Showing posts with label EQ. Show all posts
Showing posts with label EQ. Show all posts

Thursday, October 22, 2009

traderpsyches: “To be better risk-managers or traders, you need to become conscious of your feelings and emotions. Then, you can be aware of your biases and you’ve got a better data set.”

If anyone is interested in becoming a better trader or investor, then I highly recommend the work of Denise Shull over at traderpsyches. The following comes from a recent article:


'...Feeling and emotion are part of your analysis and decision-making,” she says. “To be better risk-managers or traders, you need to become conscious of your feelings and emotions. Then, you can be aware of your biases and you’ve got a better data set.”

She says modern portfolio theory and behavioural finance have neglected to explain how individuals’ views of the market are shaped in the first place, while context-free trading formulas and market theories fail to describe financial markets accurately.

“These are social markets,” she says. “All you’re doing is betting on what other people are going to pay for. We’ve tried to turn that into an algebra problem and it’s not.”

This is challenging stuff – not just for the male-dominated world of trading. Ms Shull suggests that what she is proposing is nothing less than “rethinking thinking” – challenging our ingrained views about how we should use our brains in the first place.

“Our psyche uses feelings and emotions as a resource, but we’ve all been brought up to think it’s not a resource,” she says. “It’s been denigrated. We’ve got to teach people how to reclaim it and analyse it. It’s always been there, colouring our perceptions of the market.”

By telling traders to set aside these emotional data, Ms Shull maintains, conventional wisdom goes against human nature. “We’re fighting the way our brains work,” she says. “Let’s start working with our brains. If you do, you’ll be able to manage risk better and read markets better – and have a chance of beating the people who aren’t.”

She is sceptical of the notion that high frequency trading has removed feelings from the activity. On the contrary, Ms Shull says, algorithmic trading strategies are stuffed full of assumptions and sensitivities – and deciding when to shut them off can be emotional...'

'...Ms Shull’s technique is founded on identifying feelings and articulating them. “Feelings and actions are separate things,” she says. “Everybody says: ‘control your feelings’. But you don’t have to control your feelings, you have to control your actions.

“However, because people haven’t been taught to deal with feelings as data, the energy of the feeling goes straight to the action – you act out the fear, the greed, the anger, because you haven’t been taught to look at fear, greed and anger as data first.”

She advises traders to identify their emotions and analyse how much they are connected to their trading positions as opposed to external influences. It helps to articulate them – if not to a psychologist then by speaking into a tape recorder or writing in a journal.

This way, traders can know if they are anxious because of something in their personal lives, or because of their feelings about the market.

Ms Shull says emotions can sub-consciously signal trading opportunities. “Your brain has been watching these markets for years,” she says. “It knows patterns you’re not conscious of, and it’s communicating that on a feelings-based level...'

Monday, October 19, 2009

Trader Psyches' 'Psychological Capital Tips and Tricks', 10/18/2009 issue, highlights the 'fear of missing' concept.

The following is taken from Trader Psyches' 'Psychological Capital Tips and Tricks', 10/18/2009 Issue (i can't find a link to this issue or where to sign up for the free distribution of it....if you are interested, then email them at info@traderpsyches.com ):

"...Behavioral and neuroscientific evidence has shown in multiple studies that the fear of missing out is more motivating than the fear of losing money or the the knowledge that you have a better chance of making money if you wait.(Weber & Johnson, Columbia)

What can you do? You know this happens and after-wards you say "how stupid" and promise not to do it again. But then...

The key lies in developing an awareness level of your own feelings, urges and motivations that equals or even surpasses that of your awareness of what the markets are doing.

Using that valuable knowledge of your own biases, impulses and feelings can literally be the very best risk management tool you have!..."


Wednesday, September 30, 2009

systemic trading for the discretionary trader: can it work?



  • now this is where things are starting to get tricky for me...
  • my systemic swing trading system 'SPY Gopher', which was opened on last thursday's close at 1046.00, is due to be exited at tomorrow's close, if its money management stop is not hit...the stop is currently around 1019.00...
  • all of the volatility over the past few days, especially today is making me nervous...i hate to see a position that is nicely green, move back to breakeven...yesterday's move in the ESZ09 to 1066ish, had the position up 2%, only to see it go to breakeven and then to red this am...
  • i am now finding myself wanting to lock in some of the ESZ09 gains even though the systemic model is not due to be closed until 4 pm tomorrow...
  • fear is leading me to change my plan...
  • though today's rebound from the early morning selling appears bullish, i am afraid that this is just eom, eoq window dressing and the rug will be pulled out from the market tomorrow...i feel this way, even though i am bullish on the ES in the longer term...it seems a bit conflicted, but this is what i am feeling...
  • i am long 4 ESZ09, and have put offers out at 1056.50, 1063.50, 1067.50 and 1072.50...the thing is, i am not supposed to be offering anything out until 4 pm thursday when my market orders are released...right now i almost can't help myself...the desire to lock in some gains is very strong....as i am writing this, my offer at 1056.50 has been hit...
  • i am being driven by fear, by the need to be safe...
  • i am also driven by the need to book some gains and pay my bills...
  • good traders might seek to lock in gains...
  • but great traders can deal with the uncertainty and let the market or the model tell them when its time to get out...
  • sometimes i will give myself credit and say i am a good trader...
  • i have never considered myself a great trader...i want to be a great trader...
  • great trading will require even more emotional fortitude than i currently have...trading with real money is not an academic exercise...it is full bodied and emotional...i can only handle so much uncertainty...
  • so exiting one ESZ09 contract at 1056.50 feels good, because i have booked some gains and have less exposure...however, i did not follow my systemic trading plan for this model, and this feels bad...
  • like i said, this is the tricky part...
  • at heart, i am a discretionary trader who trades a lot of systemic models...is this in sync? probably not...am i trying to grow? definitely...
  • perhaps the next step is to really recognize that i need to generate enough money every month to pay my bills and if i have to lock in some gains on my systemic trading models to accomplish this, then so be it...
  • if the emotional uncertainty of an open position is too much for me, then i have to continue to trade even smaller or lock in some gains on systemic trading models that are in the money and are getting close to being exited, until i can build my emotional fortitude back up, and then trade the systemic trading models 100% the way they are supposed to be traded...
  • right now, i would say that i trade the systemic trading models the right way about 95% of the time...this is a big improvement from a few years ago, when it was perhaps 70% of the time...
  • hmmm, this is a lot of obsessing regarding 5% of my behavior...
Disclosure: Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

Monday, September 28, 2009

9/28/2009 11:30 update: NQ



  • wow, the bulls are back in town...i am heavily position for their return, though i did not think they would bound back in so adamantly...
  • in response to their quick return, i started monkeying around with my first sell level of 1726.50...i started looking a bit closer at the 15M chart and saw a minor pivot around 1725, so changed my offer from 1726.50 to a market order when the NQ was trading in 1722/23s around 10:08 am and got filled at 1722.25...
  • +8.17 NQ points/contract, 1 contract closed...
  • the impetus for the order change was fear...since the run up occurred so quickly, i was afraid it could drop back down just as quick...i am also long a full position in the ES via the 'SPY Gopher' model...i guess i wanted to reduce some exposure and take advantage of the quick run up...
  • it is this type of dynamic which continues to effect my game...on many occasions, i lower my offer or raise my bid because i am afraid the NQ will not move to the level that i originally targeted...sometimes it works in my favor, and sometimes it doesn't...i don't have enough stats on this to determine if this order level change, mostly influenced by fear and somewhat influenced by re-analysis, is helping or hurting my discretionary performance...
  • i am not sure if i even want to commit to finding out...i feel as if i have so many trading related things to attend to, that i just don't have the time to get some stats on whether discretionary swing trading plan changes are helping or hurting my performance...maybe i am just making excuses...this is something for me to think about...
  • i am currently offering 1 NQZ09 at 1736.50 and 1 at 1746.50...
  • i am currently bidding for 1 NQZ09 at 1713.50...if this fills, it won't bring my avg cost immeasurably down (1714.08), it will just get me bigger for in my view, the probable move back up to new swing highs...
  • both the NQ and the ES are in my view, behaving quite bullishly...both found support at the previous mentioned levels of 1690 and 1035, and have now broken above friday's high (1709 and 1049.50), firmly putting in higher highs on the 15M intraday charts...the trend up today has been so strong, i can not find any meaningful pivots or lows on the 5M or the 15M charts of the NQ or the ES!!
  • this move up is also occuring on essentially no news...yeah, there is some M&A this morning, but there is no economic data and no major earnings news...the upside move in the market in the absence of any major news catalyst is quite bullish in my opinion...
  • how probable is it that both the NQ and the ES will see new swing highs by the end of this week? i don't know, but today's powertrend reversal to the upside after last weeks downdraft, increases the odds...
  • i can't find any freely available links to reference this, but from the research i have followed over the years, the last few days of the current month, and the first few days of the new month, tend to be the best performing days of the month...i am not sure why this is the case...perhaps it has something to do with end-of-month money manager window dressing, or mutual fund inflows being quickly put to work, or something else...
  • in any case, i have noticed this end of month and begining of month bullish tendency...it factors into my discretionary swing trading as well as some of my systemic trading models...
  • this end of month and begining of the month bullish tendency, combined with the upside reversal of last weeks downdraft has me allowing for the increased possibility that we will at least test last weeks swing highs, and perhaps generate new swing highs by the end of this week...
  • my 'SPY Gopher' model is due to be exited at the thursday's close...if new swing highs are generated this week and can stick, this model will generate some nice performance for me...
Disclosure: Long NQZ09, Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

Using systemic trading models as an aid in discretionary trading

  • this summer's rally has seen 4 swing lows...they are highlighted on the above 'BTD Index' NDX chart with white circles: 6/23, 7/8, 8/17 and 9/2...
  • the last 3 swing lows, occurred on the same day or on the following day that the NDX closed below its lower bollinger band (yellow bar highlighting an NDX close below the lower red line)...this area around the level of the lower bollinger band has acted as support, and marked the general area of the swing low...
  • last friday's low was just above the lower bollinger band (lower red line), suggesting this 1690 area may be the general area of the current swing low for the NDX (NQ)...
  • while i did not add another NQ contract to my discretionary swing trade, i have been using the lower bollinger band level on the 'BTD Index''s NDX chart to help inform me of where a possible bottom for the NDX (NQ) may form...this potential swing bottom area has influenced the general levels where i will consider bidding for a 2nd and 3rd contract when building the size of my NQ discretionary swing trade...
  • i take the same view brett takes: systemic trading models can be useful inputs into the decision making process for the discretionary trader...
  • my overall trading plan contains both systemic and discretionary trading styles, and i believe i am a better trader for it...of course i still have a lot more to learn cognitively about both trading styles, as well as practicing to become more emotionally comfortable with the uncertainty of each trades outcome, but using the tools and bias's of both styles has made me a better trader...
Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

Thursday, September 24, 2009

9/24/2009 1130 am update: NQ, emotions influencing the decision making process, emotions as information



  • NQZ09 traded down to 1696, and then bounced back to 1700...
  • it then started trading to 1701, 1702, 1702.75, then back down to 1702, 1701, 1700.50...
  • i began to think that the low for the morning may be in, and began to get just a bit anxious that my 3rd entry order at limit 1693.50, which missed getting filled by 2.50 points, was not going to get filled this morning...
  • i canceled my previous bid at 1693.50 and place a buy stop at 1703.00...
  • i got filled a few minutes later...
  • currently long 3 NQZ09 at an average of 1714.08...
  • the last two additions (1711.75, 1703.00) occurred at higher levels than i initially planned (1708.50, 1693.50)...
  • part of the change in the trading plan is related to fear of missing an opportunity to increase my size because my limit order may not get filled...part of the change is also a re-analysis of the trading environment...i am not sure how much of the change in my plan is related to emotion and how much is related to cognition...
  • if the change is more related to emotion, i have to pay more attention to how my emotions factor into my decision making process...the problem is, i don't know how to determine or measure how much the emotion played into the trading plan change...
  • if anyone has any suggestions on how to do this, please let me know...
  • i hear and read a lot on how traders are supposed to remove as much emotion as possible from the decision making process...this is part of the reason why a large part of my overall trading plan includes systemic trading models...
  • i wonder if a further goal of trading is to not remove emotion from our decision making process, but to use what we are feeling and what the market as a whole is feeling, as part of the decision making process: emotion as information...
  • perhaps we are not supposed to immediately react to an emotion that happens to pass through our being on any given moment (sad, glad, mad, scared), but rather recognize what we are feeling, and then cognitively decide if this is something that we need to respond to on a trading basis...what do you think?

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

Tuesday, September 22, 2009

finding a relaxation response in my belly

  • when i got sick earlier this month, i had to find a way to relax my mind and my body when the headaches and the dizziness got too intense...
  • one of the things i discovered was that i could relax my mind and my body by extending my breath exhalation by about 2-3 seconds...i was able to accomplish this by noticing when the breath exhalation was about to finish, and then use my diaphragm to push more air out of my lungs...
  • since last wednesday, i have been intentionally practicing this new breathing technique while i am at my desk and at random times throughout the day...
  • when i do this, i notice i am able to become more aware of my thoughts and feelings, especially if i am getting stuck on a particular thought or a particular feeling...the increased awareness of getting stuck and then remembering to breathe with the extended exhalation has been helpful in getting 'unstuck'...
  • this breathing technique has been extremely helpful in reducing the amount of anxiety i experience, including when i have a trade open...
  • i plan on practicing this breathing technique more and more during the course of the trading day and when i am away from my desk...
  • this technique has definitely helped me relax...while it's not the relaxation response per se developed by herbert benson, it has helped me reduce my level of anxiety in both my professional and personal life...

Monday, September 21, 2009

Zen Trader System's T.Y.P.S.: Tap Your Power Source

  • the following are notes from this evening's free webinar given by Mike Kanuika of Zen Trader System on his T.Y.P.S. (Tap Your Power System) program/product...
  • the T.Y.P.S. audio product uses alpha wave/state entrainment with customized nlp (nuero linguistic programming) to reprogram the traders subconscious paradigm such that it becomes synchronized with the traders conscious intention...
  • trading success is significantly influenced by subconscious programming...
  • synchronize conscious intention with subconscious paradigms...conscious intention may win a battle but the subconscious paradigm tends to win the war...
  • learn how to consciously communicate with the subconscious brain...
  • alpha wave/state training extremely important for shifting/changing the subconscious paradigm...
  • enter into the alpha state ==> identify negative energy patterns ==> change the program via customized nlp...this will reduce/eliminate the impact/charge of the previous negative energy pattern...
  • enter into the alpha state ==> identify positive energy patterns that i wish to have ==> program the new pattern via customized nlp...this will lead to relaxed precision...
  • birth to age 7ish we develop our survival paradigms within the family/environmental structure...this paradigm influences everything we do, including how we trade...
  • perceptual misalignment's need to be realigned...
  • deep sleep wave session (alpha and theta states while sleeping: 50 minutes); morning magic session (30 minutes); neuro nap (noontime refresher)...

Friday, September 11, 2009

9/11/2009 notes to self

vcm discretionary daytrading:
  • if a position is to be held through lunch, then do not open any new positions after 1115 rt...
  • consider exiting open positions into the 1200 or the 130 rt...
  • wait until 215 rt to open new positions for afternoon trades...
  • if i am comfortable with the uncertainty of a position that is going against me, i have to train myself to be comfortable with a position that is going in my favor...when it is going in my favor, i have noticed that i tend to believe that it will reverse and then go against me...

Tuesday, September 1, 2009

'1 CT Spyder' generated a long exit signal for tonight's close (9/1/2009)


'1 CT Spyder' generated a long exit signal for tonight's close (9/1/2009).
  • what an ugly day...the bulls tried to get us going in the am, but the bears took control into the close...
  • the model closed out its position for a 2.33% loss...
  • the actual trading position booked a 2.28%, slightly better than the model...
  • today's loss was the 3rd worst loss in the model's history...i have to go back to 9/2002 to find a larger loss...interestingly, the 3 worst lossess all took place in the months of september or october...
  • i believe the concept for this model is still robust...it is based on the trading behavior of the SPY during the last few days of the calendar month and the first day of the new calendar month...this pattern has been robust since the inception of the SPY in 1993...
  • since the begining of july, the primary systemic swing trading models that i have been trading have booked either scratch trades, moderate losses or complete stop outs...very frustrating, especially since the markets have been heading up, though somewhat choppy of late...
  • the 'NB #1 NDX' discontinued model generated an entry signal for yesterday's close due to be exited at today close...i stopped trading that model in july because of a flaw in its logic...i am glad i did, because it would have been stoped out for a 1.6% loss today...
  • hopefully with the rebuilding of a few of the models to reflect better datastreams and more in sample data, the models will turn around soon, and begin to generate the gains that they have over the past 3-5 years that i have been trading them...
  • historically the systemic swing trading portfolio posts a max drawdown of about 15% from its recent high...right now, the portfolio is down about 12% from its early july high...
  • the portfolio gets another go at it tomorrow, as the 'NDX 1st DoM' model generated an entry signal for today's close....
  • chin up adam, tomorrow is a new day...
Disclosure: Long NQU09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

Tuesday, August 25, 2009

back in sync: is fear now my friend?


  • when the NQ started to retest the morning highs, i tweaked the exit and got filled at 1651.75 (+9.25 points/contract)...
  • i was looking to buy this lot back at limit 1643.50...tweaked the entry and got filled at 1644.00...
  • both of these tweaks were based on fear: fearful that my exit at 1653.50 wouldn't fill and then fearful that my entry at 1643.50 wouldn't get filled...as it turned out 1653.50 would not have filled, and i would have been pissed to watch the NQ fall back into the low 1640's...
  • 1643.50 may have filled, but since that was the low of the swing down from 1652.75, it may have not...
  • so fear definitely helped my exit and may have helped the following entry...my intention of trading with less of an influence by fear would have hurt me in these two instances...not looking to make any drastic changes regarding how fear influences my trades, just observing it...
  • currently looking to sell this newly added lot at limit 1662.50 during the day session...
  • currenlty looking to buy another lot during the day session at limit 1617.50...
Disclosure: Long NQU09.


***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

8/25/2009 11 am update




  • ego, ego, ego!! so invested in the trades outcome...so pissed when i am out of sync!!
  • afraid of not having a position in the NQ for the discretionary swing trade...afraid that i am going to miss the move...afraid, afraid, afraid...
  • tired of the day and night sesssion chop in the NQ since mid morning friday...when the NQ gapped up this am into the low 1640's, my limit order which was moved down from 1656.50* to the mid 1640's, but i kept on missing the exit by a few ticks...so i moved the limit order down and down and down and the got filled at 1641.25 (for +5.75 NQ points/contract)...
  • what did the NQ do then?? why it went on to rally to recent resistance at 1647ish, break that resistance and rally up to 1655.50...
  • i decided that i did want to get back into the NQ, but at a level that takes the following into consideration: multiple time frame analysis (15M, 60M, Daily), pivots, moving averages and expected ATR high/low areas (http://stbsmb.blogspot.com/2009/08/atr-average-true-range-volality-bands.html)...this analysis led me to place a re-entry order at limit 1642.50...
  • the 1655.50 high of the day was hit at 1004 am, and then 14 minutes later i was filled at 1642.50...i didn't expect/want to get filled that quickly, as that quick reversal suggest potential weakness....however the market internals were either neutral (TRINQ) or bullish (AD LINE), so i still took the trade...
  • exit order at limit 1653.50...
  • in my vcm daytrading account, i shorted the COCO gap up...the entry was good, however i messed up the exit just like i did yesterday with VRX...
  • when R base trading, i need to decide if i am going to scalp a small portion of the position when the trading vehicle moves to predefined pivots and moving averages (for both exits and entries), or if i am going to use an AON (all or none) tactic with a hard stop and a hard target...i need to think more about this...
* i tend to place an entry and an exit order in the overnight session that is somewhat far away from the closing price, but within 1 ATR of the that closing price...i don't expect the order to be filled, but i want to take advantage of the possibility of a volatile overnight session and have an order sitting there just in case we have a big move in either/both direction(s)....the more heavily i am currently positioned the more inclined i am to exit than enter, and the more lightly i am positioned, the more inclined i am to enter than exit...

Disclosure: Long NQU09.


***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

Two great blogs: Dr. Brett Steenbarger's 'Trader Feed' and Rob Hanna's 'Quantifiable Edges'.

I have been traveling through the blogosphere of late and have found numerous great sites, all of which have been added to the blog roll (to the right and the then scroll down a bit).

However two stand out to me:
  • Dr. Brett Steenbarger's TraderFeed ...in addition to numerous technical and statistical studies that are posted, he just hits the ball out of the park when it comes to the psychology, trading and peak performance...this is a great example: Mental Fatigue and getting to the next level of performance
  • Rob Hanna's Quantifiable Edges...on a daily basis, he performs original studies on market behavior...i have numerous ideas for potential systemic swing trading models based on the concepts and research that he has performed and documented...

Thursday, August 20, 2009

8/20/2009 post open update

NQU09 discretionary swing trade/'BTD Index' systemic swing model:

  • NQU09 traded down to 1591 after the 830 economic data releases, and if that is the low for the session, and with an expected range of 2.00-2.60% today, then the NQU09 projects up to 1623-1632 for today's session...
  • 1632 has been the high of this month long base...
  • sell limit 1612.50 has been filled...
  • sell limit 1617.50 is still open...
  • though the 'BTD Index' systemic swing trading plan calls for exiting at the close if the NDX closes about 1603.50, i am going to call an audible and sell that NQU09 lot at limit 1622.50...this is against that model's trading plan...
  • added a buy limit 1603.50...if it fills, then i will sell it at limit 1622.50 and move the 'BTD Index' related lot from limit 1622.50 to 1627.50....
  • NQ started to show some RS compared to the other major equity indices (YM, ES, EMD, TF)...
VCM daytrading account:
  • shorted the LANC gap up into resistance and booked a quick + $0.70/share on the post gap up drop...
  • HURN gapped up, i bought some on a pullback, it didn't show much strength after the pullback, so i exited with + $0.06/share...
  • GENZ trading above its daily and hourly base, bought some on a pullback, exited on a return to the morning high for + $0.27/share...able to enter and exit a second position in GENZ for + $0.15/share...

Other:

  • really impressed with Dr. Brett Steenbarger's TraderFeed blog...i am finding it to be a great resource for statistical analysis of market behavior as well as for insights into the psychological (EQ) part of trading...
  • i am having a lot of fun trading today!
Disclosure: Long NQU09, Long GENZ.


***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

Friday, August 14, 2009

Quiz: What personality trait may best predict achievement in the real world? Hint: it's not smarts.

Answer: According to the following article, the answer is not the standard measures of intelligence, but rather the ability to set a long term goal and work exceedingly hard toward it. In a word, its 'grit'.

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The truth about grit

Modern science builds the case for an old-fashioned virtue - and uncovers new secrets to success.

by Jonah Lehrer

http://www.boston.com/bostonglobe/ideas/articles/2009/08/02/the_truth_about_grit/?page=1

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Here are some quotes from the piece that I found to be very interesting:


"...The new focus on grit is part of a larger scientific attempt to study the personality traits that best predict achievement in the real world. While researchers have long focused on measurements of intelligence, such as the IQ test, as the crucial marker of future success, these scientists point out that most of the variation in individual achievement - what makes one person successful, while another might struggle - has nothing to do with being smart. Instead, it largely depends on personality traits such as grit and conscientiousness. It’s not that intelligence isn’t really important - Newton was clearly a genius - but that having a high IQ is not nearly enough..."
“...I’d bet that there isn’t a single highly successful person who hasn’t depended on grit,” says Angela Duckworth, a psychologist at the University of Pennsylvania who helped pioneer the study of grit. “Nobody is talented enough to not have to work hard, and that’s what grit allows you to do....”
"...Lewis Terman, the inventor of the Stanford-Binet IQ test, came to a similar conclusion. He spent decades following a large sample of “gifted” students, searching for evidence that his measurement of intelligence was linked to real world success. While the most accomplished men did have slightly higher scores, Terman also found that other traits, such as “perseverance,” were much more pertinent...”
“...Genius is 1 percent inspiration and 99 percent perspiration,” Thomas Edison famously remarked - the researchers are quick to point out that grit isn’t simply about the willingness to work hard. Instead, it’s about setting a specific long-term goal and doing whatever it takes until the goal has been reached. It’s always much easier to give up, but people with grit can keep going..."
"...One of the main obstacles for scientists trying to document the influence of personality traits on achievement was that the standard definition of traits - attributes such as conscientiousness and extroversion - was rather vague. Duckworth began wondering if more narrowly defined traits might prove to be more predictive. She began by focusing on aspects of conscientiousness that have to do with “long-term stamina,” such as maintaining a consistent set of interests, and downplayed aspects of the trait related to short-term self-control, such as staying on a diet. In other words, a gritty person might occasionally eat too much chocolate cake, but they won’t change careers every year. “Grit is very much about the big picture,” Duckworth says. “It’s about picking a specific goal off in the distant future and not swerving from it...”
The following finding from the study surprised me. As a parent, I have been praising my three year old son for the effort he puts into figuring out the the world around him and sticking to the task in front of him. Perhaps I should do it more.


"...In recent decades, the American educational system has had a single-minded focus on raising student test scores on everything from the IQ to the MCAS. The problem with this approach, researchers say, is that these academic scores are often of limited real world relevance.
However, the newfound importance of personality traits such as grit raises an obvious question: Can grit be learned?
While Duckworth and others are quick to point out that there is no secret recipe for increasing grit - “We’ve only started to study this, so it’s too soon to begin planning interventions,” she cautions - there’s a growing consensus on what successful interventions might look like.
Interestingly, it also appears that praising children for their intelligence can make them less likely to persist in the face of challenges, a crucial element of grit.
For much of the last decade, Dweck and her colleagues have tracked hundreds of fifth-graders in 12 different New York City schools. The children were randomly assigned to two groups, both of which took an age-appropriate version of the IQ test. After taking the test, one group was praised for their intelligence - “You must be smart at this,” the researcher said - while the other group was praised for their effort and told they “must have worked really hard.”
Dweck then gave the same fifth-graders another test. This test was designed to be extremely difficult - it was an intelligence test for eighth-graders - but Dweck wanted to see how they would respond to the challenge. The students who were initially praised for their effort worked hard at figuring out the puzzles. Kids praised for their smarts, on the other hand, quickly became discouraged. The final round of intelligence tests was the same difficulty level as the initial test. The students who had been praised for their effort raised their score, on average, by 30 percent. This result was even more impressive when compared to the students who had been praised for their intelligence: their scores on the final test dropped by nearly 20 percent. A big part of success, Dweck says, stems from our beliefs about what leads to success..."
We can test our own level of grit here: http://www.gritstudy.com/

Thursday, August 13, 2009

8/13/2009 morning update 2

  • shortly after the last post, i came to the conclusion that the most recent NQU09 addition at 1621.50 was made mostly because i was afraid of missing an up move...the 'fear of missing' in and of itself is no big deal in my mind...however acting on this feeling by entering a trade in a more aggressive manner than is comfortable for me is a big deal...
  • i should have just moved my initial limit order up from 1603.50 to 1612.50...moving it up to 1621.50 was too far...
  • since i was no longer confident in my NQ discretionary swing trading plan, the lot that i added at 1621.50 was just sold at 1626.50, for +5 points/contract...
  • i have changed the buy limit order that was on the books from 1603.50 to 1612.50...
  • this makes more cognitive sense to me and feels better emotionally...the NQ still has not broken out of the current range that is now 10 days old...if it does break out, and then if it sucessfully re-tests the break out area, then i will feel more confident in the bullishness of the NQ and re-enter an NQU09 discretionary swing trade...
  • right now, as far as i am concerned, the NQ is still in its range, and thus i should be entering in the bottom of the range at best, and if i want to be a little more aggressive, then entering in the middle and at the bottom of the range...exiting should be at the top of the range...
  • if i had thought and felt this all through earlier today, then my 1603.50 limit order would have been moved up to 1612.50, would have been hit around 10 am, and then would have been exited around 1627.50, netting me 15 NQ points/contract...
  • as it turned out, while rangebound, i took on too much downside risk, while having too little upside reward...though i netted 5 NQ points/contract, it was a poor plan and a poor trade...
  • now that i am out of that trade, i feel better about the new plan...
***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

8/13/2009 morning update


  • though i feel this up move by the NQ is getting a bit long in the tooth, i am still playing NQ to the long side...
  • this is an aggressive move for me: based on this morning's pre-market strength in the NQU09, and break above the top of the base, i moved my swing entry up from limit 1603.50 to limit 1621.50...
  • the limit 1621.50 was hit, and NQU09 continued to sell off to 1610...
  • i have a sell limit 1646.50 for the first lot....
  • i have a buy limit 1603.50 for a second lot...if this lot gets filled, then i have a sell limit 1627.50 for the second lot...
  • adding another lot around 1612.50 looks good in hindsight (just above a pivot from friday/monday/tuesday), but i was hesitant to stack additional lots so close together (1621.50, 1612.50, 1603.50), so i decided to just add a second lot at 1603.50...perhaps just moving the first lot up from 1603.50 to 1612.50 would have allowed me to be bit more aggressive on the re-entry...re-entering at 1621.50 is very aggressive for me, and feels a bit uncomfortable...learning process...
  • i am not sure if the aggressiveness i feel today is based strictly on a proper re-analysis of the NQ, or the fear of missing a move up in the NQ, or perhaps a bit of both...i will be thinking alot about this today...
  • this is my current NQ discretionary swing trading plan...
  • heading out of state later in the day for a little r&r...i will still be trading later today and tomorrow....
Disclosure: Long NQU09.
***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...***

Friday, July 24, 2009

7/24/2009 noon update



NQ discretionary swing trade:
  • NQ ran back up to the top of the base that formed from the overnight session and the morning high...got nervous when it started to sell off from this high, and exited the long position at 1587.50 for a net gain of 12 points (27 for the day)...
  • nervous is the operative word here...perhaps fearful is a better word...i didn't want to give back my nice gain...i initially placed my target at 1597.50, thinking that the morning low was greater than the overnight low, so we had a slight uptrend in place...if the NQ could rally back to the top of the base (forming an ascending triangle), then there was a good chance it could break above the base and then rally to the 1600 whole number and i would exit at 1597.50...this was the thought process and the plan...
  • however, my emotions started to get amped up after we hit the top of the base, and then started to head lower...i didn't want to give back my gains, so i hit the sell button...
  • this exit was not part of the trading plan that i described this am...though i did book a nice gain, i did not execute the plan...i will give this trade a C+
  • my plan could have had another contingency, such that i could take my profit at the top of the base....since i believed that the NQ could test 1600 today, i could re-enter on a break above the top of the base with a tight stop a few points below the break, or i could re-enter on a move back down to the low 1580's - high 1570's....
  • right now i have an order to get back in at 1577.50...
  • i am feeling somewhat jumpy as i watch the NQ move back up toward the top of the base again...maybe it will break above it, maybe it wont...i am hesitant to buy a break above the base as i feel like i am acting on the frustration of not trading the plan according to specs or not having a better plan laid out this am...i do not want to trade from a place of frustration, so i will not enter a long position today above the top of the base...
  • i still want some longside exposure for a longer term move up, so if the NQ breaks above the base, then i will raise my limit order (which is currently below the market), from 1577.50 to 1582.50...
***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***

Wednesday, July 22, 2009

Catching up; checking in with 'fear'

its been a few days:
  • the 'SHOE July Pre OE' long model was closed on Monday at 4pm, and generated a loss of about 1.7%...
  • still stressed about the systemic swing trading models being out of sync with the market...i know there is nothing i can do about it and that is helping a bit...still its been nice not having any open systemic positions the past few days...i needed a break from the 'uncertainty associated with an open position'...
  • doing some joint development work with JE on an ES intraday trading model (http://myestradingjournal.blogspot.com/) ...some concepts appear robust and limited testing bears that out...continued refinement of additional concepts and then more involved testing...working with JE has been a great experience in and of itself...
  • discretionary daytrading at vcm (http://www.vcmtrading.com/#) has been going pretty well since the beginning of last week...i have been focusing on trading opening gappers...so far the results have been good...the things i am most proud of are cutting my losers short and taking the small loss, as well as exiting a trade that wasn't moving in the direction i was anticipating after a reasonable period of time...i still need to work on letting my winners run some more...over the past 8 trading days, the dollar value of the biggest winner has been greater than the dollar value of the biggest loser, so this is step in the right direction...but perhaps the bigger thing is to decide if i am going to R base the opening gap plays or scalp them....so far its been a blend of both: start a small position with a known profit target, add to that position when certain setups occur, and then calculate the R based stop...even had a good back and forth chat room exchange this am with the chat room moderator (trading/teaching master to the nth degree), who helped clarify my thinking about certain concepts...
  • from this weekend's quiz (http://stbsmb.blogspot.com/2009/07/quiz.html) : when the average trader makes a decision to enter or exit a position, one of two emotions is probably dominant in the traders decision making process...what are the two emotions that the average trader might be keying off of? JE had a funny response...the insight i had this weekend is the two emotions are not the usual fear and greed pairing, but rather 'fear of losing' and 'fear of missing'...'fear of losing' leads to them selling into a down market, 'fear of missing' lead to them buying into an up market...when these traders act on either of these emotions, it tends to drive the market further in the direction of the current trend...i believe this is what is playing out now...the shorts have been madly covering over the past week on the failed head shoulders pattern in the S&P 500...under invested longs are scrambling to get more upside exposure and continue to drive the NASDAQ 100 to new swing highs...'fear of losing' and 'fear of missing'...
  • can it be that 'fear' is the driving force in the market?? leading to under performance for the trading novice and to out performance for the trading master?? i am aware that fear plays a role in my trading performance, but perhaps i have underestimated its influence...
  • is mastering fear one of the requirements to achieving trading mastery?