BTC Book Club - Lessons Learnt & Trading Stories
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Hi everyone,
Following on from the recommended reading post, I mentioned that I make notes and save them in a folder. I wanted to start a blog and share what I’ve read, key lessons and how I will try and apply them to my trading. It’ll be great to hear from others to understand how their experiences align and the lessons learnt. It also might help anyone who wanted to get into reading but was unsure of where to start.
I’ll try and keep the summaries concise and aim to post either monthly or fortnightly depending on how much reading I get done. I won’t list out all the books as I read a lot of history, however, if there is anything of real value I will also share that.
FEBRUARY 2021
My first weekend on BTC I was way too eager and tried to trade everything and came away with nothing. I decided to re-read a few books and get focused again.Thinking in Bets by Annie Duke
- Poker term “Resulting” - when you change your plan based on the outcome of a previous hand rather than the facts
- Do not confuse decisions with results. We control our decisions but not the results. A great decision can have bad results. For example, driving drunk can have a good result (you didn’t crash) but is a bad decision.
- Our brains do not like luck and hate randomness. Therefore we try to put things in order after it’s happened. This can lead to confirmation bias.
- Don’t think of your mistakes as “wrong” but a statistical inevitability. Consider alternative outcomes rather than right or wrong. It’s easier to say “I was 68% certain but now I’m only 42%” than to say you were wrong.
- OUTCOME BIAS - when we believe the outcome had an impact on the decision. For example, when scientists do studies and know the desired outcome it affects the way they work (even subconsciously)
- When you bet, you are betting against future versions of yourself. Stop to consider how you would feel both if you won, and if you lost. What advice would those future versions tell you?
- Scenario planning. Consider various outcomes, the likelihood of each outcome and the appropriate reaction if they occurred.
- BACKCASTING - working backwards from a success “a journey of 1,000 miles starts with a single step”. However, it’s better to imagine the 1,000th mile and how you got there.
- PREMORTEM - think about the outcome. It failed. Why? Work backwards.
What I learnt: There’s so much in this book. I’m sure I’ll continue to revisit it as I progress as a trader. Right now I found it useful when considering strategies and filters.
Ego is the Enemy by Ryan Holiday
- Ego is stolen, confidence is earned
- There is no one to perform for. There is just work to be done and lessons to be learned.
- Don’t boast - “You know a workman by the chips they leave”. It’s true. To judge your progress properly, just take a look at the floor.
- The world is indifferent to what we want. If we insist with needing, then we are only setting ourselves up for resentment or worse. Doing the work is enough.
- The only real failure is abandoning your principles. If your reputation can’t handle a few blows, it wasn’t worth it in the first place.
- Greed is the only one of the seven sins that you don’t get any enjoyment out of.
What I learnt: There is no shortcut, you have to do the work. I’ve found this most helpful when trades go wrong or I have a bad day. Sometimes I just want to throw the whole thing away and start from scratch but I have to catch myself and ask “Are you the only person in the history of mankind that has come up with an unsuccessful strategy? Definitely not. Are you the only person to have bad days? Nope. So stop acting like you are!”. Same when you win, it’s easy to give yourself a pat on the back but did you really follow the plan how you wanted?
Turning Pro by Steven Pressfield
- Everyone has habits. The difference between the amateur and the professional is the amateur has amateur habits and the professional has professional ones.
- There is a difference between failing and failure. We all fail but some get addicted to failure. It’s an excuse to stop trying and lets you off the hook. When we fail we’re secretly relieved.
- Do not get addicted to money, it will distract you from your true calling.
- Before you turn pro you live a life of fear and resistance. We are denying our true existence. When we turn pro we stop running from our fears and instead turn round to face them. The authors “turning pro moment” - he forced himself down and started writing. Afterwards he threw it in the bin and did the washing up. He realised that it may be years until he wrote something good but at least he’s started.
- The amateur seeks approval. The professional does the work.
- The 12 step programme says “one day at a time”. The professional says the same thing.
What I learnt: You can’t join a community like this and think you can just plug in someone else’s filter and start making profit straight away, that’s the amateur mindset. Create your own filter and start learning, people will help but you have to show willingness to learn. Failures will come, that is inevitable, but even if your filter has a 0%SR and you bin it after 100 tests you gained a lot more than just copying someone else. Don’t focus on the prize, focus on the process and make sure you’re getting better - one day at a time.
Extreme Ownership by Jocko Willink
This book mostly deals with discipline and motivation in a very non-sugar coated way. It’s very much no excuses, just get it done. Some key lessons:- When plans go wrong (and they will) complexity compounds issues that can spin out of control
- You should continuously check your plan as information becomes available. No plan stays the same so be adaptable.
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@ryan I appreciate your feedback. I knew straight away what I did and it was the cliche beginner mistakes. It’s not something I would usually do it was just that yesterday was a particularly bad day with work, etc. That was the tipping point.
I’ve never punched anything in anger and in truth it was probably 1% trading and 99% continuous build up of external stuff from the past 18 months.
I guess I wanted to vent to someone and luckily we have this community. I’m sure there’s other traders who have had similar situations (or as I will now refer to them - knucklebreaker trades)
I also think it was the universe telling me I need to focus on the important things in life and stop putting off what needs doing to scalp some horses!
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@dan-mackinnon My heart breaks when I see posts like this buddy.
One of the main reasons as well is I feel powerless to help you, I can give you all the advice you've already heard but I cannot press the buttons on the mouse or sit in your house and stop you.
All I can say is that I am here to help you plan when you are back and feeling it. My advice is don't beat yourself up, what's done is done.
Take a break, enjoy some things you enjoy doing.
One thing that has worked for other traders is to grab a piece of paper and write it all out - why did I do it? Then journal it out.
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I apologise now for the long post, but yesterday was an absolute s**t day.
Outside of trading I’ve had ongoing issues with work and my mental health which seems to be the worst it’s ever been. On top of that I’ve got my studying and chartership, which speaking with colleagues is commonly described as “the hardest thing you’ll ever have to do”. So overall, I’ve been feeling somewhat stressed and overwhelmed.
With trading I’ve stopped everything except Darri’s LTD. As I’m often out the house at weekends I can’t get on every trade and have the unfortunate habit of avoiding winners and picking the losers (maybe my trades should come with a warning). Whilst it feels everyone’s on to a winner I’m slowly watching my bank get chipped away.
Earlier this week I decided to start scalping the horses using £2 stakes. I’ve scalped horses since I joined BTC but never used money so wasn’t a complete beginner. Despite a couple of losses I finished the first day up 1pt. Thanks to @John-Folan for giving me advice on the dogs and putting up with a running commentary of my trades! Overall I was pretty pleased. Then yesterday happened…
I got off to a good start and finished my lunch break 2pts up for the day. 3pts up over 2 days! I was so pleased, I put everything away and got back to work thinking maybe I’m onto something here. Then I made every beginner mistake possible. My girlfriend was out for the evening so I thought I’ll get involved again. Maybe scalping is my way forward and I’ll be over the moon if I can make 1pt each day. I was overconfident and just finished a full on day at work that I forgot the dogs market gets suspended once it goes in play - I hadn’t closed my trade and lost 4pts in one race by being careless. I was really annoyed with myself, but got back to it and finished even.
But something in my mind wouldn’t let me stop, I did the classic thing of refusing to walk away and got more involved and upped my stakes. Before I knew it I was betting 10pts on 1 horse race which I found myself pleading with the trading gods - if this wins I’ll be back to my starting bank and I’ll never make stupid irresponsible mistakes again! If it loses, then it’s my own fault and I should feel extra bad for being so reckless. No prizes for guessing what happened next.
I was so annoyed with myself, and an accumulation of everything that’s going on right now I turned around, and for the first time ever I punched the sofa out of pure anger. If bad things come in 3 my last bit of bad luck was that I managed to go through all the soft parts of the sofa and find the hard frame! 3 hours later I’m home from A&E with a broken knuckle.
So what’s the point of my rambling? I guess, sharing so others can learn lessons, but more importantly so I can learn. I wanted to write this out as a lot of it has been playing on my mind and I needed to share when things aren’t going so well (something I'm not great at). Also writing it out means I can always refer back in future.
The benefit of breaking my knuckle means I have to take a break, which reading back seems overdue. Time to reset and re-engage when things are a bit more together.Thanks for reading!
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@dan-mackinnon ahahaha I know I am tempted to say to them sometimes do you want a refund lol
I think there’s all you need on our YouTube.Thank you, I’d look to do a few more podcasts like that then.
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@ryan Another podcast episode I really enjoyed was the one you did with James because it's acknowledged that it is mindset and how we deal with it. I think at one point he talked about trying to trade football and tennis and you asked why? Why not just bin off the football and focus purely on tennis? Or the classic "master one strategy at a time". You both talked about things which I feel everyone has encountered at some point. Especially when you're new you might find success with one thing but also hesitant to abandon that to move on to something more successful.
Because the YouTubers are a sales pitch they push the myth that there's a secret formula and they're willing to share it if you purchase their course. You could make a drinking game out of how many times they use the phrase "I've got an edge" or "I know how to read numbers" and get wasted in no time! I'm sure you get members join that believe that myth and want the silver bullet, which is why it's even funnier that you openly give away your strategies on YouTube and people still aren't satisfied!
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@dan-mackinnon Yeh man you know it! I was editing that and it was a nightmare! lol We have a couple coming up we liked to do as well.
I am reading a book at the moment 'The Psychology of money' I think it's a cracker and it says luck and risk go hand in hand and we have to respect that.
Ahahaha yes! Those YouTubers ey? Not really giving any value but its a pitch mainly!
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@Ryan @Martin I really enjoyed your podcast this morning (I also find it funny when podcasters say they will edit something out but don't do it
).I've always liked reading biographies and learning from people's experiences rather than having a book tell me what to do. As the saying goes "it's always good to learn from your experiences, but it's better to learn from other peoples". Hearing you guys talking about early mistakes was really interesting, not only from a learning perspective, but a reminder that we were all beginners at some point. Even hearing what you both consider as "success" is interesting because everyone has their own answers. Darri has talked about this recently as well.
Keeping with the theme of learning from other traders, I've been reading a book by a popular YouTube trader. So far it's mostly him saying "screw you everyone who doubted me" followed by "99% of people will fail at this but luckily I've got an edge". Reminds me of another YT trader who's videos are just sales pitches for his own software. The biggest lesson so far is don't let your ego run your trading!
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@dan-mackinnon Yep like their new course which is $697 and is just the book in longer form!
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@adam I'll check that out. I used to enjoy reading self-development books but after a while it seemed a lot were just trying to sell a silver bullet.
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@dan-mackinnon @Clare-Taylor yep it was 4,000 weeks! My bad!
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12 Week Year is great, definitely helps you to focus on your goals and achieve them.
Four Thousand Weeks is a brilliant book too but in many ways the antithesis of 12 Week Year as it makes a pretty good case for goalsetting being a potential source of unhappiness, and questions the point of even trying to get more done in less time! Absolutely worth a read for a different perspective and, in relation to trading, could help you get more comfortable with the uncertainty of the markets.
Oliver Burkeman has written another book called "The Antidote: Happiness For People Who Can't Stand Positive Thinking", which is exactly what it sounds like and is well worth a read too.
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@ryan @Clare-Taylor I've heard of 4,000 weeks. That seems an interesting book and one of my never ending wishlist.
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@clare-taylor This is interesting as @Adam has read this as well, on the BTC weekly call we all go over what books we have been reading and this was one he liked - he also mentioned one about 4,000 hours which seems really interesting!
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@dan-mackinnon I have set myself three very specific trading related goals I am going to add in a few personal ones following on from atomic habits so I will see how I get on. 12 weeks runs until 5th December at which point I will have a break for Christmas as start again refreshed in January!
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@clare-taylor I remember reading that a long time ago. It’ll be interesting to hear what ideas you get from it and if it can be related to trading. This forum is a good place at keeping individuals accountable
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I have started the 12 week year plan by Brian Moran. It’s a very structured approach to breaking up you long term goals, (5/10/15 years) in to 12 week highly focused blocks. The premise is you can achieve more in 12 weeks than in a year if you are disciplined. It’s very goal orientated and I think is very adaptable to fit with trading as it requires weekly reflection on how you are doing with your goals and areas to improve to hit your long term goals.
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I was at work and we put the TV on and couldn't believe what we we're watching without realising the magnitude
