Trader Training - Using Your Human Powers

Hi, Brian McAvoy here with Inside Out Trading. And today I wanted to talk to you about the three sources of power that you already have. These are like your three greatest powers as a trader. And this is serious stuff. I'm not clowning around when I say your powers when it comes to, you know, approaching trading in general, particularly when you're looking at your system or considering another system. Also particularly if you're looking to make changes to your system or perhaps take your system to different markets or to just different items within the marketplace that you trade. Like if you're a stock trader taking your system to go look at different stocks or different sectors. Here's what I'm talking about. The first of your three major powers that you already have, and it's important to put it to use, is that of observation. You do have the power of observation. So when you're, let's say you're looking to find more opportunities to trade, perhaps your system doesn't provide as many opportunities as you would like with the stocks or currencies or whatever that you're working with. So you want to be able to have the day such that you have plenty of opportunities to trade, good opportunities, not just one or two or three, and you're wanting to trade some more. So you start looking to place trades that maybe are questionable. Here's what I'm talking about. What you would do then is let's say on certain days the stock that you're looking at moves in a direction that you want, it's favorable for your system. But other days you don't get hardly any entry signals. What you would want to do then is start observing other stocks or currency pairs, commodities, whatever you trade, and see what is active that you might be able to watch on days when your particular select chosen ones are not providing you with the opportunities that you want. What you would do, the first thing you would want to do is start observing the other markets, the other items to trade within your marketplace. Just observe them and look for the indicators, general indicators, not technical indicators, but just general indicators that, yes, this is worth further investigation, that leads to the second power. The second power you have first one is observation. The second one is reasoning. If, let's say that you have a particular system or stock that you trade that kind of runs contrary to the market in general. So what you would want to do is you think it through. Okay, well, if this is running kind of contrary to the rest of the markets, where are some ones that I can look for that run with the rest of the market and are active on days when my favorite one is running its direction, excuse me, is not providing the opportunities. So you want to put your reasoning cap on and then also just take a look at the items, the ranges, the things about it from what you can observe, think it through and question it. Does this make sense? And so those are your first two powers. You have observation and reasoning. And I'm bringing all these up for a reason, which I'll get to here in just a second. The third power that you have, and as a trader, this is wonderful because in trading, this is the only business that I know of where you can do this. You have the power to test things in the real world. Any other business, you can't do this. It's speculation until you actually put something out there for real. That costs time or money, usually money. In trading, you can back test things for free and you can trade in a demo account for free. So you're working with the real world to see if things work. So you have power of observation, the power of reasoning, and then the power of testing to know that things work. So you can approach your trading rather than from one of hope and I think and opinions and that kind of stuff. You can make it so that it's a very calculated and very high confidence endeavor by going into it very prepared and in a knowing manner. Because you've observed these things, you thought it through, you went back to do some more observation, you verified the things that you thought, okay, I can do this over here. I can use a system where these markets work well in these circumstances. And then you've tested it so that you have again, more verification and you actually have hard numbers. So those are the three things and the reason that I'm wanting to bring all this to your attention. Nicholas Garvis is a very famous stock trader, traded back in the late 50s. Took his account from $3,000 to over $2,000,000. And he was trading back in the days and we didn't have personal computers. Heck, he didn't even have calculator. He was doing everything by hand. But what he did is he tried a lot of different things that a lot of other people do. He relied on his broker and then he started doing his own stock valuations. And he tried a lot of different things and found that they were not reliable. He wound up creating his own system by observing particular stocks and their price behavior and then putting some reasoning to it. And then he started trying some things and testing them, trying them, observing, testing, until he wound up coming up with a System that was wonderfully simple and extremely profitable and one that he could be absolutely fearless with. He knew it worked because he had built it right. And he went into it in a knowing manner, not just, hey, I think I'll try this. That sounds good. He wanted to it in a very knowing manner. And the testing is probably the key. We also have available to us nowadays metrics and other things that he really didn't have back then. And that's why I put together the Trading Performance Analyzer so that you can see more than just does it make money or doesn't it? Simple back testing doesn't really tell you a whole lot. It's the metrics, the numbers, the measurable aspects of a trading system with a particular item to be traded, whether it's a stock, a currency pair, commodities or futures, it doesn't matter. The metrics tell you whether or not it works and how robust it is. And some of the metrics are like your winning percentages, your profitability, your average return per trade, maximum drawdown, huge. These are important things to know, but it lets you expand your trading capabilities and your ability to have more opportunities available to you. It also allows you to try different things and become more selective and improve your profitability overall, your effectiveness in making money as a trader. But it's doing it in a knowing manner. You're exercising your three powers. The power of observation, the power of reasoning, and the power of testing. You have all three of these available to you. And if you'd like, help with the testing again, that's where the Trading Performance Analyzer can really help you out. So make sure you use your three powers. Don't just let your emotions run rampant. When you're running into difficulties, break out these three powers. Observe what's going on with markets. Observe what's going on with yourself. Begin to reason it through. Call in that side of your brain to help counter the emotions and give yourself the confidence so that you can go into things in a more knowing manner. Take a lot of the anxiety out of it. Anyway, those are the three powers that all traders have. Make use of them. If you'd like help with those or other aspects of your trading, swing by insideouttrading.com this is Brian McAvoy. Cheers.