Trading under Chaotic Conditions

The human brain can only take so much noise and distraction before it becomes confused and erratic.

If you are consistently trading under chaotic conditions, whether you are discretionary, rule-based or systematic in your approach, there will be times when the little voice on your shoulder will tell you to override your system.​​​

It may be on a big spike up day, a massive sell off day, or even an energy building consolidation phase where boredom has set in.

​​​​The fact is that when your mind gets cluttered with noise, the markets become very bad teachers.

​They will encourage you to take small profits instead of riding trends.​​​​​​

They will encourage you to manage risk poorly.

They will encourage you to position size recklessly.

Full Time Trader​

When I first started as a full time trader, I traded everything from Live Cattle, Soy Beans and Cotton, to Blue Chips and penny dreadfuls.

​​​​​​I woke automatically at 2am, would turn on my computer and ‘cheer on’ on my Futures Trades, whilst stressing about every intraday tick that went against me.

I read every news report the markets, read a truck load of books, subscribed to fear driven newsletters (just in case), and thought pseudonyms such as Smuggler and MoonDoggy on popular stock forums knew what they were talking about.

​​​​​​At one stage I was making trading decisions off  5 and 10 minute tick charts. 
It was an exciting adrenaline-fueled time, yet it was chaotic and damaging mentally, physically and emotionally.

I needed to dramatically turn down the volume.​​​​​​

So I eliminated each behaviour listed above and reverted to a simplified trading approach that centered on three core ingredients. I would:

1) study only price action
2) create a robust rule-based trading strategy with risk management and position sizing being the foundation
3) become an End of Day (EOD) Trader.

​​​​​​The last point was a revelation. As it meant only opening my trading platform and charts at the end of each day. After market close.​​​​​

I’d manage stops on my open positions. Scan for new trade set ups. Set up new positions that were to be activated on the open of the following day.

From then on it was a simple process of rinse repeat, rinse repeat.

​​​​​I now had plenty of time throughout the day to enjoy life. Pursue other business interests. Spend time with family and friends and maintain a healthy balance.

​​​​​Finally, I was a Zen trader. ​​​​​

Best of luck with your trading.