Trader Mindset

Latest Episodes:

Why I would cut my margin balance during earnings season Jul 29, 2020

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Subscribe to the show You can fantasize about how much your account balance can explode if you get lucky. However, margin cuts both ways and you can get blasted more times than not. Protect your capital and play superior defense. Treat every trade as serious business. You can learn to do great things and grow your funds systematically. Click here to get your free copy of The Inner Voice of Trading audiobook.

Be mindful of correlations and trade your equity curve Jul 28, 2020

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Subscribe to the show One bad earnings report can impact several of the other names you own. Trade your equity curve and cut your position sizes if vol increases. Click here to get your free copy of The Inner Voice of Trading audiobook.

What not to trade during earnings season Jul 27, 2020

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Subscribe to the show Making a big bet before an earnings announcement is a gamble. You can't infer what the company is going to report because "you see something" in the chart pattern. Here are my thoughts. Click here to get your free copy of The Inner Voice of Trading audiobook.

Studying your backtest to harvest the gems that can improve your overall model Jul 24, 2020

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Subscribe to the show This might be too "inside baseball" for some, but you can study the simulated backtest of a model and use the insights gained to go back and adjust your rules. You can segment the winning trades from the losing trades and study both outcomes to improve your entries, bet size, and exits. By doing so, you might be able to improve either your winning percentage or the expected value of a trade for the rules you'll follow. Click here to get your free copy of The Inner Voice of Trading audiobook.

How to determine the best trading methodology for you Jul 23, 2020

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Subscribe to the show Trading systems have different accuracy rates and ratios between winners and losers. Knowing these ahead of time might better help you determine which is most suitable for you - at least to start with. A trend following model might have 30% winning percentage with winners being 3 times the size of the losers. A chart reading model might have a 70% winning percentage, but a winner / loser ratio that might be smaller than 3:1. Both can have a positive expected value of a trade, so they can be worth following. One might be a better fit for you although both are expected to make money. Of course, knowledge of yourself first is the best way to evaluate trading rules when determining compatibility. Click here to get your free copy of The Inner Voice of Trading audiobook.

Why you might consider trading outside of normal trading hours Jul 22, 2020

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Subscribe to the show Your data feed might only include what we call normal trading hours or "outcry only." For some of you, it might make sense to analyze what happens in pre-market and after-market activity. You may be able to define a small edge to either improve your entries or exits. For your exits, you might be able to effect a trade in the pre- or after-market to improve your price and limit losses or to better protect unrealized gains. Click here to get your free copy of The Inner Voice of Trading audiobook.

How to run your screens and be mindful of survivorship bias Jul 21, 2020

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Subscribe to the show Most system traders can screen for tickers by price, volume, and volatility. You can also add some overlays if you want and test those parameters also. Here are a few thoughts on running screens. Be mindful to find the data on the securities that don't trade anymore and add that data into your overall data to screen. Else, you'll only be looking at survivors and it would be good to know how your rules would have worked if your model had initiated longs on ENE or BSC that eventually went bust, or other names that were taken over or merged. Click here to get your free copy of The Inner Voice of Trading audiobook.

When to increase your bet size Jul 20, 2020

Show notes

Subscribe to the show Most system traders do not just increase their bet size on a whim. Many have their risk systematized to be a fixed percentage of their overall equity conjugated with the volatility of the instrument. They increase their risk systematically and only trade larger when their capital base grows due to gains or from adding capital to their account. Chart readers can do the same thing although they have to do it by hand. Be careful if you increase your size because you think "you are on to something..." and get too big too soon. That can come from hubris which we spoke about recently in another episode. You can look at your winning percentage and ratio of win size to loss size to help determine if/when you should increase your bet size / risk unit. Click here to get your free copy of The Inner Voice of Trading audiobook.

Why your protective stops matter more than the story Jul 17, 2020

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Subscribe to the show In this episode I recall how I got stopped on CSCO for a loss and why that was a great trade. Click here to get your free copy of The Inner Voice of Trading audiobook.

How your stop orders reflect your belief system and why knowing isn't doing Jul 16, 2020

Show notes

Subscribe to the show If someone you know is bearish and they're not short, they're full of it and probably like to hear themselves talk. Do them a favor and call them on their nonsense. Ask them where their stop orders to enter the market are. I find this happens with people who are looking for attention and trying to show you how smart they are. What a snooze. I don't care about opinions and theories. If this is something you're falling victim to, you can gauge your own level of self-deception by listing all the entries you have for your theories. Click here to get your free copy of The Inner Voice of Trading audiobook.

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