By Boris Schlossberg from BK Forex
In Alchemy of Finance, the legendary trader George Soros recalls his short of the home builders in the 1970s. He notes that he profited handsomely from the trade, but then did something interesting -- he looked at his own notes for the original thesis for the trade which discussed how the sector would dive then rebound and then collapse once again. Revisiting his own words Soros decided to re-short the builders and once again walked off with a handsome profit.
Out of that little story Soros ultimately developed his theory of reflexivity of the markets which has allowed him to make billions over the years.
So what's the most important thing that we can learn from one of the greatest traders of all time?
Take half an hour this weekend and write out your trading setup.
Soros, who is steeped in European tradition writes because he fancies himself a Renaissance man and craves the intellectual approbation almost as much as material wealth.
But for us as day traders writing has a decidedly more practical application. It will literally make you trade better. Forget indicators, forget EAs, forget systems, forget gurus. Mark my words the single most important improvement you can do right now is to write out your trading plan on paper.
In fact, the best exercise for the trader is simply write out all the times that he will NOT trade during the day. One of the best traders in my room -- a guy who hit 50 winners over the past three week while taking only 1 stop -- did just that yesterday sending me a text of his thoughts.
It was an amazing document, showing crystal clear reasons for why he would and would not engage with the market and made me understand why he has been so successful using my Boomerang system.
Writing forces discipline. Discipline creates structure. Structure leads to efficiency and efficiency leads to profits.
Want stop flailing in your trading? Write your thoughts out this weekend -- it will be the best trading hack you can do.
Trade with Boris at BKForex.
