This is the place where I hope to write all that I learn from trading the world markets. It is intended to help me to be a more disciplined trader and to stimulate a greater understanding of the way I trade. Comments are welcome but it will be written as a private journal.
Welcome AJ, and good luck with your journal, I hope it helps you.
In my experience journals work best if you concentrate on just one market. It's difficult to learn when you may need to use different skills in various markets.
It's useful to have specific goals in mind. When I first began keeping a journal it was nothing more than a list of trades. It told me very little about my trading. I could tell myself to be more disciplined etc. but it meant more when I could identify my strengths and weaknesses and understand my emotions.
If you haven't already, take a look at "Jay's Journal". It's a brilliant example of how to use a journal to enhance your learning. Jasont will make faster progress than most of us learning our markets or about ourselves as traders.
Hope to read your journal entries over the coming days, weeks, months, etc.
In my experience journals work best if you concentrate on just one market. It's difficult to learn when you may need to use different skills in various markets.
It's useful to have specific goals in mind. When I first began keeping a journal it was nothing more than a list of trades. It told me very little about my trading. I could tell myself to be more disciplined etc. but it meant more when I could identify my strengths and weaknesses and understand my emotions.
If you haven't already, take a look at "Jay's Journal". It's a brilliant example of how to use a journal to enhance your learning. Jasont will make faster progress than most of us learning our markets or about ourselves as traders.
Hope to read your journal entries over the coming days, weeks, months, etc.
Background
BACKGROUND :clap:
So I wanted to reflect on my past experiences, both successes and failures as I thought that would be the best place to start.
My father first introduced me to stocks at the age of 13 and I got hooked ever since. He opened up an account for me (under his name of course) and helped me to pick a basket of stocks. His investment philosophy stemmed around picking companies with high yielding dividends, reinvesting the capital, compounding the earnings etc.
After high school I formed an investment club with some of my friends, partly as an excuse to keep in touch with them (as we had all moved to different universities) and partly because I thought having a collective group to learn from and discuss ideas with was a great idea.
Some of our parents and Ex-high school teachers were involved as well. My father was the treasurer of our trust and another parent (who was the CFO of a big Australian company at the time) acted like a mentor towards all of us.
The fund did quite well with about a 30% gain in the 3 years it existed. After a while though, we had to wind it down as meetings were becoming impossible and members had left for overseas jobs.
We had such a diverse group of individuals, and everyone brought a different approach to investing that it really helped us to make the best decisions for the fund. I fell in love with technical analysis and every month would bring 3 stocks I had pick based on charts. Most other members based their recommendations solely on fundamental aspects and analysis of things like book value and future outlooks etc.
Once every member had presented we voted as a group and the picks that got the most votes we invested in.
When I look back now I laugh because we had no money management, no risk analysis and it was amazing we did so well. We did however, occasionally cut out losses in favor for investing in other opportunities, which is more than i can say for most "buy and hope" type "investment" groups.
I believe that during strong Bull markets, anyone can make money, and you don't need to be an expert or even a skilled trader. It's when markets stops continuously rising or turns bearish that requires skill.
I guess that was the biggest lesson I learnt from the whole experience. We needed to place limit orders and stop orders. We had a rough rule that we would take profit at 10% and cut losses at 10%. Sometimes however, the stock in question would make a massive rally between meetings but because we met only once a month to make decisions, it had retraced its entire move and we were still at break-even. The same went for losses.
After the partnership closed I still traded stocks from time to time making some money here and there but it wasn't until I moved overseas that I really began to concentrate on researching, educating and trading full-time.
I have a main business in another area that I built up that no longer requires my full attention. So I found myself incredibly bored and came up with looking at trading as a way to pass the time.
Initially I traded stocks again on margin. I cut my losses at 2% and took profit at 5%.
I held positions for as long as it took to fulfill those requirements, using technical analysis to pinpoint entries. I made about 15% on the capital I traded and things were going well. I began to sense that the market was reaching a “euphoria stage” early last year and decided to stop trading all together, and move in Forex.
Everyone I talked to (non-traders) reassured me that this market was so full of risk and that it’s only gambling and to forget the idea. But having nothing better to do I pursued it and studied it for about 6 months before I made any real big trades.
I found it to be a fascinating place to trade and just 'clicked' with it from day one.
Of course like anyone I lost quite a bit in the beginning until I began to understand the flow of the market better. I believe there is no right or wrong way to trade a market in terms of time-frame and systems, there's no one system that makes money whilst all others fail. Rather that you need to find a system that is reflective of your own needs and makes money at the end of the day.
Making the switch from stocks to FX for me was one of the best things I could have done. It forced me to expand my horizons and to research and learn as much as I could about trading. Unfortunately I'm one of these people who unless they are challenged, gets lazy and unhappy. So starting to trade FX gave me that challenge to make money.
I believe we can do anything we want to do, we just have to apply ourselves. Sappy I know, but believing in this always prevents me from giving up and from always trying the things I want.
After trading FX I managed to get my fund up 30% in the space of 3 months. Like everyone I thought I was unbeatable. A momentary lapse in concentration changed all that and brought me back to break-even. The point of this journal is to keep my ego in-check and to help me focus on my system of trading so that that kind of mistake never happens again.
I hope you enjoy my posts, but please bear in mind they are written for personal reflection and not as an educational resource for others. I am no expert. If you find something useful in them than that would make me very happy, but I apologize in advance if my focus seems narrow. Please feel free to post any comments.
With that all said, on to trading....:clover:
BACKGROUND :clap:
So I wanted to reflect on my past experiences, both successes and failures as I thought that would be the best place to start.
My father first introduced me to stocks at the age of 13 and I got hooked ever since. He opened up an account for me (under his name of course) and helped me to pick a basket of stocks. His investment philosophy stemmed around picking companies with high yielding dividends, reinvesting the capital, compounding the earnings etc.
After high school I formed an investment club with some of my friends, partly as an excuse to keep in touch with them (as we had all moved to different universities) and partly because I thought having a collective group to learn from and discuss ideas with was a great idea.
Some of our parents and Ex-high school teachers were involved as well. My father was the treasurer of our trust and another parent (who was the CFO of a big Australian company at the time) acted like a mentor towards all of us.
The fund did quite well with about a 30% gain in the 3 years it existed. After a while though, we had to wind it down as meetings were becoming impossible and members had left for overseas jobs.
We had such a diverse group of individuals, and everyone brought a different approach to investing that it really helped us to make the best decisions for the fund. I fell in love with technical analysis and every month would bring 3 stocks I had pick based on charts. Most other members based their recommendations solely on fundamental aspects and analysis of things like book value and future outlooks etc.
Once every member had presented we voted as a group and the picks that got the most votes we invested in.
When I look back now I laugh because we had no money management, no risk analysis and it was amazing we did so well. We did however, occasionally cut out losses in favor for investing in other opportunities, which is more than i can say for most "buy and hope" type "investment" groups.
I believe that during strong Bull markets, anyone can make money, and you don't need to be an expert or even a skilled trader. It's when markets stops continuously rising or turns bearish that requires skill.
I guess that was the biggest lesson I learnt from the whole experience. We needed to place limit orders and stop orders. We had a rough rule that we would take profit at 10% and cut losses at 10%. Sometimes however, the stock in question would make a massive rally between meetings but because we met only once a month to make decisions, it had retraced its entire move and we were still at break-even. The same went for losses.
After the partnership closed I still traded stocks from time to time making some money here and there but it wasn't until I moved overseas that I really began to concentrate on researching, educating and trading full-time.
I have a main business in another area that I built up that no longer requires my full attention. So I found myself incredibly bored and came up with looking at trading as a way to pass the time.
Initially I traded stocks again on margin. I cut my losses at 2% and took profit at 5%.
I held positions for as long as it took to fulfill those requirements, using technical analysis to pinpoint entries. I made about 15% on the capital I traded and things were going well. I began to sense that the market was reaching a “euphoria stage” early last year and decided to stop trading all together, and move in Forex.
Everyone I talked to (non-traders) reassured me that this market was so full of risk and that it’s only gambling and to forget the idea. But having nothing better to do I pursued it and studied it for about 6 months before I made any real big trades.
I found it to be a fascinating place to trade and just 'clicked' with it from day one.
Of course like anyone I lost quite a bit in the beginning until I began to understand the flow of the market better. I believe there is no right or wrong way to trade a market in terms of time-frame and systems, there's no one system that makes money whilst all others fail. Rather that you need to find a system that is reflective of your own needs and makes money at the end of the day.
Making the switch from stocks to FX for me was one of the best things I could have done. It forced me to expand my horizons and to research and learn as much as I could about trading. Unfortunately I'm one of these people who unless they are challenged, gets lazy and unhappy. So starting to trade FX gave me that challenge to make money.
I believe we can do anything we want to do, we just have to apply ourselves. Sappy I know, but believing in this always prevents me from giving up and from always trying the things I want.
After trading FX I managed to get my fund up 30% in the space of 3 months. Like everyone I thought I was unbeatable. A momentary lapse in concentration changed all that and brought me back to break-even. The point of this journal is to keep my ego in-check and to help me focus on my system of trading so that that kind of mistake never happens again.
I hope you enjoy my posts, but please bear in mind they are written for personal reflection and not as an educational resource for others. I am no expert. If you find something useful in them than that would make me very happy, but I apologize in advance if my focus seems narrow. Please feel free to post any comments.
With that all said, on to trading....:clover:
Welcome AJ, and good luck with your journal, I hope it helps you.
In my experience journals work best if you concentrate on just one market. It's difficult to learn when you may need to use different skills in various markets.
It's useful to have specific goals in mind. When I first began keeping a journal it was nothing more than a list of trades. It told me very little about my trading. I could tell myself to be more disciplined etc. but it meant more when I could identify my strengths and weaknesses and understand my emotions.
If you haven't already, take a look at "Jay's Journal". It's a brilliant example of how to use a journal to enhance your learning. Jasont will make faster progress than most of us learning our markets or about ourselves as traders.
Hope to read your journal entries over the coming days, weeks, months, etc.
Thanks a lot for the tips LiggerPig. At this stage I am only trading the FX markets with the hopes of expanding later. I agree with you about concentrating on one market, it's hard enough as it is!
"Jay's Journal" is really good. I haven't had a chance to read it all yet, but the few excerpts I read were awesome.
