Trading Holiday During Toxic Times

This is the third in a series of articles that began with the article entitled “Are You Fit To Trade?” dated February 26, 2007.

Part of self-examination includes noticing environmental factors that impact your trading.

There’s a series of articles in this blog starting July 11, 2006 entitled “Profit By Skipping Out” that address this.

It’s better to skip out on trading than to continue trading when any of the following events occur in your life:

 Divorce
 Marriage
 Birth of a child
 Death of a family member
 Selling your house
 Buying your house
 Moving from your old house (or office) into your new house (or office)
 Quitting (or getting fired from) a job
 Starting a new job
 Getting sued
 Suing someone else

Also, it’s better to skip out on trading than to continue trading when you are stressed out by toxic people such as the following:

 A spouse who keeps nagging you to give up trading and get a “real” job
 A parent mother who browbeats you about your love life or lack thereof
 A flaky cousin who thinks trading e-Mini’s on the CME is some sort of scam
 A dumb brother-in-law who keeps saying trading is so easy a monkey could do it
 A stressed out financial partner who phones every day to pressure you to make him rich
 Kids who won’t listen to you about whatever

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Impaired driving and impaired trading

This is the second in a series of articles that began with the article entitled “Are You Fit To Trade?” dated February 26, 2007.

Why should you be concerned about being fit to trade? Isn’t it just a matter of sending orders to your broker? Au contraire.

Trading can be as dangerous as driving an automobile. Would you drive if you knew your ability to drive was impaired (e.g. by alcohol or medication)? Maybe you would, but would you agree that your chances of getting into an accident are higher when you’re not fit to drive? The same line of reasoning applies to trading when you’re not fit to trade – you’re more likely to get into an accident.

So how do you know if you’re fit to trade?

One way is to just ask yourself if you feel that you’re fit to trade today.

A variation of this is to rate yourself on a scale from 1 to 10, and decide that you’ll only trade when you’re at an arbitrary figure like 7. Then keep a record and compare your results to your self-rating to see where on your self-rating scale you need to be historically before you can get good results in trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Self Examination

In the article dated Tuesday, February 20, 2007 entitled "Ten Things Successful Investors & Traders Do" I listed the ten activities that research has shown to be common among successful investors and traders. The ten activities model was created by Van Tharp and involved his study of thousands of investors and traders.

One of the ten activities was “self examination”.

That’s going to be the topic of this week’s series of articles.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Tenth Task

This is the fourth and last in a series of articles that started February 20, 2007 with the article entitled “Ten Things Successful Investors & Traders Do”.

10. Periodic Review. Ask yourself, “Is what I am doing working or not? Am I making or losing money?” Do this only after a significant number of trades, such as 25 round trips. That’s because any single trade is not statistically significant. You need about 25 round trip trades to be able to confidently form any conclusions based on the data.

Get an article in PDF if you’re in a hurry to find out more about the 10 Tasks of Successful Investing & Trading (it was for free last time I checked)
http://www.otrader.com.au/stock_and_option_trading_articles/van_tharp.asp

Or order the home study course from Van Tharp at
http://www.iitm.com/products/product_list.htm

back next week ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Tasks 7,8,9 out of 10

This is the third in a series of articles that started February 20, 2007 with the article entitled “Ten Things Successful Investors & Traders Do”.

7. Taking profits if applicable. This has to be pursuant to the Low Risk Idea you developed in Task #1.

8. Exiting a position with a loss if applicable. This has to be pursuant to the Low Risk Idea you developed in Task #1.

9. Debriefing. Ask yourself, “Did I follow my plan (from Task #1)? Do this daily if you day trade. If you trade less frequently than day traders, do this while you are stalking a trade and after each order entry (even if the order is not filled – you have an opportunity to correct any mistaken order if you do this debriefing).

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Tasks 4,5,6 out of 10

This is the second in a series of articles that started February 20, 2007 with the article entitled “Ten Things Successful Investors & Traders Do”.

4. Stalking. Waiting until conditions match what you want them to be before entering into a trade. This has to be pursuant to the Low Risk Idea you developed in Task #1.

5. Action. Enter an order to open a position. This has to be pursuant to the Low Risk Idea you developed in Task #1.

6. Monitoring. Check what has happened to conditions since opening a position. This has to be pursuant to the Low Risk Idea you developed in Task #1.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Ten Things Successful Investors & Traders Do

This week’s series of articles are about the ten things (tasks) that successful investors and traders do.

The list of ten tasks appears at page 40, Footnote 4 in Financial Freedom Through Electronic Day Trading by Van K. Tharp and Brian June. The list was based on research by Van K. Tharp involving studying hundreds of successful investors and traders to determine what they had in common.

Here are 3 of the 10 tasks.

1. Develop a low risk idea. Observe, research and test what elements of a trading system that you think would result in profits that are larger than losses.

2. Self-examination. Ask yourself if you’re emotionally fit to trade. If not, don’t do it until you are. Do this every time before you enter any trading orders. Day traders have to do this daily. Others have to do it every time before entering a trading order.

3. Mental Rehearsal. Imagine yourself going through the motions of trading. Mentally practice your winning moves based on the Low Risk Idea that you developed in Task #1. How often you do this depends on your desired frequency of trading. If you day trade, you'll need to do this daily. If you only trade once a week or once a month, you can do it less frequently.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Breathing - Some Resources

...continued from yesterday

This is the fifth and last in a series of articles that started on February 12, 2007 with an article entitled “Better Trading by Better Breathing”.

If you’d like to learn more about how to use breathing to enhance your life, including but not limited to profitable trading, try these resources (which I neither recommend for nor against).

Free Mini-manual on how to breathe
abel.hive.no/trumpet/exercise/yoga.html

Free evaluation about your breathing:
http://breathing.com/tests.htm

According to the following website, proper breathing technique is part of the training program in the Russian military. Some of their breathing techniques have made it to the west at
http://www.russianmartialart.com/main.php?page=article_info&articles_id=16&osCsid=5aa33ac742a9028e34bc513b3f83e882

The University of Utah has a course on Breath Walking which aims to increase energy levels, mood control, and mental clarity. See http://www.acs.utah.edu/GenCatalog/1074/crsdesc/lldan-nc.html

Here’s a couple of yoga oriented websites that offer lessons on breathing
http://www.goodintentionsonline.org/breathwalk/basics.html
http://www.yogachicago.com/nov04/breathwalk.shtml

Here’s some interesting books you might find either at your local public library or for sale at some of the internet book vendor companies:

Ramacharaka Yogi, Science of Breath.

Andy Caponigro, The Miracle of the Breath: Mastering Fear, Healing Illness, and Experiencing the Divine

Dennis Lewis, Free Your Breath, Free Your Life: How Conscious Breathing Can Relieve Stress, Increase Vitality, and Help You Live More Fully

...back next Tuesday (Monday is a holiday)...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Breathe Away Fear

...continued from yesterday

This is the fourth in a series of articles that started on February 12, 2007 with an article entitled “Better Trading by Better Breathing”.

Use Version Two of the breathing technique to give yourself a strong boost of energy when you’re feeling tired or fearful to the extent of being unable to pull the trigger before or while trading.

Here’s Version Two:

1. Inhale through your nose for one count, taking the air in QUICKLY and FORCEFULLY;
2. Hold for four counts,
3. Then exhale through your mouth for two counts QUICKLY and FORCEFULLY.

Do only ten repetitions of this three part cycle of breathing.

This method works to counteract the feeling of fear, one of the two killer emotions in trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Breathe Away Greed

...continued from yesterday

This is the third in a series of articles that started on February 12, 2007 with an article entitled “Better Trading by Better Breathing”.

Use Version One of the breathing technique to calm yourself if you’re feeling nervous or anxious before, during or after you trade. You’ll likely get better results in your trading while you're calm instead of feeling nervous or anxious.

Here’s Version One:

1. Inhale for one count SLOWLY;

2. Hold for four counts;

3. Then exhale for two counts SLOWLY.

Do only ten repetitions of this three part cycle of breathing.

This method works to counteract the feeling of greed, one of the two killer emotions in trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Breathing Against Fear & Greed

...continued from yesterday

This is the second in a series of articles that started on February 12, 2007 with an article entitled “Better Trading by Better Breathing”.

There’s two versions of the breathing technique outlined in yesterday’s blog.

One version helps you overcome greed by putting you into a calm mood.

The other version helps you overcome fear by putting you into a strong energetic mood.

Together, the two versions of the breathing technique help you overcome the two deadliest emotions that traders face everyday.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Better Trading by Better Breathing

Do you breath before, during and after you trade? If so, then you need the information in this week’s blog articles. Did you take a course in breathing in your MBA program?

I first learned about this technique from a karate master in Montreal. Decades later, I read about it in a book by Tony Robbins, entitled Unlimited Power, at p 171.

There’s a way to breathe that cleanses your lymphatic system, gives you an energetic feeling, and seems to improve mental clarity.

For traders, the most important benefit is that this breathing technique can be used to alter your mood so that you can trade “in the zone”, your ideal mental and emotional state.

Breathe in this ratio: inhale through your nose for one count, hold for four counts, then exhale through your mouth for two counts. The “counts” can be seconds, multiple of seconds or even minutes. For example if you inhale for 10 seconds, then you need to hold for forty seconds, and then exhale for twenty seconds.

When you inhale in this technique, you need to take deep breaths through your nose so that the air feels like it goes all the way down to your diaphragm. In fact, your diaphragm and midsection of your body needs to expand while inhaling to let in as much air as your lungs can hold. Your lymphatic system accepts the inhale part of your breathing as a vacuum that sucks toxins out of your blood system.

When you hold your breath in this technique, you are oxygenating your blood.

When you exhale in this technique, you are eliminating toxins that goes from your lymphatic system into your lungs.

Do only about 10 cycles of this inhale-hold-exhale at a time. Start with fewer repetitions until you have stronger lung capacity for more repetitions.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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...continued from yesterday

Today's blog is the fifth and last in a series of articles about a study mentioned in the blog on Monday February 5, 2007 entitled "Commitment & Passion Don't Distinguish Winning Traders From Losing Traders".

The sample of profitable traders in the study were all technical type traders who used specific entry and exit criteria. They did not second guess their entry or exits, but instead just took the trading signals as they manifested from charts.

Meanwhile, the results in the study showed that unprofitable traders had a lot of internal self-talk and mental debate before, during and long after any given trade.

They hesitated before entries to think about them.

They second guessed the wisdom of being in any given position while holding the trade in their account.

Then after the trade was over, they agonized over what could have, would have and should have been.

They were an anxious bunch. Sometimes, instead of slowly debating with themselves before entries, their anxiety sometimes pushed them into trades and they did not feel comfortable going for any length of time without being in a trade.

gone until Monday ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Goals: Profitable vs Unprofitable Traders

...continued from yesterday

Today's blog is the fourth in a series of articles about a study mentioned in the blog on Monday February 5, 2007 entitled "Commitment & Passion Don't Distinguish Winning Traders From Losing Traders".

Another finding in the study was that goals distinguish the profitable traders from the unprofitable. Both groups set goals, just different types.

Profitable traders set money management type goals as well as stop loss goals. These are performance type (aka "process type") of goals.

Unprofitable traders set get rich quick type of goals such as turning $10,000 into $1,000,000 quickly. These are end results type (aka "outcome type") of goals.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Do you believe you can and will make money trading?

...continued from yesterday

Today's blog is part of a series of articles about a study mentioned in the blog on Monday February 5, 2007 entitled "Commitment & Passion Don't Distinguish Winning Traders From Losing Traders".

The study also indicated that the profitable traders are different from the unprofitable in terms of beliefs.

Profitable traders believe that they can and will make money trading.

Unprofitable traders doubt if they or anyone else can or will make money trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Specialize in a few markets/instruments

...continued from yesterday

Today's blog is the second in a series of articles about a study mentioned in the blog on Monday February 5, 2007 entitled "Commitment & Passion Don't Distinguish Winning Traders From Losing Traders".

While committed focus on trading does not distinguish profitable from unprofitable traders, another type of focus does.

Being focused in the sense of specializing in one or just a few markets/instruments does distinguish the profitable from the unprofitable traders. The aforementioned study indicated that profitable traders do specialize in one or just a few markets/instruments, some for many decades.

On the other hand, unprofitable traders quickly and frequently change markets, instruments, gurus they follow, and newsletter advisory services that they use.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Commitment & Passion Don't Distinguish Winning Traders From Losing Traders

Larry Williams wrote about a study in which a group of 20 profitable traders were compared with a group of 30 unprofitable money-losing traders. The results were summarized at pp 231-232 of his book Long Term Secrets to Short Term Trading.

The study found that commitment to trading and passion about trading were common to both the profitable and the unprofitable group of traders. That’s surprising given that many trading coaches emphasize that commitment and passion are necessary for success as a trader. For example, Ruth B. Roosevelt wrote about that in her book Exceptional Trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Two-bit Speculator????

...continued from yesterday

Here’s something to ponder over the weekend. According to World Cup trading champion Larry Williams, “Until you use a money management approach, you will be a two-bit speculator, making some money here, losing some there, but never making a big score. The brass ring of commodity trading will always be out of your grasp as you sashay from one trade to another, picking up dollars but not amassing wealth.” (From his book entitled Long-Term Secrets to Short-Term Trading).

continued Monday ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Capital To Trade = ?

...continued from yesterday

World Cup trading contest winner Larry Williams described his formula as a variation of the Kelly formula popularized by Ralph Vince.

Capital To Trade
= (Win/Loss Amount Ratio + 1) / (System Accuracy – 1)

Note that the formula he actually used is a variation, and not the original version, of the above formula.

The money management formulae mentioned in this week’s series of articles are based on information contained in the book Secrets of the World Cup Advisors.

Larry Williams has a book in which he devotes an entire chapter to describing his current thinking on the Kelly formula and how he derives his current formula for calculating how many contracts to use on his next trade. That book is entitled Long-Term Secrets to Short-Term Trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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