Futures Trading and Professional Mentoring - Jeff Quinto’s Guest Lecture to the LBR Group on learning to trade, sizing, dry spells and the grind

Jeff Quinto’s Guest Lecture to the LBR Group on learning to trade, sizing, dry spells and the grind

June 22, 2007 | Author Jeff Quinto

Linda [16:09:32]> HI Gang! We have a guest lecturer today, Jeff Quinto. He works with the traders. He will give an introduction, talk about a few things, and then take questions. He knows a lot about the grind of trading, including long flat periods, and frustrating days.

JeffQ [16:11:28]> Hi everyone!Good to be here again! I had a great session last year.I would like to do is talk a bit about getting started, dry spells, the grind and, then, take questions – that was most fun for me last year, hearing your questions!
Let me tell you about the best trader I was ever involved in training. If I told you what he made in a recent year you would be impressed, but that is less important than the struggle he went through to get to that point which says a lot about the dedication it took, but also, that it is possible to do this.The first thing I want to say is that as great a trader as he is today, it took 9 months before he even broke even But, after 9 months, he started making money. He slowly and steadily increased his profitability.
Learning to trade and being successful takes a long time. One of the reasons that people fail in trading is because they give up part way through the learning curve. You DO have to make progressive improvements in your trading, but it still takes awhile. It can be years, too, not just 9 months. Any occupation where you can make this kind of money takes years to learn. It is too lucrative a business for people to make it that quickly. The reality is it can take even up to three years to find a consistent groove.Throughout this period, though, you should be making progress. You need to be keeping track of your progress. Record keeping is vital to keeping track of your progress. You need to be able to judge how and what you did.As this top trader became more proficient, we devised methods for him to increase his SIZE as the market rewarded him and decrease his size in bad times. When one increases size they often tense up. You need to be able to do this automatically; as you make money increase size; and as you have flat periods or draw downs, decrease size.On days that are WORKING for you, you NEED to PRESS!

This is the KEY! Press on Good days – if you are having a good day press and press.
If you are having a bad day or are out of synch, stand aside – lose small amount only, then say you are not in the groove and walk away from it. Which leads to the GRIND – what do you do, when you come in each day and you lose and you are disappointed and you are down.

WHAT TO DO?

The first thing I note is that we all have control over only one thing in life – ourselves.So when I get down to the grind, I try to do things that are positive for me – exercising, eating right, sleeping – doing all the things that we should be doing, but somehow we do not do them. That is one way that I fight the grind by being as positive as I can – I can only control myself and do positive things for myself. I can not control the market.freddy [16:10:34]> Jeff – talk to me about frustrating days! thx!JeffQ [16:24:45]> Frustrating Days: The first thing you have to do is have a trading plan and then look for good trades. My brother-in-law always used to say, “If you come to work each day and make good trades, the results will take care of themselves.”You have to be CLEAR on what you intend to do. You have to be honest with yourself which is something that people do not always do. When you are frustrated, you make trades that do not fit your plan and you are making trades you should not take. You end up SABOTAGING your plan.Are you frustrated because the market is not accommodating your plan, or are you frustrated at your own actions and performance?

The trader I was talking about earlier, would simply walk away on the frustrating days. He would be mad that he lost on the day, but it would not change his attitude. Some days you are in tune and some times you are NOT. It is just part of the probability of things.

rajhima [16:25:09]> Jeff: Any hints or tips on increasing size?

JeffQ [16:29:31]> My idea regarding size is that you prearrange how you are going to handle size based on your performance. You must have a plan that:

if you are up, say, 20 ticks – you trade 2 lots;
if you are up 40 ticks you trade 4 lots.

You must make sizing automatic. It must be easy to implement. It must be decided in advance. If your account is up N %, you increase size by x amount. It must be predetermined and vice versa. If you are down by N amount, you reduce size – all according to a prearranged algorithm that suits your risk profile and amount of capital you have. It must be easy for you to implement this for it to work properly.

vince1 [16:26:13]> Jeff – so talk to us about patience as it pertains to the good days and bad days.

JeffQ [16:31:47]> Let’s talk about patience – I think the good trades ought to work immediately, so I do not give flat trades any patience. If it does not work when I think it should, it is suspect. As long as a trade is working in your favor, you have to stay with the trade. Patience to stay with a good trade comes with experience. If you get out of a trade because it looks like it faltered, but, it is only a pause, you have to be prepared to get back in

Let me tell you the mindset of a very short term trader, in three progressive parts:
1) The market is designed to pay you money;
2) A good trade works immediately; and
3) anything that does not work immediately is suspect.In this way, what I am doing is looking at the market and saying, the market is designed to pay me money if I can figure out how to operate within it. Because I am convinced it should pay me money, every trade I put on should explode in my direction. And, if it does NOT do that, then I am quick to get out of it.Now, we all know that every trade we do does not explode in our direction. The fact is, most trades are more complicated than that. But, you see how it affects your ATTITUDE. That is the attitude you should have. Of course, it is dependent on time frame – working on a daily time frame with immediacy versus working on 1 minute time frame are naturally two different things.Everyone takes a different number of trades and has his own style – an active trader may trade 20 times a day.

iggie [16:37:21]> do you have any audio tools for purchase r/t to your mentoring concepts?

JeffQ [16:39:23]> Our Mentoring Program is designed around one-on-one daily interaction because people learn in their own way. Your trading needs to be a reflection of your own personality. I would not be disappointed if someone was learning more quickly than I was or making more money then I was making. You need to develop a plan that makes consistent returns for YOU. In terms of a plan, in the Mentoring Program, I use a written template for a plan, but anyone can make their own template. Try to put down on the plan:what setups you are going to take;
the hours that you are going to trade;
put in the most detail that you can; and
DEFINE what you are going to do during the day. In the case of my students, we share these trading plans between the trader and me. First, it holds the trader accountable for doing what he planned to do. In your case, whether you tell someone else about it or keep it to yourself, you have to make yourself accountable as to how you execute your plan.Your plan can EVOLVE over time, but you should not change every ten minutes. I would be very slow to add new setups or change the way I do things. A well thought out plan should be something that you are convinced can work.Things that are related to risk should NOT change quickly – what are you going to do if you have three losers in a row, or lose x amount – that is something that should NOT change because that is what makes you an effective trader.One of the things that I see time and again with people – one of the things that I see is that this great plan gets thrown out the window on frustrating days and it becomes free form trading, a veritable trading free-for-all. This is where people really do a great disservice to themselves.

They have a great plan. Tey just do not have the discipline to stick with it. Here it helps to have someone else to talk to. Have someone that you are held accountable to – to ask you did you follow your plan? It helps to have someone to share this with at the end of the day.

acies [16:39:51]> How do you feel about stop and reverse trades as a successful trading style?

JeffQ [16:45:21]> This is not my style. I believe in trading WITH the energy. Over my years of experience, the real money is made trading with the energy. What you describe is just a different style from mine.

There are all types of things that people do that lead to successful styles, though I do not try to push people into a specific style of trading. It is important for you to come up with your own trading style.In our Mentoring Program, I help traders focus on risk and how to increase size and decrease size and, then, I hold traders accountable to it. So, the style is less of an issue to me, if it is actually working for YOU!iggie [16:44:55]> Do you have specific tricks/strategies you use to build discipline in the traders you mentor? If so, can you give some examples?JeffQ [16:48:57]> In terms of discipline, I meet with my traders over the Internet every day and we go over their trades. Both the trader and I know clearly what they were intending to do and we look and see if they actually did it. Sometimes, I see a trade that just does not fit and I tell them it did not fit or that it was “bone-headed” and that helps tp hold them accountable.
Because we have a plan and we are executing trades within that plan, I do not want to hear about a trade that is not in the plan. Over time, we can add new trades to the plan. Then we can execute those trades. Cut and dry.A lot of this comes down to accountability. That is a problem with people because they are out there in their homes and offices by themselves with nobody looking over their shoulder to check on them.In addition to holding traders accountable, as I have been in the business a long time, I can tell you if there is something that has greater odds of working or not. In the long run, you must build your own way of trading though.

pearlstone [16:51:06]> Jeff: could you give an example of trader having a profitable day and how to press winnings?

JeffQ [16:52:35]> OK, let’s say that you start the day as a 5 lot trader. You are now up 10 ticks on 5 lots (10 ticks times 5 contracts). Now, you increase your size so that you are a 10 lot trader, making the same trades, doing the same things, except that you are a 10 lot trader.I like to talk about TICKs, not Dollars. It puts money in the abstract that way. We are just making ticks here – same thing with increasing size, none of it should be a big deal. A trader that presses something knows he has the trend for the day pegged, so if you have the right game plan or road map for the day (which is impossible to do every day), but when you DO have the market pegged, keep trading it, keep increasing size as you are rewarded.If your equity backtracks by a certain amount, call it a day. The MOST debilitating thing you can do if you increase size is to keep the full size on and then lose. So, in my scenario, you are only giving yourself so much more to do. You have to be willing to stop if you start backtracking – it is VERY important not to turn a winning day into a losing day. Trade aggressively in the direction of your game plan WHEN the game plan works. There are many days and times of day that are not productive. The morning tends to be the time of most opportunity. Lunch can die down, don’t press trades at lunch if there is nothing going on.Here is something I advise, if you have a BAD losing day take the next day off and do something you enjoy. Do not do it as punishment. Do it to take a rest and recharge your batteries.What most people do is they come back again and again and repeat the same mistakes. There is nothing wrong with taking a breather from trading, be it an afternoon or a few days.
Also, it is important to have hobbies that give you pleasure and are very different than trading. I like to hike and do things outside. That is how I get joy in a way that is different than the markets.When I work with traders, they put their trades on a CHART. They either print off a chart or put it on your computer showing where you bought and sold during the day, as well as how many ticks you made or lost and how long you held the trade. This is a great tool because when you put your trades on a chart, you can see absolutely what you did and not what you THOUGHT you did.You can see when holding a trade made sense or when you should have gotten out sooner. All these things become evident when you look at a chart with your trades put on it. Another thing we do as part of all trading plans is to keep statistics – any stat that will be helpful as to how you are doing.

Here are some of the obvious ones:
average hold time for winners
average hold time for losers
maximum hold time for winners and losers
the amount of heat that you took
and then the distribution of ticks per trades like a bell shaped curve.

From these things, you can get an idea of what you are doing . I really like the HOLD TIME for winners and losers. People FOOL themselves with what they are doing with actual trades. They THINK they hold their winners longer then their losers. Often, the opposite is the case. Look at this over time. It becomes more subtle with a more experienced trader. It is really important informationLinda [17:06:08]> Sounds like you could also use number of bars as well, so as to adjust for trades off hourly chart versus trades off 5 minute chart.JeffQ [17:06:18]> We look at minutes most often.Here is another SURE SIGN of someone not making it:

They hold losing trades overnight.

In my world, you would never hold a losing trade overnight. Why would you hold any losing trade overnight – it shows up on your statements in the morning.

If you made a rule that said I WILL Carry NO trades with a debit overnight, I bet your trading would improve by a huge percentage.

iggie [17:09:10]> What can I use to track time?….a cooking timer or what?

JeffQ [17:10:16]> A cooking timer might just be the ticket! I have people who use EGG timers and turn them over with each trade. Of course, your trading style can not change to anything longer or shorter than the time it takes to boil an egg if you do that.
Another idea would be to use a stop watch. We had a guy in the trading room who had two stop watches around his neck at all times. He looked like he was timing race cars, but it worked for him.The place that you trade is important, you need to control your environment at home. It needs to be quiet. You should not be disturbed. The point is, control the things you CAN control – yourself, your environment, and recognize you can NOT control the market.You need to be serious and focused the whole time you are trading – FIGHT DISTRACTIONS.

Here is story for you – SPECIALIZE – successful traders often excel in one market, but do not trade well in other markets. The best bet is often to concentrate where you make your profits trading, often it is in just one market.

Linda [17:17:40]> Nothing wrong with that – sounds like you should know your game and what works best for you, and have patience if you are still going through the learning curve and finding out!

vince1 [17:17:32]> What is the best way to focus on multiple markets – sometimes I miss trades because I am babysitting a position – how do you figure out the most effective amount of markets to trade for each individual.

JeffQ [17:18:32]> You are going to miss moves. That is OK. You can only focus on so much. Sometimes you are focusing on the right market and sometimes the wrong one, but you do not know in advance.

Linda [17:19:30]> Sort of like, you get the direction or main play right or you do not -same with picking markets. Sometimes you pick the right ones, other times, they might stall.
Linda [17:21:38]> Thank-you everyone for your questions! We will clean up the transcripts and have them posted for your review tomorrow. Any last Questions for Jeff?rajhima [17:21:34]> There are lots of days when I make good money in Currencies and give everything back in Indexes and vice versa…Any hints at how to manage these? In other words, I feel like being in a zone in Currencies and carry that into Indexes and get whipped.

JeffQ [17:22:58]> It might be helpful to have a risk plan for each market since they are totally independent – each market should have its own limit and risk parameters. Each market should also have its own separate sizing strategy, so you do not give back money. Think about starting over again when you start to trade the Indexes.

Linda [17:28:59]> Thank-you, Jeff, for taking the time to share some stories, advice, and words of wisdom. I like the emphasis on accountability to your plan that you have in your program.JeffQ [17:30:02]> Thank-you for having me as a guest on your site, Linda. Thank-you for your questions, everyone and I look forward to meeting more of you one of these days! Again, please feel free to contact me if you have any follow up questions that come to mind!

Good Night!Linda [17:31:06]> Thank-you Jeff
Excellent lecture
Good night!

Posted in discipline in futures and options trading, PTM, Quinto, success in futures and options markets, Trading from home, trading strategy in futures and options markets | Tags: Member-only content

Username
Password

	Remember Me Lost your password?

Jeff Quinto’s Guest Lecture to the LBR Group on learning to trade, sizing, dry spells and the grind

I am the first to be surprised by this outcome: I am doing something I could only dream of just five months ago. Andrea Cullati, Milan, Italy