My work as a psychologist has brought me in contact with a variety of traders working in proprietary firms, hedge funds and investment banks. It is fascinating to see how many styles of trading are out there and the variety of ways that traders search for a performance edge in the marketplace. As a rule, I find that there is a correlation between the amount of time and effort traders spend in preparation and the longevity of their success in the marketplace. Too often, traders with a good “feel” for the markets find their intuitions lacking when patterns of trend and volatility shift. Traders who spend quality time outside of trading to prepare their ideas, on the other hand, expose themselves to a wide array of market patterns each day. To paraphrase Pasteur, they benefit from chance’s tendency to favor prepared minds. Indeed, as I researched principles of performance expertise for my forthcoming book, Enhancing Trader Performance, I was struck by a universal relationship: Highly accomplished performers in any field spend more time rehearsing and improving their performances than actually in formal performance. Wrestlers spend more time practicing their moves and escapes than in matches; chess players review and replay many more practice games than they play in tournaments; Broadway actors and actresses will rehearse their lines many times before the curtain opens; Olympic track stars typically prepare for years for performances that may last only seconds.

Finding a Needle in a Web
An investor—one who holds positions months or years—has the luxury of spending considerable time reviewing market patterns, formulating trade ideas, backtesting them and tweaking the results. The day trader, however, initiates and closes positions between the market open and close, often holding positions for minutes at a time. Faced with the need to closely monitor market conditions during trading hours, the day trader has only the time in the evening and early morning to prepare for the coming day. It is imperative to use these limited hours as productively as possible.

The web is both a boon and bane to the day trader in need of good market information. There is no lack of market data: just about every major portal—MSN, Yahoo! and Google—maintains financial sites that include charts and news. These sites typically include columns from well-known writers and bulletin boards with discussions among traders. In addition, trading communities such as Trading Markets (www.tradingmarkets.com), Minyanville (www.minyanville.com), and TheStreet.com (www.thestreet.com) feature data, articles and interaction among community members. Amidst this haystack of material, however, it is difficult to find the needles of valuable information that are truly relevant to a particular trader and trading style. This problem occurs in part because many people writing about markets are not necessarily day traders themselves. It is difficult for them to produce actionable material for day traders if they are not actively engaged in the markets themselves. With limited time and a bewildering array of data and websites, day traders are understandably frustrated in the search for information that can provide them with useable ideas.

Blogs to the Rescue
This is where weblogs (or blogs, as they’re known) have filled an important niche. Typically (though not necessarily) written by traders for traders, blogs are online journals that record thoughts and ideas as they occur. Thanks to sites such as Blogger (www.blogger.com) and Typepad (www.typepad.com), blogs can be constructed in a matter of minutes, providing an attractive layout and push-button publishing. The ability to update a blog in seconds and on the go (no resident software on the user’s machine is necessary, other than a browser) is a major factor in their timeliness.

Given the ease with which all of us can now become authors, it is little wonder that the blogosphere is expanding exponentially. Technorati (www.technorati.com), the leading search service for blog content, tracks more than 47 million sites and 2.7 billion links among them. It is estimated that 11 percent of all web users regularly visit blogs and that 75,000 new blogs are added to the web every day. One reason for this expansion is that blogs can be easily syndicated through formats known as RSS (really simple syndication) and Atom. With a program known as a feed reader (or aggregator), users can subscribe to syndicated blogs. (I find the FeedDemon reader—www.newsgator.com—to be particularly user-friendly). This allows updated blogs to appear automatically in the feed reader, so that users don’t have to type in URLs and search the web for new content. (Many browsers, such as Microsoft Internet Explorer 7 and Mozilla Firefox, also support feeds.) Quite simply, you can wake up in the morning, open your reader and peruse the updated blogs you have subscribed to. No pop-up ads, no spam, no wasted time clicking around the web.

Linking to a Community
Another valuable aspect of blogging is the community emphasis. Bloggers consider themselves part of an online community and thus commonly link to one another, creating ongoing dialogues. Readers typically have the option to comment on blog entries, expanding the interaction. Not infrequently, ideas for my own blog entries have come from suggestions from readers or posts from other bloggers. The Technorati search engine is excellent for tracking all links to blog sites, allowing readers to see which sites are interrelated. Traders can thus quickly identify blogs that are of specific interest to them and add those to their readers.

These features of blogs have made them favorites among traders. Several websites aggregate blogs and organize them by content. StockBlogs (www.stockblogs.com) breaks blogs down by their type of content (technical analysis, fundamental analysis, etc.); Seeking Alpha (www.seekingalpha.com) categorizes blog entries by the markets/sectors that they cover. Several community sites have begun their own blogs, including the Trading Markets (www.moneyblogs.com) and Trading Education (www.traderblog.com) sites. Many blogs maintain blogrolls (directories of blogs they like) on their sites, making it easy to surf the blogosphere. Trader Mike’s blog (www.tradermike.net), for example, identifies when blogs on the blogroll have been updated, making it easy for readers to keep up to date if they don’t maintain a reader.

What to Look For in a Blog
The ease with which blogs can be published has also meant that there are many poor-quality blogs out there. Here are some of the features that distinguish the valuable blogs from the filler:

• Frequent updating – A blog is both a journal entry and a participation in a community. The most valuable blogs, on average, will be those that stay on top of the markets and post actively. As a result, such blogs build up large archives of timely and useful market information.
• Unique content – The best blogs offer perspectives on the market that cannot be found elsewhere. This can be achieved in many ways. The Big Picture blog, offered by Barry Ritholtz (http://bigpicture.typepad.com), draws upon his distinctive perspectives as a money manager. John Mauldin’s popular blog, Thoughts From the Frontline(www.frontlinethoughts.com), offers in-depth analyses of trends in the economy and the markets. Adam Warner’s Daily Options Report blog (http://adamsoptions.blogspot.com) covers markets and indicators not often on traders’ radar. The excellent CXO Advisory blog (http://www.cxoadvisory.com/blog), my own TraderFeed blog(www.traderfeed.blogspot.com) and the Ticker Sense site (http://tickersense.typepad.com) offer original market research.
• Actionable content – The content of the best blogs is practical, useable information that day traders can apply immediately. There are several excellent stock-picking blogs, including Trader Mike’s watchlists (www.tradermike.net), Declan Fallond’s Stock Picks (http://blog.fallondpicks.com), and Jon Tait’s Fickle Trader (www.fickletrader.blogspot.com). The Alpha Trends blog (http://themoneyblogs.tradingmarkets.com/alphatrends) utilizes video to capture the technical condition of the market; Jim Wyckoff’s blog (http://www.traderblog.com) summarizes developments across markets and their implications. My trading psychology weblog (www.brettsteenbarger.com/weblog.htm) covers unique market indicators each day to give day traders a sense for whether markets are strengthening or weakening.
• Useful links – Few blog writers are as creative in finding interesting and useful market material across the web as Charles Kirk (www.thekirkreport.com). I find the links posted by the Abnormal Returns site (http://abnormalreturns.wordpress.com) to be of particularly high quality. The Big Picture (http://bigpicture.typepad.com) not only links to interesting features, but typically comments on them at length. I find these links to be important stimuli for brainstorming market perspectives.
• Modeling – Because trading blogs are typically written by traders for traders, they are often quite powerful in modeling how experienced traders think about the markets. Charles Kirk (www.thekirkreport.com) keeps his trading journal online; Jon Tait (www.fickletrader.
blogspot.com) puts his market homework on his blog. Trader Mike (www.tradermike.net) posts annotated charts that capture his thinking about stocks. This aspect of blogs is particularly useful for new day traders who are just beginning to develop their own trading styles.

In general, the best blogs come up with fresh, relevant material on a regular basis. The worst blogs are thin veneers for advertising and self-promotion or forums for the author’s rants. As a rule, the best blogs tend to link to other good blogs, which helps traders quickly identify promising resources. If you trace the links to your favorite blog in Technorati, you’re almost certain to find other useful sites.

Beyond Blogs
Blogging is an inherently social activity, and some sites are taking the social dimension beyond blogging. We’re beginning to see social sites for traders such as Stock Tickr (http://www.stocktickr.com), which allow users to post their watchlists and trade ideas for all in a community to share. Creating tags for blogs on sites such as Del.icio.us (http://del.icio.us) allows for an integration of blog content based upon users’ interests. Increasingly, we’re seeing vendors of trading software utilize blogs to communicate with users and obtain feedback for product upgrades. The Trade Ideas market scanning program (www.trade-ideas.com), for example, has created real-time market scans out of patterns that were first identified in blogs. I predict it won’t be long before we see wiki-style blogs that are written and edited by communities of authors, reflecting the collective wisdom of experienced trader-writers.

Blogs do not substitute for study and hard screen time to master market patterns. They can, however, provide an important source of information and ideas for traders in an engaging format. For time-starved day traders, a core set of blogs that appear each morning for a reader is an excellent addition to the pretrading routine.

{Note: I do not maintain a commercial relationship with any of the sites or services mentioned in this article.}