When several traders who use the Futures Magazine traders forum learned that there would be a book on Phantom of the Pits they made suggestions. We are going to start this chapter according to Ulrich Eckardt, a young trader who was born around the time Phantom was learning his first behavior modification about trading.
When Ulrich was in the States as a youngster, his uncle wanted him to paint the stove pipes on his roof. Excited as any child at a young age to earn money he was eager to start. He grabbed the paint and a brush and decided to hurry on the roof.
His uncle stopped him and gave him his first lesson in trading or life for that matter. His uncle proceeded to tell him the requirements of completing a job. First you must be properly prepared. Second you will do the work and last you will do the clean up.
It seems we can follow that train of thought just fine. First we must be prepared!
ALS - It's a step everyone must go through to get to where traders want to be in trading. To prepare oneself for trading is just as important as any aspect. Without it a trader does not have the foundation to continue in trading. Where does a trader start to prepare to be a successful trader?
POP - Too many beginning traders and established traders take the easy route and expect the markets to be cut and dry of what is required of them in their trading careers. They will paper trade and have fairly good success. This in no way prepares them for trading.
They must be prepared in every way. That means mentally as well as physically and emotionally. Priorities must be in the proper place including family, friends and environments.
ALS - Where do you suggest they begin?
POP - Get your office ready! Pick out your office where it is comfortable for you to have quiet time and a proper place to relax. Trading is going to be an all out effort if they expect to climb the mountain in front of them.
The first thing is to get a comfortable chair. It must be a proper chair in order to start behavior modification immediately.
ALS -(laughing) I really have heard strange things but really? The readers are going to think this is a Joke book! A chair?
POP - I'll tell you the reason for that remark about the chair being so important. There is significance in what I am going to tell you about the proper chair. You see some traders think that the market is to position and lean back and wait to get stopped out or take their winnings. It's not. That is where your chair is going to save you more than it cost you.
Don't get one of the lean back easy chairs as they will be too comfortable and like the markets, you must be reminded daily that you can never let yourself get too comfortable in your market positions. Don't get a standard rocker, especially if you have a cat with a long tail, as it moves all over the place. What kind of chair do you think I am talking about?
ALS - I'm suppose to ask the questions! I know your chairs that is an easy one to answer.
POP - Ok, I'll give you the answer anyway. You want to get what is known as a slider-rocker chair. One that rocks back-n-forth over its own base without moving over the floor. Even get yourself an ottoman. The big reasons are as follows: First in your trading career you will find that the markets go back and forth without going anywhere a lot of the time.
Your slider rocker chair will remind you of this every time you use it. That step is important to drill into your thinking. Your chair will not move around the room but rock back and forth. Second in your trading you will find you do not ever control the market but only your position. Your chair is the same way as you can stop your position wherever you wish.
I want you to drill that into your thinking also. I will repeat what I just said because it is important. You can stop your position wherever YOU want! You wouldn't think of letting the chair oscillate if you didn't want it too. Same in trading. You can stop the markets oscillation any time you wish. Simply stop (remove) your position.
ALS - I knew you had a good reason for the proper chair. Do you really believe this helps?
POP - How much easier can it be? No one has to remind you to stop your chair from rocking back and forth. You will do it without thinking. Your trading position will often times need to be stopped. It must become second nature to automatically do it at times. This simple symbolic gesture for your office will save you lots of distress in your trading.
Note: Shortly after the part about the chair was written and permission from Ulrich Eckardt to post the draft he sent the following about a comfort couch he once had. It reads as follows: just thought I'd tell you a story about a very comfortable couch I used to have in my office.
It was back, when I traded the financials very actively. The DM had a strong resistance and I decided to go short. I was proven correct with about 40 ticks and was very tired. So I sat down on the couch and slowly fell into sleep.
When I woke up again, about 1 1/2 hours later, I had to find out, that resistance was broken and stops accelerated the contracts to new highs 200 points above my entry.
I don't have this very expensive couch anymore. I could have sold it, but I really needed to carry it out on my own and throw it away.
Regards - Ulrich
ALS - Ok we are now prepared with an office and a chair. What next?
POP - Next we want a clock with accurate time. A battery operated clock so you don't have to reset it often. The most important part of the clock is to get one that actually talks to you and gives you a reminder of the time by talking. Instead of looking at the clock for time it will remind you what time it is.
It's another symbolic point to start behavior modification. You see we remember things well when we associate them with something else. Memory experts will tell you this also. When the time announces you must realize that you are required to work with your positions and not let the market work on your positions.
You must always act promptly and deliberately within your plan. The clock can be used to reinforce your thinking and behavior.
ALS - Aren't you making an assumption that traders are clear to be free while the markets are open? Doesn't this leave out the poor trader who works two jobs and seldom has time to kiss his wife let alone trade your way?POP - So it seems but No I am not making that assumption. My concern in preparing a trader to trade is to put behavior modification immediate from the beginning. The chair is to be used whenever any trading plan is developed and thought is given to what the market possibilities on your position might be.
The clock is to be there to remind you of promptness every time it announces. The office set up is to give the trader the message of importance to be in control of their positions and not delegate it to the markets. Your office is important because you must be in control. Remember we use to have our small space in the pit and what did we call it?
ALS - Your Office. We have our office with a chair and a clock. What's next?
POP - You must establish a routine in order to set up the environment of each trading day. Allow at least one hour prior to the opening of your market. In this hour you should exercise from 10 to 20 minutes. This really does keep your mind sharper. The next thing after your shower you should spend one or two minutes giving thanks to your higher power and explain what you are going to do with the funds you earn. Don't be selfish about it.
This actually gives your sub conscious a reason for being a successful trader. Last of all face the north and acknowledge you actually know which way is up. This gives you a better sense of well being by confirming to yourself that you are in total control. You will need that total control when you follow your trading plan.
ALS - Not everyone can do or would want to do as you suggested!
POP - I know! Some will be at work or on their way to their work but they can still do those things as they are in commute. It is important to acknowledge the reason for trading regardless of your situation or reason. Thirty years ago I would have thought it very strange to take these steps.
ALS - Do you do these things?
POP - Yes, in my own way I do. Every trader whether beginning or established should set up a routine to follow as I suggested. There is more benefit from it than can be seen at first thought. ALS - It all seems like a lot of work and we haven't started our learning process yet.
POP - The most important person in your trading is yourself. Take care of the minor details early and you will have your routine. It is more of a positive re-enforcement of what you are expecting from trading.
ALS - Are we ready to start yet?
POP - A couple of more items. You need to acknowledge your reason for trading each day. If you can't afford to buy the chair and the clock then you should postpone trading until you can. The reason being that you need every aspect of trading in your favor. If you do it all right there will be better times ahead.
The next thing I suggest is to get a favorite book to read. The last thing I suggest is to pick out a person who you admire most in your life for their accomplishments.
ALS - What would your favorite book be?
POP - I shall tell you of a suggestion from a very brilliant trader. His suggestion is "The Art of Warship" by Sun Tzu. The book was written about 2500 years ago, and forgotten for a long time. Since it was in Chinese, there are different translations. The best one is with a word from James Clavell. He based his noble house saga characteristics on that book.
The book discusses rules for war in ancient times, but can be translated into business-life, private relations and even trading. Sun Tzu rules have been alive for 2500 years now and still fit perfectly.
ALS - Why is a book important?
POP - On bad days instead of could-a, would-a or should-a you must expel your feelings of defeat as soon as possible because if you don't it will affect your next days trading. Read that book if just for 10 minutes. Make it a routine.
ALS - I guess I have a few things to learn myself. You said to pick out the one person who you admire most. Why? Who do you admire most?
Pop - There is a great deal to be learned from the person you admire most. You will need to understand your ability to become an admired person if only in your own mind. I have changed my most admired over the years and now that person is younger than I.
There are many reasons I admire my choice. I'll give you the most important reasons. She gives and gives of herself each and everyday. She is not selfish and she truly cares about her fellow men, women, children and all life on this planet. I admire that so much. I hold her responsible for showing me the light. She is the only Oprah I know.
ALS- Does she know you feel that way?
POP - No, but it is important to let your most admired person in your life know that they are indeed most admired. It goes right to the positive example you need in your trading life. Do it! Let them know even if there is no time for their acknowledgment. You have done your part at that point. It is good mental food.
ALS - Are we ready to start learning to trade yet?
POP - I would say that for me I am prepared now for the job.
ALS - I guess Preparation for trading is a different process than most imagine. I really thought we were going to get into the learning process of how to trade and setting up a program to trade. Are we going to get into the specific ways to trade?
POP - Keep in mind we want to guide and not give specific advise on trading. There are basic requirements which determine a winner from a loser and that is what I am after in this insight. There are as many ways to trade as there are traders but the basic fundamentals required are seldom presented to the trader.
It is important to present a plan which keeps the trader in the game over their lifetime. Let us expound on that subject in your book. We can address trading methods in detail at later writings. I have been trying to give some examples on the forum to help traders understand where I am coming from in my rules of Phantom trading.
We will answer some of their specific questions on trading later. I read a short book called "Notes to myself" several years ago and it was but a self-diary which had been published. It was a small book but it really had great insight. I liked the idea.
We can all learn from other people's insight on subjects that we are investigating. It in no way is advise but we can make our own minds up by knowing those thoughts. This is more of my purpose in answering you questions for this book. It puts the traders on a one on one basis for understanding the complexity of the markets and helps establish criteria for an overall plan with the most important points at the front of a trade program.
More often than not these simple thoughts are not used or known by most traders. It's sad that everyone feels they have a great fortune hunt in front of them and there isn't a lot of thought required in how trading actually unfolds.
What subject do you want to discuss next?
ALS - It's beginning to be a surprise to me and knowledge learned new again.
"Priorities must be in the proper place including family, friends and environments. " ---POP