Do You Trade with a Market Bias?

Today, I had a conversation in the APA Zones skype room and this is how it went…..

G: Well so much for the Long Play today.

G: You know seeing the TF market retrace this much can give you second thoughts about if my bullish bias was really a good call this morning or not.

G: TF didn’t break out of its Globex Range at all.

Michele: It has been said by many traders that it is not good to have a bias in the markets at all but to let the market ‘tell’ you what it is going to do

Michele: Some people might call your bias a ‘limiting belief’ as it did not allow you to see with clear eyes all the opportunities presented, but focused you on looking only for long entries.

G: Yeah, it good to read the candle sticks and not how badly I want to be correct.

Michele: Here is the thing… if you don’t have a bias, you can’t be wrong!  And since our ego’s fight tooth and nail to make us right, ‘It’ limits the things we see to make a decision.  ‘It’ looks for what will support ‘Its’ bias/view/belief.

Michele: Then it becomes a right vs. wrong decision instead of an ‘it just is’ decision

G: So at what point does a trade setup become a bias?

Michele: It is based on the ‘probabilities’ of your set up working.  And this is based on your experience with your set up from the past uses of it.

Michele: It is a statement of “in the past, this has worked out more than not so I am taking this stand and we shall see what happens”  There is no real bias to it.  If we add the bias, then our ego and emotions get involved and we start doing things like moving our stops or targets or doing self talk that is not of a pleasant nature.

G: On the daily it looked like we really need to retest the previous High which we do on several of the markets.  But on the intra-day chart it’s HH/HL. type of deal.

Michele: So what does your experience tell you with those facts?

Michele: My 60 min chart says we are in consolidation.  With that, my experience says anything is fair game.

G: My bias is an open door for emotions.  So I need to keep that door closed.

G: Otherwise it’s too hard to take the GH/GL [Globex High/Globex Low] level or spot my reversal points.

Michele: very true.  And your vocalized biases can also influence others

G: Just like how I have let other people’s views in the past influence me in the past.

Michele: Not sure if there are others seeing this conversation but would like to know how your market biases have affected your trading….  please chime in

G: Taking the trade setup when you have a bias is limiting.  And is really trying to make the world fit into “my box”.

Michele: Exactly!  And we all know, we can’t influence the markets

K: Michele, so suppose we open above yesterday’s range, with daily or 60M chart already in an uptrend, wouldn’t you say that your expectation for that day would be buy pullbacks to demand? Instead, are you looking to sell supply zones?

Michele: K, it really does depend on your trade style.  If you are a trend trader, then you would look to buy pullbacks until the market did a move that told you it was switching directions.  If you are a counter-trend trader, then you would sell supply until the market told you otherwise.

Michele: Each of us analyzes the markets differently based on our trade plan and experience.  The rule is to also know that the markets cannot be influenced by our thoughts and so, we need to be open to what the market is telling us and not what we want it to do.

Michele: Now, part of that is how we approach the markets and the words we use.  Saying “I feel/think/have a strong belief that the markets are going to go………”, is different than saying “my indicators are all/mostly saying ……….direction and so I am looking for …….. set ups until my indicators tell me otherwise.”

Michele: The second statement; 1) leaves you open to see the change in the indicators, and 2) does not commit your Ego to a position and so allows you to trade the markets and not your beliefs.

Michele: Does that make sense to you K or anybody else reading this?

D: Makes sense to me

G: Yeah, so don’t attach your feeling into the statement rather just facts as you see them???

Michele: Exactly!!  If you don’t have a strong ‘opinion’ about it than your ego/body/soul/subconscious does not have to try and ‘prove’ you are right

Michele: It opens up so many more possibilities and keeps you from limiting yourself

K: Michele, yes it does. I use “expect”, “probable” for my pre market game plan. Of course the market is going to do what the market wants to do, but I think the game plan is also important. I am not going in and taking every PIN BAR I see on my chart when we are in an uptrend (whether it be on your trading time frame or longer time frames)

Michele: Good K.  And your trading shows it.  You are very skillful in your trade set ups and management of them.

Michele: Although it may seem like just a slight difference to use another word, it makes a BIG difference to your subconscious and how it processes the information and makes decisions.

G: I was just looking at the stock twit control panel.  It has a “bias” button.  And this conversation has me thinking if I ever want to use that button again to say if I’m going long short or what not.

Michele: yep

B: Makes sense Michele – I like it

G: We don’t like emotions in our trading!

Michele: The goal is to get them out of our trading.  They don’t belong there.  They belong in other areas of our life and not trading.

My question to all who read this is, “How has your bias effected your trading?”  Please contact me so we can get that bias out of your trading and allow you to see the market for what it is.

 

Until we meet next, Green Trades Everyone!

-Michele

There are no short cuts to success

It has been almost 4 years since I started following the Stock Market and I had seen very little progress on my trading. I would read and study to get better results.  It was disappointing for me after all the knowledge that I was getting.  I thought it was never ending information that I had to get my hands on. Every book, every website that I would go to, I felt the need to study that information. I blew up my small account even with all the new knowledge I was getting. I have always wanted to write a plan I just couldn’t do it. After a friend of mine (Edward McCall) told me about a very good trading coach that had helped him in trading, I thought I would give it a try. I contacted Michele  Hurlbut  she took all my knowledge that I had and narrowed it down to a very simply yet very powerful  strategy. We had three sessions to write my plan but it is not just about writing a plan it is about knowing what you want and what you are comfortable with trading. In my personal experience, I think this is one of the best things that ever happened to me when it comes to my trading.  Now I feel comfortable looking at my charts and knowing what to look for and not get lost in my charts like I used to.  This is all thanks to Michele. I have a clear picture of what I am looking for to achieve my trading goals. There are no short cuts to success you have to do the work and Michele can be a big help for your success.  I highly recommend Michele to anyone who is serious about trading.

-Jorge Perez

San Jose, California

Is Risk, Risky?

Risk is a very important topic to traders.  But what are we, as traders, risking?  Is it money?  Is it self-confidence?  It is a little of both or is it something else entirely?  Do you know that your view on risk and what you consider to be risky verses what you don’t, came from a part of your life that had nothing to do with trading and at a very young age….  Below, I have copied an article I received from Bob Proctor that I think explains risk and its origins very well.

My [Bob Proctor] dictionary tells me that to risk is “to expose oneself to the chance of loss.” I suppose that is true. Another piece of literature I was once given (author unknown) suggests that:

To laugh is to risk appearing the fool.
To weep is to risk appearing sentimental.
To reach out for another is to risk involvement.
To expose feelings is to risk exposing your true self.
To place your ideas, your dreams, before a crowd is to risk their loss.
To love is to risk not being loved in return.
To live is to risk dying.
To hope is to risk despair.
To try is to risk failure.

You may avoid suffering and sorrow if you don’t risk, but you simply cannot learn, feel, change, grow, love, live. The greatest hazard in life is to risk nothing. The person who risks nothing, does nothing and has nothing. Only a person who risks is free.

What causes individuals to shy away from taking a risk, even if it is a low risk and will give them something they really want? Well, certainly high on most people’s list would be fear of loss, failure and perceived humiliation if the loss were to occur. Why would we automatically think that we would fail at something? Why wouldn’t we first try and see, and then if we did fail, learn from that experience and move on? What causes us to have these thoughts of inferiority?

Well, I believe it dates back to our little life. And, since risk-taking, to my knowledge, is not a subject that is taught in school, it would lead me to believe that a person’s fear of taking risks might stem back from before they can even remember. When you were a child taking your very first steps, it wasn’t uncommon to hear one of your parents or guardians say, “Be careful, you might fall.” Or, “Don’t do that, you’ll ….” Though some of this is rhetoric and you don’t really pay much attention to it, for some, it begins the pattern of playing it safe.

Think of how much better equipped we would be to face life’s challenges and succeed, if we had repetitively heard, “Take a chance and don’t worry about falling, because you’re going to fall…probably quite often. Falling is an important part of learning.” Many of the greatest lessons you’ll receive in life are going to come from falling … from your failures.

Failing will never make you a failure unless you quit. Unfortunately, very few people heard that when they were small. The vast majority of our population have been mentally programmed to play it safe.

I have often said that a little baby is a natural born risk taker. The baby never considers the consequences of falling when it is learning to walk. Falling is acknowledged as a natural consequence to learning to walk. I guess you could call it a calculated gamble; it’s a prerequisite to mastering a myriad of motor skills required to get you on your feet and moving. It’s a natural progression in movement. Why then, wouldn’t we stop to consider that any movement into unchartered territory should be viewed with the same consideration? What happens to us?

Why is it that we do not see the process of reaching our goals as having steps similar to the ones the baby must take in order to learn to walk? There will be some stumbling and falling in the learning process, but success can only be reached when we are prepared to take those steps, all of them, even the ones where we may fall down. The real win is the confidence and experience we acquire which translates into new opportunities for growth, enjoyment and expansion in all areas of our life.

When I was a youngster in school, I participated in track and field. Pole-vaulting was my specialty; it was the one event I seemed to excel at. I clearly remember knocking that bar flying more often than I cleared it. I also remember I was not very enthusiastic when that happened. Knocking the bar off left me with a feeling that because I had failed, I was a failure. I had failed and as I remember, no one advised me of anything different. In retrospect, it would have been an excellent opportunity for one of my teachers to help me understand one of life’s greatest lessons. But, it never happened and it would be many years before I learned the truth, the hard way.

However, every time I ran down the field and lowered the pole into the box, attempting to vault myself over the bar, I was challenging myself. Taking risks is essential when you want to reach a goal and the purpose of goals is growth. When you challenge yourself, you bring more of yourself to the surface. If you knock the bar flying today, at least you will know you are challenging yourself; you’re a success!

If you dream of living your life in a really big way, you must accept risk-taking as a very real part of the apprenticeship you must serve. Make a decision right now to change. Decide this very moment there will be no more playing it safe … no more “saving it for a rainy day” type thinking in your life. When people get caught up in the habit of saving for a rainy day, that is generally what they get … a rainy day.

I clearly remember the first time I heard Earl Nightingale. Earl was telling a story about a farmer who was out walking in a field. He looked down and saw a tiny pumpkin growing on a vine. Nearby, he spotted a small glass jar. The farmer reached down and placed the tiny pumpkin inside the small jar. The pumpkin continued to grow until it filled the inside of the jar. Beyond which it could not grow.

There are a number of people like that tiny pumpkin. They limit themselves and refuse to take a risk. They never truly test the strength of their abilities. You will never get to second base if you keep one foot on first. Too many people go through their entire lives playing their cards close to their chest. They never step out and bet on the surest thing in the world … themselves. If you hope to accumulate great wealth or achieve high goals, history records that the first few steps have a high degree of risk. You must turn your back on safety and security. To make it big, you must take big risks. You will very likely have to put yourself in a highly vulnerable position. It is also worth remembering you cannot almost take a risk.

Eleanor Roosevelt said, “You gain strength, courage and confidence by every experience in which you really stop to look fear in the face.” Follow her advice and liberate yourself from the crippling emotional state of fear and enter into a world of freedom.

How does your view of risk-taking factor into your trading, and your life, and how does it hinder you?  Would you like to change that?  Are you ready to change it?  Let me know how I can help you do that very thing.

Until next week…Green Trades Everyone!

-Michele

Wait for It……

I have spoken to a couple of traders this week that are “disappointed” that they are not in a trade at all times.  Since they feel they need to be in a trade all the time or they are not going to “make the money,” they are always looking for a set up and then finding a rule that they think might fit at that time thereby being able to trade all the time (boy, that made me dizzy writing it….).  I asked them how they were doing on their balance sheets with this type of trading.  “Not so well” they said, “I always seem to be on the losing side.  It’s like there is someone on the other side of the computer and trades against me, and takes my money!”

Now, think about this realistically, can that really be true?  Do you think all the brokers hire a person to watch what you do and take the opposite of your position? Of course not but, at the time, it can sure feel that way.  You are actually trading against yourself.  Why do I say that?  Being in the trading world for any length of time, most of you have run into a trader or two that makes their living doing this day in and day out.  Have you ever asked them how many trades they take in a day or a week?  Well, I have. They usually say one to three and I’m done.  Well, if they only take one or two trades in a day, what are they doing the rest of the time?  They are waiting for their set up to come to them.  They are not forcing a trade out of what the market is showing them at that time.  A successful trader is not “in” the market all the time.  They spend a fair amount of time waiting for their set up.  The set up they have designed and practiced time and time again and know well.  They look for that set up and that set up only because they know the odds of its success is great when it shows up on the screens.  Now, why did I say you were trading against yourself earlier in this post?  Because, the market will always give you a mixed signal with every move it makes in the second it is making that move.  If you are not focused on looking for one thing, you will see many things, and when you finally get frustrated enough to take a trade, it is not a tried and true set up that you have good odds and faith that will succeed thereby creating failure just by definition and action.

There are many emotions that make traders feel they must be in a trade at all times.  Emotions are good for our family and friends but not so good for your trades.  What emotions are getting in the way of trading your plan to its successful conclusion?

Here is a quote I heard recently that I love:  “There is no reason to have a Plan B because it distracts you from Plan A”  -  Will Smith, Actor

This quote rings true for all the successful traders out there.  They have their Trade Plan A and nothing else.  It is what they trade day in and day out and makes them live to trade another day in great comfort.  You need to wait for your set up.  It is the most important thing you can do as a trader.  If you do this, you too will also live to trade another day in great comfort.

Until next week…Green Trades Everyone!

-Michele

A Personal Conversation…..

The markets have calmed down a little from last months’ volatility and seem to be moving in much nicer ups and downs.  I hope everyone is doing well with it.

I had a conversation with a client of mine yesterday and I would like to post it here.  It is a little different than my usual blog but I feel is it very much what a lot of people think trading has to be like.  Now, this person is a big baseball fan so you will see that I explained things to him in baseball terms.  Since we are all familiar with the All American Sport, I am sure you will all get the analogy.  Here it is….

Client:  You know any professional has pressure. You have to have it. You can’t be without pressure. The best baseball player deals with it all the time. From the opposing team or his own numbers or the guy in the minors that wants to prove that he belongs in your place. So, to trade without pressure is not something that is doable for most. And to me the pressure is important to be there because you groom yourself to achieve in the most stressful of environments. Paul sent me a thing about the men and woman who achieved in the most stressful of times. The pilot who landed safely in the Hudson etc. that makes sense. To think you are not under stress, or only trade when you not, will not help if you do this for a living. How you trade and handle yourself during those times is the difference between success and failure.

Me: I agree that how you believe and handle yourself during those times is the difference between success and failure but it is not my belief that it has to be surrounded with stress and pressure.

Different people will handle the same situation differently based on their views/interpretations of what the particular environment means to them.  Not all people will consider it to be stress/pressure.  But it is still how you handle the situation that makes the success not if it has stress/pressure or not.

Let’s take your favorite sport, Baseball and equate it.  A player coming up to bat with bases loaded and 2 outs.  It seems obvious to those watching that it is a stressful situation, but is it?  Does that batter see it as stressful or does he see it as an opportunity to do his best?  Does that put undue pressure on him or does it give him a challenge to overcome? Or does it relax him knowing that he is going to do his best this time as he does every time.

These are all different ways that a player can handle the same situation.  The ones that can tune out the “internal chatter” and focus on the play are the great ones.  Like your favorite player, Evan Longoria

Client:  I’m keeping that chat.  You are correct; strive to win when I am in that situation. Don’t look back, look forward. I am at that place in time because I put myself there. Seize the moment!

Are you all Seizing your moments?

Until next week…Green Trades Everyone!

-Michele

Trusting Yourself

This has been an interesting time in the markets recently and in the world.  The markets have been reacting to all of it and so might we be in our trading.  I have a client, and friend, who I chat with regularly during the trading day, and he is very regimented to his trading plan.  He is what we all strive to be with our plans.  He has also been on the floor of the CME as a trader and has gained much knowledge through that time. The other day he saw a set up that his “gut” told him was a good trade to take but it did not fit his plan.  He took the trade and made a great trade.  Green all the way.  But then he became very conflicted about it as he “did not trade his plan.”  And so much so that he proceeded to beat himself up about it for hours.  Now, how many of us beat ourselves up over a green trade?   I would venture to guess that not many beginning traders do.  Veteran traders might have a different answer.  There answer would be “depends on why I took it?”  What is the reason for this difference you ask…  This difference has to do with the discipline they normally show for their trade plan and the knowledge they have gained from trading the markets over time.

 In the beginning of your trading career, you have very little reference to go on for how the markets work and what they do at what time. There are many emotions involved with taking the trade or not, winning and losing and how you view trading as a whole. But, as we sit in front of our charts, day in and day out, we learn and our subconscious learns too.  We learn on a conscious level to trust our trade plan. That it works well for us and we should trust it.  We work on our emotions to not get in our way.  On a deeper level, our computer brain is learning too, and at a very fast rate.  Much faster than our conscious can keep up.  Our subconscious files all these learnings away in its file cabinets (neuron pathways to be exact).  As we are learning our trade plan, our subconscious is learning the market.  One day, after you have been trading a long time, your ‘gut’ tells you to take a trade.  ‘It’ has seen this set up many times and knows that the probability for a win is very high.  You can decide whether to take it or not at that time but it will present the offer.  In this case, my friend took the trade and later recognized why the feeling had been so strong in him to take it.  Yes, he went against his trade plan for that one instance (and that is the key, it was only for one instance in a long line of trading his plan), and he was successful.  And now he is back to trading his plan exactly as written.  Until the next time his subconscious ‘sees’ a great set up and lets him know.  He can then decide whether to take it or not.

How are your emotions during trading?  Are your entries just a matter of fact or do you have to wrestle with your emotions?  If your emotions are getting in the way of your trading, please contact me so we can talk and get you through it.  Trading is what you make of it and I hope you are making it enjoyable.

Until next week…Green Trades Everyone!

-Michele

Do You Let Your Emotions Do The Trading?

The higher our emotions are, the more difficulty we have staying grounded.  –Market Profile

I am sure you have, at some time in your life, gotten into a discussion and all of a sudden the discussion got completely off track.  You were originally intending to make a light point but then it became you on a soapbox.  Once you stopped, you looked around and saw, with complete astonishment, that the person you were talking to was just staring at you with open mouth.  This is what emotions can you do you when they are in control of you and you are not in control of them.  While that can be good in love and caring, it is not good in trading.

These last two weeks have seen many large swings in all the markets.  The emotions of the general populous have been swinging along with it.  There has been much joy and pain in the room where I trade in the early mornings.  And, as the day continued, these emotions became more evident in the trades that were taken.  I heard several newer traders taking trades and justifying the fact that they were not following their trade plans with many excuses.   Some of these trades worked out but most did not.  These traders saw the market ‘getting away without them’ and didn’t want to be ‘left behind.’  I also noticed that many of the veteran traders were sitting on the sidelines waiting for the trade to fit their trade plan.  When it did, they were in without hesitation. The veterans where not trading by their emotions but by their plan.  And because of this, they fared much better than the traders that were trading from their emotions.  A trader that has removed the ability of their emotions to trade for them, is not worried about ‘missing’ a trade as they know a new one will come along and it will be one that fits their trade plan exactly as it should.  And with this confidence and control, they are successful day after day, and year after year.

Do you let your emotions trade for you?

Until next week…Green Trades Everyone!

-Michele

I Love My Targets!

I hope everyone had a safe week in trading this latest round of volatility.  It might have been a test of your courage in following your trade plan or it might have been a walk in the park on that aspect but a little worrisome about getting stopped out.  It’s all about confidence and attitude.

I have heard a mantra being said by some people when they are being challenged to keep their stops where they are. And last week, I heard it a lot!  This mantra goes something like “I love my stops, I love my stops.” And they repeat it over and over during the course of the trade until they are either stopped out, or it moves in their direction and they feel comfortable again.  A fellow trader and I were discussing his use of this mantra one day and we realized something….he was possibly attracting the stop-out since he was putting so much positive energy towards them.  I know you have all heard of the Law of Attraction; that which we focus on, we attract.  Well, my trade friend did an experiment.  He changed his wording to “I respect my stops and love my targets.”  I’ll bet you never guess what happened……. He got stopped out less often!  It is amazing how one little change in our thoughts can make such a difference in our results.  Can you think of something you would like to change the way you think about so that your results will change?  Contact me and let’s GET IT DONE!

Until next week…Green Trades Everyone!

-Michele

How do we Change our Mindset?

In Mindset 101, we learned that Thoughts-Become-Things.  It’s all made up!  Richard Bach says “There are an infinite number of possible futures.”  And it is up to us to pick the future we want.  The best part of my work is that I help people to change their Thoughts so they Become the Things they want Now!  The venerable Mark Douglas says, “Everyone who trades ends up learning something about the markets; very few people who trade ever learn the Attitudes that are Absolutely Essential to becoming a consistent winner.” (emphasis mine.)

So, what determines our Mindset?  It is our collection of programs!  Every result in your life is based on the collection of programs YOU installed, and run consistently.  These thoughts govern the results you have achieved in your health, career, relationships, finances, trading and everything else in your life.  Do you need a new program?  How do we create a new one?  Changing our thoughts about something, then changes our language about it, our emotions around it, our beliefs about it and lastly, our actions to it.  Doing all of this then changes your Results!  How is this done?  First we have to identify unhealthy programs.  We ‘scan for viruses’ and take them out.  I challenge you, good reader, to a task.  Pay attention to what you say to yourself while trading and write it down.  Are you giving yourself Limiting Beliefs like my client John?  “I can’t do that because…..”  Are you around toxic people giving you negative feedback or are you saying toxic things to yourself?  “I’m a stupid idiot because I didn’t take that trade….”  Are you following the herd?  “So-and-so said it was a good trade to take….”  Once you’ve written these down, email them to me and let’s see what we can do to change them!

Until next week…Green Trades Everyone!

-Michele

What is a Mental Mindset?

In last week blog post, I mention “How we approach our trades is our Mental Mindset.”  What does that mean?  Webster’s Dictionary defines it as 1) a mental attitude or inclination; 2) A fixed state of mind.  How do we develop a ‘fixed state of mind?”  Through our programming.  From birth to about six years of age, our conscious brains are not fully formed.  That is why you can play peek-a-boo with a toddler and they actually are surprised when you remove your hands from your face and they see you are there.  At those formative years, you are operating from your subconscious mind.  This is the part of the brain that keeps us alive, beats our heart while we walk, tells us when we need food so we don’t starve, allows us to drive and keeps us safe from harm, or at least what it remembers as possibly being harmful to us.  When we do something that it views as a threat, it reacts by having us feel fear or a number of other emotions that it hopes will get our attention and get us to stop the offending activity. Emotional responses are one of the ways our subconscious mind communicates with us.

While we are learning all these new and fascinating things about the world, we form automatic responses so we don’t have to re-learn these things over and over again but can go on to learn new things.  These automatic responses are stored in our subconscious mind and are triggered whenever something happens in the world that matches the criteria for that response.  Much like a computer program or our trading plans.  Now, do you think the way you need to react to an event is the same now as when you were six?  I should say not!  Yet many of you find that you are doing some trading based on emotions that you are feeling at that time.  Maybe you move your stop to ‘give the trade some breathing room to work out,’ or you close out your trade before it reaches its target to preserve some green in your account balance only to have it go to your target.  All this is based on emotions and programming that was put in place before you were six years old!  Can it be changed?  The answer is a resounding YES!!!

Until next week…Green Trades Everyone!

-Michele