Joe Ross

Thanks Aaron, it's nice to be appreciated. All the best in your trading, JR

Of all the people who attempt trading, only a few become consistently profitable. I have knows some who achieved early success, but it was often short-lived. Sometimes a trader will hit a winning streak, but eventually the streak ends. It is not an easy thing for those who want to sell you their products to admit, but long-term success eludes many traders. It is the exception rather than the rule for an aspiring trader to succeed. It seems to happen only for those who have a strong drive to go all the way. Books have been written and tests structured in an attempt to discover what it is about successful traders that enables them to make it to the end. I have never seen results that produced a definitive list or a common denominator. Yet there seem to be some traits that are common to successful traders; these apply to those who succeed in any field, not only trading. By acting like the successful, you'll put yourself on the path to success. The characteristics follow: Persistence: They persist until they reach an objective. They are not easily discouraged. They push themselves to the limits and build up their skills until they achieve high levels of mastery. Organization: They are extremely organized and focused. They set priorities and devote their energies to the work that really matters, while ignoring tasks that may have relatively little impact. They carefully monitor their performance. Honesty: They would rather have honest, accurate feedback that addresses their shortcomings in scrupulous detail, than receive sugar-coated fluff that temporarily makes them feel good. They aren't afraid to face their shortcomings head on. They work independently, and focus on their own internal standards. They are not concerned with the performance of others. They are extremely competitive, but they don't compare themselves with others. In the end, they are not consumed with doing better than others, but in enjoying the process of trading. They look inward rather than outward when determining how well they are doing. They are not afraid to face their limitations. They work around them, andapproach them with a realistic sense of optimism.

Trading and risk go together. Short-term trading denies the trader the strategy of minimizing risk by holding a position over a longer time period. Short-term traders must learn to use momentum and volatility. Volatility can force short-term traders to become scalpers. I know; often I am one of them. However, the scalping, in turn, causes a lot of "noise" in the market. When enough people are scalping short-term, the market becomes full of noise. At that point, prices begin to fluctuate rapidly and risk is increased. In that respect, scalping can work against short-term trading. All of us have a built-in aversion to risk. Traders, if they can still pull the trigger, have no problem entering into what seems to be a sure win  but when it comes to a trade with a clear possibility of loss, they hesitate. Traders in general don't like taking losses, and will do anything to avoid taking them. They will take even greater risk in the hopes of avoiding a loss. We see it all the time: a trader holds onto a trade while the losses continue to mount. They will pretend that the losses aren't really there. Rather than realizing a loss, they stay in the market and hope they will not be wiped out. The ultimate manifestation of this is seen in the dead accounts; accounts that don't trade, which amount to money in the billions held by brokers, simply because the trader leaves the money rather than close out the account and admit defeat. There is always the "hope" that some day, sometime, they will trade again. The State of Illinois gets rich from those accounts, because after a certain number of years they have the right to confiscate them. If you are going to be a professional trader, you cannot avoid risk and losses. They are simply a part of the business of trading. You don't have to learn to love them, but you do have to learn to accept the fact that they are a reality of trading, and work at disciplining yourself to keep them to a minimum.

GSX and Aiki both have good points and GSX has a very valid point when he says turn your screen upside down. From a real incident with one of my students I can tell you that capturing the chart and turning it upside down is one way to solve your problem. Of course you will also need to turn it mirror image so that the prices are where you expect to see them. One other student who had that problem solved it by listening repeatedly to the CD "Trading Mind." It is available from many websites including our own. Repeated affirmations of the kind included on the CD work extremely well for some people. But you must do them hundreds of times. There will always be some stress as noted by Aiki, but you can learn to subjugate that stress and make it work for you rather than against you. If you believe in yourself and in your trading plan, eventually the stress will work in your favor. Interestingly, the majority of traders prefer to be short. With the exception of currencies, prices move down much faster than they move up. Cheers.

Do you suffer a lot when you trade? Are you under constant stress from trading? What are your thoughts about stress, and is it a major factor in your trading? Stress in trading is not always harmful, probably depending on the source of the stress. For some traders it is imperative that they run scared. For those traders it is the emotion of fear that can generate the concentration necessary to survive. For all traders, it has been proven that trading is a stressful business. Tests have shown that even when traders appear calm, relaxed, and comfortable during trading, their heartbeat rises, blood pressure rises, and skin moisture increases. In other fields we see constant demonstrations of performing under stress. It is the ability to thrive under stress that sets athletic superstars apart. It is the ability to go onstage when a person's stomach is full of butterflies that can make a stage performer into a star. An effective trader learns to handle stress. His natural instinct of self preservation is what makes him effective when challenged. There are other forms of stress besides fear. Selfishness can cause a trader to fight greedily for what he thinks he must have. Such a trader will trade without any consideration for personal honesty. The attitude of this kind of trader is "get what you want. Win somehow." As a trader you must find out who you are and learn to accept yourself that way, or better yet, change; become a better person. Regardless of the source of your stress, if you are going to trade effectively, you must face the cause of it and learn to deal with it.

Great points All. Thanks for your posts. I appreciate them. What it amounts to is that with all of our posts, we have proven that trading is not science.

I believe trading is far more an art than a science. For one thing, if trading were a science, then we should all be able to enter the same trade at the same time, and exit at the same time, getting identical results. We all know that just isn’t so. Yet if trading were scientific, we should be able to get identical results by doing the same thing. I believe such expectation describes the “scientific method.” In addition, if trading were scientific, we should be able to come up with a “get rich” formula that would work all the time. We could then all retire and never have to work again. We all know this isn’t so either. When we, as traders, make a trading decision, most of the time we do not fully know why we are making that decision. You look at a market, you think about taking a trade in that market, and at some point you pull the trigger. You have thought of dozens of things in the time interval leading up to your entry. If I were to ask you, "Exactly why are you buying what you are, or why are you selling what you are?" you would probably not be able to give an accurate answer. You may be able to give a few reasons, but it will most likely not be the full answer. A lot of your decision to enter is subconscious. You do not really know why you entered, especially if you are day trading. To that extent it is more an art than a science, because you cannot fully demonstrate why you are doing what you are doing. But you could say, "I fully know what I'm doing. I am taking the trade because I am following the signals of my method or system." Wonderful, you have just proved my point. When you are blindly trading signals from a method or system, you truly don't know why you are taking the trade. You are essentially acting like a robot, pre-programmed to follow signals whether or not they make sense. I am not disparaging trading that way. If a method or system produces winning results, then what you are doing is following a statistically proven plan. All methods and all systems are based on statistics. The odds on any single trade are never more than 50% win or lose. However, the probability for a succession of trades is quite another story. If you are trading a method that wins seven out of ten times that you enter, and the method has produced a loser three or four times in a row, then the probability for a successful trade increases each time you enter the market. Sooner or later, over a series of trades, you are going to have the result of seven winners against 3 losers. That is statistically valid; however, it is not exactly rocket science. You will have proven that trading is an art — the art of following a statistically valid plan.

Are you really afraid to fail as a trader? Have you put so much into your desire to trade? Do you have a wall full of books? Have you invested most of your money? Is it that you feel you don’t dare fail now, but are afraid you will? How do you deal with your fear of failing? How you think and how you approach life affects how you approach trading. If you are extremely fearful, you are not going to be willing to take risks. The ultimate result of this is that you may be afraid to put on a trade. Your expectations, whether conscious or unconscious, have a powerful influence on your trading performance. As traders we face many common fears. We are afraid of being wrong. We fear losing money. One of the greatest fears is that of missing a trade. Some of us are afraid we are leaving money on the table. All of these are different sides of the same box – fear of failure. So how do we handle fear of failure? We have to recognize the basic assumptions that underlie the fear and counteract them. Generally, rather than come face to face with our fears, we avoid dealing with them. We may even deny their existence. However, it can be useful to simply identify our erroneous underlying assumptions and change them. When we change our assumptions, we really are changing ourselves. We need to know what causes the fear of failure. Some of us feel that we must be thoroughly competent, adequate, and achieving. But the truth is that you do not have to be that way. Holding such a belief produces fear and anxiety. If you are a trader, fear and anxiety can produce hesitation and self-doubt. Traders who believe they must be competent spend their time worrying about what they did wrong, what may go wrong, and how they will recover should they fail. They are, in effect, distracted by their own thoughts, and have programmed themselves for failure. You cannot afford to allow fear of failure to interfere with your trading success. You don't have to be perfect. As any professional trader will tell you, you are going to make mistakes from time to time, and if you are totally immersed in avoiding them, you'll be so anxious and fearful that you will make even more mistakes. Tell yourself that it is not practical to believe that you must be thoroughly competent. You don’t have to be the greatest achiever. Realize that, as a trader, you cannot live up to a standard of perfection. If you strive to be perfect, it may actually lead you to the very failure you are trying to avoid.