I found this on one of my regular "reads," http://www.smbtraining.com/blog/
and appreciated it. Adam Grimes' blog has been a great source of info since its inception...
The Rage to Master
February 25th, 2011
Most of my past blogs have focused heavily on technical trade ideas, setups, or statistical analysis of market data. As I have mentored more and more traders on the SMB desk, I have been thinking a lot about the parallels between the process of learning and teaching trading, and my previous experience as a top-level classical musician and teacher. I want to write a short blog series sharing some of these ideas because I think there are many interesting and valuable lessons here for developing traders.
One of the things that I struggled with most as a music teacher was why some students did so well while others, given the same effort and attention from the teacher, did not. I suspected the answer was related to another interesting question, which was how and why I was able to make incredible and rapid progress after I came to music relatively late in life (nearly 10 years old). After struggling with this question a long time, and usually asking what I, as the teacher, could have done better, I decided the answer was actually pretty simple—students who made real progress toward mastery loved what they were doing. They were passionate about it… not in the sense that every business school student will tell you they are “passionate about I-banking” or “passionate about capital markets”, but passionate in the sense that music, for them, became all-consuming. At first a fairly normal kid, once I became obsessed with mastering my instrument, I literally practiced 6-10 hours a day, every day, in addition to whatever else I had to do. I carried printed music with me at all times and rehearsed in my head (visualized, but that’s a topic for a later blog) every chance I got. In every class, I pretty much ignored the teacher and studied music as much as I could. Every spare minute, at recess or study halls I usually managed to work my way into a practice room instead of wasting time doing whatever “normal” kids did. When I got really obsessed on a particular piece of music, I would skip entire days of school so that I could work on it. (Yes, I skipped school… a lot of school… and stayed home to work!) I rigged my instrument so that I could practice more or less silently, well into the wee hours of the night. I was, in no way, shape or form, a “well balanced” kid. I was completely consumed, completely obsessed with the drive to master my chosen craft, and I eventually became better than almost anyone else at what I did.
In retrospect, it is obvious to me that some sacrifices were made. I didn’t do a lot of the things normal kids did. Teachers and a lot of my peers thought I was an alien from outer space and had no idea how to relate to me. I probably missed out on a lot of things a lot of other kids did growing up, but, and here’s the interesting thing, even though I was working close to 60 hours a week on mastering my craft it did not seem like work. I was completely immersed in the process of learning, absolutely addicted to the flow experience when I performed well. Incremental progress was as satisfying to me as any drug could have been. I could see the where the ragged edges of my technique were not up to the challenges of certain pieces, and I took every failure as a challenge to get better. I was actually angry when I couldn’t play something, and I channeled that anger into effort. Frankly, I didn’t spend much time thinking about the possibility of failure. For one thing, I saw clearly that with proper focus and effort I could do pretty much anything in my chosen field. Challenges and milestones were clearly defined, and my teachers taught me how to break huge challenges down into manageable chunks. I guess I also didn’t think too much about failure or about not being able to do something because failure simply was not an option.
I wasn’t until much later that I heard a term (first used by Ellen Winner I think) that captured the essence of what I went through as a child musician, and what I later saw reflected in my best students – the rage to master. Children are able to find this much easier than most adults, for many reasons, but people who have the rage to master are completely obsessed beyond any sense of balance, beyond any reason with mastering their chosen craft. For these people, working toward mastery rarely seems like work, simply because they love what they are doing. They are motivated by the end goal, yes, but perhaps even more so by the process of learning and the process of getting better. I had a major “ah hah” moment sitting on a plane, reading one of the first copies of Dr Steenbarger’s Enhancing Trader Performance, when he used the term rage to master to describe what he saw in the master traders he worked with. I had been trading for a long time before that, but I never drew the connection between elite performance and trading until that every moment—and nothing has been the same since. (Thank you, Dr Brett.)
I know that many people with a wide range of interest levels read this blog. If you are casually interested in markets or trading, then that is fine. It is certainly possible to have fulfilling interactions with the market, enjoy the experience, and get something valuable out of it as a lifelong hobby. But, if you think you have made the commitment to really master trading and to become a professional trader, I challenge you to ask yourself a difficult question. Reread what I wrote above. Though it specifically described my early childhood experiences as a musician, most people who really master any field will tell you very similar stories. The best athletes, artists, actors, writers, professors—the elite performers in any field—would be able to write similar descriptions of their own obsession and efforts at improving themselves. If you want to be a top-performing, elite trader, ask yourself if you are consumed by the rage to master your chosen craft. Do you dream about trading? Do you work seven days a week? Are you thinking about trading in the shower, in the car, on the train, while you are eating? If so, are you prepared to maintain that level of intensity for the 3 to 4 years it will probably take you to achieve some mastery? When you close your eyes, do you see the market patterns? If the answer to these questions is no or maybe, I suspect you can still become a competent trader given enough time and the right environment. However, if you think you have made the commitment to becoming a top notch professional trader, if you think you have “burned the ships”, and you cannot emphatically answer yes to those questions with no reservations, I suspect you may be in for a bumpy ride.
In fairness, I think there are some things that make it difficult to maintain this level of intensity through the process of becoming an elite trader. Let me collect my thoughts, and I’ll share them in another post soon.
Posted in Adam Grimes's blogs, Trader Development, Trading Psychology
2 Comments »
Friday, February 25, 2011
Tuesday, February 15, 2011
Thoughts on the Year 2010 & 2011
It was an eventful year, 2010. So much was changing that wasn't brought to this blog. I foreshadowed my goals that lead to these changes in my post on January 5, 2010. Reprinted here...
Tuesday, January 5, 2010
2010 - What's In Store...
Here's the new year, here's the new decade. But, it seems it is more of the recent same for me. My time in front of the markets is reduced compared to where it was late winter, spring and the early summer of 2009. What I discovered was that the old adage is true: you cannot serve two masters. My two masters are the stock market and my small business. By dividing my time pretty evenly between the two for much of 2009, I was doing both a disservice. Now, I have thrown a major home construction project into the mix! For the next few months, the stock market will be the lesser of these three priorities. However, for the long-term, it is my first priority. As I have blogged before, the construction project is an apartment which will generate income. And starting February 1st, I am actively seeking a buyer for my business, which I hope will sell by years end. The sale of the business will produce revenue and time necessary to follow my path to trading the markets full-time. Construction and business sale... these are the short-term foci of attention here at bluecollartrader central. "Winners Finish Strong" is a phrase I've heard and like. That is my intent... to finish my business strongly enough to be happy with the outcome. This is not to say that I will be ignoring the stock market... not a chance. I will continue to practice and blog my results, to follow the blogs I like, to read and re-read books on the subject, and keep track of the general condition of the economy through the news and CNBC.
I believe I reached the point last year where I could not advance in my abilities unless I was trading full-time. I have a pretty good grasp of technical analysis and a basic understanding of momentum analysis. What I lack is perspective and relevance. Both of these require experience... face-time in front of the computer studying the intra-day movement of stocks; continual attention. But, I cannot apply this required amount of effort this year to practice trading. It would not be in keeping with "Winners Finish Strong;" as I defined it above. At age 44, I have the entire second half of my life to trade stocks. I can sacrifice another 6 to 12 months in service to my business and other matters which in the longer term, will free me financially to pursue my goal of earning my living as a self-employed stock trader. I expect that what you'll see in 2010 here at http://www.bluecollartrader.blogspot.com/ is close to what you saw between August 2009 and the present and less like what you saw from February 2009 through July 2009.
My best to you all for a stunningly prosperous 2010!
----------------------------------------------------------------------------------
Goal Oriented and Finishing Strong, Assisted by Common Sense & Life Experience
I am happy to announce that my two primary goals noted above were realized in 2010; the completion of an income generating apartment and the sale of my small business. The former was completed at the end of June, and the latter effective December 30.
Throughout last year, I acted as designer, general contractor, and primary tradesman on the 1400 square foot construction project that included the completion of a 750 square foot apartment. The project was much more than the income unit. Also included was another 700 square feet of living space added to our personal home in the form of a guest suite; large bedroom with private stairway, and full bath. Beyond the new construction area, the project also involved the installation of an additional 800 sq feet of hardwood flooring and nearly 50% of the trimwork on the already occupied second floor of our home. These items were intentionally neglected for the first 6 years of our occupancy until our mortgage debt level got to a point where we felt comfortable enough to proceed. In fact, this responsible management of personal mortgage debt was the overriding determinant of when we would do the entire project to begin with! It is more coincidence than design that my interest in trading and the sale of my business occured at the same time.
And, the work continues still... Without a "day-job" anymore, I am using much of my time to complete the trimwork/finish carpentry which remains. It is finicky, slow work for someone who doesn't do it as a primary trade. And some is entirely custom, like hand making 1/2 moon window casing for two windows and designing and building from scratch a bathroom vanity that will work with the design limitations in the new guest bathroom.
My goal is to complete it all by end of February. With the exception of the initial basic framing, the drywall installation, connecting the heat to our boiler, and much of the painting by Mrs Bluecollar and her brother, I have done all the work myself. I am many things, and of them, I am well served by my frugality! And frugality provides great reward, both for financial gain and for the self-discipline it requires. Profligate spending simply does not nourish the best parts of our spirit, it fosters waste and over-indulges the ego.
-
I had initially intended to pursue the business sale earlier in the year but found that the timing was not good, considering the construction project that was in full swing and just how active the business was as compared to 2009. After the tenant was secured in the new apartment, I put out the word in my industry that I was "for sale." A buyer, one of my competitors, immediately expressed interest and we negotiated throughout the Autumn months. And finally, the paperwork was signed on December 30th. I insisted we not wait until January 2011, in order that I could meet my written goal from the January 5, 2010 blog post reprinted above. I fully intended to do as I said I would.
-
I now have time on my side to learn to trade for a living. While I still am finishing the remnants of the construction project over the next two weeks, I will also be practice trading when I can. Ironically, ever since the sale of my business, I have actually spent less time paper-trading a live market than before when I had day-job committments! Assisting in the transition with the buyer of my business, the last of my construction project, and the computer virus issue noted in earlier posts has eaten up much of my time since the first of the year. However, I have spent more time with chart study in the early mornings and evenings than before... and I still dream of candlesticks at night; something that hasn't changed since January 2009 when I set my career goal as being a self-employed market trader.
I am resolute in my pursuit of this goal. However, Mrs. Bluecollar & I are not wealthy people and do not have an endless pool of money on which to live while I pursue my goal. At a well-defined point, the money will run out if I do not begin to successfully trade live.
There is real financial risk in this, and it is always in the back of my mind as I go about my daily tasks. The future is uncertain and I do not have a clearly defined backup plan in place if trading does not work for me. This is all without a safety net. And I wouldn't have it any other way.
-
Once February ends and I can sit with the markets full-time, I will begin to put up more posts on this blog. I look forward to the new year, 2011. I sense I am at a turning point in life, and the nervous excitement is driving me on.
-
I wish a prosperous 2011 for us all.
Tuesday, January 5, 2010
2010 - What's In Store...
Here's the new year, here's the new decade. But, it seems it is more of the recent same for me. My time in front of the markets is reduced compared to where it was late winter, spring and the early summer of 2009. What I discovered was that the old adage is true: you cannot serve two masters. My two masters are the stock market and my small business. By dividing my time pretty evenly between the two for much of 2009, I was doing both a disservice. Now, I have thrown a major home construction project into the mix! For the next few months, the stock market will be the lesser of these three priorities. However, for the long-term, it is my first priority. As I have blogged before, the construction project is an apartment which will generate income. And starting February 1st, I am actively seeking a buyer for my business, which I hope will sell by years end. The sale of the business will produce revenue and time necessary to follow my path to trading the markets full-time. Construction and business sale... these are the short-term foci of attention here at bluecollartrader central. "Winners Finish Strong" is a phrase I've heard and like. That is my intent... to finish my business strongly enough to be happy with the outcome. This is not to say that I will be ignoring the stock market... not a chance. I will continue to practice and blog my results, to follow the blogs I like, to read and re-read books on the subject, and keep track of the general condition of the economy through the news and CNBC.
I believe I reached the point last year where I could not advance in my abilities unless I was trading full-time. I have a pretty good grasp of technical analysis and a basic understanding of momentum analysis. What I lack is perspective and relevance. Both of these require experience... face-time in front of the computer studying the intra-day movement of stocks; continual attention. But, I cannot apply this required amount of effort this year to practice trading. It would not be in keeping with "Winners Finish Strong;" as I defined it above. At age 44, I have the entire second half of my life to trade stocks. I can sacrifice another 6 to 12 months in service to my business and other matters which in the longer term, will free me financially to pursue my goal of earning my living as a self-employed stock trader. I expect that what you'll see in 2010 here at http://www.bluecollartrader.blogspot.com/ is close to what you saw between August 2009 and the present and less like what you saw from February 2009 through July 2009.
My best to you all for a stunningly prosperous 2010!
----------------------------------------------------------------------------------
Goal Oriented and Finishing Strong, Assisted by Common Sense & Life Experience
I am happy to announce that my two primary goals noted above were realized in 2010; the completion of an income generating apartment and the sale of my small business. The former was completed at the end of June, and the latter effective December 30.
Throughout last year, I acted as designer, general contractor, and primary tradesman on the 1400 square foot construction project that included the completion of a 750 square foot apartment. The project was much more than the income unit. Also included was another 700 square feet of living space added to our personal home in the form of a guest suite; large bedroom with private stairway, and full bath. Beyond the new construction area, the project also involved the installation of an additional 800 sq feet of hardwood flooring and nearly 50% of the trimwork on the already occupied second floor of our home. These items were intentionally neglected for the first 6 years of our occupancy until our mortgage debt level got to a point where we felt comfortable enough to proceed. In fact, this responsible management of personal mortgage debt was the overriding determinant of when we would do the entire project to begin with! It is more coincidence than design that my interest in trading and the sale of my business occured at the same time.
And, the work continues still... Without a "day-job" anymore, I am using much of my time to complete the trimwork/finish carpentry which remains. It is finicky, slow work for someone who doesn't do it as a primary trade. And some is entirely custom, like hand making 1/2 moon window casing for two windows and designing and building from scratch a bathroom vanity that will work with the design limitations in the new guest bathroom.
My goal is to complete it all by end of February. With the exception of the initial basic framing, the drywall installation, connecting the heat to our boiler, and much of the painting by Mrs Bluecollar and her brother, I have done all the work myself. I am many things, and of them, I am well served by my frugality! And frugality provides great reward, both for financial gain and for the self-discipline it requires. Profligate spending simply does not nourish the best parts of our spirit, it fosters waste and over-indulges the ego.
-
I had initially intended to pursue the business sale earlier in the year but found that the timing was not good, considering the construction project that was in full swing and just how active the business was as compared to 2009. After the tenant was secured in the new apartment, I put out the word in my industry that I was "for sale." A buyer, one of my competitors, immediately expressed interest and we negotiated throughout the Autumn months. And finally, the paperwork was signed on December 30th. I insisted we not wait until January 2011, in order that I could meet my written goal from the January 5, 2010 blog post reprinted above. I fully intended to do as I said I would.
-
I now have time on my side to learn to trade for a living. While I still am finishing the remnants of the construction project over the next two weeks, I will also be practice trading when I can. Ironically, ever since the sale of my business, I have actually spent less time paper-trading a live market than before when I had day-job committments! Assisting in the transition with the buyer of my business, the last of my construction project, and the computer virus issue noted in earlier posts has eaten up much of my time since the first of the year. However, I have spent more time with chart study in the early mornings and evenings than before... and I still dream of candlesticks at night; something that hasn't changed since January 2009 when I set my career goal as being a self-employed market trader.
I am resolute in my pursuit of this goal. However, Mrs. Bluecollar & I are not wealthy people and do not have an endless pool of money on which to live while I pursue my goal. At a well-defined point, the money will run out if I do not begin to successfully trade live.
There is real financial risk in this, and it is always in the back of my mind as I go about my daily tasks. The future is uncertain and I do not have a clearly defined backup plan in place if trading does not work for me. This is all without a safety net. And I wouldn't have it any other way.
-
Once February ends and I can sit with the markets full-time, I will begin to put up more posts on this blog. I look forward to the new year, 2011. I sense I am at a turning point in life, and the nervous excitement is driving me on.
-
I wish a prosperous 2011 for us all.
February 15th
I was reading my old posts from January 2010 and came across my reprint of a post from Dr. Brett's site, http://www.traderfeedblogspot.com/
I found it insightful then and still do. Go to the actual post to see the charts he refers to in the text.
Here it is again...
Sunday, October 08, 2006
Who Controls the Markets?
In my posts, I have frequently emphasized that large market participants dominate the equity index markets and control its movement. My trade-by-trade analysis suggests that the largest 3-4% of trades (those over 100-200 contracts each in ES) account for well over half of the total volume in that market. Because volume correlates very highly with price volatility, the presence or absence of large traders in the marketplace is an important determinant of opportunity for the intraday trader.
Above we have a demonstration of how size controls the markets. The chart represents the S&P emini futures (blue line) over the past month. The red line is a cumulation of the ES price changes over the month that included only those one-minute periods that traded on twice (or more) the average volume expected for that time of day. In other words, the red line is price change solely attributable to time periods in which size has hit the market. These high volume occasions accounted for only about 11% of the minutes in the trading day.
The two lines correlate almost perfectly: .96. Essentially all of the movement in the ES can be accounted for by the small number of periods in which large participants have entered the market. When large locals and institutions are not in the market, the market--for all practical purposes--goes nowhere.
Many market indicators and technical analysis formulations treat each time period during the day as equivalent. An alternative--and promising--strategy is to separate signal from noise by analyzing only those time periods in which large participants are present.
My data suggest that fully half of all ES trades are one and two lots that only account for 3% of total market volume. In a very real sense, over half of everything that occurs in the equity indices doesn't matter. The key is focusing on the trades--and traders--who do move the markets.
I found it insightful then and still do. Go to the actual post to see the charts he refers to in the text.
Here it is again...
Sunday, October 08, 2006
Who Controls the Markets?
In my posts, I have frequently emphasized that large market participants dominate the equity index markets and control its movement. My trade-by-trade analysis suggests that the largest 3-4% of trades (those over 100-200 contracts each in ES) account for well over half of the total volume in that market. Because volume correlates very highly with price volatility, the presence or absence of large traders in the marketplace is an important determinant of opportunity for the intraday trader.
Above we have a demonstration of how size controls the markets. The chart represents the S&P emini futures (blue line) over the past month. The red line is a cumulation of the ES price changes over the month that included only those one-minute periods that traded on twice (or more) the average volume expected for that time of day. In other words, the red line is price change solely attributable to time periods in which size has hit the market. These high volume occasions accounted for only about 11% of the minutes in the trading day.
The two lines correlate almost perfectly: .96. Essentially all of the movement in the ES can be accounted for by the small number of periods in which large participants have entered the market. When large locals and institutions are not in the market, the market--for all practical purposes--goes nowhere.
Many market indicators and technical analysis formulations treat each time period during the day as equivalent. An alternative--and promising--strategy is to separate signal from noise by analyzing only those time periods in which large participants are present.
My data suggest that fully half of all ES trades are one and two lots that only account for 3% of total market volume. In a very real sense, over half of everything that occurs in the equity indices doesn't matter. The key is focusing on the trades--and traders--who do move the markets.
Thursday, February 10, 2011
Computer problems have left me unable to post for quite some time
I had computer virus issues back in early January. As a result, I installed a firewall/security program which disallowed me from a number of activities.
One of which was posting to my blog. I just removed the program today and found that I can now watch video and post to my blog.
I have been practice trading in the meantime ...and much has happened on the personal front since last I posted.
More on that later. For now, I am going to just say hello and long time, no see.
One of which was posting to my blog. I just removed the program today and found that I can now watch video and post to my blog.
I have been practice trading in the meantime ...and much has happened on the personal front since last I posted.
More on that later. For now, I am going to just say hello and long time, no see.
Subscribe to:
Posts (Atom)