Broker/Data: Mirus Futrues, Zen-Fire, IQFeed, Kinetick
Favorite Futures: 6E, CL, GC
Posts: 132 since Apr 2010
Thanks: 22 given,
If we're speaking in generalities, this is all pretty good stuff. It was pointed out that not everyone is cut out to be a trader. Passion has a lot to do with it but many are so far behind the required level of patience and discipline that their odds of making it are practically nill...especially without considerable mentoring.
I believe a fair amount of sim trading is manditory. Trading is a skill and no skill is ever mastered without practice. In trading, practicing to hone your mechanical skills in live account trading is insanity. With a good trading system, market knowledge and the mastery of the mechanics, most traders can be taught to do well on practically any day they choose - in simulation. When they switch to trading "live", the wheels fly off. Why?
All the simulation in the world will not replicate true trading stress (emotions). A few traders are able to make the transition from sim to live and do ok. But they are such a small number that we must postulate that, as a general rule, ALL traders will blow up their first account. The psychological stresses will be so great and their defenses so weak that they will be virtually powerless to combat the urge to bend, twist, bust, mangle and break their rules. Everything they know works goes out the window. At the end of the day, after reviewing their "performance", the sickening feeling of despair and disbelief sets in and they hate themselves. But overcoming those mental monsters is another topic.
We can take a simple poll here to find out how many futures.io (formerly BMT) traders made a successful transition and never nuked their first account. If honest, I venture to say "not many". So, if we accept the postulate as overwhelmingly true, then the question is, "How much money do you want to lose?" $2500? $20,000? $100,000? You get to choose. Think of it as your "tuition" in Trading 101 to learn that "cowboying" trades doesn't work and, to succeed, you must settle down and start mastering yourself. If you give in to your emotions and break your rules even one time, you cannot call yourself a disciplined trader. Without total discipline there cannot be lasting success.
It has always puzzled me how traders will invest so much time and money in learning systems, but put virtually nothing into learning themselves.
The following 7 users say Thank You to rogerf for this post:
Great thread - great posts. The emotion in these pieces is as palpable as the emotion on display when people trade. The human spirit is as dichotomous as the market itself. If it is not channeled properly, trading success will be unreachable. This means the trader must have a full understanding of both the negative and positive contributions of the human spirit. He must develop the right attitude which includes: discipline, emotional control, and the ability to handle success and failure, while always guarding against negative and debilitating emotions.
Perhaps the greatest impediment a new trader faces is his emotional investment in the trade itself. The "outcome" of the trade takes on paramount importance, not the "process" entailed in making the trade. It becomes all about "being right" and making money, and not about controlling risk. Each trade is a life-and-death struggle where the emotional investment can be as skewed as the trade's risk/reward. A trader should simply recognize what he did correctly or incorrectly, and move on to the next trade.
Trading is not about being right or wrong the market, or predicting where the market is headed in the next moment, hour, day or week. Trading is nothing more than a probabilistic endeavor, and a trade is nothing more than a statistical data point. It's the next event in a series of events governed by the statistical random distribution of results. Win or lose, negative emotions should not be allowed to play a role - only the positive aspects of the human spirit should be evident: confidence, patience and humility. A trader's winning percentage is essentially, a meaningless metric. It doesn't matter if his last trade was a winner or loser, because a trader is only as good as his next trade.
Last edited by tigertrader; April 21st, 2012 at 07:06 PM.
The following 19 users say Thank You to tigertrader for this post:
Just thought I could add some information to this thread. The web site Your Trading Coach has a great article on discipline. Lanc Beggs explains it very well. As a trader who has not been prifitable for over a year now some of his points hit home with me, ex. having a positive expectency method by which to trade by. Also, I took a trading psychology lesson from Andrew Menaker who is very good by the way. I had some failure to pull the trigger problems early on. I truely believe it comes down to having a positive belief in the method you are using, if you don't a lot of other discipline and mental issues will surface. The key is finding the right method that works for you.
Wow! I do recognize myself in that
- Invest a lot of money in learning
- Invest lot of time to developp software
- Invest lot of time in paper trading
- Start to trade live
- Bent my rule
- Panic at the first small gain
- Resist to close on some trade going again me
- Foraging from one system to another
- Keep trading after an extended serial loss (many loss in a row)
- Trade in tiny market ( low volume period)
Today I could say that I'm more confident than I use to. I'm still in the red zone, but dancing with the Brake Even line.
Now, I do start to recognize some mistake (demon) that I have like putting my stop to near the action. I did start to write down every trades that I take + few comments. Still a lot to do in these report.
For the moment, my worst stress is to loose any gain that I have. I will put my stop to close or refrain to close a small winning position because I want more.... Gready Gready Gready..... Not good
I do accept the fact that trading is an emotion game. For me and for the others to. Controlling my emotion and learning where the others participants may loose their. That is a good objective. Easiest said than done.
Excuse my English . I'm better in French...
Methinks the answer to this puzzle is found in the momentary pleasure found in denying reality. To learn myself requires honesty, high pain tolerance, hard work, and dealing with much unpleasant reality that I would rather deny and spend thousands of dollars on systems that fail and get the blame rather than the one common denominator... myself. "Know thyself" is the beginning of learning anything substantial. I have seen the enemy--- and it is me.
It is a lot more fun to have romantic notions of success if I can only find that winning system. It is also A LOT MORE EXPENSIVE! Dealing with reality is the only way to succeed over time. Truth hurts. Then truth, if applied, heals.
In this country you can't get a drivers license without proving you have some degree of rudimentary knowledge of traffic rules and driving skills. Yet you can get married or open a futures/forex trading account , two activities that have broken more men than a stay in Guantanamo, with few requirements other than fill out the forms and pay the minimum requirements.
I apologize in advance to everyone who's head is going to explode and call me a Commie/Socialist/LeftWingFanatical/Democrat rat bastard... for what I am about to write .... (Actually... I have been called worse... and sadly, in most cases it was justified)
1. Getting to trade live should be like getting a drivers license ... you have to pass a written test on fundamental trading knowledge and pass a SIM trading test.
2. You can not trade in a retirement account until you have shown consistent profits trading a non-retirement account.
3. You have to track your trading progress in a trading journal on futures.io (formerly BMT) and respond to all the "helpful" comments posted by experienced traders.
Don't ya'll all feel better now... things could be worse ... I could be in charge...
Disclaimer: This post does not represent the view point of the owners, managers, or moderators of this web site and is not intended as a slam against any moderator, board member, any banned former members whose name we dare not say, any other living person, any recently living person or any person or persons whose status we are not sure of and especially not for any platform vendor with a questionable product and a pit bull lawyer. This post is meant purely for entertainment and should not be confused with a real thought.
I am not a programmer, coach, trainer or self appointed guru and do NOT hold myself up to be a good example for anything. I do not have a book, trading room or seminar. Even though I have an opinion on every subject under the sun, I do not give financial advice. Nor should I be held responsible for feeble attempts at humor at your expense.
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
The following 3 users say Thank You to ThatManFromTexas for this post:
What can we, those who accept what you say, work as a community to help ourselves, to master ourselves?
All the posting, blogging, etc. won't do it. It might help others understand they have to do it but this activity by itself will not move us towards the goal of mastery.
It seems to me that there are aspects of trading that are like dieting. We read what the problem is; we read what the solution is; we buy books; we 'try' the latest 'fad'. And like trading, most dieters fail and for a lot of the same reasons. I believe there are programs like Weight Watchers that help those that have crossed a threshold of commitment. The individual still has to do the work and take responsibility but there is an 'active' support group in place to help.
It also occurs to me that people suffering from addictions like alcoholism benefit greatly from organizations like AA.
Assuming that at least some of you agree with this concept, what can we do to create such a support environment. What we have here in this forum is a great start but it is just a start (for some or most of us). I know I need to do more, a lot more, but I think I would get there quicker if I was able to get support and at least as importantly - give support to others. We help ourselves when we help others.
I have a lot more to add to this but I would like to see if there are some kindred souls to share with first.
The following user says Thank You to gcaldridge for this post:
Broker/Data: Mirus Futrues, Zen-Fire, IQFeed, Kinetick
Favorite Futures: 6E, CL, GC
Posts: 132 since Apr 2010
Thanks: 22 given,
Interesting concept. Something like BTA..."Bonehead Traders Anonymous"...LOL.
Seriously, some type of support group might be of benefit but the problem is usually pretty stubborn. Many years ago I use to be a smoker. I tried everything under the sun to quit...and that was the problem. I was looking for an easy external fix to a big internal problem. I couldn't quit until I admitted the problem, realized what it was doing to me and those around me, and took a good whiff of myself. Then I had to reach way down and grasp every ounce of willpower I had in my being. I had to outlast the grasp that evil nasty habit had on me until it was out of my life forever. It took time and it took support from others...but a very special kind of support.
It was still a tough battle...but not as tough as breaking bad habits in trading. The urge to smoke eventually disappears but the urge to break rules and discipline never does. It's a constant struggle but it does get easier over time as good habits replace the bad ones and are reinforced daily.
Bad habits and negative reinforcement are the product of what's happening between our ears. I had a student once, Jim, who had a particularly hard time with his negative emotions when trading. I had him make a solemn pledge to trade by his rules, remain patient and disciplined, and totally justify every trade he took FOR JUST ONE DAY...IN SIMULATION! He just couldn't do it. He tried hypnosis, psychotherapy, relaxation techniques, etc. and nothing helped.
In trying to help him, it reminded me of my personal struggles and I could see he was looking for external "fixes" just as most people do in trying to overcome life's demons. For the longest time, he couldn't understand what I meant when I told him that the solution wasn't in reaching out...it was in reaching in...deep. But just "toughing it out" usually doesn't work...it takes guidance and support for many.
Today, Jim is one of the most disciplined traders I know and he'll be the first to tell you it wasn't easy by any means...and he didn't do it alone. He was fortunate enough to find a good Trader Coach who was not only a Doctor of Psychology but also a professional trader himself. He helped Jim to harness the human power that is within all of us to overcome his mental barriers...not by external fixes, but by internal strength. Skip the psycho babble mumbo jumbo that you hear so often. Perhaps a support group based on this concept could make a difference in some traders. I like the idea.
Know thyself and to thy own self be true.
The following 5 users say Thank You to rogerf for this post: