I see some clever dude who trades from his box room, in a three bedroom semi in Hounslow, West London, is up for extradition to the US, for causing the May 6 2010 flash crash in the S&P E-Mini on the CME, by automating large amounts of sell orders then pulling them at the last minute to profit from the crash. Apparently his internet connection was a nanosecond faster than those in the city of London as he was closer to the server. Can’t see anything wrong myself in that, unless other evidence emerges. Still he does face a possible 380-year prison sentence, maybe in somewhere like Guantanamo or San Quentin, with a possible remission for good behaviour after serving a quarter. But for those of us who aren’t as clever and haven’t a clue how he did it, here’s something completely different:-
I’ve always meant to read those Market Wizard books by Jack Schwager but have never got around to it. I think my reason for this, is the thought that they will be about various other types of trading other than currency trading. Now I know there will be lots to learn from other types of trading, but I’ve always struggled to read books other than forex related. I did read Mastering the Trade by John Carter for example, but found myself skipping parts to get to stuff that was more relevant in my eyes to me. A few years ago I looked at Tim Bourquin’s traderinterviews.com website and out of about 300 interviews there was only a few about forex traders and so I ended up purchasing only two interviews, number 203 about Kevin a forex scalper and 250 Rudy Leder a forex backtesting guru. The interviews were great but only two about forex was disappointing. Tim did write the book ”Trader’s at Work,” which does contain an excellent interview with Rob Wilson, a forex eurusd 1 min chart trader at that time, which I got from a free book sample download. Again I never actually bought the whole book to read. Now when I heard Rob Booker had purchased traderinterviews from Tim over a year or so ago I thought there would be loads of interviews to get my teeth into, but alas nothing seems to be going on with the website and I can’t even seem to login any more. So what can we learn from other successful traders other than the inspiration and the confidence that success in trading is actually achievable by the person with a computer and an internet connection at home. Well Tim did try to sum up all those 300 interviews into 30 habits of wealthy traders which I give below. In his lectures he did elaborate a lot more but the list is still good. Some may not seem quite relevant to you at the moment, but I’m personally finding more and more of them are to me. Now Rob Booker also did such a list but narrowed his down to 16 in his ebook and I’ve added those below Tim’s. Again you’ll have to get hold of the ebook to get the fully expanded stuff but an interesting list all the same.
30 Habits of Wealthy Traders by Tim Bourquin
1. Wealthy traders are patient with winning trades and enormously impatient with losing trades.
2. Wealthy traders realize that making money is more important then being right.
3. Wealthy traders look at technical analysis as a picture of where traders are lining up to buy and sell.
4. Before they enter any trade they know exactly where they will exit for either a gain or a loss.
5. Wealthy traders approach trade number 5 with the exact same mind set they did on the 4 previous losing trades.
6. Wealthy traders use naked charts and focus on zones.
7. Wealthy traders realized a long time ago that being uncomfortable trading is OK.
8. The markets they trade fit their personality. They are a participant – not an on-looker.
9. They stopped trying to pick tops and bottoms long ago.
10. They stopped thinking about the market being “cheap or expensive.”
11. Wealthy traders are willing to change sides, short to long and vice versa when the market tells them to do so.
12. Wealthy traders trade aggressively when trading well and modestly when they are not.
13. They realize the market will be open again tomorrow.
14. Wealthy traders will never add to a losing trade….EVER.
15. Cash is the target but wealthy traders set goals for their trading that are anything but money.
16. They read trading books, but they read more “crowd” books too ex: The Wisdom of Crowds, The Art of Strategy, Markets, Mobs & Mayhem.
17. They provide liquidity to the markets while watching price and volume.
18. They have a way to gauge fear, greed and speed of transactions. One way: tick charts.
19. They practice reading the right side of the chart, not the left.
20. Every wealthy trader trades has an edge.
21. Their position size is calculated exactly on risk tolerance.
22. Profit targets are based on Average True Range.
23. One or two trades a month make their month.
24. Confident decision makers in the face of incomplete information.
25. A losing trade is not a reflection on themselves as a trader.
26. Their business isn’t trading – it’s finding the right trades.
27. They write down or record every trade, price, thoughts, mood.
28. Their conviction on an active trade remains unless something major changes.
29. A winning trade does not result in taking on extra risk the next trade.
30. They trade the reaction not the news.
16 Rules of Millionaire Traders by Rob Booker
1. There is one kind of trading you can be great at. That’s what you should do. And nothing else.
2. Your very best trades are created from: overwhelming evidence on the charts; and a fundamental or order flow ”boost” to drive it.
3. Your investment in a healthy mind- courses, books, motivational and inspiring material, will have the most immediate and positive impact on your trading, more than anything else.
4. Do not drink, smoke, or abuse your body or otherwise become addicted to any substance, person, thing, belief. burden, sorrow or experience.
5. Focus beats natural skill and luck every time. Focus means you do one thing great, and that’s all you do.
6. Trust one person to close out your trades if you break your rules. Guess what? You won’t break your rules any more.
7. Your rules about how to handle losing trades are ten thousand times more important than anything else in your trading. There are two great trading rules about money management that can make you a millionaire many times over. These two rules are:
8. ”The Rule of Ten.” If you prefer to cut off losing trades quickly, find an edge that won’t ever give you more than 10 losing trades in a row.
9. ”The Rule of Thirds.” If you prefer to hold into and work your way out of losing trades. Consider making your second trade 3 times bigger than your first.
10. Radical honesty will unlock long-term consistent profitable performance.(Tell the truth in your journal, don’t hide losses, honesty lifts a weight from your shoulders.)
11. You must believe you can and deserve to make massive profits.
12. Your daily trading plan and ritual is not optional. If you don’t plan, you don’t trade.
13. Your success is directly tied to your obsession with accumulation.
14. If you open a trade with a massive size, then your judgement has become distorted.
15. Never marry a trading position. The market does not ”always come back.” Don’t trade like it does.
16. If you find that you are stuck, reboot. Start anew.
Note: I will emphasise that some of these are explained in much more detail by Tim and Rob themselves in their respective course/books. I thought I would add that last note in case I get an extradition order for plagiarism and copyright theft to join the clever dude for a two way stretch in some US scrubs. I did also send a note to Rob Booker in the show notes of the traderspodcast, about not getting access to traderinterviews, as I had heard he was interviewing Matt LaCoco and Kim Krompass and I would love to read or hear those interviews. Hugh Kimura did interview Kim on his trading heroes website podcast, but Rob Booker is in a different league in any trading type interview scenario. Well that’s my Saturday night gone, writing my blog and supping a few bottles of ”suds” as they called them in the Shawshank Redemption. Let’s hope that poor chap doesn’t end up there!