Gordon, I have to say that I agree with most of what everyone is saying here. The only thing that I would add is that the difference for me came when I came to a few critical realizations: 1. All the systems, all the methods, and all the technical skills you gain from reading books, attending workshops, and frequenting boards like this one are important, but not nearly as important as you might think. It may be an exageration, but I like to think of it this way: All of it is important in that it improves your odds (this is a game of probability not certainty, as you know), but the improvement only takes you from a coin flip's 50% of being correct (in some unknown timeframe) to maybe 52%. If you find a system that is consistently 55-60% correct, then you are kicking ass and don't need to be here. 2. That being the case, the secret to survival and success must not lie in the objective principles and theories you can learn from a book, but rather in the subjective discipline and emotional state of mind that you bring to the trading desk. Indeed, many would argue that if you have the discipline and emotional courage to admit when you are "wrong" (or COULD be wrong) in a trade while only allowing yourself to stay in those trades where you continue to be shown "right", then you would not even have to be right 50% of the time in order to stay ahead of the game. It's that tired old phrase you hear over and over: "cut your loser short and let your winners run." Definitely easier said than done. 3. And then even in those trades where you are shown to be right...in fact, more and more right as the trade goes your way, you could still end up wrong because ANYTHING can happen at ANY time. That retrace against you may look like normal consolidation, but then again, maybe it's just starting slow so that when you turn away for a second it will spike against you turning your winner into a loser. I have a theorem that I call "Derek's Monkey Theory" and it goes like this: Hypothesis: Exit discipline and money management are more important to trading than TA, tape reading, or execution skill. Proof: If you had to choose one, would you rather make your own entries and have a monkey manage your exits, or would you rather have the monkey make your entries and manage exits yourself? Conclusion: When in a position, always assume that a monkey made your entry. I have developed a reputation for "trading scared", and the folks who I trade with have great fun at times calling me a "wimp" or referring to "Derek-style chicken stops" (all in jest, of course). And consistent with my style, I almost always have more stopouts/bailouts than "successful" trades on any given day, and sure, many of those discarded trades would have been great wins if I only woulda-shoulda-coulda stuck with them. My win percentage is definitely less than 50% and my broker loves me because I churn a lot of commissions in my account. There are days when I finish with a large collection of papercuts to show for my efforts. But there are MANY more days where I show a decent profit. You see, at some point I decided that for all my intelligence and analytical skills, I'm just not good enough (or lucky enough) to go for the home runs. I decided that FOR ME this is not the lottery, this is not about getting filthy rich quickly on a month of phenomenal trades. This is about trading just ahead of the game and surviving while trying to do so. And in taking that attitude, I've found that I am now sitting quite long ways ahead of par. If you do decide to keep trading (or come back to trading), I hope that you are able to find the state of mind that works for you... --Derek
SEE the market, FEEL the market, BE the market It appears you have never paper traded for a signifigant period of time.
quote: -------------------------------------------------------------------------------- Originally posted by dereksas Hypothesis: Exit discipline and money management are more important to trading than TA, tape reading, or execution skill. Proof: If you had to choose one, would you rather make your own entries and have a monkey manage your exits, or would you rather have the monkey make your entries and manage exits yourself? Conclusion: When in a position, always assume that a monkey made your entry. -------------------------------------------------------------------------------- That is the best trading quote I have ever heard!
To the gentleman that mentions Corporate life with some paradise scheme -- What are you smoking? Corporate life SUCKS! You go into a job where you always have more than one boss in an atmosphere where an axe is always grinding somewhere. You live your life day by day hoping that the next round of corporate layoffs won't get you or your best friend. Those hot women that you speak of are usually bonking the guys that are three levels of management above you -- and there is always three levels of management above you, too. The you have to deal with the political bullshit of everything -- until you eventually feel like a trained droned that comes in, performs your assigned function and then leaves -- usually taking a project or two home with you because that 40 hour a week salary job that pays 80k a year is really only paying 40k a year because you wind up working 80 hours a week. Corporate life SUCKS.
Gordon, Threei said something on SI a couple of years ago that I read and took to heart. I've been trading since 1997 and had all of the ups and downs..... His statement was "trade what you see, not what you think" I've been solid ever since I let that phrase sink in. I've abandoned almost all the complicating TA info I learned and began playing the game like a hand of poker....I played the cards as I saw them and took my chips when I had a winner.....regardless of size. Levi
True. But you know what sucks even more? Working from 9:30-4 PM, wearing jeans and a T-shirt, getting mentally drained by the chaotic market, and taking home NEGATIVE income and being unable to pay your bills! Now THAT sucks big time! At least in the corporate world, you have POSITIVE cash flow...
GG, sorry to hear about your situation. On the plus side your sincere plea for help has brought about one of the finest threads on ET that I've seen in some time. Here are a few excerpts that impressed me.
All the advice I quoted is classic. I've definitely learned something new from reading this thread. As for my thought for you I hope you understand that I'm saying this from the perspective of one who wishes to help and not hurt. Facing the music is good for the soul. You need to do what was mentioned earlier and stop beating yourself up. You need to drop the Gordon Gekko fairy tale persona, and just be normal joe trader. Every time you read your signature you are reinforcing the fact that you were lucky to make money in the first place. Just start over and fill your mind with positive ideas about yourself the successful trader. You need to stop saying things like "I suck". Even if you don't really believe it, your subconscious catches that phrase and believes it and thus eventually it becomes your reality and ends up sabotaging your success. You don't suck. You aren't a bad trader either. You are a good trader. Good traders are willing to do what it takes to turn losses into profits. Just because you have lost a bumch of money doesn't mean you aren't a good trader. Think of yourself as a winning trader. Really believe it is true. If you don't believe you are a winning trader then why trade? You have to do this in order to really start achieving success. And focus not on making money as your main goal. Focus on taking "your" trades and managing those trades well. Redefine success as how well you follow / execute your trading plan and not as making money. You need to spend some time and get rid of the mental roadblocks that you have built up to success.
I had two months of living expenses left in my bank account. That's when I finally realized that passive learning doesn't work. You have to WANT IT I couldnt agree more you have to really WANT IT, WANT IT BIG TIME
Gekko, I don't know how close you are to Minneapolis, but 25K is a well funded newbie wheat trader. The seat lease is only $30 a month. Wheat is in a huge bull market (highly trending which is what you like). If you were on the floor watching real traders 4 hours a day, you would see how they make money. The costs of trading on the floor are very low. www.mgex.com