I don’t think I’ve been doing a very good job of generating developmental material for the site lately. The older articles I’ve written are still popular, but when I look at them now I mostly cringe. I think it’s because I was writing about problems I was overcoming, and now that I don’t have those problems, the posts seem silly. The old interview MWF recently posted reminded me of how different my viewpoint is today than it was in 2006.
It stands to reason that I would cringe less at more recent articles, if I would just write some. After all, I still have problems with my trading and I still work on them. It’s just that, the kinds of things I focus on now are more personal, and generally harder to put into words. And I am lazy.
I don’t mean personal as in private or embarrassing, but personal as in relating specifically to what goes on in my mind. And also, it’s harder to know when I’ve really “won” or learned anything worth passing on to others… it’s not as clear-cut as when I decided I knew something about profit factors.
I will give you an example. If I could change one thing about my trading today, I would want to trade all day as if it were my first trade of the day. If you read the site and watch the videos, you know that once I’ve made some decent money, I lose all motivation to trade. I still watch the markets, but none of the setups look good enough to me anymore. I feel sluggish and uninterested. On the other hand, when I’ve traded myself into a hole, I have no trouble finding good trades until I’m in the green again.
So, even though it presents itself as a kind of lethargy or distaste for trading, I have to assume that there’s some fear deep down of giving up the money I just made. Or maybe it’s something else. But the fear thing sounds good. I would like to fix this, because I think I would be well on my way to serious wealth by now if I could just keep trading enthusiastically. Trading stocks, I would usually take 3 to 5 trades, which for my style meant I had open trades in the market for a total of 2 or 3 minutes out of the market day. Obviously, there was room for a LOT more trades. The big downtrend on Friday gave me lots of opportunities in @ES that I didn’t take. You saw me take the first one effortlessly in the live trade video. Each trade after that took more willpower, and after I made a few more points I pretty much stopped at midday. Crazy!
So that’s the kind of thing I am focused on now. I am reading Trading in the Zone for the first time, in preparation for an eotpro event with the author. I had heard of the book a lot of times, but just never got around to reading it. Maybe I will find something in there, of use.
(aside: how stupid is it that Ari Kiev also wrote a book called Trading in the Zone? I didn’t even know that was allowed! I can tell you right now that my first two novels will be called Harry Potter and the Sorcerer’s Stone and The Holy Bible: King James Version).
January 6th, 2008 at 10:08 am
lol…IMO “the disciplined trader” by the same author was much better than trading in the zone…most of the topics are similar, but he did a better job in his first book
if one of your students (i’m really talking about me) starts putting up some serious money, then maybe that will motivate u…i’m still a one lotter, but after i have a longer track record, i plan on upping the stakes - and doing so aggressively
besides, we have a lot of authors not pullng their weight…its time for michael, eric, zoomie, and prospectus to step up, so u don’t have to do all the work
January 6th, 2008 at 10:17 am
That’s going to be great when you start scaling up. Just going from one lot to two is pretty amazing, since your profits literally double without you having to do anything different. Of course, so do your losses, so you need confidence to keep the down days from feeling 10 times worse! Too bad pain and pleasure do not scale up symmetrically.
January 6th, 2008 at 10:24 am
richard: exactly…realistically, in the SnP futures, i really doubt there would be much slippage with 20 lots…i pulled up a 15 second chart, just to see the amazing volume that was there, in that short time…i think i saw dr. brett say that many are using 50 lots…talk about heart failure!
once u have a winning style, then scaling up is no problem, because of the liquidity…but being able to handle it mentally would remain a huge obstacle…doing it too aggressively would definitely impact the way i enter and exit…i’m still sweating every tick with 1 lot, so this may take a while
January 6th, 2008 at 10:58 am
MWF, I assume that you’ve played with one of the simulators that are out there to test setups, etc. I’m using the demo from OEC (open-e-cry) and it works great.
Their demo account is $50k so I’ve been trading up to 10 lots on it. Market orders always fill instantly and limits will sometimes ‘nibble’ for a second or two. 10 contracts is really nothing to the market and yet that’s a ton of money–$500/point.
Of course, my simulator account is down $10k right now but that’s because I was doing a whole lot of stupid, desperate things on Friday in an attempt to get back from $7k. Worked for me, didn’t it? lol. I’m back to being disciplined and recovering my simulator account this week.
January 6th, 2008 at 11:22 am
Richard, I’m not qualified to give advice but I’ll share an observation. Most of the traders that try to get rich seem to blow out and the ones that trade for an income and stop seem to keep on going.
Wouldn’t you rather have one perfect setup a day with higher leverage and then relax the rest of the day? It sounds like your stock strategies were scalps so I don’t know why you’d want to change something that works for you (and in general).
One thing that I noticed in my first three days of paper trading is how incredibly draining it is. The level of concentration required to follow the charts leaves me more tired after half of a day than I was in an entire day at my previous job. I don’t think I’d like a system that requires trading all day…I know that I’ll be tired after a while and make mistakes.
January 6th, 2008 at 11:42 am
maybe I am an anomaly, but I have never had much trouble following charts all day. When I have early losses and end up trading the majority of the day, I don’t feel very tired afterwards. If you have an edge, it really is statistically best to exploit every instance of it, no matter how rich it is making you.
In reality, most people that trade will fail, no matter what their motivation was. If I’m going to be a success, it might as well be a spectacular success. My edge in stocks does not exist in index futures, so I’ve had to change styles regardless. That was part of the fun of switching. Something new.
January 6th, 2008 at 12:22 pm
michael: absolutely…once a trader can get over the psychological hump, there really is no limit (except for the account size of course)…then if your account gets too large, u can always play the basket of eminis…if that’s the major problem is finding liquidity in the futures market, you really don’t have any financial problems
January 6th, 2008 at 12:53 pm
Richard, though i obviously can’t ‘know how you feel’ i do understand where you are coming from regarding the ability to stay in the market like it’s your first trade. and i understand from the point of view of someone developing that skill, not of someone who has mastered it.
i don’t know how much you follow sports, and football specifically, but to me trading and professional sports are very analogous. this year we got to watch as the Patriots went 16-0, something that hadn’t happened in 35 years. week in and week out, their coach ALWAYS hammered on the same point: we look ahead to our next game and no further. one game at a time. i think nearly every coach says that, but this team truly lived and played by that mantra. and within that approach, they played each game one series at a time. they played every game as though it was 60-minutes long … because it is.
for me, i am working on developing these skills in trading. yesterday is yesterday and i can’t do anything about tomorrow or next week or a year from now. all i really have to work with is today. regardless of my trading timeframes, that doesn’t mean i can’t or wouldn’t incorporate historical information into my trading, it just means as a trader i have today, this game only, to truly work with. and i want to win today. while trading today, i know i have a finite amount of time to work (for me the RTH session, as i don’t hold trades past closing). if i get a great trade at 08:30am central, awesome. trade it and trade it well. but that doesn’t mean there won’t be another great setup at 10:30 or 1:30 or 3:10. if there is, i want to be there, in the game, and ready to trade it like it is my first and only trade. basically, i am working on developing the realization that i enter each day 0-0 and enter each trade 0-0. because it is true. since the market doesn’t know or care about my trades, i am the only one keeping score. my trading isn’t really a correlatable event. ideally (and theoretically) my trading should represent something similar to the statistical probabilities of the setups i use, but one trade is not correlated to another.
this year the Patriots were accused and criticized for running up the score. i don’t know what that means. imo, every freaking time you are on the field you should want to score and win. if you get the ball, you should want and try to score. if the other side has the ball, you should want and try to score. score on every possession and win every game. and to do that you have to be ready to play the full 60-minutes. a lot of games have been decided in teh final seconds of the game.
from what i’ve read, you seem to be a great trader with his head on straight and his stuff together. that’s awesome. i’m certain you will find what is blocking you, address it, and further develop your trading expertise. as you have discovered and advised: the trader is always more complicated than trading itself.
kudos to you on your progress so far, and best wishes for you in the future.
btw, yeah it seems a bit odd that there would be two trading books with the same title from different authors. however, they did both come out around the same time (Jan and Feb 2001), and i imagine the title was too integral to each book to go back to the drawing board.
if you haven’t already seen it, you may also find Dr. Brett’s recent book (Enhancing Trader Performance) useful.
take care and trade well
January 6th, 2008 at 12:57 pm
Richard, I’m sold. I’m going for filthy stinkin’ rich. I’ll get to that as soon as I stop losing money in simulator (get comfortable, this could be a while ;).
January 6th, 2008 at 1:25 pm
michael, you may find that you build up a chart-watching endurance over time. Good luck!
Thanks for the comment, Derek. I don’t follow sports but I believe it is exactly as you say. The market does not punish you in the afternoon for making money in the morning. The greed to keep making sensible plays is not the kind of greed they warn you about in all those pig clichés.
January 6th, 2008 at 2:12 pm
it also didn’t hurt that the Pats signed randy moss
January 6th, 2008 at 11:07 pm
http://www.youtube.com/watch?v=0EU1O-hGxgg