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Tuesday, December 08 2020
It’s OK to Quit! by Rob B
If you know me, you have heard me say more than once, Never Give Up! While generally this is true, there are times that you need to quit something you are doing, especially in trading. I would never say quit trading overall, unless you truly feel that trading is not for you. While trading can be for everyone, not everyone is for trading and that’s ok.
What I would like to discuss is when to quit. Quite often it’s the quitting of something that saves us time, effort and energy and that time, effort and energy can be refocused into something productive.
Some examples in everyday life that we realize we need to quit and refocus our time would include a marriage that is not going to last. While this seems a bit harsh, after all options to save the relationship are exhausted, divorce can be the only option for both to move forward with their life.
Another example would be a project you started, like restoring an old car. You think, “wow, this could be fun!” I’m pretty handy with tools, and I like cars, but after 1 year, you see how much time, effort and energy (and money) you have put into it, you decide to cut your losses and move on. This is OK.
There are some areas of trading we can look to quit to preserve both capital and our sanity as traders!
Quit moving your stops when the trade goes against you. You had a plan, that plan is not working out. Moving your stops on a regular basis will increase risk and you are not confident in your plan.
Quit thinking or having an opinion on where the market is going. Trade what you see, NOT what you think. The market does NOT CARE WHAT YOU THINK!
Quit trading other people’s plan. You MUST develop your own plan and trade your plan. While we can learn from others, we cannot trade other people’s plan.
Quit having an EGO when trading. Most traders are more concerned about being right than they are about making a good decision and letting the results work themselves out in the long run.
Quit being results oriented. Every trade is a new trade and the last decision you made is unto itself. The next trade is a new trade, and the last trade has NO bearing on the outcome of the next trade.
Quit listening to media outlets for advice on trading. Its ok to be informed but DO YOUR OWN WORK/Diligence on your trade. You will never have confidence in your trade if you're just taking advice from someone else and not actually doing the work yourself.
Quit trading when you are not in a good mood. When you sit down to trade, have positive energy around you. Surround your desk with pictures that make you happy. If you are in trading group, be around other positive folks. Making a good decision is paramount, and while we will never win every trade, when we do have a loss to start the day (and you will) having a positive attitude will help you make a good decision on your next trade..
Quit overtrading! Take trades that are in YOUR ZONE. For me, in a 2-hour trading session, I will typically take 1-3 trades per session. Sometimes ZERO trades if none are in my zone. Just about every time I overtrade, my results are breakeven at best, and typically it was a struggle to just breakeven.
Quit lying to yourself. When you get stopped out of a trade, and you realize you made a bad decision, own that decision and move on. Stop rationalizing why the trade stopped out.
QUIT TRADING AGAINST THE TREND. This is self-explanatory.
Quit Being GREEDY! Have an amount you are happy making and be done with your trading day. For me, this is the only way I can keep the money I have made. Too often I have given back most, all or more than I made by continuing to trade when the market is just not in my zone.
In summation, know when to quit. When you know when to quit, you can refocus and keep moving on.
Trade Well at FNL!
Tuesday, December 01 2020
Poker VS Trading By Rob B
I've been playing poker on a regular basis (both online and live) since 2005 and trading daily since 2015. The similarities are amazing and both help the other.
One of the biggest and most important is Risk management.. In trading, how much do I want to risk on this trade and what is my potential profit.. How often, based on my experience, will I win this trade with a given risk management strategy (i.e. break even formula - profit / (profit + stop). In poker, how much do I want to risk on this hand, what kind of pot odds am I getting to call someone's bet, based on my perception of their hand strength range versus mine and what can I accomplish with a bet in this situation and how often will I win in that bet.
Patience and Discipline:
In both trading and poker you MUST wait for YOUR spot.. Typically in poker a solid reg will be playing 18-22% of the hands dealt in a 9 handed game over a session (typically 2-4 hrs). That means they are folding their dealt hands before the flop, 78-82% of the time.. They are waiting for position, a top shelf hand or a player they know they can outplay. Folks that play A LOT of hands typically do not fare well over the long run. They may have a couple of good sessions due to variance, but inevitably they go bust as they think this is a winning strategy. If I sit down at a table and cannot find the fish (bad players) well, guess who the fish is... IT'S ME! I will leave that game and look for another game that I can find my edge.
Traders who attempt to trade every move of the market in their session (typically 2-4 hrs) fall in the same trap as the poker player that plays too many hands.. They have a winning trading session, think this is how they are going to crush the market and within a short period of time, are busted. Typically traders that are looking for their "spot" will take 1-3 trades in a session. Sometimes no trades are taken as the price action is not conducive to finding their spot they know they have an edge in the probability.
More than 50% of my poker winnings in a cash game come from players on TILT.. They have just had a bad beat (gotten their money in good, they were a favorite, but the cards that came out after the money went in, caused them to lose their hand... They made the right play, but lost... The reload and now are playing mad... What we call playing on Tilt. These are the easiest players to play against, as they have a very hard time making solid decisions due to the emotions of losing a hand that cost them money, even tho they made the right decision.
In trading, you will find your spot, make a good decision and still stop out (lose) the trade.. How do you react? Do you up your contracts and try to get the money back quickly? Do you immediately get into another trade? Or do you wait? Be patient for another spot that you can make a good decision.. This is the biggest difference between winning and losing traders.. They winners regroup, do not let the stop out effect their next decision.
Both successful poker players and traders are NOT RESULTS ORIENTED. They are more concerned with the decision they made, not the result.. They know and understand that over time, if good decisions are made, the results will speak for themselves.
Play Poker or Trade whenever you want!!
One aspect that I absolutely love about Poker and Trading is that I can play poker or trade on MY TIME.. With the advent of online poker and card rooms running around the clock I can find a game when I WANT to play.. Im not relegated to a 9-5 schedule.. Trading is the same. With the futures market, we can trade 23 hrs a day Sun night - Friday afternoon.. Again, on MY SCHEDULE. If I am not in the mood to play or trade, I dont.. I've found when my attitude is not positive and Im not in my zone, my poker and trading goes a similar route. I feel like I am forcing every hand and trade I take. When I play in my zone, I can let the poker game and trading come to me and it comes fairly easily when I dont have to force it.. Play when YOU want to play!
Critical Decision Making!
When money is on the line, can we make critical and thought based decision based on our experience and knowing the risk mgmt percentages of winning the trade or hand over the long haul?How many folks do you know that are Sim Millionaires in trading, but when they trade live money, they cannot make the same decisions and why is that?
BR Mgmt falls in line with Risk Management. Knowing your bankroll in both is crucial to maintaining ;a solid strategy of not being over leveraged in a trade or a poker session. Typically never trading more than 1-3% of your trading account on one trade is crucial. In poker, you shouldn't be bringing more than 10% of your bankroll (or less) to any game... Tournament poker even less than 10% as the variance (swings) can be brutal. Are your playing stakes too high for your bankroll, or trading too many contracts for your trading account to handle. These are sure fire ways to go broke!
Losses are a part of Trading and Poker!
Downswings (poker) and Drawdowns (trading)are a part of each and how you handle the losses will determine your long term profitability. This is what separates consistent and profitable poker players and traders .. In my experience in both, how I can steadily grow my poker and trading accounts is this.. My goal is small win, small win, small loss, small win, small loss, BIG win, small win, small loss, BIG win.. Obviously in any order, but notice that BIG loss is not a part of my equation if at all possible.
If I start a poker or trading session with a bigger than normal loss, I will not move up in stakes in poker or trade more contracts, actually I may do the opposite. I may drop down in stakes or trade less contracts and chip away at my loss.. My goal is to get back to even.. I am NOT going to try to get back my loss in one trade or hand... Grind your loss to a break even. I consider that a WIN and typically will end my session and come back to fight another day with a great attitude!
In summation, I believe trading and poker is gambling UNLESS you have an edge by using position, situational awareness and risk management.. The only way to find your edge is experience. Joining a trading group, poker training site and getting a coach or mentor will be the most productive way for you to find YOUR EDGE and shorten the learning curve.
Keep grinding at the tables and charts and look to collaborate and share with other poker players and traders!
Trade Well at FNL!!