Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I wanted to create this thread to draw the attention of struggling traders who have examined last years trading and found they lost more than they made. While personally I made more than I lost, my goal here is to help others.
First, I've been there. So have many others on the forum. I'll also start by saying that trading is not easy. I have said before that becoming a successful trader was the single hardest thing I have ever done in my life, and that I literally and to become a different person in order to succeed.
If that scares you, if you don't know for sure you have the resolve to see this through, then probably some of the best advice I can give you is to stop. Stop trading. Find something that you truly do want to do. Finding the thing that makes you happy and that you are good at is very important. Life is short, don't spend it struggling.
For those of you who have decided that trading is what you want to do and have the resolve to see it through, then I'd like to ask a few questions as I feel the answers will directly impact your chance for success.
1) Do you have your life outside of trading in order? If you don't, then you are not doing yourself any favors by focusing on trading. Don't think that if you can just pull your trading together that suddenly you will be able to pull together the other things in your life. It's the other way around. I am speaking from experience. You have got to position yourself for success, and that means you need to work through any other challenges in your life outside of trading and get them into a good place before you can tackle the new challenge of becoming a successful trader. For many, this will mean the best thing you can do is stop trading, focus on these external things, then come back to trading later.
2) Are you actually able to trade, financially? If you are trading with rent money or the kids college money, retirement money, etc then the answer is no. See item #1. It won't work! Please, for the sake of yourself and your family, stop trading. Come back to trading once you have a dedicated set of funds that you can use for your trading education and training. This is money that you will pay out and you need to accept that 100% of it will be gone. It's your tuition. You also then need a separate set of funds after you have "graduated" to fund your actual account. In both cases, these funds should not impact your life if they are lost.
3) Are you actually able to trade, time wise? This is more of a question of selecting the appropriate market to trade given your schedule. If you are working a 8-5 day job, then you can't be a day trader but you could be a swing trader. Make sure you have set yourself up for success, position yourself so you can succeed! Your trading style should make trading painless/effortless, no conflict with your job, no "rushed" feeling because you are squeezing it in before work, or during lunch.
4) Does trading make you happy? I figure that for the majority of traders that make it this far down the list, the answer is yes. But you should pause and really ask yourself if trading makes you happy. I don't mean only when you have a profitable trade, I mean the whole thing. All of it. If trading is causing you nothing but stress, nothing but problems in your life, nothing but strain on your relationships, then the answer is likely "no". It may be that you need to go back to item #1, #2 and #3 and work through some things so that the answer to #4 can be a resounding yes. Until that time, don't trade!
5) Are you willing to make dramatic changes to yourself to be successful at trading? It's not an exaggeration when I said earlier I had to literally become a different person to be successful at trading. I was previously a high power C-level executive, with lots of money and a lavish life style. I was good at problem solving, forward thinking, planning, and leadership. I was confident in myself and my abilities. This made me a great executive and great for the corporate world. It also made me an absolute terrible trader. I have read, and firmly believe, that people like me that enter trading blow up their accounts more/bigger/faster than other types of traders, for example a blue collar worker may find success much more easily in trading than a white collar worker. This is because a blue collar worker is generally better at following orders, where as a white collar worker doesn't like following the rules, he likes making them. In trading, the market is always right. You are simply along for the ride. If you cannot adjust your personality and style, you will blow up your account. You cannot overpower or "will" the market into doing what you want, and worse - if you try and occasionally find what appears on the surface to be "success", you will be creating and reinforcing some of the worst trading habits that exist. Don't take #5 lightly. If you've always been a big success in your career, it is likely you will have the hardest time in trading. You will have to admit defeat and admit you were wrong many, many times. And you'll have to be OK with it. And you'll have to learn from it.
6) Do you have the time and patience to become a successful trader? Let's take an example of a college kid fresh out of college that has a huge interest in the markets. If he has only given himself 3 months over summer to prove that he can be a successful trader, then he has already set himself up for failure. You cannot force a time table on success. Success happens on its own schedule. The more you try to rush it, the less likely it will come. A good number that most people agree with is 10,000 hours of screen time. That's a lot of screen time. What you are doing is making trading second nature. Another reason it requires so much time is that trading is a career only for the best of the best. You might relate it to becoming an astronaut. You'll have to beat out a lot of other traders in order to be successful and make it to the moon, figuratively or literally. That also means you will need to allow yourself to make all the mistakes that any trader can make, yet position yourself so that you can keep coming back. Mistakes are inevitable. A "master" trader is simply a trader who has made all the mistakes you can make, and has survived. You must have the time and patience to allow this process to unfold.
If you've made it this far down the list then congratulations. You will find yourself in rare company. If you are still struggling with your trading then you need to "step back" and examine your trading as impartially as possible so you can find your weaknesses and strengths, and then you need a plan to eliminate the weaknesses and reinforce the strengths. One of the best ways to do this is by creating a public journal on the forum, and posting your trades to it each day. You'll find the accountability to be a great motivation in improving your trading, and you'll find it is easy to see your mistakes when viewed in this light. You are also free to ask for others advice and opinions so that you may consider them and either reinforce what you already believe, or call into question what you believe and possibly make changes to it.
This is a brand new year. What will you do to become a successful trader this year?
It's rare that I disagree with some of what you say. Not in full, but in part. Actually, I do agree with everything to a point. I think its a matter of what degree. I think we do need to have our lives in order outside of trading, but again, I think its a matter of degree. Nobody lives the perfect life, and if some do, I think they are the exception and not the rule. I think more importantly and maybe more specifically we need some level of control over our emotions and mental speak. In other words, a handle on the psychological aspect of trading. As far as the other issues go I would agree with not using rent money, or college fund money to trade with. I do think though that one can put aside a small account of 5-10K and work with it. Is it optimal, no, but it can be worked with if the person is ready in other areas. I think the thread, Zen of the Small Account is a testament to that. As far as not trading in the morning because of work etc. I think it depends on what the persons plan is. If the plan says I trade between 7-9am eastern time and they have the rules and setups defined then that is okay. It doesn't mean they need to force a trade or manufacture a trade. I admit that I am some what bias because I am not all the things you listed in your post and if I were to follow your guidance I would need to stop, and I have for periods of time, but I feel determined to make this work and if I wait for all the stars to be in alignment then I will never do it.
I think most importantly is some mental preparation, whatever that is. Work on the demons and why one may revenge trade, over trade, over leverage, trade opinions etc. Once some work has been done there then move on to the other aspects of trading such as a plan. In the course I took Gary Dayton talked about deliberate practice and used the analogy as many have about professional athletes such as tennis players and all the practice time they put in. He also said that a professional musician would put in the same level of practice. Since trading is a skill he felt that it deserved the same level of deliberate practice.
So, for me, what I will be doing this year is first to get Gary's Mindfulness course geared towards overcoming erratic trading. Then I will work on a plan with setups etc and practice by annotating charts, looking at charts bar by bar and looking for the setups I have for myself. Gary talks about being accountable and the only way to do that is to have someone see what you did, so I will either need to find someone that will review my charts or post on futures.io (formerly BMT) or both.
One other comment that Gary made in the course and that is "It is all about the process of trading and never about the money." The process is the plan and the practice and following the plan.
Thanks David! I agree with everything you've said, and am glad you said it!
You should feel free to disagree with me, I am not perfect and this is a discussion forum after all. The main purpose of my post was to make people evaluate their trading, and take a look at the answers and see if they like them or not, then help and encourage them to make certain changes to get them where they need to be.
I hope others will share as you have. I know you have worked extremely, extremely hard on your own trading over the past year.
Sometimes it is easy for traders to get carried away and basically setup rules that are impossible to follow. They don't do intentionally but almost subconsciously. The end result: if a trade doesn't go their way, if they have a bad day, they always have an excuse or an "out". "If only..." and then the list is long.... but a popular one "If only I had followed my rules".
Sometimes your rules are impossible! You can't follow them! A lot about trading comes down to what can be described as intuition or a gut feeling. Don't you think its possible that your mind can process more information than you can verbalize or perceive? That could be your "gut" talking. That is also why many great traders often have somewhat vague answers on their specific reasons for taking a trade at the exact time or moment they did. Sometimes it is just intuition.
But on the other hand, such vagueness or grey areas can make it impossible to literally follow your rules, because if you try to literally interpret them there will always be a new interpretation that may change based on the exact frame of reference or trade or situation.
So rules are incredibly important, but equally important is the ability to step back further from the rules themselves and find ways to measure yourself in different terms. Some examples may include measuring your stress level. Is your back firmly against the back of your chair? Are you hovering/lurching over the keyboard? Is your heart rate up, are you nervous? Still other things to measure could be your alertness level, your concentration level, are you distracted or are you focused? What about things like pressure to perform. If you only have a 2 hour trading window each morning before work, do you feel it is necessary to force a trade?
The point of this follow up post was to put my first post, post #1, in some context. No one has a perfect life with every single thing in order exactly the way they want. Well maybe someone does, but not me. So you can't take everything literal when measuring or comparing. But, there is the other end of the spectrum where there are traders here that are trading rent money or college funds, they are trading behind the backs of their spouse, they are trading on lunch breaks at their jobs, they are trading in less than ideal circumstances -- and they are probably losing because of those same circumstances. So you have got to be realistic. You can't become a neurosurgeon on your lunch hour, and you can't become a successful trader over your lunch hour either.
Mike i think the way your question was formulated will eliminate many participants:
'This is a brand new year. What will you do to become a successful trader this year?'
This type of question implies the only members that can post are losers. Who wants to identify with being a loser ? Beside it's not positive to state a question like that. I would be more inclined to participate if you'd have asked, can you state one positive aspect in your trading something that you like and one aspect you'd like to improve and what's your plan to achieve it.
And now I feel compelled to write another follow-up!
You can't go the extreme other direction here! You can't swing from the hip! You can't bounce around from trade to trade with no written rules and methodology. You have to practice sound risk and money management!
The first few times the neurosurgeon practiced on the dummy medical doll in class, he probably made mistakes or killed the patient. Eventually, over time, with practice, he learned the precision of a scalpel that is required in his profession. In the beginning he was perhaps wielding a huge ax, cutting and making a bloody mess everywhere, but over time it became a scalpel of perfection.
It is true of trading as well. I imagine brain surgery isn't easy. Neither is trading.
One positive aspect is that i am a very patient trader. That's certainly my biggest strength.
However, there is one aspect in my trading i'd like to improve, ie, learning to accept some deep pullback when i am in a trade instead of closing an opportunity at break even. I'd like to learn to accept more heat in order to favor bigger winning trades.
This year, my current objective is to simplify my trading model as i realised last year my setups can easily be seen or anticipated without indicators. A simple trend line is all i need in most cases.
I have already removed most indicators on my chart as my basic model was based on the framework developed by NexGen (TriggerLines, MACDBBLines, Keltner Channel, Fibonacci lines). FatTails has been kind enough to let me use his Fibonacci tool as a substitute but to be honest i rarely used it.
My setups are failry simples, i trade similar top/bottom which can be anticipated without indicators specially if you take the second test. I also trade a change of direction or when the current bias is about to change (again this can easily be detected with a trend line) and finally my other setup is more of a trend continuation setup when price is bouncing off a moving average.
Simplifying my model also means reverting to a more formal interval like a time based interval. I want to be able to transpose my trading model on any platform wihout being dependent on any of its available indicators.
One other area i'd like to get familiar with is the pyramiding model in order to compound or maximize my profit. I am convinced this is where you can skew the odds in your favor by a huge factor. This is more related to the money management aspect of my model. My plan is already designed to take advantage of this aspect which is somewhat more complex but demand a good deal of guts to put into place.
