alan76543

How to introduce myself...well, I'm 43, and I got my start in the markets in 1993. After a very choppy first four years, my results have been consistent since 1997. However, I'm taking the mindset that I'm a newbie and a beginner because what I'm contemplating is so much different from what I've done the last ten years, I really am starting over from scratch, and I don't know a lot about the trading methodologies that I'm contemplating. My current methodology started out as fundamental analysis, and evolved to a two step process...1) determining what the likely news/earnings were going to be, and then trying to figure out how the people buying and selling the stock were going to react to that news. Frontrunning dumb money was one way that I refer to it. My focus was very narrow, it was on the mortgage REIT and the oil tanker industries. Both of these industries are predominantly owned by the retail crowd, and I found you could predict with reasonable accuracy what they were going to do in advance. They would do some pretty stupid things which I could take advantage of, and it seemed like they made the same mistakes every quarter. The trades on that methodology usually worked, and if they didn't, they didn't usually go very far wrong. At one point, my understanding of the mortgage REIT companies was considered on par with that of the professional analysts, but it isn't now. So if its working, why change? While its true I've had a good last ten years, my gut feeling is that the good traders of the world are tanning my hide. Although it has been reasonably successful, there are a few problems with what I'm doing now, 1) returns aren't what they could be, 2) There are periods of time where I haven't figured out what the heck is going on...in one of those big time now. 3) I'm dealing with companies without huge share volume, I've pretty much hit the limit of size I think I can do, and 4) because the trades were in small industries, I never felt like I had a strategy that would accomodate other peoples money. So I'm trying to take the next step, which unfortunately means pretty much starting over. Although I've always tried to anticipate what others would do, my means is more of getting inside their head and understanding what they were thinking as opposed to interpretting a chart. I've read several books on chartreading...some twice or three times. I've read John Carter's book, follow his nightly videos (the free ones), and I've read several other books. One habit I never picked up was the trading journal or the trading plan. I feel I'm going to have to do that now if I want to succeed. My steps that I've laid out for myself are 1a) Read a lot of books 1b) Start papertrading using several setups 1c) Look at a lot of charts, trying to understand what is going on within them. 2) When the paper results start going consistently positive, start trading with small stakes (single contract or 100 share lots). 3) When that goes consistently profitable, go to a bigger stake. Not a fan of papertrading, but in order to have any confidence in what I'm doing (which to me will be the key to sticking to my plan), I need to have a lot of confidence in my methodology, and so I'll need to do a lot of backtesting myself to get that confidence. Figure the positives are that I've already climbed this mountain several times. I've been a somewhat successful poker player (social anxiety stopped me from being better), a winning horseplayer, and succeeded fairly well in the markets. All of those pastimes have odds of success and learning curves similar to trading. However, from traveling the other roads, I know I have no chance if I try to tell myself past experience will carry me through, and if I don't give it a full effort. I'm still trying to figure out what sort of a system would work well for me. I've looked at John Carter's materials, Alexander Elder, and William O'Neill to start with. Have several other books at home (a lot dealing with theory of technical analysis...just to try to get a basic knowledge). I like Carters emphasis on a trading plan and Elders emphasis on records. A third piece of the puzzle to me comes from Dick Mitchell, who wrote about horse race handicapping years ago. He said that you'd always go back over the past performances for race winners, looking for information that would have told you that he had a chance to win. I figure that'll be the same for every trade here. And the biggie...I have to learn to bear the discomfort of being in a trade. Bearing the discomfort of being in trades and being able to handle the pain of a loss seem to be the two big obstacles to trading right. Easy to say, and hard to do. Anyway, I'm going to try to go at it with the mindset that it is going to take me at least two years to really start to get this down. But I realize that I'm in a nice calm place contemplating this...the moment I start following things, I'm going to want to jump in...we'll see if I have the discipline to stay out. I'm hoping I can cut down on the learning time, but that's probably just another way I'm kidding myself right now. There will probably be some losses along the way as well. Sounds dreary, but if you try to climb Mt. Everest with a daypack, you aren't going to make it. Better to be mentally prepared.