Successful Trading

<b>The three volunteers walk up to the Master.</b>

Master: I want to give each of you something, according to your ability. Handing 5 coins to trader #1 Here, take these 5 coins. Then handing 2 coins to trader #2, Here you take these 2 coins. Then handing 1 coin to trader #3, and you, take this one coin. I must go on a long journey, but I will return some day. Master walks away.

Trader #1 I know what I will do with my 5 coins. I will start a business and help people all over town. I'm sure my business will do very well.

Trader #2 I know what I will do with my 2 coins. I will invest them and earn much interest.

Trader #3 I know what I will do. I do not want to loose my coin, so I will bury it in the backyard, so nobody will steal it.

<b>The Master returns home </b>

Master Looking at trader #1 Well tell me, what have you done with the 5 coins I gave you so long ago?

Trader #1 Look, you trusted me with 5 coins, and I built a nice business using them. See, here are 5 more coins, 10 in all.

Master Well done good and faithful trader. You have been faithful with a few things. I will put you in charge of many things. Come share in my happiness.

Then he looks at trader #2, Well tell me, what have you done with the 2 coins I gave you so long ago?

Trader #2 Look, you trusted me with 2 coins, and I have invested them. Look here I have gained two more, 4 in all.

Master Well done good and faithful trader. You have been faithful with a few things. I will put you in charge of many things. Come share in my happiness.

Then looking at trader #3 Well tell me, what have you done with the 1 coin I gave you so long ago?

Trader #3 I was very afraid because you are a hard man, using what others have, so I hid the money where nobody could find it, so here it is.

Master You wicked, good for nothing, lazy trader! If you know I use what is not mine, you should have at least put the coin in the bank in order to earn interest. Everyone who uses what he has will be given even more, but anyone who does use what is given to him, it will be taken away. So now give your coin to the trader who has 10 coins, and live in darkness.
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Accountability is a great motivator that has a way of sobering one up and helping him keep focused on what's important.

Whoever you are accountable to probably wants you to do very, very well, maybe even more so than you yourself do. 'Working' for that one instead of for yourself is also a cure for selfishness, which, among many other things, breeds myopia.

I can't help thinking that, based on the comments of the Master, he is saying to his traders, "Go for it, do your best! I want you to succeed."

<a href="http://www.emmanuel.kiev.ua/Kids/Color1E.html">Source.</a>
 
Originally posted by chasinfla


Accountability is a great motivator that has a way of sobering one up and helping him keep focused on what's important.

Whoever you are accountable to probably wants you to do very, very well, maybe even more so than you yourself do. 'Working' for that one instead of for yourself is also a cure for selfishness, which, among many other things, breeds myopia.
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Best trader I know trades out of his home. He has several high net worth individuals and has dicretionary trading accounts in their names. He doesn;t trade his own money at all.
He only trades the s&p minis, and his returns over the past several years have ranged from a low of 30%+ to over 300% last year. He has always been biased to the downside, so that helped big time when his time came. He takes a small one time management fee, and 20% of the profits.
I wish I knew how he does what he does. But he is very secretive about his trading style and strategies. Only reason he disclosed his returns to me is he wants me to raise more money for him. He has non-disclosure agreements with his clients, so he can't show his track record. All he can do is make his pitch and then show results with initial investments that lead to bigger investments after a short time.
He too has expressed his belief in "accountability" and truly feels he could not get the results he has achieved if not for this. His money goes in the bank.
 
Originally posted by chasinfla


That is one of the most poetic things I've read. Did you think of that?
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yep, pulled it from the all too personal experience file
 
Originally posted by darkhorse
...one day the thick skull is penetrated and a chorus of angels sings.
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<a href="http://www.cenobite.com/pix/hr2-cenobites.jpg"> the angels of pain?
 
Originally posted by darkhorse
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Words of wisdom can go in one ear and right out the other for months or years on end, until finally one day the thick skull is penetrated and a chorus of angels sings.
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In particular I second your opinion on being able to justify every entry and especially every exit.

In order to get this down, every night I print out 2 minute charts of the stocks I traded that day and paper trade them (after the fact) and then compare that to my actual trading during the day. The results are eye opening. I see a wide gulf betwen what I believe I would have traded by looking at the hard copy printout for the day versus what I actually traded that day. Some of it is explainable by the fact that you have all kinds of time and no stress when looking at hard copy charts after the close versus the frenetic reality of live trading. More importantly though, I seem to violate the rule of "cut short your losses and let your winners run" all the time despite the fact that I've heard this a thousand times!

One's emotions tend to make you jump out with a small gain for no reason. A much bigger gain was on the table and there was no real reason to exit.

Today 7/3 was a great case in point. I traded HET (Harrah's) short (around 10.05 am) and made about 50 cents per share. There was easily over a $1 in that trade before the intra-day trend changed and no wiggle-out point before the trend change. I just grabbed my 50 cents and watched the stock get "walked down" another 90 cents.

Nice point, well put and appreciated. Frank at Bright (NYC)
 
"In order to get this down, every night I print out 2 minute charts of the stocks I traded that day and paper trade them (after the fact) and then compare that to my actual trading during the day. "

That's an absolute non-sense. Paper trading has some limited value but at least you have to do it real time. Still most people will find the way to kid themselves.
To grab a chart and think here I would do this and then I would do that. I would call this a masturbation not a paper trading.
 
Deluding yourself...

Yes, but you won't get away with it for anywhere near as long (unless you are taking OPM).

****

I think fkeane's idea is sound. It's like reviewing your plays on video after a game. It's not 'paper trading' in the usual sense of the term.

What he's saying is, 'hey, that looks like something I would have held. Why didn't I?', or, 'man, I thought that little twitch was the end of the world. It was nothing.'

Once in a while I will use the 'scroll' feature of a chart to scroll through the tick chart for a day and sort of 'relive' a trade; it can help you recall your emotions during the trade so that next time those emotions come on, you can recognize them and prevent them from overriding your rational decision maker.
 
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