Lessons from a failed trader

[destriero]

Hello All,

I am writing this post because even if it helps one person it was worth it.

I purchased my first share of stock in 2005. I then became a daytrader for many years (until about 2014). I kept thinking that one day it will all click. I figured if I never quit, I would one day be successful. I tried price action, indicators, combinations of both, time and sales, etc. ad nauseam. However, eventually I quit, I had lost tens of thousands of dollars and had no backup plan or skills to build a new career upon. Unfortunately for me, I had no finance professionals around me to guide me. I wasted years of my life chasing short-term trading in hopes of one day finding a profitable system. I blamed my discipline. I blamed my trading system. I fooled myself into thinking that I was getting closer, that I all I had to do was work harder, and the profits would pile up soon enough.

Now here is where the story gets interesting. In 2015 I discovered value investing. I spent some time learning about fundamental analysis, something I spent no time learning back in my trading days. It all started to click. If a share of stock is just a partial ownership in a business, why would some squiggly lines on a chart tell me if the business would be more valuable in the future. If you were to buy a local coffee shop, would you somehow try to use TA to buy it? Heck no, you would research competition, talk to customers, talk to the employees, etc.. You would see how much the business earned over the last five or ten years, and try to pay a fair price to earn a satisfactory return on investment.

Once this light bulb went off, I then spent a lot of time reading everything Warren Buffett wrote and the writings of other successful value investors. I started to learn how to actually value a business using a discounted cash flow approach. Since then, I have yet to have a single losing year. It doesn't mean they can't happen, they will, I will possibly have many over my career, but the long-term scorecard will be satisfactory. I am now managing money professionally for friends and family. I just wish I could have seen the light earlier, instead of wasting so much time, energy, and money chasing short-term speculation.

Anyways, I figured I would write this post and share my story. If it helps even one person become more successful and happy, it was well worth it.

Wow, dude still doesn't realize it's a 12Y bull market and not deep value.

 

[themickey]

If I were a value investor I doubt I would be trading, it's rare to find value in stocks these days.
Those which are value / low PE, are for a reason, because they're dogs.
Buying budget, like transport, you'll get there but twice as long.

 

[taowave]

Isn't Sven a value guy??
Do you follow him?

There are systematic trend following funds like Man AHL, Winton, Dunn Capital, AQR. Just that they don't do it in a simplistic way. They use different systems to measure trend strengths - scaling in and out of markets.

And yes - simple buy and hold may not work. Sideway mkts happen more often than trending markets.

Note: Some screenshot that I took from Sven Carlin's youtube video.

View attachment 250500

 

[sef88]

Isn't Sven a value guy??
Do you follow him?

Yes, he is a value guy. But I'm not. I watch him because sometimes he provides some macro perspectives.

 

[ironchef]

That's debateable. Padu is yet to be a consistent large profitable trader imo.
After gawd knows how many years being a Brooks follower, still pecking away at crumbs under the table.

You said he has not been profitable all these years, yet he traded and spoke with confidence like a pro?

 

[Laura48]

It takes guts to admit one's failure ad talk openly of it. Traders should understand that being consistent and profitable is not easy while trading and so learning from such posts and one's experiences becomes really important. Kind of motivates.

 

[misterkel]

I thought you said you made 1000000000% on some Indian bank. Why do you need lunch money? Unless of course, you didn't make 100000000%.

He only invested one rupee.

 

[Jones75]

Hello All,

I am writing this post because even if it helps one person it was worth it.

I purchased my first share of stock in 2005. I then became a daytrader for many years (until about 2014). I kept thinking that one day it will all click. I figured if I never quit, I would one day be successful. I tried price action, indicators, combinations of both, time and sales, etc. ad nauseam. However, eventually I quit, I had lost tens of thousands of dollars and had no backup plan or skills to build a new career upon. Unfortunately for me, I had no finance professionals around me to guide me. I wasted years of my life chasing short-term trading in hopes of one day finding a profitable system. I blamed my discipline. I blamed my trading system. I fooled myself into thinking that I was getting closer, that I all I had to do was work harder, and the profits would pile up soon enough.

Now here is where the story gets interesting. In 2015 I discovered value investing. I spent some time learning about fundamental analysis, something I spent no time learning back in my trading days. It all started to click. If a share of stock is just a partial ownership in a business, why would some squiggly lines on a chart tell me if the business would be more valuable in the future. If you were to buy a local coffee shop, would you somehow try to use TA to buy it? Heck no, you would research competition, talk to customers, talk to the employees, etc.. You would see how much the business earned over the last five or ten years, and try to pay a fair price to earn a satisfactory return on investment.

Once this light bulb went off, I then spent a lot of time reading everything Warren Buffett wrote and the writings of other successful value investors. I started to learn how to actually value a business using a discounted cash flow approach. Since then, I have yet to have a single losing year. It doesn't mean they can't happen, they will, I will possibly have many over my career, but the long-term scorecard will be satisfactory. I am now managing money professionally for friends and family. I just wish I could have seen the light earlier, instead of wasting so much time, energy, and money chasing short-term speculation.

Anyways, I figured I would write this post and share my story. If it helps even one person become more successful and happy, it was well worth it.

I was fortunate enough to learn value investing first, and did very well. It's when I switched over to day and momentum trading my accounts took a hit. After six years of mostly trading sideways, I went back to value investing, and am still in the game. Cheers.

 

[taowave]

Hey Jones,whats your holding period??

I was fortunate enough to learn value investing first, and did very well. It's when I switched over to day and momentum trading my accounts took a hit. After six years of mostly trading sideways, I went back to value investing, and am still in the game. Cheers.

 

[ironchef]

I was fortunate enough to learn value investing first, and did very well. It's when I switched over to day and momentum trading my accounts took a hit. After six years of mostly trading sideways, I went back to value investing, and am still in the game. Cheers.

And sir, what is your definition of value investing?