The Benefits of Trading in Samples


In my top 3 books about trading rests Trading in the Zone byMark Douglas. I found this book to be the most helpful trading book in myearlier days of learning to trade. I find it interesting that one of myfavorite books on trading doesn’t have 1 chart, indicator, setup, or any fullmethodology within its pages. It is almost entirely about individual trader psychology,and I have learned that this is the crux of the trader’s issue. The tradersmind, both friend and enemy, both roadblock and engine. 

Mark Douglas, in this book, was the first to introduce me totrading in samples. I had heard about it in passing, but never paid any realattention to it as it seemed to me an obscure way to deal with traderpsychology. Why not just focus on one trade at a time? For those of you who arenot familiar with trading in samples it is a method outlined in the bookwhereby the trader gives himself a set amount of trades to conduct before heexamines the results in depth. The idea is that this will allow a betterplatform for the trader to think objectively about his/her trades bydistributing his emotional involvement with his trading over a”sample” size of trades, say 20 or so, as opposed to making dynamicemotional investments in each individual trade. The question is, does it work?

Transitions

The United States Currently has a civilian workforce of 154 millionpeople. The current number of actual business owners is a number between 2 and3 million. This means that out of the 154 million people out there only 2 or 3million people are calling the shots. The rest of us just go to work every dayand take orders. We know our jobs, we don’t make any tough decisions, and thenwe punch out and go home. It is within this group of drone like individualsthat trading most finds its appeal. To the group who feels oppressed by theiremployer because he must work to pay off his debt, and in some cases, must workto pay down only his interest on overpriced college educations and the ensuingcredit card dependent lifestyle that so many have become accustomed to. Thesepeople range from professional to entry level. From the intelligent to thesimple, but almost none of them are entrepreneurs. Almost none of them haveever told themselves what to do for money. Enter trading ?.

I have often said that the desire for easy money is thenumber one reason why there are so many who trade markets and the number onereason why there are so few who trade markets. Trading has called many, butchosen few. And I believe this is, in part, for the following reason. In mostcases, trading is going from a setting where you are told exactly what to do tomake money(day job) to a setting where no one tells you one single, objectiveway to make money(trading). From a situation where you have almost no controlover your day to day activities to a situation where you have total control ofyour day to day activities. The contrast is often murderous. Many who begintrading think they are moving into a profession in which their objective is totrade the market and derive some sort of income from these activities. Many payvery little to zero attention to one of their biggest hurdles, which is thatthey first have to learn the art of complete control after having almost nonefor their entire workplace experience. This is where properly managingindividual trader psychology fits into it’s most important and original place.It is the common lineage of all great traders. Sample trading is but one small,but very meaningful part of this bigger picture.

To answer the question, yes, I would say trading in samplesdoes work, and by work I mean helps us to overcome a large obstacle that wouldimpede our ability to find ourselves of sound mind enough to trade the best waywe know how. Please don’t make the mistake of assuming that trading in sampleswill make you a profitable trader, because it won’t. It will simply help moveyour psychology out of the way so whatever trading skills you do have can comeforth and help you be the best trader that you can be. Needless to say thesedegrees of skill will vary greatly from trader to trader. 

Trading in samples helps in thefollowing ways:

1. Enables a division of association by spreading out theemotional investment in our trading over a larger number of individual tradesto bypass the volatile emotions caused by either a very good position or a verybad position. This is important because our emotional state will mostinevitably effect our psychology, which then in turn greatly effects ourability to properly manage subsequent positions. 

2. Allows us to “call a spade a spade” by enablingus to let go of positions that do not work out for us as we do not have ourentire emotional capacity invested in any one trade. This is important becausewe are able to drop bad positions before they have more a negative effect thanwe had originally anticipated. 

3. Puts us in a position to approach the markets in a veryobjective way through understanding that not any one position holds the answerto whether or not we are good or bad traders.

4. Promotes all of the above which over time will help us tolearn a very healthy mindset towards the markets, and this is indicative oftrue success.

My personal approach is to trade in 20 trade samples and Ihave seen very much improvement in my trading since I have taken this approach.I consider it one of the “keys” to my success. 

Give trading in samples a shot, I think you’ll achievepositive results.

Gabriel Baryard can be contacted through TradingApples

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