Favorite Futures: Futures, currencies, stocks and options
Posts: 13 since Jun 2012
Thanks: 58 given,
The market is random at best, but if a trader comes with edge. Only business the trader should be involved in the market is to execute the edge. If you make trades that is not part of the plan/edge and make trades based on hope, fear and greed you are going to loss in the long run.
Few simple steps to become a trader
1. Come up with the edge
2. Come up stockpile of cash to deal with expenses for earlier months or years
3. Clear money management ( Never loss more than one percent in a week in your first year ).
4. There should be no If's, But's, Hope, Fear and Greed in this business.
5. Know your strength and weakness.
6. Execute the edge, nothing more and nothing less. ( Even if you have a edge it will take time to become expert at it ).
Trade what you know ( in terms of setups ) and leave the rest to others. If you are going to survive in this business there is going to be nearly infinite amount opportunities to make money and I can bet you have only finite amount of money to start with, so use it wisely to execute the edge.
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I'll never forget what one really great trader taught me one day.
He sat me down at a terminal and put a 10 period and a 30 period SMA on the screen, and told me to trade the crosses long and short in the market in sim. We did this together for 1 week's time. Always in the market long or shot, from 9:00am EST to 12:00pm EST.
I asked him why he was making me do this, as the system clearly wasn't profitable.
He told me that until I could condition myself to take every signal that this simplest of rule sets generated, that I had no business spending money on any commercially available system or methodology. That I needed to learn to crowd the noises out and take the signal despite what my "intuition" and internal reasoning centers were telling me.
He said, "you have to treat your signal like sobriety. Every trade taken with your rules is one day closer to your 1 week "chip".....your one month "chip"..........your one year "chip".
I found it interesting that he connected the psychology of trading, with the psychology of staying sober. I've never forgotten that analogy and I've passed it along to many of our new trader clients...
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"W.D. Gann's outstanding skill was his ability to produce accurate annual forecasts of the stock and commodity markets. Gann stated that his forecasts were based on his secret "time factor". However, careful analysis of his novel entitled "The Tunnel Thru The Air" reveals Gann's belief in the overwhelming importance of astrology. Therefore astrology is the real basis of Gann's annual forecasts. Indeed, astrological analysis is implicit at key points in his books and courses. Consequently it is concluded that if we wish to emulate Gann's outstanding forecasting skills we must follow in his footsteps by firstly learning astrology and then apply this knowledge to the stock and commodity markets. "
"Born on the 6th June 1878 Lufkin, Texas (Chart 1) in the sign of Gemini and in the true spirit of a Mercurial child, William started working as a news butcher on a train selling newspapers and food at the young age of 13. His family was very poor and as the eldest of eleven children, he grew up very quickly working hard on the family farm and in the cotton warehouses- where he was exposed to commodity trading.
By his second Jupiter return at age 24, he was a husband to Rena May Smith and a father to Nora. A year later he moved his family to New York City where he worked for a Wall St Brokerage until 1908, later opening his own brokerage firm, W.D. Gann & Co, age 30.
There was no stopping W.D. Gann, even when he incurred great losses through Bank failures in November 1907. In the Wall St Stock Selector under the caption "When a Man's Trend Changes " Gann wrote about these losses by bucking his own trend. To quote him, " I was trading in a period which should have been for rest, recreation and gaining of knowledge." Astrologically, at 29 years of age, Gann was under the adverse influences of a Saturn return. This was also around the same time that he divorced his first wife and married his second, Sadie in 1908. "
What does this mean? That a trader can have psychological insight to the mind but not the foggiest notion of what moves the market...and still be profitable? In other words he talks about rules but his rules are mumbo jumbo.
Last edited by Coast; April 27th, 2013 at 01:40 PM.
In my opinion, the greatest weakness is believing your strategy is always fool proof. Another example is believing you're more intelligent than the next person in the room or the market itself! Confidence is a good quality but there should be limits to everyone's reach!
Totally agree with what you said. As an intermediate trader who has only been trading a few years, I follow a automated system that is doing quite well but as soon as I have a losing week I start 2nd guessing the system. Thinking I know better. Takes a lot of emotional control to try and right the ship.
Trading rules are like rules when driving on a road. You are not supposed to stop on a highway but if all the cars in front of you are stopped it would be foolish to keep on the gas.
Guidelines are too ethereal a word, so framework can be used. Random or non-random markets, whichever you believe, they still fit into a framework of definition. Constantly changing indeed, so what precision worked yesterday might take tweaking today.
I find that acknowledging my emotion help. Take note of them, then they transform into a ‘thing’ rather than something that is inside you. ‘I am losing my patients in this trade’ Then I ask, have the original parameters of the trade foundation, setup, and execution changed? If no then there is no reason to lose patients. If yes then the exit strategy take place. Emotions can be a guide. A power to harness.
Have Fun with it. If it is not fun, it not worth doing.
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