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The Super Secret of Successful Trading

I said I would do this, so here goes:

I have worked with thousands of traders. I have been paid to train hundreds of traders.
I have made a lot of money for my employers and lost plenty in my own accounts.
I have been a market maker, stock broker, proprietary trader, firm trader, and private money manager.

Why did I do so poorly in my own account.....?

Reason: accountability!
Purpose of this post: To try and help individuals to successfully trade their own accounts...in other words, the typical ET trader.

The one most common thing I see newer traders doing wrong is over-trading. It is understandable to me that new traders are impatient. They are told to learn from their mistakes. Not to be afraid to lose. Encouraged to trade a lot of small positions in order to more quickly gain experience. They want to speed up the learning process to get to their goal of making money as quickly as possible.

Traders are encouraged in some cases to generate commisions, order flow, ticket charges, desk charges. They feel like they have to trade to get their moneys' worth. Maybe they get a volume discount.

Newer traders read trading books, learn a zillion chart patterns and trading systems. They talk about technical theories, fundamentals, momentum, relative strength. They drool over technology that screens out parameters. They go to chat rooms and bulletin boards. They pay to "learn to trade" at seminars.

Some of these things I did. Most I did not. But invariably, I always made money for other people, and just couldn't do it for myself.
So after too many years of this, I came up with a mental approach that seems so obvious, but nonetheless took me forever to grasp. I had to treat myself as a customer/client. I could not use my intuition, my gut, my hopes and prayers in my own account. I never did for the clients, the employers and investors I had. Just for me. And what did it get me? POOR RESULTS.

So here is my Super Secret....if you are trading your own money, think of it as anyone's but your own. Have a reason for every single trade. Every single move. How would you EXPLAIN what you were doing to your mother if it were her money (as an example..use your own....your wife, child, priest, whatever). Could you explain? Or would you say "it's my job...I'm doing my job...I know what I'm doing"...etc.). The fact of the matter is I always knew that I could be questioned by those whose money I controlled. I knew I needed to have an informed and reasonable response. And I never got into a position I couldn't comfortably justify. But my own money? I didn't need to justify anything to myself. I felt I "knew what I was doing". I had my OPINIONS. I had my long term outlook, while I never used that in regard to my professional trading.

I am going to paraphrase something someone once said to me....We were working together managing money for an asian bank whose owners were very hard to deal with. I hope I can get his point across. I wish I could remember his words.. It was something like this:
"My wife went out one morning wearing gym shorts and a tee shirt over a bathing suit. She was going to meet her friends for breakfast and a day of boating. It was very cold, but it was very early. It was July in Arizona. I said to her, "honey it's freezing...take something warm". She said "no, it will warm up, it's summer."
Well it stayed cold and got colder still during the day. Rain,, wind, everything that "shouldn't have been". Her day on the water was ruined of course. Her car broke down on the freeway. The heat didn't work in the car, and the windows were home in the garage (an old jeep). She sat and froze until she finally got a tow after hours of shivering on the side of the road."

(I guess this was pre-cellphone days).

His point to me was to never assume to know what was going to happen no matter the circumstances. I never saw him make a trade he didn't believe would work. But he never "knew" it would work. He stayed consistent, but he stayed disciplined. If he was wrong, he saw it and changed his position. He believed what could be, but he knew what was.

He, and experience, taught me that opinions are plentiful. Their value is another thing entirely.

Now it is important to have opinions...no doubt....if you don't think something should or will happen, you cannot possibly initiate a trade. But be nimble. Don't hold opinions too long if they turn out to be incorrect.

I work with traders that only fade a big up or down open. They believe this will work more often than not because they know from prior results that this works for them. I know guys that only trade Nasdaq stocks, and others that only trade listed. I know guys that never trade after 10:30 and guys that are done by then. And on, and on.

Why do they do what they do? Because it is their discipline that they stay with what works for them. Do they keep the same style forever? No....traders have to adapt. But it is a slow process in general. So when things work well, you must press. When they don't, you must slow down. Or change. Usually one preceeds the next.

I have talked here before about the 3 most critical aspects of trading:
Discipline
Timing
Stock selection.

Discipline alway is on top. Be accountable to yourself. Treat your money as if it was entrusted to you by whomever you most love, respect, fear... whatever works.

Have a reason to make every trade. Be able to verbalize that reason. As importantly, have a reason to exit a trade. You hear "cut your loses and let your winners run"....That is so true. I so often have seen traders get our of good positions because they have achieved their "target price" "target of profit"....I say this is bad thinking. If the trade REMAINS a trade you would put ON at the time you "achieve target", why in the world would you take it off? To me, it is as important to have a reason to get out of a trade as to get in. Anyone can say to themselves they have a reason to exit a losing trade..."cut your losses"..Why then is it so hard for so many to have a real reason to get our of a winner?
It should be, and is, easy. It just takes DISCIPLINE. If you give back X% of your profit; if the market changes, if the group starts to get weak, whatever. You have to have your disciplines and stick to them. Make your own rules, and stay consistant to them.

I hope that all this typing can result in just one positive thought to just one person here. I have gone to so many "brainstorming" meetings in my career. I have listened to a million opinions, statements and arguments. I go though because I KNOW that if I pick up one single constructive thought I will have spent my time wisely. and believe me, they are few and far between. But I can remember single sentences said years ago in long boring meetings. Those senteces have added up to serve me well.

Timing should be easier for new traders to learn. Just be patient and buy or short at the price you pre-determine. Don't chase.

Stock selection...this is a bit tougher. I could write a hundred pages on this issue. But not being so inclined, have standards. Volume, percent of average volume, relative strength, news, whatever you are comfortable with. Know what your quote provider can tell you other than quotes alone. Look for trades, but don't be impulsive. Sometimes not making a trade is a great trade.

Again, I truly hope someone, somewhere, finds one thing of value in what I have said.

Great post rs7!!

Tomorrow, I'm going to consider every trade as though it
was money my grandmother entrusted me with. The signal's
are going to have to be perfect! Thanks

__________________
The Trend is Your Friend

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Originally posted by Breakout
Great post rs7!!

Tomorrow, I'm going to consider every trade as though it
was money my grandmother entrusted me with. The signal's
are going to have to be perfect! Thanks

---

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Originally posted by rs7

I hope you are not being facetious...really, try it. It's the only thing that worked for me trading on my own.
And thanks for saying so if you are not being facetious

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__________________
The Trend is Your Friend

---

Originally posted by Breakout


I always read your posts with
special attention. I will try it.

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accountability is lost concept. what you said about it is huge. This is the first post I have ever printed.

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Originally posted by chasinfla
accountability is lost concept. what you said about it is huge.

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RE: Reasons for Each Trade

yes, this sums it up perfectly...I think that you have hit on almost every example of what causes trading losses and trading gridlock...Especially the overtrading part...But I also feel strongly about the concept of letting winners run and especially not shortchanging oneself with regards to exiting positions once a "target dollar amount is hit" or whatever the reason may be...I think that is one of the MAJOR flaws of setting daily profit goals...Unless you are a true scalper who is just darting in and out for pennies a share of for several ticks in futures, the daily profit goals just confuse $$$ with good trades...After all, not every day is the same as the next...There are days where the money is easy if you get the right entry and just sit tight and manage the giveback and the profit targets right...And then, of course, there are many grinder days, where if you are trying to fulfill an arbitrary profit target per day you are going to force trades where there are none...

In general, alot of the trading "truisms" can either be your best friend or worst enemy...It all depends...And by depends, I am implying that unless you are trading on the specific time frame, with the specific risk parameters and profit objectives that the trading "truism" describes, all of it will only confuse rather than clarify...

There are several other threads on this site where everyone is basically shouting out opinions about how to trade...And if we were to all step back and look at the advice, we would see exactly where the advice falls short...Basically, everyone's advice is their own internal landscape of trading...There are no absolutes...and yet, somehow like a religion, we all want to believe in OUR OWN absolutes...

Kudos to you for sharing your insights...I could not agree more with them...I also, after many years of fighting or defending one technique over another, just believe that I cannot tell anyone what is THE RIGHT WAY to trade...Hell, if I know what is the right way...I can only figure out what seems to work for me...and it is one hell of a relief that I am not still following someone elses RIGHT WAY of trading...

Re: RE: Reasons for Each Trade

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Originally posted by vulture

Kudos to you for sharing your insights...I could not agree more with them...I also, after many years of fighting or defending one technique over another, just believe that I cannot tell anyone what is THE RIGHT WAY to trade...Hell, if I know what is the right way...I can only figure out what seems to work for me...and it is one hell of a relief that I am not still following someone elses RIGHT WAY of trading...

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Re: Re: RE: Reasons for Each Trade

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Originally posted by rs7

I agree totally. I know that what works for some people doesn't for others. Why? I have no idea. I wish I had a system that worked all the time for all the people. Or just for me. But I don't. What I tried to get across is the mindset. That, I believe, does work all the time for anyone that can stay disciplined and responsible to themselves. It is weird to me that (at least in my case) I had an easier time with this responsibility to others than to myself for so long.

---

Great post rs7!!

What also helped me is to realize each trade is only 1 in a series of many.
Also learned my personal mindset and physical condition to know when I am in a keen mental state and when I am not.
Also getting away from looking to score the home run.
If I follow my strategies my edge will prevail and the occasional home run will occur but don't look or push for it.

Almost like dating in high school.If the chemistry is there eventually it will happen.If you are impatient it won't help to achieve the goal.
Almost like trading, keep following your rules and be in the right places and occassionally you will get the big move.(the chemistry is analogous to your edge.)
Patience and discipline are the keys.

__________________
monee

"...one constructive thought..."

Well, I guess I am at least one person who received "one positive thought," from your post.

I will definitely include the concept of accountability as part of my trading decision making. Such a little thought goes a long way.

Very good post RS7. Keep 'em coming.

ENJOYABLE READ

Thanks for the post. Well written and informative. From what I have heard you could charge about $3,000 for that at a seminar.

I can relate to what u wrote. As someone that has been a very active investor for many years and daytraded by design infrequently but only when I thought it was a very good opportunity that I could not pass up. I was mostly successful at daytrading so called "investment stocks". So I thought I would give a go at daytrading. But i have lost money at the endevor.

I have read a few daytrading books and activity trader magazine for a while. Now that for about 2 months I have been in the process of attempting to daytrade every day. Too many times I have entered trades to see what would happen so I could learn something. Other times just to have some excitement. Not the way to make money

I thought of the perfect person to get me to change my thinking by pretending that she entrusted me with the money. I will take the mindset that the money I am trading is my great grandmothers, who was a wonderful person that worked in a school cafeteria all life for her savings.

I think that will be the perfect mindset to enter trades, but I will have to quickly change my thinking after I press the buy or short key or I will stop out of every trade after a penny loss.

Successful Trading

First and probably last post for me ever, but I do appreciate your candor in talking about your own experiences. Think you helped me along my learning curve and I am grateful for your honesty.

rs7

Well I have to admit it was worth the wait. I wish I would have read this a year ago. I lost a big chunk of my girlfriends money when I started to trade her account. I tried so hard to make her money that I dropped all of my tradingrules and chased anything I thought would make me a buck. Needless to say I lost the whole account in around a months time. When she asked me what happend all I could tell her was that I was an idiot. That sucked.

I think that your post has come at a good time for me. Truth be told on Friday I just thought you were some idiot touting his own trading crap but I was wrong, you really make a good point. From now on I will only take the trades that meet all of my criteria. Even if I have to wait a day or two to find a good trade.

Anyway, thanks rs7, good post.

Thanks rs7

Great post.!

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Originally posted by ANCHOR
rs7

. Truth be told on Friday I just thought you were some idiot touting his own trading crap but I was wrong, you really make a good point.
Anyway, thanks rs7, good post.

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Re: ENJOYABLE READ

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Originally posted by egusc
Thanks for the post. Well written and informative. From what I have heard you could charge about $3,000 for that at a seminar.

.

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from ANCHOR

"I think that your post has come at a good time for me"

This is a good point. Whatever circuitous paths we each take on our personal journeys to comprehension we have to be at that particular intersection of need/desire and presented information to cause an epiphany. The info was always available somewhere, we've probably seen it before and glossed over it, it just didn't have the impact that it does when it's the answer you need at the moment.
rs7 and vulture,this is the stuff trading is ulimately made of,the head trips, nice posts.

Re: Re: ENJOYABLE READ

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Originally posted by rs7

You are very welcome...and if it would make you feel better, you can send me money. Better yet, send it to your favorite charity on behalf of "All Daytraders". Maybe that will help our image. We could use a little of that!

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klaatu barada nikto

That means "good post and good idea".
I'll pretend its my mom' retirement money.

__________________
Trading is like driving. If its exciting, you're doing it wrong.

Good Post!

Hello,

Good post and excellent advice. I know that Tony Oz has advocated accountability in ones trading decisions. Most people dont plan to fail they fail to plan.


Best regards,

Trapper

Re: Re: Re: ENJOYABLE READ

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Originally posted by chasinfla



yeah. because the worse this bear gets, the worse traders will be regarded.

---

Thank you rs7. It is good to hear tips from experienced traders on how to trade successfully. I had been thinking of starting a thread to highlight my own trading mistakes of late and get some help. This is the kind of thing I need to hear. As you said, patience and discipline are of paramount importance. I just started full time trading in May so I feel big pressure to "make it". I did well the first month but when June hit I got wrung out. I started losing patience, my trades went nowhere and then when my setups stopped happening I started breaking my rules just so I could get some trades, my fix of "action". Well the action cost me. If I had just waited and gone by my rules I would have done ok. I can't believe how often I will break my rules for the purpose of just being in a trade. My other career was an active, on-the-go type activity. To just sit and do nothing all morning is tough. It doesn't feel right.. like I'm wasting time, and sooo boring. I am probably not alone in my addiction to the excitement of trading. Just as that third beer is hard to resist so is the trading game. Trading is like doing drugs. Brain chemistry is involved. This is when discipline is needed. This is when we must be Spock. And the very creativity that led to our trading methodology must now be ignored and suppressed within the rigid framework of it's rules. Tough to do but essential for profitable trading.

I like your idea of thinking you're trading for a loved one. Any subconscious feelings of personal unworthiness that may be undermining our trading are eliminated, because now we're doing it for someone we know is worthy.

***********************************************

"Our patience will achieve more than our force."
-Edmund Burke, Reflections on the Revolution in France, 1790

*****"When I read about the evils of drinking, I gave up reading."
- Henny Youngman

successful trading

I can guarantee that rs7 speaks the truth. I am a 3rd year college kid (International Business and Finance) and over 40 years old. My mother had lost some money in the market and she gave me a shot at helping her recover her losses after I ranked top of the class in pretend trading. To date, the trades I've made with her money, have earned 138 percent (in two months.) I am currently "down" in my account. In reference to your posts regarding education, I have learned many things that have helped me in trading. Most of all it gave me self-confidence. But knowing how business and markets work didn't hurt any. I'm nowhere near 17 and I didn't know what I wanted to do when I started to college even though I thought I did. I entered seeking a degree in journalism and by the end of my second semester I switched to business/finance. Your advice is savvy, wise and helpful. Thanks

__________________
"Be bold-- and mighty forces will come to your aid" Basil King

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Originally posted by futurecurrents
My other career was an active, on-the-go type activity. To just sit and do nothing all morning is tough. It doesn't feel right.. like I'm wasting time, and sooo boring. I am probably not alone in my addiction to the excitement of trading.

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Re: Re: Re: Re: ENJOYABLE READ

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Originally posted by rs7

Chas...why do you think that? We don't commit fraud, cook books, evade taxes. None of us that I ever knew of even used Arthur Anderson. We can't make a $60 stock go to 6 cents.

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Re: successful trading

---

Originally posted by Lavish
To date, the trades I've made with her money, have earned 138 percent (in two months.)

---

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

RS7

Nice to see a pure act of trading benevolence from a seasoned vet such as yourself... I suspect the market and the universe will pay you back 3 fold

PEACE and good trading,
Commisso

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

RS 7

Excellent post, I especially like, the point that anyone can hit a buy or sell key, it's the decision making that'll make us the money. I frequently seem to turn a winning day into a losing day by getting into ill-advised trades, I will make a WRITTEN note to myself daily to work on that as well as the other 200 things I need work on.

Original Post by Commisso

Lavish not for anything but unless something fell into your lap from the "trading gods" you are risking too much per trade... I suggest you seriously look over your risk management...

PEACE and good trading,
Commisso
____________________________________________________

Commiso, I am always willing to learn. Here's the deal. Mom lost approx. 1500 dollars on Lucent. I worked with 3,000 to earn that 1500 back and protect her 3 grand. Here is my main trade. I picked cvu and added their contract value in to their earnings, with the knowledge that they would have some write-offs for disposing of a bad aquisition. Based on a modest ratio of 10, I predicted their value would land between 10 and 13 dollars per share by the end of this year. I bought 1000 shares at 2.05 and traded them again at a sales price of 5.23 and bought again at 4.47 then sold them at 8.12 and bought again at 6.72. They are currently trading at 6.97 but I'm expecting their next rally to reach 9.00 plus. As of right now, the portfolio shows the roi to be 138% and the initial investment is available for trading. (I lost 448.00 on a penny stock tip from a friend that had attended an investment seminar) I am not putting the initial monies "at risk" and plan to only work with the amount in excess of 4500 so that I risk none of her original monies. I am not a "seasoned" investor/trader and warn anyone reading my post to NOT follow me because I really don't know what I'm doing.

Anyway, Commiso, given this information, would you please relate exactly what you mean by "risking" too much per trade?
Thanks

__________________
"Be bold-- and mighty forces will come to your aid" Basil King

rs7 :

Lots of constructive ideas !!!

... thanks for not being just another blowhard

commisso

It's always a pleasure to read your posts. You are so zen.

Hi rs7 :

very useful advice and good comments.

It's interesting to read, that a knowledgeable trader as you seem to be, is more afraid of loosing other peoples money then his own and therefore trades better with other people's money than with his own. I for myself do rather care more for my own funds then for anybody elses money.

I'd be interested to know, if you can tell us here, without revealing too much of your trading secrets, how this approach ( trade as if you'd trade your mom's money ) actually changed the way you trade.

Did it change :
- selection process for stocks to trade
- number and size of open positions
- trading longer time-frames ( multi-week rather then intraday )
- the kind of trading signals you use ( technical, fundamental, proprietary )
- Management of the trade ( using physical stops etc. )
- hedge positions via options / futures
- a mix of all that.

I mean, how would you describe the difference in your trading style when trading for your own account vs. trading for a 3rd. parties account ?

Thanks a lot in advance for your much appreciated comments

__________________
Good Trading
Privateer

Thrilling

rs7, thrilling as usual
Keep it up pal !

---

Originally posted by Privateer
I mean, how would you describe the difference in your trading style when trading for your own account vs. trading for a 3rd. parties account ?

---

rs7 is spot on

---

Originally posted by rs7
I said I would do this, so here goes:

I have worked with thousands of traders. I have been paid to train hundreds of traders.
I have made a lot of money for my employers and lost plenty in my own accounts.
I have been a market maker, stock broker, proprietary trader, firm trader, and private money manager.

Why did I do so poorly in my own account.....?

Reason: accountability!
Purpose of this post: To try and help individuals to successfully trade their own accounts...in other words, the typical ET trader.

The one most common thing I see newer traders doing wrong is over-trading. It is understandable to me that new traders are impatient. They are told to learn from their mistakes. Not to be afraid to lose. Encouraged to trade a lot of small positions in order to more quickly gain experience. They want to speed up the learning process to get to their goal of making money as quickly as possible.

Traders are encouraged in some cases to generate commisions, order flow, ticket charges, desk charges. They feel like they have to trade to get their moneys' worth. Maybe they get a volume discount.

Newer traders read trading books, learn a zillion chart patterns and trading systems. They talk about technical theories, fundamentals, momentum, relative strength. They drool over technology that screens out parameters. They go to chat rooms and bulletin boards. They pay to "learn to trade" at seminars.

Some of these things I did. Most I did not. But invariably, I always made money for other people, and just couldn't do it for myself.
So after too many years of this, I came up with a mental approach that seems so obvious, but nonetheless took me forever to grasp. I had to treat myself as a customer/client. I could not use my intuition, my gut, my hopes and prayers in my own account. I never did for the clients, the employers and investors I had. Just for me. And what did it get me? POOR RESULTS.

So here is my Super Secret....if you are trading your own money, think of it as anyone's but your own. Have a reason for every single trade. Every single move. How would you EXPLAIN what you were doing to your mother if it were her money (as an example..use your own....your wife, child, priest, whatever). Could you explain? Or would you say "it's my job...I'm doing my job...I know what I'm doing"...etc.). The fact of the matter is I always knew that I could be questioned by those whose money I controlled. I knew I needed to have an informed and reasonable response. And I never got into a position I couldn't comfortably justify. But my own money? I didn't need to justify anything to myself. I felt I "knew what I was doing". I had my OPINIONS. I had my long term outlook, while I never used that in regard to my professional trading.

I am going to paraphrase something someone once said to me....We were working together managing money for an asian bank whose owners were very hard to deal with. I hope I can get his point across. I wish I could remember his words.. It was something like this:
"My wife went out one morning wearing gym shorts and a tee shirt over a bathing suit. She was going to meet her friends for breakfast and a day of boating. It was very cold, but it was very early. It was July in Arizona. I said to her, "honey it's freezing...take something warm". She said "no, it will warm up, it's summer."
Well it stayed cold and got colder still during the day. Rain,, wind, everything that "shouldn't have been". Her day on the water was ruined of course. Her car broke down on the freeway. The heat didn't work in the car, and the windows were home in the garage (an old jeep). She sat and froze until she finally got a tow after hours of shivering on the side of the road."

(I guess this was pre-cellphone days).

His point to me was to never assume to know what was going to happen no matter the circumstances. I never saw him make a trade he didn't believe would work. But he never "knew" it would work. He stayed consistent, but he stayed disciplined. If he was wrong, he saw it and changed his position. He believed what could be, but he knew what was.

He, and experience, taught me that opinions are plentiful. Their value is another thing entirely.

Now it is important to have opinions...no doubt....if you don't think something should or will happen, you cannot possibly initiate a trade. But be nimble. Don't hold opinions too long if they turn out to be incorrect.

I work with traders that only fade a big up or down open. They believe this will work more often than not because they know from prior results that this works for them. I know guys that only trade Nasdaq stocks, and others that only trade listed. I know guys that never trade after 10:30 and guys that are done by then. And on, and on.

Why do they do what they do? Because it is their discipline that they stay with what works for them. Do they keep the same style forever? No....traders have to adapt. But it is a slow process in general. So when things work well, you must press. When they don't, you must slow down. Or change. Usually one preceeds the next.

I have talked here before about the 3 most critical aspects of trading:
Discipline
Timing
Stock selection.

Discipline alway is on top. Be accountable to yourself. Treat your money as if it was entrusted to you by whomever you most love, respect, fear... whatever works.

Have a reason to make every trade. Be able to verbalize that reason. As importantly, have a reason to exit a trade. You hear "cut your loses and let your winners run"....That is so true. I so often have seen traders get our of good positions because they have achieved their "target price" "target of profit"....I say this is bad thinking. If the trade REMAINS a trade you would put ON at the time you "achieve target", why in the world would you take it off? To me, it is as important to have a reason to get out of a trade as to get in. Anyone can say to themselves they have a reason to exit a losing trade..."cut your losses"..Why then is it so hard for so many to have a real reason to get our of a winner?
It should be, and is, easy. It just takes DISCIPLINE. If you give back X% of your profit; if the market changes, if the group starts to get weak, whatever. You have to have your disciplines and stick to them. Make your own rules, and stay consistant to them.

I hope that all this typing can result in just one positive thought to just one person here. I have gone to so many "brainstorming" meetings in my career. I have listened to a million opinions, statements and arguments. I go though because I KNOW that if I pick up one single constructive thought I will have spent my time wisely. and believe me, they are few and far between. But I can remember single sentences said years ago in long boring meetings. Those senteces have added up to serve me well.

Timing should be easier for new traders to learn. Just be patient and buy or short at the price you pre-determine. Don't chase.

Stock selection...this is a bit tougher. I could write a hundred pages on this issue. But not being so inclined, have standards. Volume, percent of average volume, relative strength, news, whatever you are comfortable with. Know what your quote provider can tell you other than quotes alone. Look for trades, but don't be impulsive. Sometimes not making a trade is a great trade.

Again, I truly hope someone, somewhere, finds one thing of value in what I have said.

---

Re: Original Post by Commisso

---

Originally posted by Lavish
Lavish not for anything but unless something fell into your lap from the "trading gods" you are risking too much per trade... I suggest you seriously look over your risk management...

PEACE and good trading,
Commisso
____________________________________________________

Commiso, I am always willing to learn. Here's the deal. Mom lost approx. 1500 dollars on Lucent. I worked with 3,000 to earn that 1500 back and protect her 3 grand. Here is my main trade. I picked cvu and added their contract value in to their earnings, with the knowledge that they would have some write-offs for disposing of a bad aquisition. Based on a modest ratio of 10, I predicted their value would land between 10 and 13 dollars per share by the end of this year. I bought 1000 shares at 2.05 and traded them again at a sales price of 5.23 and bought again at 4.47 then sold them at 8.12 and bought again at 6.72. They are currently trading at 6.97 but I'm expecting their next rally to reach 9.00 plus. As of right now, the portfolio shows the roi to be 138% and the initial investment is available for trading. (I lost 448.00 on a penny stock tip from a friend that had attended an investment seminar) I am not putting the initial monies "at risk" and plan to only work with the amount in excess of 4500 so that I risk none of her original monies. I am not a "seasoned" investor/trader and warn anyone reading my post to NOT follow me because I really don't know what I'm doing.

Anyway, Commiso, given this information, would you please relate exactly what you mean by "risking" too much per trade?
Thanks

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

"The right state of mind" can help you in trading... it's an illusion. Everything comes down to the nature of market, risk, position management and simply luck.
I think that successful trading is a combination of:

1) how your trades/strategy/system fit with the nature of markets you trade - you can try to trade with market swings, by using optimization, of course to the past data.

2) right position management. If you lose 20%, you have to earn 25% in order to go flat. Your task is to minimize that negative effect.

3) LUCK. You can only optimize your system rules, parameters and position management to past data. Future is unpredictable, uncertain. So, you have to be lucky to some degree, in order to be profitable.

I can tell myself that i trade with not my own money. OK i trade with my best friend money. So what? Markets are chaotic. This approach won't help me much IMO.

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Originally posted by futurecurrents
To just sit and do nothing all morning is tough. It doesn't feel right.. like I'm wasting time, and sooo boring. I am probably not alone in my addiction to the excitement of trading. Just as that third beer is hard to resist so is the trading game. Trading is like doing drugs. Brain chemistry is involved.

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Here's my one half of one cent:

I got my psychology right long before I got my method right. Money management, discipline, patience, no hesitation, no jumping the gun, 'listening to the market'- all those things.

I still had to fall on my face at least a hundred times before getting anywhere, and this was AFTER being well along the knowledge and discipline path. Think you can stand up to a mental and financial beating? Multiply your estimate by a factor of ten, and then maybe you are in the ballpark. A lot of would be traders wash out for the exact same reason a lot of would be Marines wash out of bootcamp.

Or think of it like golf: you have to have the proper mindset, and psychology is definitely a key component of the game. But if you don't have a well honed technique that comes with hundreds of hours of practice, you could be a mental cross between Tony Robbins and Deepak Chopra and still suck.

I like Mark Cook's answer for what it takes: "Five years of 12 hour days and losing money." That's a bit extreme, but it gets the point across.

p.s. i'm talking real trading here, not the free money window of '98/'99 when Barbara Streisand was cleaning up.

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

I got off track by taking quick profits on the stocks with good fundamentals ( gold stocks in this particular case ) and holding the tech stocks overnight for swings that never happened. That was just lack of discipline and is my own fault entirely. Can't blame the market or wcom or anything else. My analysis and my trade entries have been good but my trade management was not disciplined, so I am in the hole. I now only have a straddle on QLGC and am hoping for big volatility to bail me out ( it isn't blind hope though, QLGC is a big mover ). I can't help but think what my situation would be like if I had just held the gold stocks through April and May. Regret sucks.

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Originally posted by dotslashfuture
Regret sucks.

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

[QUOTE]Originally posted by DT-waw
[B]"The right state of mind" can help you in trading... it's an illusion. [B]

Well I can say(after 10 years in game, 4ft as soul source of income) that for me "the right mind state" was at least 75% of the equation...

BUT its like Dark's fav Zen proverb...

"Before enlightenment chop wood and carry water"
"After enlightenment chop wood and carry water"

Once you find your way you no longer have to constantly search for it... You just have to get out of the way

As for RS7's "pretend it is your mothers money" I do not really agree with that... Over the years the money aspect has become so abstract that it is not even a factor at all... I no longer play the game for utilitarian purposes and it has become much more than a financial excercise... I take great pride in playing the game the right way for the sake of playing the right way and not exactly avoiding financial loss...

BUT accountability is a must IMO... And you have to be 150% honest with yourself... Being honest and humble enough to recognize your weaknesses is essential...

Like the Oracle in the ancient Delphi said "KNOW THYSELF"

anyway great post RS7
and PEACE and good trading to all,
Commisso

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by DT-waw
"The right state of mind" can help you in trading... it's an illusion. Everything comes down to the nature of market, risk, position management and simply luck.
I think that successful trading is a combination of:

1) how your trades/strategy/system fit with the nature of markets you trade - you can try to trade with market swings, by using optimization, of course to the past data.

2) right position management. If you lose 20%, you have to earn 25% in order to go flat. Your task is to minimize that negative effect.

3) LUCK. You can only optimize your system rules, parameters and position management to past data. Future is unpredictable, uncertain. So, you have to be lucky to some degree, in order to be profitable.

I can tell myself that i trade with not my own money. OK i trade with my best friend money. So what? Markets are chaotic. This approach won't help me much IMO.

---

---

Originally posted by rs7

I could give a glib answer here too, but my real advice is to start watching a few stocks and get a "feel" for them. Pick say 4 or 5 stocks in 4 or 5 different industry groups. Make sure they are actively traded.

Watch what these stocks do relative to each other both within their own groups and compared to the other groups. Watch what one group does compared to another. Watch what they (both the stocks and the groups) do relative to the markets as a whole.....s&p, and nasdaq. I don't think the Dow, which is only 30 stocks is all that important to watch, but watch it anyway....doesn't take much time.

Look at charts of the stocks you follow. See if you recognize any repetitive patterns.

Do paper trades...keep score for yourself. (Make sure you buy at the offer and sell at the bid!...it will be worse in real life, so don't cheat by going by last price).

Go over your trades when you are done. See if you can spot what the winning trades had in common. What the losing trades had in common. (other than results).

Don't buy stocks that are moving up very quickly. Don't try to short stocks that have sold off dramatically. Know what rules apply to shorting stocks!

Don't buy stocks that are laggards. Buy the strongest stocks, short the weakest.

Successful day trading consists of (IMHO)
1. Discipline
2. Timing
3. Stock Selection

Hope this helps....best of luck!

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---

Originally posted by rs7



One last thought ...about pressing.....
If you flipped a coin and it came up heads 9 times out of nine, and you needed to wager on the 10th flip, what would you do? Would you feel that a tail was due? Would you feel that it was statistically a 50/50 proposition so it didn't matter? Would you feel that "heads are on a roll"? Is there a right answer to this? I believe there is. Does that make me an illogical person? I know this is off the subject, but I find it an interesting question to ask prospective traders (I have been in the position to interview and hire...but not now, so please don't take this there). What would you answer? And why?

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

there is a right answer

If you believe that the tenth outcome depends on the previous nine then you are projecting your own belief and memory onto the coin. The coin has no idea how many times it has been flipped nor does it know how many times it has come up heads or tails. It is a coin. The same can be said for the market

The market also does not care how many times it has gone down or up. Or whether you are making money or losing it. By believing that it should go up or down because of what it has done in the past, you are replacing the market with your own value system.

__________________
Discipline over conviction

Re: there is a right answer

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Originally posted by Babak
If you believe that the tenth outcome depends on the previous nine then you are projecting your own belief and memory onto the coin. The coin has no idea how many times it has been flipped nor does it know how many times it has come up heads or tails. It is a coin. The same can be said for the market

The market also does not care how many times it has gone down or up. Or whether you are making money or losing it. By believing that it should go up or down because of what it has done in the past, you are replacing the market with your own value system.

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Commisso


Well as a product of the human condition I would have to say tails... BUT after many years in this game I see the folly in looking at the micro-level... Last play or coin flip in the macro-view has absolutely nothing to do with the next one... So the "right" thing to do is treat it like anyother play or coin flip... IMO of course

COMMISSO

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Hey thankyou very much for the kind words

As I said with my prior post, I would treat this flip independently from all others... With a coin flip the saying "when your hot you are hot" does not apply at all... It is an illusion and can be proven mathematicaly... Goes back to Desartes (there is no causality between mind and matter in this case)

BUT as you very well know as a discretional trader you are not exactly betting on coinflips... Essentialy what you are doing is betting on 1) yourself, that you will do the right thing at the right time 2) the mathematical expectation of the "method" you employ...

So I totaly agree with you that if you are a discretional trader than the point you are trying to stress is abolsutely appicable... When I am "feeling" it or what others would call "in the zone" it would be extremely wise for someone to up there bets on my next trade

PEACE and good trading,
Commisso

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Babak
The coin has no idea how many times it has been flipped nor does it know how many times it has come up heads or tails. It is a coin.

---

---

The same can be said for the market. The market also does not care how many times it has gone down or up.

---

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Originally posted by Magna
I agree completely.I disagree. As the sum total of all the participants the market clearly has a collective "memory", unlike a coin. Otherwise trendlines, moving averages, Elliot waves, fibonacci retracements, price support/resistance, etc. etc. would never come into play. But they obviously do, time and time again.

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

Magna, the reason the market has memory is that we give it our own. Trendlines, S/R, etc. are important because we deem them to be important.

__________________
Discipline over conviction

rs7,

Very valuable advice. I like to think in terms of having to justify positions to an imaginary partner. Tends to prevent the loss of all discipline type mistake that cna really put a hurt on your account.

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Originally posted by Babak
Magna, the reason the market has memory is that we give it our own. Trendlines, S/R, etc. are important because we deem them to be important.

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Babak
Magna, the reason the market has memory is that we give it our own. Trendlines, S/R, etc. are important because we deem them to be important.

---

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Originally posted by Commisso
IMO the results of each and every trade on a micro level comes down to pure chance...In other words the market has a collective memory but the method itself does not

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Originally posted by Magna
I agree, but like in the casino where each roll of the dice, each deal of the cards, each spin of the wheel is random.....the overall outcome can be predicted since the casino has a clearly definable edge.

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Commisso
I would treat this flip independently from all others... With a coin flip the saying "when your hot you are hot" does not apply at all... It is an illusion and can be proven mathematicaly...

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Yes it makes sense Rs7 as I tried to explain in my post... but imo the coinflips are poor analogy because like I said there is no causality over mind/matter... In trading, poker, etc. you internally have an effect on the external reults (if you are discretionary trader ofcourse)

but i do totaly agree with the point

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by AAAintheBeltway
rs7,

Very valuable advice. I like to think in terms of having to justify positions to an imaginary partner. Tends to prevent the loss of all discipline type mistake that cna really put a hurt on your account.

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Originally posted by rs7

Ahhhhh.....back to the beginning! I am already sorry about the coin toss question.
The "justifying" the "accountability" were really my point. And I am sticking to my premise there no matter what happens with the coin toss

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

Commisso, re: rs7's original post

First off Lavish thanks for taking the time to reply...

Secondly WOW! What a chart and that seems like some great trading you did on this stock.... Please forgive me as I am no longer used to 4 baggers in 3 months!

I assumed that their might be a flaw in your risk and exposure calculations due to an excessive return in such short TF of only two months...

As long as you are not betting the ranch on each play then I would say that is some great trading

PEACE and good trading,
Commisso


__________________
Flowing like a river, mind of a pure mirror, responsive like an echo...
------------------------------------------------------------------------------------

I'm not...not in mom's account but the point I was making is that my own account is a different story. rs7 struck home with me because the "accountability" factor explains what is going on here. I can and did explain exactly why I made every move I made in that account. But why the heck am I holding two losing gold positions and a defense stock that has seen some small rally's but are all down now? uh, I dunno. They hold SOME promise? Yikes. Anyway, my sincere thanks to both of you for your insight. You'll have given me some excellent tools. If only I can figure out how to use them!

__________________
"Be bold-- and mighty forces will come to your aid" Basil King

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Originally posted by Commisso


Ahh Rs7 you are good shit!

PEACE and good trading my friend COMMISSO

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Agree with rs7 about coin toss

A suspicious young gambler named Reds,
Sees a succession of twenty-five heads,
Now the inclination would be tails,
But common sense prevails,
And he promptly reports to the Feds.

Re: Commisso, re: rs7's original post

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[i]Originally posted by Lavish Anyway, my sincere thanks to both of you for your insight. You'll have given me some excellent tools. If only I can figure out how to use them! [/B]

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Re: Agree with rs7 about coin toss

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Originally posted by Mr Subliminal
A suspicious young gambler named Reds,
Sees a succession of twenty-five heads,
Now the inclination would be tails,
But common sense prevails,
And he promptly reports to the Feds.

---

regarding coin flips and gambler's fallacy:

the gambler's fallacy as viewed in light of coin flips is true. there is no reason for the tenth flip to be affected by the previous nine.

however, pure application of the gambler's fallacy to market activity would negate the tendency of reversion to the mean. when cycles get out of whack, they tend to come back, for logical reasons.

to agree 100% with the gamblers' fallacy yet to also recognize the validity of overbought/oversold conditions would represent a contradiction in terms.

i submit that 99.5% of the time there is a rational directional bias to the market- a favorable probability distribution that is not 50/50. we just don't always know what that distribution is, so we deem random/unknowable that which WE don't know.

p.s. if we want to get really wacky we can note that probability is actually just an ignorance hedge and does not exist at all

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse


p.s. if we want to get really wacky we can note that probability is actually just an ignorance hedge and does not exist at all

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

even in a random world where no one knew the answer, probability still does not exist

has anyone ever pinned down a likelihood? has anyone ever witnessed a nonoccurring event?

while true, I admit that was posted more in fun than anything else…not all observations have immediate value except for the purpose of tweaking our brains

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse
even in a random world where no one knew the answer, probability still does not exist

has anyone ever pinned down a likelihood? has anyone ever witnessed a nonoccurring event?

while true, I admit that was posted more in fun than anything else…not all observations have immediate value except for the purpose of tweaking our brains

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

Re: Re: Commisso, re: rs7's original post

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Originally posted by rs7
My favorite false expression that I hear all the time is when someone says the reason the market (or a stock) is going (up/down), is there are more (buyers than sellers/sellers than buyers).

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__________________
"You're walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place." - Gordon Gekko, Wall Street

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Originally posted by Commisso


I don't quite undertstand what you are saying Dark...

PEACE and good trading,
Commisso

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse



i didn't mean to make this into a point of debate- simply that probability is a man made concept.

the odds for all events that actually happen are 100%.

the odds for all events that never happen are 0%.

there is no true middle ground except in our heads.

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Breakout
Great post rs7!!

Tomorrow, I'm going to consider every trade as though it
was money my grandmother entrusted me with. The signal's
are going to have to be perfect! Thanks

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Originally posted by Commisso


Oh I see now, sort of like "right and wrong"

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse




LOL

no, not really, since morality has a source

nice try though

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

---

Originally posted by Commisso


Hey, can't blame a brother for trying With respect for Rs7 I will reply on the Voodoo thread

PEACE and good trading,
Commisso

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Originally posted by EricP


Breakout:

Did you make some money for Granny today? Seriously, how was your day today with the new mindset?

-Eric

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Originally posted by rs7

Yes, curious myself.....did it have any effect at all? I don't necessarily mean that you should measure by loss or profit. Did you feel a different sense of control? That was my hope.

Best of luck, and I really hope that I may have contributed some good for someone. Hope it was you. Or even better, you among others!

RS7

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I guess my main question is do I have to go through all the mistakes like most people say I will,

yes

or can I learn faster from reading all this.

no

Will this get me to my goal of making money any faster?

maybe so

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

on a more serious (less sarcastic?) note outlaw, can't speak for the others but i'm just a 26 year old dude sharing ideas and having a good time most of the time. i like beer and snowboarding and video games, i'm not some swami with a long beard. sometimes serious, sometimes goofing around, sometimes acting responsibly, sometimes acting like a kid.

i don't think there was any set rationale for this site other than 'hey, why not set up a place for traders to bs and talk shop and earn some money from advertisements on the side.' no hidden plan here that i can see. it is what it is.

just hack through the jungle. advice is well and good, encouragement is valuable, sharing is great- but as far as becoming a successful trader you have just got to get in there and lose money and take your beatdown and learn from your firsthand mistakes.

plan and be rational and read the market wizards books and suck up all the info you can, yeah yeah yeah. then throw your fear to the wind and dive in like a bungee jumper. beat your chest and yell at the top of your lungs and take the plunge, face the live fire. lose. lose again. and again. after you get the crap beat out of you a few times you'll be learning the real lessons in the real way- from the inside out.

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

Outlaw

"Commisso too seems like some kind of guy that would have been on one of those 1950's quiz shows (like the movie). How come you guys don't go on jeopardy?"

Not for anything BUT I am anti-knowledge I feel it blocks wisdom...

Seriously Outlaw... my suggestion would be to filter out the noise and go straight to the signal... There are some really solid traders on here tntneo, babak, magna, dark, rtharp, rs7, threei, tripack etc just to name a few... absorb as much as you can from these people... but ultimately if you are using this site as a short-cut you are wasting your time... The way will befound through action and experience not the chit chat...

PEACE and good trading,
Commisso

__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

Commisso, did we just independently offer the same advice?

What in the wide wide world of sports is a goin' on here?

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

yo rs7

thanks bud, I found it helpful and appreciate your effort to share

Great post rs7. I printed it as well. I used to do exactly that - give great advice but never follow it.

I have a folder of trading gems I pick up from various bulletin boards (there are very few good ones, believe me) and yours is in there now.

Very well said - thanks for your insight.

accountability

my take is that one can't just wish away a psychological problem with a psychological solution; what I mean is, just saying that I will be 'accountable' or assuming I will be, by pretending it is my grandmother's money or some other mental trick won't work except in the short term because it is still you trading with all your usual emotional baggage. You need to hard wire a fix with a real world solution such as actually having your grandmother present in the trading room. The reason I feel rs7 was successful with other people's funds was because there was always someone in charge marking his account to market each day who could pull the plug if things went downhill, and this kept rs7 in control. We all have emotional baggage that we bring to the table each day, it is what makes us distinct and I believe we will always have these individual trading characteristics no matter how hard we may try to hide them; good traders learn early how to keep these under control recognizing that they are always just beneath the surface ready to rear their ugly head if we get sloppy. So basically I posit that to really improve we need to set up a real system to overide these tendencies. An example might be to limit our maximum daily losses to X% before we must quit for the day or just watch; this will instill discipline for the desire to trade is greater than the need to incur a large loss hence we will honor our stops; you get the picture. I would love to hear Allen & rtharp comments here. So in summary thanks to rs7 for a fine post and thread, but if anyone wants toincorporate his ideas in their trading program they will need to do more than just thinking it.

Re: accountability

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Originally posted by stkcowboy
my take is that one can't just wish away a psychological problem with a psychological solution;

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__________________
He deals the cards to find the answer...
The sacred geometry of chance...
The hidden law of a probable outcome...
The numbers lead a dance...

The hard truth is that regardless of desire, some people have what it takes but most people just don't. You'll never know for sure until you give it your best shot, and in the meantime listening to seasoned veterans like rs7 sure can't hurt.

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.

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

sicko

rs7, outlaw or whatever else you use........you are one sick puppy..........get some help dude

rs7 and a piece of divine trading wisdom

Its exactly 2:00am PST and I just read your post. I'd just like to say this is the most incredible post that I've read since becoming a member to this site. I for one would like the thank you for taking the time to share your thoughts and let you know that not one word went unappreciated.


If you are running for Trading-God status, you just moved one trade closer.



sincerely,



momo (an alias)

>>> this is the most incredible post that I've read since becoming a member to this site. <<<

momo,

I used the same sentence earlier to describe one of his posts ... I entirely agree !

__________________
Bono

rs7,

I have a question for you as well as everyone who wishes to answer :

When the market goes down ... real bear trend ... just like the current one ... what stocks would you buy ? Assuming you can't trade options, so you can't buy puts or sell calls ... only stocks ... or maybe I should ask, what stocks/sectors have been consistently going up over the years whenever the stock market is going down, and vice versa ?

__________________
Bono

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Originally posted by Bono
rs7,

I have a question for you as well as everyone who wishes to answer :

When the market goes down ... real bear trend ... just like the current one ... what stocks would you buy ? Assuming you can't trade options, so you can't buy puts or sell calls ... only stocks ... or maybe I should ask, what stocks/sectors have been consistently going up over the years whenever the stock market is going down, and vice versa ?

---

rs7,

well .... in as far, that reply makes sense to me thanks a lot !
I'll go search it more ...

P.S. Right after I posted my question, I did some search, and discovered that Silver & Gold sectors are indeed the best defensive stocks ... health care too ... back to more search now

__________________
Bono

Re: sicko

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Originally posted by secco
rs7, outlaw or whatever else you use........you are one sick puppy..........get some help dude

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---

Originally posted by darkhorse
has anyone ever pinned down a likelihood? has anyone ever witnessed a nonoccurring event?

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Re: accountability

---

Originally posted by stkcowboy
The reason I feel rs7 was successful with other people's funds was because there was always someone in charge marking his account to market each day who could pull the plug if things went downhill, and this kept rs7 in control.

---

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Originally posted by darkhorse
I guess my main question is do I have to go through all the mistakes like most people say I will,

yes

or can I learn faster from reading all this.

no

Will this get me to my goal of making money any faster?

maybe so

---

---

Originally posted by darkhorse

...until finally one day the thick skull is penetrated and a chorus of angels sings.

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A story about accountability

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The three volunteers walk up to the Master.

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.

The Master returns home

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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Re: A story about accountability

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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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Originally posted by chasinfla


That is one of the most poetic things I've read. Did you think of that?

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse
...one day the thick skull is penetrated and a chorus of angels sings.

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from Motley Fool...UK

Don't Panic Over Five-Year Low

By James Carlisle (TMFJimmyC)
July 4, 2002


Unless you've been in the Big Brother house, you'll know by now that when the stock market opened this morning, the FTSE 100 was at the lowest it's been for five years. The media makes a meal of this sort of thing, ourselves included I guess, precisely because its so unusual. We can see how unusual by looking at CSFB's indices for the total returns for the London stock market. The figures show that, on average (and taking the figures from 31 December each year), shares have delivered negative returns in just five of the 128 five-year periods since 1869.

The most recent, and by far the nastiest, occurrence was when the stock market crashed in 1974 leaving shares with a return of -41% since 1969 (equivalent to -10% per year). For those that held on through 1975, though, things worked out okay. In 1975, shares had their best year ever, with a return of 149%, giving a return of 47% (or 6.7% per year) for the period 1969-1975. By 1980, shares were more than six times their 1974 lows.

Going back from 1974, we get to the back-to-back negative periods of 1935-1940 and 1936-1941. In each of these periods, shares would have lost you a little less than 10% of your money (around 2% per year). Again, though, for both these periods, holding for the sixth year would have got you out of trouble. 1941 and 1942 both individually returned about 20% to give overall returns for the six-year periods ending in those years of about 10% (or just less than 2% per year).

Surprisingly, the five-year period ending 1929 produced a positive return thanks to a strong run in the late 1920s. Yet, despite the crash in 1929, 1930 and 1931 were further down years, giving shares a negative return of 7% (1.4% per year) for the period 1926-1931. Once more, however, the sixth year came to the rescue, with a positive return of 35% in 1932, making a total of 26% (or 4% per year) for 1926-1932. By 1936, shares were at three times their 1931 levels, before moving into the slow 1936-1941 patch we just looked at.

The only other five-year losing period is the one ending in 1903. In a period of very low inflation (in fact, prices actually fell between 1869 and 1914), shares would have lost you a measly 1% of your money between 1898 and 1903. Hardly a great disaster and, you'll have got used to this by now, 1904 solved the problems with a bounce of 9%.

So what's the conclusion from all of this? Probably not a great deal. We're dealing with so few occurances that there's not really enough data to go on. We can say, though, that negative five-year returns have been very unusual and, on the few occasions we have seen them, a little patience would have sorted you out. The five years following each of the bad periods would have generated positive annual returns of 2.2%, 25%, 14%, 13% and 36%.

Of all the periods, the economic environment now is perhaps most like the period at the turn of the last century, with all but no inflation. In that period, the stock market was one big snore, with not much happening either way. So perhaps we'll be in for a slow and steady period. That seems unlikely, though, given the excitement of the last two years. But what has really produced the biggest dramas in the past is a sudden burst of inflation. That's what happened in the late seventies and seeing it coming is what caused the carnage in 1974. So long as Steady Eddie and his chums do their job of controlling inflation, patience is likely to pay off again.

I once sold short 1000 shares of NOVL(20.25) @ the close for a swing trade. An earnings warning came out after the bell. After Hours dropped the price to 11.75--I bought those puppies back and gave them back to their rightful owner.

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Originally posted by thunderbolt
I once sold short 1000 shares of NOVL(20.25) @ the close for a swing trade. An earnings warning came out after the bell. After Hours dropped the price to 11.75--I bought those puppies back and gave them back to their rightful owner.

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__________________
"You're walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place." - Gordon Gekko, Wall Street

That trade proved that you were not only weak but that you've shown it. Hope this helps

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Originally posted by thunderbolt
That trade proved that you were not only weak but that you've shown it. Hope this helps

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__________________
"You're walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place." - Gordon Gekko, Wall Street

Re: A story about accountability

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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.
....

Source.

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---

Behind all speculative success is a positive triad of extraversion, energized mood and risk-taking. We know from research that people who take an active interest in the world around them are more likely to experience life with vigor. They are also more likely to assume prudent risks."

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great thread.

i am also thinking about, who to overcome those psychological limitations within a trader. the "to do so as if" is not going far enough IMO.

you have to open a second account, place an "operator" on the other side of your desk and advice this person, strictly to open the opposite position to your expressed "feelings" and "opinions" referring to the market at any time of the day like "oh no, to late to enter, price is too HIGH/LOW..." -> in the same moment this shadow-person has to go long/short...

the same with exiting a winning trade to soon, one of the biggest psychological threshold in this journey, i believe...



happy trading

Re: rs7 and a piece of divine trading wisdom

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Originally posted by momotrdr
Its exactly 2:00am PST and I just read your post. I'd just like to say this is the most incredible post that I've read since becoming a member to this site. I for one would like the thank you for taking the time to share your thoughts and let you know that not one word went unappreciated.


If you are running for Trading-God status, you just moved one trade closer.



sincerely,



momo (an alias)

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cesko

You missed the point - what I' described was more akin to going back over my trades of the day to see what I would have done if I followed my own rules that day. I don't advocate paper trading per se.

Re: Re: rs7 and a piece of divine trading wisdom

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Originally posted by rs7

No, I am not running for anything....you must have me confused with "super_ego" in his "I'M HOME MAMA" thread.

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Re: Re: Re: rs7 and a piece of divine trading wisdom

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Originally posted by super_ego


Hey! Play Nice.

SE

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Originally posted by hardcash
great thread.

i am also thinking about, who to overcome those psychological limitations within a trader. the "to do so as if" is not going far enough IMO.

you have to open a second account, place an "operator" on the other side of your desk and advice this person, strictly to open the opposite position to your expressed "feelings" and "opinions" referring to the market at any time of the day like "oh no, to late to enter, price is too HIGH/LOW..." -> in the same moment this shadow-person has to go long/short...

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Originally posted by hardcash
great thread.

i am also thinking about, who to overcome those psychological limitations within a trader. the "to do so as if" is not going far enough IMO. .......
the same with exiting a winning trade to soon, one of the biggest psychological threshold in this journey, i believe...

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re-posting

I have been getting a lot of private messages asking essentially the same stuff. In an effort to avoid having to re-think and re-type, I will simply re-post what I wrote in another thread. Took me a while to find it, 'cause I couldn't remember where it was. But after a bit of searching, I found it. So for all of you that have been sending me Private Messages about how to best get off the ground as traders, here are my thoughts (once again):

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Originally posted by rs7

I could give a glib answer here too, but my real advice is to start watching a few stocks and get a "feel" for them. Pick say 4 or 5 stocks in 4 or 5 different industry groups. Make sure they are actively traded.

Watch what these stocks do relative to each other both within their own groups and compared to the other groups. Watch what one group does compared to another. Watch what they (both the stocks and the groups) do relative to the markets as a whole.....s&p, and nasdaq. I don't think the Dow, which is only 30 stocks is all that important to watch, but watch it anyway....doesn't take much time.

Look at charts of the stocks you follow. See if you recognize any repetitive patterns.

Do paper trades...keep score for yourself. (Make sure you buy at the offer and sell at the bid!...it will be worse in real life, so don't cheat by going by last price).

Go over your trades when you are done. See if you can spot what the winning trades had in common. What the losing trades had in common. (other than results).

Don't buy stocks that are moving up very quickly. Don't try to short stocks that have sold off dramatically. Know what rules apply to shorting stocks!

Don't buy stocks that are laggards. Buy the strongest stocks, short the weakest.

Successful day trading consists of (IMHO)
1. Discipline
2. Timing
3. Stock Selection

Hope this helps....best of luck!

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Originally posted by rs7

.

I NEVER leg out of a day-trade position.

BUT....for traders that have a hard time holding winners, I think it is a great idea to get accustomed to holding by keeping a small part of your original position just to get comfortable

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Originally posted by marcD


Hi: could you please explain why you NEVER leg out of a day trade?
Also, I like the premise of holding part of a winner to get used to holding, but I don't understand the contradiction here.
Thanks, Marc

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Originally posted by rs7
Hope that you understand that I do not believe there is any one correct way to trade. Look back over what I have written here. It is just all a matter of personal style, which equates to comfort.

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Originally posted by Huios
I would rather be uncomfortable and make money, than be at ease and slowly piss it away.

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Originally posted by Magna
rs7, while I fully understand the intent of your response, a recent post by another member is worth repeating....With that said, I don't find either of your comments contradictory.

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Originally posted by rs7

I agree....I too would rather be uncomfortable and make money. It sounds good to me as a concept. But I have seen that in practice, good traders adapt their trading styles to fit their personalities.

Yes, it takes some adapting of your personality too. That is exactly why I suggested those who could not hold winners to keep a small portion....that is a way to help them find a way to ease into an uncomfortable scenario.

But there are definitlely traders that stay with what is comfortable and make it work. I don't pretend to understand why they do what they do, but it works for them.

I worked with one guy that never traded a nasdaq stock. Also never took overnights. One day a few years ago, he decided to do both at the same time for whatever reason. He bought Intel, held it as an overnight, and they warned. He lost about 10 pts. on it (this was when the stock was trading over 100...a few splits back). He never traded another nasdaq stock again, and never took an overnight again. Maybe if it had been a winner, he would be a different trader today. But he still makes a 7 figure income. I think he would no matter how he traded. He is just a GOOD trader.

I could give a lot of similar real life examples of how traders do stay with what is comfortable for them. Different strokes...etc.
Bottom line is that traders do need to learn. They do need to find what works for them, and what they like to do (comfort?). There is no one right way to trade (unless you believe that Super_ego has some real magic formula). I know so many really good traders. I don't know of any two that trade exactly the same way. In truth, I don't even think it is possible to sit next to a trader and copy their trades successfully. I have seen people try and it doesn't work.

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MarcD.

I think I can understand your question. My feeling is that new traders need to hear more then "you need to find your own style of trading". How can you tell a new trader that and then leave him with no styles and strategies to look at. I think new traders befit the most from being around other traders, and viewing what they do. Once new traders have seen many different styles and ways of trading then they can start to find out what will work best for them.

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Originally posted by marcD

I hope this isn't a dumb question. But if what you say here is really how things are, then how do people learn from other traders? I read today on ET where someone said it is better to work on a good desk at a bad firm. But from what you said here, I don't get why it matters? But it seems that I hear a lot of stuff like that. To get with good traders to learn. Do you disagree with this? And if everyone needs to trade their own way, how do you find out what way is best to try? How do you think some traders got to only trade one way and others the opposite like you said?
Hoepe this question makes sense. Thanks, Marc

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse




How does someone become a good golfer, a good pilot or a good pastry chef? How does someone become a good ANYTHING?

Study, listen, practice, screw up, learn, repeat.

Just do it. Listen, learn, put ideas together. Then go do it. Make mistakes. Burn through thousands of dollars and months or years of learning. Its called tuition, just like med school. There's no secret, no special list of do's and dont's, no rite of initiation. Just learn what you can and fall on your face a thousand times and keep at it until you are making money or until you quit. That's it. JUMP IN. LEARN.

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marty schwartz said it well in calling himself a synthesizer. he would take ideas and observations from other traders he respected, put things together in a way that made sense to him and fit his personality, and ended up developing his own unique style through this process. find your own way but listen to others in the meantime so you don't have to reinvent the wheel. develop a general thesis, get it down on paper, and then hone it and craft it until you have a tailor made method that fits your personal strengths and weaknesses and your overall mental approach.

p.s. i would hate being in an office with other traders, i'm much better off alone. but i'm sure many guys feel the exact opposite. which way to go is really a personality question.

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

Going around the block...

To make it easier on yourself, simply learn the basics (not somebody's "system" or "method" ),...most likely their system worked once a long time ago, and now they write books or something.

Basics from the trading floor...how markets really work (most don't have a clue), which markets can be beat consistently, how orders are executed, all this before worrying about individual stocks or picking entry points.

Heck, I have people that I could place in front of a computer, with black tape covering the stock symbol, and they would still make money...they know how to tape read...simple as that.

Sure it takes a while to learn the basics, and even longer to feel comfortable with them...but it is easier to do it right (and cheaper) than to try to emulate someone elses tired old strategy that may or may not work.

We live in the Here and Now, and it is easy for my to see who is doing well....we simply stay ahead of the others.

Simplicity!!

Don

__________________
Don Bright (not an alias)
Bright Trading, LLC
http://www.stocktrading.com

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Originally posted by darkhorse
Study, listen, practice, screw up, learn, repeat.

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don bright

So, Mr.Bright, where can we find this info. on the basics of trading?

RE: Other Traders

Darkhorse stated it very well, as usual..

There is nothing gained by not taking the risks individually and seeing how you react given any number of outcomes to one trade or a series of trades...It takes a long time to find your own "footprint" in the markets because you really do not who you want to be or who you are as a trader...

I think the analogy to golf is a very good one, and one that I am familiar with because I spent so many years practicing, competing at it, etc...I also came across so many golfers who seemed to always flip thru Golf Digest and try and figure out the "perfect swing"...You see the search for perfection is not just something indigenous to trading, it is something all novices seek out...They think they can watch a pro tournament and if they can just emulate that guys movement they can somehow become just as proficient...But then people forget about Paul Azinger, Hubert Green, Lee Trevino, Arnold Palmer...All guys with distinctly different swings, swings that are "wrong" according to all the "experts", but swings that nonetheless have produced enormous success...

I think that one of the most dangerous times a trader has is in the "in between" stages...Once the trading bug bites you, you are constantly in search of something that is perfect...And you are very impressionable...There are threads on this forum that have some of the more basic concepts and you can just see people fawning over these ideas, so enamored with the concepts, that they think they have found nirvana...And once they have that first losing trade or that second losing trade, they will scrap those ideas and go searching again...That is what is most dangerous...

If I were to start all over again from scratch and erase my mind, I would probably want someone to say to me...For one month you will trade this specific time frame and you will trade this specific pattern and you will not diverge from this specific set-up even once...Because over that month I would see the balance of winners to losers and I would not be swayed by a very small sample of trades...I would develop a consistency and an eye for that specific situation and over time I would become an expert on one specific time frame, one specific scenario and I would no longer be "searching" for something new...

Its good to seek out others assistance...Its especially good to find people who really know what they are doing and understand exactly how the market works as a whole...The basics of price action, the phases of trending, congestion, volatility, etc, etc...But without a basic understanding of price action, it is very difficult to make any progress forward..Kind of like the golf swing..You need to learn the proper grip, allignment, weight transfer, etc ,etc before you can attempt to work the ball...It all begins with the fundamentals and then grows from there...

I have been a member here about 6 mos and this is my first response. Exellent post! I have been demo trading the last 5 weeks due to losses eg over trading and have calmed down and re-focused considerably. I not only print my trades eod, I print the accompanying charts and the Naz chart for the day(1 min) and write an explanation next to each trade as to why enter, exit.
Keeping these records and thinking I may show them someday and have to defend them is similar to your thought on pretending to trade someone elses $, it works.

My P&L has improved much and I'm the three C's now; calm, cool & collected. I return to the real deal later this week and hope to trade as I have been in demo, no chasing, no trading out of boredom, I'll cuff my hands to the chair if necessary( oops the lady's getting excited hehe).

Thanks again rs7 and others.

Re: RE: Other Traders

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Originally posted by vulture
...It all begins with the fundamentals and then grows from there...

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thanks

thank you guys, I guess I sort of get the idea. Maybe I should continue to trade from home as I am. But I keep thinking that exposure to better traders will help. Maybe I should re think the whole subject!

posted by me

"My other career was an active, on-the-go type activity. To just sit and do nothing all morning is tough. It doesn't feel right.. like I'm wasting time, and sooo boring."

posted by rs7

"But what he (and so many others) did not understand that often the "hard work" in trading is going through what you call the "boring" times. Being disciplined is hard work. Not trading is hard work. Watching the "action" and not participating is hard work. Inaction does not equate to doing nothing though it may appear that way. It is the DECISION to "do nothing" that makes that very "inaction" work. Our job is about making decisions, not about making trades. Anyone can hit the buy or sell button. Deciding when to do it is something else. It is what seperates work from play. Trading from amusement. "

************************************************
Thanks for the advice. I guess I have to get used to the idea of work as just sitting in a comfy chair.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"Patience, n. A minor form of dispair, disguised as a virtue."
-Ambrose Bierce, The Devil's Dictionary, 1911

Rs7, you may be more right than you think. A few years back I opened Roth IRA accounts for myself and my wife. I have contributed equal amounts to both. Today, her account is twice as big as mine...

dis

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Originally posted by dis
Rs7, you may be more right than you think. A few years back I opened Roth IRA accounts for myself and my wife. I have contributed equal amounts to both. Today, her account is twice as big as mine...

dis

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RE: Hard Work is Sitting

BTW, the "hard work is sitting"...that is really on the money...and almost like a Livermore type of truism...The easiest thing to do alot of times is jump into the fray and get a "piece of the action", the hardest thing to do is sit patiently like a lion waiting for his prey to be most vulnerable and then leaping out from behind the bushes to pounce on it...

Sitting

Brevity is the soul of good trading as well as wit.

__________________
If you care, don't share (your strategy).

Re: RE: Hard Work is Sitting

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Originally posted by vulture
BTW, the "hard work is sitting"...that is really on the money...and almost like a Livermore type of truism...The easiest thing to do alot of times is jump into the fray and get a "piece of the action",

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__________________
PositiveEnergyAlwaysCreatesExplosions

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Originally posted by futurecurrents
posted by me

"My other career was an active, on-the-go type activity. To just sit and do nothing all morning is tough. It doesn't feel right.. like I'm wasting time, and sooo boring."

posted by rs7

"But what he (and so many others) did not understand that often the "hard work" in trading is going through what you call the "boring" times. Being disciplined is hard work. Not trading is hard work. Watching the "action" and not participating is hard work. Inaction does not equate to doing nothing though it may appear that way. It is the DECISION to "do nothing" that makes that very "inaction" work. Our job is about making decisions, not about making trades. Anyone can hit the buy or sell button. Deciding when to do it is something else. It is what seperates work from play. Trading from amusement. "

************************************************
Thanks for the advice. I guess I have to get used to the idea of work as just sitting in a comfy chair.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"Patience, n. A minor form of dispair, disguised as a virtue."
-Ambrose Bierce, The Devil's Dictionary, 1911

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Originally posted by rs7
Guess you are accountable to your wife like I am to mine

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Re: RE: Hard Work is Sitting

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Originally posted by vulture
BTW, the "hard work is sitting"...that is really on the money...and almost like a Livermore type of truism...The easiest thing to do alot of times is jump into the fray and get a "piece of the action", the hardest thing to do is sit patiently like a lion waiting for his prey to be most vulnerable and then leaping out from behind the bushes to pounce on it...

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RS7

This is the first time i am reading your initial post on this thread. This is the reason I voted for you to stay! Discipline comes from accountability. If self accountability does not work for you then find something else. I know of someone who went so far as setting up a corporation to trade his personal account so that he "thought" he was accountable to the shareholders (him, his wife and a trust for his kids).

Great post.

__________________
I could tell without asking she was into the Blues...

Re: RS7

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Originally posted by Newatthis
I know of someone who went so far as setting up a corporation to trade his personal account so that he "thought" he was accountable to the shareholders (him, his wife and a trust for his kids).

Great post.

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__________________
PositiveEnergyAlwaysCreatesExplosions

Re: RE: Hard Work is Sitting

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Originally posted by vulture
BTW, the "hard work is sitting"...that is really on the money...and almost like a Livermore type of truism...The easiest thing to do alot of times is jump into the fray and get a "piece of the action", the hardest thing to do is sit patiently like a lion waiting for his prey to be most vulnerable and then leaping out from behind the bushes to pounce on it...

---

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

Re: Re: RE: Hard Work is Sitting

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Originally posted by darkhorse



true dat

you have to be johnny on the spot when the opportunities come, but you also have to be willing to sit for days on end. this combination of do nothing/sudden action is psychologically very tough, especially for hard working people who are inclined to feel like bums if they are not making some kind of forward motion.

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yep, but those other jobs also offer a steady paycheck and societal 'legitimacy'....someone who puts on a shirt and tie and sits at a desk in a glass building is 'obviously' at work, as opposed to someone out there on the edge doing wacky market related things that Lou Rukeyser considers unrespectable.....

lots of jobs have the real gains in fits and starts, it just doesn't appear that way on a surface level. salesmen who cold call all day long make an actual sale only once every few days or even once every few months if the product is seriously high end/ large scale....businesses with huge payrolls ship out product once a month or once a quarter....there is all kinds of in between time in the business world. the trader is just fortunate enough to be able to relax in his and call it what it is....trading is capitalism purified, with all the glories and uncertainties of capitalism boiled down to the most basic scale

__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse
yep, but those other jobs also offer a steady paycheck and societal 'legitimacy'....someone who puts on a shirt and tie and sits at a desk in a glass building is 'obviously' at work, as opposed to someone out there on the edge doing wacky market related things that Lou Rukeyser considers unrespectable.....

lots of jobs have the real gains in fits and starts, it just doesn't appear that way on a surface level. salesmen who cold call all day long make an actual sale only once every few days or even once every few months if the product is seriously high end/ large scale....businesses with huge payrolls ship out product once a month or once a quarter....there is all kinds of in between time in the business world. the trader is just fortunate enough to be able to relax in his and call it what it is....trading is capitalism purified, with all the glories and uncertainties of capitalism boiled down to the most basic scale

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Originally posted by gerry875


at the and all that counts is the result. everbody has to make money in order to survive. what we do is legal - nothing else matters.

societal legitimacy - i don't give a damn about. if there wouldn't be traders - there wouldn't be brokers - and lots of people wouldn't have a job. hey - there you have it - the societal legitimacy of the bad bad traders.

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse




ain't got to convince ME brotha man

u be preachin' to the choir in these parts

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Re: Re: RS7

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Originally posted by PubliasEnigma
I am curious to know if this had a positive impact on his trading?

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Originally posted by gerry875


ok ok ok

and do always think about this one:

** he who always works has no time to make money **

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse





'if you have a hard task, give it to someone lazy-
they will find an easier way to do it.'

decent book on this topic (twenty percent of it anyway):

http://www.amazon.com/exec/obidos/A...5845395-2367133

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Originally posted by gerry875

yeah - i've already heard about the pareto principle. it's really amazing how it can be applied to many things in life / business / ...

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

Re: Re: Re: RS7

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Originally posted by tom_p
During my earlier young and foolish days, I travelled the globe looking for opportunities to legitimately exploit weaknesses in the gaming industry. This ranged from counting cards to finding positive expectation games due to promotions or erroneous payout schedules. I had a backer and when I was on the job, I followed all the "rules" to a tee and was quite successful. Privately, playing for myself, I would break every rule in the book whether it was bet sizing, steaming, playing in unfavorable games etc. and generally would lose. If, for example, my backer decided that I should leave the table after losing $X, then that is what I would do without any thinking or effort. Easy as pie. And he wasn't even on the premises. When my money was on the line, sometimes you would have needed wild horses to drag me away from the table. The simple yet powerful effect of true accountability (as opposed to artificially set up accountability) was already then evident to me.

rs7 hit it on the head.

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PositiveEnergyAlwaysCreatesExplosions

Darkhorse,

If you would not mind could you briefly explain the 80/20 rule???

Sounds interesting TIA --->Publias

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PositiveEnergyAlwaysCreatesExplosions

Great thread. I've always done better with OPM. I'm an inventor and like to change things midstream, usually with negative results. With OPM your accountable and less likely to play around. I try to have my wife make me accountable, but then that Bill Clinton in me sees a sucker and I take advantage of her when necessary. I'll have to work on some more mental deceptions to convince myself its not really my $2K loss showing on the P/L.

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Originally posted by PubliasEnigma
Darkhorse,

If you would not mind could you briefly explain the 80/20 rule???

Sounds interesting TIA --->Publias

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

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Originally posted by darkhorse






From studying these examples of the 80-20 Rule, managers in both profit and not-for-profit enterprise can increase their effective and efficient use of resources by analyzing the inputs required to produce the outputs that they experience.'

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__________________
"Be bold-- and mighty forces will come to your aid" Basil King

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Originally posted by Lavish



Seriously, the way it was taught to me in sales training is that you cannot successfully identify "what" productivity comes from "where" (because of the rule)... therefore you must give 100 percent to become successful.

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Originally posted by darkhorse




Drilling the old holes deep before going onto new strikes. Depth more important than breadth, new connections superior to new information.

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I Love You Man!

Hey Rs7...I've spent the last couple of weeks telling myself,
this was my sweet grandmothers money on the line, while
I was brainstorming the best method possible.


Well, I came up with something completely new, and I've
been profitable every day this week, so far, trading
the ES mini.

I think it worked dude, and I just wanted to say...



I LOVE YOU MAN!!

__________________
The Trend is Your Friend

Re: I Love You Man!

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Originally posted by Breakout

I LOVE YOU MAN!!

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__________________
Mercenary Trader: Timely market commentary, valuable resources for current and aspiring money managers, high quality free materials on the theory and practice of trading, and more. "Be loyal to your friends, not your trades." www.mercenarytrader.com

Re: I Love You Man!

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Originally posted by Breakout
Hey Rs7...I've spent the last couple of weeks telling myself,
this was my sweet grandmothers money on the line, while
I was brainstorming the best method possible.


Well, I came up with something completely new, and I've
been profitable every day this week, so far, trading
the ES mini.

I think it worked dude, and I just wanted to say...



I LOVE YOU MAN!!

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Originally posted by rs7
.

Again, I truly hope someone, somewhere, finds one thing of value in what I have said..

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thanks for the 80-20 rule. never used it for trading before but now i got it posted right next to my monitor. THANKS

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Originally posted by larrybf
thanks for the 80-20 rule. never used it for trading before but now i got it posted right next to my monitor. THANKS

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successful trading redux

Well a lot has transpired since I last made an entry into this thread.

Seems like I was unable to follow my own advice.

I tried trading my own money. For one month. It did not work.

I found a flaw in my premise. While I still think that my "accountability" approach is valid, I failed to take some things into account when I entered a "partnership" in which to trade my own funds with the leverage of a "prop firm".

One fatal mistake was putting myself at the mercy of the risk parameters of the firm.

I found two major faults in my arrangement. First I came from an environment in which large numbers of dollars were common in my daily P&L swings. This was not possible in the new arrangement. It took me only one or two negative days to delete my portion of the equity I started with.

The second fault was having to play by the rules of whoever managed "risk" at the firm. They had a maximum dollar a day loss amount, which is fine, but forced me to get flat when I hit that dollar amount. Prior to this, where I traded previously, if I were down a certain number of dollars (unrealized) I had to start booking loses, or at least not let them get worse. But here, I had to book them all. So naturally, what happened was I got out at the worst possible moment of the day. Several times.

And since I could not open new positions, I could not trade my way out of a bad day. In the past, if I was holding bad positions, I could get on the other side of the positions I was in (ie: if I was long, I could put on shorts or vice versa). This way, I could actively manage the account and go with what was working, and lighten up on what was not. I was comfortable with the knowledge that I could trade out of anything. With this last situation, I was just done for the day.

Today was a perfect example. I had only 4 positions, which I had over the weekend. 4 longs. The market opened weakly, and I was forced to close out the positions at the low of the day. Naturally, 4 out of 4 positions went positive after I booked the loses. Had I been able to hedge them, I may have still lost, but certainly not as much as I did. In all likelyhood, I would have actually added to them when I had to get out. Why? Because they were all showing relative strength compared to the market.

So now, sadly, I am done trading at that place. I thought they were interested in having an experience trader. But all they really were interested in was a customer. I should have known better!!

Anyone know of any real firms hiring real FIRM traders? This "partnership" thing does not work for me.

Peace to all,
RS7

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Originally posted by Commisso
RS7

Nice to see a pure act of trading benevolence from a seasoned vet such as yourself... I suspect the market and the universe will pay you back 3 fold

PEACE and good trading,
Commisso

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sounds like you just bet too large to me. Everybody has bad months in terms of win/loss ratio, but its only really a bad month when you bet too large, as in 10:1 prop firm margin. Is that what happened ?

rs7,

Sorry to hear that you had such a disappointing experience. It sounds like trading with such a strict loss-cutoff risk management policy is quite hard/unpleasant to do, whether those limits are imposed by a firm or are imposed by oneself. I wonder if some scheme for budgeting intermediate losses would have kept you in the game. If one sets intermediate, flexible loss limits that are well inside the stricter limits, then there is more room let positions turn-around or trade out of the hole. The strict limits help ensure that one doesn't let losses run to far. Admittedly, the flexible limits would force the trader to be more conservative (to not run afoul of the stricter hard-limits), but maybe being more conservative is a good thing.

Anybody here use flexible per-trade loss limits that fit within a broader per-day hard-cutoff?

Hoping you find a trading situation that suits you better.

Traden4Alpha

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Originally posted by rs7


Well it seems your forecast has yet to be realized. But I have hit rough spots before, and I have weathered the storms.

I remain positive (but frustrated).

Rs7 (still smiling despite it all)

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Originally posted by dotslashfuture
sounds like you just bet too large to me. Everybody has bad months in terms of win/loss ratio, but its only really a bad month when you bet too large, as in 10:1 prop firm margin. Is that what happened ?

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Originally posted by LiquidSwords


Commisso still has faith in you RS7

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Originally posted by rs7

Oh no...is this another Publias alias? If so, where is my fantasy football team?

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Originally posted by LiquidSwords



Why not start a thread Rs7, people seem to like you around here

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Re: The Super Secret of Successful Trading

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Originally posted by rs7
But invariably, I always made money for other people, and just couldn't do it for myself.

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Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo


rs7:

Over time I realized that trading with somebody else's money doesn't carry the burden of anxiety and fear. You know, it is not scared money. Therefore it is just easier to be disciplined and objective. Hence the good results.

Please let me know what you think.

cpo

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Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by rs7
I found myself unable to be "fearless". I felt out of control because I had a firm looking over my shoulders, and I felt too much self doubt. I lost my aggressiveness. I lost my conviction. It was replaced by trepidation.

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Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo


The idea is to get detached from the micro level performance of our trading and put the odds (and no certainties) in our favour in the macro level. Once the trader doesn't focus anymore on the micro level performance of his trading, he would have the carefree state of mind to be as disciplined and objective as he would be with somebody else's money.

cpo

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Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo


Fear being part of the human condition cannot be overcome, only transcended. It would appear that the only way the individual trader would be able to transcend fear is by setting up a trading structure that allows him to completely embrace risk and error, as well as his fallibility. Then, and only then, clarity would be achieved.

cpo

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"I found two major faults in my arrangement. First I came from an environment in which large numbers of dollars were common in my daily P&L swings"

anyone who has a style that has large p&l swings has a high probabiliy of washout.this style plus high leverage is a surefire way to go bust.

Re: The Super Secret of Successful Trading

Awesome post! Although I'm still a humble newbie, I have experienced a few occastions where I did the right thing only b/c I'm trading someone else's money... Unfortunately this someone else also kinda let me play with other alternative strategies and experiment... I've found out that whenever I do smth I don't feel 100% comfortable doing (read, wouldn't have done with my parents money), I get my ass kicked. I felt that QQQ's where gonna drop today on the jitters and fears. I shorted some yesterday (on the 10th)... I turned out to be correct, eventually, but got out too soon... This was not completely related to the original strategy of course and I would not have taken the position had it been my dad's hard earned money...
Although not completely the same, but I think what you are describing is very related to the well-documented "house-money" effect, whereby people tend to do dumb trades with the money they had earned on the previously good ones...
Your post has made me think quite a bit of what I have been doing wrong and I think it will be very helpful for my future trading. Thanks. I wish I had read that on day one!

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Originally posted by vhehn
"I found two major faults in my arrangement. First I came from an environment in which large numbers of dollars were common in my daily P&L swings"

anyone who has a style that has large p&l swings has a high probabiliy of washout.this style plus high leverage is a surefire way to go bust.

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Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by J_Commisso


Again Cpo very well said!

PEACE and good trading,
Commisso

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Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo


Thanks. Well, I had a professor to teach me those truths.

Nice to see you back my friend,

PEACE and good trading,

cpo

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Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by J_Commisso


uhhhhhhh

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Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by rs7


Are you talking to yourself again?

Faster is in the football thing...right faster? PM him the info.

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Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by J_Commisso


thats not me rs7... i only have one login buddy! what do you think i am some pathetic loser that talks to himself on message boards

Faster you in??? I think vulture is in too!

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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by rs7


The "peace and good trading" ...you are being plagiarized.

Cool, vulture , very good!!

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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by rs7

The "peace and good trading" ...you are being plagiarized.

Cool, vulture , very good!!

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Originally posted by Rogue Trader
Sleight of hand is to the magician as sleight of mind is to the markets.

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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo




I AM NOT Faster, vulture or whatsoever. Anything wrong with somebody who likes to listen?

cpo

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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by cpo




I AM NOT Faster, vulture or whatsoever. Anything wrong with somebody who likes to listen?

cpo

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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by rs7
And you do sound somewhat like him. But we know you are not him.

Keep up the good posts!

rs7

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rs7,

how can it be soooooo hard to get someone to participate in the greatest game on earth (except for trading)... Some wierd shit going on around here buddy!

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: The Super Secret of Successful Trading

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Originally posted by J_Commisso

hey you like football cpo???

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