This post was inspired by another blog entry. Specifically, the line that caught my attention the most in that post was:

"It is not possible to reduce trading decisions to a simple set of rules or patterns to be applied blindly."

The cure for New Years resolutions - NYR Let's get real for a moment.

It is the second week of January and I'm assuming many people have made at least some progress in forgetting about their NYR. Seriously. These things rarely work. Why?

When I left graduate school to become a trader it was 1994 and there were a goodly handful of books specifically about trading psychology and a few more specifically about expert traders. I, as many new traders, couldn't get enough of this stuff. I would even sometimes just skip the Chicago social scene and go home to read - on a Friday night! I was definitely hooked.

Emotions get a bad rap in trading. The prevailing thought among many traders, including trading educators, is to rid oneself of emotions, or ignore emotions. The fact is that if you are alive and you don't suffer from an unusual brain disorder or brain injury, you will have emotions.

Sometimes I wonder if I should create an email indicator for my trading, or maybe I already have one. You may have heard the old adage that the market does a good job of keeping the majority of market participant's off-sides.

Is it against the law to cross the street against the light when there are no cars coming? Technically speaking yes. Steph knows a woman that crossed the street, when there was no cars coming but against the light. A traffic cop just so happened to come around the corner and see her do it. He gave her a $200 ticket. The woman scoffed at the idea of the ticket she felt was unnecessary and a joke. She blew it off! A notice in the mail came a couple months later telling her that since she ignored the fine it is now $400. She went to court and the judge reduced the amount to $300. Valuable lesson? Well for her, it was, because she got caught and she is now preaching up and down the street to everybody she knows to not j-walk.

I'm a little troubled with the MF Global Bankruptcy and the freezing of assets of individual traders (that had nothing to do with the bad bets of an FCM) that I see flashing on the news wires these days. It brings back memories of 2004 - 2005 when I was introduced to Spot Forex and Refco. Maybe many of you can remember back when Refco filed for bankruptcy.

Today is one of those market days when the price goes basically one way. For some, these days can be their best money makers - they know how to push the pedal to the metal when the time is right. For others, they tend to be their worst days - the think they have missed it, they fade the move (it will revert right?) and then give up and go with it - at the exact wrong moment.

I'm going to show how watching people get slapped on Reality TV can be a trading lesson.

Obviously, you need an edge with your trading methodology or you're not going to make it. If you haven't back-tested it or cannot articulate it, you may not have one. But many traders who do happen to have an edge with their methodology are still not performing well. I sometimes refer to this as the 'profit gap' - the difference between your plan/method and your actual results. As a trading psychologist and an active trader myself I have a different view of "edge".