Why I hate Mondays…and you should too
I typically trade about 10 days per month to a schedule laid out as much as 6 or even 12 months in advance. Some friends asked me recently how I decide upon my trading schedule. What is the formula? How did I arrive at it?
So I agreed to write an article explaining all of the ins and outs of a subject which is more important than many traders realise. Here it is, the answer, the formula and the logic underlying it…
The premise
We can’t physically trade every hour that the markets are open, so we need to decide how much of the available market time we are actually going to trade. We also shouldn’t want to trade every available hour. Aside from being intensive work that is tiring, the reason we are in this business is to provide flexibility for a better work / life balance. It is all too easy to lose sight of that fact!
So we need to set a plan that suits our personal needs as well as having us concentrate on the most productive trading days as far as possible, or at least those days that are most likely to be the best trading days over the long run.
My answer
First I will give you my own answer to this riddle and then work back through how this is arrived at. My conclusion is to trade no more than 12 days per month and no fewer than 8. These days must be selected and planned well in advance and not just drifted into based on how you feel when you wake up each morning!
That is why I know my trading schedule months in advance. I then stick to that schedule with cast iron discipline. There is no point having a well thought out plan if you don’t then stick to it, is there? The only deviations, which are extremely rare, are due to unexpected events.
As an example, here is my own schedule…click here
The formula
There are three items that go into this formula each of which results in eliminating certain days from the annual calendar and what we are left with is our personal trading schedule for the year. The three items that lead to days being eliminated are as follows:
- The days of the year that are least likely to be productive in general
- The days which statistically are less reliable for our own trading strategy
- The need to take regular breaks from trading, to rest as well as to enjoy life
Step 1
So first we eliminate the days each year when the odds do not favour success, or at best when profits can be expected to be below average making these days poor use of our valuable time. These tend to be days when we know ahead of time that volume is likely to be light. This is the list I like to use:
- The day of and the day preceding: Martin Luther King Day, Presidents Day, Memorial Day, Labor Day.
- The day of: Good Friday, Easter Monday, Columbus Day, Veterans Day.
- The day of and the day after: Independence Day.
- The day of, the day preceding and the day after: Thanksgiving.
- The whole period between and including Christmas Eve and New Years Day.
Step 2
The second step is to examine our own trading strategy to see if there are any statistical tendencies that we should be aware of and hence respond to. Some years ago I analysed no less than 5 years worth of short-term trading results to look for clues, somewhere of the order of 1000 days of data. I discovered something interesting.
When I broke the profit over the 5 years down by days of the week I found that profits were distributed approximately as follows:
- Monday -10%
- Tuesday +35%
- Wednesday +30%
- Thursday +30%
- Friday +15%
There is some powerful ammunition here. Until I did the analysis I had no idea that Monday’s were so bad. There were plenty of great Monday’s in the sample, clearly enough of them to disguise the long-term reality from me! Guess what – I never trade on Monday’s today and haven’t done for several years!
Friday’s are still profitable, but far less productive in terms of “earnings per hour” than the remaining three days of the week. Therefore as a general rule I tend not to trade on Fridays either. This is not as absolute as my hatred of Monday’s and I do trade a few Fridays each year – usually the first Friday of the month (Payrolls Friday). Fridays for me are used primarily to backfill my calendar to ensure I am able to trade enough days during months that are shortened by other factors.
Interestingly Mondays and Fridays also tend to be the lower volume days of the week, hence the findings here were consistent with the same logic for eliminating the set of days in Step 1.
Step 3
The final factor to consider is the need to take regular short breaks from trading. Quite apart from the importance of having a family life outside of the very intensive career we choose, it is extremely important to switch off, relax and recharge the batteries at regular intervals. Trading is extraordinarily tiring compared to any other occupation that involves sitting at a desk, staring at computer screens and swearing at them occasionally!
If you don’t get regular rest from this you slowly but surely lose your effectiveness. You can prove this to yourself by literally taking a week off and seeing how much more alert and attentive you are on your first day back. So this isn’t being lazy. This is a critical element in a long term and successful trading career. Yet you would be surprised how many traders try desperately hard NOT to take time off! We are brought up to believe that the harder we work, the better we will succeed. Well in my experience quite the opposite is true when it comes to trading. You need a razor sharp mind, absolute concentration and unshakable discipline – all things that start to be eroded as you tire from working too many days without a decent rest.
So my personal recommendation is to take off a good 7 to 10 days at least once per quarter, but ideally more like every other month.
Discipline
This formula is simple enough, logical and makes sense. But another value to having a schedule to work to is that it brings another element of discipline into your work. Unlike following a trading plan, avoiding over trading etc. this is a discipline that is much easier to stick too. Discipline in everything improves the more you are able to be disciplined in a few things. It becomes more of a habit and slowly becomes easier to be more disciplined in general. So it is constructive to have a few plans to follow that are easy! Working to a well thought out schedule each year is a simple plan to follow as well as having real value in improving trading performance.
Is my plan the right one for you? Maybe, maybe not. If you like the logic and it sits well with your view of life and your personal circumstances, by all means copy it. If not modify it to better suit your own needs. But I do urge every trader to have his or her own plan and to follow it. This is a serious business and the days you choose to trade deserve more thought than just how you feel each morning when the alarm clock goes off!
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2012, all rights reserved
Happy New Year! (Let’s make it a great one too!)
Well what a year that was. I don’t know about you but I am so glad to be rid of 2011. From a trading perspective it was one of the harder years I can remember and I am not hearing from many people who had a great year. Errr I haven’t heard from anyone saying they had a great year in fact!
But I have heard a few horror stories. So if you generally held it together during 2011 then I think you deserve a pat on the back. Anything around breakeven on the year seems like a good outcome and certainly nothing to feel ashamed about.
Throw in the fiasco of the MF Global collapse and its immediate dampening effect on the markets and you actually complete the picture of a pretty ugly year all around.
The highlight
For me the highlight of the year was the Century of Trading seminar with my great friends George Kleinman and Jeff Quinto. We had a blast in Santa Monica and met such a great group of traders, many of whom have become good friends since the summer event.
You know, more than 9 out of every 10 people who attended have written saying how much they enjoyed and valued what was a very intensive learning experience. That is so rewarding for us to hear and makes all the hard work worthwhile. Who knows one day we might do another one, or maybe release the videos as a home study course. That is something for us to think about for 2012 anyway.
2012 will be a great year
I can just feel it! 2011 was sufficiently challenging that the cycle is overdue for change this year. When precisely that will be I don’t know, but I feel sure that 12 months from now we will be looking back on a really worthwhile year.
Fortunately we are entering 2012 from a solid position, despite the year just gone. Our daily swing trading strategy (S-I-R) is sitting here right at equity highs and the 5min strategy in the Trading Den is also right at equity highs. So not having a lot of ground to make up means we are in great shape to tackle the exciting year ahead.
But as I always say at this time of year – it doesn’t matter what happened last year, whether you were up, down or flat on the year, its time to wipe the slate clean and start all over again! Bank the profits if you made them. Forget the losses if you took them. Zero the clock and focus exclusively on leaving the starting line as constructively as you can. Which also means with a completely clear head and maximum discipline (New Year resolution perhaps?)
Projects for 2012
Every year I set myself the objective of tackling a number of projects. Every year I also overestimate my ability to do everything planned by a factor of 2 at least! Let’s see if this year I can get closer to delivering everything I hope to.
I plan to build upon our 3 out of 3 profitable years of running signal services by improving the existing services further as well as introducing 1, maybe even 2, new ones. These have proven to be great in helping traders through the inevitably long apprenticeship that trading success demands. I can’t make every member take every trade and similarly I make mistakes in my own execution at times just like everyone else. But having a consistently profitable strategy to start with is a critical foundation and this has really proved it can give many people the staying power that they otherwise might not have had.
More and more people ask me for training courses and/or simple strategies that they can learn and become experts in themselves. So in 2012 I will undertake to make more educational materials available than in the past. There are several suitable things in R&D at the moment that I know have the potential to help people improve their game significantly. So this will have more of my focus this year than in the past.
Finally this newsletter and several websites are due for a facelift and revamp which I think I can just about squeeze in too! I have loads of insights to share with you this year and you can expect articles to start flowing again more regularly in a couple of months time.
I am currently buried under a pile of admin, accounting system changes and a significant change of business model in the way I manage money for other people at the moment, hence more radio silence then usual in the last few weeks! This is my current priority and once it is all out for way I can set to work on some of these other projects for other people.
Let’s get cracking
So those are my plans for the year, what are yours? Have you made your own plans and set your own goals? Trading is a hard enough business when you have clearly thought out plans. Without a plan to follow and to hold yourself accountable against is like trying to cross a busy road blindfolded. So make sure you know what you intend to achieve in 2012 and you’ll have a far greater chance of actually achieving it.
It’s going to be a great year for many people. I intend to be one of them and I hope you do too. So what are we waiting for? Let’s get cracking!
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2012, all rights reserved
Natural gas out of thin air…Now there’s a good idea
With front month Natural Gas closing at 3140 yesterday, its lowest price in over 2 years, you might be bracing yourself for my annual tirade about the flagrant abuse of customers by the energy cartel that operates in Britain. But you would be wrong.
Well sort of anyway. I can’t help myself from mentioning that in the same week that Nattie traded 3140, a whopping 80% decline from its 2005 peak of 15780, it was reported on the BBC news that this year alone the ever fleeced British consumer experienced a rise in energy bills of a staggering 25.4%. So much for free markets levelling the global playing fields!
Oh well at least the powers that be tell us there is no inflation to worry about, so I am sure we should behave as the reliable unquestioning citizens that we are expected to be and believe all of this utter rubbish.
But hey ho, I promised not to get on my soapbox today, so let’s turn to something a little more positive. I was joking with friends yesterday about how they will be giving away natural gas with cornflakes before long it is so darn cheap. Funnily enough that might almost be the case soon.
How about an unlimited supply of cheap, carbon neutral Natural Gas! Sounds impossible right?
Well think again. Like Steve Austin you will be relieved to know that we have the technology! Better still it is under construction right now. Natural Gas produced out of thin air that does not fill the environment with CO2. What a wild idea.
Here is a very short article I read this morning about powering cars and homes with this cheap, clean, energy.
Click here to download the PDF
Pretty cool stuff I am sure you would agree.
Of course by the time the poor old consumer has access to it, you can be sure it will be much more expensive. As domestic gas supplies continue to demonstrate there is no correlation at all between what we are charged and the true wholesale prices that prevail.
However unlike “Natural Natural Gas” this stuff looks to be available in virtually unlimited supply, so may well be a key component in powering our homes and cars as the impending energy crisis starts to materialise.
About 10 years ago I did drive an LPG car and as a confirmed petrol head I can say that it isn’t as good as the real stuff, but much closer to it than electric is. I am also sure that the technological improvements since then will have been very considerable. So my guess would be that in 2013 when these cars arrive, they will be pretty impressive. We’ll find out soon won’t we!
For the avoidance doubt…Thank you Audi for the use of your article and for letting me share it with my friends.
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Copyright © Simon Townshend Ltd 2011, all rights reserved
Someone’s hushing up the MF Global affair
…but the time bomb is ticking!
I am intrigued, as well as suspicious, at the lengths that “someone” is going to to suppress this news outside of the USA. How can the 5th (?) largest bankruptcy ever simply not make the news here in England? Yet someone in Sussex has lost a cat and that’s newsworthy? Hmmm.
Half the locals are currently out of business with their working capital frozen and we have all witnessed the collapse in liquidity this month. You can’t take out the biggest player in an industry and expect life to carry on as normal. The American futures industry is basically mothballed until those MFG funds are released and even then there will be no “getting back to normal”. This industry is fundamentally changed by this sorry affair.
Short term market risks
Personally I think the stakes here are far higher than most people realise. I doubt that anyone with accounts at MFG will lose a single cent at the end of the day. However if this takes more than a few more days for the funds to be released back into play in the markets, the potential exists for a massive collapse in the markets in my opinion.
The issue here is not the frozen money. That will sort itself out at the end of the day. The real issue is the principle of segregated funds being sacrosanct including, in particular, the BELIEF that they are so. The whole industry has segregated funds as its bedrock. If the CME drags its heels any further in sorting this out it is gambling not just with viability of the American futures industry but also the stock market and many other markets too.
The slightest hint that segregated funds might not be 100% secure could have the effect on the markets be like a pin meeting a balloon. In 2008 we experienced a run on several banks as scared investors pulled their money out. Imagine that same fear being applied not just to a few banks but to financial markets worldwide! Anyone with a segregated account containing stocks, bonds, commodities, currencies could simply say “to hell with this I’m cashing out!”.
Even spread betting accounts here in England are segregated these days and as far as I can see are the cornerstone of pretty well all investment accounts.
The CME had better be smart enough to realise that they are playing a game of chicken here not just with its own little world but also with pretty well every financial industry you can think of. Hmmmm could that be why this news is being suppressed so heavily? Well in the internet age you can only sit on these things for a limited time. Once it gets out and if it takes hold, be afraid, be very afraid. Man itself is irrelevant. But as a catalyst its potential is enormous.
The money temporarily locked up in MFG isn’t the issue at all. As usual the majority are looking in the wrong direction. If word gets out to the big wide world from this very small circle that we traders all move in, then batten down the hatches.
Longer term implications
So what about the future, after this sorry mess has actually been resolved? My guess is that in years to come we will all be looking back at this event as the time that everything all changed. How big, how fast and how far reaching these changes will be is anyone’s guess. If I was to take my best guess then the longer term implications I can envisage would include these…
- The loss of many brokerage firms who previously relied upon Man for clearing services. Every day these businesses continue to pay their staff and other overheads while their clients are unable to trade. Existing clients are unlikely to refund new accounts and the firms will struggle to find new clients. Every day that the CME fools around rather than just ponying up as it inevitably will have to, is a day closer to the end of the road for otherwise perfectly innocent firms stuck in the middle of this mess.
- The industry will have to get used to the idea that clients will no longer deposit cash with clearing firms who will have to accept unmargined accounts secured via complex structures allowing clients money to be safely housed in banks that the brokers cannot touch. In future the only cash that will pass through the hands of brokers will be amounts representing daily profits and losses sufficient to return the account balances back to zero again. Those who will benefit from this fiasco will be those firms who are first to roll out such mechanisms, already used by small numbers of more highly valued clients, to their whole client base. Those who are slow to adopt such mechanisms will rapidly go out of business.
- A mass exodus of volume away from the fundamentally broken, and never again to be trusted, American futures industry. The European exchanges are the ones likely to hoover up all of this business by developing a more progressive regulatory regime while also providing better proximity to the emerging markets, making them the obvious next step for the global centre of the industry in its natural progression from west to east. I would be very surprised indeed if European exchanges are not already planning mass marketing campaigns and big incentive schemes for next year, ready to take on the wounded beast that the CME will shortly be revealed to be. And let’s not forget that exchange fees in Europe are already a fraction of the extortionate rates charged by American exchanges, plus contract sizes are also much bigger. So putting together very enticing schemes to lure away that volume will neither be difficult nor costly!
- A loss of the hitherto distinct Asian, European and American trading sessions as a more normalised genuine 24 hour market evolves to cater for all timezones from a more natural geographic centre in Europe.
- Lots of new and exciting products to compliment the existing deep, but limited range of markets available in Europe, with lots of volume from very early on in the new products’ life.
- Ultimately the migration of large numbers of traders from the United States to Asia and the Far East, where they can enjoy substantial tax benefits as well as trading whichever of the old timezones that best suits their lifestyles and still operating accounts within the safety of the European regime as it evolves.
Is that all bad?
Absolutely not! There certainly will be short term pain, do doubt about that. But I believe that the short term inconvenience that we are all being put through will soon be surpassed by the benefits of the improvements that will come about as an antiquated industry wakes up and gets dragged into the 21st century triggered by this catalyst that is the Man Financial mess.
Will any of my hypothesis come into being? I have absolutely no idea. But I am sure that 2012 will prove to be a major pivotal moment in the history of this industry. I also believe that whoever it is that is, so far, being effective in burying this major news, knows it too. Well the lid won’t be kept on for very much longer, there is no going back to business as usual, so the next question is what the short term fall out is going to look like before the phoenix arises from the ashes.
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
Confucius was right…but forgot to factor in time!
“Feed a man a fish and you’ll feed him for a day. Teach a man to fish and you’ll feed him for a lifetime.”
We all know the Chinese proverb and we all know it to be true. But what if it takes a year to learn to fish? Or 3 years, or 5 years?
That’s the chink in the armour and the reality is that learning to trade successfully takes that sort of time. It’s not like a quick fishing lesson and hey presto you can feed yourself, despite what all of those classified ads would have us believe!
As a result so many would be and could be traders never quite make it. Before they reach the point where they can feed themselves, they run out of time or run out of money (sometimes both!).
The solution is simple of course – feed that man a fish each day until he develops into a competent fisherman!
Then time ceases to be his enemy. He can take as much time as he needs to learn to be not just any old fisherman but a fishing expert.
The Trading Den
For about 3 years people have been asking me to put together a service providing low risk, short term trades using my highly profitable, time proven strategy. Well now I can reveal that over the last year I have secretly been running such a service, quietly providing a fish a day to a dozen other traders.
Interestingly all of these great people are professionals, mainly career traders, successful in their own rights. They are already fishermen and fisherwomen (is that a real word or one I just invented?). But they have been enjoying the Trading Den trades in addition to their own trading as a means of boosting profits without increasing leverage. So even though the idea is to feed a man a fish to buy the time needed to become an expert fisherman, that doesn’t mean it can’t also benefit veterans seeking to increase their earnings without increasing risk!
During this year we have honed this service to the point it is now running like a Swiss timepiece. It is about as good now as we can ever hope to make it. So now I am ready to invite up to 10 newcomers into this secret little club to join us in landing typically around $7,000 per month trading only half time and with no overnight risk.
If that sounds like it would help you in your own trading evolution, novice or veteran, 1-lot trader or 10-lot trader, then you can read the whole story at…
What John thinks about it…
“I have been a member of Simon’s Trading Den since the inception and have witnessed first-hand, on a daily basis, Simon’s keen abilities trading the futures markets. The posted results are genuine, as is Simon himself. Finding someone with Simon’s skills and integrity in the trading arena is like finding a needle in a haystack, and I consider myself very fortunate indeed to have met him and to be trading with him.
Besides the trading profits, the other big benefit to the Trading Den is being able to watch Simon enter, manage and exit trades live. Every day trading in the Den is an enjoyable learning experience that adds greatly to my own trading skills.”
John, San Francisco
You can meet John and the rest of gang, in my private Trading Den this week. All you need to do is to read about the service, make sure it fits within your current trading portfolio and grab one of these 10 new seats. We look forward to seeing you next time we convene in the Den to wage war on the markets once again!
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
This is what you asked me for…and its on its way!
For two and half years now I have been trading a strategy that has also been made available to a tiny group of professional traders. Many of these people have made big money in this time, where big means 6-figures for some of them – in addition to their own trading returns.
However, this has one particular limitation and that is the fact that the signals are taken off daily charts and actioned in the most part at the end of the day. This was deliberate as it made it ideal for more passive traders and investors who had lives outside of trading and who did not want to follow the markets during the day.
But daily charts by definition mean a relatively small number of trades and relatively large initial risk per trade. This is perfect for those more “passive types” but during this 2-3 year period many more active traders have asked me…
“Isn’t there a way to trade this intra-day, off smaller charts, with lower risk trades?”
There wasn’t.
A moment of madness!
But more and more people asked which got me thinking. Then one day, in the summer of 2010, I woke up one morning and decided to do something completely crazy. I decided to start trading the same strategy intra-day off much smaller charts.
What’s crazy about that you might ask? Well nothing in principle. The bit that was a bit off the wall was doing the whole thing before a live audience!
Yeah that’s right, no quiet development in the basement late at night. Just straight in at the deep end in the live market with my most loyal and closest clients watching every damn trade in real time!
OK, lets be honest, I didn’t take that leap of faith without a pretty good idea that it would work. But it wasn’t perfect. It took a bit of refining and developing as we went along.
A little help from my friends?
We have been quietly trundling along making about $7,000 a month with this. Then last month with the help of some of the gang also watching out for the sort of things I look for on my charts, we increased our number of trades and our profit on the month exploded to $15,248!
I should point out that we are not scalping for a handful of ticks here and there, but seeking 2 to 3 high probability trades per day each worth a decent chunk of cash. Oh and we only trade 2 to 3 days per week too, so this is about as low key laid back day trading as you can find!
Well a year down the road, with a tidy old profit under our belts and having really found the groove in our weekly activities, I have decided to admit just 10 new members to this exclusive group. This is the chance for those who have been asking for such a service to finally receive exactly what they have been looking for.
Work is underway finalizing everything and I hope to release those 10 new spaces in early October. So if this sounds like your kinda thing, watch this space and I’ll let you know the moment those places become available.
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
The hidden power of writing…don’t underestimate it!
After my “Evolve or Die” webinar in March with Linda Raschke and FuturePath Trading, Linda mentioned something really interesting. She said that she often finds a real benefit of running such events is that it forces you (the speaker) to gather your thoughts and reinforces concepts for you personally as well as helping others with the insight provided.
I have long been a believer in writing things down, as I have always found this does exactly the same thing that Linda was alluding to. It forces you to think things through in a very structured and rigorous fashion. It also makes you think through the finer details very carefully of what you are trying to communicate and these can often contain surprising revelations. Finally, the act of writing things down somehow seems to help commit them to memory much more fully than not doing so.
So you could say I am a believer in committing things to paper as there are often much deeper benefits to be had as a result, over and above the obvious purpose of simply capturing information.
My Eureka moment
Well this week something startling happened that I had never anticipated. I was working on my slides for our summer seminar. In one of my sessions I will be revealing all 6 of the trades in my behind the chart strategy. Previously I taught just 2 of these setups.
Anyway there I was marking up some charts with the entry points, initial stops etc. Suddenly something amazing just hit me as I was drawing on those charts. For years I have followed these trades and simply never noticed it before. Yet the simple act of preparing some slides suddenly opened my eyes to something quite incredible.
What did I discover?
Well, have you ever noticed how you always seem have your biggest positions on losing trades and conversely never seem to have enough on the best winners? For many traders this is in fact the case. But even for others who use a fixed unit size – this still feels like it is true!
OK so how would you like to turn that on its head? How about having only half as much on the losing trades as you have on the winners? Wouldn’t that be quite something?
Impossible you say? I hear you. In most cases I would agree with you. However what I discovered quite by accident really does allow you to have twice as many contracts on the good trades as you have on the bad ones!
I shared this with Professor Quinto later that day. He was stunned.
I shared this with some of the traders in my chat room this week and they thought this was really cool. We watched a real trade unfold in real time as I talked them through the strategy. It was spectacular.
Just to be clear what this profit magnifying technique does is to provide 2 units of your chosen trade size on the best winning trades, yet never to lose more than 1 unit on the losing trades!
I am really excited by this as it makes a massive difference to the overall performance of any system. You only need 33% winners like this to breakeven and let’s be honest even the crappiest of strategies can do better than that. We will be teaching setups that often deliver 70% to 80% winners where this can be applied. The only drawback is that I can’t apply this trick to every setup in my toolkit. But you can be sure from now on I will be applying it to every trade where it can be used.
Join in the fun
If you would like to take my newly discovered profit magnifier and apply it to all the setups I will be teaching or to apply it to many of your own trade setups, then do join me at the Century Of Trading seminar on June 25th.
This profit magnifier was never planned for the seminar, so I am really excited to be adding yet another amazing technique to the already bursting agenda. I am really excited to be sharing all of this, period. I do hope you can join us for what will be a spectacular event – the first live appearance I have made in 4½ years!
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
“Evolve or Die” – LBR webinar replay
I was swamped with feedback after the webinar I recently gave with Linda Raschke and have tried (!) to respond to everyone in the days since this took place. Thank you to everyone who took part and I’m delighted so many people found it so thought provoking.
If you missed the live event or would like to watch the replay, here is a link to the video archive. Just click on the picture below…
Enjoy it, let it percolate in your mind for a few days and see how you start to think differently about the markets and start to find ways to simplify what you yourself are doing each day!
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
A Century of Trading – June 25th
Jeff Quinto, George Kleinman and Simon Townshend together have over 100 years of experience in the markets! That’s somewhat alarming to them but great news for you.
Call upon a century of experience and learn 6 trading techniques and money management strategies that these 3 traders use in the markets today.
At this one time, one day seminar in Los Angeles, Jeff, George and Simon will teach you techniques that have stood the test of time and that they personally use today. These are all straight forward, based upon sound logic and a century of experience in the markets.
Each of these 6 individual techniques can be used on its own and each one is more than capable of boosting your bottom line. Better still use them together as a powerful solution to long term trading success.
The 6 techniques you will learn are as follows (full details on the other 3 pages of this website):
- George’s Secret Indicator (and a complete strategy for using it)
- Behind the Chart (basic & advanced use in trend following and reversal trading)
- Don’t be Afraid of the Money (how professionals handle their capital)
- The Power of Natural Numbers (a breakthrough strategy for capturing profits)
- The Keys to the Kingdom (the much overlooked power of trade sizing)
- Overcoming Fear and Programming Confidence (turning a new trader into a survivor)
Best of all you can take any or all of these and start using them yourself straightaway on Monday morning.
To find out more, please visit: www.CenturyOfTrading.com
Disclaimer, risk warning and copyright notice apply to all articles published on this site.
Copyright © Simon Townshend Ltd 2011, all rights reserved
Perception is not always reality
…but can be a real risk to performance!
The last few weeks we have really been getting beaten up. At least that is how it feels. Many of my friends that trade the same strategy with me are feeling the same frustration as I am feeling. Few trades seem to be working and those that do just don’t deliver worthwhile profits.
At least that’s how bad it feels. Yet when we step back from the day to day activity and look at the facts, we see a rather different picture. Our daily strategy that usually has about 8 to 12 trades per month closed in November at all-time highs. December delivered a small loss equivalent to just 2 losing trades. January has been similar.
So in reality we are actually behind by about 4 losers. That’s all! Or put another way we are just 4 modest winning trades (or just a couple of decent winning trades) off of all-time highs!
That’s not exactly a bad situation is it? Yet we are hurting and I want to understand why?
The only conclusion I have been able to draw is that our perception is being benchmarked against recent history rather than what it is reasonable for us to expect. Psychologically we have become conditioned to expect to close every month at new equity highs, as that is exactly what we have been doing month after month for a long time. So relative to our benchmark and expectations we feel like we are really getting a good kicking.
However in reality, 4 losing trades is so immaterial traders wouldn’t normally even discuss it. So we are actually still in a good place, a place that many traders would be only too happy to have achieved.
So what’s the problem?
Well there actually is a very real problem. Our perception of doing badly takes us psychologically to a very dangerous place and we have to be very careful how we handle this. Feeling like we are doing badly is very destabilizing, even though it may not be true. This in turn can lead to irrational behaviour, to lack of concentration and to silly errors.
It can also create a feeling of desperation to get back on track quickly, which in turn can lead to cutting corners, to taking sub-optimal trades, to over trading and to sloppy trade management.
Together all of these things can easily conspire to create the poor performance that we are actually trying to avoid! This is why we have to be so careful about everything we do until this dangerous psychology is lifted.
So to counterbalance these risks we have to deliberately work to do the opposite – to minimise the number of trades we take, to double check we only take the best trades, to manage them strictly within the rules of our trading plan and to avoid impulsive, irrational decision making. In truth half of the battle is just being aware of these increased dangers we face at odd times like this. The other half is working on these opposites in order to achieve the balance that we are at risk of losing if we allow the false psychology to get in our way.
So watch out for this trap next time you feel you are going through a rough patch. Ask yourself from an objective standpoint “Am I really doing badly or is it just a perception?”. Then work hard to move the perception back into line with reality taking great care until the psychological trap has passed.
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