I am very excited to be able to offer the nineteenth in my series of posts asking Pro Traders about their psychological processes. Delving a little into how it feels to them when trading. The good and the bad. How this has changed over time and what preparation they do mentally for performing as a trader.
One of the key features for me was that I wanted traders with experience who have been through the mill over the years and of course those who were kind enough to broach this subject publicly. This I hope gives developing traders more to learn from.
I’m very fortunate to have a great line up and this week is:
Trader: Richard Weissman
1) How long have you been trading?
2) What style of trading / investing do you practice (technically driven, fundamental, systematic, a combination etc)?Primarily my models are technically-driven though depending on the fundamentals I might accept slightly larger percentage exposures of total assets under management - specifically, if the market rallies on bad news or sells off on good news I will take on slightly larger exposures in the direction of the market movement.
3) How do you feel when a trade goes against you?One of the great myths of trading is that once you are successful you will no longer feel any emotions during drawdowns. This is absolute nonsense. Instead, I have learned to dampen the emotionalism associated with drawdowns and to prevent such emotions from derailing my adherence to the positive expectancy models as well as stringent rules of risk management.
4) How do you feel when a trade goes for you?
Same as above.
5) How have these feelings changed over your trading career? (Can you recall how you originally used to feel and elaborate on how this has changed over time?)
Earlier in my career my emotions would result in abandonment of positive expectancy models as well as my adherence to rules of risk management.
6) Do you have any practices that you do away from the trading screen to help you mentally and emotionally handle trading?
Yes, I do lots of affirmations (example: I am adhering to a positive expectancy model and prudent rules of risk management, therefore I have confidence in taking each and every trading signal), modelling of my behavior based on traders I respect (example: I ask myself is this how Larry Hite would manage the risk on this trade?); a wide array of somatic exercises (including yoga, swimming, walking, deepening of breath, aerobics) and meditation.
7) Have you always done this?No. I developed these techniques in order to make it easier to follow my trading rules.
8) If not, how have you learnt to deal with the feelings that come up when trading?n/a
9) Can you describe a time in your trading life which really rammed home the point that so much of trading comes down to psychological factors?
I was experiencing a drawdown and abandoned a positive expectancy trading model. I abandoned it because I realized that despite its enjoyment of positive expectancy it was actually not suited to my particular trading personality. This led to the realization that we are not looking for the best risk-adjusted rate of return; that instead we are looking for the best risk-adjusted rate of return for our particular trading personalities.
10) If you could give aspiring traders one piece of advice about emotionally handling the market what would it be?
Backtest any and all trading strategies prior to putting capital at risk. This will give you confidence during drawdowns. Also, it is more important to be the best risk manager and best position manager than it is to develop the most robust rules for trade entry.
I’d like to thank Richard Weissman for sharing about the way he tackles the market from an emotional / mental side of things and for his willingness to allow me to post this as a free resource in the hope that traders who have been in the market for less time or are thinking of entering can perhaps pick up some A-HA’s.
If you are interested in finding more out about Richard Weissman you can find him:
Previously in the series:
Charles Kirk - read it…..here
Matt Davio - read it…..here
David Blair - read it….here
Mike Bellafiore - read it….here
Mark Holstead - read it ….here
Brian Shannon - read it…. here
Mike Dever - read it…. here
Anthony Crudele - read it… here
Derek Hernquist - read it … here
Ivan Hoff - read it… here
Brian Lund - read it… here
Greg Harmon - read it… here
Michael Bigger - read it… here
Jon Boorman - read it…. here
Darrin Donnelly - read it….. here
Stephen Burns - read it…. here
Tony Rohrs - read it…. here
Bruce Bower - read it…. here
Disclaimer: Embrace The Trend / Richard Chignell does not provide investment, financial or product advice. If you are going to trade / invest it’s at your own risk and you must take responsibility for your actions.