Secrets They Don’t Tell You About Trading

October 3rd, 2014

Distilled wisdom from approximately five years of battling markets as a retail trader. Classified most often in the category of ‘brilliant advice you won’t follow’ based on my experience, we all view ourselves as considerably above average. All of these points could be expanded on but represent a minimal guide to reality as I experienced it.

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1) Equity swings are brutal for your emotional health : you have to work out how to “game” your emotions so you can focus on your “average” day and making that better and not thinking  +/- 2 standard deviation days are normal.

2) Escape velocity is difficult to achieve : to make a living you really need a large multiple of a normal salary just for your trading stake. The cost of living can eat away at your capital base.

3) Reasonable expectations :  Warren Buffet does 22% p/a. Will you do better? And how consistently? Funds management is a very different thing to retail trading.

4) It takes years, not months : Just like chess mastery, to get to a high level in trading, the journey is measured in years and not months. Might your time be better invested in another area of income generation?

5) The education industry is dangerous : The skill to recognize sharks can only be gained by swimming with them long enough until you notice your own blood in the water (or words to the effect)

6) Opportunity cost can be significant : While you are engaging in this anti-social activity, you could be contributing to society in a  more meaningful way than just a “liquidity provider” in the capital markets.

7) You can lose your respect for money : When your equity swings are daily in the thousands of dollars range it is a simple thing to lose discipline in matters such as daily budgeting. Why bother to look after saving  a few dollars at the shopping center when it might be less than the brokerage on your next trade?

8> Variable reinforcement activities can lead to addiction : Beware of signs of addiction.

9) You can never truly win unless you have a finish line : Every day places you closer to ruin, unless you know when to walk away from the heat, it will eventually burn you.

10) Sometimes a zero sum game is good : As often the case, trading represents a negative sum game.

Raptitude Wisdom

January 4th, 2014

A wonderful list, worthy of a sticky post on the blog, just for the purposes of review and consideration and regular intervals. I like point 8 especially :)

original blog post

1) The sooner you do something, the more of your life you get to spend with that thing done — even though it takes less effort (or at least no more) than it will later. It’s the ultimate sure-thing investment and I pass it up all the time.

2) I never regret working out. I can’t count the number of times I’ve negotiated with myself to work out the next day instead of today because I’m worried it will be a “bad workout.” I seldom have a bad day on a day that I work out.

3) Whenever I’m playing with my phone I am only shortening my life. A smartphone is useful if you have a specific thing you want to do, but ninety per cent of the time the thing I want to do is avoid doing something harder than surfing Reddit. During those minutes or hours, all I’m doing is dying.

4) Nothing makes me more productive and in-the-moment than a clean house. There is mind-clearing magic in cleanliness. Waking up in a house where everything is put away is a glorious feeling. There seem to be more possibilities in the air, and all my things seem more useful.

5) Minute-for-minute, nothing I do is more rewarding than meditation. Even after just a very short session, it reliably makes me better at everything, especially making decisions. It lets me do my best. Yet I still do it only intermittently.

6) Creative work is something that can be done at any time. It’s no different than any other kind of work. Inspiration is nice but completely optional. I’ve almost completely come around on this one in 2013. But sometimes the Four Horsemen still trick me.

7) Acting the way you want to feel usually works. When I feel crappy just before I have to go do something, if I decide to act as if I am happy for a while (even though I’m not) I usually end up feeling happy after not too long, or at least much less crappy. This is straight out of Gretchen Rubin’s The Happiness Project and it’s an extremely powerful thing to experiment with. [More on this in an upcoming post.]

8>> Ninety-five per cent of my happiness comes from having a home, a functioning body and something to eat. I live in utter luxury, by any sensible standard of what “luxury” is. If I am unhappy it’s because I’ve lost perspective about the other five per cent.

9) Our minds are geared to manage much less than we typically end up managing. Modern people have so many options they conflict with each other in almost every area. The fewer things I have, the more I enjoy my things. The fewer goals I have, the better I do them. The smaller the portion size, the better food tastes.

10) The quickest and most reliable path to personal improvement is to do the things on my list that I resist most. Internal resistance should be taken as a big red sign guaranteeing rapid growth and new capabilities. Given my experience with the ecstasy that comes with overcoming resistance, logically I should be attracted to it by now.

11) All you need to do to finish things is keep starting them until they’re done. The idea of doing something in its entirety always seems hard. But it’s easy to commit to simply starting on something, and then you’re past most of the resistance. Continuing is just as easy. (Thanks to Leo Babauta for this one.)

12) Whenever I think I’m mad at a person, I’m really just mad at a situation. I’m mad because suddenly life requires something new of me, and it’s easy to implicate a person who contributed to that situation. I want the situation to be responsible for fixing itself, so I attribute it to someone else’s moral failing, and then I don’t have to feel responsible for this new problem of mine.

13) Ultimately, to get something done you have to forget about everything else while you do it. The mind is always telling you that 85 things are on fire and you need to do everything now. However you respond emotionally to it, to move things along you have to pick one to deal with, and let the rest continue burning while you do.

14) The most consistently joyful activities for me are visiting with other people and reading books. Aside from earning a living and a bit of travel there isn’t much else I need in my life. Somehow these two things are still not clear priorities. What are yours?

15) If I find myself in an argument, I’ve made a mistake. It doesn’t matter whose position makes more sense, because by the time it’s an argument any real communication has ended. Marshall Rosenberg’s brilliant method of Nonviolent Communication is a far more useful default response than argument, but I often forget it completely.

16) Few things matter long-term other than relationships, health, personal finance and personal growth. Crises in almost every other area turn over so quickly there’s not much reason to get upset at them. Interestingly, those four are the areas that probably contribute most to happiness in the short term too.

Health Goal: Week 2/2014: Jan 6th-12th

January 4th, 2014

current: 97.0
starting: 97.0
goal: 89.9

weekly (=)
yearly (=)
goal achieved (0%)

Don’t Drink Soft Drinks

January 1st, 2014

Read nothing from the past one hundred years; eat no fruits from the past one thousand years; drink nothing from the past four thousand years (just wine and water); but talk to no ordinary man over forty. A man without a heroic bent starts dying at the age of thirty.

‘The Bed of Procrustes’ Taleb

Health Goal: Week 1/2014: Jan 1-6th

December 31st, 2013

97.0 starting weight

Build Your Dreams

October 2nd, 2013

You must either modify your dreams or magnify your skills. Jim Rohn