Chase Success!

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Check out this post by ZBS. I’m actually surprised to see him dummy trading. Back when I was doing it, I remember that he consistently would rack up huge gains. After reading a few of his journal entries, I can see why he gravitated towards dummy trading.

I only found out about dummy trading after my two biggest losing days, in my trading career. I followed up a $15,000 loss the next day by losing another five grand. I was in shock to say the least.

The first thing I did was to stop trading altogether (similar to Prospectus). I didn’t blog, so there was really no need to proclaim - I quit! However, I knew something had to change. Back then I used mental stops. I also had a bad habit of seeing a pattern form, and then I would make my bet. I would draw my trend lines, and say this is where I’ll get out. In real time, it was funny how one pattern would morph into another. I would draw trend lines to reflect this new development. In fact I would often average down/up. Many times I would congratulate myself for digging myself out of the hole. That’s what led to the blow up. I didn’t have a system at all.

When I became a dummy, my stops were quite clear. I also took Maoxian’s advice, and used hard stops. The setups were easily identifiable, and the entry and exits were set in stone.

Here’s my take on that before I go any further. From that period, I found out one important truth about myself. If the rules were clear, I could follow them.

I experienced a similar frustration to what ZBS is going through. I would have runners on my watchlist that I didn’t take. If only I had taken that trade instead. On days when the market trended strongly, and most of my watchlist fared well, then my account benefited. On days that the market reversed, I would be stopped out. However, I was following the system. I patted myself on the back. When people left comments on my former blog, I ignored them. I was following the plan. Some days were better than others.

I tried using Trade-X’s methods, but didn’t find that I could duplicate his success. Many other traders were able to do it, so it wasn’t his method. Eventually, dummy trading was responsible for me being able to get a clear head. I could see the overall goal again - to become a full-time trader. I owe a lot to TraderMike and Maoxian for that (I found Maoxian through TM).

Why am I not still dummy trading? The #1 reason is that I could never get over the frustration of watching trends reverse, and passively sitting by. There is nothing wrong with the method. In fact, Eyal uses it as his only source of income. So it obviously works.

My problem with this style was that it didn’t suit my personality. When I pulled up 3′ charts, I could see tradable trends. Did it mean I knew how to do it? No! Did it mean that I could eventually learn? Not necessarily. However, I knew that I would never be satisfied with the method I was employing. I wasn’t chasing success, in the sense that I was copying every trader out there. It was something inside of me, and I knew it.

The other problem (or benefit) I saw, was that on days where everything on my watchlist screamed, I made the most profit. With that in mind, I gravitated towards futures. Although I didn’t have a clue on how to trade futures, or smaller timeframes, I knew these two things: (1) honor your stops, and (2) I could follow a clear plan. Utltimately, I knew that I would benefit greatly on days when everything was screaming. I didn’t fare that well on tight range days with the dummy method anyway. Sometimes, I would, but not most.

Now it was just a matter of finding the right plan. I quit reading most of the trading blogs out there, because they offered nothing to my pursuit. My original idea was to watch nothing but the same market, on the same timeframe. I would let the market teach me. After several months of experimenting with every indicator my charting package offered, I was about to give up. I could have went back to dummy trading, but that wouldn’t solve the real problem. This isn’t like alcoholism. An alcoholic can’t drink! This was a matter of finding a style that fit me.

If you are dating a girl, and you can see that it won’t work out, do you: (a) marry her, (b) cheat on her, or (c) find a new girl.

Obviously, you wouldn’t marry her, would you? Well, some of you did, and that just proves my point. Option “b” is a viable option, but its not right. Option “c” is the only viable option.

Sometimes you need to trade a strategy, long enough, to see that its not actually for you. If you really understand it, you will profit from the experience, even if you move on.

Now, with a little over a year since I left the dummy experience, and traded futures exclusively, I can positively say that I did the right thing. I found a viable strategy with clear cut signals. My exits are set in stone. My entries require a little more art, but even if I took every signal, it is wildly profitable.

I’m not bellyaching about these violent trend days. I’m laughing all the way to the bank.

Now, why don’t I just let you in on the system? Trick Daddy says it best in the opening moments of White Folks TV, “don’t be like me player, be like yourself, be like Mike.”

Finding a trading plan is a lot like dating. You look around until you find one that fits you.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com