Ingot54

You make a good case for the influence of luck, Mighty Mouse - I can't dispute your analogies would have had me scratching my head about market action in smaller TF. But I would put these down to being more closely aligned to Black Swan activity (probably unfair to the Black Swans) than any form of luck in my trading. I usually keep an eye out for up-coming news releases when trading (Forex Factory Calendar being the main quick source) and tread carefully if my trades do not yet have the break-even point secured. During the current -17th January - Euro-US sessions I was surprised to see the rapid fall in the EURO, and couldn't find any immediate news event related to that. I traded the move anyway, and later found the reason on Bloomberg News. But I have to go with the "make your own luck" camp on this, while not denying the influence of a one-off event. Take a look at the MONTHLY chart of Gold. Since putting in a recent high of USD$1423 on 3rd January, it has lost USD$67. Now you know within the Monthly trend is a Weekly trend and Daily and 8H trends too ... so by only trading with the established trend, a lot of "bad luck" is eliminated. Further, by keeping out of the time frames that "louder noises" influence so much, these incidences of "bad luck" can be reduced. A similar story with the EURAUD - the pair has been in serious monthly decline since February 2009, and only the current month (and maybe one or two others) has seen much of a dispute with that trend. But we still have a couple of weeks to go in this month, and it is a high probability that we may even see another month of decline. If so, there is a lot of "good luck" to be made if you are observant with these kinds of trends. If not, then eventually there is a high probability of a good short, as/if the down-trend resumes, depending on your observations of the charts. I don't know of many traders who follow the monthly trends - not too many - because I rarely read of anyone trading off the direction of that TF when writing about trading. But you would have to agree that it would take something like a bond market failure somewhere, to nudge the monthly trend too far off course. Even the 9/11 event did not significantly alter the course of monthly trends. It CAN happen of course - but part of "making your own luck" in trading is being prepared for it. It may never happen - but if it does, traders should never be surprised by it. Trading is not a matter of being controlled by luck ... or controlling it; luck certainly can not be dismissed in anything we do, and no, we can not prepare for some events. But by keeping away from the kind of trading that seems to be surrounded by "unfortunate market moves" shall we say, it is possible to limit the number of times these kinds of circumstance influence our profitability. I would rather NOT have good luck - I would rather know my edge - know my probability of success - and just work my strategy. And I like to imagine that through my trading this way, I can remove myself far from the sphere of gambling, and simply ride the coat-tails of those who are truly moving the markets consistently.

Hi Salma I was wondering if you are a trainee, why your mentor was unable to provide these answers for you? There have been many very good responses to this question, and my own would simply be that there is a difference between 'taking a gamble' and 'gambling'. The objective would be not to consciously remove any gambling aspect from the activity, but to locate the best probabilities (your edge) and consistently execute trade-after-trade in accordance with your plan. You are then moving from gambling, to structured and calculated investing. To sum up - you are creating your own luck by moving into a business-like approach and by removing as much uncertainty as is possible. Salma - you are very teachable and deserve honesty. There is no 'correct approach' as such - only a process of discovery. There are several things you will eventually address as you develop as a trader a) What is your Trading Personality/Profile? What method suits your personality - discretionary, mechanical, a mixture of both? And what markets suit your personality - stocks, derivatives, indices, commodities? b) What is your risk profile? Can you handle the drawdown (temporary losses) that come along as markets ebb and flow on their way to creating direction? Do you prefer the fast-thinking and highly technical world of the scalper, or the more relaxed way of the position trader? Does intra-day or weekly trading appeal more? Can you make the decision to close a trade that is clearly not going as planned? c) Are you mentally tough? Can you decide on a winning plan, and remain with that plan, instead of jumping from one trading idea to the next? Can you consistently operate a strategy regardless of the previous win or loss, when over time, that strategy has shown to have a winning edge? Can you handle being wrong with a trade and simply move on to the next setup? Can you take a loss without taking it personally? The market is NOT "out to get you"! This is a very big topic, and I have not begun to cover it really. d) Are you well enough capitalised? Having only a small amount of capital can lead to desperate trading, and this truly is gambling. Scared money will have trouble surviving. e) Are you willing to continually educate yourself? There are many things you do not know that you do not know. But when you discover what it is that you do not know, then you have to do something to address the knowledge deficit. Things like Money Management (Position Sizing), Trade Management, Spread and Slippage, Brokerage and Brokers, technical Indicators, Price Action, the role of News and Fundamental Analysis and Events, Insider Activity, Market Manipulation, Correlation with other Markets (Gold, Oil, Foreign Exchange) ... and so on ad infinitum ... f) Are your personal circumstance suited for you to be trading? Are you employed full-time, or part-time; do you have family that rely on your being available at call; are you able to sit at the computer for long periods learning and watching the markets as they move; do you have toe kind of insight required to be aware of what else is happening in your life while you are engrossed in the cyber-world of virtual reality; are you able to maintain physical fitness while trading; will your significant relationships suffer through your involvement in trading; all the above are serious considerations, and yes, even these things have to be considered as a gamble, if you are not able/willing to continue to nurture and maintain them as essential life-style considerations. g) ... many other things which are not basic, but do serve to 'tweak' and improve your ability to trade well. Once you begin this journey, you are truly beginning to "put luck in your favour". I guess I could ask if you have a personal mentor, but since you mentioned you are a trainee, I assume you have a mentor. But it may also be that you meant that you are a beginner. If you do not have one, I suggest the fast track would be to find one - not necessarily an expensive mentor, but someone who trades for a living, or who is trading successfully themselves. many teachers are unable to trade, but are very good at 'market speak'. The technical stuff flows freely, but the ability to use it is lacking. Salma - I think the hardest questions you will have to find answers for, are whether you want to do this so that you can safely invest; or whether you want to do it to provide an income stream for the rest of your life; or whether it is something you want to try to see if you are good at it. For myself, I see that I allowed my physical health to deteriorate over 6 years, subtly, but certainly, and I have now been able to reverse that and get back my fitness. But more damaging, was the failure to maintain close personal relationships - to remain connected emotionally - with those in my family who cared more for me than any money I might bring. Thankfully - I have been blessed, and it was not too late to also address this imbalance in my life. Certainly I did lose some good time with family as they grew up, because I was telling myself that "I am doing this for them". But now I am able to balance trading with real life. It is something you/we all need to watch for - that fine line where passion becomes obsession. Keep your perspective, your family, your health and your friends. Treat trading as a vocation - you do not need to be at your computer desk 16 hours a day. And you certainly do not have to wonder any longer if trading is gambling. It is not. I wish we could learn to use terms like 'progress' instead of 'winning' and 'draw-down' instead of 'losing'. The words 'winning/losing' do indeed align trading with gambling ... but it is simply NOT so. Having an edge - a high probability of a trade succeeding - is what removes gambling from trading as an idea. The choice will only be yours, and that will depend on how seriously you want to prepare yourself to meet the market.

A few years ago I saved a link on my "Favorites" menu that dealt with this very issue: Success Rates of Traders The author gives some good advice and has uncovered a couple of probably now well-out-of-date studies. But it is a useful read, and I found more to awaken me in his conclusion: reasons to avoid trading! But even if the true failure rate of traders was known BEFORE they commenced this pathway ... would it have deterred them? I think not. In my own case, I was looking at having to retire in about 10 years, and had nothing on earth to show for it. To keep it short, I was not prepared financially for retirement. I had no option but to "have a go" ... and once on the path, I did not turn back. I am grateful for the persistence and commitment that somehow developed from my early years. Because it is this, and passion for financial instruments, rather than any other other factor, that led me to believe I have passed the test. Those with true passion have a chance. Those with obsession may likely have a very tough time of it. Google brought up other interesting links which you can find yourself, but in the couple I read, there seems to be no research-based study that defines exactly what the true rate is. Finally - I think the figure is always going to be elusive because as trading becomes more sophisticated, and as struggling traders seek out education and mentors as useful tools, the figures might swing like a pendulum. But there are ever increasing numbers joining us every day, seeking their fortunes. How many of them know what they are getting themselves in for? I have to agree with Siuya too - even if a trader can make money, the taxes, and living costs will still consume a chunk of it. But it is obviously still an attractive pastime. The numbers do not seem to be dwindling.

I have paraphrased your post Steve, to highlight an important point that any/all of the accounts bring to light - and that is the passion Livermore seemed to have for the markets, and winning at any cost. In order to win, he didn't seem to be sitting back and waiting for the information to come to him. He went all out looking for it, befriending those whose coat-tails he knew would carry him to fortune in trading. In short, Livermore needed an edge, and once he found that edge (insider information) he exploited it for all he could. Contrast/compare that with the market geniuses and marketeers today. They too have an edge, but to be a successful insider, you have to have connections, and you have to have financial batting power. Unless you are a Goldman or a Morgan-Chase, you will never get the kind of information, or the kind of impunity it takes to "succeed" in financial markets. Even the rogue marketeers of the false systems that abound on any Google Internet search of "Forex Trading", are exploiting an edge - that of the gullibility and desire pf mug gamblers for easy profits. So we fall back on the other "legacies" Livermore seems to have left his disciples and apprentices: 1) The work ethic - nothing comes except by hard work, and perhaps serendipity 2) Passion - unrelenting pursuit of an idea or a goal can not fail but to yield to you persistence. 3) Vision, determination, commitment and sheer effort of the will can deliver what wishful thinking can not. Maybe I am painting a rosier picture of the rogue than he deserves, but there is a saying from the Good Book: "Whatever your hand finds to do, do it with all your might... " and didn't Livermore do that? I would suggest that those who follow system-after-system, signal service-after-signal service, and never truly put in the hard work necessary to break through to successful trading really do not deserve to succeed. I would put those why try, but fail, far above those who never seriously tried at all. In that respect, Livermore does deserve a respected place in the annals of trading history.

All traders if they are open about it, are on an evolutionary journey with their strategy and technique. My own path has been rough, having blown a couple of accounts and more than once suffering the angst of the decision to quit or not. Thankfully I persisted. Today I have what has turned out for me, the structure of an excellent system, and enough runs on the board to signal that I have broken through. I would like to share with you (and hope you reciprocate) the things that have made the difference, and brought about that moment of eventual enlightenment. My final breakthrough came about as a combination of much of what I had already learned, but hadn't placed enough weighting on in the past. 1) The popular pendulum swings between using a few "good" indicators, to using none and trading pure Price Action. I have tried both of course, but I came back to the good old (customised) MACD, and two well-known others which I have also customised. I am finding the signals from these so reliable that I wondered why I didn't stick to the approach at least 2 years earlier when I first received them. Why do I use a few indicators, instead of pure PA? Because that's what works for me, and that's what I am comfortable with. In the future, I may lean more towards PA alone, but right now, I am pleased with what I have. I am still learning. 2) I have always done far better on the higher time-frames - 4H to 8H to Daily. Yet, because I have a close trading buddy who is successful at scalping, I dabbled in this short-term stuff for years. What I was battling was my own trading personality and trading profile. Scalping simply does not suit my make-up, and it certainly does not suit my day job. The positives to come out of scalping for me are that I have become much better at the technical side of analysis, and I discovered a couple of things that actually work far better in the higher TF than they do in the 5 and 15 min TF. And the biggest breakthrough there, was the understanding that I excel at the higher TF trades. I no longer feel the frustration and guilt associated with scalping failure. 3) I have learned to trade from the "right hand edge of the screen". Years ago I discovered Alan Farley's website (Google it if interested) but I can not recall much about it, other than I think he is a very short term trader. I simply was not interested in that, but a light bulb was turned on that has never gone out. That light bulb shone the way to help me ignore many of the hundreds of videos and systems that only serve to lock traders into a carousel of hopping from one indicator, or one system to another. How is that? Well "most" system sellers and marketeers try to show you what you could have done, or where you could have entered to make this amazing profit. In hindsight, the entry was optimum, and indeed the trade was great. What the hardrightedge.com concept taught me was that in reality the trade would most likely NOT have been visible, and most certainly NOT likely to have been taken at all. What we were looking at was a cherry-picked situation to illustrate how the system "selected" this great winning trade. So how did I apply the concept successfully? By learning to take EVERY setup as it came - no exceptions. THAT'S where the winners come from. Sure, there were/will be losing trades, but unless you take all those setups and make all those entries, you will not be in your trade long enough to profit, or you will not be able to get an entry at all. 4) I found a trading "buddy" who may not always have been on the same page as I am, but we have learned so much from each other, and every day we link via Messenger or Skype, and send screen-shots and discuss entries and setups. I have had the privilege of meeting up with this friend a couple of times - but I live north of Brisbane, and he lives south of Sydney, so the messaging services work well for this situation. Being able to discuss trades and outcomes, as well as give heads-up to new sites and ideas (and yes - interesting indicators and approaches) has been a very maturing experience for me. I have the confidence to admit my silly mistakes to my mate, and instead of chastising, he asks "Why did you do that? What was the trap there?" 5) I used to spend hours every day reading newsletters and trying to get a handle on the Fundamentals that rock the world. While this was good - and even necessary in order to understand why currency moves occur, it is now no longer essential reading. There is no sin in unsubscribing to your favourite newsletter. Indeed, hitting "unsubscribe" will release you to concentrate effort where it is most valuable - in finding and managing your trades. Of course what goes along with cutting down on newsletter reading, is cutting down on forum time. Don't get me wrong - I still belong to forums and I still post - forum life is healthy for a trader. But do learn to control it - read only the best posts, and contribute only when you truly have something to ask or say. I used to be an active member of 2 forums, and made about 2500 posts on one, and 4000 posts on the other. Sure I learned a lot, and it was essential at the time for me, because I found myself teaching-in-order-to-learn, so it was great then. But I had to realise I had outgrown the need for reading and contributing on a daily (or hourly at times) basis. Today I do not feel the need to "belong" to a community to the same extent. But I still seek out "good" places to learn and contribute. 6) I finally understood the true meaning of discipline. I have always been a "wild horse" of sorts - ever unorthodox, and ever contrary and thinking differently. It's just in my make-up. So it irked me to no end when I read the mantra of "discipline" in trading. I had nothing but contempt for the word, and saw it as a way of being "controlled". But then another light bulb was turned on. While discussing trading one evening with my buddy on the Messenger Chat, asked me: "You have some great setups, and have made some great trades. What is damaging your record?". I couldn't find the answer immediately, and he refused to tell me what he thought until I had 24 hours to think about it. The next evening he asked me again: "Well ... do you know what is damaging your trading?" During the following day I looked over my past trades. I looked back at my strategies, and the systems I had used in the past. What I found was not pretty. I had jumped from method to method, and from time-frame to time-frame. I had some good trades using simple setups, but then abandoned them for something "better." In short, I had never truly focused on, or mastered ONE single trading strategy in the 6 years I had been in trading. That was indeed an "aha!" moment. But I still can not bring myself to use the word discipline. Try substituting the word CONSISTENCY and see if that helps you. It sure made a difference to my mental approach. Instead of trading like a piece of tin-foil, I now trade like a rod of iron. I am immovable and unshakeable in my determination and desire to simply follow my own rules (no one forces me - I make the rules) my own plan and my own setup. It works - it is not broken - it does not need to be fixed or "tweaked to death". I have not mentioned things like money management, because I think it goes without saying how essential that is for traders of all instruments and time frames - but I do acknowledge how vital MM is if you are to make a consistent stream of income in trading. This has been a long post - only my second on TL - so will hand over to you. I hope this has been of value to one person at least, as we enter the 2011 trading year. What has been your breakthrough moment? What things have turned around (or are turning around) your trading? :missy:

I agree with Bakrob99 that the poll has a bias to achieve a certain result. I have read ROSO a couple of times, and it is nothing but a good read about a trader, and about an era where bucket shops and high rollers gambled away their lives. I would not recommend ROSO as a trading "must read" for anything other than an insight into the kind of greedy actions of bucket shop operators, the traditions of which are still carried out today by operators like Goldman Sachs. Today, we have operators building huge computer complexes right next to NYSE in order to maximise the speed at which they are able to intercept and manipulate market orders. And we see the churning of clients' accounts and the use of algorithms to step up/down the price in order to achieve volume, for which they receive huge rebates; and in order to achieve a respectable VWAP for clients. In Livermore's day the bucket shops used the telephone and the tape to gain an edge over the sucker stock gambler. Today they use computers and the widening of spread to knock out trades at strategic levels. And the electronic triggering of stop-loss orders, which leads to a cascade of sell orders, followed by the fortuitous triggering of clairvoyantly-placed conditional buy orders, is still happening today. NYSE Euronext > Exchanges > I would venture that what went on in LIvermore's day pales into obscurity when compared to what those who are "doing God's work" get up to today. I'm doing 'God's work'. Meet Mr Goldman Sachs - Times Online These people are untouchable. The model Goldman Sach uses, is to head-hunt the brightest young things from Harvard and the like, and train them up to be brilliant derivatives traders and super-salespeople. Next, they get a ticket to Washington, where they are able to effectively block any legislative attempt to clean up the Financial Services Industry by Congress. Neither side of US Politics has been able to get any reform past the house in recent years, that might have a moderating effect on the antics of Goldman Sachs in their relentless and ruthless march for financial glory. Finally, after years of faithful political service to the company in Washington, the employee is welcomed back into the GS fold, and can be asured of the very best lifestyle money can buy until death us do part. This is not fairytale stuff ... has anyone heard of Hank Poulsen, the former CEO of Goldmans Sachs, and the Secretary of the Treasury of the United States of America? You don't have to read all of this link ... just scroll down to the "Conflict of Interest" item: Henry Paulson - Wikipedia, the free encyclopedia Particularly poignant is this: "The Goldman Sachs benefit from AIG bailout was recently estimated as USD 12.9 billion and GS was the largest recipient of the public funds from AIG.[35] Creating the collateralized debt obligations (CDO's) forming the basis of the current crisis was an active part of Goldman Sach's business during Paulson's tenure as CEO. Opponents[who?] argued that Paulson remained a Wall Street insider who maintained close friendships with higher-ups of the bailout beneficiaries." Now, why would you idolise a book like ROSO, when the financial manipulation going on today has left the corruption of Livermore's day far behind? The true lesson to be learned here, is to be aware with whom you are playing, when you dabble as a wannbe trader in financial markets. Sorry for the long post, but it had to be said. A sixth question for the poll should have been added: Did you gain any useful information from ROSO that could assist your trading today? I believe the overwhelming response to that question would have been a large "NO". As such, the book is overrated, and nothing more than a good bedtime story, for those who like to read about quaint historical figures and their antics. The real financial world story today would appear like a horror story if compared to Livermore's experiences.