If there is one thing that stands out from any conversation with Brian Shannon about the trading process, it is this:

For discretionary traders, there are no rules. Instead, there are “guidelines.”

And because Brian is human, he occasionally breaks his guidelines and suffers the same consequences as anyone else. Everyone gets what they deserve. Even a trader of 30+ years like Brian Shannon.

If a trader buys the dip or sells the rip without a plan to control her risk then she, too, will get what she deserves. Eventually. The market is always on the hunt for our weaknesses.

This is one of the things I love about my friend Brian. He doesn’t tolerate nonsense. He tells it like it is. Tough love. It’s what a trader needs.

And he’s adamant about tuning out the noise and focusing on his strengths. For instance, he no longer pays any attention to financial TV. “It makes me emotional. TV is just theatrics. If it doesn’t help me make money, I completely ignore it.” He knows what he’s good at, says no to everything else, and makes the best use of his time by focusing his energies on profitable pursuits.

Shouldn’t we all live and trade like that?

He’s had to learn the hard way that things like global macro, or Fed policy, or foreign affairs just confuse him. And certainly don’t add any alpha to his trades. Instead, he focuses on a “bottoms-up” approach to stock trading where each individual setup is measured on its own merits. Each potential trade speaks for itself.

After more than 30 years in this business, Brian’s engagement with it has varied between addiction, obsession, and passion. But one thing he knows to be true is much of what we need to do in order to be successful cannot be learned in a book. It has to be experienced.

He has observed that too many inexperienced traders want to simply copy successful traders instead of learning the “why” behind any trade. This is the type of thing that experience teaches you.

One important thing Brian has learned is that most times when he takes on 20+ swing trade positions and his account is fully leveraged, that would usually be a signal that the stock market is ripe for a meaningful pullback. Do you think he learned that in a textbook? Or did he learn it the hard way via experience?

I think you know the answer.

Please enjoy this wonderful episode of Off The Charts with our friend Brian Shannon.