Adam Fiske on Trading

a trade that produces profits over a meaningful sample size is said to have edge.

 

• Edge isn't discussed openly (firm traders sign NDA's) leading to broad misunderstanding. To use a card game analogy - you don't show your opponents your hand.

 

• The benefit of intraday trading is arriving at meaningful sample sizes quickly. It's also a skill and experience fast track. It's why successful longer-term traders built their skills through intraday trading.

 

• What edge isn't - when you have a range of trades that produce an overall positive outcome. No way of knowing what contributed to edge across different trades.

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What's most important:

1. psychology?

2. money management?

3. or trading edge?*

*a trade that produces profits over meaningful sample size is said to have edge.

Listen:

If you haven't got edge

the best psychology and money management won't save you from losing money.

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What set up the first payout?

Sure the u̶n̶d̶e̶r̶ ̶N̶D̶A̶ trade paid

But what was the catalyst?

Here's your play:

The early move-up was a carbon copy of the prior day.

When trading a continuation of that move rewarded you.

But now

There's keen interest in a rinse-and-repeat long trade due to recency bias.

Yet there is a structural difference...

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Know the feeling?

When you're overwhelmed by trading?

It's a mental grip that depletes your confidence.

And calls for a way to reset.

Even though it's written to a Millennial

Obstacles are generation agnostic

So this note to a mentoree will work for you too…

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The yellow line in the chart below calculates weekly volume-weighted average price (WVWAP). The slope of WVWAP is trending up, as we would expect, given the massive upside gain this week. Generally, price trading above WVWAP as a signal to maintain long positions.

See how price price has broken below WVWAP, only to reverse back to the upside, as shown by the blue ellipses? What's this signalling to traders?

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As a serious trader your first step is to chunk down until you have a framework that brings order to your trading.

Think playing field and sports.

Within the field of play is when you can trade. Out-of-bounds is when you don't trade.

But it's not only about being in the field of play.

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The examples are clear. But unlike surfing both conditions hurt you. So screen time teaches you to recognise and avoid them. But perfect waves seldom occur in markets. As shown in the image below, markets are mostly a blend which makes when to trade ambiguous. Right?

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"I'm good at picking when the market turns so that makes me good at trading."

Says a struggling trader

Followed by:

"So I know I'll be profitable if I get help with my psychology."

Look

1. Even though you experience winning trades…

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Ironic isn't it
You've experienced pain from

• expected returns not met

• being overwhelmed with "how to trade"

• years of trading losses

• courses that didn't help

• minefields of analysis, tools & indicators

• "Holy grails" recommendations, poor advice

Yet:
when it comes to trading

pain pays…

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Is your concern re developing trading?
You can only do so if you can allocate all your time.

Truth is
when you first commence professional trading
you don't have the "trading fitness" to trade 5-8 hours a day…

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If your problem is:

• over-trading

• taking poor odds trades

• feeling like you're going to lose when you put on a trade

Here's how to resolve it…

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Take poor odds trades?

It's not as simple as

• Boredom

• FOMO

• But what if?

3 reasons why

1. You define yourself as a trader
And as a trader, unconsciously, you tell yourself if you're not trading, you're not "working"

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