Are You Really an Experienced Trader?

[TheNegotiator 13]

This is a question to which the answer is variable. It is however, an important question for anyone who hasn't 'made it' already(and to some who haven't really made it but think they have ).

 

I think that many have the idea that if they trade for several years, they will become 'experienced'. Some have done this and may actually believe they are 'experience'. But what the bottom line reads is the important qualifying factor here. The proportion of this time which is truly dedicated to understanding the market process and your strategy imho is a far better yard stick of experience. I challenge any trader to sit back and make an honest assessment of the effort they put into their practise of the trading discipline(live or sim).

 

Let me attempt to illustrate my point in another way. You are about to take a flight and you are allowed to choose your pilot. Pilot A has flying in his blood. He has never actually flown a plane before, but he has for the past 10 years sat next to his Father in the cockpit on every flight which is every day. Pilot B has never actually flown either. He has accrued over 1000 hours in a state of the art simulator, 500 hours of which were under expert instruction. Well you HAVE to take the flight. Lol. I think the choice is clear.

 

So when if you haven't got a high degree of real experience, what can you do? There's only one session you can realistically trade per day right? Well, you concentrate for a start. You can prepare for what you think you may see and watch for what you do see. You can try to understand the way the market is functioning at the moment and how your trading strategy or style fits in with that. You can replay the market either by reviewing your chart or with many platforms you can now do a market replay at whatever speed you wish to. You can analyse your performance using all sorts of useful metrics.

 

Profitability comes from understanding comes from experience comes from dedication. Not necessarily from screen time.

[bootstrap 47]

And what about pilot B.

 

One who has flown through the storm, the last plane in before they closed the ramp, one who has landed a crippled plane. SIMs are awesome, but there is nothing like the real thing.

 

you want a guy flying the plane who has simulated crashing, or someone who almost has?

[TheNegotiator 13]

Well you HAVE to take the flight. Lol. I think the choice is clear.

 

I know BUT my point is just sitting in front of a trading screen is not necessarily that useful. You have to learn and study and develop yourself. Use your time wisely so that you stand a better chance of the experience being useful as opposed to just going straight over your head.

[bootstrap 47]

I know BUT my point is just sitting in front of a trading screen is not necessarily that useful. You have to learn and study and develop yourself. Use your time wisely so that you stand a better chance of the experience being useful as opposed to just going straight over your head.

 

i have to agree that you have to learn and study. but to go back to your analogy the best pilots are not those that do well in the sim, but those who have had their butt on the line.

 

case and point, but not a flying analogy. while this is not life and death, me and a buddy went to idaho this summer. i have fly fished all my life. he has not. he is a much better caster than i. he loves the idea of fly casting/fishing. the first day we caught nothing. he was depressed. i had a beer.

 

the next day same thing.

 

next day, he caught nothing and i reeled them in.

 

what does this mean? just because you are better, does not mean that you are. if you are good and think you are, your mistakes are compounded. if you know you are flawed you except loss and your mistakes are minimal. if you are good and think you are, your success seem great. if you know you are flawed, your success is protected.

 

back to flying. both fly through the storm. at the end pilot A is shot and cant land. Pilot B is shot but lands anyway.

[TheNegotiator 13]

back to flying. both fly through the storm. at the end pilot A is shot and cant land. Pilot B is shot but lands anyway.

 

What?! Where did the being shot bit come into it? I know you have to expect the unexpected but the idea is about experience and practise. Pilot B has never even taken the controls. It's like letting your 12 yr old son drive your car because he's sat next to you on lots of journeys and watched what you do. It's not right!! My point was that if you don't properly experience something at all you are far less likely to be proficient at even after considerable time. Perhaps the simulator analogy was chosen poorly.

 

EDIT: Lol. I was trading and got confused as to which was pilot B! Oh well. Trade was good. Probably shouldn't trade and post at the same time.

Edited October 27, 2011 by TheNegotiator

[bobcollett 10]

Dear negoch8tr (zdos idea of a shorter name)

I am very confused by the above

Have you been drinking?

I am still not sure which pilot you have picked

I whould think B.

regards

bobc

[TheNegotiator 13]

Lol. I would have picked B. I noticed I had reversed the two in my last post which is why I added the Edit in to clarify.

[BlowFish 10]

You missed pilot C. Over the course of many years has logged thousands of hours flying. The only trouble is periodically (s)he crashes and burns.

[SIUYA 11]

does this sort of fall into the category of - everybody makes easy money in a bull market.

But until you have experienced a couple of cycles you have not had real trading experience.

I think a lot really depends on how much you have a good base (reality not theoretically) from which to ground your experience - do you have a philosophy of the markets, have you enough depth of knowledge to really make the most of the experience you have (even if its a little)

 

For the pilot example - cropdusters - one of the more interesting jobs you can get.

a friend of mine became one, he said most crashes occur in the first 1000 hours of flying due to lack of experience, after that not much happens - until either luck catches up with you, OR you think you have enough experience because at about 5000 hours experience they all start to crash again.....make of that what you will

[TheNegotiator 13]

Great quote(I think I may have already put it in the quotes/sayings thread)

 

"Men are wise in proportion, not to their experience, but to their capacity for experience"

 

-James Boswell, Scottish diarist and author of "The Life of Samuel Johnson"

[peterjerome 10]

WOW...answers all over the place.

how about a measurement focusing on income generation strong enough to support a full and active lifestyle year over year and shows net worth "up & to the right"?

peter.

[Cruiser 10]

Frankly - I wouldn't get on the plane with either one of the two pilots since neither of them has any experiance. I know you said I "HAD" to get on the flight, but the bottom line is that if that was really true then it would only be a situation where my life over if I didn't because there would be no ****ing way I'd get on that plane otherwise.

 

Siuya and peterjerome identified a couple of points that one would have to be to be an experienced trader. The bottom line is that until you have actually done something then you don't have experiance. Schooling and practice don't equal experiance.

 

 

WOW...answers all over the place.

how about a measurement focusing on income generation strong enough to support a full and active lifestyle year over year and shows net worth "up & to the right"?

peter.

 

And there are different types of experiance as well. I think the presumption in Siuya and perterjerome's is that we're taking about a trader with years of successful trading. There are traders with experiance who are terrible and unsuccessful too. Your two pilots might both have had 20 years flying in all sorts of conditions, good and bad. Pilot X has killed 1000 passengers in over 30 crashes but somehow has survived and kept his license. Pilot Y has successfully navigated similar poor conditions and has a spotless exemplary record. Both have experiance but which would you fly with?

 

I've been trading for 2 1/2 years. I have a lot of trading experiance. But I still have not been consistently profitable. What has my experiance gotten me? I know what needs to be done and I know what I need to find. I've only recently developed a strategy that is based on clearly identifiable criteria which can be back tested and which, at the moment, appear to be profitable. I'm in the process of live trading it, after a period of sim, and have been profitable for several weeks on limited trade size. I still need to develop the plan more to fine tune entries and exits in different market conditions and gain more experiance with it. Hopefully in a year or so I'll have this done and will have ramped up my trade size enough to support myself and stop depleting my savings.

 

Actually finding and developing such a strategy is the nirvana that might make this all actually work for me. It has also given me the confidence to overcome many different psychological problems. I'm already content to make only one trade a day (most of the time) but still need to work out getting more comfortable with not even taking one every day and knowing what days to take a pass on it. In the past I've been more like a madman with a machine gun running out into the open and blasting away than a carefully trained sniper who knows he only really has one good shot most days.

 

So maybe a year or two from now I'll go from being a terrible trader with a couple years of experiance to a consistently profitable trader with several years of experience.

[peterjerome 10]

I've been trading for 2 1/2 years. I have a lot of trading experiance. But I still have not been consistently profitable. What has my experiance gotten me? I know what needs to be done and I know what I need to find. .

 

Cruiser,

here is what turned my trading around years ago...it came from a very experienced and successful trader. he said "if you are not making money in the market, you are doing something wrong. figure out what it is you are doing wrong and STOP doing it".

 

sometimes the simple answer contains the key...Occam's Razor

good luck,

peter.

[PiP.Squeak 10]

Cruiser; "The bottom line is that until you have actually done something then you don't have experience."

 

So I have to actually hit my own thumb with a hammer in order to know it hurts? I can't watch someone else do it and learn from all the cursing and dancing around the room with a throbbing thumb that smashing the crap out of it is probably not a good thing to do? Dang!:crap:

 

Then why are we reading and posting on all these sites?

 

As for me' date=' I'm trying to share my experiences (good or bad) with others and hoping to learn from the experiences of others who have gone before me. Maybe that way I won't have to always smash my own thumb to become a better trader.

 

Experience and success are not the same thing. Just think of a football game, success is winning, experience is had by all - winners and losers! I think there are some really, really "Experienced" traders out there who have never achieved success. However, I do believe that to achieve long term, sustainable success [u']you must have experience,[/u] some can be obtained by your own actions and some can be obtained by observing and learning from others, (i.e. reading these posts). I also believe, the more experience you have the better your chances of success will be.

 

Success in trading is easy to measure - A long term, sustainable increase in wealth!

 

Maybe the real question should be "Are you really a successful trader?"

[SIUYA 11]

as in everything definitions are largely personal and there are exceptions to every rule!

 

maybe the question should be - are you really a successfully profitable trader over a period of time and experience to show consistency of process and ability (or is it just luck)

and yet even that cuts out people who might be very good bull/bear market traders and smart enough, or experienced enough to realise their limitations and so rather than banging the head against the wall (or the thumb with the hammer!) they manage to avoid those times that dont suit them.

So the question could again be ...are you really a successfully profitable trader over a period of time and experience that suits your talents/abilities and smart enough to learn quickly from your own and others mistakes to show consistency of process and ability (or is it just luck)

:haha:

 

one thing that comes up time and time again when talking to many people who have been successful is that they learn from others and find people who are smarter/more talented than them and allow them to do what they do best......there might be something in that for all of us.

[TheNegotiator 13]

I'm not suggesting in any way that you can't learn from others. The comment about the question being changed to one of consistent profitability as a gauge of success is not what I am getting at and I actually disagree with it anyway. I am getting at the idea that the length in time of your journey to being a highly competent and experienced trader depends on your application to the exercise. Simple. Just as the difference in two kids' grades in school isn't always about level of intelligence and often more about how hard they work and if they listen in class. I disagree with profit being a gauge of your success not because it isn't, but because if this is the way you judge your own performances in the market, it opens up a whole lot of potential for psychological issues. The best traders always trade to trade well. They know if they do, over the long haul, they'll take a good amount out of the markets. If you HAVE to, talk in ticks not in $.

[Cruiser 10]

So I have to actually hit my own thumb with a hammer in order to know it hurts? I can't watch someone else do it and learn from all the cursing and dancing around the room with a throbbing thumb that smashing the crap out of it is probably not a good thing to do? ...

 

I think you are confusing knowledge with experiance. The question was about experiance not knowledge.

 

You can have the knowledge that hitting your thumb will cause pain but knowing that does not give you the experiance having it happen nor the skill of preventing it. Have you every done a job that requires a great deal of hammering? I'm neither a craftsman nor a carpenter and most of my hammering involves things like hanging a picture on a wall. But many years ago I built a large wooden shed from scratch. I had to hammer in literally hundreds and hundreds of long nails. I knew ahead of time that hitting my fingers with the hammer would hurt and never did it intentionally but did it far too often. But as the hours of hammering progressed I figured out techniques to hold the nails and hammer that resulted in fewer and fewer finger hits. As I gained some experiance at hammering I became better and better at not hitting my fingers. That period of experiance lasted only a couple days and at the end my fingers were hurting and the carpentry was less than square and true. Just imagine how better things would have been on that one particular job if I'd been building sheds and doing other carpentry for a few years beforehand. I might not have hit my finger once and my shed might have been perfectly square and even.

 

You might not need experiance to know what the consequences or rewards of an action will be but knowing and doing are two different things. Sometimes being able to do well, and constantly, requires a level of expertise and accomplishment that can only be developed through experiance.