My biggest weakness is the tendency to "tighten" up when I'm trading well while getting more aggressive when I'm trading poorly. I've never had a problem on "offense" in finding new trades, yet when it comes to the proper time to pull back and put on the brakes when things don't go my way, I have a habit of putting the foot on the gas instead. So the pattern recurs of having long stretches of good profitability followed by quick outsized drawdowns. This instinct is completely wrongheaded but it's been something I've dealt with a long time -- I definitely feel this is the biggest stumbling block I need to overcome before I can take my numbers to the next level.
Dad took a massive position in bond futures in front of the fed. Expected an ease, and there was a surprise hike (as the tale was told). This was many years ago, back in the early 80's. Immediate insolvency. Of course, he hadn't socked away assets in 'safe' places such as insurance, annuities and what not, so it was a total loss. He never regained his edge and when he was able to get some extra cash, he would trade it away. Died penniless, nearly impoverished mom in the process, usual sad story, blah blah blah. Ed Sekoyta's famous phrase "Everyone gets what they want" definitely applied here. Dad was a gambler, and he wanted to trade for the rush of it. He wanted the emotional satisfaction from the highs and lows he got, and he surely got those. So, he traded for those swings. And it ended badly. I, as you would imagine, have great distaste for such emotionality in trading (or in general). The take home lesson is this - you're not always going to know what happens to you and yours, and sometimes fortune's bow is going to just strike you down hard & you can't avoid it. However, he who has something left to start over with does so ahead of the rest of the folks who are at square zero. With that said, I always get annoyed at the dimwads & personal finance 'experts' who say, "Don't waste your money on insurance or annuities, just have a diversified portfolio and you'll do better..." Sounds nice, until you hit one of those three sigma events and are facing down the barrel of thirty long years to recover to the point you started at. You don't pay management fees for added performance in these instruments. You pay them to transfer risk in a contractual agreement so that you and your family can have something left over when you blow up, and that you will know for sure that you will at least have something to take care of them, if not to live in high style. I would recommend that any trader with a family who depends upon him diverts about 5% of profits into protected instruments(IRA, 401K, insurance, annuity, irrevocable trusts) and handles them in an EXTREMELY conservative (cash & bonds, cash life, fixed annuity) fashion. If you are wildly successful, you can laugh about it in your old age. If you aren't, you'll be glad you did. You can fade the temporary loss of growth in your trading capital. And your mom won't go from living on Park ave. , to a one bedroom low income apartment. Banjo - I suspect, like most people, we all have complicated relationships with our parents. I just wish someone had given him advice like this and he had followed it. It has been a long climb back up - a third of a lifetime.
Not really a flaw?! That's <b>the mother of all flaws!</b> The 'gun-shy' trait is absolutely lethal. I've known <b>many</b> traders with this trait, and <b>not a single one</b> of them was ever able to build a successful trading career. Sorry if that sounds harsh... I'm just truthfully sharing what I know.
"The LT ratio of successful traders to unsuccessful traders haven't changed in a loooong time. For as long as I can remember, it's been somewhere around 5-10% successful - at best! The unsuccessful 90-95% aren't exactly idiots either. Traders are usually some of the most intelligent people out there. And you think you can go up against these people who eat, sleep, and shit this stuff?" i do, and absolutely i know i can, and so can u, and here's why. while a good trader is usually a reasonably bright guy, the implication that IQ is somehow correlated with trading success is not supported as far as i know. and in fact, people wiht a higher IQ tend to know it, and this impacts them negatively (many brokers claim that Phd's, MD's, etc. tend to make TERRIBLE traders) because they think they are smarter than the market, and will thus not be as willing to admit when they are wrong on a trade ime, the vast majority of trader mistakes come down to errors of risk management, ego, and emotion - not of analysis.
It is widely known that academic types usually make lousy traders- but I doubt that's the real reason. I'd like to know what other here think, but I think its due to the fact that great traders usually have such a burning drive to get rich NOW, they're not inclined to spend (waste) years in a classroom when they could be out pursuing their dream.
i wish i discovered tradin' a couple of decades ago instead of trowin' away yrs on freakin' latin and greek...boy what a waste.
overcame this crap a month ago...hopefully will last. just comin' out from a fase of experimentin' new strategies that lasted months, looked like it was the wrong thing to do cuz of the costs but boy if it is payin' off now, am a very happy bunny and ready to bring it to the next level.
"It is widely known that academic types usually make lousy traders- but I doubt that's the real reason. " oh, i think it is. spend some time around academic types. academic types usually have their engines in massive cognitive dissonance overdrive mode. we are talking a group of people who touted "efficient market theory" for DECADES. these people cannot let facts get in the way of theory. "I'd like to know what other here think, but I think its due to the fact that great traders usually have such a burning drive to get rich NOW, they're not inclined to spend (waste) years in a classroom when they could be out pursuing their dream." i disagree. i think the reason so many high IQ people fail is their psychological failings, their idea that they MUST be right. whether you spend 1 or 20 yrs in the classroom, a good trader will be a good trader and get on with it. a poor trader is gonna be a poor trader with or without the 20 yrs. and academics in the 'social sciences" are gonna be the worse of the traders, since their disciplines are the least reality based, and the most prone to grand theories, that never can be (or will be) tested in the real world
They were just normal avg joe blow ups, the plain vanilla type. Like any other guy sitting next to you on the desk. It was an easy fix in retrospect, but very difficult. I've always said that a "successful" trader is one that is meeting their expectations. If you are, then it's a waste of time going down the "woulda-shoulda-coulda" path. Whether you make enough for an extra vacation or if you do this 24/7 and make a gazillion dollars, it's the trader meeting their expectations that is more happy. And in the end, isn't this what it's all about? More money, freedom, whatever...don't you want to be happy in the end? If you're not meeting your expectations, then you still have work to do.
Agree to disagree. But I'm confused to what exactly you're disagreeing with. Are you saying being lazy is ok? Or that the 90% unsuccessful are not intelligent? Or somethingelse? Sorry, it's been a long day.