Need help developing into a better trader ...

D

djxput

First off I read this article here and alot of what is said there made sense ...

http://www.traderslaboratory.com/forums/f43/new-traders-journey-success-156.html

First off let me give you a bit of a background ...

I was introduced to the stock/option market about 12 years ago.

Being a previous blackjack player I was drawn toward the options market in particular.

I have traded on and off for the past 11-10 years. I have produced record gains (over a few months) many times; but I also have given it back many times.

I am not a successful trader. Successful trader meaning - you dont tank your account to the point you quit.

I consider myself a excellent chartist (I have studied everything I could get my hands on in terms of charting; although I found my nitch so I focused on that in particular).

I have not developed a solid trading plan (entry and exit points).

I'm not one to follow someone else's rules/plans etc I'll learn from them and mold it into my own.

In the past few years I started to 'fool' around with futures and forex. I had always been a option/stock trader.

I really liked trading futures (high leverage and you dont get screwed as much on spreads (unlike options) - or the delta).

Most of the time when trading (in the past 10 years) I was very anxious to get money on the table (even after just a short period of time 'paper trading'. This usually resulted in learning things at the expense of money.

In my most recent futures trading my trading plan was sketchy and I was 'trying' to develope a trading plan as I was trading so my exit/entry was often lacked confidence and conviction and reliability.

with the article I linked; i would consider myself between a stage 3 and 4 trader.

I havn't been trading the whole time for the past 10 years; its been on and off (mostly off).
In the past it has been like this:
a. a strong interest to trade again - to play the game
b. a strong desire to learn everything I can
c. a strong desire to pit myself vs the market
d. a strong desire to make alot of money quick
e. trading for awhile up and down etc ...
f. after the doubling-trippling etc of my account; bad trading would come into play and I would lose most of it.
g. finally I would stop after a certain point with disgust at the market/myself/circumstances/anything
h. I'd take time off 1 year or more
i. repeat steps a-i once again ...

So here I am again at stages a-c with a tendency for d (although I know this has been a downfall with my trading style in the past).

My current plan is this:

1. To continue to learn as much as I can on charting/trading and having a positive backroll over a long period of time.

2. I am in the process of seeking out a charting package that is made for me (I am close to signing up to Qcharts again - have used this in the past and really like the charts). For me charts are the canvas and my analysis (lines/candles/patterns) are my paint brush.

3. I am determined to work on developing a solid trading plan; I am determined to test and paper trade and to devlope a solid trading plan. I am determined to learn much more using paper trades then using real money.

<<< I am trying to concentrate on this because I am very tempted to throw money at the broker and say lets have at it.

4. I want to focus on future trading; if I havn't learned it in the past I should make myself look at my old tax returns of my option trades and see how much I got screwed with spreads/illiquidity/changing deltas/news dictating option price

- I also enjoyed trading SSF in the past-

5. My plan is to focus more on the above ie charting/learning/growing into a better trading then thinking about money.
I want to learn to trade for the fun of it; not for the money (I figure the money will come if you learn to trade well).

This is my plan ...

So what's your thoughts/opinions/suggestions

thanks

No I'm not going to quit my day job ;)
 
my opinion would be to continue to develope your skills and papertrade until you get it together......

you seem like you have not figured out what you really want to trade and until you do i dont see how you can develope any particular reliable strategy.

until you have a reliable strategy that is proven that you have confidence in i cant imagine you will continue to keep any money you give to any broker.

i think you summed it up well in your #5 point.
 
Brett Steenbarger's observations of traders in Chicago's trading rooms is interesting (from his new book, "Enhancing Trader Performance"):

During the dull markets moments, such as lunchtime, the Average to Below Average Traders leave their desks and socialize. The Top Performing Traders stay at their desks and review their morning trades trying to figure out how to improve their performance in the afternoon session.

When the markets close, the Average to Below Average Traders go home. The Top Performing Traders are at their desks reviewing the day's trades trying to figure out how to improve their performance and develop a trading plan for the next day.

The first paragraph of the book says a lot:

"He was cut from his team in his sophomore year of high school. Any hopes of obtaining a college scholarship were quickly receding. Most aspiring athletes would take their lumps, join a local league or intramural squad, and move on with their lives. Michael Jordan, however, was not like most young athletes. He responded to the cut by practicing day after day. When he felt too tired to continue, he forced himself to recall his cur from the team and drove himself harder. Two years later, he was a McDonald's All-American and the MVP of the McDonald's game. The year after that, he hit the game-winning shot for the University of North Carolina in the NCAA finals. By the time his NBA career ended, Jordan had made an astonishing 25 gam-winning shots, perhaps none as memorable as the jumper he nailed against Utah June 14, 1998. With 5.2 seconds left and no one in the house doubting who would take the last shot, he sealed his sixth championship for the Chicago Bulls."

Practice at anything is important. However, the main focus of practice should be strengthening any weaknesses. You also need to enjoy would you are doing. If you do not enjoy what you are doing, you will not put in the effort to become proficient.

Charles
 
Quote from djxput:

d. a strong desire to make alot of money quick
f. after the doubling-trippling etc of my account; bad trading would come into play and I would lose most of it.
g. finally I would stop after a certain point with disgust at the market/myself/circumstances/anything
More...

These trading results remind me of high risk level trades, shorter term, and (I suspect) big slippage.

You might want to find a quiet place and explore your feelings of excitement and disgust. Something might be leading you to choose your current trading system.
 
I say continue what you are doing. I read that article before you posted it here on this thread. I actually printed it out and tacked it on my bulletin board along with some other jewels of trading.

I consider myself between stage 5 and 6. I think the path you're on is the right path. It is taking time but anything worthwhile is worth the effort. Sure you may be a late bloomer at 11 years, but the best thing about trading is once you get it, you're set. You can trade until you're as old as Soros or Buffet.

The plan you have of focusing on charting and not the money is something that I totally agree with you. This is actually my weakness that I'm working on as well. There are periods usually lasting around 2 weeks when I only trade the chart and do well. Then after those 2 weeks I look at my PnL, am happy, and my thinking shifts to trading money. This is when I get out of trades too quickly or size in too much because I'm concerned about money.

What I find works best is to only have your charting program open. Draw your TA lines in there and after you're happy with what you want to do, only then log into your account, execute the trade, put your take profit and stop loss, and close the platform. Then monitor your trades on your charting program. It's amazing how well that works for me. Hopefully it's a tip that you can use too. Best of luck.
 
Your first mistake is that your equating "trading" with "gambling".

I dont believe "active trading" is a successful strategy. Yes, there are those days when you make tens of thousands of dollars in one sitting. Then there are those other days where you lose it all. As much fun that can be gained from this type of day-by-day trading more money can be lossed. Losing money is never any fun.

I have a simple philosophy. I buy stocks that are obviously undervalued and sell them when they have run their course. I dont take short positions, rarely do I involve myself in options. I never involve myself in futures, commodities, etc. Too risky for me.

Over the summer I was into quite a few names that have recently run their course. Each one ran up 50-100% from the value they were over the summer. There are values like that everyday of the week though.

For example, Western Union trading right around 23 bucks. In 2-3 months I have confidence that it will go to 30. 30% return in 3 months. Cant argue with that. Then when I feel its hit the magic number, I take the cash out and find other undervalued stocks to invest in.

Its not an exciting strategy, but it works for me. I dont like to stay at monitors all day long because it takes away from my life social and otherwise. My formula has increased my cash worth by 400% in two years and I am very satisfied with that.

I have been on three trips to Asia in the last year. Culture, wild women and just great fun. My strategy has helped finance those trips. So if trading in and out all day long and facing the potential loss of everything is your game then you can give your money to those on the other side of these costly trades.
 
Quote from eagle488:

I dont believe "active trading" is a successful strategy. Yes, there are those days when you make tens of thousands of dollars in one sitting. Then there are those other days where you lose it all. As much fun that can be gained from this type of day-by-day trading more money can be lossed. Losing money is never any fun.
More...

What you "believe" or even what I "believe" doesn't matter. Facts are more important.

If you doubt this then spend a little time studying the 2005 and 2006 P&L threads.
 
It's simple and yet not easy at all.

It take a very specific trading plan that you follow rigorously.

It takes alot of passion to make it in this field. It is turning out to be the hardest mental game I have ever played. Spend alot of time on read psychology books.

Once you have your plan you need to focus on following your plan perfectly. Because if your plan is good the money will follow. Focus on action quotas instead of production quotas.

It's similar to when I was on top in sales, not bragging seriously. :) When I followed and executed my business plan well the money just kept coming in. Once I got of my plan the money started to disappear very quickly.

Find a method, that you really like and our comfortable with, that shows a positive expectancy, test it, and trade it. See how easy that was! :D

Am I there. Heck no! By no means, but I am enjoying the journey everyday and things just get better. A year ago I couldn't make money on the sim! :D Now I can consistently pull $200 per contact in the futures market per day. Is that impressive? No, but we all know it takes time in biz. Best of trading to all of you. :)

Dan
 
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