Traders

[FXTraderWill]

So who here is a professional trader or a full-time rookie trader? I mustn't be the only on a "personal development for smart people" forum who bangs his head against a wall and sits in front of LCD screens watching pretty colors, squiggly lines, and moving numbers all day long.

[Vinny]

well i plan on becoming a professional trader. How long have you been doing it?

[Colin]

I'm more in the part-time, slowly working towards becoming full-time camp.

I spend a lot of my trading related reading and research on my personal development and psychology, which is one of the reasons I'm a frequent reader of Steve's.

I also develop video games full-time, and so I'm familiar with the whole casual games marketspace and Steve's old dexterity site too.

I've been at the trading game for four years now and it's certainly been an interesting, wild ride. It has me constantly asking who am I and what do I want out of life, which is one of the main reasons why I see it being my main 'job' in the years ahead.

[Richard_Todd]

I'm a full-time stock trader (for 10 months now, anyway), and I love it! Totally mesmerized by the blinking numbers. I maintain a website at Move the Markets (shameless plug) to try to help others get to the point where they can take the plunge, too.

Oddly enough, I've found that daytrading has more or less forced me to move forward with my personal development on all levels. It's seriously made me a healthier, more complete person. I had to come to grips with stress, and my beliefs about failure and success. I had to get through some issues with being alone all day (no more breaks with coworkers at an office), etc. And I've just had more free time for introspection, etc. It's the best thing that's ever happened to me.

Reading trading blogs, I've noticed similar stories in other traders. A lot of us are into meditation and eastern philosophy, for instance. I don't think that's a coincidence!

[TheBull]

I've traded off and on and have just recently taken it back up. In the I just lost interest or focused my attention somewhere else. however things have changed for me peronsally and I more geared towards making money without banging out a 9-5 job, and trading is one of the many ways I plan to accomplish that.

Do you know of any trading blog aggregators out there? I recently joined pfblogs.org and while there are some traders there, that isn't the focus.

[Richard_Todd]

Originally Posted by TheBull

Do you know of any trading blog aggregators out there? I recently joined pfblogs.org and while there are some traders there, that isn't the focus.

There's instantbull, which has an interesting interface, but seems to be popular. I generally just add RSS feeds of blogs I like to my newsreader, so I'm my own trading blog aggregator.

[Jim]

Some friends of mine and I developed an automated trading system a few years back. You can get an overview of the system here :

MarketHackers.com

[TheBull]

Originally Posted by Richard_Todd

There's instantbull, which has an interesting interface, but seems to be popular. I generally just add RSS feeds of blogs I like to my newsreader, so I'm my own trading blog aggregator.

Interesting interface is a nice way of putting it... I'm starting to look for some good blog sites to add to my reader. Any favorites that you recommend?

[Richard_Todd]

Originally Posted by TheBull

I'm starting to look for some good blog sites to add to my reader. Any favorites that you recommend?

For active trading, there are a number of wonderful resources out there. To me, the big two are Trader-X, and Trader Mike. For a slightly faster-paced trading style, try the NSYE Scalper.

I'll also humbly suggest you check my blog out, if you haven't. I have a button at the top for "Blogs I Read," with a text description of what I like about them.

These are all primarily blogs about trades and trading, from people slogging away at it, day after day. Those are the ones I prefer, and relate to best.

[Dave Kaminski]

Oh boy I'm excited about this thread! I just went out and bought a couple of books on options trading. Any options guys in here? Do you think it can be as profitable as the day trading you guys do? I'm totally ready to start trading.

[Colin]

Originally Posted by Richard_Todd

Reading trading blogs, I've noticed similar stories in other traders. A lot of us are into meditation and eastern philosophy, for instance. I don't think that's a coincidence!

I've noticed pretty much the same thing too. Becoming a good trader and personnal development seem to go hand-in-hand. Maybe it's because being a trader is such an individual activity (whereby you win or loss money based purely on your own decisions and actions) that you're forced to make yourself a better person, as no-one is going to do it for you.

I wonder how other people would be if they had to focus more on personnal development as part and parcel of making significant advances in their choosen field or profession?

[Richard_Todd]

Originally Posted by Dave Kaminski

Any options guys in here? Do you think it can be as profitable as the day trading you guys do? I'm totally ready to start trading.

My most profitable trade ever was in options. With any trading activity, the profit potential is limitless, so you can do quite well. Though I don't trade them often, I've found options to be a very different game than stocks. A bit more cerebral and slower-paced. There are more basic concepts to grasp in order to get started, but the most important principles (like risk management, expectancy, risk of ruin) are the same in all areas of trading.

Good luck, and tread lightly until you know what you're doing!

[Dave Kaminski]

Originally Posted by Richard_Todd

Good luck, and tread lightly until you know what you're doing!

Thanks. I've heard stories about guys who lost a lot of money in options before they started making any money. I've been investing time and money in options books so I can get my feet a little wet first. I'll be jumping in in January hopefully!

[Richard_Todd]

Originally Posted by Dave Kaminski

I've been investing time and money in options books so I can get my feet a little wet first. I'll be jumping in in January hopefully!

Great! I don't know what you're reading, but one thing I've noticed about options books is that they tend to focus on the mechanics of options, and all the ways you can combine them to create different types of trades. That's important, but they don't touch on things like trading psychology or how to develop a trading system and style that works for you. I can't overstress how important those things are, regardless of the instruments you are trading.

Book-wise, in those areas, I might suggest Trading Your Way to Financial Freedom, and Trading in the Zone. Brett Steenbarger has a good website on trading psychology, as well.

(Sorry, I'm out of town at a relative's house and in a hurry, or I'd have looked up the links for you)

[Jim]

Originally Posted by Dave Kaminski

Thanks. I've heard stories about guys who lost a lot of money in options before they started making any money. I've been investing time and money in options books so I can get my feet a little wet first. I'll be jumping in in January hopefully!

Dave, listen to Richard closely.

The hard part is not the mechanics of the trade, the hard part is the speculation. It's very hard to win trades consistently for the long term.

Read this book from front to back:
Amazon.com: Stan Weinstein's Secrets For Profiting in Bull and Bear Markets: Books: Stan Weinstein

The book is significant not because the trading system outlined is the holy grail, but because it takes you step by step in the development of an *objective* trading system. This is extremely important.

Trading options is just a vehicle for making money; if you're not on the right side, who cares what you're trading, you're still losing money.

[reuben]

"Phantom of the pits" is also a good read you can find it on google.

You should read books, articles etc. but the only way one can learn is by actually doing it. Open a demo account (go for a broker that allows you to have a demo account longer than 30 days). for forex i can recommend Oanda.

[copla]

Another trader reporting in, I day trade futures, though not consistently as of yet. Been hacking at it for the last five months and getting better every day, I'm extremely close to having a break-through in my trading, and once that happens I'm looking forward to upping the contracts and getting a nice penthouse apartment overlooking San Diego Bay. Dropping out of college to day trade futures, what could possibly go wrong

Like others have mentioned, trading really forces you to pursue personal development in every aspect of your life. It's like Mark Douglas says in Trading In the Zone, trading exposes you to every single one of your most deep-seated fears. If anyone here is in the San Diego area I'd love to meet up sometime and talk shop.

Dave, no offense meant here at all, but that you're looking at it from the wrong perspective when you talk about people losing lots of money first. You have to go into it assuming that you will lose ALL of your starting RISK capital. The way I see it, your first trading balance is tuition in the School of Consistent Trading. If you lose it all, congratulations, you've paid your tuition!

People will spend hundreds of thousands of dollars on a college education to learn a profession, but scoff at people who are willing to spend $2,500 to learn trading. Reminds me of talking to someone in a class of mine, we were talking and he asked me how much I was down from my 3k starting balance, I answered $1000 down to $2,000 over a six month time period, putting me well ahead of the average, as 90% of new traders are wiped out in that same time period. He started going on about how I had wasted a thousand dollars, when I asked him how much he's down college tuition he said that that's different

You have to get into trading for the long run, deciding that it will be your profession, your expertise, and consistency your major definite purpose. Once you do, the promise is clear, and all that's left is putting in the time to get there.

[Pagoda]

I am not a full time trader in most people's sense of the word (i.e. I don't make trades everyday and trading is not my primary income.) But at this point in my life I don't want to be a full time trader.

That being said, I do have a 20 minute routine I do each day that keeps me abreast of market conditions. And when conditions are right (usually 8 to 12 times a year), I am a full time trader for the next few days.

I don't make as much as if I was grinding out trades full time, but it is worth the effort. I have struck a balance that I am happy with.

If I had to suggest a book to read it would be The Hedge Fund Edge by Mark Boucher.

[pranagold]

hello all,

i am a lightworker like most of you in this blog (i think) and i can relate to a lot of what you are saying. I just decided to go on my own and want to start trading online. What will you recommend for a beginner? any blog or web to read about small cap or companies going public?

thanks, abdallah

[Colin]

Originally Posted by copla

Dave, no offense meant here at all, but that you're looking at it from the wrong perspective when you talk about people losing lots of money first. You have to go into it assuming that you will lose ALL of your starting RISK capital. The way I see it, your first trading balance is tuition in the School of Consistent Trading. If you lose it all, congratulations, you've paid your tuition!

What copla describes here is one of the generally accepted pieces of 'wisdom' that you hear as you study and learn to become successful as a trader. (Don't worry copla I'm not picking on you for having mentioned this, I just have a slightly different take on it).

Take a second and step back to think who might have come up with such a statement: that you should expect to lose your initial investment (and maybe the second and third rounds investments too) as the small price to pay on the road to becoming a great money maker. Could it have been a broker perchance? It costs a fortune to become a doctor, why shouldn't it cost a fortune to become a successful trader?

The way I see it, you need to do everything in your power to make sure you don't lose your initial capital investment, ever. If you lose it all once, you'll have broken one of the cardinal rules that should be part of your trading plan: preserve your capital.

If you feel reckless enough that you blow it all, then either stick with a demo account until you can overcome that feeling, or limit yourself in some way so that you have a drawdown line in the sand. Say you set that max drawdown level at 30%. If you manage to reach that drawdown level by losing 30% of your account your trading plan should have a set number of steps that you will then follow to determine what is going wrong. For example, you could revert back to demo trading until you start becoming profitable again, switch to much reduced leverage, evaluate your current trading plan/system to see if it is really meeting your expectations, etc.

If you want to be trading in the long run then it is crucial to take this sort of approach. Preserving your capital will be a prime criteria when you a successful trader, so why would you want to act any way different when you are learning to become one?

Rob Booker does a great job of explaining this point of view in a presentation he gave at the last FXCM Expo (just don't let his jacket put you off too much!).

[Richard_Todd]

Originally Posted by Colin

Preserving your capital will be a prime criteria when you a successful trader, so why would you want to act any way different when you are learning to become one?

I tend to agree that the "plan to lose your first account" adage is bogus. I never lost mine.

In fact, if you look at all the traders interviewed in the StockTickr interview series, you'll see one of the questions is always about whether they lost their shirt early on in their trading. I think in 95% to 100% of those interviews, they never destroyed their accounts. In the excellent Market Wizards series of books, I can only remember one interview off-hand where the trader lost everything before succeeding.

So, I tend to think the successfull traders are the ones that "get" the capital preservation idea early on.

[coollikeme]

the fx market and the stock market. Do 'ok' in stocks not so good in fx. I love it makes it fun to get up every day, knowing I can make money and be my own boss. Lot to learn but I am ready for the challenge. Good luck to you. You will have some to hard days but at least you control what you do.

[copla]

Oops! I think I completely misrepresented my thoughs on the subject there. What I meant was that even though you treat your trading equity as risk capitol, you protect every single penny as if it were your last. You use strict money management, reasonably tight stops, and keep a trading journal of your trades so you can get a bead on what your average profit potential and heat are. And, like you said, you start with paper trading until you are consistent, then move to cash. The main distinction I was trying to make was that if you lose money starting off (not all of it, but some of it), that doesn't necessarily mean you should overly fet about the loss, you should look at it objectively and decide in which ways you might need to alter your trading in the future- but the loss is not a problem in and of itself, it's just an opportunity to elevate yourself to the next plateau, as one trading in New Market Wizards put it.

So I couldn't agree more with you, I just wanted to draw a distinction in the way to respond to loss- if you look at a loss as a learning expense (one you keep to a minimum by good money management), then it's easier to move on to the next trade and execute your system with fascination as to the outcome, looking forward to what you could learn, rather than fear of another loss. Of course, if you're taking all losses after a good sized sample of trades, something's clearly wrong

[Colin]

Looking at losses as the cost of doing business as a trader is a much better way of looking at it. Like in any business costs are unavoidable, but you try to minimize them whenever possible. Hopefully your income (profits) outweights your costs (losses) and you make some money for all the time and effort that you put in!

I remember as a kid that I used to hate losing. Doing sports, playing video games, you name it.

It was one of the first bad habits that I had to unlearn when I started trading, and it has had a noticeable impact in other areas of my life. You give up trying to 'win' every arguement. You become a better listener. You probe out alternate solutions to problems without giving up at the first stumbling block.