WSCS Trading Combine: Lesson 1

Many people have performed interesting experiments based on a crazy premise: Super Size Me, Super High Me, “The self-interest of lending institutions [will act as a regulator] to protect shareholders’ equity” (Alan Greenspan), etc. After completing Dr. Brett Steenbarger’s new book The Daily Trading Coach, we have committed to a more useful challenge: the Wall St. Cheat Sheet Trading Combine.

The WSCS Trading Combine is an existential commitment to methodically go through all 101 Daily Coaching Lessons in Dr. Brett’s must-have book. We will blog our application of approximately two lessons a week (no guarantees on the exact number because I have a newborn arriving soon) until we complete the entire program. Our goal is to share our experiences, encourage dialogue with other pro traders, and print an archive for new/aspiring traders. Hopefully Dr. Brett will have some additional advice for us along the way.

Like any educational course, you will get the most from the experience if you too have the textbook and follow along — especially since I will only share a small fraction of Dr. Brett’s advice and awesome exercises. Rather than make this course a subscription based feature, we are hoping you will purchase Dr. Brett’s book through our Amazon Affiliate link. If you find any value in this series, please support the cause.

So, without further ado, here is the first step on the journey of a thousand miles:

Chapter 1: Change
Lesson 1 : Draw on Emotion to Become a Change Agent

The goal in this lesson is to transcend the phase of initiating change (on which infomercials prey), and take our game to the crucial phase of sustaining change. In order to sustain change, Dr. Brett tells us we must super-charge our goals with emotional force. This force is the secret sauce upon which professional athletes and traders rely to perpetuate change in the face of boredom, burnout, and quitting.

When I first read this lesson I set a goal to reduce my frequency of trading. Like a world-class business, I wanted to increase my Return on Investment (NYSE:ROI) by only trading the filet mignon. In order to defeat the urge to trade second-tier rated setups (especially in slower markets which we are experiencing now relative to the pre-election environment), I used Dr. Brett’s recommended visualization technique. I imagined sitting in front of my screens watching second-tier setups unfolding while acknowledging their inferior rates of success and the feelings that arise when those trades fail. I then imagined watching the setups move past the point of entry, and then feeling a strong sense of pride for resisting the urge to trade them.

After practicing this exercise at least every morning, I slowly built a strong sense of aversion toward my second-tier setups. I also noticed that I felt a sense of accomplishment when I avoided them. As a result, I have greatly increased my winning percentage and spent more time trading larger position sizes in top-tier setups rather than getting distracted by second rate trades.

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