September 22 - Trading Accomplishments

Completed the following tasks:

• Read 16 trading blog posts
• Archived 0 blog posts in email

5.0 hours of backtesting with StockFinder 5.0

Updated market breadth indicators spreadsheet

Monitored intraday SPY and IWM activity

Recorded paper trades for trading strategies in journal

posted Market Report

Researched/documented Stocks in Play News

Researched/documented Story Stocks News

Researched tracking company quarterly earnings/sales/news

Morning cardio workout

Market Report - September 21

September 21 - Trading Accomplishments

Completed the following tasks:

• Read 68 trading blog posts
• Archived 11 blog posts in email
• 5.0 hours of backtesting with StockFinder 5.0
• Updated market breadth indicators spreadsheet
• Monitored intraday SPY and IWM activity
• Recorded paper trades for trading strategies in journal
• posted Market Report
• Researched/documented Stocks in Play News
• Researched/documented Story Stocks News
• Researched tracking company quarterly earnings/sales/news
• Morning cardio workout

Trading Experience - Lesson Learned

Below is a post by Jeff Pietsch from the ETF Prophet blog discussing the advantage of talking through your trades and documenting thoughts. TRADING IS A GAME OF PATIENCE.  WRITING DOWN OR SPEAKING YOUR THOUGHTS HELPS CRYSTALLIZE YOUR ACTIONS!  THESE DOCUMENTS CAN BECOME AN EXCELLENT TOOL TO REVIEW YOUR ACTIVITY AND IMPROVE PERFORMANCE.  VERBALIZING ACTIONS HELPS CATEGORIZE TRADING ACTIVITIES, MAKING IT EASIER TO RETAIN SPECIFIC SKILLS.

The Gift of Gab & Trader Performance

In our ETF Prophet chat room last week, I was asked what motivates me to host the room. The first and easiest answer is the social aspect. Trading can be a lonesome endeavor, and it’s nice to have a virtual bull pen with which to share insights and ideas, as well as camaraderie and the occasional joke. If there seems to be a focus on the latter much of the time, I assure you it has more to do with day-trading being 90% patience waiting for proper set ups than anything else. When the trade is on, we are (usually) quite serious.

But the chat room serves another purpose for me as well, and that is to articulate my day-trade rational in written form. I find it extraordinarily helpful to pen what I see and why I take action in real-time, both as a form of documentation and for the teaching benefit of the group, but also as a means of cognitive self-talk. Indeed, this is one of the primary reasons that I started blogging to begin with. This latter point is the focus of this post, where I suggest that it may be even more beneficial to trader performance to physically verbalize out-loud what we see….

After decades of debate, scientists are building an increasing body of experimental evidence that our world-view, and indeed our very cognitive abilities are strongly shaped by our verbal aptitude. From a recent article by Robson(1) summarizing the significant connection between language and cognition,

“… language helps us to think and perceive the world… like a form of augmented reality, an overlay that changes how we think, reason and see…”

Interestingly, when I asked our very own “Doc” Martindale to review this piece, he found this quotation consistent with his own point of view. As a therapist, he has observed that people search for the causes of their problems while failing to see that they are often related to and indeed grounded in their very own vocabulary.

What We Say Affects How We See

Here are key “take-aways” from the Robson article:

• 70-80% of our mental experience appears verbal, rather than visual or emotional;
• We are better able to group objects into categories if we have learned a category name;
• Speed of object recognition is significantly increased through this same mechanism;
• Having and speaking names for objects also aids in memory, including retention of specific details;
• Hearing verbs associated with objects affects the eye’s sensitivity to the described action, priming sensitivity to such stimulus; and,
• Over generalization within a learned category is a potential downside, possibly reducing some attention to differentiating details.

In summary, having a vocabulary and language to explain and categorize our visual experience is, overall, a significant cognitive advantage. Essentially we create ourselves in dialog, speaking and language. We invent and create ourselves as we speak and do — we are what we say. Thus, using our language out-loud may confer important added benefits. I also wonder if continuously increasing one’s self-taught “vocabulary” through study and observation doesn’t largely overcome point six, constituting a large part of the oft referenced “10,000 hours to become an expert” rule.

Mapping a Vocabulary for Day Traders

While my swing trades are largely quantitative driven, my day-trade/scalps and hedges are somewhat less so and are certainly much more visually focused, even if driven by a myriad of essentially quantitative indicators. The practical relationship of the Roberson take-aways to my day-trader performance is therefore clear. Indeed, this article “opened my own eyes” to the potential benefits of literally talking through my trades out-loud.

Market Report - September 20

September 20 - Trading Accomplishments

Completed the following tasks:

• Read 98 trading blog posts
• Archived 12 blog posts in email
• 3.0 hours of backtesting with StockFinder 5.0
• Updated market breadth indicators spreadsheet
• Monitored intraday SPY and IWM activity
• Recorded paper trades for trading strategies in journal
• posted Market Report
• Researched/documented Stocks in Play News
• Researched/documented Story Stocks News
• Researched tracking company quarterly earnings/sales/news
• Morning cardio workout

September 19 - Trading Accomplishments

Completed the following tasks:

• Researched liquidity requirements for backtesting strategies
• Ran 3.0 miles