My Path To Success

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Maybe. That is a gray area I suppose.

But what about spending your talent on a self-seeking endeavor like trading? That is doing the world a disservice. People might starve because of your choice to not focus on more socially productive activities. With great power comes great responsibility!
 
Sure it helps that I know I can do some good stuff with the money when I make it.

I want to share just a little about how success works. Growing up I wanted to design video games and I learned to program had various success. But, truth was that the game designer was a really rare job because everyone wanted to do that and usually it ended up being the person who had the money to pay everyone else to do the work or it was shared amongst the entire team.

At one point, I became interested and thought well I'll do artwork for games. But, I'd get tired after a while. I needed variety and the ability to work both sides of my brain. And fact was, I wasn't as good as the other game artist.

The point I'm trying to get at is that my passion for video games didn't help with my art ability. My real passion was in terms of ideas. But, what it impress upon me is the guy who ends up making the art for a video game doesn't have to be most dedicated gamer, in fact the more dedicated artist will probably be more likely to do a better job. That I wasn't as good as the other game artist didn't mean I was a failure: it just meant that doing that sort of job wasn't for me. It didn't mean I couldn't do some really good artwork, either. And even when I wanted to design the games, I didn't really play them as much as the real gamers. I studied them.

I think that the reason that I feel that I'll be successful in trading is because my desire is not built on a desire or passion for trading or for the market. But, it comes from my desire to do what I'm really good at.

But, yeah I can't see any way that I could have a bigger impact.
At the end of the day, trading is about money though..
 
You misunderstand me. What if your mind is gifted to discover cures for cancer or new foods to save the world? What if you could sit on your watchtower over the Middle East and solve the great crisis of our age? Instead you sit with your tower over the markets and snatch money from the meat eaters. Is that not squandering your unusual talent? What if Steve Jobs had used his vision to be the best WOW player ever instead of revolutionizing computing? Where would we be now?
 
don't listen to these idiots,
fuck the people with cancer,
focus on your trading skills, make money.
you are a capitalist not a pacifist.

make sure you have enough capital. 200k mininum
 
Me:
Lot of stress today, I've a few subscribers to my system. If I were trading conservatively then I wouldn't care but I'm shooting for +1k per day which is both experimental and a really high return target. And, so *I* know the (sim) losses I'm prepared to take to meet this goal. But, I don't know that my subscribers really know. Although, if they view my trade history they can see clearly the wins and losses. But as much as that, I like to experiment as I try to really hit my stride but I have methods that I've more experience with and then methods I have less experience.

It looks like they are trading at full size because I seen my orders, a 5 lot in ES go off in the AH. But, I don't know 100% if that was my trade or not. I like the ambiguity actually. It kinda ramps up the pressure.

Coach:
Breath. Relax. You've disclaimers and tell anyone the risk up front. You need to perform at your best because that's what they are paying for. They're not paying for a conservative system. They come to you to have a chance to hit the big returns. You can't worry about anyone else.

Me:
I know that. They pay for my simulated performance and that's the type of performance I intend to deliver.

Coach:
Do you know the value of money?

Me:
No. Never! $500 could be $50 to me.

Coach:
Good. Now, tell me about your trade sequences today?

Me:
Well today could have been a +2k to +5k day or a -3k to -4k for me. I ended up hitting my +1k goal. But, it was kinda messy. It's not the way I like to hit my goals.

Coach:
Explain?

Me:
I've been experimenting with hedging with correlated instruments. If I have a bias, today was down then I'll hold short but it goes against me and I still have my bias then I'll hedge with a strong instrument. I scalp the losing side and wait to re-time my entry. I call this my "hammer trade" but I don't believe there is any real edge in it. It requires precise timing. Sometimes I get scared out of my hedge. I know it sound foolish and each time I tell myself to sell it at break even or a profit. I mean I was leaning short all day but it just got messy because I lost more on my hedge then I did on my short play.

Coach:
That sounds interesting and something I've read about in a book about how some futures traders trade, scalp long to the strong side, and scalp short to the weak side. But, this is an experimental methodology for you. I want you to start opening those hedge orders at 1/2 size. And keep your total leverage below 6 contracts or approximate 4.5x leverage.

Did you move your target today after you predict it?

Me:
Yes, I had it ready to hit submit but I was just watching it and knowing we might get a trend day and that I could change gears. But, it hit my target then zoomed to the upside. I should have submitted my target.

Coach:
You had the right idea that about the trend day. But, you didn't execute well because you were sized for a small move and you didn't execute that well because you trying to play a different trade. One trade a time. Know that trade. Trade that trade. Remember, you're best at singles -- not home runs. Keep the home runs at 1/2 size unless its a system edge.

Keep practicing.. it is starting to work. But get sleep too. Balance. Its a marathon not a sprint.

Remember, stay away from crude because its your big loser -- until you can learn to trade it.
 
Well, somebody lost about $4500 today "betting" on me. It means a lot that someone will believe in me enough to take my trades at full size and I want to do the best. The money I get from subscriptions means nothing compared to winning. I am absolutely driven to my my subscribers money because it is my own self-validation. I don't even care anymore about the money from subscriptions and people go around talking about how I'm a vendor in disguise!! They're the vendors.

I felt like before I took the hit that I might be devastated and I feel bad but honestly you know it doesn't bother as much as I thought it would because I traded to the game plan. This was a system trade.

I felt that it was worth taking a 3k-4k risk on this idea and just bet with my best sense of the odds. Did I trade perfectly? Absolutely not. I was a hair from cutting the trade down in size which would have reduced the loss today to about 2500 to 3500 range. There is no way I wasn't going to lose money today. It was just a question of how much because I bet when I have good odds.

I mean I added a contract (6 lots) when I should have been max size to 4 or 5 lots. So I lost a little more then I should have.

But.... I could have justified to bet as much as 7k on this idea.

So, I didn't lose the minimum possible but I didn't lose the max. I lost what i was prepared to lose and I feel good because I'm not left hoping and praying. I made my game plan and played it. My subscriber is still with me. Its only a relatively small hit to our total capital.

But, let this be a lesson -- if you sign up for a system then you better look darn hard at the losses because they will happen.

For me... I'm ready to get back into the saddle and start winning again. I don't have any self-doubt like I would if it were my money... I objectively identified what I did wrong and right.

If I think about it "that's a car"."that's a month's wage etc" then I couldn't trade... End of day: That was 3.5% of system capital. I did over 20% returns last month alone. That's 3-4 days of "work" when I'm hitting 1k-3k per day.

That's down 1 trade..

I mean end of day: if you can't stand the heat then don't get get into the ring.
 
Me:
Underperformed tonight.. should have made +$1500. Only took a few hundred.

Coach:
Do you know WHY you undeperformed?

Me:
I was a bit skiddish and not wanting to take another hit. Trying to get a few wins under me.

Coach:
At end of day, if you make a decision then it could be right or wrong. Sometimes it is better to stick with the original idea and sometimes it is better to cut it. The struggle is always going to be present if you choose to use discretion which you have.

The main thing is that I don't want you to focus on your losses. Do you remember when you were down like 10k last month?

Me:
Yes, and it was my best month ever. It seemed like a huge loss to overcome and I did it within days.

Coach:
Exactly.. don't focus on your losses. Study them. Learn from them. Move on. Now, you're shut down right?

Me:
Yes, if I start to lose in a session then I'm done. I'm only taking my best trade ideas and trading when I'm winning. It'd been nice to get the +$1500 and meet par. But at end of day, I'm not trading well. Might as well cut my "losses".

Coach:
Right and can you tell everyone how you calculate par?

Me:
I calculate par based on what I would do at my best or my system actually did. The thing is I have multiple systems I turn off and on based on market conditions. So, "par" is basically a range of options and scenarios. I compute it in a few ways. Let's say I predict there is going to be a trend day to down side. I can compute par based on what I"d likely made doing that versus taking targets. In general, when I trade more actively I slightly outperform par but the main thing is I don't REALIZE much risk per trade. Typically, I'm moving myself toward a higher risk/adjusted return but may suffer net performance as I did tonight.

Coach:
Okay, good and what is your principle when you start to lose?

Me:
I have principles and not rules. So if I start to lose then it doesn't mean I just quit. But, if I deem that I'm trading poorly then I quit for the sequence/session. There are basically 3 Sessions per day: Morning, Evening, and Night. Also, I aim to hit 1k per session/day. So that could be +3k or +4k per 24/hour day. I rarely trade evening though. Really I only trade 2 sessions: morning and afterhours.

Coach:
Okay, I think this is a good principle. You WILL get your mojo flowing again. Rest. Take it easy. While getting the system money is important, remember last month when you bet against it and had some of your best days. It all came down to confidence. Rest. Wait until you are confident. You will hit your stride again. This could be your best month yet.

Do the following:
Rest. Forget your losses. Focus on your strengths and then come out and do what you always do. Remember, the system is so powerful because it doesn't have too much a memory.

Me:
I'm eager to get back to getting a read on the market and hitting my stride. I've already forgot my loss and feel rested. I'm eager to hit my goals. My clients/subscribers can either hang with me or not.. But, I will do what it takes to perform at my best.

Coach:
And you shall! You shall indeed.
 
I'm going to share a little something different this post. I'm going to share how I made my "big breakthrough" and developed my abilities. I do not share my exact methodology and the "secret" to it. In fact, I really have several methodologies. Creativity is very much an ingredient.

But, I want to share how I made my breakthrough. My breakthrough was really the result of 2 things(as well as finding Dr. Steenbarger's blog):

1. Reading Gary Smith's "How I Trade For A Living". This book really allowed me to understand the uncertainty of the market. I read this book about 5x. So, it was very instrumental, and for practical purposes it has been the most important book in my development.

2. During the time that my ability really soared, I was in busy in school and didn't have time to calculate the stops for my predictions. So, I quantified them by time.

Now, a couple things derive from not using stops. First, of course, my win ratio would have to go up. I've backtested systems with win rates as high as 75% to 80% without a stop and then when I add the stop the win rate will drop to maybe 52%.

But, the reason I believe my performance soared was because calculating the stop was taking all my energy. Precious energy that I needed to focus on the market. We have LIMITED energy for making decisions.

As I said, I have many styles. Some months ago I decided to try a scalping style that worked well. I went with a default 3x stop to target ratio because I knew my win ratio would be very high by pure chance and I didn't want to spend any time thinking about the stop.

I will typically use a catastrophic stop. I think that my energy I'm using in calculating my stops may be part of the reason my performance has dropped recently with the addition of subscribers because I've felt more of an obligation to calculate stops (even though I said I wouldn't). Again, this process takes an enormous amount of energy, as well as increasing the risk of losing a good trade.

I've found a few methodologies that work in terms of setting stops

1. Use a fixed target to stop ratio. Very little energy requires. Works well. Stop size needs to be at least 2x to 1x in my experience.

2. Use a catastrophic stop only. It'll work but you must monitor the trade and take it off before the stop is hit. This would be a stop of 20 points in the es or 2.5% to around 5% of trading capital.

The other methods require an analysis which again uses up precious energy. Most support levels are good entry levels for trades. Placing a stop below a support level will often result in it being just barely taken out.

My key goal with stop setting is to make it require no energy on my part.

The problem is that I'm now trying to trade larger size and I'm not comfortable with using a catastrophic stop. Likewise, I don't feel comfortable setting a larger 3x to 1x target stop.

I've never been able to trade with tight stops. I think part of the reason is that I"m very good at predicting direction and the best trades never retrace. So, I really like to enter on market orders and exit limit which is the combination that I feel best for me. I'm not stating it is impossible to trade with tight stops and maybe to trade large size that one has to trade with a tighter stop and really pick their spots.

C2 is now beta-testing "constraints" where I can set the max risk on a trade as a % of system capital. I had set it kinda high because I didn't want it to mess up trades. I'm now thinking that perhaps I should just use the automatic stop feature. Free up mind. I really feel it might allow me to perform at my best. I can just mark a relative place on the chart where I might want to get out... and if we pass then I try to get out. I

The basic theory is that we have limited energy. I can either set a fixed stop on each trade but I trade different sizes so then I have to calculate that. I can set a stop below a support level but again those are often are just taken out.

If I were to use the C2 constraint option then it would do a few things:

1. Ensure I never have a loss bigger then the max loss I deemed acceptable as a ratio of system capital.

2. Likely it would be near to the optimal stop as the optimal stop is often the biggest stop we can stand.

3. Most important... free up my mind for more important activities.

It is done. I'm done setting price based stops. I'll risk 4% of my system capital per trade as max risk. Of course, I'll still manage my trades and try to avoid the stop hit.
 
Discouragement..

All my life all anyone has ever done has DISCOURAGE me from trading. I've went to everyone and said, hey I'm really good at this. I've a talent. Help me to help myself. And, all anyone has did has said.. Quit, stop, cease, desist, laugh and poke fun at my desires to trade.

But, all that did for me was to make sure that I redouble my efforts.

Now someone, somewhere had the courage to bet big on my me and trade the full size of my calls -- that's a 6 lot of ES. And they had some losses. They haven't complained. And they are still trading some of my signals at full size.

Discouragement...

Do I get discouraged because someone took a shot and lost a few trades?

Again, it is another way to discourage me. But, no it does not. It encourages me . Because it says someone looked at what I was looking at -- my history of performance -- and said this is a good bet and put down a good sized bet on me.

Now that's OBJECTIVE FEEDBACK.

The fact they lost in the short term is inconsequential. I was down 10k last month and had my best month ever. Trading is 50/50 you can be up $50 and then down $50 but if you have an advantage then it will show up. In end, everyone has to take own responsibility. Again this trader hasn't complained and hasn't even contacted me. He just keeps trading and managing his game. That's the way it should be.

Quit? Surrender?

As Cramer said something to this nature (and I don't think I'd ever find anything of value from Cramer) but he basically said it, Quitting is not an option because the rewards are so much further and beyond the risks.

Quit? Me? No, never! Quit and do what? Quitting is not an option. You want the best in the world to quit calling the market? Quit working to be the best ? And then what?

It is not an option. And, as I grow more successful there will be even larger losses.

Anyway, the rich have become helpless. They've became "I cants". Well, I can and I will. I can do more then anyone would have realized and proving people foolish, proving people wrong is what I do.
 
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