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Confessions - Stories of defeat and lessons learned
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Confessions - Stories of defeat and lessons learned

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Confessions - Stories of defeat and lessons learned

Trading is arguably one of the toughest business out there, and I doubt any trader has made it to consistent profitability without many setbacks. I wanted to see if I could entice other traders to share stories of what they believe are their greatest screw-ups, and if there are lessons to be learned from those.

I'll go first;

I got into trading somewhat by accident. I had lost a bunch of money as a real estate developer who started getting one loan after another shut down (even though the payments were current and all other loan criteria was met. Different story). The banks just stopped renewing. I personally lost millions.

In the middle of that whole mess, I discovered day trading. My business had become nearly non-existent, I was still "independently wealthy at the time (per the balance sheet of the day). I had the free time and was looking for something to ease my pain, make some money, get back some of what I lost. Trading had high liquidity, something I realized I was needing in real estate but could not find, and it had leverage, a principal I had used to build wealth in real estate. Looking back, I think I just needed something to find "hope" in.

I opened an account at Scottrade, and called myself a trader. I did "ok", considering the lack of knowledge, but after making and losing for several months I decided I needed some education. I found a class that taught how to trade futures. I called and spoke with an instructor, and one of my questions was, "so why do you trade futures instead of stocks?". The answer, "you get more bang for your buck". Sounded reasonable...

I opened a futures account and started trading away. Wow! Adrenaline rush! I was going to make back my lost millions in no time! I had put $20,000.00 in the account, and so started trading 2 contracts at the recommended leverage other traders suggested. I made and lost money $500.00 at a time, $1,000.0 at a time. Nothing really crazy either way.

Then one day, slow and lacking volume, I decided to short the ES. It had crept up nearly all day and I just KNEW was way overdue for a pull back. I entered with 5 contracts (hey, my broker says I can trade 40 if I want), the market kept creeping up, would not even come back a point, so it seemed. Getting further into the red I thought, "this market is nuts, it should at least come back a point or two". I doubled in, 10 contracts strong, and I was going to step out a breakeven. Then I was down about $3,000.00 and closed it. But I continued to watch.

I was mad at the market. How could it go in one direction all day long. It never did that before while I was trading it. I was going to get my money back. Today.

A big burst of volume came in and pushed it down a bit. "Now, finally!" I thought to myself, this market is due for 3-5 points at least. I was down $3,000 +/-, and only wanted to get back to breakeven. I'd go for 3 points, that should be an easy target. Let's see, at $50.00 per point x 3 is $150.00 per contract. I need to make $3,000.00, so that's 20 contracts....

I shorted and got out, shorted and got out. Two more losses. Went to get in heavy again. I had to stay leveraged to get back to even, right?.

Big warning sound on my screen. I did not have the proper margin requirements. I lowered the contracts traded until it let me in...

End of day, I was $13,000.00 +/- down, felt like the biggest loser, just sat there and stared at the screen. How could I be such an idiot? I knew better! How could I lose control of myself so easily? What was I thinking? I should just give it up.

At the time, I was already "down" in my real estate finances over $1 million, so in some ways the $13k loss felt insignificant. Plus, I was on antidepressants from the original financial losses and the feeling of apathy that came with the environment at the time. That trading loss was tiny in comparison, and I was angry with the world already. I was out of control.

The real estate money was not lost in the same way. I was a professional in that, considered to be very conservative. But, that was definitely not the person who I brought to the trading screen that day. That new person I just discovered was impatient, illogical, reckless, a gambler. Not a part of myself I had seen before when it came to money.

Surely that was just a fluke. I knew I was capable of handling myself professionally. I was just upset and not my normal self that day. A week or so later I went back to trading. I had learned my lesson...

I eventually "blew up" that account. Well, not really to zero. When I got down to about $800.00, and I fought that out for at least a week, I made every single tick count. I thought I would build it back to $20,000.00.

Then one trade, below $500.00 for maybe a second. Flat. My broker cut me off. I left the house and went rollerblading, Ipod to drown out the rest of the world. I cried. I was a failure in finances, in real estate and in trading. I cried harder. I was on a trail where not many people were, and was moving fast enough that the few people I did pass could not have known. And I really did not care. I was surprised I even could cry, antidepressants make it tough to do.

So, I got out of trading for several months, worked hard to try to negotiate with lenders, changed up my marketing on my remaining real estate holdings, networked like crazy, got property after property in contract, then fell through... But I kept thinking about trading. I was hooked. Addicted, perhaps. I kept thinking, "if it can take my money that fast, it can also give it back in the same amount of time".

And that was the thought that lead to the second time I "blew up". Not the same amount, $5,000.00 that time...

Then it was serious. I was going to get my money back, but this time I was going to do it the right way.

I wanted a system, I wanted to be shown how to trade, "just tell me I will follow it".

It does not happen that way, or at least it would not for me. I had to finally get into my head that there were far too many variables to ever find a "perfect" system, and that if I was going to make it, I needed a lot of skills, and they all needed to function together.

I went to simulation only. I spent years studying roughly 7 days a week, 14-16 hours a day many times. I was obsessed beyond anything I have every pursued. Building up, then giving back, then building up, then giving back, all in sim mode, but it had then become just as serious to me.

I would set goals to double a $5,000.00 sim account, or lose it all, but either way I had to ride it to the end. Blew up, reset. Blew up, reset. At least it was simulated.

Then, finally, doubled. It took me about 2 years of practice to get to that point. I cried again. I could not believe I did it. It was only sim, but it did not matter. I got my balance back, I learned to gain control over my emotions, I became conservative again.

And I learned to find MY WAY to trade. That was the toughest part of the whole process.

Reset. Doubled again, Reset...




I have since learned to trade profitably, and I trade live again on nearly a daily basis, but it looks nothing like that "trader" I thought I would be. To this day, I have no desire to make back my $13,000.00 in one day. I don't doubt that I will someday in the future have that as a reasonable target, but only when my trading capital catches back up with where it needs to be for that size of a position. I actually know there are times I probably could make $13,000.00 in a day. I have the capital, I have the experience. But instead, I actually trade at far less leverage today than others might expect, because I choose to keep my losses to an amount that I don't think about them.

Today, I could probably trade as my sole source of income, but I don't want to. Maybe I will someday, but I have learned that my mind has more to do with my results than the side of the market I choose. When I "have to" make money, I trade far worse than when I don't have to. I am possibly proudest of myself when I watch the market for hours and cannot find a trade to take. Big improvement.

It has been a very hard ride. Many times it seemed like I should have just given up and gotten over it. But, I would not let myself. I was going to figure it out, no matter how much work it took. I was stubborn, determined, vengeful in some ways. But somehow I learned to turn that energy into something positive.

I am very proud of where I have taken my trading, but I can say without a doubt, it is the hardest thing I have ever done. I had to learn so much more than how to trade. I had to learn myself in the process.

Today I consider myself a TRADER, not a gambler, not a loser. But I was one, and a big one at that.



Thanks to @Deucalion for the idea for this thread. I hope this is helpful to some traders.

I hope you will add a story of your own.


Trade safe!

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And I saw myself in your experience.

First post here on this great board, been lurking for a long time and learned a lot.

Here's my story... but I'll give a bit of a backstory as well.

My great grandfather owned a number of taverns and was looked up to for a number of reasons for his business savvy. Probably the thing I am most proud of was that he felt it was unfair to charge blacks a quarter for beer when whites were only paying a nickel. This caused some uproar by his competitors, but he knew where his heart was and felt he needed to do the right thing. This was early part of the century so different times, different mentalities. Fast forward to the fifties and he's ready to retire and take life easy. With a small nest egg of about $15,000, he decides to make some investments in the stock market. Everyday he would get on the bus and ride to downtown Seattle to "watch the ticker". This was a room located at a brokerage where many men would gather to share investment ideas and watch the market unfold. Anytime he would close out a position, my grandmother would take half and put it away... many years after they had both passed money was found hidden in books throughout the house. I'm sure his wealth would have been compounded many times over had he reinvested all of it, but having gone through a depression, one needed to be safe. Upon his death in 1972 his portfolio was almost $300,000. Of course I heard these great stories and he always told me to put my money to work and not leave it in a bank to draw a paltry interest rate. At 8 or 9, I kinda got it, but it wasn't that important to me.

Not until I was 14 that is. One day my Mom brought home a Wall Street Journal from her office thinking I might want to read it. Over the next week I read every story in that issue and started watching the market and some of the stocks I had read about. I picked up a few books in the library to get a better understanding of investing and with my limited knowledge, looked for some stocks I might be able to "buy" by paper trading. I did this with some success and I remember at the end of the year picking up the WSJ where they would have the stock pages with each stock and it's performance for the year. I remember a company called Berkshire Hathaway that had a price of almost $3,000 a share, I thought that might be a misprint but years later the world would know who they were.

Finally when I was 16 or 17 I thought it was time to invest and I asked my Mom to open a brokerage account for me. I had researched a number of stocks and started subscribing to a newsletter even. The great thing about the newsletter was that I received a free copy of Stock Market Logic, what a wonderful book this was...wow so full of great information like "Two Tumbles and a Jump" meaning if the Feds lowered interest rates twice, the market would jump. I had found the holy grail to investing I thought and was in tune to the market and all that was going on, even subscribing to the WSJ.

Through my research I found a company called Chase Revel Inc. that looked like a great buy. Chase Revel was smart and owned Entrepreneur Magazine, something else I read on a monthly basis. So armed with some money, I gave it to my Mom and asked her to buy 150 shares. I think it was maybe .70-.80 a share at the time. Slowly I watched it move up and down, never really going anywhere, but I was an investor and dreamed of making millions. Fast forward about six months and I'm listening to the radio and hear that the guy that owns Entrepreneur Magazine had declared bankruptcy. The DJ's were laughing because this guy was supposed to be the smart one. I asked my Mom to call the broker and sure enough, the stock had tanked and I was out my money, or so I thought. Eventually I did receive money for the shares from the new owner who had taken over. I remember he called me and asked if I was willing to share my shares.

As life got busy, I still kept my ear to the ground on investments, but didn't want to risk any more money that is until I was 19. My Father had passed away suddenly and left me with a very small insurance policy that basically covered expenses and gave me a bit of money to maybe take a nice vacation. I decided to give investing another try and drove a half hour to the nearest Merrill Lynch office and gave them a check and asked them to make it grow for me. a couple times a week I would drive to the office to check the quotes on stocks like Kindercare on the Quotron. Soon I was doing this daily despite having to pay for the gas. My portfolio doubled and I was super excited but thought I needed to think about buying a house so looked for a foreclosure since I knew they would be a better deal. In 1984 I took that money and made a down payment, signing on the bottom line at an 11.18% interest rate. Five years later the house doubled and I started building a small nest egg that continued until a divorce took all that I had built 15 years later.

Fast forward to the present day and I was a Network Engineer for a major bank responsible for the network controlling our trading systems. I loved the energy and always made a point to go talk to the traders on the floor, wishing I was in their position, but without a college degree it wasn't to be. I would watch the market on a daily basis as my job required me to be aware of what the system status was. All the while dreaming of becoming a full-time trader on my own.

Last September I was told that I was no longer needed along with a large number of employees. I became a casualty of the downsizing in the banking industry. I was excited, having saved quite a bit of money knowing this day would come. As is standard, I received a severance package and for the next four months I paper traded on the Think Or Swim system. Starting with $100K I was able to double it in those few short months. I traded stocks and oil futures mostly and did quite well using some indicators like Relative Momentum Index and MACD Crossovers on 5 Minute charts. I figured I was ready to trade for real, so The first week of February this year, I went live with my own money starting with $50K

The first day I struggled, trades were not matching up with what I was seeing when I made my trade and at the end of the day realized I was trading in partial realtime.. yikes. I hadn't signed the proper paperwork to have realtime. I was able to fix that right away thank goodness, but my first day I was off a couple hundred dollars.

Next day I was in an oil trade and short 3 contracts when all the sudden it spikes down and I am up $1,500 in about 30 seconds… I was paralyzed and couldn't believe how much I made, but those profits disappeared as fast as they came and when I flattened the trade, I made a couple hundred where my hesitation and greed kept me from making more.

The next few weeks I struggled, paper trading does not have the emotion that putting up real capital does. My setups were perfect, but if a trade went agains me I would bail and lose money. $200 here, $500 there, pretty soon I'm looking at an account that is down $6 grand. Then I have the best day ever last Wednesday, Feb 29th, a day that only comes once every four years. I traded oil perfectly, every side I was on made money, short or long trading 1-2 contracts. My day netted me $3,200… wow this works!

Went to dinner with friends that night and shared my success and I was on top of the world.

But tomorrow would be a new day.

I figured I was so good yesterday, I'm going to move it up to 3-4 contracts. My first trade I'm down $1,100 in about ten minutes. "Well I have to make this back right" So I wait for another good setup and all indicators point in my direction, almost the moment I hit send on the trade and get in my position, it goes against me. I slump at my desk thinking "The trading gods are against me". How do they know when I make a trade to reverse?

I swear off oil for awhile, "Oil is the devil" I think to myself and make a few trades in AAPL that prove profitable.

But oil calls me back and I see a wonderful setup.. everything is perfect, so I put on a short four contracts at around 107.35. It ranges for about a half hour with my area and I put a way out of the money stop at $107.90 and go take a shower. I run in and out of the shower and come back to my screen and my stop was hit and I'm out of the trade …..WTF? Yep, that shower cost me $2,000.. eventually oil hit a high of $110.55 for the day (March 1st), so it saved me quite a bit. By the end of the day, I had revenge traded away more money and was down $7,000.

I took my indicators and dumped them, and started reading this forum for some help. "I'm unemployed and need this to work" I though to myself. I have always dreamed of trading for a living and this was becoming a nightmare.

So I trade on new indicators, trying Stochastics and Fisher Tranforms and all kinds of new ideas. The money still drips away… A grand here and grand there… each day I say the hell with oil I'm done. But like a crack addict.. I keep going back and getting it handed to me.

Tonight as I write this, I am $18 above my $25K limit for day trading, yup I have blasted through $25K in the past month spending over $8K on commissions alone by having way too many trades. So tomorrow I am back to paper trading to try and get the doubt, fear and negativity out of my head. I know this can work… I just need to reduce my trades, tighten my stops and find a system that works for me consistently like it did when I paper traded. The emotional part of trading wrecked me when it was for real money. Lots of lessons learned, but I'm tired of paying this expensive tuition so it's back to square one.

Thanks for starting this thread.


Last edited by Rockmann; March 9th, 2012 at 02:00 AM.
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Thanks for sharing from the heart, guys. I know that others will benefit from your posts.

Mike

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  #6 (permalink)
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Dear Rockmann,

why don't you start a trading journal, link it from your post here and people might help you (ask them to).

I am in no way a master of markets, so my advice and help will be overshadowed by other experts here in forum, but I see danger in you thinking that you take too many trades. There is no such thing as too many trades or too few trades. I would disregard all advices from all books, because they are all wrong. You can trade profitably making a hundred trades a day or five trades a year. How things should be is not how they are. Taking some average of how many trades should there be ruins all the art. One has to explore himself, see what works for him and what does not and disregard everything everyone says. Usually doing the extremes, a 100 a day, may prove to work best.

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Might start a journal

Thanks ReaM, I have considered creating a journal but for now I am back to paper and SOH with this lackluster market. Not seeing any good trades even if I wanted to commit except maybe for a trade on VXX, but even that seems to crank lower everyday. I'll post a link here when I get back on the horse and start a journal.

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Thanks guys...

for sharing your experience. Something I needed to hear. Best of luck and trade well. DB

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GaryD View Post
Trading is arguably one of the toughest business out there, and I doubt any trader has made it to consistent profitability without many setbacks. I wanted to see if I could entice other traders to share stories of what they believe are their greatest screw-ups, and if there are lessons to be learned from those.

I'll go first;

I got into trading somewhat by accident. I had lost a bunch of money as a real estate developer who started getting one loan after another shut down (even though the payments were current and all other loan criteria was met. Different story). The banks just stopped renewing. I personally lost millions.

In the middle of that whole mess, I discovered day trading. My business had become nearly non-existent, I was still "independently wealthy at the time (per the balance sheet of the day). I had the free time and was looking for something to ease my pain, make some money, get back some of what I lost. Trading had high liquidity, something I realized I was needing in real estate but could not find, and it had leverage, a principal I had used to build wealth in real estate. Looking back, I think I just needed something to find "hope" in.

I opened an account at Scottrade, and called myself a trader. I did "ok", considering the lack of knowledge, but after making and losing for several months I decided I needed some education. I found a class that taught how to trade futures. I called and spoke with an instructor, and one of my questions was, "so why do you trade futures instead of stocks?". The answer, "you get more bang for your buck". Sounded reasonable...

I opened a futures account and started trading away. Wow! Adrenaline rush! I was going to make back my lost millions in no time! I had put $20,000.00 in the account, and so started trading 2 contracts at the recommended leverage other traders suggested. I made and lost money $500.00 at a time, $1,000.0 at a time. Nothing really crazy either way.

Then one day, slow and lacking volume, I decided to short the ES. It had crept up nearly all day and I just KNEW was way overdue for a pull back. I entered with 5 contracts (hey, my broker says I can trade 40 if I want), the market kept creeping up, would not even come back a point, so it seemed. Getting further into the red I thought, "this market is nuts, it should at least come back a point or two". I doubled in, 10 contracts strong, and I was going to step out a breakeven. Then I was down about $3,000.00 and closed it. But I continued to watch.

I was mad at the market. How could it go in one direction all day long. It never did that before while I was trading it. I was going to get my money back. Today.

A big burst of volume came in and pushed it down a bit. "Now, finally!" I thought to myself, this market is due for 3-5 points at least. I was down $3,000 +/-, and only wanted to get back to breakeven. I'd go for 3 points, that should be an easy target. Let's see, at $50.00 per point x 3 is $150.00 per contract. I need to make $3,000.00, so that's 20 contracts....

I shorted and got out, shorted and got out. Two more losses. Went to get in heavy again. I had to stay leveraged to get back to even, right?.

Big warning sound on my screen. I did not have the proper margin requirements. I lowered the contracts traded until it let me in...

End of day, I was $13,000.00 +/- down, felt like the biggest loser, just sat there and stared at the screen. How could I be such an idiot? I knew better! How could I lose control of myself so easily? What was I thinking? I should just give it up.

At the time, I was already "down" in my real estate finances over $1 million, so in some ways the $13k loss felt insignificant. Plus, I was on antidepressants from the original financial losses and the feeling of apathy that came with the environment at the time. That trading loss was tiny in comparison, and I was angry with the world already. I was out of control.

The real estate money was not lost in the same way. I was a professional in that, considered to be very conservative. But, that was definitely not the person who I brought to the trading screen that day. That new person I just discovered was impatient, illogical, reckless, a gambler. Not a part of myself I had seen before when it came to money.

Surely that was just a fluke. I knew I was capable of handling myself professionally. I was just upset and not my normal self that day. A week or so later I went back to trading. I had learned my lesson...

I eventually "blew up" that account. Well, not really to zero. When I got down to about $800.00, and I fought that out for at least a week, I made every single tick count. I thought I would build it back to $20,000.00.

Then one trade, below $500.00 for maybe a second. Flat. My broker cut me off. I left the house and went rollerblading, Ipod to drown out the rest of the world. I cried. I was a failure in finances, in real estate and in trading. I cried harder. I was on a trail where not many people were, and was moving fast enough that the few people I did pass could not have known. And I really did not care. I was surprised I even could cry, antidepressants make it tough to do.

So, I got out of trading for several months, worked hard to try to negotiate with lenders, changed up my marketing on my remaining real estate holdings, networked like crazy, got property after property in contract, then fell through... But I kept thinking about trading. I was hooked. Addicted, perhaps. I kept thinking, "if it can take my money that fast, it can also give it back in the same amount of time".

And that was the thought that lead to the second time I "blew up". Not the same amount, $5,000.00 that time...

Then it was serious. I was going to get my money back, but this time I was going to do it the right way.

I wanted a system, I wanted to be shown how to trade, "just tell me I will follow it".

It does not happen that way, or at least it would not for me. I had to finally get into my head that there were far too many variables to ever find a "perfect" system, and that if I was going to make it, I needed a lot of skills, and they all needed to function together.

I went to simulation only. I spent years studying roughly 7 days a week, 14-16 hours a day many times. I was obsessed beyond anything I have every pursued. Building up, then giving back, then building up, then giving back, all in sim mode, but it had then become just as serious to me.

I would set goals to double a $5,000.00 sim account, or lose it all, but either way I had to ride it to the end. Blew up, reset. Blew up, reset. At least it was simulated.

Then, finally, doubled. It took me about 2 years of practice to get to that point. I cried again. I could not believe I did it. It was only sim, but it did not matter. I got my balance back, I learned to gain control over my emotions, I became conservative again.

And I learned to find MY WAY to trade. That was the toughest part of the whole process.

Reset. Doubled again, Reset...




I have since learned to trade profitably, and I trade live again on nearly a daily basis, but it looks nothing like that "trader" I thought I would be. To this day, I have no desire to make back my $13,000.00 in one day. I don't doubt that I will someday in the future have that as a reasonable target, but only when my trading capital catches back up with where it needs to be for that size of a position. I actually know there are times I probably could make $13,000.00 in a day. I have the capital, I have the experience. But instead, I actually trade at far less leverage today than others might expect, because I choose to keep my losses to an amount that I don't think about them.

Today, I could probably trade as my sole source of income, but I don't want to. Maybe I will someday, but I have learned that my mind has more to do with my results than the side of the market I choose. When I "have to" make money, I trade far worse than when I don't have to. I am possibly proudest of myself when I watch the market for hours and cannot find a trade to take. Big improvement.

It has been a very hard ride. Many times it seemed like I should have just given up and gotten over it. But, I would not let myself. I was going to figure it out, no matter how much work it took. I was stubborn, determined, vengeful in some ways. But somehow I learned to turn that energy into something positive.

I am very proud of where I have taken my trading, but I can say without a doubt, it is the hardest thing I have ever done. I had to learn so much more than how to trade. I had to learn myself in the process.

Today I consider myself a TRADER, not a gambler, not a loser. But I was one, and a big one at that.



Thanks to @Deucalion for the idea for this thread. I hope this is helpful to some traders.

I hope you will add a story of your own.


Trade safe!

You have earned the right to be called a trader, welcome!

I have several very similar stories and I am sure many more on here do as well.

JAM

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the worst day i ever had came after a few good days in which i made several thousand dollars very quickly. oh, miss Maisie can just hit the Transmit button, and money will shower down over her head now, right? so one brisk, or at least, california-crisp, december day, i sat there on the sofa with my laptop, sure that the magic would unfold once more. yes, some bank was just about to bounce - hey let me dump twice my usual amount of money into it! oh, i'm up 10% - i know it can go higher. wait, that bar opened higher - i swear it did, why is it just ever so slightly lower now? must be my screen. what, red? i'll just hang on a little longer. glance down at the evil "portfolio window" under my charts -25%, then -35% then ...well, u get the picture. trade after trade. i ended up losing about $3,600 in about 4 hours of trading. this was over the *christmas holiday*, when my boys were home from school. the whole time, the whole family had been milling around, completely oblivious to the fact that i was blowing our money away on idiotic trade after idiotic trade. i finally raised my face to them and told them. my husband gets the official Saintly Husband award, because he kept his cool in front of the kids the entire day, and merely asked me that night, Honey, what happened??

i spent alot of time answering that question in subsequent weeks. no trades for me - studying charts, thinking about what i was doing, reading various websites, gathering information. i was very shaken.

but i knew i was capable of finding good trades, and there would be money in there for all of us if i could learn to control myself! so i've been studying away since and do seem to be making some modest improvements.

one thing i really like is the free 30-day course at scott redler's T3 live. i have found it *incredibly useful*. u do not have to be a member or anything - it's totally free. of course, there's a marketing pitch in there for their chat room, but u do not have to sign on.

i have learned the hard way, go to the guru websites and worth through *all the free* stuff. when you're done, find another website!

thanks for opening up the "confession booth"

Du sublime au ridicule, il n'ya qu'un pas. ~Napoleon Bonaparte
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