From the Desk Of A Trader #14
“What trading is all about”
Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, ETH, CL, ES, and NQ as well as our favorite altcoins.
Today, we are happy to share the thoughts from the desk of a commodities trader. The following views are that of Martijn Bron and do not represent the views of his employer.
From the Desk Of A Trader
Reflecting upon a spectacular first quarter and March madness in the financial markets, I dug up a presentation I built in 2011, after trading commodities for over a decade in Cargill, about trading and #riskmanagement for new hires.
That presentation I have shared over the years pretty much unchanged, while the organization and markets continued to evolve.
It focused on cocoa, a niche market, so I share the more general #trading insights which can be applied in all financial #markets.
More than a decade later reading below statements still represent what I consider what trading is all about, and I can't easily come up with additional ones.
The Essence of Trading
Discipline
Intense personal involvement. It’s hard work. Do your homework
Appetite for risk and risk control
Hold on to winners and cut losers
Being open and curious
Courage. To try, to fail, to succeed, to keep on going when the going gets tough
Acknowledging you won’t buy the low and won’t sell the high
Fear for the mkt. Think about how much you can loose, not about how much you can gain
Psychology
Enormous emotional ups and downs
Mental strength
Accepting you were wrong
While your are in, you can’t think. When you get out then you can think clearly again
Ego’s. If a position doesn’t feel right as soon as you put it on, don’t be embarrassed to change your mind and get right out
Balance
Balance between the conviction to follow your ideas and the flexibility to recognize and act when you have made a mistake
Don’t worry about getting out, you can always get back in. The latter is much easier as the first confronts you with your mistake
Style
Stick to your own style and plan. Rather lose with your own vision than lose with someone else’s vision
Be able to see that the emperor has no clothes
Confidence. Trading someone else’s vision or style won’t give you the confidence
Size
Decrease size when you trade poorly, increase size when you do well
When you trade the worst, you trade the smallest
Protective stops. Max amount loss, or (better) level where there is reasonable certainty that the trade is wrong. Adjust size accordingly
Assessing size and liquidity. When trading size you have to get out when the market lets you get out, not when you want to get out
Use this knowledge. Large speculators want others to execute stop losses to liquidate their positions into stops
The Market
Respect for the person on the other side of the trade. What do they know that I don’t?
Don’t believe in conspiracy theories. Nobody is bigger than the market, and sooner or later it goes where it wants to go
People are driven by fear and greed
Trading is NOT about
Entertainment
Wishing or hoping. This is a destructive way of thinking, taking attention away from the fundamental analysis
Impulsive decisions
Luck – in the long run
Being a hero or a macho
Feeling you are very good. The second you do that, your face is being ripped off
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