I gave up the "grail" yet he failed.

Discussion in 'Psychology' started by TrueRange, Oct 14, 2010.

  1. A family member came to me 6 months ago for some advice. He lost some money trading stocks and wanted to know the secret sauce.

    I was very reluctant to give advice for a couple reasons. But the primary one being this : trading success for most requires a personal low to be hit before you can begin the process of "re-wiring" your natural born tendencies that allow one to become a long term winner at this game. He had not hit this low. A loss of a few grand was the brunt of the "pain". Of course this made me chuckle.

    But since he is a family member and he once did me a favor that was very small in effort but came back to me in spades regarding my own psychology I decided to assist. I gave him a set of rules based on my own experience of 8 years that would guarantee at the very least he would not make a account ending trade(barring an act of god) and best case he makes some money and learns how to evolve his own style and approach.

    The rules were simple too follow. Details I wont share, but basically it went like this

    - A filter to choose what to trade.
    -money management rules to choose how much to trade and what to risk per trade.
    - and a general market filter to determine whether to be in the market(long only) or stay in cash.

    I then told him I dont want to hear about your progress at all for one year. Stick to the rules then report back to me. And if you have done exactly what I told you, regardless of actual PnL I will assist you further and help you step it up.

    So, fast forward 6 months I get a call. "I followed your rules, they were working great! I was making money. Then I stepped outside your rules and lost half my money. Can you help me make it back?"

    So, I am considering helping him one more time for the sake of second chances.

    What would you all do?
  2. xburbx


    personally i would give him one more chance and let him know that if he steps out of the rules again, he is on his own.
  3. Maybe tell him the year hasn't passed, follow the damn rules and then you'll talk?

    If you decide to help him early, I guess I would ask him the obvious question? Why did you break the rules if they were working? You and I know the answer, but he has to figure it out. He obviously hasn't gotten to that re-wired point in his career.

    This is very interesting.

    You've obviously been around the block, so all will eventually be well. But it's impossible to teach others those life changing lessons.

    Good luck.
  4. I like this.
  5. Thats the first thing I said. But he pled with me to hear him out. And since I owe him a debt of gratitude I listened.

    He admitted he played some pink sheet POS and got roach moteled. Those types of issues are off limits in my game. So he got greedy, sized up and got smoked. But , yeah he needs to say it outloud and feel the pain some more.
  6. Oh god. Pink sheets. Nuff said. Hopefully he learned from it.
  7. jem


    I think you should go all yoda on him and tell him only that now he must trade half size or smaller.

    Wax on
    Wax off
  8. AK100


    Give him another shot and another rule -

    Only allowed to trade stocks > $20 with 1 million shares average volume per day.

    And tell him if he breaks the rules again he's out on his own. Can't be fairer than that.
  9. :D
  10. One of the issue filters I gave him was price =>10 and 1mm avg daily vol.

    I agree.
    #10     Oct 14, 2010