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

As suggested by many commenters after my long losing streak, I’m conducting a focused and thorough inventory of myself. I want to get everything out in the open–my strengths, preferences, personality, resources, constraints, and my flaws and weaknesses. I also want to put together all of the good trading principles and wisdom that I’ve collected in the hopes that I can integrate them into a system for myself–one that I truly understand, that I believe in and will stick to. I hope to take this assessment and develop a personal strategy to give me the best chance at success.
Jesse Livermore said:
Following the dictates of experience may possibly fool you, now and then. But not following them invariably makes an ass of you.
I have not followed the dictates of my experience for a long time now, so you know what that makes me. My experience tells me time and again that I need to really examine myself. I try a new system, get banged up, and decide that I need to examine myself, don’t do it, try a new system, repeat the cycle. I’m ending the cycle with this personal inventory.
If a trading method is in conflict with my personal characteristics, I won’t be successful with it. Conversely, if a trading method is in tune with my personality and strengths, I should be able to do very well with it. So, here are some of my traits:
PERSONALITY
•Ambitious and Driven–I want to accomplish things. I read, trade, write, think about stocks from the time I get up until I go to bed. I put a lot of my free time into the study of trading. I even read eBooks and articles on my PDA when I walk my dog!
•Spontaneous–I hate drudgery, monotonous tasks, grunt work, rigid schedules. I’ll shirk things if they are a chore.
•Helpful–I like to help others!
•Self-Critical–I really get down on myself for “failure”.
•Performer–I look for feedback from others, and I live for praise and recognition. I “need” reinforcement from others, like an actor or a musician.
•My Meyers-Briggs type is eNFP (formally tested at work), so I’m barely extroverted, strong intuitive, strong feeling and strong perceiving. (Here’s a link to what all that stuff is.) I consider special circumstances, am open to and await new information, interpret and add meaning rather than focusing on the basic information. Basically, my personality is a direct opposite to what a good engineer should be! I just don’t fit in that profession.
PREFERENCES
•I like movement. I like to chase strength and weakness, not fade them–momentum and breakouts are my preference.
•I like to be profitable RIGHT AWAY in a trade, even if it’s small. Then I am the most comfortable.
•I like to win. I like to “be right”, even though I know it isn’t the most important thing. I like to finish out periods in the green (day, week, month, year, etc.)
•I like to trade often, every day if possible.
STRENGTHS
•Programming–I can program well, and I understand computers and computational things.
•Thinking / Analysis–I can look at facts and data, formulas and laws and come to conclusions.
•Mathematics–I have a graduate degree in Engineering. I got the whole “Math” thing down.
•Communication skills–I fancy myself a good writer and communicator…
•Humility–I can acknowledge where I am deficient and also acknowledge when others are superior in their skills
•Ability to learn–I can learn very well if I am guided, less so if I’m all on my own.
•Self Awareness (to some extent)–I stop to ask myself why things are the way they are with me. I am not oblivious to my faults (most of them).
WEAKNESSES
•Emotional– get overly emotional about things, good and bad. Probably influences why I always seem to be on the wrong side of the market when I trade without a system.
•Manic-Depressive–While not diagnosed :P, I go from carefree highs, taking too much risk, to pessimistic lows where it’s all gloom.
•Impatient–I hate waiting.
•Lack of Self Control / Impulsive–I don’t follow through with my plans. I don’t stick to my resolutions. I change on a whim, even when it’s against what I’ve resolved.
•Inconsistent–I change things up when they aren’t working, and I don’t stick to a good plan.
•Rash–I rush to judgments and conclusions without sufficient time or data
•Wishy-washy–I easily change my mind, back and forth, based on circumstances.
•Self worth & emotions tied to market success or failure–I am heavily long emotionally in my performance in the market. I want to succeed here so badly, that if I fail in this, I feel I have failed in life. Too much pressure!
•Lazy–In contrast to my drive and ambition, I also have a lazy streak, where I will try to take the easy way out of anything that is in front of me.
•Sense of Urgency–I’m always racing! I want to turn my tiny account into enough so that I can quit my job and trade full time tomorrow. Not realistic, and self-defeating! I’m always trying to race too fast.
CONSTRAINTS
•Part time trading–I can’t devote my full time to the markets (that pesky day job thing)
•Low equity level–My balance is $2k. There, now everybody knows. My commissions are per-share, so they are not the drag that I have faced in the past, but that means I also have to play small. It also means that I’m stuck with free tools, since large fixed costs will eat me alive.
•Distractions during day–Coworkers, bosses, meetings, etc.
RESOURCES
•Buying Power–I’m leveraged 25:1 in my prop account. I have plenty of buying power, way more than I need.
•Trading mentors–That’s all of you out there. :)
•Trading skills–I’m no novice when it comes to actually carrying out trades. I’m comfortable executing orders. I’m also moderately skilled at in-trade management, choosing partial and full exits and stop management.
•Good trading principles–I’ve learned a lot of good principles in my study of the markets, and I’ve internalized a few of them.
Here’s a few quotes and paraphrased general principles that I want to implement more:
Quotes:
HCPG: “You don’t suck, you just need a system. After you find a system, just stick with it and become better at it. Your energies now should focus simply on that — what kind of trading do I want to do? A scalper? Futures? Swing-trading? Momentum break-outs? etc.”
Pinoy: “It seems that you just need to focus on fewer set-ups instead of jumping from one system to another…when I was at point of giving up many years ago just like where you are now, a very wise trader advised me to go back to all my trades and remember which of these trades did I feel like I was most relaxed and calm (whether taking profit or cutting losses). And I found that I’m most relaxed when trading breakouts and chasing momentums…you need to find that trader inside you and trading will be more pleasurable”
Born2Code: “Look at the charts the night before, look for a breakout to a new high, or a retracement. Buy the follow-through using a stop-order with a profit target and a stop loss. You would still be “day trading” but using the daily charts.
The amount of noise in this market is incredible. Watching the daily chart during market hours (not the 15/30 minute chart, but literally the daily candles) shows me very clearly how difficult it is to day-trade this market these days. The signal-to-noise is very high.”
Johnson: “Find something that you are good at now - looking at your 30% run up seems to fit :) - and become great at it. Know exactly when to jump into that type of trading. What type of environment was the market in when you experienced those gains? Once you have one strategy that is successful you can begin to experiment with new techniques. Paper trade, or start very small, in techniques which you are unfamiliar with and go from there. I think you’ll find that if you stick to what you know you are good at your account size will prosper.”
Zoomie: “As per Jamie’s comment, eons ago, in a post forgotten because it conjured up too many painful memories, said it takes 3 years to become a proficient daytrader.”
Richard: “It’s not a race!”
Paraphrased:
Trader-X: Just look for one high quality setup consistently and you can do well with only a couple of trades per week.
Jamie: Volume spikes, capitulation, pivot points, daily/intraday interactions, base-and-break
00NR7: Truly understand your trading system, bring a structure to the trade (he uses fib retracements)
Teresa Lo: Test your strategy for confidence
HCPG: Follow a system, stick with it and become better at it
Muddy: Price and volume! Trade what’s moving, don’t force trades
Zoomie: Unlimited trading is a double-edged sword
During my 30% run-up, I was trading momentum and breakouts. I was watching gappers and trading from very short timeframes (1 min) with structure and targets set up on a higher timeframe (15 min or daily). Maybe that style just matched the markets well at the time. I used the same strategy to grind back down to 0, when the volume was low and breakouts failed.
What strategy to try now? How best to address my flaws? Not sure, but with all of this out there it should help me to work that out. I’ll read and re-read this post to let it all sink in.
This post was contributed by a guest author, and does not necessarily
reflect the views of Richard or MovetheMarkets.com