ACT III

BarroMetrics Views: ACT III

I received an email stating that the coverage I gave ACT was superficial.

I agree. The blogs are intended as an introduction, In ACT, I provided a link for an in-depth introduction. And, you can always ‘Google’ Acceptance & Commitment Therapy (also Acceptance & Commitment Training) for books and courses on the subject. 

Today, I want to look at an example of ACT’s positive influence on my trading.

For many years now, I have sought to overcome the ‘ebb-flow’ volatility of my results. Periods of ‘flow’ (when I could do no wrong) were inevitably followed by periods of ‘ebb’ (when nothing I did was right). In the ‘ebb’ phase, I gave back too much. For example following a ‘flow’ period that ended in Jan 2014, I experienced a 15% drawdown that took the best part of nine months to recover.

My thinking was if I could reduce the drawdown, then I would not have to ‘chase my tail’ to recover the drawdown losses.  This year I may have found the solution. I say ‘may’ because the measuring period has been only nine months – too short to draw any firm conclusions. But, the signs are very positive.

So, what has made a difference? I’d love to say I found a brand new TA tool – that way it would be an easy fix for everyone. Unfortunately, the answer lies in my psyche.

As a trader of over 30 years, I ‘knew’ that ‘leaving money on the table’,  and ‘missing out’ are part and parcel of our profession. In the ‘flow’ phase, neither issue arises or if they do, arise rarely and are quickly forgotten because I am onto another ‘great’ trade. When the evitable ‘ebb’ stage occurred, both would occur with greater frequency. The way I initially responded was to reduce position size and hold onto to the position until stopped out.

The feelings I would experience – disappointment, regret – I would ‘force’ down by reminding myself of the nature of markets. And in that response lay the error.

ACT suggests that we allow ourselves to experience the feelings fully rather than suppress them. Opening ourselves to the feelings without fusion and judgment dissipates their effect. The ACT tools in the ‘acceptance process’ (Figure 1) were also used to experience and then dampen and remove the residuary, adverse effects of disappointment, etc. In doing so, I was open to the solution of exiting a trade if it did not behave in a manner I expected.

This did mean that on some trades I would miss out and leave money on the table –  trades that would have been profitable had I waited for the stop to be hit.

It also meant that:

* I had to prepare diligently for the likely scenarios that could occur after I took the trade, and

* It also meant that the only way I’d stay in a trade during ‘ebb’ stage would be if it were an expected, positive (or neutral) response.

But,  I can’t argue with the results. Since I adopted the approach, ‘ebb’ results are breakeven or a small loss. This means that when I move into ‘flow’ or ‘normal’, the profits don’t chase past losses.

I am curious to see if 2015 will prove to be a watershed year.  It would be amazing if it were, and will go to show that old horses can still learn new tricks.

act-hexagon-4.png

FIGURE 1

ACT II

BarroMetrics Views: ACT II

HK is on an August Moon Hols. Wishing all my HK readers a fab hols!

Figures 1 and 2 are different versions of the ACT Hexagon. Figure 1 provides a detailed description; Figure 2 shows the two processes.

Most of the ideas are self-explanatory – except perhaps ‘self as context’. ACT takes the view that we are composed of three selves:

  1. Self as concept. This is the idea that we have of ourselves – our self-concept. It comes from our beliefs, thoughts, memories, judgments and facts. It is also the self that houses the ‘ego’. It is the self with which we tend to ‘fuse’ e.g. taking a loss is not just a financial loss but a judgment of our self-worth. 
  2. Self as awareness. This is the process of observing without judgment i.e. with defusion.
  3. Self as context.  This is the ‘3rd-party’ observer. The one who views our actions and results with dispassion and without judgment (i.e. also with defusion).

Our job as traders is to work as far as is it possible for us to do so with the areas of awareness and context.

The two processes complement one another:

1)  The acceptance process leads us to view the results of our trading without ‘attaching meaning or judgment’ apart from the fact that we have lost money.

2) The commitment process leads us formulate goals and take action to attain them. It also leads us to focus on what market information is telling us rather than viewing market information from the perspective of what we would like the market to be telling us.

(more tomorrow)

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FIGURE 1

act-hexagon-4.png

FIGURE 2

All Well Now! BrightWin

BarroMetrics Views: All Well Now! BrightWin

At last I can say I have fully recovered from the spill I had (what felt like) an eternity ago. All of last week, I sat before my computer and nary a twinge in sight. Hopefully that’s the last long-term injury I’ll have for a while. Still when you are a septuagenarian injuries are part of the life.

The great thing is my trading has never been better. Because of the injury, I traded only my own account; so, I am hoping that the run in 2015 is because I have taken the trading to the next level rather than just being in the flow.

And, if I have moved the trading up a notch, I know where the kudos rest: with Acceptance Commitment Therapy – by far the best tool traders have to improve.

Speaking of ‘improvement’, my first Singaporean friend, put me onto BrightWin. BrightWin is a New Zealand broker with a couple of interesting innovations:

  1.  BrightWing will chart your equity curve based on your trading with it. What I call ‘an equity journal’ is an essential upkeep if we want to improve. Based on the 20-years of teaching experience, I formed the view that keeping a psych and equity journal things most unsuccessful traders are loath to do. Well now the broker will do it for you. No more excuses guys and gals!
  2. The other innovation is a twist to a wrinkle quite a few brokers are offering. BrightWin will post the chart of its best traders. You can elect to automatically place the same trades. However, unlike the rest, BrightWin monitors your equity so that you take the same percentage risk as the mentor. I thought this an excellent twist.

I had a look a BrightWin. It seems to be an ECN (i.e. it will charge you a brokerage fee);  its spreads are competitive; and it covers most FX pairs , some in indices, and some commodities (CFDs).

BrightWin also an interesting rebate structure. If you want to open an account with it (and receive some benefit for any referral), you can open an account at:

http://affiliate.brightwinsecurities.com/signup/Riovest.aspx?AI=1427

When you do that, you are placed  under my Jeff Tie’s group. This means if you have any questions, do drop him a line at:  Jeffery Tie <jefftie@gmail.com>.

Or if you are like me, who prefers to just open an account (i.e. no associate account), drop Jeff a line and he’ll tell you how to do that.

Ohh! Before I forget. I have two attachments:

  • One is Jeff’s equity curve since starting with BrightWin.  It shows the win rate, average P&L, best and worst returns on margin and Jeff’s max drawdown to date. It also shows the number following Jeff at the time of the snapshot (28).
  • The six steps you need to follow to start trading with BrightWin (assuming you want the rebate)

jeff-equity-curve.png

Jeff Tie’s Equity Curve

birghtwin.doc

6 Steps

FOMC 2015-09-17

BarroMetrics Views: FOMC 2015-09-17

A couple of essential matters before today’s comments.

Firstly, the series I was planning to write for the blog.

A big ‘thank you’ to those who commented, and expressed an interest. That said, the response has been distinctly underwhelming. So, I guess there is little interest in the topic. I’ll drop the series for the blog.

For those that did drop me a line…. I have decided to write the series anyway. It will help clarify my ideas on the subject. I’ll send you the pieces I write for myself as I complete each section.

Secondly,  on a totally different subject. Some of you in Singapore may remember my nephew, Kane Petersen – we did a seminar together some years back. Kane is a professional high-wire artist, one of the best in his field. Recently he did a walk in Melbourne that was covered by many of the news channels, including CNA (Singapore).

Here is a link to the walk…

http://www.9jumpin.com.au/show/today/videos/4487554317001/

Turning today’s blog.

FOCM decision day (2:00 pm EST; 2:00 am HK time, 09-18). I’d say one of the most highly anticipated decision’s in recent memory. Figure 1 shows the daily NZDUSD. You can see that for the past 9 trading days, the pair has drifted sideways. Most of the FX pairs show a similar pattern.

The S&P shows 13 trading days of sideways drift.

So, all eyes on the FOMC decision. My view is the FED will raise a 0.25% and will accompany the rise with a dovish statement. My strategy will be to rely on the Rob Hanna FOMC day ‘system’ . I had a quick squiz at Rob’s site. The system appears no longer to be for sale. Pity, I have found the approach to be very useful to enter a trade on FOMC day.

I plan to trade the NZDUSD – long for a day trade, short for a swing trade. Provided I am not too tired, I’ll post immediately after entry.

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FIGURE 1 NZDUSD

New Series

BarroMetrics Views: New Series

First though, an apology – for some reason I ‘lost’ a week and thought last night was Sept 16 i.e. FOMC day  (Opps!). Of course that’s next week.

Today, I am writing to announce that I am beginning a mini-series on why traders fail and what we need to do to succeed. The series will probably occupy two of my weekly blogs. I am looking to restart a daily blog on Tuesday, Sept 15.

To succeed we need to attain:

  1. The knowledge (know what to do), and
  2. The skill (do what we know). 

Of those whom I have made who ‘failed’, did not even pass the first gate i.e., they failed to acquire the knowledge they need. In the series, I’ll not cover the content you need – you have info galore. What I will do is cover how to integrate that knowledge so that we can say we have ‘know’ the material. So, next week will be FOMC focused with space for the new series.

Update on Webinar Series

An update on the webinar series. We will be sending out individual responses to each of the registrants. However,  here is a quick snapshot.

There were insufficient registrants to conduct the 3-series webinar. My apologies for disappointing those who registered. In our letter to you, we’ll provide the three areas to focus on to overcome the Hidden Barriers to Trading Success.

Webinar Series

BarroMetrics Views: Webinar Series 

In response to your request, I’ll be running a 3-part webinar series for the material I presented in Singapore on June 22: provided we receive enough numbers.

The proposed dates are: July 6, 10 and 17, 7:00 PM (HK time). The material covers the “Hidden Barriers to Trading Success” and includes a mechanical system I use to illustrate the “hidden barriers”.

What I found interesting was the fact that the ‘hidden barriers’ were operating for all the world to see at the presentation! No wonder over 90% of retail traders fail at trading.

We’ll have the registration page up by Monday, June 29. Registrations will close Thursday July 2. I’ll confirm July 3 whether the webinars are on. The series will be recorded, and the recording made available only to attendees. 

Last Call

BarroMetrics Views:  Last Call

My last call to register for the Investor Wealth Summit in Singapore on June 20 and June 21 at Suntec City, 1 Raffles Boulevarde, Room 324.

The registration link is below: 

http://www.investorwealthsummit.com/ray/

It’s always nice to hear that some attendees who are coming a long way just to attend my talk: Perth, London, Lisbon.  Welcome and thank you.

I’ll be speaking from 11:30 to 1:00 PM and presenting material I have never before presented. I was interviewed by Income and Assets Magazine, and Bill Bodri, the interviewer, said that he had never heard of an interviewee cover the topics I raised.

Some of these topics I cover at Investor Wealth.

Here’s a tidbit: We now know that humans abor uncertainty. Whenever we meet situations of ambiguity we look to inject certainty if only by making the decision. A decision made, for this reason, is probably going to prove to be the worst one possible. This is especially true of mechanical traders who use system rules as a way of defeating emotions. The problem is emotions cannot be controlled. Indeed the more we suppress them, the more likely it is our emotions will come back and bite us.

Then, as my Singaporean friends would say: “So how?”

That question is part of what I’ll be looking at my presentation. In the process, I’ll look at a setup that has proven to right 72% to 86% of the time across different asset classes.

Hope to catch you on June 21!

The link again:  http://www.investorwealthsummit.com/ray/

The Hidden Reasons Why Over 90% of Traders Fail

BarroMetrics Views: The Hidden Reasons Why Over 90% of Traders Fail 

                                    (and What You Can Do About It!)

That’s the title of a 90-minute presentation I shall be making on June 21 in Singapore.

To register go to http://www.investorwealthsummit.com/ray/

And yes, it’s a free event, thanks to the sponsorship of OandaMoolahSenseOne Capital Holdings, and MIDAS  Development Corporation.

I’ll be producing all new material – stuff I have never before presented. In fact in the light of the recent research in some areas, I have redone the entire MIND section of my Barros Swing module. The presentation is extracted from that section.

To understand why I am so ‘chuffed’, you need to appreciate that for years, I have been seeking to solve the conundrum: how can I help traders achieve their trading dreams?

While I have had some success, that success has been well short of what I wanted, and what I believed was possible. Now, thanks to the recent breakthroughs in learning and behavioural change theory I believe I’ll see the success I have wanted for traders.

I am very excited about the presentation! It will introduce:

  • A learning model to acquire the knowledge, and to translate the knowledge into a skill set.
  • A model to deal with those pesky impulse emotions that ruin our ROI, ‘fight, flight, and freeze’.
  • A model to reduce our reliance on WILLPOWER to maintain our trading discipline. Willpower will always play a role in the exercise of our discipline. But, with this model, you can reduce willpower from 90% to 10% of discipline!

The presentation will also explain

  • A mechanical system that contains rules for trading continuations, and for trading, changes in trend. The ‘two in one’ system!

I’ll be teaching the mechanical systems as a live illustration of the three models.

If you are in Singapore, I’ll see you there. One thing. If you intend to register, do it now – the organisers tell me the seats are filling very quickly.