good to know information for new traders

[SPX Options Trader]

what information would you pass down

and i dont mean generic stuff like"mindset is everything" "its all about psychology bro

I know to the new, or amateur, young, trader....they don't want to hear that generic, theory, wisdom, old man, nonsense and bs, sleepy stuff.
But those types of words, sentences, can be incredibly profound in your rather long journey of market, life, success, profits.

Younger guys are so eager to make the instant money, the cheese, the big bucks, have a big swinging dick, have an exotic car, expensive watch, be a Hoochie Coochie Man.
But real life doesn't, exactly, rarely, play out like that. You have to be wise, patient, intelligent, bright, actionable, brave, neutral, and open-minded, philosophical.

Don't discount anybody, any resource, any word, any sentence. But also don't treat anything as God's word, or higher up and important than another.

Would you rather rob the bank today for instant money, Or gain the knowledge, experience and wisdom...to generate the money that's inside the bank?

 

[Laissez Faire]

Seems like the picture/quote I posted had a broken link. It's a favourite of mine, so I'll post it again.

New traders should stay small for longer than they think or at least until they don't need to ask for advice. There's no substitute for experience.

 

[longandshort]

Study the market and learn how to analyze it effectively. Before you look at charts, you should read about the theory and practice of capital markets. Then, start to test your hypothesis against historical data. E.g. “what does performance look like on buying the dip and why does it vary over time?” That kind of research gives you earned insights which are the seeds of edge and alpha.

 

[GotherL]

Proper preparation prevents poor performance.

 

[TraderDaveUK]

1. Learn how to back test, properly. i.e. In sample, out of sample, walk forward analysis. This means that when you do find your 'grail' or at least an approach that works for you, you have some level of confidence, and should know how to deal with the variance you see in your live trading. I.e. Is it within the model parameters or not.

2. Learn to code. Simply helps enormously with (1) above.

TDUK

 

[themickey]

Seems like the picture/quote I posted had a broken link. It's a favourite of mine, so I'll post it again.

New traders should stay small for longer than they think or at least until they don't need to ask for advice. There's no substitute for experience.

View attachment 267785

I would add, if a stock trader, always trade small relative to your bank.
This allows for more opportunities, spreads risk and reduces risk, trade more frequently, allows one to free up tension and take greater risk (this goes with trading more opportunities) and finally it allows one to mentally accept they can hold positions for longer, yup take larger drawdowns but also to let winners run longer- be exposed into money making positions longer.

 

[mute9003]

ok what imeant is things to know about the market that a new trader would not know
technical details that you know now that are crucial but not obvious to new player

every book talks about same thing psychology. i literally reead 5 books already that all talk about same thing"mindset bro" i got that part already from books and youtube videos.
mindset without understanding is useless.

 

[deaddog]

every book talks about same thing psychology. i literally reead 5 books already that all talk about same thing"mindset bro" i got that part already from books and youtube videos.
mindset without understanding is useless.

You mean the secret that the experienced players have that you don't? Well i hate to tell you this but there isn't one.

The market operates on fear and greed. That's why the psychology part is so important. You have to be able to guess what the other players are thinking. You can't possibly know but you can make an educated guess.

Ask yourself why price stops going up and starts going down or vice versa? Watch and see if it does the same thing at the same place. Is there a pattern that repeats? Can you take advantage of it?

That's trading in a nut shell. Seeing something in the market and being able to take advantage of it.

 

[KCalhoun]

Great points, again the one thing I learned from a technical trading standpoint about markets is avoid trading much when the stock market is trading inside the previous day's range and the same for anything your trading, mainly because institutional volume and volatility is much stronger outside of prior days high low ranges - that's the single most valuable tip I could share from 20 + years of experience. And trade very small very often versus big positions with big stops, law of large numbers.

 

[Bad_Badness]

• 
  How do you do that?
  
  What I measure is whether I followed the plan. (Yes or No).
  If my equity curve drops then I can tell whether the problem is the plan or the trader. Equity curve All part of the plan. the execution should be planned. What do I trade, how much to I trade, when do I exit.

How often do you suggest you do this?

It depends on what is in your plan. For example, if one has a setup they use, and the P/L varies from trade to trade, based on some other variable, (VIX, MA positions etc), one can measure the efficacy, R:R, etc and see if any of those variables make a difference, to get filters on when not to take the trade or simply take the best trades.

Equity curve is great but it is pretty high level, 10K feet above. Of course it matters supreme. Following your plan or not is critical. One should do that for sure. On the flip side, I run 5-10% of my trades outside the plan. Always looking for new setups. (BTW: I put on between 25-50 trades per day on ES)

Perhaps we are talking about different types of trade time frame too. There is more noise in shorter time frames trades and shorter time frame chart measurements. That noise needs to be filtered out.

Measuring MAE and MFE is the main measure I use. I then adjust the mechanical execution parameters (time, price, range, etc.) to optimize the MFE and the minimize the MAE.

It is a big discussion. The point I was trying to make is measuring the trades, MAE, MFE, time in trade, entries and exits can all be measured. Sometimes there are things to be optimized for P/L. Sometimes it makes no difference.