Over the past few months, I’ve been listening to a podcast called Chat with Traders where you get to listen to professional traders share how they work.

Having no experience in the trading world, I thought it would be a good idea to try and pick up the topic by listening to conversations about it, rather than books. I’m not sure I’ll listen to all episodes but here are some lessons I’ve picked up from the podcast so far.

  • Any trading strategy needs:
    • an entry logic
    • an exit logic
    • risk management rules
    • scale up and/or partial closes rules
  • Fundamentals can be too “story-driven” and subjective in their interpretation.
  • Price tends to encapsulate what everyone is thinking, even as a function of news.
  • You need a trading plan; a plan is just a set of rules for your trading operations.
  • Adding complexity to strategies doesn’t necessarily lead to better results.
  • Keep your strategies simple.
  • Backtest strategies over different periods.
  • Backtest strategies across different stocks.
  • Find a niche that you understand well (commodities, stocks, or sectors).
  • You’re better off paper trading when starting.
  • Position trading (potentially) beats day trading.
  • Swing trading also (potentially) beats day trading.
  • EPS (Earnings Per Share) drive prices.
  • Set a dollar amount to your exit strategy; use a stop loss.
  • Diversify your portfolio across industries, allocations, and strategies.
  • It’s better to use probability and statistics to devise strategies.
  • You can (and should) simulate if your broker fees will eat away at your account.
  • Make sure to understand why a strategy makes money.
  • Trade with the market; don’t try to predict or beat it.
  • Find a style (and tempo) that suits you.
  • You make the most money in trending markets, not during choppy ones.
  • Different actors control the market at different times of the day.
  • Focus on understanding the market structure and price action.
  • Understand what drives different trading instruments.
  • Understand the macroeconomics that drives trading instruments.
  • Understand the cyclicality of trading instruments and their patterns.
  • Segment markets by the hour of the day, week, month, season, and more.
  • Technical indicators are rubbish.
  • Technical indicators can be useful.