Travis, I disagree with what you're saying. Being modest is a terrible characteristic to have as a trader, the important thing is to be respectful of what the market can do to you. Not to be confused with being scared or nervous. In order to trade for a living, you need to be DECISIVE AND HAVE TREMENDOUS CONFIDENCE IN YOUR TRADES. That is the only thing that allows a trader to grow and start not to make a living for himself, but to make a life for himself. Also, you don't have to love trading to lose money. I know many traders that are stressed, hate sitting and staring at a screen all day..... the one thing that they all love isn't trading, IT'S MONEY. There is no other job in the world where you can literally make unlimited amount of money. Not even in casinos. IN TRADING PROFITS ARE UNLIMITED, THAT'S A BIG PART OF THE ATTRACTION TO IT. AS MUCH AS YOU'RE WILLING TO RISK, YOU CAN MAKE TEN FOLD, UNLIKE A CASINO THERE'S NO LIMIT AT THE TRADING TABLE.
Yeah, fine. That's not exactly what I said. Somewhere in your post, you say "you're wrong in saying this and that" when I didn't say it. We could go on arguing forever, mostly about semantics, about what "modesty" means, and so on. I read your other post, and you say that you're profitable as a discretionary trader. I am not. So you know better than me what it takes to be profitable. Your opinion is much more valuable of course. Instead, I can only guess as to why I never managed to become profitable (only as a discretionary trader, because I am profitable as an automated trader). Personally, I think that one of the (many) flaws that's kept me from becoming profitable as a discretionary trader is my lack of "modesty". Try and understand what I mean by it - "modesty" can also be intended as a quality - let's not start a debate about what "modesty" means. After making a trade that proves unprofitable, I cannot exit the position, and expect the market to go my way because I can't be wrong, and I can't admit that I made a mistake (it often leads to blowing out my account). I call that being "immodest". Also, if I make a trade that's profitable, pretty soon I start thinking I am god, and I can make no mistakes. I call that being "immodest". In that sense, I said that being "modest" is a quality for a trader. Because being immodest (in the sense I mean it) certainly isn't.
A passion is fine but having a passion for trading is like saying you have a passion for playing blackjack. The financial market is just a tool used by many to make them rich, but what actually happens it becomes a tool where money is being sloshed around and it leads to trading becoming merely a "game" to redistribute cold hard money. That's all it is. It is very dangerous what you said you said you didn't care just about the money you would make. Well that is the road to ruin because trading is only and only about making money, in the long run.
Travis.... you're right, we are just using different definitions of modesty. I would say what your problem is trading non-automated is discipline, plain and simple. Obviously holding losers is a hard way to be profitable. We were talking about the same thing, just using different words. When I started out, I did the same thing as almost every trader does in the beginning. What helped me take winners and cut losers is that I would think about my bills. For example, if I had a nice trade with say 1000 shares and was up a grand I would think about the risk vs. reward as in how much further can this stock go my way vs. how quick can they squeeze me and take half my profit. The mixture of that and thinking in my head, okay I just payed for X% of my monthly expenses if I get out here helped me learn discipline. I put up post its saying pay your bills and it kind of helped me with that problem. Obviously putting up post its doesn't matter if you are a true gambler. But, when I was a novice, thinking that way helped me MAKE THE MONEY REAL, which is the problem most traders face. It's like sitting at a blackjack table. If I'm up, I have no problem putting down a few thousand dollar chips, but if I actually had to count out 30 or 40 hundred dollar bills I probably wouldn't have made the bet just b/c chips make it feel like it's not real money.
I couldn't agree more. The best traders I know are assholes as people. They are generally ignorant, full of themselves, cocky, egotistical, and shallow, but they make the best traders. You need unyielding confidence in yourself and you can't care a less what others think of you. You need a type-A, dominant personality to succeed in trading. So fuck ya'll, I'm "the1." Edit: And it's not modesty you need, it's humbleness. You need to be humbled by the market and everyone will be but at that point most will quit. If you can dig down after this and channel that anger to work to your advantage then you can come back. At this point you need to become a ruthless son of a bitch.
Yeah, perfect example. You were saying to yourself: "I have to pay my bills", to keep your expectations low, to keep your feet on the ground... to keep yourself "modest" (now we have a new suggestion for the right term: "humble"). Instead, each time I would say "I am gonna show you all, what I am capable of... I will make 200% each month". Once a year I would have a month where I made 100% or more, the other 11 months I blew out my account, or close. The thing is, I could never fix this problem with my attitude, so I just gave up trying and quit discretionary trading altogether. And now I am the biggest fan of automated trading.
I've actually never tried automated trading. How does it compare to discretionary? As far as P and L I would assume it relatively the same, assuming that you get out where you intended to while trading discretionary. But what I mean is do you find the fills better? Do you ever end up in something you don't want to b/c a certain programmed indicator is hit? Stuff like that. I was looking into having someone program a box for me but never really got around to having it tested, just talked about what I wanted an never followed up. I'm assuming when you're saying automated that you are using an intra day black box. However, I also know some guys that use automated systems to just put on and take off size, yet they still have to hit the button to activate the buying or selling. Let me know which you do and a few more details. I'm curious if it would be worth it to develop one myself.
As far as I am concerned (and I told you how I trade discretionary), automated trading meant for me that ever since I started over a year ago I've made money every month, whereas as a discretionary trader I couldn't make money in almost any month of the past 12 years. As I said in a post today, I think that being unprofitable for an automated trader is as hard as it is to be profitable for a discretionary trader. For the past few months, just like you said, I also worried about moving averages and other indicators starting trades just because they barely got triggered. So I was often checking on the systems and closing positions that had just been opened. I was also closing positions early because I thought the system was stupid, and I was smarter than it because ultimately I had created it. And the answer is yes, sometimes they do something stupid, but, overall, by now I have found out without any doubts that the system, without my intervention, makes more money, so I have stopped interfering altogether. And I have stopped checking, and even looking at quotes during the day. If I could leave it unattended for an entire week, I would (one day hopefully I will be able to). Not longer than a week, though. I don't know what you mean by "intraday black box". I thought black box meant that it triggers trades without my knowing what's behind the signals. To avoid misunderstandings, let me state clearly that I created the whole thing so I know exactly what it does at all times. As for the other question, I don't do anything, except restarting everything (pc, tws, excel) once a day. Regarding turning your method into an automated system. It can be done, but I wouldn't be capable of doing so - real programmers could. You see, I am a poor programmer (self-taught vba) and I am an even poorer discretionary trader. My whole profit came from finding something that works through back-testing. It's not like I turned a profitable discretionary method I was using into a profitable automated method, like it would be in your case. I think it could be done, but it might be harder, because you're probably looking at many more things (some of which you may not even be conscious about). Right now all of my systems are using about 3 "ifs" to enter a trade, and just 1 "if" to exit it. Certainly I could never program your discretionary trading into an automated system, but I believe that most of us can create from nothing a profitable automated system, even if they were unprofitable discretionary traders like me. Of course, despite all this talk about how bad I am and how easy it is, I should also mention that I worked on it for about 7 years. But, as I said in another post, if you just do the right things without wasting time, you could do everything in 1 year. But not me. I had to experience every single mistake that could be made in trading before I could do only the right things. That's just the way I am. I had to learn the hard way, and lose a lot of money in the process, and waste a lot of time.
Thanks for the info man... much appreciated. I'm the same way it took me a year or two to stop myself from doing things to sabotage my own trading. Whether it be holding on too long to winners and making them losers or not getting out of losers by just wishing them my way. After two years of that I finally got my act together. I don't know how it is for most people, but for me understanding trading and reading stocks was really easy. If I told someone else where to get into a trade I'd always make money. When I started, the thing that really got me was just not being disciplined.... That was much harder for me to learn than the actual trading b/c by nature I'm always looking for a huge move even if it's not there. Anyway, years later I have managed to rid myself of the habits and actually make a nice living. But my feeling starting was that anyone can learn to trade, granted some people just "get it" for lack of a better phrase, but anyone can be a profitable trader off of charts, techs, whatever. Anyone can make a living doing this, granted a living can be anywhere from 40K a year to millions a year, depending on whether you have a real feel and talent for the market. The thing I see with almost all of my new guys is that they learn to trade but just can't get out of a trade whether they're up or down. Either guys are too nervous and get out of winners way to soon or they are too greedy and hold on to winners too long. I have found that the discipline to hit the exit button was not only my main problem, but the main problem for most traders starting out. Don't get me wrong, obviously it takes a year or two to learn and get a real feel for what you see on the charts, tape or whatever you use to initiate positions. But I have found that anyone who sticks with it for a year or two can make money, the question is that when you understand what you're looking at can you put fear and greed aside and trade a stock like it's supposed to be traded as opposed to letting a lack of discipline overtake your trade. Just to point out, discipline can ruin a trade you make money in, I don't know how many guys I have that get scared and get rid of a winner for 20 cents b/c they're so scared about going back to flat when they should be taking it for a dollar.
My guess is that a lot of really smart people lose money, some have lost massive amounts.. If somebody was first off, interested in trading, and had maybe above average intelligence only, most successful traders could train them to make money.. or that same student could take a long time and learn everything the hard way and become a trader if they were prudent about not losing money while learning.. I'm like the OP, self taught programmer, interested in trading, learning all the time.. in fact I had to work on the art of learning.. you have to change your environment if you are stagnating... move from screen trading to automation or vice versa, switch from futs to stocks or something.. every time I've done that I've made big moves forward... I liked that Robert Redford movie about how the CIA would just randomly launch an attack on an office to keep people on their toes, Redford goes for coffee and when he returns his pals are all wasted and he's on the list... the idea was to keep shaking the tree to get the complacency out..