Roger Felton

You are absolutely spot on. You call them emergency and I call them catastrophic stops. They're only there to prevent any major damage but they are also rarely ever needed. If a trade is a loser, I'm almost always out long beforehand. I commend you for not only understanding this concept, but for actually using it. Let the market (not your stop) tell you when it's time to pull the plug. Excellent!

I was a trend trader for several years and I hated every minute of it. Day after day, year after year I could see that if I had just put my greed to catch a trend aside and take the "hit and run" trades, I would have been light years ahead in the game. If the market is going to trend strongly, I'll get numerous opportunities to get back in. Follow the Trend - What trend? A short term trend can easily be a long term pullback. I love trading pullbacks. They are generally quick and very accurate. Cut Your Losses Short - Nobody's been able to define that. Use a 2 tick stop? Good luck. You have to pull the ripcord on a losing trade based on a number of factors including the current market condition. Choke your stops and you won't be trading long. Let Your Profits Run - I do. They run right to my profit target and it's generally not too far away. If I have an 80% chance of bagging 10 ticks (about $200) in 5 minutes and a 30% chance of 50 ticks in 2 hours, sorry guys, I'm out in 5 and off to the next trade. Manage Your Risk - That's pretty much my "cardinal rule" but it needs a lot of work on definition. Basically, I never get emotionally attached to a trade by spending too much time finding it or getting so deep in a hole I can't let go. I never get even close to that point. My stops aren't placed on the traditional 2 or 3:1 formula. That doesn't work. For example, you enter a trade long for 30 ticks and you place a 10 tick stop. The market stagnates and 4 hours later, the trade has wandered all over the place but now is 10 ticks above BE but coming down steady. All your indicators say the market is tanking and will drop another 50 ticks before finding support. But you can't exit now or you'd be breaking a cardinal rule! It's 30 ticks or bust. That's nuts! Determine the odds of a trade's success and stay on it. They can change dramatically during a single trade. I built an indicator that does that for me because the algorythm is pretty complex. If they stay above 50% on a 3:1 trade, stay in. If they drop below, get out fast. But you'll rarely enjoy the high percentages going for the big targets. The problem with these "Cardinal Rules" is they're all too vague. Define them for your specific system and don't be afraid to toss the ones that flat don't work for you. Just because they're cardinal rules for someone else doesn't mean they have to be for you. Your rules are what works for you...and that's all that matters.

An annualized percentage return on capital would be very easy to calculate if you could provide me with some very basic information. Do you want the data on a consistently winning trader or a consistently losing trader? I would need the specific trader's initial trading capital amount, what trades they will take over the next year or previous...preferrably 5 years for better accuracy...including actual realized profit/loss, exchange fees, commission amount charged, etc. I can crunch the numbers pretty well but I can't guess what any particular trader is going to do or has done in the past. Get the point? Never try to apply the data of one trader to any other trader. That's like having a non-handicapped golf tournament of golfers with widely varying levels of skill and experience and expecting them to all shoot the same score day after day, tournament after tournament. You won't even get two to match. It's never going to happen. Not in golf and not in trading. But some will score consistently well and some wont. Fact of life. So, what would this return on capital document accomplish? In effect, absolutely nothing. It might show what is possible, but that would range from terrible to terrific. You get out of trading what you put into it...but there's more to it than that...much more. What does it take, how long does it take, and where is 'there'? To answer that, this post would become a novel. As a trader you know it takes great passion and supreme effort. It takes as long as it takes but amount of effort is directly proportional to time. Finding the right path and staying on it is the hardest part. "There" can only be defined by the individual trader. What's your goal? You are correct, SIUYA, spent a few days in the trading room, asked no questions and then reported his findings which were, on whole, positive. As you know, no trader or trading system can be effectively forward tested and evaluated in a few days or even months (and being clueless as to what's going on) so, even with rave reviews, it's basically meaningless. The data would be statistically insignificant. No trading strategy in the world will appeal to everyone. In fact, they always work out to the contrary and that's as it should be. It has to fit. It has to feel comfortable. It has to be a natural extension of everything you know about trading. It has to work for you. Unfortunately, traders generally make impulsive decisions and spend big bucks on what's popular...or what system's sales department can apply the most pressure to buy. I'm a trading education vendor,sure, but I never advertise and I don't have a Sales Department. SIUYA will attest that nobody ever asked him to do anything or buy anything. Maybe that makes me different, I don't know, but I think that's how all trading vendors should be. No trading system or education vendor should ever hint, insinuate, imply or state that their system is a "Holy Grail" or will work for particular trader or their course is easy and will get them to their goals quickly. Forums are chock full of traders who fell for that bunk. BHS, I appreciate your open-mindedness. For a bit of a pessimist, that's pretty commendable. I hope you don't walk away from trading. All traders hit potholes on their journey. None of my business but maybe you hit a sinkhole and have been trying to work thru it alone. That's the toughest route. Might try getting a different perspective from someone who's advice you value. Could make all the difference.

I doubt if you'll ever stop permanently. You have the passion. That's the one common thread among all successful traders.

Ok, let's think this through. A trader with a $100K account trades say, oil or gold futures, as I do. Brokers often require $1000 margins/contract but some are down to $500 or less. The only logical reason for a $100K account vs. a $10K account is to trade more contracts per. If a trader can't average 3 out of 5 wins, they have no business trading. Period. I know there are some Trend Traders who sit there and lose trade after trade hoping to catch that big run to come out ahead, but that's a miserable way to trade in my opinion and certainly not what I'm talking about. Ok, so your High-Roller trader places 100 to 200 contracts on a trade for 10 to 12 ticks (fills are usually going to be all over the place by the time all are in, BTW, making scalping much more difficult). If they have good Trade Management and Risk Control skills, a 2:1 or 3:1 risk/reward would be likely. Assume 5 trades are taken each day. If the 1st wins, he/she made a minimum of $10,000 minus comm. Some traders might quit at this point, but not our intrepid trader because they know this is a numbers game and the odds are skewed in their favor. Let's say the first trade lost and, at worst they lose $5000 plus $500 commissions (probably much less since they'd be a high volume trader). They take a second trade. If it wins they'd net about $4000 if one lost or $19,000 if both won for the day at this point. If both lost, they'd be negative about $11,000 at worst. But this would mean that, on average, the trader would then win the next 3 trades for a net profit of $17,500 on a mediocre trading day. How would this trader ever scale this down to $200!! As we all know, traders must think in terms of averages and there will be drawdown periods, of course. So traders would need to be capitalized sufficiently to allow for the inevitable. But $100,000!!! Gimme a break. If the trader is only shooting for $200 per day, then only 2 or so contracts are needed per trade if the trader maintains a 3 out of 5 average. If they cant, get out of the market until you can or dust off your resume. So, BHS, you're telling me that a trader must be prepared to lose up to 1,000 trades in a row if he/she hits a "nasty" drawdown period. That's ridiculous. For $200 per day, a $10,000 account is more than sufficient. You don't even think of trading it until you can demonstrate that you can, by following your rules exactly, win 30 to 45 days in a row in simulation. Then, the trader must demonstrate solid emotional control by trading their live account for at least 30 days with just 1 contract and being profitable on 3 out of 5 trades taken. Then slowly increase # contracts while staying in their mental comfort zone (exceed it and your emotions will rush in to sabotage you). In addition, all trades must have been taken and managed with zero mistakes according to the system rules. If, at any point, the account balance drops by more than 20%, all live account trading ceases and they go back on sim and start over after getting with their mentor to identify and overcome the problem(s). Pilots train on simulators, astronauts train on them as does the military. For traders, they are vital unless they are already millionaires to begin with. If a trader has to burn through $100K before they "get it" then they definitely have no business trading. This would be like deciding to learn how to drive in the Indy 500 without your glasses. You'd get slaughtered. Find a good system and then get on a really good simulator and practice, practice and practice. When you think you're pretty darn good, practice some more. You won't be ready to trade your live account for probably a year or more, but then, how many years does it take to become a doctor, engineer, scientist, or pro golfer? Pro level trading is one of the hardest career choices anyone can make and few manage to do it alone. There's no Holy Grail (with all due respect to Ingot) and there's no shortcut. But it does not take a $100K account to get there. Most traders are not emotionally ready to accept the risk of trading 100 to 200 contracts at a time in futures. Equities, yes, probably so...but that's one of the worst vehicles any trader can ever choose to make money and would be very lucky to maintain a $200 per day average since they'd get wiped out every few years like clockwork.

Just so I understand, you're saying that the best traders can possibly do trading a $100,000+ account is to make 1 or 2 ticks per week or so? That, it's impossible to trade a couple of contracts and come out a lousy 10 to 12 ticks ahead on an average day? The pessimist who can't do it and has never seen it done says it's impossible. People that do it or watch it being done consistently by others have no doubt. I don't condem the way you feel about the subject because I understand ignorance...the earth is flat and man didn't walk on the moon. Those that lack understanding because they wont even take a look...or even question...geez, it's just sad. I'd be willing to bet anything that you think I'm claiming to have a trading system that enables traders to consistently win. I don't have it, you don't have it and ingot doesn't have it. And if I told you how my students accomplish it, then you'd really be confused and will stay that way until you realize that trading is a SKILL, not a system. But one thing I've learned over the past 17 years, extreme pessimists cannot be taught...at least I've never been able to.

Nobody's "peddling" anything but the truth as they know it to be. If you were an actual trader, you would know that your theory collapses in the real world. There's a practical limit to the number of contracts you can trade without getting split fills splattered all over the place, for instance. Any real trader would know the many holes in your stated theory. If it were possible, traders would be doing it..and nobody is. In spite of your claims, you don't have such a system to give. Total BS crap I hear all the time. Trading is NOT a get rich quick scheme, never was & never will be... but so many traders like yourself still think it is. Worn out spiele? Maybe... but sounds like somebody's not listening.

One of the major trade magazines published a study a couple years ago of the Top 10% that you always hear about - the traders who make money. This group conjures up images of yachts, mansions and parties at the Hamptons. Not really true. If you toss out the outliers like Warren Buffet an the guys who end up making a dollar a year, the "average trader/investor" makes around $100,000 per year. That's probably due to a number of factors. The majority of traders are working off of relatively small accounts. This limits their profit potential from the start and most of what profit they manage to eek out goes toward paying the bills so they struggle to get ahead. Trading is a supplimental income for many. The big high-roller winners you hear about usually manage to lose most of it back over time and a 500K guy ends up averaging closer to 100K. Many traders I know are happy making a couple hundred per day and they set that as their goal average.

"It's the hardest "easy money" you will ever make."

Yeah, perhaps it would have been better to say, "You can take a horticulture, but you can't make her like it". Seriously, one trader's opportunity is another's Waterloo. The truth is that most traders don't stick with any system or method long enough to find out if it works (for them) or not. Most, for a variety of reasons, don't follow the rules worth a flip from the get-go and then curse the system because it failed. To trade any system and have any meaningful stats you have to trade it like a robot. No guessing, no impulsiveness, no mistakes and only make adjustments when you are absolutely positive that the change is an improvement. I visited the link and viewed Ingot's beautiful Rainbow charts. Fascinating...and also evident that it would take me years of blood, sweat and tears to make that work for me...if at all. But that's nothing new, it takes years of hard work for any trader to learn or develop any system to the point of actually achieving long-term goals with it. The system works for him...and it would probably work for many others but to try to tackle it with no instruction and regular training would almost certainly end in disappointment. Traders switch systems like my wife switches shoes. To make it in this difficult game, traders must find that which works. There are numerous systems and methods that have the potential for long term profitability, some more than others. The system/method must fit the traders personality...style, complexity and risk well within their ability and comfort zone. Then roll up your sleeves and buckle down for a long difficult struggle, usually several years. If you want to boost your odds and cut down on the learning curve, find a really good coach...just like anyone else seeking a professional proficiency level in a difficult career choice would do.

Velly Goot! Forgot to mention that the termite went into the bar, yet went around it at the same time....LOL

Ok...A termite crawls into a bar...looks up and around and says, "Where's the bartender?" There's a joke in there...the riddle is, can you find it?

Confucious say, "Only ting worse than sore loser is sore winner". He might be right...

I'm not too sure about that. I have a poodle and tried to teach him to trade. Had to give up when I realized he could only win 3 out of 5.

Great post. Another in a long line of examples of how much grief you have to take from the ignorant when you try to enlighten. In trading, you gotta learn from the exerience and mistakes of others because you aren't going to (financially) live long enough to make them all yourself. From your post, I sense a tinge of frustration. Sometimes you just want to throw up your hands and just go trade. But some traders will actually get it. You will save their bacon and change their life. The friendships you form from your generous spirit will last a lifetime. Hang in there ... take pride in your accomplishments and that which you are able to share.

I'm amazed at the really savvy responses from most of the trader posts here. Let me start off by saying I am an education and system vendor. I state this upfront because, to some here, that makes me a bad guy...even though they don't know me, never met me, never talked to a student or spent so much as 60 seconds in my Trading Room. From experience, these "critics" will flood this thread in an effort to slander me as much as they can so, for the rest, be forewarned. But, any honest system vendor (not an oxymoron) can have a lot to contribute on this excellent topic so here's my two cents. I've been sharing information and teaching people how to trade free of charge for almost two decades. It's only when a trader wants to form a close daily learning relationship for the rest of their life that I have to draw the line on what I can do for free. Please understand that I do not need any more lifetime students, but yes, I would gladly share my techniques and strategies for free because I do it every single day. Realistically, you cannot kill a trading system, even a great one, by teaching it. Perhaps a highly specialized system that trades in a very thin market might be an exception if you could convince enough people to lose their mind. The Turtle System, for instance, happened to be the right system in the right vehicle at the right time. It didn't die from overexposure, it died because the market dynamics changed...just as they always have and always will. When a new trading system comes out, the world doesn't rush to trade it. Those that do will never all trade the same trades in the same market at the same time. Probably what has affected trading more than anything are the HFT's but, for me, the effects are mostly positive, not negative. No trading system left "unattended" will last indefinitely. Traders must learn how to stay light on their feet and adapt or they will get clobbered. If you can get a couple years out of a trading system with no tweaks, that's pretty darn good. Why are some successful traders so secretive about their trading strategies and systems? Well, for some it's just a form of greed. I get asked all the time, "Roger, you are a terrific trader. I've watched you every single day for 6 months (eg.)...why do you teach? Why don't you just trade?" The answer lies in the same reason multi-millionaires and multi-billionaires give so much of their wealth away to others who desperately need it. Then there are the Joe Biden's...they will never get it and forever wonder why the others do it. But also consider that there is a big difference in giving away knowledge and personal time to help a trader in need and someone giving away their code. Whenever I discover something extremely useful that greatly adds to my trading accuracy, I have it coded into my system. My philosophy is that, computers do a lot better job of measuring, figuring, filtering, data-crunching, anticipating and keeping everything in order and at instant fingertip access than I can...so let it have at it...while I take care of the fun stuff. It's like the alphabet. The letters are free. Words are free. I'll take the time to teach anyone to read and write. But, if I sit down for 3 years and write a best selling novel, I doubt if I'd give that away. So consider that when a trader seems "secretive". There's a lot more I could say on this topic, for sure, but this is getting long. So, would I freely share a terrific, winning system that wins a high percentage of trades with a squeeky tight stop? Sure. But most traders don't want to "learn" anything. That's too much like work. For some goofy reason, 98% of the traders I help don't come from trader forums. Ya'll tear 'em up in the markets tomorrow! "No trading system is ever any better than the trader behind it pushing the buttons"

Was the forex trader also a Dallas Cowboy Cheerleader? Might make a difference whether I want to escape.....

Hummm....I still like my answer that the bridge made a 360 degree spiral as it crossed the tracks. He'd be going over the bridge and around it at the same time YET would be walking on all fours....LOL

Good stuff, Vince50. Good question, too. It's not enough to put on the "poker face" and get spanked so hard by the market that you have to trade standing up and not let the pain show on your face. You really do have to FEEL the discipline or it's just an act. So, how do you feel discipline? To really feel it, you have to understand it. Discipline is, of course, having a Trading Plan and then being able to follow that plan without deviation. Is it ok to "fudge" once in a while when your gut says it's a good idea? NEVER. If you break, bend, twist, alter or mangle your Trading Plan in any way at any time, you cannot call yourself a disciplined trader. Why is this so important? Imagine that you spent years developing a trading strategy that worked so well that you turned it into an auto-traded system. The software code found the trades, executed them, managed them and exited them and good profit was made virtually every day in the backtested results. However, when you put this great system online trading your real trading account, it would arbitrarily do really strange things that weren't supposed to happen. The system started to lose badly due to these "cowboy" trades. What would you do? Probably FIX THE DARN THING!...and quick! If you wouldn't tolerate goofy trades in your code, why would you tolerate it in your discretionary trading? Yeah, it's all rooted in human emotions, but that too broad and doesn't nail down the real cause or cure. Think about this: Emotionally, what's the difference between getting in your car and driving accross town now and when you did it for the first time? Or when Dr. DeBakey performed his first heart transplant and when he did his 5,000th. What I'm getting at is "Confidence". Having rock solid unshakable confidence in two critical (yet different) things...that performing a task will accomplish the desired result AND that you personally are knowledgable and experienced enough to perform that task. For instance, I know that the Space Shuttle can take me around the moon, but I lack any level of confidence that I could get in one and perform that task. We know the Shuttle works, because we've seen it. We know a particular trading system works, because we've witnessed traders making their daily goals with it for months. So, why is it that when a trader gets "behind the wheel", so to speak, he can't trade that system for one single day with true discipline to save his life? I think it all comes down to confidence. He doesn't know right down to the core of his soul that all he has to do is follow the system...follow the plan...stick to the rules...and it will literally no longer matter if any particular trade...or series of trades...win or lose. When you know that you did your job correctly and you know beyond any doubt that doing so will enable you to achieve your goals, then you are never tempted to do anything else. Breaking your Trading Plan means that your belief system is impared and, that being the case, you will fail every time. Building and maintaining the confidence necessary is no easy task. It takes a good system, preferrably one with minimal drawdown periods...drawdowns throw confidence in the woodchipper for most traders. But that's just the beginning. You must have Method Mastery. You can't trade that which you don't understand. This is why complicated systems have such a high failure rate. You must have Experience, too, and that's something money can't buy. However, it can be shared for considerable benefit...but it can't be replaced. Traders must achieve the same level of confidence that they possess when they perform any other task they know they can do...because they've done it so many times before though maybe not always successfully. I've had some car crunches but I still drive with total confidence. So, bottom line, if you still deviate from your trading plan, even just occasionally, then true discipline doesn't exist in you....yet. You don't really FEEL it because your Confidence is still in the formation stage. It's there one day and gone the next. When it's there day after day, through all the ups and downs, highs and lows, the good, bad and ugly of everyday trading experience, then you will know you are truly disciplined...you will have no urge to bust your system and only then will you begin to enjoy the goal achievement consistency you've been searching for.

Relax, Patuca...MM's a good trader and actually a nice guy. Plus he complimented the stupid riddle....lol Besides, traders gotta learn how to handle the tuff markets, too. MM is kinda like trading in chop in very low volume...but with a bottle of Jack Daniel in your hand. Ok, I gotta go work on a better analogy than that.....

You bet, Gekko. I trade differently from just about anyone on the blue marble. If something isn't powerful, accurate and simple, I toss it. I've tossed a lot of junk over the years but every once in a while.... In trading, seems like to get the really good stuff, you have to make it yourself. But you may have discovered that already. What happened to the riddles??

I'm a trading instructor for my company called Felton Trading. Something I've been doing for the past 17 years. Hey, I think ole Patuca was having fun and just got a bit carried away...whole thing just strikes me funny.....

So, if a newspaper headline says, "A woman was shot last week and the bullet's in her yet.", would that mean the bullet ended up in her dog...or it's in some part of the female anatomy that I'm unaware of?

Oh what the heck. The riddle wasn't the hoot...it was everybody's guesses. It was how funny it was to see how one guy with a really lame "riddle" led everybody around by their nose..for way too long. Then, one by one they all turned on him like Cujo yet he didn't give a flyin' flippo. Common guys, it was a fascinating process and it was funny...admit it and let's all have fun with the next one...ok.

That's it?? His dog was named "YET"? So,YET "went" around the bridge...is that like my dog ROLEX (my "watch" dog) "went" around the backyard? Is that why the man went over the bridge, so as to not step in anything? Ok, Patuca, now here's my riddle. You'll never get this one in a million years: A man crosses a bridge over a friggin railroad track. You are watching him do so. As he crosses the bridge, he is walking away from you yet he is walking towards you SIMULTANEOUSLY. How does he do this? Give up? Here's the answer: Before crossing the bridge the man takes a Viagra and an ExLax together. What? you don't get it? By doing so, it enabled him to be Coming and Going at the same time! If you can make up a stupid riddle, so can I......I think we're even......