Inflation vs. The Fed/Round 1 Fight!

Positions, discipline, Da Vinci, Natural Gas, Bonds, Oil, Gold

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I received a great message today from a subscriber. Kian said “Hey, so I know we're not supposed to call trading easy, but is it REALLY AS EASY as writing an easy-language script on trade station that buys 100 day highs, sells 50 day lows, has a stop loss adjusted for volatility, and is applied to instruments that allow me to keep my position size less than 1%? Other than dealing with rollover, is that all there is to it to automated trend following strategies? Just apply it to as many instruments as possible.”

I love this. Kian is absolutely right. Trading is hard but what is hard about it? Staying disciplined about your trades. Whatever style you do. First, backtest a system and find the timeframe and strategy that fits you. Backtest it and make sure it works.

Once you apply it, (here comes the hard part) now you have to follow it. You have to follow it when you have a losing month, quarter and possibly a losing year. You also should figure out how long a losing period can last. If it says 1 year, then it may be 2 years. Then you have to mentally prepare yourself to handle that. If you are trading a system for 20 years, that period will happen at some point. Can you handle that?

Some might say well I would just change my strategy at that point. Sure you can, but most of the time right when you do the market moves back in to a period that is conducive to your strategy. So the goal has to be to find a strategy that you adore and can stick with. Find a few if you can. Then stick with it.

There are a million ways to look at this. Fundamentals, trend following, mean reversion, macro, inter market and so on… I like to use a mix of strategies to smooth returns. I also think that all of these can work, you just have to figure out which one works for you.

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This is a great book. If you have ever read about great artist or took a class on art or photography, you will hear the term perspective again and again. As traders that is what we need to have. A different perspective.

Shifting to a positive perspective is crucial for becoming a better trader. Begin by focusing on the process rather than the outcomes. Embrace each trade as a learning opportunity, regardless of the result, and analyze both successes and failures to extract valuable lessons. Cultivate a mindset of continuous improvement by setting realistic, incremental goals and celebrating small victories. Surround yourself with positive influences, such as successful traders and supportive communities, to reinforce a constructive attitude. Additionally, practice mindfulness and stress management techniques to maintain emotional stability, which can help you stay objective and make better decisions under pressure. By fostering resilience, adaptability, and a growth mindset, you can transform challenges into opportunities, ultimately enhancing your trading performance.

Here, you may not get trade ideas everyday because there is no such thing as constant trade ideas that make money. There is constant gambling.

Here, you get the truth. I won’t be on live talking about the FOMC as it is happening, I should be in front of my desk researching and possibly managing positions if need be. It is rare that, that happens but I am here.

Trading can be easy but there is a reason why most traders fail. So today let’s try to be more disciplined than yesterday.