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Confessions - Stories of defeat and lessons learned
Started:March 8th, 2012 (09:34 PM) by GaryD Views / Replies:9,292 / 45
Last Reply:January 31st, 2013 (11:07 AM) Attachments:1

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Confessions - Stories of defeat and lessons learned

Old March 28th, 2012, 08:08 PM   #31 (permalink)
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well ty everyone for prompting me to reconsider my stops-are-evil belief. i think i just abandoned stops because i started using a trendline to time my exits, and there is no way to set up a stop based on a break of the trend. i tried making an alert in IB to bump me out of my option position if the stock got to a certain price, but what ended up happening is that i went short the same call and of course banked accidently. i still dont' fully understand that one. why wouldn't they have sold my actual position? anyways, ages ago, IB told me basically there was no type of conditional stop i could attach to my order to get me out of an options trade that was based on the equity price action. honestly, this seems...odd to me. i don't really know why they don't let you set up a conditional stop order which says, if the equity gets to x do y with this position.

there is in fact software for NT which will exit you based on a trendline break - found that on the NT board. but it doesn't work for options

*however* it dawns on me that i could bring up the options chart, draw the same trendline on there, and see where my exit would be and set that price as a stop. u guys make good points; i am going to try that.

also, finding this 97 dollar "market tamer" options course highly useful; perhaps they address the issue of stops at some point.

Du sublime au ridicule, il n'ya qu'un pas. ~Napoleon Bonaparte
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Old March 28th, 2012, 10:10 PM   #32 (permalink)
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I suggest that emotions are everything. To make effort we must want. As a simple example, you could be angry, yet that could manifest into being productive, or, being angry could make one non-productive. But somewhere in there are emotions shaping our every move.

If I could say something to myself, when I was going through a similar time in life, use trading (simulated) as a tool, not to make real money, but to learn acceptance.

Let it hit your stop. It's ok. Let it run to you target, or remove the target and let it breathe.

We try to structure the world in a manner where we have control. In many places we can, but not all. You cannot control the markets, you can barely forecast the markets, but you can control where you enter or exit a trade. Why get out at 1 tick? Choose something better.

And if it does not come, accept it. And try again.

Power and control comes from giving it away without losing it. Just as GaryD suggested. Yet every rule is both breakable and sacrosanct. Discretionary traders must constantly look where they can push without falling, pull without being frozen....the line is forever the same, yet forever changing....

And now I will get a thousand nasty comments about speaking in riddles again

"Visceral"..."Darwinian".....the following quote transmits (to me) the same power as those 2 words....."This is a religious issue, either you believe this or you don’t."

I have bastardized this quote...but it comes from here.....Black Box - Thomas A.Bass. Thanks to Lornz for the link.

PS - I am happy that Gary took my suggestion and acted on it, but he deserves the thanks and I don't because I did not act on it. Having read all the comments on the thread, Gary's initial thread-starter post should be printed out as a reminder of the abyss and that abyss' can be climbed.

Last edited by Deucalion; March 28th, 2012 at 10:18 PM.
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Old March 29th, 2012, 03:59 AM   #33 (permalink)
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Hi. I have been trading for more than 3 years. If memory serves me right i had started in Oct 2008. Although it seems more like 20 years back.

During March 2008 i had finished my MBA Finance. This was the time when the world economies were in recession. And the majority of the people were getting laid off. I applied to a lot of firms for a job , got rejected in a few and rejected a few as the salary they were offering was quite less in my opinion. So i decided i would stop applying for jobs and focus on my thesis solely. My topic was "Manipulation in financial markets within the legal framework". I was also eager to make money and found a reputed "Analyst" ready to share his secret at a nominal price with 100 more enthusiasts like me. So i attended the weekend workshop and according to the reputed analyst i was ready to make money from in Cash Market and not futures since his method was specifically useful only in slow moving markets.

I was 24 years at that time and had just got out a relatively serious relationship. So my focus was a little off but i started trading. I bought and sold stocks as i was taught but the account was not in the green. In fact i was down about 10k for the month. So i decided to trade futures. I was trading futures based on either my broker's recommendation or what i was reading online. It wasn't bad. I was making money here and there.

Then one day i was down about 7k for the day. I recovered the money the next day (GOD KNOWS HOW) . Then i was down 20k for the day. I still remember this trade. I went long at the high of the day and as price fell i was buying more and more and more. Since i had recovered my loss of 7k earlier i could easily recover my 20k. But things were different and i lost another 18k. I had smoked about half a pack of smokes in a couple of hours. The only thing which was going on in my head was WTF is happening . I need to get a grip on things in my life. To make matters worse at that time i had a slight tear in my left quadriceps and was skipping muscle rehab and pain would become very severe at times.

Since i was a teenager i have excelled at sports and have played at the highest level and traveled a few countries to participate in tournaments and to demonstrate my skill. One thing i had understood very early in my life was that if i had to improve i had to point out my mistakes and work on them. Most people hate it when someone points out their mistakes/flaws but it wasn't an issue for me . So with the benefit of hindsight i wrote down all the things that i did wrong in my trading so far. This became a list of what not to do. If this is what not to do then the opposite should be of what to do. But what i realized was that i had little skill at that time and needed to more practice. I was drawing parallels between trading and my prior success as a teenager.

I took some time off from trading since i did not want to blow up my account.Started reading some stuff online and luckily i found out about VSA which eventually meant reading the work of Wyckoff. There were days when i would put in around 10-12 hours to get a better understanding of the market and there were those days when i couldn't sit in front of the screen even for an hour. Everyone around me was telling me to give up and get a full time job since there was no activity in my trading account for nearly a year. I read a lot of books during that period and a pattern began to unfold. All great traders had gone through this "STRUGGLE" phase and came on top of it. I had done the same earlier as a teenager and had overcome this phase in another walk of life. I knew that i could do the same in trading.

The aim was simple : I should be better than what i was yesterday. The progress will be slow but will be extremely stable.

Fast forward in time Today and I am more or less a break even kind of trader who makes nominal profits and withdraws and spends them every once in a while. After a lot of effort i have reached this point where i am extremely relaxed while trading real time.


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Old March 30th, 2012, 02:35 AM   #34 (permalink)
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Key Lessons Learnt

This is my 1st post on a public trading forum, having been a full time day trader since April 2009. First of all, I want to thank Big Mike for giving traders a productive environment to share and discuss ideas. One of the reasons I never spent time on forums was due to general negativity of the participants - I think you have done a great job from what I have seen keeping the forum positive in that respect, so well done and keep up the good work.

I am writing this to share my experience as a trader so far and hopefully give others some guidance. From a young age, I have always been into performance-oriented disciplines starting with playing piano to concert level, national squash, professional golf and now full time trading. The reason I mention this isn't to brag about what I have done, but merely to pass on valuable lessons I have learnt on my journey to becoming a full time trader. There is significant overlap in all these endeavours and will discuss what I mean by this later in the thread.

Back in 2005, while I was playing professional golf I started to become aware of what separated the guys who were struggling to make it on the mini tours to those who were at the top of the game, consistently keeping their tour cards. Many of the guys had the ability to make it, but why weren't they? What was holding them back? To become a consistent tour player, you have to master a number of disciplines. In simple terms you have - 1) course management 2) technique and 3) psychology. Of these 3, which do you think most of the guys spent the majority of their time on? Which do you think would make the biggest difference at that level? Of course, most believed that is was their technique that was holding them back, so they spent all their time on the driving range and short game areas honing and trying to perfect their technical game, while giving much less consideration and appreciation for course management and psychology. What did the the guys at the top of the game do? They spent time working with a sports mind coach on mental preparation, pre-shot routine, state control, staying in the moment and eliminating negative thoughts while working out a game plan for each hole and weighing up the reward:risk of each individual shot. They had a deliberate set of actions that they followed with patience, discipline and focus. They also kept things simple!

These disciplines broadly translate in trading terms to 1) business planning, position sizing & trade management 2) technical analysis 3) psychology. What do the majority of traders spend their time on? What do you think professional traders focus on? Read "Market Wizards" series of books by Jack Schawager if you haven't had the chance to. Hopefully you are starting to notice some overlap here with trading & sports.

After noticing this I become fascinated in understanding what drives human behaviour and causes people to take certain actions. I found myself a sports mind coach, and started working with him one-on-one, taking him to tournaments and including him as part of my team, along with my technical coach. Funnily enough during one of the sessions, we started talking about wealth & money. He mentioned that he traded options and explained the concept to me - I became hooked. Little did I know what awaited me down this road...

I bought a trading course and like most new traders instantly became excited at how much money I could make. Plugging the numbers into compound calculators and doing projections years forward - it sounded so simple and a route to extreme wealth in a short period of time. As you can imagine, this wasn't the case, and I quickly realised that it wasn't quite as simple as it sounded! So I thought I need to understand options in more detail (as I have always been a detailed oriented person) and took an options course and read books on options - I now had a wealth of knowledge about options but did it help me become profitable - simple answer, no. So I understood multiple option strategies, what I must be missing is a timing mechanism, along came technical analysis. I found a company selling a technical trading system and jumped at the opportunity to learn and understand it. For some reason, even though it appeared profitable, I wasn't able to make consistent profits and couldn't figure out why. What I must need then is to customise the indicators - along came a technical guru with tons of technical indicators - this must be the answer. So I followed him for a few months and started to learn programming to customise my own indicators. I read books by Wells Wilder, Chuck Le Beau, Charlie Wright etc and started backtesting various strategies. After around 9 months of frustration, sleepless nights and 1000s of hours struggling to find strategies that had a demonstrable edge across a broad range of markets in different conditions taking into account trend and volatility, I began my path to simplicity! I'm sure many of you have been here and know exactly what I mean, and if you haven't I'm sure one day you will.

Although at the time, I couldn't believe how much time I had wasted, I now respect that it was necessary to lead me on a journey to where I am today. From doing all the backtesting it gave me an appreciation for simplicity - as I discovered the more variables that were introduced the more the system broke down when trading live. I eventually realised I was struggling to become profitable as the systems I was developing just weren't aligned with my own values and beliefs about the market - this was an AHA moment for me!!

Around mid 2010, I began to get an appreciation for discretionary price action trading. I read the classic technical analysis books by Edwards & McGee, Richard Schabacker & John Murphy as well as material from Pristine, Linda Raschke, Al Brooks and Bob Volman. I took all the indicators off my charts apart from a couple of moving averages and volume. I started to learn about multiple TF analysis, candlestick analysis, volume, identifying trends, TRs, BOs, fBOs, TLs etc. This was a huge leap for me and I felt naked without the indicators but I believed it was the correct path to take. Over the last 18 months or so, I trained myself to look at only 1 chart (5min) and infer what is happening on higher & lower TFs as well as taking off volume and trading off the charts so no need for DOM. Again another breakthrough for me.

Through NLP and understanding my own personal psychology, I have come to realise that the more stimuli I have, the worse my real-time execution becomes. When not under stress, I am able to process maybe 6-8 pieces of information, but when market is moving and I am reading the hard right edge of the chart, that may go down to 1-2. The candlesticks and MAs are already 2 pieces, so adding the DOM and other charts introduces more stimuli and reduces my execution capabilities. Also as I am detailed oriented, I have a tendency to want to drill down to smaller TFs and if I have them up, I become attached to them and lose track of the big picture.

So what have I learnt so far?

1) SPEND TIME WORKING ON UNDERSTANDING YOURSELF - this is the single most important point I want to reinforce. I wish I had realised this sooner as it would have saved me a lot of time and money. I still speak to my sports mind coach from on a daily basis as he now also runs a private trading fund similar to myself - this is invaluable for me. Many of the behaviors I experienced in golf carry over to trading. This is the only way you will ever be able to find a method that you truly believe in and are able to trade consistently - don't underestimate this, it is vital! I appreciate that not everyone will be able to have their own mind coach, but there is plenty of good material out there to help by authors such as Mark Douglas, Van Tharp, Denise Shull etc. Spend adequate time learning about personal and market psychology.

2) START OFF WITH SMALL RISK IDEALLY USING UNLEVERAGED VEHICLES - I started learning about options & futures without ever trading stocks / ETFs. In hindsight, this was a mistake as I donated unnecessary capital. I would recommend risking as smaller % as you possibly can to gain experience, after proving your method on SIM. Many books quote 1-2%, I would go as far to say if you can 0.25-0.5% is even better. Don't worry about impact of commissions at this stage - the key is capital preservation at first. Later you can move on to working out ways to maximise gains, but first stay in the game long enough! If you don't have a large enough account for PDT regulations, trade an instrument that isn't going to wipe you out as such as CL, GC etc - start with something like NQ with $5 tick size or trade mini/micro lots in spot FX market. Spend time understanding how position sizing can be used to meet your objectives - Van Tharp is an expert in this area.

3) SET REALISTIC EXPECTATIONS - This is important from a confidence point of view. No-one wants to feel like a failure so set targets and goals that are achievable. Don't expect to make 10% per month when you are starting out - b/e is a very good start! Accept that there is a high cost to entry into trading and you will likely have to make significant donations to learn the lessons Mr Market will teach you. Make sure you have daily loss limits and be disciplined to stick with them. Many traders have strings of winning days, then blow their profits on one bad day where they are overconfident.

4) MASTER THE BASICS & KEEP IT SIMPLE - I have always been a believer in life that the most successful people keep things simple and are able to explain a complicated subject matter in basic terms to someone with little understanding in that field. Same goes with trading - it isn't a mysterious art, although many would make it appear that way. Understand what is driving market movement and how you can capitalize on it. Figure out how you can gain a small mathematical edge and spend time sharpening it on a daily basic. Find 1 simple method that you believe it - whether it be price action, volume/market profile, tape reading, VSA, cumulative delta etc. The most profitable traders I have personally met all have mastered ONE of these, they keep it simple and they stick with it. Don't jump from one to the other on a weekly basis. I see majority of traders spending all their time searching for the holy grail in technical analysis - let me save you some time by explaining that you are competing against the smartest and most capitalised institutions in the world. Whatever concept or idea you have thought of, they have probably tested it already. Just accept this and believe you only have a small edge in this business, otherwise no-one would take the other side of your trade. There are many methods that do have this small edge, pick ONE! As humans we are naturally inquisitive and although this can have its advantages, you have to be aware that it can do more harm than good for your trading. Becoming profitable in trading is actually very simple but not easy to do, as you have to fight your desire to jump around looking for what others are doing - find what works for you and stick with it long enough to understand its subtleties, realise its edge and let the probabilities play out - this is more down to psychology than anything else.

5) QUESTION EVERYTHING, TEST FOR YOURSELF & MAKE IT YOUR OWN - On your journey to becoming a profitable trader, you will come across many different beliefs about the best way to trade - whether it be best markets to trade, time of day to trade, most effective method or trade management etc. Let me tell you, there is NO best one of any of these for everyone. There is only one best one for YOU. What works for me isn't going to work for you unless you have exactly the same belief structure, values and identity. You have to come up with your own set of beliefs that govern your actions and behavior. All the best traders again that I have met, have taken the most valuable parts from each of the courses or books they have learnt from and adapted it to suit their own personal psychology. This is the only way you will have confidence pulling the trigger on a consistent basis. A good example of this is with regards to trade management which is a huge topic and an area I have spent a lot of my time as I know the impact it has on my bottom line. Some will same use wide stops based on ATR to avoid the noise. Others will say use tight fixed stops as they believe best trades should go their way quickly with a small adverse excursion. Some will be all in-all out traders. Others will favor scaling out to bank some profits. Some will go in small initially and add aggressively throughout the trade. Which one is right for you? Only you can answer that based on doing the work yourself. Don't be lazy and try to imitate others - it just doesn't work, trust me. I have done many of the same courses and have the same experience as my sports mind coach, however our beliefs about trading are totally different and so our methods reflect that. He is extremely patience and is willing to have a much lower frequency than I am, so he trades a slower market on higher TFs. I could never trade like him and vice versa, so we don't try to, we have our own methods and they work for us. There is only so much others can help you, ultimately your success in this business is done to you and putting in the required screentime and hard work to take money off your competitors. Over time you will find your own way of looking at the market that makes sense to you and be able to recognise certain characteristics and behaviors that have a tendency to repeat themselves when certain criteria are present.

6) THINK IN TERMS OF PROBABILITIES & BE PROCESS ORIENTED - This was a big one for me. I come from a family full of professionals - doctors, dentists, surgeons etc. Many of whom have perfectionist streaks and this can be a big disadvantage in trading. What I came to learn is that trading is a probability numbers game. You have to think in sample sizes and not give too much weight to individual trades. Most new traders give far too much importance to mastering technical analysis, believing this will make them right, not really understanding the purpose of it. Technical analysis is designed to give you a probabilistic edge over a series of trades, minimum 20. You shouldn't expect to know what is going to happen next, as there are so many variables and one trader could make your prediction wrong. Don't fall into this trap and let your edge play out by ensuring you do the same repetitive actions for long enough without tinkering and finding reasons to take or skip trades. Don't measure success based on your PnL at the end of the day but rather whether you followed your plan and executed it flawlessly.

7) KNOW YOUR EDGE INTIMATELY - Unless you understand your edge, it will be impossible to sharpen it. All profitable traders have an edge, whether it be their speed of execution, market timing, patience to wait for only the best setups, laser focus, extreme discipline etc. Figure out what your edge is, write it down and work on it consistently.

8) HAVE A BUSINESS PLAN & RESPECT THE MARKET - Many traders come into this game due to the low barrier to entry believing it is a quick road to riches. It should be treated like any other business and taken seriously. I would hazard to guess around 1% of traders have substantial business, contingency and trading plans. Take the time to do this, you won't regret it. Again Van Tharp is an expert in this field. You will have times throughout your trading career where you lose connection to your broker or the exchange goes down, your PC crashes etc. Prepare for it now, this is part of risk management - how will you hedge your positions? If you are trading ES and the CME goes down, how many SPY options contracts would you need to offset your ES position etc. There is nothing worse than spending months of hard work building up your account to lose a chunk of it unnecessarily when it could have been avoided in advance by a bit of simple planning. Amateurs focus on profits, pros focus on risk. Have a deep respect for the market - the sum of its participants are far larger and more powerful than you as an individual trader will ever be.

9) KEEP A JOURNAL & LEARN FROM MISTAKES - Keep a journal and note what worked and what didn't. Did you follow your plan? Each week identify which were the 1/2 biggest mistakes you made and aim to eliminate them the following week. Were you getting in too early? Cutting winners too quickly? Going against the trend? Don't try to fix everything at once, take it 1 step at a time, and it you will get to where you want much faster.

10) DON'T UNDERESTIMATE IMPACT OF EXECUTION SKILLS - This is especially true for intraday discretionary traders. If you could squeeze 1 extra tick out of each trade on average, how would that affect your PnL at the end of the year? Hone your skills in this area.

11) CONSTANTLY WORK ON INCREASING EFFICIENCY OF TRADE MANAGEMENT - To start with I always recommend traders use a passive style of management. Set an OCO order and walk away. Keep things simple and focus on taking only the best setups. Once you are profitable doing that, then you can start with an active style of moving stops and targets. Always use an All or Nothing (OCO) approach as a benchmark. From my experience over the years, around 80% of traders are better using this approach even today than an active style of management. Once you can consistently beat All or Nothing, constantly work on ways to improve your trade management and keep a journal comparing your current method with 1-2 others. Don't spend 90% of your time working on entries believing that is the holy grail, which majority of traders seem to do - this may give you a few % edge at best - believe me. Working on trade management will make a much greater difference to your PnL. I proved this to myself by developing trade management strategies that made money with random entries - try it for yourself, it may be an eye opener.

12) IGNORE NEWS - Be aware of important releases such as Non-Farm Payroll, FOMC etc, and don't initiate positions just before, but don't try to trade off information from news. The institution have trading desks specifically to do this and pay millions of dollars a year to get access to this info in electronic format, that is processed and executed on in micro seconds right next to the exchange servers before it will even appear on your chart - don't try and compete, as this is not your edge as a retail trader.

13) DON'T GET SUCKED INTO SMALLER & SMALLER TF CHARTS - Many traders including myself get sucked into the smaller TFs. They lure you in believing that you can have smaller risk and better timing. The markets are now becoming more and more dominated by HFTs (some estimate they make up around 70% of the trading volume). Their edge is NOT your edge as a retail trader. Use them to your advantage and trade in alignment with them, don't try and compete against them or you will probably lose. They do leave recognisable footprints that you can capitalise on especially when they are in agreement and market is out of balance you get fast momentum moves. I recommend sticking to 5min and higher TFs for most traders, until you are consistently profitable and only then considering going down to smaller TFs and tick charts.

Hopefully, some of you will be able to relate to my journey and learn a couple of nuggets of wisdom. Hope that helps and happy to answer any questions where I can.

Trade well

Trading is: Having the KNOWLEDGE to know when the odds are in my favour, having the PATIENCE to wait for that moment, then having the DISCIPLINE to handle the trade properly when it goes in my favour and properly when it goes against me
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Old March 30th, 2012, 06:06 PM   #35 (permalink)
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Futures Edge on FIO

What happens to the S&P 500 when a new President takes office?

My worst day was on August 31,1998. The market opened, I had a long signal, and I went long on the BIG S&P. Yeah, that one - the full sized S&P at $250 a lot.

So there I am casually watching the monitor. I had an initial stop of 3 points. The market reverses and I say to myself "you know it always comes back - just hang on". Yeah, right. I cancel my stop. One hour goes by and the market is still tanking. Okay, I say, I'll wait it out. My account is large enough - I can take the heat. Another hour goes by and the market is still tanking - already down 50 points. I see my equity disappearing real fast by now. And I STILL say to myself - hold on - you know you're ALWAYS right!!!!

So long story short, by the end of the trading day, I was in margin call for $18,000! This loss was completely avoidable. I was arrogant and thought I was smarter than the market. If I had not cancelled my stop, I would have had a loss, but it would have been only about 10% of my eventual loss. Big wakeup call.

I started trading again a few weeks later with a newly funded account. Different attitude, however! I did blow another account, but it was basically because the system I was using was over optimized and I wasn't experienced enough to see it.

Anyway, now I have great respect for the market and am much more humble in my approach to trading. I remind myself quite often that I'm NOT smarter than the market and manage my risk like my life depended on it.

Take home message: When you're in a bad trade, get out while the getting is good. Obey your stops. Tomorrow is another trading day - if you don't blow your equity!

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Old April 1st, 2012, 09:29 AM   #36 (permalink)
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Here is my story:

Growing up I always gravitated to the markets. My first two stock investments in the 80's as a kid (3 shares of Phillips Industries and 2 shares of Church's Chicken). I tripled my money on Phillips Industries and made a few bucks on Church's chicken (I was hooked).

Fast forward to the early 90's while working my first job out of college in Chicago, I received a small booklet advertising a course called TWMPMM (funny how we remember these things) from a guy by the name of Ken Roberts. Although I had no capital to speak of I ended up ordering the course as the futures markets always intrigued me. It was simple technical analysis (1-2-3, break outs) supported by a daily phone hotline. Since I had no money I mostly paper traded (literally paper traded on graph paper). Once I came up with about $500 to open a brokerage account, I scoured the Chicago area for any brokerage that would allow me to do so. There were very few but finally got one to let me buy options (one at a time). Of course, a little technical analysis and blindly following recommendations resulted in a couple losses and a realization that this "holy grail" did not work.

A few years later when I had sufficient capital I went on to open a few more futures accounts and had some wins (Gold in 1995) and losses (Heating Oil in 1995) - but overall mostly in the red.

I always followed the markets and fantasized about making it big and having the freedom that entails, while I slaved at my various sales jobs.

It wasn't until around 2005 when I became active in the markets again, mostly trading ETFs in the gold/silver area (GLD, SLV) when they first came out around 2005-06. My M.O. would be a few good winners and then giving all my winning back plus some in subsequent massive drops these instruments had over the years (see the charts). Then holding on to them hoping for break even.

Around 2007-08, I ventured to open a day trading stock margin account for the first time to really make a go of it trading SPY and QQQ and after my ceremonial first few wins promptly blew out my first account to the tune of mid-5 figures. "Margin call" was something I never heard of so that was quite a surprise - getting it more than once is a real nightmare. I always seem to be in the market heavy when the market crashed - and 2008 (of course) was one of those years. The mistakes were quite common - averaging in losses, over-using leverage, not using stops. In a parallel account, I was "experimenting" with options on a massive scale (way more than my account could handle). For example, I bought a ton of options on USO (I think that's what it was) on of the last ticks on the oil parabala (that last gap to $150 - yes that was me) and rode it all the way down until worthless options expiration. That account went from mid 5 figures to low 5 figures and a margin call of course.

After those two accounts were blown out good I decided to stick with my day job and give the markets a break for a couple years.

I became active for some more "punishment" last year (2011) but had not yet learned the lessons of my past trading mistakes - so was bound to repeat some again (hopefully for the last time). Mostly I traded gold, silver, gold stock EFT's and was having a lot of success with a metholodogy I put together. The success went to my head and all risk tolerance out of the door when again I got caught on margin in a leveraged silver ETF and options on the crash from $50 last April. My account went from up $15k to down $10k ($25k swing) in a matter of days.

This time I was beaten, so I decided to change my approach. I started to study position sizing, trading with the trend, risk tolerance, psychological issues, proper stop loss, trade management. It was either that or quit trading forever. It's been about a year since that time - I've invested a lot of time and money in education and research (happy to share where I found the best of the best). Most importantly I learned that I can't trade someone elses methodology - I need to create my own from all the available resources at my disposal.

At the beginning I kept losing money trying to make back all those losses (I estimate over $100k over the years) but slowly started to listen to common sense. It's been a lot of hard work but my ETF account is profitable in 2012. I'm still trading SIM on NT (and have been for the past 3 months) but I'm also profitable there.

All the mistakes I made in the past beat me up enough to take the path I'm on now.

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Old April 1st, 2012, 10:41 AM   #37 (permalink)
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GaryD View Post
I suggest that emotions are everything. To make effort we must want. As a simple example, you could be angry, yet that could manifest into being productive, or, being angry could make one non-productive. But somewhere in there are emotions shaping our every move.

If I could say something to myself, when I was going through a similar time in life, use trading (simulated) as a tool, not to make real money, but to learn acceptance.

Let it hit your stop. It's ok. Let it run to you target, or remove the target and let it breathe.

We try to structure the world in a manner where we have control. In many places we can, but not all. You cannot control the markets, you can barely forecast the markets, but you can control where you enter or exit a trade. Why get out at 1 tick? Choose something better.

And if it does not come, accept it. And try again.

What a fantastic post

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Old April 9th, 2012, 08:35 AM   #38 (permalink)
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San Diego
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Ok, I'll share my story

I first learned how to read a quarterly report to figure out which companies grew 20-25% to make an aninvestment in them from a retired successful investor.

Opened an account with Charles Schwab and who knew about a market topping? Threw out all that knowledge and bought stocks I believed in and kept buying as the market fell early 2000's. Felt bad about it, till I heard some fund managers on CNBC, telling their story about buying a stock during a down trend and then felt better, everybody makes the same mistakes.

Meet a broker who stated, he doesn't care what direction the market goes in, he makes money in down trend and up trend and that was a new concept to me, you could make money as the market goes down? I had to learn that because I vowed never to be in the market overnight again.

I studied with Tom Bugsby: lost money. Studied with TTM guys, lost money. Found out all these guys have working relationships with the brokerage houses they recommend, so they make a percentage off of each trade I made and really didn't care about me becoming a successful trader but expect you to blow up your account since very few people become successful traders.

I have some horror stories about these guys, needless to say, I decided never to pay big bucks to learn so I found Woodies CCI, studied with him and lost money. Doens't matter what the system is, they all work in trending markets and loose money when the markets aren't trending.

The thing is: other people's systems didn't suit me. I had to learn what kind of trader I was and had to develop some skills: learned money management: risk only 1-2% of my account in any trade,
learned to keep a stop in place,
learned to know the instrument I am trading,
learned I loved to short but needed to learn to go long which I did after some time.
Learned I would make a winning trade or trades in the early part of the day and then give it back and some, so learned to stop trading after I was in profit after a certain amount,
learned all the different indicators and then learned it is all about price structure for me.

My favorit set up:

price makes a low, then makes a higher low, then price comes down to test or touch that HL: go long!!! I see it all the time on different time frames. I have had successful trades and lossing trades on different things: TF, GC, DAX, NQ, ZS and CL, which is what I concentrate on now.

I learn something about myself from my trading each day and then work to correct that part of myself be it: greed, fear, lack of focus etc.

I started trading futures around 2005. Before that, in my IRA and SEP, I would do one trade a year and make 25% on my account each year, without risking all of my account. I would study different stocks through out the year, find the one I felt had the biggest potential to move and buy it at the bottom when the markets pullback in Sept or Oct, hold it for a few days and make my profit.

I got into trading because I have a jewelry business, where I make custom jewelry for people and saw the price of Gold rising. I thought, if gold continues to rise, people are not going to want to buy jewelry and I better learn to support myself independantly and choose: day trading. It suits my personality.

I have made all the mistakes mentioned and came to the conclusion: I had to throw out a lot of what I learned and do what was right for me, which each day is a new discovery and adventure.

If I have made money: I will stop trading for the day, I am still watching the markets, I might sim trade to test out some system,set up, theory etc but my main focus is to be green. If I have made a couple of trades and have come to my limit of what I feel comforatable trading: I stop, I will go into sim. I love trading but I have learned through experience, to keep my profits and if I am loosing, I stop trading live, once I come to my limit.

The biggest mistake a made was at the beginning buying that stock in a bear market and while trading futures: one day I was so angery at Tom Bugsby: I had just quite his system, I decided I will trade for myself: and traded without any true set ups, and lost one after another trade. That day I lost over a thousand dollars and I learned never to trade like that again. I stopped trading for about a week, so I would calm down and then started again.
Never trade when you don't feel well, are sick etc.

Here are the set ups I look for in a day:
1. Low, HL and 2nd test of HL, go long, is my favorite set up.
2. Bottom: watch big buying volumne come in, price still comes down, at the new low, more buying vol comes in, but not as much: it bottoms. I might only trade this in sim, waiting for the next HL's.
3. 2nd test of high of day or LH
4. Waterfall: 3 lower highs: on the third go short.
5. Market Maker set up: draw box on H and Low of Globex: night makret, price just goes a bit below the low: big buying: price rallies up or price does oppositie at High of Globex: price goes above Globex High, big selling comes in: price falls.
6. Trendlines: Bull Channel, Bear Channel, Wedges, looking for fake out break outs. Inside and Outside days.

I learned stocks, options and futures and for me: CL futures fits me best. I don't care if I make $50.00 for the day or $1,000 for the day, as long as I am green is fine. If I go into a loosing streak, I go into sim mode, till I start becoming profitable again.

Each day the market is different and I have to adjust myself to fit CL for that day. I wanted to be a great trader, able to trade any kind of market but for right now, I do my best trading when the markets are not trading wildly. I can have a very successful day just trading a small range day on CL but have also learned to stay out
when it's range is very narrow and difficult to trade: topping action or the big funds are exiting just before the next down leg.

I still have my jewelry business which isn't doing so well in this economy but I have a few high end clients that kept it still going. I make money trading and use that to support myself when I need it.

I have to say, I find Big Mikes forum the most useful trading forum/info I have come across and Thank him and the other very successful traders I have observed here: Gary, Gabriele and Perry up to this point. Thank you all for sharing, teaching, I appreciate you (those I haven't mentioned) all so very much.

Wishing eveyone the very best on all levels,


PS One of my horror stories: about one of the people I studies with: was in their inner circle and was told to look at the YM option during the summer months. That YM usually rallied 9 out of 10 times into the fall. At the time the option was around 2.50 a contract. Was told, we were going to make a lot of money on this trade and that we should watch that option and buy it, when our trading Guru told us too. Finally the day came, in the trading room, his secretary announced we should go buy, buy buy this option, which I did. Bought a lot, didn't know anything about money management at the time. The option was now 5.75 and saw the volumne was hugh: over 50,000 contract bought that day, where the contract above and below had very low vol. Well that option, decreased in price, called in to see, should we stay in it: was told, it will go up. It keep going down, called in again when it had lost half of it's worth, was told, stay in it, it will go back up. While I was in the trading room, the Guru came on and mentioned all these people went into YM and they are hurting. He said this as if these people had made a mistake and didn't mention, he had instructed his inner circle to buy those Options!!! I thought what is this? I exited the trade. Within an hour, one of his sales men contacted me wanting to sell them there overnight trading room. I previously told him: through email I wasn't interested yet he called me. To make a long story short: we had an arguement, I hung up on him, he called me again, I hung
up on him again. Then the Guru's secretary called me: I accussed the Guru of Selling us those options to us, his students and wanted my money back. They never gave refunds but I got my money back because he was selling us those options and he didn't want me to report him.

Also, this Guru manipulates the night market and all these big traders know each other. There is about 12 of them, that meet each year. They pay about 10K each, bring their brokerage account statements to prove they are successful traders, and each one shares one of his set ups. I have seen Tom Bugsby's set ups work better, once some of these big traders know his set up. When you have hugh funds, you can make it happen because people like me are watch volumne all the time.

I have also meet successful honest traders, just doing their thing. Meet this one guy trading Woodies CCI system: very successful, like a robot but it took him 5 years to get there. We have all made the same mistakes, you need to develop a lot of different skills to make it and to learn about yourself and what kind of trader you are. Hopefully, you have the funds to go through the learning curve or have learned the lesson to be in sim, till you have been consistently successful, then go live.

Me, each day, I change what kind of trader I am going to be that day, scalp, not trading, looking for a bit of a swing.

Get to know your trading vehicle really well, so you know what kind of mood she is in.

Example: certain times of the month, CL trades better than other times, also different times of the year and differently before certain news events. Certain times of the day etc.

Once again, just want to thank Gary, Gab and Perry and Big Mike, you are all very special and appreciated.

Last edited by Rachel; April 9th, 2012 at 08:46 AM.
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Old October 21st, 2012, 08:52 AM   #39 (permalink)
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My quick story

Here's a girl I was in the Philippines I think I had bloomberg on the television. I started to google for how to trade and trading lesson I came across understanding candlestick charts. There was a small e-book which I forget the name of but I downloaded and printed all out and gave it my full attention.

It explain things like dojis and the open cause of the candles.
It took me a long time to figure out how to get a trading platform and a broker.

Before I figured that out I discovered spread trading. It was tax-free and she did into and basically bedding but it had to candlestick charts that I studied. I had no idea about news or anything and went ahead and traded the main currency pairs. I would say I last about €2000 doing this.

With a little more research I found out there was different platforms and 30 use one of them was ninja trader which I like the sound of, Particularly since I've found meta trader 4 quite difficult to understand and ninja trader looks somewhat like my spread trading online account.

So I did a google for forex and ninja trader seen as Forex was now what I was used to and I found online educators called triple threat trading.

This showed a little bit about how to set up ninja trader which is what I needed to know. But then it also went into details analysis and concepts that I was not ready for such as gartley patterns And butterflied patterns.

Luckily my stepfather helped me pay for this tuition which in fairness I thought did help me quite a lot as I began to understand how broker platform and trading came together along with new ideas of patterns

Sadly this tuition ended after two months and I was left high and dry again and of course I didn't have any of my own money to invest in alive account to try It.

We are now about four years down the road. Another year past and I decided I would really like to put what knowledge I learnt to use but I needed more education I looked at training academy online and even went to some of the seminarists here in Ireland Along with plenty of other spread trading seminars from market spreads.

So back to Google again looking for a longer term educator I remembered joseph James from last year that he had a lifetime membership at school of trade so I decided I would give this a goal and this time With the goal of going live at some point. With no real money to my name again I had to Ask for a loan and also I had to pay for ninja trader when I want to do trade live. This cost about $5000 all together. Then I also funded my live account would $5000 making it all together $10,000.

At first I thought joseph James was great and it got me a lot about a simple pastor and that I could use to trade and start me a lot more about ninja trader. In the first week I actually doubled my investment but I soon found out that it was partly just luck. Needless to say I lost my $5000 investment in my live account but with my appetite wetted so much at how much I could make every day as soon put in another $5000 which I also lost.

I am still a member of school trade and attend almost every day but I am beginning to get very concerned that he does not sure his trading management window where I can see how and when he gets his entry on trades.

In some ways I feel like I already have my money's worth because I have learnt so much but in other ways I can also see that through it all I am down $20,000 and could have gotten this information from free sources with out spending a penny. Having said that, it is very hard to do this on your own when you're starting and you do need someone to show you the way and show you the ropes, Therefore it is huge advantage to be able to watch someone trading. But now I know there is a lot of free rooms out there that I can attend with other like minded traders.

This is my story so far and my platform is still ninja trader although I am looking at indicator warehouse for a new strategy that is more solid. And I am also interested in learning about options. I feel very grateful to have the information that I do and have the experiences. But I just wish it didn't cost so much. I still believe I can make it as a trader but I am almost only halfway there I would say.

Thanks to beat Mike for this forum I have done a lot of searching and found a lot of answers from hope you enjoyed my story let me know what you think..... Cheers

Ps sorry about the weird words I done this on my iPhone recognition is a bit off but you get the idea.

Last edited by jeronamo; October 21st, 2012 at 08:57 AM.
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Old October 21st, 2012, 10:55 AM   #40 (permalink)
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Hong Kong
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Favorite Futures: Oil, E6, Gold
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Here another quick story to share

I started to trade (full time) around mid-2011 with 20K capital, opened a future account with a broker and tried paper trading for 2 weeks, read another dozen of books, free materials on internet.

In the first month while I was using moving average, volume and %R for buy/sell signals and made 50% up in my account ! I made 2 weeks off to Thailand.

When I came back, I doubled my contract size and number of trades per day, then I started to lost 1 or 2k per day. I felt angry and traded more wanna to get back what I lost, this blown out my 1st account in 2 weeks' time !

I took a break and spent my time reading more books, searching for more advanced indicators from internet, paper trades. While I felt better, I deposit another 50K capital March this year trading ES, GC, ZC and options on futures. I tried use only %R, trendlines, and volume as my indicators but still losing money due to the fact that I did not proper manage my emotion and resulted in over trades.

I saw my capital down by another 90% this Sep, so I deposit another 10K early Oct.

Here I summarized what I learned,

1) Only trade ONE instrument at ONE time at key price level, my favorites are day high, day low, prior day high, day low
2) Trade less (frequency), trade small (start with 1 contract and pyramid), and slow i.e. use bigger time frame
3) Always use stop for future, and the stop should not exceed 1% of capital (I had times that my margin can only trade mini or micro size contracts but I came back to full size after a while)
4) Be VERY patience, the market may not give you signals every day or hour. Stay tuned, wait for next setup.
5) Do not blame yourself on early exit, late entry as long as it is a winning trade. This gradually build up your confidence.
6) Do not trade when prices are narrow ranging and volume is thin (market markers are hunting)

I have been following above lessons learned for 2 weeks now, and keep having positive ticks every day. Though the amount is small and the progress is slow, I have more time to plan and review my trades to advance my skills and system. Good trading !

Thanks to BigMike to have such a wonderful forum people can share honestly and learn together. Hope all of your trades are good.

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