Fear(less) log Nr 12 - Peter Brandt.
Peter Brandt. Stick to the basics.
Hi Everyone
It has been a while! The topic of AI and how to incorporate it into trading has kept me busy (but then again, who isn’t doing anything AI related these days? :)). That said, I have been contacted by many of you asking for more insights from top-notch traders on the topic of fear. And who better to shed some light than the Twitter legend with 700k followers and a prop Trader since 1975!, Mr. Peter Brandt.
This Episode is slightly different from others since Peter, while always playing with a full deck, he decided to pull out a joker or two during this episode's questionnaire.
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Let’s go!
Peter Brandt (Legend. Legend. Legend.)
While his Twitter BIO describes Peter as - Prop trader since 1975. Author. Featured in Market Wizard Series. Chartist. Swing trader in futures - I guess it’s fair to say that the term ‘Legend’ would be enough here. Most of us (including myself) were not even born when Peter was already a smooth stock-market operator.
Let’s see what Peter had to say to our questions.
When did you first become aware of fear while trading? Was there a particular trade or situation that triggered it?
“I learned fear in my very first trade at the Chicago Board of Trade. It was a long Soybean position and I lost more money than I was prepared to lose.”
What specific fears did you experience while trading? How did they manifest? The most common fears include fear of losing money, fear of being wrong, fear of losing out on the dream, fear of not being respected, fear of keeping up with expectations, or just fear of losing.
“Originally, it was the fear of losing money. The other fears you cite in your question are irrational, but I understand how many traders can experience them. I fortunately have not had the FOMO and couldn’t care less what others think of me.
As for expectations, it is dangerous for traders to trade against expectations or hopes.
There is another subtle, more dangerous, fear for traders who use systematic rules – and that is that a trading edge might disappear and that a successful approach might stop working. From time to time, I have dealt with this more macro fear.”
How did you initially deal with those fears? Did you try any specific techniques or methods?
“Determined what I was willing to lose and used protective stops.”
Did you seek out mentoring or support to help you deal with your fears? If so, what kind of support did you receive?
“I was lucky enough to be a trader at the CBOT where I had some tremendous mentors who were willing to share their wisdom with me. That wisdom dealt primarily with risk management and the managing of emotions.”
Were there any resources (books, courses, etc.) that helped you better understand and cope with your fears while trading? If so, which ones?
“For me, I have always relied on re-reading the Schabacker book and reminding myself of the importance of staying with the basics and what has worked for me.”
Have you ever paid attention to your body signals, such as heart rate, while trading? If so, how did you use this information to manage your fear?
“No, although I am aware that my dog always knew when I had a bad day. Dogs are so smart.” (Yeah, thanks for that Peter) :)
Are you now fear-free while trading, or do you still experience fear from time to time? If you still experience fear, how do you manage it? Does it motivate you, or do you try to eliminate it altogether?
“I would not define what experience as fear, as novice traders might understand fear. I would define it as great respect for the damage the markets can do if I get careless and do not stay grounded in my foundations.”
What advice would you give to someone who is experiencing fear while trading? Is there anything you wish you had known when you first started dealing with fear in trading?
“Paper trade for at least two years. Then trade with real money, risking no more than 1/2 of 1% of capital per trade.”
References
Most read Fear(less) logs:
Final Word
Straight to the point without any nonsense—that's Peter for you. In trading, it appears he lives by the same mantra: keep it simple and stick to your strengths. Many of us, perhaps, are guilty of overfitting and overanalyzing our trading strategies. But at its core, trading is about living with uncertainty. It's as simple as that.
Peter can be found on Twitter @PeterLBrandt and on his website peterlbrandt.com
Have no fear!
Chris
crk@traderistic.com
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