Much time and material is devoted to point a trader in the right direction. Yet this and future short stories aim for the opposite; learning via negativa à la Nassim Taleb.

In other words, the moral of the story can illuminate what not to do. 

———-

A collection of fishing rods lay against the side of the boat. 

The three men sat calmly beside each other as they oversaw their fishing. 

One remarked to the other about the best way to hold the fishing rods. Later, another debated the finer points of hook designs with the first fisherman. Animated by the conversation, the third fisherman spoke definatively about his revolutionary fishing techniques, boat design and the future of the profession. 

As their time drew to a close, the men withdrew their equipment and stepped out of the boat. 

Walking on to the grass, they each turned to look at their boat; comfortably balanced between a collection of boxes and an earth mound. 

Today marked the fourth year they practised fishing on dry land. How much they knew and learned since then!  

Dressed in the best and newest smocks, and bearing the finest fishing rods, hooks and freshest bait they each proclaimed their love of fishing; their dedication and smarts. It is only a matter of time until they will catch real fish. 

As they returned to town, other fishermen were mooring their boats laden with fish from today’s catch. These old fishermen, with their weathered faces, gruff beards and thick hands began unloading their catch from their battered boats. 

The three men ignored these old fishermen, just as they had too ignored their own lack of catch, and quickly moved on. They instead remarked to themselves how one day their comprehensive knowledge, hard work and passion will quickly surpass the abilities of these antiquated fishermen who remained on the pier. 

At home, the three men settled into their routines to affirm their zeal for fishing. One had cut out the latest articles and sketches from the Fisherman’s Digest to add to his scrapbook. Another practised casting his fishing rod, trialling a new technique he devised and proceeded to meticulously journal his findings. The latter pleased himself with the quality of the photographs he took of himself and his friends fishing. Energetically, he wrote letters to his friends and sent them the photographs, for everyone to admire their choice of profession. 

That evening, the trio had agreed that the following morning they would take their boat into the sea for the first time. The time had come! 

Sailing past the old fishermen in their ramshackle boats; the three men cast their fishing rods and waited to catch their fish.

Later that day they returned with no fish in hand. 

Instead the three men were only rewarded with the sun bearing down on their necks. The restless sea provided them only sickness and trepidation. Their ingenious casting techniques had only resulted in losing some of their fishing rods to the vast, salty expanse. Their expertly crafted hooks failed to attach to their fishing lines; their bait expensive and barely used.

Returning back to the pier, the three men damaged their boat as they fiddled with rope to moor her. Their fishing smocks, once pristine and fresh, had now transformed into an odorous clump. 

The trio repeated their attempts each day in the following weeks; transforming a passionate, confident group into a squabbling, miserable and reluctant mess. 

One evening they discussed their woes and mistakes. They had discussed their unjust experiences! The failure of their equipment! They decided that their studiously devised fishing techniques and boat handling must have not worked because of the nature of the sea itself. Finally, they had reached a solution. 

The next day, they heaved the boat out from the water and took it back to their well-tested and reliable earth mound. Re-energised, the three men got into the boat and cast their fishing rods, just as they had practised all these years. 

Their excitement and love for fishing came flooding back! Look at how their casting techniques now work beautifully! How stylish they look in their fishing smocks in their latest photographs. No more sickness from a rocking boat. How much more left to learn, practice and test! No more sea at last. 

The trio never caught any fish, but they were indeed — of course! — fishermen.

***

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis — Co-Founder, Head of Trading
Alex Haywood — Co-Founder Head of Strategy

• Chapter I. – Trading Journey: Not Your Typical Beginning
• Chapter II. – Trading Journey: Discovering The Trading Edge
• Chapter III. – Trading Journey: Coming Home
• Chapter IV. – Trading Journey: Back On The Trading Floor
• Chapter V. – Trading Journey: My Worst Trading Day

As the summer of 2021 was ending, I was happy. I have managed to get out of the terrible Gold carnage, my trading become much more consistent, I have solved personal issues in my life that were holding me back and my health was finally back. I was happy, full of energy, and in a good spirit for the months to come. It was a combination of the right circumstances, persistency, luck, and skills that got me through the summer. I remember thinking one summer night coming back from the successful day of trading: “Now the trading career will accelerate and I will make leap progress. The hockey stick P&L will unravel in front of my eyes. Well, I was wrong again. The Autumn came.

It started to roll slowly. Losing day here, losing day there. At first, I have ignored it but I have not yet addressed it deeply. Given the experience with the disastrous Gold trade, I was aware that I must address it in order not to repeat the same mistake. I took some moments to review what was going on. I have clearly identified that the rhythm of the market has changed and I have not adjusted my style. I did some tweaks, highlighted what to focus on, and kept going. But even with the tweaks, I felt that something is still not right. Wild swings of P&L, up and down were hammering my mental state. I kept going. Given the time and effort I have put into the trading so far, I hoped that at this stage of my trading career I would reduce the large P&L swings already. Not eliminated, but reduced. Although we theoretically know that P&L should not be our objective, we are still humans playing the performance game. Regardless of any system or process we build, there is always P&L at the back of our minds. Although I was not repeating the same disastrous mistakes as in the past, my P&L curve was more like a rollercoaster than a path to consistency. My profit and loss curve was the signal that I am clearly doing something inconsistent in my trading. I knew that if I get rid of this inconsistency in my process, the P&L curve should reflect it. I have noticed that the harder I tried, the worse results came back. And that was the problem!

Going through my debriefs there was one re-occurring pattern. I have observed, that I simply pushed my trading way too much, way too early, and way too stubbornly. With the positive summer behind me, I got the feeling that now I have finally “cracked the code” to consistency and now I can push more. I wanted to grab it all. By digging deeper I have noticed that my scaling was way too big and inappropriately managed the second I have entered a trade. Because I have drunk the Kool-Aide of my “monumental rise” (a bit of sarcasm) over the summer, I have felt I can push for more. Don’t get me wrong, there is nothing wrong with pushing more, but when we push, we must push on all fronts and not all fronts might be ready. Was I ready to push on all fronts? No! On trades with high conviction, I put much bigger size, but I was blind to any invalidation price action. I held longer than I should, I have averaged at places where I should get out. I simply was too convinced that I must be right because hey, I am ready to push for more right? Given the size, this had a damaging effect on my mental state and consequently the consistency of my trading.

Looking back, the biggest takeaway was that I pushed for more, way too early at the wrong places. I wanted to move to the next level way too early. My goal was to finally make it big, it was never the consistency. Brutal honesty is critical. Every time we feel it is time to accelerate, we must evaluate if all aspects of our trading are ready for this acceleration. We must be brutally sincere about the direction where we want to get and build processes around it. Trading is the process of slow gradual progress where things happen rather organically when we put in the effort in the right process and we are ready. Any forced action will provide us with instant feedback and tell us if we are truly ready or not. I was not, but gained valuable lessons into the wintertime, where I could test my more sincere goals. But more about that in my future post.

Thanks for reading. Trade well.

JK

Embracing The Impermanence Of Things And Relaxed Readiness

September was a month defined by my physical deterioration. This stemmed from the overwhelming stress I found myself under in the wake of an immediate drawdown, in pursuit of trying to access Spoo downside which began at the beginning of the month. Even on revisiting my warm-up journal from the first week of September, I can sense the eagerness in my feelings, the desire to do the right thing. I believe expectations were taking a strong grip on my reactions to the events that followed because they were so unconsciously overwhelming when they started to surface to a much more emotional level, I struggled to react from a place of acceptance. The surface level of my questioning took control in that first week of September and I allowed myself to take it out upon self-worth. The immediate term thoughts were ones that instantly hindered my ability to learn from the experience, instantly drawing my attention to the start of August and basically every other month of this year, in which I begin with a noticeable drawdown. Perhaps this was the case because I had not fully come to terms with these experiences, but on reflection, I believe it was a combination of process and outcome momentum running hot. The timing of drawdowns is completely irrelevant, yes you can learn a lot from identifying patterns in the time of such events, but to truly grow from them is to take self-accountability. For whatever reason it may be, I appear to build process and outcome momentum into the end of the trading month, if this is left unchecked for too long it is inevitable that at least one of these variables is going to face some resistance – in some cases both will take a hit.

My inability to go through the entire acceptance cycle of what had just happened, rippled into my physical health, quite literally dumping a month’s worth of emotional and mental capital into a two-day period. All the thoughts that I was tapping into in the wake of this were detrimental to how I addressed the immediate term. As touched upon, the timing of events more often than not hold less weight than we want to admit, more often it is simply a matter of process and outcomes beginning to run hot – simply an ebb and flow which we operate within. I believe my desire for finality and resolution, a perfectionist quality, was largely at play at this moment. Something subconscious within me was craving a definitive ending to this reoccurring pattern, for it to happen again in the manner that it did put my ability to gain closure to the test.

Even now I must be careful not to get stuck back in that place, yes my immediate reaction was far from optimal, but it happened and moreover, I got incredible feedback via the physical reaction that preceded. The very literal experience of turning ill from stress-induced resistance to adversity has never made it clear to me how important it is to approach and resolve experiences from a place of acceptance; at the very least to constantly preach and live by the belief, as it is unreasonable to expect you to demonstrate it perfectly on every occasion.

The seven conditions for achieving flow:

• Knowing what to do
• Knowing how to do it
• Knowing how well you are doing
• Knowing where to go (navigation is involved)
• Perceiving significant challenges
• Perceiving significant skills
• Being free from distractions

Having a clear objective is important in achieving flow, but we also have to know how to leave it behind when we get down to business.

The points focusing on our ability to perceive both challenges and skills encapsulate my experience in mid September. There was no accounting for the possibility of challenge in that time, I was also incapable of taking a step back from the initial challenge in order to focus on the most leverageable of my skills – tools which would have helped me address the immediate term with far greater efficiency. Ironically in the aftermath of my emotional reaction transitioning into the physical, there has been a persistent feeling of not only acceptance but gratitude toward what unfolded. Often telling myself that this is the best drawdown I have ever been through, recognizing that this is the best version of myself perhaps ever (knowing how well I am doing). These are things which were quite literally impossible for me to see for such a long time, now that I can direct attention to them I believe my ability to embrace the next challenge I face can be from a much more accepting place – one of believing in letting as by doing so is to trust in my process.

Not too dissimilarly to August, the month of September was one in which adaptive situational trades, at times took too much control of my decision-making. When put under periods of stress look to:

• Push points of access further away than you think (identify areas that you expect to gain feedback from, build ideas around this)

• Broaden ideas to a larger timescale (if the idea does not play out today, how might it look tomorrow?)

• Work harder to do less  (we are constantly making decisions, a position should not be seen as the only way to make one)

• Remove levels of fabrication and get to the core of an idea (most efficient ideas have a basic principle of understanding when a market may move from x to y)

Believe in principle that something I come across quickly is something I do not understand sufficiently (often closely linked to accessing of a bias).

If the tempo of opportunity is to remain or even increase, I need to be aware that it is likely that their quality has deteriorated also. It is in my ability to fall back on my selection that will allow me to filter through these opportunities, ie moving to a more broad segregated way of coming up with ideas. Even if the pace is to actually fall, it is likely that there will be a higher quality idea developing, it just may mean there are prolonged periods of doing nothing in-between my times of idea selection.

An ideal trader state is all about ownership, expectations take away our ability to own our decisions and take self-accountability.

Accept it for what it is and springboard into the next experience.

There are no negative emotions only negative reactions to them.

Focus on enjoying your daily rituals, using them as tools to enter a state of flow.

Rituals over goals.

A ritualistic workplace.

By Joe Carey

FREE Webinar Sign Up: https://www.elitetraderworkshop.com/

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy

This blog post is part of a trading journey series. For previous chapters, follow the links below:

• Chapter I. – Trading Journey: Not Your Typical Beginning
• Chapter II. – Trading Journey: Discovering The Trading Edge
• Chapter III. – Trading Journey: Coming Home
• Chapter IV. – Trading Journey: Back On The Trading Floor

Chapter V. – My Worst Trading Day

As the trading clues got more integrated, I started to feel a slight change in my trading consistency. This subtle change that took 12 months of deliberate practice, weekend drills and endless debriefs to build, suddenly started to bring fruits of my labor. Axia Futures co-founder Alex Haywood always reminds us how long this journey to consistently profitable trading is. How long it takes to integrate all the nuances of consistently profitable trading and under which regime and deliberate practices the achievement is possible. None of us want to listen at the beginning, we all want to jump in the arena of trading live and become the outlier, the 1 in 10 000 who can make money from month two. Most of us never become the outlier but ego is bigger than our realistic expectations. Maybe for a good reason. Maybe, if we would know how hard it is at the beginning, we would never start. As Steve Jobs once put it:

Most of the traders who try to become professionals fail and leave the business for good. We blame all kinds of things, from internal drivers such as our belief system to external drivers like “shitty choppy” markets or HFT manipulation. I have been through a lot so far on this journey (from seeing 8 figures trades on day one of my trading career to dealing with unbearable physical pain)  and now I finally started to see some longer-term consistency build up. My biggest trait though still was my good days/bad days ratio. The ratio in which on bad or very bad days, I lost much more than on my good days. I was able to have long strikes of positive consistency until one day, the big loss came and erased a larger portion of my profits. Well, things were about to get even more dramatic than I thought in the days ahead. A dramatic loss that made me question if this is THE time to quit for good.

The day started slowly. It was Thursday. During the week I have felt I have underperformed a bit in my trading but it was not bugging me much. I did not feel any strong pressure from the week. Just a subtle irritation. I just felt that the week was somehow slow and there were a couple of mismanaged opportunities. As the afternoon was approaching, I have built an idea for nice reversal trade in Gold, going long. Everything was set up nicely. I started to really like the trade idea. First common mistake: You feel you have spent so much energy preparing for this trade so it simply must work. It is time to get paid. The market started the anticipated move in the US cash session in the direction of a reversal zone. Dot by dot I started to connect my clues for access into the trade and started to build the size. Then, suddenly, I got stopped out! That little fast stop triggered a little rage. Still, I felt I am aware of what is happening and calmed myself down. I thought I was in control again. But then the market again started to exhibit all the attributes of the successful reversal. It showed me it is time to load up again. I started to build my position, got nicely onside, and I was already counting money. Now I am gonna get paid. Mistake number two and three: not only the trade you have married started to work, not only it showed all the attributes for a reversal but now it started to pay off. Then, suddenly new flows came into the market and Gold started to press down yet again! This time, I would not let this happen. “This is yet another fake reversal“, I told myself. I am gonna hold. I have invested already so much energy, time and money into this play. Little I knew that the market just started one of the biggest drops in months. Under bigger rage, I started to TILT into my trade idea and I did the worst mistake number four: I started to average down. Suddenly I have compounded a position of 10lots in Gold on a day of the biggest drop in months. The loss happened so fast, that even the risk manager that usually gets us out of massive trouble could not react. Everything happened super fast. The damage was massive. I was devastated.

Looking back, the scariest thing about the damage was, that from a certain moment, I was not present. Only my neanderthal mind clicking the mouse, not willing to accept a devastating loss was present. A recipe for disaster. Once the dust settled, I was out of all my positions, I was staring into my screen thinking, this is it. I can’t do it. How can I ever become a consistently profitable trader when I let things like this happen. I was fearful, in disbelief, and in rage with myself. I wanted to quit. After all positions have been closed, I felt a physical disgust with myself. I was so down, that I hated to do the debrief on a trade that I would rather immediately forget. I wanted to distance myself from the pain, not put it under the microscope. I wanted to quickly forget, go home, and cry.

Later that day, Axia trading coach reached to me and we had a very lengthy conversation about what has happened. We discussed all the nuances that led to this biggest red day of mine and how it was probably a matter of time for this trade to happen. I had to go back to the drawing board. I must learn from this! I came back to my trading desk and I have questioned everything, from the type of trade, a risk I took, planning, triggers, and clues throughout the week leading into the trade. Every little detail that got me into the devastating TILT MODE. I have reviewed in depth the source code that led to this massive loss. I have beaten the crap out of this trade in the debrief and went into the smallest details of what that source code leading to this loss was. After an hour of thinking and debriefing, I have located invisible issues that triggered me. Something that was hidden from me deep down and I completely ignored. I took few days off to fully reflect on what I have found and I have decided to install new practices that would hopefully forever remove this “trigger” of poor trading behavior. Looking at this negative experience, I would never tell how significantly my approach to trading has changed from that moment on and how it could lead to the most profitable months ahead. But more on that later.  

Thanks for reading.

Trade well.

JK

• Chapter I. – Trading Journey: Not Your Typical Beginning
• Chapter II. – Trading Journey: Discovering The Trading Edge
• Chapter III. – Trading Journey: Coming Home

Chapter IV. – Back On The Trading Floor

Given the obstacles life threw at me during my trading journey I managed to come back. I felt a sense of pride but also a sense of worry. I have managed it so far and here I am. Back on the floor. I have witnessed the best days of Elite and Senior traders on the floor at the beginning of my journey that gave me a certain degree of hope that it is possible to achieve great success in this game. But now it was time to step up my own game. As days on the floor went by, I felt a bit lost. On one hand, I was happy that I am able to keep going and I did not give up but on the other hand I felt that all the accumulated knowledge so far did not serve me. On the contrary.  I felt I am accumulating more and more knowledge yet underperforming in my P&L. I knew that the learning curve and the controllable variables are something I need to focus on and P&L will follow. But it is easier said than done. And for how long one needs to go until the desired consistency is found? Where is the line between sanity to keep going and time to admit this is not your thing? When comes the great arrival of consistency? I knew I need a hint, something that would give that extra kick. As all these thoughts were coming through my mind, my ego was screaming, full of worry trying to avoid the discomfort of the journey. Of the unknown.  While searching for the answers, trying to be patient, I have observed a small change in my trading. A new perspective that I would not be able to realize without stepping back from the markets and coming home for a while. I have noticed that suddenly my prior knowledge became much more integrated than before. It seemed like all that knowledge suddenly baked in into my primary circuitry and somehow I started to see new things in a market. I felt like a character in the video game that without any intention suddenly unlocked another surprising level.

Meeting new people on the floor gave me that new kick to see their perspectives with even better clarity. From new price ladder observations to deepening the understanding of the market auction I felt my fuel tank got a new kick in form of a deeper understanding of the market and a new meaningful milestone appeared. A project! An idea of a “clue library” has been born. If I can’t rely on binary P&L outcomes, I need to have something else to lean on than just a pure faith that in the end, great success will come. I have realized that somehow I need to quantify my progress but that quantification needs to become much more process-oriented, crafted towards my personality. Given my engineering background, the “clue library” was exactly what I needed at that point in time. To build a database of repeatable lego bricks, that in the right sequence trigger a favorable market move. On top of that, I have started to add also my psychological clues that were accompanied by those market clues. By this, I not only could capture the market repeatable blocks and their sequencing but I could also tap into my stereotypical self-talk when this market clue sequence occurred. Am I more prone to over-trade or will I be more prone to freeze in this particular sequence? Will I be looking for more confirmation to avoid discomfort in this clue setup? The combination of both psychological and market-driven clues gave me a chance to tackle my trading from an angle of measurable and more organized craft. Something that fits my engineering personality very well. Now I knew it is all about the time. As long as I will be showing up, working on my structured clue library, doing the prep, debriefs, and deep reflections I am on the right path.

Although this project gave me the deeper sense that while I am building my craft, I have something to lean on that is outside of daily P&L swings, I started to have another problem. Cash. I was burning my cash cushion I have built from previous businesses to support myself and my family. I knew that without the ability to meet my target to pay myself in the months ahead, I will be forced to stop trading. As time will be running out, I will have to make some hard decisions. But more on that in my next post.

Thanks for reading.

JK

‘The underappreciation of finely tuned process’ in the binary world of trading‘

The purest understanding of trading can be viewed as binary. Long or short, buying or selling, the option to be flat adds some variety to your array choices. Money is made or lost on any given trade, over a period of time or specific event. As a result of these deeply simplistic boundaries which traders operate within, our worldviews of success and failure become very apparent. Immediately, and more so over time the market taps into the dichotomy of the two states. What proceeds, is the extraction of unknown scarring fleshed out explicitly through market reflection.

How an individual manages this should be bespoke, however, broad foundations can be laid in order to better understand our complexly intrinsic relationship with success and failure. It is dismissively simplistic to group people, actions and basically anything you can imagine into the two binary categories of success and failure. Moreover, the boundaries between the two are constantly blurred and often much closer than you realise. Throughout a period of profitable trading you view yourself as a success, believing you are creating a bigger divide between the stereotypes of success and failure. Only for this reality to be shattered entirely, how could it be possible to fail so badly – what has gone wrong? Without refined, as well as fluid frameworks which constantly evolve with success and failure, it is very easy to fall into counterproductive habits which flatten your learning curve and inevitably your equity curve. These market participants are doomed to drift between success and failure, as a result of unclear definitions regarding the two states and what they mean relative to their learning curves.

The first topic I wish to address touches upon the idea that a given success today can easily be deemed a failure tomorrow, how does this shape a market participant’s learning curve? What pushes a trader onto ‘greater success’ is how they compare themselves to their prior success, this is obvious. However, the vital and often overlooked part of this reflection is in the context of how this comparison is framed. If you frame your success entirely within the parameters of binary outcomes, profit or loss, right or wrong, you are suffocating the creative life from your learning curve. In this case, your learning curve no longer reflects personal growth, the deep perspective gained from changes in market personality and an overall appreciation for the challenge at hand – mastery of self. Instead, what it resembles is something much closer to your equity curve, a despondent and non personable entity, a scoreboard for those who aren’t willing to probe deeper into their decision making process. Getting to a place where a trader can make sense of success outside of their profit and loss, undoubtedly takes time, but also requires them to go through the infancy stage of their career in which their success is entirely dependent on increasing their equity curve. The juxtaposition between breathing life into your fragile trading career through increasing equity, versus the intricacies of learning about oneself in order to leverage your own strengths and weaknesses within the backdrop of the markets, is exceptionally challenging and in reality is an open ended lesson. As mentioned, this is a by-product of poor understanding regarding the two states of success and failure, but also the result of over reliance upon them in the first place. A trading scenario presents itself and you trade it according to your plan / strategy/ instincts, resulting in a profitable trade – potentially a sizable profit relative to your recent equity curve. How you go onto frame this event is frighteningly critical with regards to the path of one’s learning curve going forward. Not necessarily immediately, but undoubtedly at some point in the future. When we are presented with a similar situation, and feel as if we’ve underperformed, many are met with the feeling of failure. Anchoring themselves to said previous experience, losing all objectivity toward the information that led them to that decision. Was this trade of the same quality to the one you’re currently anchored to? How high was the original level of questioning? Did I in fact over perform relative to the opportunity that just presented itself? The cost of framing a recent experience entirely on the equity outcome of a given trade, instantly caps the outlook for growth, it numbs the sensory feelings of how you are interacting with the market – limiting the questions you are willing to ask of yourself as well as oversimplifying an undefinable experience.

So, what is the solution to this innate human flaw most of us deal with on a regular basis? I believe it derives from the underappreciation of finely tuned machines, in relation to ‘definable success’. What I mean by this, is that we heavily overvalue clear binary outcomes, over the natural development of ruthlessly diligent routine. Take the example of your pre-trading routine, the period of time between waking up and sitting down at your desk, whenever that may be. What is done during this time is hugely overlooked and underappreciated, relative to your end of day / end of week / end of month profit and loss. If you can build an environment in which success and failure is based entirely on the effectiveness of your incorporated machines, you reframe some of the binary elements of trading that pull on your psyche. By doing this, what you are creating is a self evaluating regime; detached from the craving to be categorised within the confines of success or failure. What you are doing instead is building confidence via clear controllables, which over time you can hold yourself accountable to – making these machines even more efficient with time.

I highlight pre-trading routine deliberately, with hindsight I significantly overlooked the role that it played within my overall cognitive machine. Prior to covid, this window of time was managed with extreme precision, minor but explicit details and nuances which could not be recreated in a working from home environment were so key on reflection. Knowing exactly what time I had to leave the front door in order to get a specific train, followed by dedicated time to breathing exercises once on said train, only once this part of the machine had finished would I transition to check overnight markets – deliberately avoiding any newswires until I had sat at my desk for half an hour. Yes, of course this could be re-created in some facet whilst working from home, however, I am trying to draw upon the significance of these tiny little processes. Their effectiveness accumulated over time. My body and mind became primed to these minor events, putting me in the best position possible to be ‘successful’ on any given day.

“Expectations also shape stereotypes. A stereotype, after all, is a way of categorizing information, in the hope of predicting experiences. The brain cannot start from scratch at every new situation. It must build on what it has seen before. For that reason, stereotypes are not intrinsically malevolent. They provide shortcuts in our neverending attempt to make sense of complicated surroundings.” Dan Ariely – ‘Predictably Irrational’

Success and failure are undoubtedly shaped by expectations, they are the underlying driver that define our ever changing view of the two states. Expectations are the misleading, unavoidable third wheel that further complicate our perception of success and failure. They are often a great hindrance to learning curves, unless monitored closely. This is not to say that there is no place for expectations or even bold aspirations; without these I believe it is impossible to maintain any level of trading consistency. Without expectations of oneself, you’re left to the mercy of randomness. What is of paramount significance is the direct relationship between expectations and your learning curve, if the market participant can shift their view of expectations to focus entirely on controllable variables, the development of a sustainable learning curve becomes more probable.

As a result of this thinking, the participants’ equity curve should follow a similarly sustainable path. I firmly believe that if you can get to this place of effective self criticism regarding your controllable variables, instead of jumping to the immediate extremes of profit and loss, the likelihood of positive returns increase drastically. As the opening quote states, stereotypes provide us with shortcuts in order to make sense of complicated situations. If you succumb to attaching success and failure to the two polar opposites of profit and loss, discreetly you will damage your learning curve. Trading is a never ending complex pursuit which seeps into your life, in many ways consuming your life. There is a danger of oversimplifying the open ended challenge of improving relative performance, by how you view success and failure, how you evaluate yourself relative to binary outcomes and in how your self-worth is packaged within recent ‘success’ or ‘failure’.

I warn of danger recalling recent experiences, it is worryingly easy to fall off the regimented route of finely tuned processes, in favour of chasing the dull comfort of binary success. I find myself craving the simplicity of stereotypes, when in reality at this moment you must ask the most introspective of questions. It is vital that you get to a place of believing in constant questioning and live by it undeniably. One of the hardest things a market participant can do, is reflect on a profitable period of trading and recognise it as unsuccessful – relative to their controllable expectations. During these periods of equity growth and depleted self reflection, you are creating a divide between your learning curve and your equity curve. This divergence can persist long before you see a correction in your equity curve, it’s at the first juncture of binary failure that you are given an opportunity to reassess and return to the original sustainable path. The gut wrenching feeling of hard binary outcomes has its place, it is essential, but if you are dependent on them solely to fuel growth, you are only scratching the surface of broad and sustainable trading success.

As touched upon, there is an important place for binary success and failure. What I wish to deter people from, is accepting progress through an entirely binary worldview, once this mindset takes control it indicates your ideology for learning has become stale. It is essential to be checked by yourself, third parties whomever it may be, to stay in motion with the ever changing states of success and failure. Deliberately using these perspectives to reaffirm a positive learning curve, in exchange for delayed positive outcomes in the future. The majority of factors influencing learning curves are lagging your current equity curve. When your thinking is restricted to binary scenarios, you are past the point of holding yourself accountable to a growth mindset. Instead, you’re held hostage to the simplicity of definable success or failure, disregarding self accountability to your own controllable variables. Proclamations of success and failure entrap you, they instantly cap the ceiling of your learning curve. Undoubtedly you need to take stock to recognise growth of account, increased position size, but many miss the underlying yet discrete successes which lead you to these binary outcomes. Once you become attached to the latter as opposed to the former, your worldview regarding progress can become extremely tainted as well as damaging. I believe this is the biggest hurdle that any aspiring, let alone experienced trader faces everyday of their career. The never ending balancing act between a learning based worldview, and the unavoidable reality of hard binary outcomes is extremely challenging. I say the biggest hurdle, as it is one that is constantly in motion and impacted by infinite inputs. You are constantly forced to re-examine and evaluate the intricacies of yourself, in an attempt to stay true to a positive path regarding your learning. You need to embrace this dilemma with curious fascination, it is the untapped well that can drive you from relative mediocrity to unimaginable realities. The backstop that reverts you to a place of synchronicity after a period of mental block.

In totality, it is hard to measure how much of an impact our understanding of success and failure impact our learning curves. I believe that most severely underestimate their influence, often requiring very blunt reality checks, in the form of large drawdowns to even consider their worldview needs readdressing. There is nothing wrong with developing finely tuned processes in the aftermath of violent market experiences, arguably this is the best way to incorporate such machines into your trading system. It is more the consistency of this approach that is so key for survival in this game, if only traumatic market experiences force you to question your current learning curve you are treading a futile path. Riding the highs and lows of this pursuit is simply human, in the moments of neutrality you must take most responsibility to address your current path of learning – ignoring the binary nature of your equity curve. With success and failure come expectations and excuses, unavoidable obstacles which nullify learning. They dull the surprise of new events, particularly ones which we don’t understand, creating potentially huge blind spots within our systems if left unchecked. One can take reassurance in knowing that the dilution of your learning is inevitable, it is how you respond to this realisation that will shape your career – for however long it may last.

Joe

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

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Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy

• Chapter I. – Trading Journey: Not Your Typical Beginning
• Chapter II. – Trading Journey: Discovering The Trading Edge

After several months of intense trading during the beginnings of pandemic madness (see Chapter I. for context), I have arrived at my apartment feeling incredibly weak. Mentally exhausted but what’s more, in a very unpleasant physical pain. My stomach was on fire. It has been in ever-increasing pain for the last month and my mind started to go crazy about it. I knew that this time it is serious and I need to take a break. Little I knew that in a week’s time, I will be barely able to get to the car that will drive me to the border of my country. When Alex was saying that one day, no matter how it will all end up, I will have an amazing story to tell, I kind of imagined a different type of story. Story of heroic trading and massive trading success. Nope. Not yet. As the time of departure was coming closer, my condition got even worse. I could not sleep anymore with the stomach pain, I noticed I lost a lot of weight and started to have frequent cold chills. Feeling dizzy without any energy, my mind at that point went mental picturing all kinds of horror stories. I remember walking to Covid testing point, at the time when testing was in its beginning to some distant Wroclaw football stadium thinking that I might not be able to get there on my own. Waiting for those test results while living in the pain really tested me. Finally, an email arrived, I rushed to print all the necessary papers and I was ready to go. I called a guy I accidentally came across in the Uber who could take me to the border since no cross border public transport was available at that time. With the remaining bit of energy, I got myself into the car thinking if this is my last time I see Wroclaw. The only thing I could think of at that time was: take me home, I need to get my health back.

At home, I have completely detached for weeks. Slept a lot, visited all my doctors, and slowly started to create a plan on how can I get better. In a meantime, I have received a medical diagnosis that was not terminal but not easily treatable. The healing plan was put in motion. My mind could finally rest together with my body. I have started to take longer and longer walks and observed the amazing ability of my body to heal again. In a month’s time, from feeling at the lowest point I have ever felt, to my first run. My problems were still there, but the level of pain went from unbearable to livable. Finally, I could sleep normally. As I was getting better I started to slowly come back to trading. Showing up each day, at least for half a day, and doing my prep, all the routines, watching the markets, and slowly starting to trade was something for what I was looking for again. But now, I was a different person. Deep down I constantly questioned if it is all worth it. If the trading craft, the struggle, the pain was worth it. I also knew, that in order for me to continue in this journey, I must radically change something in my life. I was too attached to performing and succeeding. Even worse, I was defined by it. I have realized that my whole life, no matter what I have chosen to do, my self-worth was defined by the outcome of my work. From a long-term point of view, a recipe for disaster and unhappiness. Realizing that, I started to work with a coach that would help me go through the process of unwinding a lot of my old beliefs about who I am and who I have to be. As I was going through this process, I have realized the root cause of my many self-sabotaging practices that have manifested in my own trading. We all say we want to be disciplined, yet we don’t know what old and deep self-beliefs drive our lack of discipline. We all want to manage our anger and frustration better, yet we do not understand the root cause of our rage when things don’t work out as expected. When our plans have been shattered to pieces in front of our eyes after trying so hard. I have realized that in order for me to truly breakthrough I must clean as much mess of the past as I can, so I can create a little happier and more relaxed me while I am trading. As I was slowly changing, I had my doubts if the passion that ignited this journey won’t fade away. If it’s still all worth it.

As physical and mental conditions got better, I have slowly started to plan my come back. I knew that a different guy than the one who left in pain three months ago is coming back and I had my doubts if I still have all that it takes to compete at the level I desire. I was about to find out very soon. 

Thanks for reading. Until next time, trade well.

JK

When Gods Play Chess

Before we embark on the journey of finding your own edge, let’s pause and imagine you are a blank sheet of paper. You have never seen the game of trading before, you have never read a book on the topic nor seen any educational video. If you would come to the game and perceive it without any rules, limits, and expectations, what would you see? In the short video down below, Richard Feynmann, an extraordinary scientist and great teacher known also as a “great explainer”, talks about the game of chess through the lens of a blank sheet of paper. Like in our example, imagine you have never seen the game of chess before but you want to understand how to play the game. What would the process of figuring that out feel like? How long would it take you to understand the game of chess? How would you feel during the process of learning? Watch this short masterpiece of an analogy in action.

So what drives you forward to understand the game? To truly understand the game in the long run, when all motivation fuel of “making a big buck” has been depleted while you have been searching for the edge? It is your inner curiosity and ability to sustain a constant flux between states of breakthrough, confusion, and frustration. The curiosity drives the eagerness to understand the part that does not fit. The rules keep on changing as you move forward in your deeper understanding of the game. Sudden changes and shifts that force you to investigate the game more and more and expand your experience. Brilliant moments of integrations when everything is pulled together into unification and turns out to be simpler than before. That is the sustainable path in this game, the never-ending curiosity that can give you fuel in the long run. 

Shallow vs Deep Understanding

It is these moments of expansion, integration, and simplification that over time perfects your edge. An iterative process that can’t be simply skipped very well described by Bogdan’s article: “A Trader’s Education: The Right System At The Right Time”. Although the path from the outside looks simple, “I just learn how to trade and I will earn money”, the process of learning is much more complicated and followed by many moments of breakthroughs as well as reality check frustrations. It can be well described by the frustration/satisfaction curve:

The problem many people face in the process of developing their own edge and deeper understanding is their apprentice incompetence. What do I mean by that? Since trading is marketed and perceived as “follow these steps and you can become a successful trader”, you are misled into believing that learning the trick leads to success. Oftentimes people are super pumped after completing our career program, eager to jump in the market and trade. But they fail to recognize that by completing the program we have given them all the tools we know of on which they can build their own edge and that deeper understanding after they have completed the course. That it all begins after the completion and not ends at completion! This failure to recognize that your understanding is shallow and how much it takes to make it deeper and integrated can be described as the apprentice incompetence. Process in which you oscillate in your learning journey through the states of shallow understanding and moments of satisfaction to the moments of despair when your understanding is tested and you know you must dig deeper to improve it. It is about how you construct the learning iteration cycles so you can gain as much deeper understanding of the game as you can.

Path Towards The Singularity Of An Edge

The idea behind singularity is that eventually, all things we experience will exponentially snowball into one deep integrated experience. Although singularity might be extreme, Richard Feynman’s earlier explanation about the iterative process of integrating that deeper knowledge leads eventually to grander and simpler understanding, something that earlier seemed impossible has now become obvious and subconsciously integrated.

Many times on the trading floor we have numerous discussions about the development of one’s own edge and each one of us is coming through our own frustration/satisfaction curve at a different pace. We are all positioned somewhere on the curve, finding both joy and suffering in each cycle. These discussions reveal one crystal clear thing and that is that edge is never one or two tricks or some dark algo trading secret. If you accept the premise that essentially you and your learning approach is your edge, that you are the edge, you can recognize that everything you do affects how successfully you are gonna trade and eventually make it in trading. From sleep to your diet. From room temperature to testosterone-cortisol balance in your body. From your daily debrief to weekend deep reflections. From constant self-awareness during the trading hours to the beliefs formed during your childhood that run your decision making in trading that you are not even aware of and many many other aspects. So you might eventually ask here how deep is the rabbit hole of an edge? I think this quote summarizes it nicely:

And just as buying a tennis racket does not make you Roger Federer, clicking a mouse and making a trade does not make you a trader. Only the application of the constant process of perfecting your game from all angles, like an elite athlete, leads to the eventual singularity of an edge.

What’s Next?

So how can one practically do all of what has been mentioned? How can one differentiate between the shallow and the deep understanding while being objective about the journey? By having the courage to ask the hard questions and set truthful expectations. By willingness to hear the hard answers. What do I mean by that? Let’s use a sports analogy that can describe what the right setting of the truthful expectation actually means. Anyone who has played a sport at the competitive level would tell you, that in order to develop a deeper skill, one must put thousands of hours of deliberate practice into it. If you ask any pro-tennis player how long did it take him or her to develop that amazing down the line forehand, you would probably get an answer by which you might get discouraged. So why do we think that trading is any different? Mainly because the industry wants us to believe that trading is easy. But anything in life that is easy can have rarely the edge that lasts. Building that amazing down the line forehand is the deep work the tennis player must have gone through to develop that specific stroke. The same goes for your position management, selecting your asymmetrical access point into your trade, your ability to deal with emotions in realtime, and 1000 other things that must be all playing together like a symphony. Therefore, I encourage you to ask the hard questions that will get you closer to the truth:

1. Which part of my game (specific trading skill) is built on deep understanding and which part of my game is built on shallow understanding? How can I recognize the difference between the two?
2. Are my expectations about the journey of becoming a trader correctly set? How did I set the expectations about the difficulty of building specific trading skill?
3. What do I do on a daily basis, religiously, to deepen my understanding of the specific trading skill?

By answering these questions you might be able to ease the pressure of wanting to succeed quickly, wanting to find a quick shortcut to riches, and start focusing on the right things building that deeper understanding.

It is the integration of deep vs shallow understanding, developing every aspect of your life into one singular edge that is YOUR OWN while remembering that in the journey you will be cycling between phases of frustration and satisfactory breakthroughs. Understanding that embarking on the journey of a trader can be one of the biggest adventures you can take in life. An adventure that will take you to places far beyond all your expectations and change your life paradigm. Many times these places can look very dark and be filled with frustration and disbelief if it is all worth it but in retrospect one day, no matter how it all ends, they can be one of the most important experiences that formed your life. The life that makes you proud that you were able to face the challenges of the trading arena, one of the most competitive arenas on Earth.

How To Trade The News

Trading news is not about predicting what the next new development is going to be but instead having a clear plan for how you are going to react to various scenarios. What market(s) will you trade? How important is the news? What scope of movement does your chosen market have? It is very important to note that these scenarios and trading decisions relate to the immediate response of markets to a new development, not a consideration for the long term implication the news.

• Trade Wars News Trading
• Brexit Comments News Trading
• Trading Over a Federal Reserve Decision

When considering the Covid-19 vaccine story and planning potential trades, the obvious first choice would be equity markets – they were severely impacted by the original outbreak and provide a direct expression of economic recovery as companies can get back to trading again. Secondly, buying Oil comes to mind – demand increases as travel and freight come back. After these two would come risk on plays – selling Gold or Bonds. Currencies provide a very difficult trade as this is beneficial globally so hard to say which currency should outperform another when it is positive for all. So with these plans in place how did the news trade?

Trading the Pfizer Covid-19 Vaccine News

The initial move on the announcement of the Pfizer vaccine having an efficacy of 90% in 3rd phase trials produced moves the like had not been seen since March and this is where having a plan counted; as can been seen below 400 ticks could have been taken in Gold and S&P 500 futures whilst Bund fell 90 ticks and Oil rallied 150 ticks in 4 minutes.

Understanding the technical landscape counted too – Oil produced by far the fastest move to its first extreme and this is was down to having a block to trade through. This was identified as a potential fast move on the Axia Morning Briefing streamed live to our members the morning of the announcement.

Lessons From Trading The News

Whilst the highlight of the day was obviously trading the news, lessons have to be learnt to be factored into future developments to the vaccine story. So how could the news be improved? The Pfizer vaccine had 90% efficacy however had to be stored at -70 degrees and had only a 3-5 day shelf life in a fridge after that, making transport and administering the vaccine difficult. From a trading perspective, the markets that exhibited the largest continuation moves after the immediate reaction were Bonds and Gold whilst equities didn’t continue – this is due to sector rotation out tech stocks that had performed well during the lock-downs ad into the down-trodden stocks set to benefit most (think airlines, energy and retail). In fact, Nasdaq fell dramatically after the Pfizer announcement. The long learnt lesson from any sequence of news stories is that the first major change in the story (a vaccine, in this case) causes the biggest reaction.

Trading The Next News Development

The Moderna Vaccine is arguably a much better solution: 94.9% efficacy and can be stored in a refrigerator for approximately 30 days so solves the logistical issues of the Pfizer vaccine, but this is now a further development of the story and not ‘game-changing.’ Positions taken and held on the first news will not likely be added to in the same size as when the original story broke. And this is the crucial point, whilst a better recognition of best markets to trade has been learnt, expectation must be managed – trade Gold and Bonds but don’t expect the same size reaction as before and trade equities but expect a choppy reaction as the sector rotation muted upside on the positive news/risk-on basis. As can be seen no markets continued it moves and the initial moves, whilst still not small paled in comparison to the Pfizer story.

Learning From The Best News Traders

Fortunately at Axia we have some of the best news traders in the business, capable of making in excess of $1,000,000 on a news based trade, meaning that the lesson a above don’t have to be learnt the hard way but instead can be learnt from collaboration on our London Trading Floor and specific news based trading process are taught extensively in our 6-Week Career Course and Central Bank Trading Course. To inspire you trading your next news event:

Richard

My journey begins at the edge of the new pandemic era. An era that will change everything. As someone who left everything behind to come to a foreign country to succeed in this craft, learning from the best, I was both full of optimism and courage, but also full of doubts and worries. It is important to understand the context I was facing. For the last two months, I have been seeing the brightest Axia Elite traders making seven and eight-figure trades right in front of my eyes, executing their craft. The craft of trading that has been learned, stress-tested, and fine-tuned over many years of trading grind. Those traders perfected the edge over the years, they all faced many dark moments as well as moments of glory to reach the point where they could with courage and confidence harvest the fruits of their hard work. To put on trades with massive size, patiently sitting in trades understanding that this is the time like no other. The asymmetry of this job in the making was happening in front of my eyes and Axia traders were putting on the biggest trades of their careers. Meanwhile, I was putting in long hours to learn as much as I could, getting more and more anxious if I can really one day make it in a way they do. How long will it really take? When can I be like them? When will I finally arrive? Trading on its own is hard already, but I felt like my learning curve is starting to stall and reverse. I constantly felt like my time is running out and I began to wonder if I am learning enough, doing enough? I was feeling worse as days went by. Alone in a city where I knew briefly only a handful of people. In a city that looked like a ghost town due to pandemic with everything being closed and everyone under lock-down. With my health conditions slowly deteriorating, getting home every night into my empty flat, feeling that I am actually getting more and more lost. I was starting to question everything. And then, as I was walking home that Friday night, beaten by the day, disappointed, sad, and anxious I have realized that I had no idea what this game is about.

I have realized that I won’t be able to learn a pattern or strategy from an Elite trader and just copy and paste it. I have actually realized that the senior traders have never  “finally arrived” as traders but continuously perfecting their craft. That there are no dark secrets and that’s why these guys can make it. I have realized that this game is so complex, ever-changing, that simple “copy and pasting” does not work. That your edge is not the strategy, latest footprint setting nor some secret order-flow pattern, but me! I am the edge! All my deep practices executed religiously are part of my learning architecture and that learning architecture is my best bet on how I can succeed in this game in a long run. Suddenly everything changed, I could drop all the hopes for those secret strategies and focus on perfecting my system of learning. How I observe things, document them, and deeply reflect on them. How I build my trading mental models and my trading principles. How I can verify them in the markets and use the deep know-how of senior traders on the floor to stress-test them, day in day out. That is my edge to how to succeed in the long run. I am the edge!

That Friday night as I have finally arrived at my apartment I could not sleep. My brain was on fire. Being exhausted but full of thoughts after many intensive weeks, I have finally fallen asleep. When I woke up the next morning, I immediately started to sketch how my learning architecture can look like. To this day I have not stopped, but I have encountered many obstacles along the way. Some so severe that forced me to stop trading and return home for a moment to realize something I would never be able to if I was not forced by circumstances. But more on that in my next blog post.

JK