It NEVER ceases to amaze me...

Discussion in 'Options' started by coyotetrader, Feb 11, 2010.

  1. how strong the internal forces of fear and greed are in most humans.
    Certainly these forces exist in my friend's trading experience
    I am an active consistently profitable fulltime trader in stock options for the past 15 years. My friend's experience...3 months with miserable results.
    He asked for my help and guidance. Against my wife's objections, I agreed to help him. BIG MISTAKE!
    I started this reclamation project by demanding that he dump everything he was using and start with a clean slate. I also told him that what I teach him is the result of years of painful lessons, dead-end methods and utter agony at times to corral your emotions. He promised to be a model student. He acknowleged my experience and trading expertise and said he needed to be humble and learn. He lied.
    Again, against my wife's advise...I taught him my methodology as well as traded it live for him for several months...with consistent profits. He was very impressed and excited that finally he found something he could use to consistently make money trading stock options and stocks. He was extremely thankful.
    Now, before letting him go on his own, I preached to him the dangers of deviating from the trading plan I wrote out for him. If followed it laid out a practical and achievable plan to consistently make money in the markets just as I have done. Therefore, I insisted that he meet with me at the end of each week for a couple months to monitor his progress.
    He even had the written trading plan laminated and placed on his desk next to his monitor.
    He agreed profusely to follow the plan regardless of external forces.
    After eight weeks of being on his own and monitoring his progress...he seemed to be getting it. His equity was growing and his trades followed the plan laid out for him.
    After a month of not hearing from him, I was nervous. I wondered if something had happened to him (though I already knew).
    Finally, I learned what...from my wife...who happened to run into his wife...who was furious at me for causing her husband, my friend for over 15 lose their entire savings.
    Shortly thereafter my friend called me to apologize for making me his scapegoat. He said he had to come up with something to save his marriage and blaming me for his losses seemed the best way to go. Thanks!
    I asked him what happened. He told me that he followed the trading plan for several weeks after being on his own. He was successful doing so but wanted to tweak it a bit to allow for more profit. In other words the old "I want to give it more room so I potentially I can (and will) lose my ass" explanation.
    You know the rest...he blew out his entire account.
    But he had more to tell me. He said that although the market knowledge I provided him was exceptional he found it to be too mundane and "unexciting". He needed more action. He therefore decided to change a trading plan that I have traded for consistent profits for 15 years!
    But what he told me next said it all. He told me that there was one thing that I could never teach him...HOW TO SAVE HIM FROM HIMSELF!.
    Trade smart.
  2. erol


    I think people have this idea of what trading is, and they stick to it.

    It actually doesn't matter what it is...

    same can go for weight loss... tell people what they should do and what works, but they'll do whatever idea they have in their head.

    Also, you value your system since there was a cost (not only monetary) in setting it up. Time, pain, sweat, etc.

    When you hand that to someone, they won't value you it like you. So it's only natural that they tamper with it. They won't realize that their unwinding your solution, instead of improving on it.

    Sorry to hear though.

    dmo from this board said something once that I think is relevant regarding giving friends advice on investing (something equivalent to):

    [don't give them advice because] "if they make money they won't remember [you] and if they lose money you will feel awful"
  3. coyote, don't feel too bad.

    Ed Seykota (a famous futures trend follower) has said that:

    "Everyone gets what they want from the Market"
  4. I think most new traders don’t understand that coming up with trading methodology is fairly easy. All they need to do is learn how to identify (couple of MAs will do) trend and simple support and resistance, and they could be on their way to make a decent living from around these simple concepts. That’s the easy part.
    However the hard part is to convince them that they are psychologically not suited to trading, that they have to adopt their thinking, and focus on risk control which translates into having and following a trading plan, money management, discipline, etc. This has been reiterated over and over to new traders. No point elaborating on this.

    In my opinion perhaps all new traders deserve to lose money over and over again until they finally either no longer cannot handle the pain from losing and they either quit and go back to their old job, or they finally realize that lack of trading success is due to their stubbornness and arrogance.

    They don’t need to lose money. They can backtest their method, and then paper traded it for a few months. But instead they CHOOSE TO LOSE money through their behavior. I suppose it would be easier to teach 10 year old kids to trade then a mature adults.
    I do agree with psytrade’s Seykota’s quote. Here is an additional quote from Mark Douglas. “All traders give themselves exactly what they feel they deserve. Trading is an exercise in accumulating money. Once we have learned how to trade (perceive opportunity and execute our trades), who else or what else could be responsible for how much we end up with in our equity account?”
  5. wst


    Nice story, thanks for sharing. Well, thats human nature I guess, greed, lust for action, lust for quick profits. Real trading is boring and that why most newbies then to charter to day trading for the daily rush of adrenaline, just like the schmucks at the casino tables.

    Must say it's very kind of you to teach your friend your whole method, I wouldn't do that, coaching/mentoring yes or maybe let them piggyback or manage. The result of 10 years of blood and sweat can not be measured in cents and dollars.
  6. drcha


    Coyote, I do not think you made a mistake. You were very kind and a good friend to this guy. The fact that things came out the way they did was entirely his problem, and due to his character flaws, as evidenced by his blaming something on you that is entirely his fault. Also, his wife is ignorant and wrong-headed to blame you--a fact she probably realizes at some level, or she would not be so pissed off.

    Don't go hide in your cave. Keep right on being a good friend to people you care about. I think you should be proud of yourself for what you tried to do for your friend. Few people would take the trouble to do what you did for him.
  7. Redneck


    This bares repeating

    And great job for trying to be a stand up friend... unfortunately it does leave one hellofa bitter taste when it doesn’t work out

  8. spinn


    nobody will ever appreciate the time to make a method, they just assume you came up with it in an afternoon.

    the method I am using was developed over 20 years, and I have spent 4 more refining it to something I can use.
  9. schizo


    There are three things you should not do in life:

    1. Never introduce your girl to your best friend.

    2. Never loan money to your own mom.

    3. Never teach anything for FREE (because it's always taken for granted).
  10. ammo


    Even when telling his wife about the loss, he didn't accept the truth, he rationalized his answer , even to you,(to save my marriage}. You can't teach a person to be honest, and without that skill, you will never be able to repeatedly take small losses,thus always leaving the door open to large losses ,or blowing out your acct.
    #10     Feb 12, 2010