(Not so) Brief history⦠fascination with trading began in â92 upon purchasing / digesting Ken Robertâs course on commodities. Paper traded while saving a small stake from â92 to â94. Began trading real-time in March of â94. Lost money. Read everything I could get my hands on from â92 â â95, the result of which was confusion, frustration, system switching, no trading plan, no money management skills⦠all while being grossly undercapitalized.
Finally found some really good information in â95⦠a course called Trend Dynamics written by Joseph Hart. This was distributed as a monthly newsletter. Later, members (many of which were professional traders) interacted via private forum. It was through this publication / collaboration and the mentorship it provided that awareness dawned on me⦠the shapes and forms of which are way beyond the scope of this (my first) post.
Knowing the limitations of my undercapitalization and how it would prevent me from being able to manage risk appropriately, I proceeded forward anyway hoping to land a nice catch to finance my startup capital. This exercise was frustrating in that I lacked the capital to hold multiple contracts (commodities), multiple positions or sometimes even a single position (no open positions, nice setup, not enough $ for margin requirements). I had to pass on many opportunities and could not put my trading into the long run.
I did make a little money in â97 (not much). Got married in December of that year and liquidated my account. It was time to shift focus to other things. While I did quit spending hours every day studying and charting, I never fully separated myself from it. I always kept a glance of what was going on in the markets.
After going back to school, settling into a good job for a few years and saving a decent stake I began actively watching the markets again. I put together a trading plan defining entries, money management principals and markets to be traded with a focus on minimizing risk. The system leveraged reactions within defined trends. Initial profit objectives were defined at technical levels and ideally multiple contracts would be traded to allow holding on to partial positions to ride the wave if the trend strongly reasserted itself. I was still undercapitalized and new it would be a while before I could trade multiple contracts.
Thus began my second go-round with real trading, this was 2006. At the end of the year my returns were in excess of 70%. Had I remained humble perhaps I would have been well on my way to accomplishing my dream. However, I began to pull money out of my account to aid in significant purchases (bought two vehicles that year with $$ down and short term financing). I thought it would be a temporary setback to my account and I could trade my way back up.
Well this is when confidence became over confidence. I had placed 9 trades total in 2006. I diligently waited / watched / waited some more and executed for the most part only when opportunities presented themselves. I still had a few trades I kicked myself about for they were what I felt were marginal setups that cost me money. The interesting thing is I started to take more instead of less of these âmarginalâ trades with this new found confidence. The main contributing factor though was the time frame I had successfully leveraged in the past was not yielding enough âat batsâ to satisfy my desire to trade.
So I began taking more swing trade setups using my actual account (instead of paper trading new ideas first) thinking I had a feel for the market. I lost money in 2007 (not a lot), but it got worse 2008, 2009 and 2010. I lost focus and started trading all kinds of intraday setups and losing money only to find myself far less prepared for the better opportunities when they presented themselves. I kept adding funds to my account, I had no trading plan⦠doing all those things âprofessionalâ traders are said not to do.
Even when my analysis was dead on, I did not make money. This bothered me the most. For example⦠my main interest is currencies. Having watched CDâs drastic climb throughout 07 that finally broke at the end of the year, I continued to watch as it could not muster even a significant rally for 8 months. Once it broke out to the down side, I anxiously monitored the reaction up from the Sept. low in â08. Due to the time this setup had taken, I felt strongly we would see a test of the last major bottom of Feb. â07. This target was derived using long term charts. On 9/24/2008 I went short the Dec. â08 contract at .9687. I was stopped out the next day at .9712. Anyone interested can take a look at that chart, those dates and the end result. This is just one example, I have others but this one hurt enough to remember.
Anyway, having gone from being profitable with 6 trades in 2006 to non-profitable with 62 trades in 2009 (have not tallied 2010 yet), I have learned a lot about myself, the psychology of trading and waiting on the right opportunity. I ceased real time trading completely in November to step back and re-evaluate. However, I am keeping a journal of all trades as they setup including entries, stops, profit objectives and results while working on my compulsive behavior when constantly watching markets. While being more selective this has only been 3 swing trade setups. I do feel I have found some things that work in the lower time frames if I can be patient enough to wait on those setups. We will seeâ¦
I have put together a new trading plan. I will begin trading it in January. The maximum allowable drawdown to liquidation will be 40%. This journal is to track this effort, to post my trades in real time and to hold myself accountable. This is it for me⦠sink or swim.
Finally found some really good information in â95⦠a course called Trend Dynamics written by Joseph Hart. This was distributed as a monthly newsletter. Later, members (many of which were professional traders) interacted via private forum. It was through this publication / collaboration and the mentorship it provided that awareness dawned on me⦠the shapes and forms of which are way beyond the scope of this (my first) post.
Knowing the limitations of my undercapitalization and how it would prevent me from being able to manage risk appropriately, I proceeded forward anyway hoping to land a nice catch to finance my startup capital. This exercise was frustrating in that I lacked the capital to hold multiple contracts (commodities), multiple positions or sometimes even a single position (no open positions, nice setup, not enough $ for margin requirements). I had to pass on many opportunities and could not put my trading into the long run.
I did make a little money in â97 (not much). Got married in December of that year and liquidated my account. It was time to shift focus to other things. While I did quit spending hours every day studying and charting, I never fully separated myself from it. I always kept a glance of what was going on in the markets.
After going back to school, settling into a good job for a few years and saving a decent stake I began actively watching the markets again. I put together a trading plan defining entries, money management principals and markets to be traded with a focus on minimizing risk. The system leveraged reactions within defined trends. Initial profit objectives were defined at technical levels and ideally multiple contracts would be traded to allow holding on to partial positions to ride the wave if the trend strongly reasserted itself. I was still undercapitalized and new it would be a while before I could trade multiple contracts.
Thus began my second go-round with real trading, this was 2006. At the end of the year my returns were in excess of 70%. Had I remained humble perhaps I would have been well on my way to accomplishing my dream. However, I began to pull money out of my account to aid in significant purchases (bought two vehicles that year with $$ down and short term financing). I thought it would be a temporary setback to my account and I could trade my way back up.
Well this is when confidence became over confidence. I had placed 9 trades total in 2006. I diligently waited / watched / waited some more and executed for the most part only when opportunities presented themselves. I still had a few trades I kicked myself about for they were what I felt were marginal setups that cost me money. The interesting thing is I started to take more instead of less of these âmarginalâ trades with this new found confidence. The main contributing factor though was the time frame I had successfully leveraged in the past was not yielding enough âat batsâ to satisfy my desire to trade.
So I began taking more swing trade setups using my actual account (instead of paper trading new ideas first) thinking I had a feel for the market. I lost money in 2007 (not a lot), but it got worse 2008, 2009 and 2010. I lost focus and started trading all kinds of intraday setups and losing money only to find myself far less prepared for the better opportunities when they presented themselves. I kept adding funds to my account, I had no trading plan⦠doing all those things âprofessionalâ traders are said not to do.
Even when my analysis was dead on, I did not make money. This bothered me the most. For example⦠my main interest is currencies. Having watched CDâs drastic climb throughout 07 that finally broke at the end of the year, I continued to watch as it could not muster even a significant rally for 8 months. Once it broke out to the down side, I anxiously monitored the reaction up from the Sept. low in â08. Due to the time this setup had taken, I felt strongly we would see a test of the last major bottom of Feb. â07. This target was derived using long term charts. On 9/24/2008 I went short the Dec. â08 contract at .9687. I was stopped out the next day at .9712. Anyone interested can take a look at that chart, those dates and the end result. This is just one example, I have others but this one hurt enough to remember.
Anyway, having gone from being profitable with 6 trades in 2006 to non-profitable with 62 trades in 2009 (have not tallied 2010 yet), I have learned a lot about myself, the psychology of trading and waiting on the right opportunity. I ceased real time trading completely in November to step back and re-evaluate. However, I am keeping a journal of all trades as they setup including entries, stops, profit objectives and results while working on my compulsive behavior when constantly watching markets. While being more selective this has only been 3 swing trade setups. I do feel I have found some things that work in the lower time frames if I can be patient enough to wait on those setups. We will seeâ¦
I have put together a new trading plan. I will begin trading it in January. The maximum allowable drawdown to liquidation will be 40%. This journal is to track this effort, to post my trades in real time and to hold myself accountable. This is it for me⦠sink or swim.
