People posting on futures.io (formerly BMT) and trading are probably not living in poverty. They are probably more educated than average.
Let's just say they make 75,000 a year at their "day job" on average. They work 60 hour weeks, aren't crazy about their job. They have a wife and 2 kids.
It is my opinion that taking this persons income from 75k to 150k isn't going to make them happier. They will buy fancier cars, a bigger house, spend more money going out and on entertainment, buy a new plasma tv, some new toys, a new set of golf clubs, buy a new boat, whatever... all of those things provide brief moments of happiness, but overall for the long haul will likely not solve any underlying problem if you are already unhappy to begin with.
It is very difficult to explain. I can still very clearly remember how I felt in my day job prior to me quitting and turning to trading full time. I would not have classified myself as unhappy. I had all kinds of toys, big house, cars, bought whatever I wanted, etc. But it turns out, I was not happy. It was not due to lack of money. Thus, money does not buy happiness.
It was only because I am able to look back and compare my happiness both before and after that event that I am able to say I was definitely not happy before the change. But like I said, if you had asked me at that time, I would have answered "yes, I am happy" simply because I did not have proper context to compare to.
I simplified my life. Changed my life, really. Changed the kind of person I was. It was not easy. Decided what was important, and what wasn't.
The only thing that was truly important was being happy, and I can assure you that the Corvette, big house in expensive neighborhood, and etc was not contributing to my overall happiness - but quite the contrary. Making big bucks at my day job where I was VP and could do anything I wanted, most people might say they would love that job. For a while I thought I loved it. I was wrong, and the more distance I put between that job and that way of living, the more I realized it was not making me happy - but in fact, the exact opposite - it was making me sick.
Once I simplified - got rid of everything, even my cell phone - and decided that trading was it for me, then I really started to see the path of what true happiness was about. And it has nothing to do with money or material things.
The important part, best I can figure out, is the feeling or sense of complete freedom. Even if you are small business owner, you have less freedom than you do with trading. There are employees to look after, there are maybe retail storefronts to manage, and then there are customers.
With trading you really cut those ties and are completely independent, aka freedom.
For me, it was just an enormous relief off my shoulders. Which is odd, since I replaced a steady paycheck with a questionable one.
I just got off the phone with my wife, explaining how ridiculous it was, that with what I am making now, in something I have done for over 20 years, and am extremely good at (not going for ego, but for definition), but do not enjoy...
When I take a project today, I know 99% of the time what I will make the day I sign on. That is the biggest difference in belief.
I can make money almost every day trading, IF, (and if it were not just silly that word would be huge) 1) I do not care, and 2) the trade size is relatively small.
And at that level, what I know I can do, is about $50k a year. 1-2 contracts. Sounds absurd, I know. Sounds so easy also, to just multiply. But it does not feel easy, and for me, as crazy as it sounds, when the feeling is gone, I do not make money.
So, yes, I can burn the bridge, and I am considering it more each week. Thought I was there; my jobs were ending and my main account went to another PM. Have enough to eat for a few years, a wife who supports me, friends here that encourage me...
And then another offer comes up.
I have not missed a delivery schedule since 1996? I am opening franchises for various businesses across the country, and that one attribute makes what I offer attractive. They need to deliver on schedule, I am almost like an insurance policy. I do not fail. And because of that, it takes a few jobs and I have a new loyal client. Easy. But relentless, unforgiving, in a constant race, time of day means nothing.
Trading works on it's own schedule. Some trades are quick, and those are the best, but most, the overwhelming majority, work on their own schedule, and give plenty of chances to decide they are not going to work out. I know that, and with one contract, it is almost a game. Price can move against me, ok I give. Not that it matters.
But I know, with almost absolute authority, I will find the trade, and I can maintain profitability even at a 50% win rate, because of the way I trade... with one or two contracts. I could be net DD $1k, so what? And hit the next opportunity with zero baggage, 100% belief.
I could survive trading, there is no doubt in my mind.
But in the depths, somewhere there was this positive reward system in what I have done in the past, more psychological than financial, that has a deep knowing of what I produce on an annual basis, and yet that math will not transistion into trading, for some reason that I do not completely understand.
My solution; be willing to accept less. And yes, that works. And so many times recently I find myself thinking, make more, for what? Stuff? Toys? Ego? Proof that I can? And having already been there, none of that seems to matter.
I know your problem intimately...there is only one solution. In the end, you have to decide what is GREAT for you and your family and what your sense of destiny is, then sacrifice the GOOD to obtain it. At that point, there is a bridge to burn. Its a reality both in the physical but more importantly in the heart. Without burned bridges, there is no emotional commitment to making a thing work. You know this better than most. Success requires total buy in. You cannot leave anything on the table. And being torn between two competing ideas, two competing paths will only lead to stress and eventually burn out.
Somewhere along this journey, you'll reach the point at which you know you must commit to one or the other. The Good Book says that "a double minded man is unstable in everything he does".
I once left a career as a software developer to pursue a full time career in a field which gave me true passion. Since then, I have woken up with "the Mondays" like everyone else at some point or another, but I have never regretted my choice to do something that I LOVE.
The money was not as good, and I basically stepped out of the nest and had to learn to fly quickly, but since making that shift 7 years ago, I have always been happy with my work, even on the tough days.
The truly sobering thing about trading the markets on your own is that no one makes you push that button. Win or lose, we are totally responsible in every way for our successes or failures. We can't even blame a bad market, as we alone make the choice to enter that bad market. On the one hand it's terrifying, because if I'm losing, well then I must look myself in the mirror and see the problem; but on the other hand, if I am successful (consistently anyway), then I can give no one else the credit. It is total freedom, and that freedom must not be abused, but it is a great feeling nonetheless. No employees, no bosses, no clients, no selling--none of it. Only us and the markets. What a job.
Did you enter trading to toil by the hour and take home a modest pay?
If you are like most of us, you entered the arena with stars in your eyes, maybe seeking escape from a day job spent doing what you might not fully like. Perhaps you were rudely awakened on one trade or a series of them from your reverie and experienced loss, pain and frustration - even a blown account - and realized that the market hadn't embraced you with its open arms even though it seemed so easy.
Buy low and sell high - and look at that parade of all those setups that are passing by which you had been missing all along till now. In you jump and then you encounter that BUMP.
Humpf! you grunt! You learn and learn and learn, pick up something new, or atleast adjust something old and expect the miracle of profitability - you surely deserve it by now, after spending so much effort, time and brain? But it eludes you.
You enter a grind that has taken up much of your hard cash, sanity and stare at the lost opportunities that have walked past while you dreamt this seemingly futile dream.
At this point the trader is at a crossroads.... this post is for that trader.
The first thing you need to do is take complete responsibility. Start with your day job. Perhaps you have a bad manager. Do you often curse him and dream of sweet revenge when you drive past him in a Lamborghini bought with trading profits? Then give up that malicious thought. Decide that you will work hard and honestly, and make it worth your while.
Why do I say this? Because the amount of honesty trading requires has to be built up. You cannot sneak off some work hours and slip them into trading and expect good results. That is stealing. When you give honestly you leave no room for excuses - when you know you have done your best. This lays the foundation for discipline.
The second thing I want to stress is that be yourself. That is one journey I had to come face to face with. If you are an artificial self then you need to get into your real natural shape first. If you need to rationalize your actions then you are not your natural self. Your actions are the most important part of the trading equation. If you are acting naturally out of a state of a winner then many things follow naturally. The emotion of humility and staying relaxed because you are not auto-acting out a part assigned to you by some arbitary parts of the society will serve you well.
@tigertrader once described the qualities that a trader should possess. If you read that post you will realize that the greatest traders of all are almost required to have all the qualities of Mahatma Gandhi.
Here is what he said:
You must be confident, but ego-less; objective, but subjective; mechanical but analytical; focused but relaxed; disciplined but flexible; and patient but decisive.
To which pat came the reply: I think you are describing Mahatma Gandhi !!! No wonder 95% of traders fail!
@iqgod: great piece-very well written and very insightful; and, you are spot-on in your reference to humility
humility is the most powerful currency one can utilize to prevent the market-mistress from collecting a toll larger than one should rightfully pay; one must have respect for the market and oneself. if one refuses to respect risk, the mistress will clearly find a gaping hole in such personae, so that she may serve up a healthy dose of humiliation.
Last edited by tigertrader; October 25th, 2014 at 07:37 AM.
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One of the benefits of having a good and trustworthy mentor in trading is that you don't learn to do things the wrong way. Unfortunately very few home-based traders have this luxury and when their self-taught methods are practiced sufficiently they come embellished with bad habits.
The best approach to eliminate bad habits is to firstly become aware of them and then superimpose the correct habits on top. With enough of this mindful practice (atleast 66 days, will talk about the figure later) the old habits will start to lose control over our thinking. But this can be a difficult and thorny process.
What gives? Why would a trader carry out such self-sabotage instead of 'getting better every day in every way'?
Of course if you never learn a bad habit that is the best, but at that point it seems such a good idea e.g. "to take that small winner to secure your wins" or to "move that stop because the market's going to come back anyway". Thus what @FuturesTrader71 calls the monkey-mind is the culprit. I have talked in my earlier few posts about what has to be done, but HOW does it have to be done?
Let us look at an example of a couple who are new pet owners trying to get their pup to eliminate a bad habit:
Look at how the problem is being tackled. When a trader is in the heat of the moment, enacting the bad habit, digging up that huge hole in his account, he is blind to obvious fact, oblivious to sensible self-advice, driven by a demon that has possessed him. Its only later when he realizes the gravity of what he has done, and then vows never to do that again, but then another 'sure-shot' trade looms large and here he is moving his stop again when he should have exited with a small loss long ago.
Note that there are 'rewards' for everything a trader does. Until he becomes mindful of those 'rewards' he cannot control the drug-induced reaction he plays out that his two pound chemical factory is executing for him. Loss? Yes. Repeated loss? Habit. Remorse after-the-fact? Habit too.
Here is the solution suggested to those pet owners:
The monkey-mind is exactly like the little puppy. It wants to be a good thing but the feedback it receives in the sterile environment of a review is not enough to make it understand that bad habits are NEVER OK. That is why there is a disconnect between knowledge and execution.
Based on scientific research, If you want to break a bad habit, here is one method that is often successful:
1. Identify a positive habit and congruent behavior you would like to adopt.
2. Identify the habit you want to break.
3. Recognize the sensory impulse(s) you experience in your body or other stimuli that occur just before you usually act on the negative habit.
4. Instead of acting on the negative impulse at that point, use your conscious attention to re-focus your thoughts and behaviors on the new and positive habit you identified in Step 1.
5. Substitute the new behavior that is congruent with the positive habit you want to form for the behaviors of the negative habit.
Continue Steps 4 and 5 for at least 66 days. Notice that you are using the triggers from the old habit to reinforce your practice of the new habit.
How long must the new behavior be repeated until the behavior becomes a habit? There is no one standard time period for a habit to form — it can take anywhere from 18 to 254 days. More specifically, the period of time depends on the difficulty of the activity being learned and the level of commitment on the part of the individual.
For example, it is markedly easier to form the habit of drinking one glass of water every day than it is to do 60 sit-ups every morning before work. Lally and colleagues discovered that, on average, participants learning to form a new habit succeeded within 66 days. By the 66-day mark, the repeated practice of those activities had hit their plateau of learning increases, and thus, the behaviors became as automatic as they ever would become.
Researchers identified an important caveat to keep in mind regarding learning a new habit: early practice of the activity resulted in greater increases in automaticity. So, if you’re going to miss a day from your repeated daily practice of learning a new habit, skip a day that is further along in the 66-day period, since the reward/increase in learning for a new behavior is greatest at the onset.
For example, here is what I am trying:
I realize that almost all my trades have the exact same issue: I exit with fear while the trade is a winner....
Henceforth every time I have this urge to move my target order I will focus on my new desire to watch the trade reach its target. The focus will have to be on bodily impulses which are hard to document but I'm hoping that the mindfulness towards them makes me aware what they are in real-time. Note that I will not focus on all the combines I have scratched - all the lost opportunity, all the profit targets never reached etc. That is feeding negativity and is simply asking for a good whack which the subconscious usually willingly supplies!
I will do this exercise for 66 trading days and keep you all posted about the results each time.
I once had the misfortune of meeting a trader who had just blown away 30 million bucks. He was devastated and depressed.
Where did I meet him? In the 10-day Mindfulness Meditation Vipassana program (described by me here) he was among the 800 people attending the program trying to find some repose and meaning to his life. (OF course at that time I thought of him as a complete fool to do that, and a sort of disciple of Satan who "deserved-it-for-anyway-for-doing-risky-gambling", myself never having waded in "impure"waters or vice of the financial markets which I placed in a certain category along with casino addicts, punters betting on horses, or cruel-Wall-Street-dudes whose business was cheating innocent people etc and more attributes of such unfounded villainy.
I had stated earlier in my puppy extract that:
Later I heard about him. So amazing was his turnaround and recovery from that unimaginable numerical hole that I still believe that if you truly desire success, such an event (even if fictitious) may well serve as the intensified self-alert to get back on the correct path following rules. And I am sure that mindfulness gave him the tools needed for that recovery.
The "What-the-Hell" Effect - You have LESS time than you think
Today I succumbed to the "What-the-Hell" Effect.
This is described by Dan Ariely who is a behavioural scientist.
The day started extremely positive and I had made a good amount of profit but then I did not exit when the market signalled to (in fact I loaded up more) and hence ended down more than 2.5x the original profit.
Here is the chart, followed by the "What-the-Hell" effect.
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Think what happens when you go on a diet. When you start out, you work hard to stick to the diet's difficult rules: half a grapefruit, a slice of dry multigrain toast, and a poached egg for breakfast; turkey slices on salad with zero-calorie dressing for lunch; baked fish and steamed broccoli for dinner. You are now honourably and predictably deprived.
Then someone puts a slice of cake in front of you. The moment you give in to temptation and take that first bite, your perspective shifts. You tell yourself, "Oh, what the hell, I've broken my diet, so why not have the whole slice - along with that perfectly grilled, mouthwatering cheeseburger with all the trimmings I've been craving all week? I'll start anew tomorrow, or maybe on Monday. And this time I'll really stick to it." In other words, having already tarnished your dieting self-concept, you decide to break the diet completely and make the most of you diet-free image. Of course you don't take into account that the same thing can happen again tomorrow and the day after, and so on.
This is a side-effect of 1. being a perfectionist OR being hard on yourself by depriving the self of too much; and 2. thinking you have infinite time and opportunity. Take care all.
I feel you this is the hardest part for me as well. That's why I try to concentrate only to make my day even if it is a bit less than the target.
I have read a good book a following story. The reader went home after a huge trend day. His friend Was asking hím great day right market was moved big happy right ...?
If you are an intraday trader it is the hardest part ... No good advice here only that to have a daily limit and stop trading if you hit it.
Of course after starting to being consistence it will easy to go further and further because you are building your confidence up slowly but till that go step by step only.
I am more than happy to close my they with 20tick plus in 2 minutes if I feeling something is wrong with the market than to win big. Of course I am training my mind every day to review all the move what the market did but it is for
My further development only
Keep it up! If don't give it up if you know where to improve there is no place for doubt !