Since we're all friends....

[TinGull 10]

MrPaul had sparked up a conversation this afternoon in the chatroom that Soul and I were there for...don't know if anyone else was...but it sparked a fire. I'm relatively new to trading, been doing eminis for about 6 months now and been a student of Market Profile for maybe...3-4 months. I'm not well capitalized, which was something that was said could be a severe crutch for traders.

 

I wanted to write a little story about things that I've learned, the insights I've taken from many of the forums and groups I've hunted around with.

 

Passion is the first thing that I think traders need to have. Really, any entrepreneur needs to have passion for what he does. I think I've got drive like few other newbies have. I know I want to succeed, I know I need to succeed. I was a salesman in my previous gig and that got me into the power of positive thinking. Knowing that things happen when you're positive is something very powerful. Trading is very, very, very difficult to "get" and few do. I think sales was the same way. Having to mine for contacts for hours and hours over the course of weeks, and months...until you have a client base to support your living.

 

It was a probabilities game there. Make enough phone calls and someone is bound to buy something. Sound familiar? Sure enough! Make enough trades and some are bound to win. Knowing when to cut the phone call loose if it was a dead lead was of super importance. It was my stop loss in sales.

 

Trading can be thought of the same as many endeavors. There's chance, risk, hope, calculations, perseverance, sweat, tears....you name it, trading will give it to ya. It has to me.

 

The biggest insights I've got...love to learn, love to dream, and love to focus. As hard as the focus part is...it's a must.

[Soultrader 12]

I definitely agree that passion is one the biggest thing needed in achieving success. There are plenty of people who understand what it takes to get there but leave it aside for tomorrow. Is this mental lazyness or is it fear of the challenge? I have programmed my mind that no matter how drowsy I feel, if there is something that needs to be done... do it NOW! Not later, not tomorrow but now. Perhaps this is why I have a workaholic personality? I need to be productive every minute or I feel so unsatisfied with my life. I hate not doing anything.

 

Even when everyone doubts you.. the strength to believe in your goal will get you there. I received plenty of objection when I decided to become a trader. But I brushed off everything and stuck to it day in and day out. Even if a starting trading blows out $10-$15k account, that is nothing compared to the return one came make if he can learn to trade successfully. It is a small price to pay compared to the rewards.

 

I use alot of NLP to keep me in a positive mindset. I also like to go through self hypnosis/meditation to enter a calm period mentally before I trade each day. Helps me get into the right focus. I am extremely zoned in during the trading hours... a person can start talking next to me and I would hardly hear him.

[TinGull 10]

I'm exactly the same. Work now play later. I need to figure out how to get into a meditative state. I've tried many times, but it's so hard to clear my mind...mostly clear it of candles and lines....

[Reaver 10]

Right on Chris. I just fall back on the ol' military days and it just clicks into place automatically (most of the time) though I'd like to learn more about NLP, etc...

[Nick1984 10]

I agree whole heartedly. For me as I'm still learning myself, I want to fill my head with enough knowledge before I go in gung ho and get false confidence on a few lucky trades. I love to bodybuild as well and the discipline behind any form of personal achievement applies across a broad spectrum of human capabilities.

 

Eg: In winter time I have to bulk myself up to pack on my muscle mass, and I eat like a pig. I start growing and growing and getting fatter and fatter, and then I have to strip it off for summer to look good again. Thats really taxing on the body and mentally its hard to watch yourself getting fat. But in the end you know that your working towards a specific goal and you have to have faith in your abilities. You have to be consistent to your approach.

 

Theres a quote which I really love and I try to apply to the activities I undertake.

 

We are what we repeatedly do. Excellence, therefore, is not an act, but a habit. --- Aristotle

[ezduzzit 10]

Hmm... a very interesting little thread though I am not quite sure exactly what we are discussing here to be sure. It sounds somewhat like what have we learned along the way to becoming successful traders.

 

I would have to agree that you'll fare far better in this fun but highly challenging pursuit if you have a passion for it. However, it is sometimes easy to get carried away with the fun and forget it is a business.

 

Someone mentioned early on about a lack of meaningful capital being a crutch for newbie traders. While I was fortunate not to be in that position, sometimes an excess of capital can prove to be as big of a handicap (I doubt you meant to say "crutch") as too little capital, but for very different reasons.

 

I quickly learned a lot about myself as I dove headlong into trading. Being disciplined is probably the only truly useful trait I brought with me from my prior career success, other than an extreme appreciation for capital preservation (I was a banker of all things heh, heh) that assisted me in this trial by fire of becoming a profitable trader. My pride, my supposed intelligence, my willingness to stick with a bad situation in hopes of turning it around and other traits that worked so well for me in prior days, served mostly as ways to lay more of my money on the table for the pros to stuff into their own bank accounts.

 

Now I finally do take a good amount of money out of the market on a regular basis, but it came more from following an absurdly simple trading plan with position sizing and money management as 90% of my focus. I learned in the most direct way that this is a game of losses, not a game of profits. If you focus on managing the losses and keeping them small, you will make it. In other words, to Hell with being right. If the market doesn't go in your favor soon after getting in, then get the heck out and cut those potential losers unmercifully. I learned not to over-think any of this and stop trying to complicate it with new and improved methods and indicators. Price, time and support and resistance seem to me to be the only technical keys to the kingdom here and even knowing all that, it will all come to naught (nothing) if you cannot control your emotions in the heat of the moment and execute almost flawlessly on a few simple rules, over and over again.

 

I think Soultrader once said the market will quickly teach you a lot about yourself. I couldn't agree more.

 

Happy Trading

[GCB 10]

If the market doesn't go in your favor soon after getting in, then get the heck out and cut those potential losers unmercifully.

 

ezduzzit,

 

I don't want to steer this thread in the wrong direction, but I have a question about this point of cutting losses. How do you apply this? Do you mean cut trades loose before they hit your stop because they are not acting right, or do you mean use tighter stops, or are you simply making reference to using stops in general?

[ezduzzit 10]

Ok GCB...

 

Yes, I agree that your questions may be off topic to this thread, but suffice it to say that I play basically with disaster stops put in place only for rapid and unexpected reversals. They are not there to "give the market room to work". That would be like saying, "Well, the trade is on, my job is done, let the stop loss protect me and let's see where I end up". Any fool can enter a position. Your real job is to manage the trades you put on so as to let as much of your position ride to the fullest profit possible, only after you have assured yourself that the market and price activity are not proving you wrong, in which case your job is to get out as soon as possible, preferrably at breakeven to a small profit or, failing that, with a tiny loss so that you live to fight another battle and your emotions aren't in total turmoil for the rest of the session.

 

As soon as I open a position I am highly focused on looking for changes that might indicate my trade was wrongly positioned or ill timed. If the market does not move in my favor in extremely short order, I simply bail on the posiition at breakeven to a tiny profit if possible or else a very tiny loss and wait for a better trade. Do I take more losses than I used to? Yes, I do.. but I dont mind at all as they are tiny compared to before and even after I add them up, my profitable trades easily outstrip them.

 

Understand that not every trader is going to agree with what I have said and that is fine. But, do consider this: you often find traders singing the praises of scaling out quite early on their profitable trades and leaving on a small "runner" to see if the trade really goes somewhere. Why then is it that many of those same traders will sit glassy eyed with their full position size intact as a trade works its way all the way back to their stop loss and takes them out? Is it because they couldn't see price activity clearly headed in the wrong direction? No, I think it stems from two things: 1) their fear of admitting they were wrong and taking a loss (even tho it could be a very small one if they acted promptly) and 2) they are almost soley focused on profit taking and not on capital preservation through controlling the size of their losses. It is one thing to consider "risking" the size of your stop and lot size. It is quite another to just give it away.

 

Happy Trading

[GCB 10]

ezduzzit,

 

Thanks for the clarification.

 

Using this method you describe do you ever have problems jumping out of trades that would have ended up being winners? Seems like that's the other side of the double-edged sword.

 

(I realize there are a lot more double-edged swords in trading. In fact, trading itself could be described as one big double-edged sword, from which we try to derive the benefits of one edge while avoiding the consequences of the other.)

 

I guess the question is, how do you practically discern noise from evidence that you are wrong on the trade. (Don't be too concerned. I try to do it, too. I'm just like to hear your thoughts on the matter.)

[ezduzzit 10]

Ok.. once again off topic of the thread but I will put it a slightly different way. How you perceive and assess risk, price action, etc. is likely very different than how I do so. Your market experience and the mindset and background you bring to your trading is also likely very different from mine. Thus, I am going to tell you that how you specifically decide to cut your losses quickly and dispassionately is far less important than your discipline in simply doing it time after time without fail.

 

Only you can come up with a method that really works for you. Don't worry about the opportunity cost loss from missing an occasional trade that turned around and ran a mile in your original direction. That can and does happen to everyone, regarldess of method, on occasion. If you are so terribly convinced it is definitely turning around and will leave you at the station, while running for the hills then there is nothing but your pride and a small commission cost prohibiting you from jumping back in. If you kept that earlier loss small (and don't forget that it is often a small profit or breakeven instead of a loss) then you won't feel bad at all for having bailed out early only to get back in. I daresay that your equity growth over the long haul will keep you feeling good about following such a method. Now let's let these fine forum members have their interesting thread back.

 

Happy Trading

[GCB 10]

Good answer. Thanks.

[wsam29 10]

Oh yeah, gotta have passion for the game and tough it out during the learning phase and not give a rats arse about what others say or how you're gonna fall flat on your face trying.

 

The pot of the gold at the end of the rainbow is well worth the hardship if you stick with it long enough.

 

That being said, I had a friend mock me about how I'm gonna make my "millions" from trading. This is the same friend who had an arguement with me about trading when he's a project manager and gives his money to an advisor. Then again, I was dumb enough to fall into arguing back. Some people just like to argue for the sake of being right if you know what I mean.

 

Those who don't trade on a regular basis like we do, do not appreciate the experiance and knowledge we have. They mistake our inability to make money with poor knowledge about the markets/trading when it really boils down to is lack of knowldge of one self in dealing with winning and losing.

 

They think you need to have special knowledge of super exceptional analysis to make a decent return about XYZ company. That's investing and since we're traders here, I can say for myself, I am a terrible investor. I don't know about how the rest of you feel about that, but we're a different breed then they are.

[Guest cooter]

Ignore the people in your life who say you can't do what you are doing successfully. Chances are its because of jealousy, envy or their own incompetence, laziness, lack of motivation, and so forth.

 

To be successful in this endeavour, you need to cast aside all the losers in your life. Anyone who stands in your way of getting to where you want to be at the end of the trading day, week, month, quarter or year must be marginalized ASAP.

 

For all the world knows, I trade stocks for a living. I keep it simple, since there's no sense in telling the world what you really do. Then again, "quantitative derivatives manager" has an airy-fairy ring to it too.

 

As Tom Vu would say: YOU ARE LOSER, GET OUT OF MY WAY. I DO IT ANYWAY. I WILL SUCCEED!!! Almost 20 years later from that infomercial it finally sunk in what he was really saying after all....

[TinGull 10]

Very nice and very true. The pot of gold at the end of the rainbow is large that comes after the tremendous thunderstorm. I'm definitely feeling the rain subside and looking forward to that sunshine