When you read newspapers or novels, do you ever wonder if the words just flow freely for the author?

It’s inevitable – sometimes writers experience “writer’s block” – and times are tough…

For traders, a similar scenario also happens from time to time, with varying degrees of frequency, depending on the trading system. The dreaded “drawdown.” During these tough times, what should a trader do?

In this episode of 2Traders Podcast, Walter and Darren talk about drawdowns – having a few losers in a row, and how to cope up with it. They discuss the dangers that may come along and the “bad trading system” versus “bad luck” conundrum. According to Darren, there are two kinds of drawdowns. But how do you tell which is which?

Also, you’ll hear about when you may want to time your vacation.

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP36_Drawdown.mp3

Download (Duration: 21:20 / 24.4 MB)

In this episode:

01:27 – real danger

03:13 – simple systems

04:39 – have a break

06:57 – good judgement

08:31 – different perspective

10:18 – over trading bug

12:09 – a new start

13:27 – get reinvigorated

15:09 – bad luck

20:13 – trading blindly

Tweetables:

When you’re in a drawdown, figure out who is trading well & why. [Click To Tweet].

The real danger is in changing your trading system because of a drawdown. [Click To Tweet].

After a heavy drawdown, take time to have break or a week off to clear your mind. [Click To Tweet].

Download The Full Episode 36 Transcript Here

Darren: When I’m trading, I’m listening to myself as much as I’m listening to the market. That’s why I’ve been looking out for these intense feelings, intense emotions and my instinct to kick in and say “this isn’t a good frame of mine to be trading in.”

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome to the Two Traders Podcast. It’s Walter here. I’ve got Darren on the line. How are you today, Darren?

Darren: I’m really good. Thanks, Walter.

Walter: Darren, I got this email from a friend, a trader I’ve known for a while. He’s a really good trader and he said “Walter, I’ve lived in a drawdown now and it looks like you are too. I’m just wondering what do you do here in this situation”.

I have some thoughts on this. I think that there’s a real danger period for a lot of traders when they get into drawdown and they have few losers in a row. What will typically happen is they’ll go one of two ways.

In this episode of 2 Traders Podcast, Walter talks about one the most common questions for traders and non-traders alike: Is trading the same thing as gambling? This episode revolves around these ideas: is trading the same as gambling?? What is sound risk management? And when does over-trading become a problem? Darren agrees that while...

In this episode of 2 Traders Podcast, Walter talks about one the most common questions for traders and non-traders alike: Is trading the same thing as gambling?

This episode revolves around these ideas: is trading the same as gambling?? What is sound risk management? And when does over-trading become a problem?

Darren agrees that while — essentially, in the context of the word — trading is gambling, it might also be just the perception of trading. There’s a bit more to it than that…

If trading is gambling, is there a way to “gamble” for consistent profits over the long haul?

Also, the discussion wanders into betting on horses and playing the slot machines, and how to identify a professional trader from a gambler.

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP35_Trading_as_Gambling.mp3

Download (Duration: 19:37 / 22.4 MB)

In this episode:

00:35 – is trading gambling?

01:32 – gambling idea

02:29 – uncertain outcome

04:26 – why aren’t the banks doing it?

06:04 – trading perception

07:14 – less reckless

09:26 – same mindset

10:17 – just lucky

12:10 – breadth of knowledge

13:26 – try new things

15:27 – different approach

16:46 – same endeavor

18:07 – live markets

Tweetables:

If trading is gambling, is there a way to make it work for the long haul? [Click To Tweet].

Having a strong belief about the market will help you tell what you are doing. [Click To Tweet].

Don’t narrow down your focus in one trade setup. Broaden your system and take time to look at different avenues. [Click To Tweet].

Download The Full Episode 35 Transcript Here

Walter: They don’t sit down thinking “I’m going to take a trade today”. But they sit down and they think: “Is there a trade today? Is there something that looks so good that I have to take it?”

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome to the Two Traders Podcast. Walter here, and Darren is on the line. Today, we’re going to talk about gambling, Darren. What does that mean to you?

Darren: Is trading gambling? For me, it’s certainly is a hundred percent gambling. If you’ll look at a dictionary of the definition of gambling, it’s risking money on an event with an uncertain outcome.

I believe that’s what we do when we’re trading. I also think that it’s probably a good idea to have a mindset: there is gambling as well. Because, as soon as you start believing that you’ve got some way of beating in the m...

Does your last trade have anything to do with your next trade? In this episode of 2Traders Podcast, Walter talks about the “gambling fallacy” mindset, back-testing, and statistical analysis; and how these can affect your decisions in determining trading results and the amount of risk you are willing to take. The “meat” of this episode...

Does your last trade have anything to do with your next trade?

In this episode of 2Traders Podcast, Walter talks about the “gambling fallacy” mindset, back-testing, and statistical analysis; and how these can affect your decisions in determining trading results and the amount of risk you are willing to take.

The “meat” of this episode centers on whether any individual trade taken is closely related to the previous trade or not.

Darren believes that while past data on charts and trends might be a great source for future expectations, it should not affect the next trade that you are in.

Sometimes traders run into a losing streak and think “This can’t go on forever, right?” But what if it does?

Finally, the conversation wraps up with a discussion about roulette and blackjack in Las Vegas… and how the casino’s point of view may help you (seriously) in shaping your trading strategies.

 

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP34_Gambler_s_Fallacy.mp3

Download (Duration: 20:27 / 23.4 MB)

In this episode:

01:43 – surviving a losing streak

02:03 – gambler’s fallacy

03:35 – complete randomness

05:43 – series analysis

08:18 – magical trend system

10:22 – what creates my losers

12:14 – being comfortable with your system

14:11 – figures in trading

20:01 – the observer effect

Tweetables:

How does the “Gambler’s Fallacy” affect your trading? [Click To Tweet].

Don’t use past trade data to anticipate the future. [Click To Tweet].

You can be right and still go broke. [Click To Tweet].

Download The Full Episode 34 Transcript Here

Darren: For me, the movement of a price chart pattern is just complete randomness.

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome back to the Two Traders Podcast. Walter here, I’ve got Darren on the line. How are you today Darren?

Darren: Hello Walter. I’m very good. Thanks, mate.

Walter: Well, I want to talk about the gambler’s fallacy. I’ll just introduce it for those of you who haven’t heard of this idea. So my friend and I in university, we had a lot of statistics courses. Mostly because they told us that if we were to take a lot of statistics courses we’ll be likely to get into graduate school.

They said, “You really need to take statistics courses.” So, we take a lot of these courses. One of my professors was a fascinating guy. We had this idea, and the idea was that… Where I went to school, Darren, wasn’t too far from Las Vegas; it was maybe, like a four-hour drive from Las Vegas or five-hour drive from Las Vegas. So we had this idea that we’ll go to Las Vegas and play blackjack and we’re going to make all ...

Darren and Walter talk about trading rules, creativity and why the school system “breaks in” children. If you are re-thinking your trading system and approach to the markets after this episode, then it has done it’s job. Be your own trader, and trade your own beliefs. It’s a better way to trade. Download (Duration: 19:35 / 22.4 MB)...

Darren and Walter talk about trading rules, creativity and why the school system “breaks in” children. If you are re-thinking your trading system and approach to the markets after this episode, then it has done it’s job.

Be your own trader, and trade your own beliefs. It’s a better way to trade.

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP33_Creativity.mp3

Download (Duration: 19:35 / 22.4 MB)

In this episode:

00:52 – gifted children

02:25 – parallels with trading

04:37 – breaking your children

05:44 – where creativity starts

07:38 – a failure

09:09 – follow the right path

10:20 – greatest contributions

11:29 – passion for it

13:47 – creative thinking

18:44 – be open minded

Tweetables:

Look outside the box and see what happens to your trading [Click To Tweet].

Which of your assumptions are effecting your trading? [Click To Tweet].

You are going to trade your beliefs. [Click To Tweet].

Download The Full Episode 33 Transcript Here

Walter: Whatever you have will morph into something that is consistent with what your beliefs are about the market.

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome to the Two Traders Podcast. It’s Walter here. I’ve got Darren on the line. Darren today, you want to talk about gifted children?

Darren: Yeah. I’ve read and asked for this week about gifted children. Whenever I read anything that’s kind of psychology or human behavior based, I’d always look for trading link within that.

Here’s the interesting thing about gifted children. Let’s say, let’s take a 5 year old who’s an amazing pianist. You’ve imagined that they’d go on, and grow up to be like great composers or the next Mozart. The funny thing is that, that very rarely happens. It’s not just in music. It’s also in sports, science and mathematics.

You know what is going on? If someone is amazing at something at the age of 4 or 5 or 6, then why when they mature are they not exactly becoming the new Mozart or Beethoven?

What they reckon… what they found was that, because the kids have these gifts, the parents tend to be really strict with them and give them lots of rules.

What happens is, they become brilliant copying what’s already known. They lose that sort of creative thinking edge because they’re given too many rules and restricted. Do you know what?

The interesting thing they found was, the kids that do go on to be very original, come up with new ideas and really sort of change the game if you like, when they looked at their parents, they’re very relaxed with rules, kind of let the kids do what they were into,

Darren and Walter each share one helpful trading tip – one thing that has helped over the past month. Walter talks about how his disciplined approach to back testing has helped and Darren dives into the deep thinking he’s been doing on the distribution of winners and losers. Download (Duration: 09:13 / 10.5 MB) In this episode:...

Darren and Walter each share one helpful trading tip – one thing that has helped over the past month.

Walter talks about how his disciplined approach to back testing has helped and Darren dives into the deep thinking he’s been doing on the distribution of winners and losers.

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP32_Helpful_Trading_Tips.mp3

Download (Duration: 09:13 / 10.5 MB)

In this episode:

01:33 –  backtesting

03:00 – chipping away everyday

04:22 – distribution of winners and losers

05:20 – take a break

07:44 – psychological break

Tweetables:

Set a little bit of time aside every day to do your testing. [Click To Tweet].

It buys you time away from the chart. [Click To Tweet].

Make sure that the next day, you’re in your game. [Click To Tweet].

Download The Full Episode 32 Transcript Here

Darren: The problem is people wants some sort of certainty that they’re doing the right thing at that moment “Oh God well. It’s moving now I could miss out on another 2 pips.” Doesn’t matter, you’ve traded a period of the week. You’ve made some profit, an acceptable amount of profit for trading a week, have a break. Why not?

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome back to the Two traders Podcast. Darren and I are gonna do something different today. How are you going today Darren?

Darren: Yeah. I’m good Walter. Thank you.

Walter: Well, I thought it would be kind of cool if we did this: what’s something that you’ve learned in the last month and how did that one thing help your trading? I’ll start first and I’ll talk about this idea of just chipping away at your testing. For some people when I say go out and test, they’ll say “what should I do to get started? And I’d say “go out and test in Forex tester. Take 500 trades and see if you can make these work, if the systems work for you.”

What typically happens is people would either sit down for six hours. Back test the crap out of it. Grow a beard and either really get excited about it or really get upset because it didn’t work. Or they will start doing that for about 20-30 minutes and then say “this isn’t working”. Give up, move on to something else and maybe backtest something else.

Instead of these extremes of starting out or giving up versus just getting really deep into it.

What I found, if you just set a little bit of time aside every day to do your testing, it could be only 15 minutes right? Let’s say that 15 minutes, that adds up over 7 day a week right? So you’re spending over an hour just testing, just getting into your system. What you’ll find is that, after a month that really adds up and you’ll get the trades that you’re looking for.

The Disciplined Trader is the only trader who consistently profits… or is this a load of hooey? Darren and Walter examine discipline in this episode, what is it? Why is it “needed?” Is it overrated? Trading discipline is the topic for this episode (and some of this you’ve probably never heard before).   Download (Duration: 19:34 /...