The Pro’s Process - David Blair

The third 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: David Blair

1) How long have you been trading?

10 Years

2) What style of trading / investing do you practice (technically driven, fundamental, systematic, a combination etc)?

Purely technical with emphasis on simplicity, looking for multi-day/week moves by following price with classical historic patterns on both weekly and daily charts, along with the aid of my carefully designed indicators.

3) How do you feel when a trade goes against you?

I’ve learned that there is no way to know which trade will work and which will fail, but  to experience one is to accept the other.  The possibility of loss (for each trade) should be factored into every trader’s PROCESS allowing for acceptance of any OUTCOME

4) How do you feel when a trade goes for you?

I feel like I got very lucky.  The minute I begin to believe that I am making money because of an indicator or because of my chart reading abilities I have to step back and remind myself that the trade is working because there are enough speculators who agree with my trade and can continue to move the price in my desired direction.  I have other speculators to thank along with lady luck.  

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?)

I used to take gains and losses personally by patting myself on the back for the former and beating myself up for the latter.  Then I realized there are just too many factors involved to allow my self worth to be wrapped up in the speculative outcomes associated with an uncertain and ever changing environment that is the stock market.  If a trader sticks with a solid plan with an emphasis on risk management, over time he or she will make money, not from being right quite often but by being wrong quite well.  The only way to know this is to experience it over time with strict rules and flexible expectations.  

6) Do you have any practices that you do away from the trading screen to help you mentally and emotionally handle trading?

I workout in the mornings during the first hour the US equity markets are open, play golf, read, blog, and spend time with my children and their sports. 

Helping other traders via my Crosshairs Trading University (CTU) has been a tremendous benefit in helping me sharpen my focus when trading, which, in turn, benefits those I mentor.  

7) Have you always done this? 

Physical activity has always been important to me and helps create a balance.  I started CTU three years ago and it keeps getting better every quarter as my trading has improved along with my ability to better explain to others market structure and how to formulate a strategy to take advantage of the market environment.  When you are open to learning, not only from the market but from others, you become a better person, a better trader, and a better mentor.  When we no longer desire to improve we begin the process of dying.

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?

The gentleman who introduced me to trading taught me how not to trade.  He was not a seasoned veteran but a ripe for the picking amateur with a passion for trading.  Unfortunately, his passion led him to chase too many rabbits.  Trading to him was all about multiple time frames on multiple monitors, numerous indicators, the latest stock market book or DVD, CNBC, anything that could help his dismal trading results.  As I began to get rid of all these things while he added more my success took off while his failures continued to multiply.  He could read a chart but could not trade. He never could understand the importance of the mental game. His failure to look within fueled his search without.  His failure proved to me that trading is not about a system but how well you develop and use the system.  Successful trading is about commitment to focus, patience, and discipline, each of which must be developed outside the charts then applied within.  My friend passed away last year after a long illness but the memory of the lessons he taught me will live on in me and in those I mentor for many years to come.

10) If you could give aspiring traders one piece of advice about emotionally handling the market what would it be?

Keep it simple.  All that matters is price and what we can control, so develop a trading PROCESS around current price and accept the OUTCOME based on the future change in price.  One is an action; the other a reaction.  One we can control; the other we cannot.

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I’d like to thank David Blair 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 David Blair you can find him:

On twitter @crosshairtrader

Or on his website: http://www.thecrosshairstrader.com/ 

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Previously in the series:

Charles Kirk - read it…..here

Matt Davio - read it…..here

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Disclaimer: Embrace The Trend / Richard Chignell does not provide investment, financial or product advice.  I trade my own capital exclusively.  I eat my own cooking as should you.  If you are going to trade / invest it’s at your own risk and you must take responsibility for your actions.