Trading education

Dr. Steenbarger did a great post about micromanging trades. This is an area of my trading that I've been working on improving for a long time and I've made a lot of progress. In the past I would find a good trade trade on a daily chart, but then constantly watch the position on a 1-min chart. Inevitably I would get scared out by something that happened on the 1-min, even though my trade was still fine on a daily timeframe. Because of this I think it's important to establish a price target and timeframe before entering the trade.

I remember being surprised when watching Jeff Bierman's thinkorswim chat on daytrading and how he was trading on an hourly chart and saying it was unnecessary to to watch every little price movement. Longer timeframes help to focus on the bigger picture and not get distracted by noise.

When thinkorswim got bought out I started considering potential alternatives just in case it changed dramatically. I realized what I needed in a broker was cheap commissions and a margin account for shorting. Thinking about my trading and what I actually needed helped me understand my own style better. I don't like short-term trading where I have to make quick decisions. I'm much more comfortable with a slower paced style.

Lastly, I found this show on BBC where people are selected to be trained as traders. The title "Million Dollar Traders" gives some insight to the mentality of the show. In the first episode, the new traders describe their motivations. Most of them are simply interested in getting rich. One retiree talks about his hopes of learning to trade so he can make money trading his retirement saving and "provide a more comfortable retirement". Another of the candidates, who works promoting fights, says "it's about validation" and that he wants to "prove" he can be a sucessful trader. To top it off, one of their coaches says "if you sleep really well every night, there's probably something wrong".

So BBC has a show about trading, meant for the public, that says trading is about validating yourself to other people, making lots of money, and taking on excessive risk to the point that you never sleep well. Great advice, BBC.

But on the other hand, people who are interested in trading and have the dedication can learn a lot. Retail trading tools have increased, commissions are cheap and the internet is full of amazing resources (like the ones mentioned above) for people who want to learn.