The Learning Curve

Discussion in 'Trading' started by macal425, Nov 10, 2001.

  1. I was wondering if some of the experienced traders would like to share their learning curve experiences in this thread.
    How long did it take to get to the stage where you realized that you would be able to trade for a living?
    What emotional stages did you go through?
    How many times did you almost quit? (If less than 100)?
    What did you do to get back on track when things looked dire and your confidence was shot?

    Any comments would be appreciated.

    Newbies may also want to share what stage they are at, especially those that are struggling.

    I started trading full time 5 months ago and still feel that I am at the very beginning of the learning curve. It seems to be 1.01 steps forward 1 step back. So far I have only lost about 5% of my capital as I have taken some good advice and started with small shares. 3% of that loss has been during 2 blowout, gambling, days. I am delighted with my decision to trade with IB and the negligible commissions on small shares.

    I know that at this stage, especially starting during the summer, a 5% loss is well within a reasonable range, however it has been a slow, slow bleed which can drain every bit of confidence.

    I do have a trading plan that I try to stick to (except for the 2 blowout, gambling, days). I have one or two entry setups that I follow that I am confident give me an 'edge'. My trade management and tendency to overtrade is where I am lacking and these are the areas that I try and work on, so far with little success. After a particularly bad day I papertrade for a few days to try and get my confidence back

    I followed advice and made sure my capital was risk capital and that I had enough income to 'survive' the learning curve. Unfortunately my personal situation changed soon after I started trading and turned my risk capital into 'must produce income' capital. I am therefor trading with scared money. At this point I am wondering if I should suspend my dream and join the workforce again, whether I should take a part-time job, or whether I should go for broke knowing that success may be just be around the corner.

    I am sure every successful trader has went through some trying periods and I hope that by sharing these it may help those newbie traders who are struggling and losing confidence.
  2. lol i like your usage of numbers here. :)
  3. Hitman


  4. prox


  5. I too have been trading for , well, about 4 months. However, I have lost a great portion of my capital. I do not believe in stopping trading to take time to analyze or papertrade until the trades are going well because they are just not the same in any way, as real trading. Everything that I have ever done in life has been acheived by trying and trying and trying. You just can't learn trading any other way than by doing it. Would one learn baseball any other way than by playing ? How about negotiating ? How about public speaking ? A certain ( x ) amount of capital is just required until you learn. One thing that I have learned that is key (for me, I suppose others as well) is to pick good set ups that (if long) are at good support with low risk and have plenty of room to run: and to LET THEM RUN. (opposite all of this of course for a short)
    Second: Wait for the good frickin' set ups ! I overtrade. I look back at my charts ( I log every trade ) and I do take the beautiful set ups but I also take set ups that I was just trying to make into a trade.
    An important note: I trade index futures. I am contemplating now ( and researching this weekend) just how may GOOD set ups there are on a daily basis in the index futures. Enough to make a living on ? I trade reversal patterns and flags from 5m charts.
    Hope this is worth something to the original poster of the thread ?
  6. garyk


    Also a newbie, started trading about 9/2003. Not yet profitable, lost more capital last year than intended, but still have capital to keep going.

    I overlooked the capability of ticket charges to cause loss of capital during the learning curve. I selected a good, small, local retail broker because of training availability and knowledgeable traders in the shop to learn from. However, I let the ticket charges entice me to trade too large size to get the per-share cost down, and therefore got larger losses than I should have. Lesson 1: use a broker like IB with a commission schedle which will will give you good per-share rates even at 100 shares/trade.

    I also think it requires some time (and probably "lesson losses") to find a style that fits your personality and risk tolerance. They guys I went with are good trend traders, but I can't hold still for the drawdowns needed to eventually generate profits.

    My next step is to go to a prop firm that gives me good rates, some good mentoring I believe, and a good short term methodology which is very risk-intolerant.
  7. I've been trading for roughly the same length of time and with roughly the same mindset as you until recently. After having made three consecutive bad trades (the knid of trades you know are bad from the outset no matter what the outcome) a thought popped into my mind.

    In every single successful endeavor of mine I have never allowed failure as an option. In fact, failure was always seen as a temporary - very fleeting - outcome. Thoughts of "how fast am I learning?," appeared as thoughts of "how fast have I learned?" and occured well after success had been achieved.

    The reason for this is that on the road to success I have never had time to consider when I might reach my destination. I only wanted to know what immediate course of action would yield success. The end result was never in doubt, nor did it need to be pondered.

    One such success was in athletics. I was a pitcher and it taught me, or maybe only enhanced, a tunnel-like view of success. To throw a strike during competition one does not need to consider how to throw a strike and one had better not think of how not to throw a ball: The only thought is "strike."

    Of course, one does need to review their mechanics periodically and so I schedule these reviews. As it pertains to trading, my schedule is this:

    *Develope a plan (however long it takes)
    *Execute (1-2 mos. - set in advance)
    *Evaluate (1-2 weeks)
    *Develope a plan...

    So, what is my learning curve?, what should it be?, I don't care. When I trade well I'm happy. When I trade well consistently I'll be happier. I don't know when this will happen, and I don't care - eventually, it will.

    Money is tight? Stop trading. Sleep on it. Make your decision. Do not waiver.

    I live by one maxim: "The race goes to neither the swift nor the strong, but those who persevere."

    I this aphoristic post is a help,
  8. the learning curve can be very long. it can take years of your life. look at my registered date on ET. thats when i started to get serious about my trading (learning TA etc). Well, I'm still not there, still struggling. But interestingly, I learned a lot. For example, I learned that there's basically two ways to trade:

    discretionary: with a method but a healthy amount of discretion/intuition which takes a long time to develop
    systematic: 100% mechanical which takes a long time to find a nugget in a pile of *, then properly test it and then have discipline to execute mechanically

    so basically if you cant do either, you cant trade. so far i havent mastered either but I'm still trying. I'm currently trying to master only one discretionary setup which is trading the classical flag pattern on intraday ES. I practice with Ensign's Playback simulator. That's where I am.


    For many students of the SCBA, this is often the hardest aspect for them to understand. Nobody wants to fail in anything they do. I have yet to meet a player that proclaims, "I want to be a poor shooter." And I have meant very few individuals who will say, "I don't care if the ball goes in."

    What players often fail to realize is that no one succeeds at first. Failure must happen before success can be achieved. Unfortunatly, we are taught at a young age that failure is never acceptable at any time. Because this failure is often uncomfortable, the player is hit with a double whammy. We make our decisions in life based upon pain and pleasure. Because many of the individuals I work with often have the same shot for over a decade; change becomes difficult to understand. Many times the individual talks himself or herself into believing that discomfort is bad.

    Players at the elementary school levels handle discomfort better than individuals in high school. High School players make up their mind based on how it feels and how they think the shoot looks. They often make up their mind solely based on how it feels. Elementary players have a tendency of not worrying about discomfort and peer pressure. They are more receptive to change.

    I come across a wide variety of shots. When I first work with an individual, the first thing I do is ask the individual shooter to shoot a variety of shots for me. After the individual shots for a few minutes, I usually follow up with a series of disclaimers. Included in these remarks are, "Expect to feel a little discomfort for the first five minutes " and "don't be afraid to fail." For a few individuals this is easy and others it's much more difficult to do.

    The players that succeed in the SCBA the most are the ones that don't mind discomfort at first, don't mind change and understand the failure will happen before success will. One of my favorite quotes that I constantly use is "you're attitude determines your altitude." This is so important for all basketball players, but none more important that when shooting the basketball. Players must always remain positive during all shooting instruction and while practicing on their own.
  10. This is my philosophy:

    Giving up on trading is ok if you realize that you just don't want to do it anymore... if you feel like it isn't worth it, etc. However, if you do want to be a trader, but you just can't do it yet, then I think quitting would be a weakness.

    Inside, you know the answer to this question. You know if you want something and you know if you're dedicated or not. Once you're dedicated, then you need to convince yourself that you can and will get what you want, it's just a matter of time before it happens.

    At difficult moments, try to look at the big picture. Realize what is happening to you. If it was easy to trade, everyone would be doing it. So obviously there are going to be some aspects to it which are difficult. When things are difficult, you have to recognize it as a point where people will quit. You are either one who quits at this point, or you're not. You will have many of these points. The people who make it in the end are the ones who never quit. So, recognize hard times as tests and get past them.

    This can be applied to accomplishing anything; not just trading. Sure, there are no guarantees, but if you're going to be successful, this is a good approach to take.

    There is a Bruce Lee quote regarding the acceptance of failure and it is so true. As long as you think you can do something, you will find the way. Once you don't think you can do it, your mind will not steam ahead full force and focus. Once you have accepted that you can't do it, you're in a very weak position.

    Think about it, say you want to go running today. If you're convinced that you will do it today, your mind will go through the thoughts to get you to actually do it. Once you start thinking that you're too tired, busy, etc., your mind will create thoughts which will lead to you not exercising. Believing in yourself is critical.

    I will say right now, within the next 5 years I will be a profitable trader. In my mind, I absolutely know it. No one can say anything to me to convince me otherwise. When it happens, it won't be because I'm some genius. Not that being smart isn't beneficial or that I'm a total moron, but it will be because I kept at it and never quit.
    #10     May 12, 2003