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  With this post, I'll be taking an extended sabbatical in order to complete my next book and related projects.  I thought a worthy final post would summarize the best practices of traders who have experienced success in 2023, with the aim of improving yourself and your trading processes in 2024. Best Practice #1:  Moving From Reactive Trading to Planned Trading Very often, the psychological challenges that traders face occur because they are making trading decisions in the heat of the moment, when they are most likely to be stressed and impulsive.  Successful traders have intensively studied their most successful trading and know what they do best.  They then turn their best practices into trading rules, so that they know exactly what kinds of opportunities to look for in markets, how to express those opportunities, how to size the positions and manage them, etc .  The beauty of knowing what you do best and how you do it is that you can then mentally rehea...

  The U.S. stock market has rallied sharply off its late October lows, bringing us to fresh highs in several large cap indexes.  On Thursday we saw particular breadth strength with over 2500 stocks across the major indexes registering fresh monthly highs and over 1700 making new three-month highs.  At the same time, only 188 and 86 stocks hit new one- and three-month lows.  Thanks to the dovish shift by the Federal Reserve and a dramatic turn lower in interest rates, the buying was broad, lifting both small and large cap shares.  When we see large moves across asset classes--fixed income, currencies, equities--we know that something fundamental is afoot among macro investors.  But what comes next?  After such broad strength, do we see further upside momentum or reversal?  Let's take a look at recent market history. As I have indicated in the past, strength (as measured by the number of shares making fresh new highs) and weakness (as measured by ne...

  Recently, I've heard from a number of traders regarding the challenge of establishing effective targets for their trades.  What has been happening in most of these situations is that a trade will go the trader's way and be profitable.  That leads the trader to hope for further gains and sometimes even add to the position.  At that point, the trade reverses and leaves the trader with no gain or even a loss.  The frustration caused by such "choppy" market conditions can then fuel subsequent poor decisions and excessive losses. This is one of those situations in which the best psychological strategy is also the best trading strategy.   It is imperative to study the markets and instruments you're trading and identify clearly how far moves are likely to go in various regimes of volume and volatility.  If you're trading a stock index, such as the SPY ETF or the ES futures, the market VIX will be highly correlated with the average size of moves on any time ...

Note:  This post is a summary of the webinar I held with traders this past Monday. I've been involved in trading the U.S. stock market since 1977.  My professional work with traders began in 2003 and continues to this day.  So I've seen my share of markets, and I've seen quite a bit in terms of what goes into trading success. What I find noteworthy in recent markets is the degree to which more and more money is being put to work, seeking relatively short-term advantages in the marketplace.  Quite a few of the hedge funds and money management firms around the world have greatly increased their assets under management.  They have also expanded operations across markets and across geographic regions.  When I started my performance coaching, it was common that funds specialized in specific strategies and consisted of solo portfolio managers, sometimes aided by assistants.  Now, we find many funds trading multiple strategies ("multistrat") with large teams....