particular sports outcome (go Sox!), but at least I have brought this dynamic to my attention. This in itself is a win.

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Confession: As a boy growing up in New York during the 1970's, I was a New York Yankee's fan. I have been living in Massachusetts since 1986, and became a Red Sox fan in 2003. My wife is a huge Sox fan, and we have watched or listened to nearly every Sox game since 2004. It has been great fun being on both sides of one of the greatest rivalry in professional team sports. I have tremendous respect for the Yankees and their organization, but when it comes to rooting I am all about the Sox. Periodically, I like to remind my wife that I was a Yankee fan. She responds with the usual grimace when I express such blasphemy.

**********************************************************************************

Disclosure: Short the ESU09, Long the NQU09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

ECRI's Weekly Leading Index (WLI) Growth Rate Rises

"With WLI growth rocketing up almost 30 percentage points in six months, it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

http://www.businesscycle.com/news/press/1461/

http://www.businesscycle.com/home/

'SHOE SPY' generates a Short Entry Signal

'SHOE SPY' has generated an Entry Signal on the Short side for the Thursday Open of the SPY. 'SHOE SPY' stands for 'SHort Option Expiration SPY'. The trade is due to be Exited on Friday June 19 at the 4pm Close, unless the Money Management Stop is hit before hand.

This Strategy is based on the behavior of the SPYder's during Option Expiration week, and is built on data that goes back to 1993.

This Short biased strategy performed extremely well during the bear market of 2000-2002 (Trade #32-52 on the Equity Curve Chart above). Though it did hit an new Equity Curve high in January 2008 (Trade 78), it has since booked its largest drawdown, during a period when the S&P 500 dropped by nearly 50%! The model appears to be out of sync with the market behavior during Option Expiration week for the past 18 months. The model may be broken.

I used to trade this model with 100% of capital, but I reduced that to 60% of capital when I put the trade on this morning. As of about right now, the position is about 1% out of the money.

I may need to do one or more of the following:

• stop trading the model


• rebuild the model


• reduce the position size even further for future entry signals

Disclosure: Short the ESU09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

'BTD Index' generates a Long Entry Signal

All of my Strategy Trading models have a max holding period of 1-8 days except one, the 'BTD Index' model. This model generated an Entry signal for the EOD yesterday, Monday June 15th. The max holding period is 20 days. This model has the longest max holding period of any of my Strategy Models.

'BTD' stands for 'Buy The Dip'. The concept is simple: while in a Long Term uptrend, buy the Short Term dip. After a Short Term correction, the Longer Term trend should re-exert itself and send the tracking vehicle back up. This is the first Entry Signal generated for this model since December 2007.

What happens if the tracking vehicle (NDX: NASDAQ 100 Index) does not resume its Longer Term uptrend? Well that can suggest a Longer Term trend change (from up to sideways or from sideways to down). How do I protect myself from this scenario? A time based Stop. This is the only model that I have that does not use a price based stop. It's stop is based on Time, and if after 20 trading days the tracking vehicle has not reached my price target, then the Time Stop exits the trade. The price target is the Short Term moving average (middle red line in the charts above).

I believe the key to optimizing the potential profit from the overall concept is in how the 'Long Term' uptrend and the 'Short Term' dip are defined. This is one of the benefits of Systems Trading: all of the variables in the model are specifically defined. The Long Term variable is a longer term moving average (magenta line in the charts above), and the Short Term variable is the lower Standard Deviation band (lower red line on the charts above) derived from a Short Term moving average. The Short Term variable's standard deviation calculation is derived from a Bollinger Band.

The first chart is the current Entry Signal. The second chart shows numerous Entry and Exit Signals for this model from late 2007. I use the NASDAQ 100 (NDX) as the tracking vehicle, and the relevant e-mini future as the trading vehicle (NQU09).

Disclosure: Long the NQU09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

Current ATR Volatility Band Increment: Descriptive or Predicitve?

As it turns out using the current ATR Volatility Bandwidth increment of 0.5 ATR's (0.5, 1.0, 1.5 ATR Bands), with the current ATR lookback period of 8 daily bars, shows the QQQQ finding intraday support at roughly -1.5 ATR's (35.63) from Friday's close.

Is this a coincidence and thus just appears to describe the current environment, or does it in fact have some predictive value of where future intraday pivots might form? I say its a good question.

I need to do some more research on the optimal ATR Volatility Bandwidth Increments to have more confidence in whatever bandwidth is ultimately used. Additionally, I need to pay attention to the following

• Deviation of Current Bar's ATR Volatility compared to average ATR Volatility during a large sample period (1-2 years worth of daily bars), would provide true historical deviation from the average, and thus might increase the predictive value of the ATR bands placed over the next bar's intraday chart, especially if the deviation forms a bell curve;


• We should also recognize that the number of Daily Bars that we are using for our lookback period is an important variable (currently using 8 bars) in the ATR Volatility calculation;


• Should the current days ATR Volatility be included in the Band calculation? Currently it is, but on days with higher than average volatility (like today), it will skew the bars outward. I will build a test version of the bands that does not use the current daily bar's ATR volatility.

ECRI's Weekly Leading Index (WLI)

Though my daytrades can be measured in minutes/hours, and my swing trades can be measured in hours/days, and my investments can be measured in weeks/months, I still pay attention to the overall fundamental outlook of the US Economy.

I use the Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI: http://www.businesscycle.com/) to help form my longer term view of where I believe the US Stock Market is headed. ECRI updates the WLI with a free publicly available news release every Friday morning (http://www.businesscycle.com/news/press/).

The premise of the WLI is that there is some economic data that sends signals (Leading Indicators) about upcoming economic activity that may suggest growth or contraction in the coming quarters. ECRI has built models with data that go back to the early 1900's, so the assumption is that the models are robust and contain not just a descriptive value of the current enviroment, but also a predictive value of the future environment. And isn't it the future that we as traders/investors are most interested in?

If you want to see what kind of economic growth may be ahead of us, then follow ECRI's WLI.

Monday morning's directional bias

Bias to the Short Side for daytrading stalks on the QQQQ

wow, that was quick: first scalp opened at 945 am and closed at 949 am for $0.13/share on the QQQQ...looking to short some more on a bounce back up...

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security***

ATR (Average True Range) Volality Bands for Intraday trading

I have been working on building an Indicator for TradeStation that places an ATR (Average True Range) Volatility Band on an Intraday Chart. This indicator may help me get a sense of what the probable trading range for the current day would be.

This seems to be working pretty well for me with the QQQQ's (and other major market indices), though may be less useful with individual stocks as they are much more subject to headline risk.

The key thing to having more confidence in the Bands, is to determine how far apart the bands should be. I had been tinkering with 0.5 increments (ie, 0.5, 1.0, 1.5 ATR's), Fibonacci increments (0.34, 0.55, 0.89, 1.44 ATR's) but this may not be that representative of probable ranges.

In the snapshot above, the upper graph has 3 ATR Volatility Bands (blue, magenta, cyan) around each days Intraday Chart. There is also Baseline (dark blue) for each day based on the previous day's Close. The lower graph has the Daily ATR (normalized by ATR/Closing Price), and an ATR moving average.

I am now thinking of using some kind of Standard Deviation calculation to have more confidence that the band width is based on something relevant (perhaps a Normal Distribution) as opposed to an aribtary band width increment of lets say 0.5 ATR's. Any suggestions on this would be helpful.

If anyone is interested in checking out this TradeStation based ATR Volatility Band Indicator, then let me know, and I will send it out to you when its fully coded, probably a week or so from now.

Wipeout

During the 12 day span from May 22nd through June 9, I had 37 consecutive winning daytrades. The losing trade finally arrived at the EOD on June 9. I was pretty psyched to have had this run scalping the QQQQ's for about $0.03/share profit. But the way I was playing it, suggested that if there was an extended move against me, I might run out of buying power/stop out before I could get back to breakeven.

Wipeout!! Well, on Wednesday June 10 I got crushed and had to shut myself down with the Daily Loss Limit. I was inclined to scalp to the short side, but the gap up wasn't big enough, so I decided to play it to the long side. Built up my size too soon, and stopped myself out at 36.29 around 2:15 pm, which just happened to be the low of the move down, and the QQQQ's then rallied nearly 2% into the close, which was the move I was looking for.

However I wasn't pissed. Actually I was glad it happened, because I knew there was something not quite right with my method. I realized that I wasn't paying enough attention to the charts, and more particularly, the appropriate setups that would help optimize my average entry price.

On Thursday, I decided to switch from scalping mode, to stalking mode when daytrading the QQQQ's. This might be a breakthrough for me. I made significantly less trades, but averaged significantly more profit/share stalking ($0.12) than scalping ($0.03). I even profitably traded UNH in this manner to the Long side shortly after its gap down open.

Today was another good day stalking the QQQQ's with a downside bias until about noontime, yielding about $0.07/share profit. I stopped daytrading around then to continue to deal with some IT issues.

System trading wise, my models have not generated any entry signals in about 9 days. Nothing is setting up right now, but who knows what will happen by 4 pm when the signals are officially generated.

IQ and EQ

i see successful trading as a combination of two skillsets: the intellectual (IQ) and the emotional (EQ)...the intellectual will plan the trade and then the emotional will trade the plan...the greater
these two skillsets and the more in balance with each other they are, the greater the chances for not just profitable trading, but trading mastery...

i have been trading for 10+ years, have had a fair amount of success, and am still finding big holes in my game...most of my success has been swing trading stocks, options, and stock index futures, with holding periods of 1-5 daily bars, though sometimes more depending on the model that i am using for that particular trade...

i am discovering that i am a horrible day trader!! i think the reason is that as i don't have a firm understading of the technical setups, thus my day trading plan is not good...

my primary income stream comes from swing trading my 25+ models of US stock index behavior...my swing trading plan is very good, but could always use some improvement...

the biggest thing that i have learned since becoming a prop daytrader this past summer, is the importance of emotional intelligence (EQ)...with the great moderators at the prop daytrading firm constantly in my ear about planing the trade and trading the plan, i have become a significantly better swing trader...their message isn't entirely new either...i was just more ready to hear it and change my behavior...

my personality has always tended to be on the introspecive side...this has helped me see my own behavior...losing a lot of mony from the summer of 2007 through the summer of 2008 because i didnt follow my swing trading plan (too scared), significantly helped motivate me to change my behavior...since the summer of 2008, i have done an increasingly better job at following my trading plan, stemming the losses, and now generateing consistent gains...my capital accounts are turning back up and i believe that my emotional intelligence is increasing...today, i am trading the plan 95% of the time...what about the other 5%? well, i am working on it...my goal is to trade the plan 100% of the time, no matter how i feel...i am almost there...

we all want to succeed at this incredibly difficult endeavor...not everyone will...if we really want to though, we have to look at ourselves as clearly as possible and identify our intellectual and
emotional strengths and weakness...if we dont, then the market will do this for us, and the results will be ugly...

if we do and are then capable of making the cognitive changes when planing the trade, and the behavioral changes to correctly trade the plan, then we just might have a chance at not only making some money, but also achieving trading mastery...