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Trader: Thanks for great e-books. I wanted to ask you how many pips on average your system is doing in trade, day or month on given currency pair. Thanks for answer.

Me: It depends. I try for between 50 and 100 pips per week. But it's more important to me that I don't lose.

Trader: how many currency pairs you trade? and which ones?

Me: i plan trades on up to 12 currency pairs per day. i take 2-5 trades per week at most.

Trader: what is your strategy?

Me: To not lose money.

Was I just joking around? No. I get more and more email every day from people asking me what my "strategy" is. My strategy is to not lose money. As much as I say that, it still doesn't make sense to some people. I'll try to write some additional posts to clarify this even further.

Continue reading "Rob, What's Your Strategy?" »

Posted by Rob at 07:06 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Ur + Ur Hand
Runaway
Conversations With My 13 Year Old Self
Nobody Knows
Who Knew
I Got Money Now

You can see Pink below, after her short GBP/JPY trade was stopped out after BoJ intervention:

Continue reading "Pink Songs that Describe Your First Trading Account" »

Posted by Rob at 06:33 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

The main thing that I do every day as a trader is : Show Up. Literally. Most of the people I have showed this strategy to follow it for a couple of days, weeks, maybe a month, but if it doesn't give them non-stop, perfect set up trading action, they leave it by the wayside. Sort of like serial monogamy.... if you don't at some point just find someone who is basically a good person and commit to the whole ride, you'll end up with a string of 1-2 year relationships that feel good initially but never really give you the depth, the wisdom, the satisfaction, of really having worked for something and gotten to know it on a deep level. There may be no great setups for two weeks straight, but if I just make sure that I show up every day, I know I will have a front row seat when something fabulous does appear, and I know that I will know exactly what to do.

Are you on the front row? Are you willing to let a week (or more) go by without a trade?

Continue reading "Getting a Front Row Seat" »

Posted by Rob at 08:24 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Pictures can deceive as well as instruct. The brain highlights what it imagines as patterns; it disregards contradictory information. Human nature yearns to see order and hierarchy in the world. It will invent it where it cannot find it.

This is a quote that I had heard years ago, but today when I read it again (thanks Mark!) it made me think longer about our own willingness, not only as traders but also as human beings, to seek out confirmation of our own opinions, and repel opinions/charts/information that does not positively correlate with our own world view.

As traders, we often invent order where it does not exist. Often I will see a trader point to a chart from an economic news report and say something like, "See what it did? This is what it always does," when in reality it was just a bunch of chaos resulting from the whack-out, crackhead trading that goes on immediately after economic news. I have been guilty on many occasions in my early trading career of attempting to find order and patterns where they did not exist, or to find "order" in a very small sample set and then apply it universally. To put it another way, I would see one example of currency movement and assume that it worked most of the time, rather than take the time to study movements that happened most of the time and then apply it to current market conditions.

Thanks again to Mark for the quote. And here's an interesting Wikipedia entry about Mr. Mandelbrot. If you click here you can skip to the interesting part about fractals and "regular roughness."

Continue reading "Instructing Pictures" »

Posted by Rob at 06:44 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

What made the dinner even more enjoyable were the people. I ate dinner with the Saza Investment company's management team, as well as my friend Tomo and a new friend who is a professional trader in Tokyo. These people were the very best. I could probably write on and on, but I will simply say a few short words below after I post the link to the Saza (in Japanese) web page:

It is very rare indeed these days to find people who are primarily interested in the happiness and success of other people. Every single person at the dinner table last evening wanted to talk about only a few things:

1. How to help traders become more successful. 2. How to help traders through the challenge of acquiring discipline. 3. How to hold chopsticks.

Kofu-San, the president of Saza, told me: "We are a small trading firm right now. But we have made a specific decision that we will help people, one at a time. And if we do this, then the business will grow naturally."

Rare, indeed!

Continue reading "Dinner in Tokyo: Rare Fish, Rare People" »

Posted by Rob at 07:01 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

If you think about what is going on with the Canadian Dollar right now, it's hard to find enough good reasons for the blasted Loonie to keep moving up. It's like Paris Hilton's popularity: it does something amazing/unexpected/vulgar, and all of the sudden it takes on a life of its own. People start buying the CAD (paying attention to Paris) just because other people are doing it. Because it's the thing to do (you can replace "Paris Hilton" or "CAD" with "Carry Trade" anytime you want).

Here's the not-so-curvy curve:

Let's call it the "PH Effect," which is a Paris-Hilton like undeserved fascination that turns into a frenzy. It will all end badly for Paris/Carry Trade/CAD.

UPDATE: I just posted a USD/CAD chart over at the Harry Banes blog.

Continue reading "The Insanity Curve and The Paris Hilton Effect" »

Posted by Rob at 09:50 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

One of the reasons that people find it so difficult to trade at home: they're alone. They not only lack supervision, but they don't have others with whom to plan, to speak, to trade. To yell at.

Collaboration is a big deal.

Continue reading "Collaboration" »

Posted by Rob at 04:17 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

If you're interested, let me know. Send me an email by clicking here.

More details to come tomorrow.

Continue reading "Live Training in London: For 5 Students" »

Posted by Rob at 10:27 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Here is a quote I thought you might find interesting:

Farrow [the researcher profiled in the article] has found that players who make poor decisions tend to glance at targets, rather than pausing on them. They're also more drawn to motion. "In a lot of team sports, you're attracted to the area of greatest movement," Farrow says. "But just be-cause there's a person running fast and waving his arms doesn't mean he's the best person to kick to."

We do this as traders, too. We are so focused on the money that we want to make, the target, that we can't see the pathway to arrive there.

Some traders seem to be "natural" at trading. They seem to effortlessly trade profitably. I believe that when a trader is so primarily and singly focused on the profit she wants to make, that she cannot actually see the pathway there. Hence, traders who say:

1. "I should have seen that trade coming! I can't believe I missed it!" 2. "The charts used to make sense, but now it is all jumbled up and confusing." 3. "It's just easier for some people. It's much harder for me."

It can become easier to trade if we focus on the big picture. This would include:

1. Balancing our attention across a wider field of vision. This means that we are not entirely focused on reading materials about trading -- we are also reading about traveling, spirituality, relationships, sports -- other stuff. 2. Making sure that we eat right and sleep well. 3. Even if we have financial pressure, that we are willing to allow ourselves time and experience. 4. Waiting for the right trading setups, not "any" trading setup.

I hope to read more about this type of thing. If you have interesting articles/books about this subject, let me know.

Continue reading "Field Sense and Mind Games" »

Posted by Rob at 09:56 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

I'm in room 2602, which I think is cool because it has the numbers 6 and 2 (62). Surely a coincide. Here's a photo from my hotel room:

More updates (and trade ideas) coming this week.

Continue reading "Room 2602" »

Posted by Rob at 08:16 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

There is a big difference in trading between keeping things simple and being simplistic. Simple means that you specialize in one type of trading, on one time frame, on just a few currency pairs, and that you keep a normal human trading schedule (remember, even Wall Street currency traders work in shift -- no one stays up for 24 hours a day to trade). Simplistic means that you expect to make money without doing any backtesting or homework or planning of any kind (not possible).

Continue reading "The Complexity Curve" »

Posted by Rob at 10:04 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

In reality, the progress of a trader towards trading for living looks more like this:

In other words, it's all about long periods of plateaus (the Ho-Hum times) interrupted by Woo-Hoo moments and breakthroughs. Many traders don't succeed because they give up during the Ho-Hum times. Their system is "not working like it used to," or "My schedule has changed," or "I am just breaking even and not making progress." At times like this, traders start to do all kinds of terrible things to try to force the progression upward, and that invariably fails.

The Ho-Hum moments are when traders lose hope.

The Woo-Hoo moments are when a trader finally understands that risking less on every trade means that long-term, he will make more money. Or when a trader finally admits that he cannot trade from the 5 minute chart, but instead needs to look at longer term setups because he has a full-time job. Or when he realizes the power of backtesting, or being disciplined in all areas of his life, or of keeping good records of his trades.

Continue reading "The Woo-Hoo Timeline" »

Posted by Rob at 09:46 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Click here to register now.

Hope to see you there.

Continue reading "Free Presentation in New York" »

Posted by Rob at 09:52 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Click here to sign up.

I hope to see you there. I will be doing a similar presentation in Australia the week after. More details to come.

Continue reading "Free Presentation in Tokyo" »

Posted by Rob at 09:48 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

1. Are reluctant to trade any system, until they have perfected their "own" system.
2. Want to build their "own" system and feel like they are "cheating" if they trade someone else's system.

We worked with a brilliant trader last week, and he straight-up confronted this attitude and pounded it into oblivion. He realized that he could trade right now using what he already knew and could learn from others. And then he could spend lots of time building his own system. This individual taught me that a trader can vanquish bad attitudes and put himself on the right path. It was inspiring to watch.

Your standard, ordinary, day to day systems can throw off revenue for you to explore the deeper questions of “a better trading system,” or a better money management strategy, etc. It is worth spending a lot of time getting one trading system -- even one that you can learn from others -- set up correctly so that it can work and so that you can produce reliable income consistently. This income that your ordinary system produces will throw off a research and development budget, with which to explore uncharted trading territories.

Continue reading "Your Research and Development Budget" »

Posted by Rob at 09:42 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

I remember a number of years ago, when Jim and I were first traveling together ... we sat under a tree and shared a tangerine. He began to talk about what we would be doing in the future. Whenever we thought about a project that seemed attractive or inspiring, Jim became so immersed in it that he literally forgot about what he was doing in the present. He popped a section of tangerine in his mouth and, before he had begun chewing it, had another slice ready to pop into his mouth again. He was hardly aware he was eating a tangerine. All I had to say was, "You ought to eat the tangerine section you've already taken." Jim was startled into realizing what he was doing.

Some traders we work with (and me for a long time) were more worried about the "perfect" system they have not yet found, instead of the system that they have available to them now, which can make them money. They are "eating" the "perfect" future system that they haven't finished building (and may never finish) and they are never using the system they have available now. They are endlessly searching and never finding. Always eating and never satisfied. So focused on "next" that they never get around to trading the now, which Bill Williams so brilliantly teaches.

Continue reading "The Tangerine You're Eating" »

Posted by Rob at 11:51 AM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

At Empirica (a hedge fund), then, there are no Wall Street Journals to be found. There is very little active trading, because the options that the fund owns are selected by computer. Most of those options will be useful only if the market does something dramatic, and, of course, on most days the market doesn't. So the job of Taleb and his team is to wait and to think. They analyze the company's trading policies, back-test various strategies, and construct ever-more sophisticated computer models of options pricing. Danny, in the corner, occasionally types things into the computer. Pallop looks dreamily off into the distance. Spitznagel takes calls from traders, and toggles back and forth between screens on his computer. Taleb answers e-mails and calls one of the firm's brokers in Chicago, affecting, as he does, the kind of Brooklyn accent that people from Brooklyn would have if they were actually from northern Lebanon: "Howyoudoin?" It is closer to a classroom than to a trading floor.

Remember, you don't make more money by being more frantic about your trading. You make more money as you relax and think about what you are doing, how you are doing it, and then watch some TV, read some poetry, play some video games, have fun with your family or friends, eat good food, sleep a deep sleep, and then get up and do it all over again.

Are you thinking deeply enough? Resting your mind well enough?

Continue reading "Lazy Traders" »

Posted by Rob at 01:37 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Continue reading "Something Worth Reading" »

Posted by Rob at 11:11 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................

Consider a turkey that is fed every day. Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race "looking out for its best interests," as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief ... What can a turkey learn about what is in store for it tomorrow from the events of yesterday? A lot, perhaps, but certainly a little less than it thinks...

Of course this paragraph assumes that a turkey can think, but if you can suspend your judgment for a moment, you can consider that traders get the same way. There are many traders out there looking for a system with "x percentage of wins," or an average win bigger than the average loss, or that trades a certain number of times, or that has a certain profit factor. And the list goes on. What really matters, in my mind, is that you consider what happens in a worst case scenario. What is your plan for what you will do if a Wednesday-before-Thanksgiving situation occurs? I know we would like to think it won't. But it will.

Continue reading "The Turkey Trader" »

Posted by Rob at 11:24 PM | Permalink | Comments (0) | TrackBacks (0) ..............................................................................................................................................