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Primary source of income: how many have made it?
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Primary source of income: how many have made it?

  #151 (permalink)
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Slipknot511 View Post
That would also eliminate the ones who make an immediate windfall in a strong market, but get wiped out after a year or two when they learn that markets can also go down. (i.e. 1999).

This is a good point and there is another related element as well. It is possible to make money in trending and volatile markets and it is also possible to make money in markets that are not moving much as long as there is some volume. A trader who either decides to make his/her living trading just one instrument or who is forced into it by the circumstance of being a market maker in just one instrument will learn to make significant money in either type of market. However when the market changes modes, as recently happened in Treasury futures, that trader will lose until he or she adjusts. One danger of having too much success early in one type of market is that you will absolutely get killed when the market switches. I knew a guy in a prop group who started trading the yield curve in a non-volatile period. He made about $600,000 his first year fading small moves. Then one day the market suddenly got volatile, and he lost $1 million on a single trade because he had never seen a market trend (seriously, it was that slow for that long!) and he just kept adding to his loser as the market trended, expecting the curve to come back to unchanged like it did almost every other day he traded.

The point is that it is not just trading a market that always goes in one direction that can make you a legend in your own mind, but also not having enough experience to know that the market can also change character, which will require a different style of trading.

I am trying to learn to watch and trade multiple markets at the same time so I can pick and choose the ones with the characteristics I want.

"You don't need a weatherman to know which way the wind blows..."
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  #152 (permalink)
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CWchang Forex Trader View Post
New here but here is my experience


5years trading (4full time)

2 Accounts completely loss for a $18k loss

Now consistent 32k last year on 2-3contracts about a MC Donald Mgr salary

It is very hard frustrating but I am my own boss in a very bad economy.

Also this 32 k does not support my family my wife works as well as a RN.


Possible to make some money but I feel this being more and more like a dream to reach 100k


Good luck to all.
Cw

If possible, what you need to do is throw all of your trading earnings back into your account and increase your trade size proportionately to your account size. Do this net of expenses and taxes. DO NOT SPEND ANY OF THE MONEY YOU EARN TRADING, TRY TO LIVE ON YOUR WIFE'S INCOME. When you first start trading bigger you will probably experience a loss of performance. The toughest jump for me was going from being a one lot trader to a two lot trader, not so much because of the extra risk but because I got greedy. At twice the size, I thought I should make a FORTUNE, and I forgot to take profits. Where I had been making money consistently as a "one lot Louie", I started losing daily when I went to trading two lots. I wound up solving the problem by scaling out. If the trade was a winner, I would take a one tick profit on one of the two contracts every time until I became comfortable with the extra size.

One thing that happens if you make your trade size proportional to account size is that eventually you get accustomed to increasing your size. Also you trade just at the edge of discomfort, which I think makes you sharper.

"You don't need a weatherman to know which way the wind blows..."
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  #153 (permalink)
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Private Banker View Post

Begin trading live when YOU feel most comfortable and are completely clear and confident in your strategy whether that takes 1,000 SIM trades or 3,000 SIM trades. The only thing that matters is your confidence in what you've developed that has proven profitability. Just keep it real simple at first.

I like this but I would add a step. Once you are confident in the skills you have developed sim trading, set yourself a sim money goal that will take a while to achieve from a specific start date, maybe a month or two. That start date should be after you have decided you are ready, not looking back to days when you took experimental trades. Trade the size you plan to trade live. When you have losing days, this will push back your "live" start date. Especially as you get close to trading live, my experience is that the sim trading will start to feel very real and the pressure of sim trading will feel like the pressure of live trading, because losing days in sim delay when you get to start making real money.

"You don't need a weatherman to know which way the wind blows..."
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  #154 (permalink)
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Private Banker View Post

Another thing about stops as they relate to a strategy. Many new traders pick a market to trade and then create a risk-reward ratio. The problem is they typically base the stop on the amount they are willing to risk with no regards to the volatility of that particular market. For example, You're willing to risk $100 to make whatever amount, say $500. You've chosen to trade crude oil. The likelihood that you get stopped out on each trade is far higher than you reaching your target as crude oil is a highly volatile market. Stops need to be placed where your particular trade is no longer valid which means a more volatile market will require a larger stop range in fact, CL will jump one point ($1,000) in a few seconds. This leads to selecting the appropriate market relative to your account size. This is one of the biggest mistakes newer traders make and probably one of the biggest account killers that exist and leads to overtrading.

Absolutely terrific point! In addition to mini contracts which can sometimes be illiquid, there may also be something that correlates highly with the instrument you want to trade but is less volatile. For example, you may want to trade 30 year bonds but they are too volatile for your account size. A less volatile contract is the five year note, which usually but not always trades in the direction of the T bond but anyway has a dynamic all its own and is liquid and tradable.

"You don't need a weatherman to know which way the wind blows..."
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  #155 (permalink)
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tigertrader View Post
Yes, but what separates the good traders from the great traders. What separates Tiger Woods from all the other golfers, and what separated Michael Jordan from all the others?

It's something intangible...

How do you define "good trader" vs "great trader"? I would argue that in the end it comes down to the bottom line. Consider two traders:

Trader #1 has a winning methodology or methodologies, great risk/reward stats, great discipline, is capable of trading many markets and many different types of market, but uses his trading income to live and does not grow his account, so his income, while consistent, does not grow fast.

Trader #2, is a "one trick pony" who makes money consistently enough but not as consistently as trader #1. He lives with his Mom so he doesn't spend any money. Instead every time his account grows by $5000 he increases his size one contract. He reinvests all his money in his trading business rather than spending it, and winds up being a much larger and much more profitable trader on a dollar basis than trader #1.


Who is the better trader? Clearly trader #1, but I would argue it doesn't matter. The fact is that trader #2 has the better business plan and winds up making more money. I think if you look at trading as a business and set up a business plan that includes growth as part of the plan, you can do very well indeed even if you are just OK as a trader.

"You don't need a weatherman to know which way the wind blows..."
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  #156 (permalink)
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jstnbrg View Post
How do you define "good trader" vs "great trader"? I would argue that in the end it comes down to the bottom line. Consider two traders:

Trader #1 has a winning methodology or methodologies, great risk/reward stats, great discipline, is capable of trading many markets and many different types of market, but uses his trading income to live and does not grow his account, so his income, while consistent, does not grow fast.

Trader #2, is a "one trick pony" who makes money consistently enough but not as consistently as trader #1. He lives with his Mom so he doesn't spend any money. Instead every time his account grows by $5000 he increases his size one contract. He reinvests all his money in his trading business rather than spending it, and winds up being a much larger and much more profitable trader on a dollar basis than trader #1.


Who is the better trader? Clearly trader #1, but I would argue it doesn't matter. The fact is that trader #2 has the better business plan and winds up making more money. I think if you look at trading as a business and set up a business plan that includes growth as part of the plan, you can do very well indeed even if you are just OK as a trader.


Yes, but trader two still lives with his mom and is therefore deemed a geek... ; )

good points...

In the end... if you trade for a living, you must live off your profits. Just keep your lifesyle simple
so you can re-invest SOME of your gains....

In time both traders are driving Dino's.....


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #157 (permalink)
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jstnbrg View Post
How do you define "good trader" vs "great trader"? I would argue that in the end it comes down to the bottom line. Consider two traders:

Trader #1 has a winning methodology or methodologies, great risk/reward stats, great discipline, is capable of trading many markets and many different types of market, but uses his trading income to live and does not grow his account, so his income, while consistent, does not grow fast.

Trader #2, is a "one trick pony" who makes money consistently enough but not as consistently as trader #1. He lives with his Mom so he doesn't spend any money. Instead every time his account grows by $5000 he increases his size one contract. He reinvests all his money in his trading business rather than spending it, and winds up being a much larger and much more profitable trader on a dollar basis than trader #1.


Who is the better trader? Clearly trader #1, but I would argue it doesn't matter. The fact is that trader #2 has the better business plan and winds up making more money. I think if you look at trading as a business and set up a business plan that includes growth as part of the plan, you can do very well indeed even if you are just OK as a trader.

I would prefer to be Trader #3, who makes money consistently who has a winning methodology or methodologies, great risk/reward stats, great discipline. Who takes between 30% to 50% of equity growth for income and the remaining 50% to 70% stays in the business account and when my account grows by $5000 I increase my size one contract. I don't live with my mom, but have living expenses LOL!!!

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  #158 (permalink)
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Private Banker View Post


But to the point of what separates the ultra successful traders from the pack is something that comes from a lot of blood, sweat, tears, determination, crazy natural ability and most importantly 100% confidence and belief in themselves through their past experiences in trading and developing a winning edge. These traits can be found in every truly successful person alive. This is something every trader should strive for but it takes a lot to get there.

In my opinion, what separates the ultra successful trader from the pack is the ability to trade size as though you were trading one lots. The kind of money we all aspire to earn comes from trading large size. If you can develop a winning methodology trading small and gradually increase you trading size as your account grows, the limit to your income is determined by the liquidity and depth of the markets you trade.

My posts on this subject are not aimed at the trader who has not yet figured out how to make money consistently and who has not learned to trade in a variety of market conditions from glacial to wild. You will blow yourself out if you trade larger than your capital and your skill set allow. My point is that as you build your trading business, growth needs to be part of the plan.

"You don't need a weatherman to know which way the wind blows..."
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  #159 (permalink)
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tderrick View Post
In my limited experience live trading, It seems to always boil down to one thing. Your mental strength.

Can you take AND hold on to the trade you've taken a thousand times in practice and know works
most of the time.

The 95 to 5 ratio is undoubtedly correct.

So... It boils down to this. Do YOU believe you are a 5%er? Have you always tried harder than everyone else?

Here is my breakdown....

The first 75% - You mean I'm going to have to study? I need to read books? Man, this is too much like school..
I'm out. I thought this would be easy money...

The next 10% - I will study my brains out and learn it all!! Oh wait, I have no guts... I am not fearless...
I'm out

The Last 10% - I can't seem to find a balance between all the immense knowledge I have gathered over the last couple of years and the simple ability to pull the trigger at the correct point in Price Action.
I am always at break even. This is taking too much of my time.
I'm out


...

People simply don't realize what they are getting into...

Love this post. IMO, "The next 10%" and "The last 10%" are really the same thing. Also, among the 95% who don't make it are many with the guts and the toughness but who lack adequate capital to take them through the learning curve. Some people simply do not have the freedom to live in Mom's basement. They have people depending on them who need to be fed today. Those people should not have started trading in the first place.

"You don't need a weatherman to know which way the wind blows..."
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  #160 (permalink)
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jstnbrg View Post
Love this post. IMO, "The next 10%" and "The last 10%" are really the same thing. Also, among the 95% who don't make it are many with the guts and the toughness but who lack adequate capital to take them through the learning curve. Some people simply do not have the freedom to live in Mom's basement. They have people depending on them who need to be fed today. Those people should not have started trading in the first place.


There are markets available for anyone to learn this game...

A teenager with an allowance can trade the Forex Nano... Anyone with enough determination can win.

To never try is the true mistake...


AJ
Nashville, Tennessee


"Life On The Edge of SR"

Last edited by tderrick; December 18th, 2010 at 02:16 PM. Reason: typo
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