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A Village to Raise A Trader
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A Village to Raise A Trader

  #1 (permalink)
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A Village to Raise A Trader

It takes a village to raise a trader.

There is a such huge amount of gratitude a successful trader owes to so many elements that one cannot but agree with the above statement. For me atleast the above has been true.

Apart from expressing gratitude, keeping the mind stable with the base of humility, it is also time to acknowledge that there exists a niche in the world where the last bastion of freedom exists.

I want this thread to purely focus on the psychology, inculcation of discipline and mental preparedness that go into building an end-product called a trader.

And I wish to document everything. And I mean everything.

The Path:

Novice walks into this thread.

A Trader (with his own monumental journey) walks out of this thread.

Caveat:
Very few do.
In other words, a person who wakes up to find himself a rich and famous trader has not been sleeping.

This thread is about the precise thoughts and efforts that I wish to articulate that went into making me prepared as a trader.


What constitutes a "successful trader"?

Certainly not simply successful trades! (implies that a successful trader has losing trades, but many other things make him 'successful').


Why document this process?

My $30,000 TopStepTrader combine starts shortly (01 April).

I had promised to completely document my methods, my psychology 'in the moment'

I also did not want to clutter the TST Combine Journal with various general observations and the planning I am putting in - this thread gives me the perfect opportunity to document everything of relevance and then focus only on the combine trades in my other journal.

My only promise here is that this thread will be 'different'.


The nature of the journey changes with every milestone. What is 'obvious' now did not seem so a few hundred trades ago. What seemed 'easy' a thousand trades back now seems risky but also seems boring and the outcome that seemed 'exciting' back then simply is yet-another-boring-business-transaction now.

If I am yawning and squirming in my seat, itching to do something but resisting, planning more than I am executing then these are signs that I am progressing towards a successful trader. It does not take much to be yanked off this treacherous path, and by documenting it I can atleast serve as a signpost (of the hidden and not so obvious dangers) to to others and therein lies the utility of this journal.


Last edited by iqgod; March 28th, 2013 at 03:02 AM.
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  #2 (permalink)
Quick Summary
Quick Summary Post

"It takes a village to raise a trader."

- Mike Bellafiore, (Parter SMB Capital) and author of 'One Good Trade'



A TopStepTrader combine is a good way to get started on the journey to becoming a 'successful trader' aka 'Consistently Profitable Trader':


Duration
10-Day Minimum Combine (to be completed within 30 calendar days)

Combine Objectives

Profit Target $1500

Trade Metrics for Evalution
Overall Combine Winning Day Percentage greater than or equal to %
Overall Combine Average Winning Day greater than Average Lossing Day
Each product traded has an Overall Average Win greater than Overall Average Loss
Each product traded has an Overall Average Win Duration greater than Overall Average Loss Duration
Each product traded has an Total Win Percentage greater than or equal to %
Each product traded has a Trading Average greater than zero ($0)

Additional Requirements
Only trade permitted products, during the permitted times
Trade the required MINIMUM number of days of the Combine
Always implement stops with an open position
Must achieve overall Winning Day percentage of 50 or greater
Largest Losing Day cannot hit or exceed Daily Loss Limit
Do not hit or exceed Max Drawdown


Last edited by iqgod; March 28th, 2013 at 04:16 AM.
 
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"Where The Mind Is Without Fear" by Rabindranath Tagore


(This poem applies much to trading. Tagore won the Nobel prize in 1913 for his contributions to literature.)

Where the mind is without fear and the head is held high
Where knowledge is free
Where the world has not been broken up into fragments
By narrow domestic walls
Where words come out from the depth of truth
Where tireless striving stretches its arms towards perfection
Where the clear stream of reason has not lost its way
Into the dreary desert sand of dead habit
Where the mind is led forward by thee
Into ever-widening thought and action
Into that heaven of freedom, my Father, let my country awake.

- Rabindranath Tagore

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Good luck during your combine journey, I'll follow your musings in this thread with interest as I hope to traverse the same path as yourself. Also, bravo for including a word that I needed to look up, 'inculcation'. I like it :-)

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Step 1: A Plan

A Plan:

For example my plan for the $30,000 10-day-min combine, where I will be trading the 6E (evaluation steps will be specified in this very journal), states simply and irrevocably the following:


- Rule 1: At no point during any trade can my loss be greater than 10 pips. If I go long the 6E at 1.3035 and it goes down to 1.3025, since the loss is -10 pips I have to close. That is a max loss of $125 on a one lot trade. A stoploss once set (15 pips away) cannot be moved till the trade goes +50 pips. This is rule number 1 and means two things: I have to wait for proper entries and cannot win if I enter in a hurry.

- Rule 2: Maximum three trades in a day.If I am wrong 3 times in row, I have not got the flow that day, and unlikely that I will. Also losing $450 in a single day is a bad idea for a combine.

- Rule 3: If profit is +50 pips then the stop loss is moved to +30. This means a 3:1 risk:reward ratio has been ensured. It means I have a good chance of reaching my profit target of $1500 in 10 to 20 days before reaching my max drawdown even if I win 50% of the times (I have to win more than 45% of the time). Also this makes me have realistic expectations from myself.

- Rule 4: Maximum position size: One lot. No multiple open trades. No scaling in or scaling out.


The next parts of the plan are about "Following A Consistent Method".

This is where hard work pays off directly.


Last edited by iqgod; March 28th, 2013 at 06:53 AM. Reason: Stoploss is 10-pips, not 15 - thanks @Bharatiya!
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HitTheCity View Post
Good luck during your combine journey, I'll follow your musings in this thread with interest as I hope to traverse the same path as yourself. Also, bravo for including a word that I needed to look up, 'inculcation'. I like it :-)

Thanks!

in·cul·cate

Verb

Instill (an attitude, idea, or habit) by persistent instruction.

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The Critical Moment

"What do I do now?"


This is the million dollar question.


Do I initiate a position, close an open position, sit on my hands, wait for confirmation, permit myself to walk away and eat/sleep/bathe?

Also do I watch the chart right now or should I hold off that till I place a plan on paper?



"When the moment comes...."

Did I do what I wanted to do in my best interest?

Did I have a verifiable reason to do what I did?

Is this a click moment when thousands of forces come together that make me click BUY (or SELL)?

Is this a click moment where thousands of forces come together that make me FLATTEN ALL?




So let us begin at the beginning. It will become obvious that where we begin does not matter, as long as we consistently begin at the same place each time.....

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Questions to be answered before taking a single trade....

20 EMA


Trendline


Conflicting signals.


Traps.


Failure of a pattern.


Each of the above is used to find simple answers to essentially complex questions - good tools, but the skills of the craftsman using the tools are what we are discussing here.

Stop hit and now what is the plan from here? Is this a click moment all over again, or is this another smart n dirty trade to cover the red faced loss?

Can I look at myself before I act?

Can I see the thousand facets of 'Me' that suddenly spring to life when a critical decision has to be made?

What if I remove the 'Me' and take refuge in my 'Plan'?


Trading is a competitive sport and requires to be the best when indulging in it. Do I follow the plan when in the heat of the moment?

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"Wanting to be right"

Until I let go of 'wanting to be right' and take refuge in my 'Plan' I might succeed but inside I will be a psychological mess.

Why not live life alongside trading? Why worry whether the next trade will be profitable or not?

Why not prove to yourself first that over 100 trades, 500 trades you will be profitable slowly and consistently? Why not do the hard work?

Why not do this work that takes all the fun out of trading?

Why not make trading a statistical certainty instead of a reckless adventure?

And why not be responsible?

Why not be disciplined if you know that discipline will ultimately set yourself free?

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Be your own guiding light!


If the painful exercises are done beforehand, a trader develops an intuitive feel for when to act, when to not act, when to sit on hands, when to remove judgement from the market and when exactly to take profits or close out a trade.

It is a delicate state to achieve.

There a trader comes and goes at a strange liberty with the market.

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