The Essential Real-Time Trading Tool

Real-time traders live from moment to moment.
Such is the pull of a live data feed, it's often a challenge to see the big picture. But this you must do if
you want to survive and prosper. .
Visualizing the current trade as one of a series helps to maintain your discipline and lower your
emotional cholesterol.
But there's one trading tool that will really improve your performance more than anything else.
A trader's diary.
Don't be scared off by the sentimental connotations of keeping a diary. "Dear Diary... today I... " this is
not.
Your own trading diary can be computer-based - via a word-processing document or a simple text file
saved to your desktop. Or you may find a traditional pen and paper version more effective.
(There is something about writing on paper that makes it more personal. Probably the way the hand
and eye coordinate with the brain. Plus you've probably got enough applications running when you're
trading in real-time!)
Another option is to a personal tape recorder. Good if you prefer speaking to writing.
Whatever format you use... what will you actually write (or say)?
Anything.
Don't worry about grammar. Make one-word notes of what's happening. Sure, you can note down the
facts and figures - stock code, time and date, position size, entry price, stop loss, exit price.
But also - and more importantly - record your thoughts.
If you were hesitant about getting in the trade, say so. If you're terrified now you're in (the dreaded
"Trader's Remorse") then make a note of it.
When you exit, say why. Stopped out? Took profits? Why? How did you feel before the exit? How
do you feel now, afterwards?
This only takes a few seconds to record this ongoing commentary of your own trading. But the
information you get can be priceless.

Mind Your Language

Try this experiment sometime:
Tell a friend to close her eyes and stretch her arm out wide. Now get her to think of the word "weak",
then press down on her hand. You'll notice her whole arm moves down easily.
Repeat the experiment as before, only this time, tell her to focus on the word "strong". This time you'll
notice enormous resistance in her arm, and you might struggle to move it at all.
Two simple words - two very different results.
If words are so incredibly powerful, just think what you do to yourself when you call yourself an "idiot"
or worse!
But words are more subtle than just name-calling. How about this one...
'Loss'.
Boy, think what that one conjures up. Missed opportunity? A gaping hole in you life? A theft? A
bereavement, even?
No wonder traders find it hard to take losses. Let's call it something else:
'An expense'.
Ah, now it's sounding better. Much more business like. Helps to put it into its true perspective.
Similarly, on the other side of the balance sheet, let's stop talking about:
'Win'
... which again is steeped in emotion... and change it to:
'Income'.
Income versus expenses. Isn't that what trading really is? A business.
You're much more likely to become profitable when you realize this. And forget about pitching your
ego into imaginary battles that ensnare your sense of reason along the way.
Mind your language when trading. Use neutral words at all times, both about yourself and the market.

Don't Think Money - Think Points

Following on from minimizing your exposure, we come to your relationship with money.
Whether we like it or not, money is highly prized in our society. It's important. And we attach a lot of
feeling to it.
How then will you feel when you see hundreds of dollars (perhaps thousands, depending on your
account size) go up in smoke in front of you?
The problem is, "expenses" are part of the game. You have to lose some to win some more. There is
no holy grail, like we said before.
If you can't change your relationship with money, then just don't think about it. Focus instead on
numbers.
Think "percentage of trading account". Think "average risk-to-reward ratio". Think "potential profit
points versus maximum points risked".
Concentrate on getting the numbers right and the money will take care of itself.

Trading is a game of probabilities.

Imagine we're flipping a coin. Heads I win one dollar - tails you win one dollar. Simple. Heads and
tails will each come up half the time, and we'll both neither win nor lose.
However, unknown to me, you have a loaded coin. For every 100 throws, heads comes up 49 times,
and tails comes up 51 times.
You now have a license to print money. Let's call it the "Tails Trading System".
All you have to do is sit back and bet on tails forever. Eventually, you'd win all my money (and anyone
else's who took you on).
All any trading system gives you is an "edge". A favorable bias. Something that is more likely to
happen than not.
Whatever trading system you use...