This is a discussion on my journal within the Trading Journals forums, part of the Reception category; Well, yeah, I agree with you on everything you said. I am not going to give him anything easy. I ...
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|Sep 13, 2009, 6:58pm||#51|
Joined Mar 2003
Well, yeah, I agree with you on everything you said. I am not going to give him anything easy. I will give him the funds (as a gift) as soon as he'll manage to be consistently profitable for three straight months, but then he will be on his own. What he instead would like me to do, and he said so already, is me giving him my systems and the consequence would be - besides the feeling of exploitation - that I will have to assist him forever, since he knows nothing about computers.
That's what's so good about these traders' forums - we can relate to one another and open up as much as we want without having to say our real names and expose ourselves. In real life it would be best to do the opposite of what we do here: shut up and not even tell anyone what you are doing. I still don't have any money, but I can see a lot of problems coming my way if I'll have it and if people will know about it.
|Sep 13, 2009, 7:06pm||#52|
Joined Jun 2009
I enjoy reading it and relating to it; I'm not very good at conveying my feelings through writing but you do it well, so i'm always like 'Couldn't have said it better myself'
Just wanted to mention something contrary to some of your earlier journal statements;
You said 'Paper trade until you have a succesful methodology'
I know this is going to sound crazy, hence i don't talk about it often - To anyone really. But i've often put my success down to me, my intuition - What i think will happen, my understanding... I've never quite had a methodology - I use to read about needing strict rules and it use to really disturb me because i didn't have any and i couldn't quite pin-point my methodology...
I guess my methodology is making trading decisions based on the current context and all the information i have, without emotions of greed being involved.
I am talking short-term ofcourse (E-mini S&P500) but when i started trading, i just almost knew what would happen next from reading Time and Sales and just watching the chart - I couldn't at the time really lable my analysis or tell others what i was looking at, it was all just so natural to me... At the time i couldn't make any money because i didn't trust my intuition as anything of value so i was forcing myself to trade methodologies strictly or systems in some instances...
I use to totally fail at paper trading; I didn't have the focus or commitment when there were no money involved... I couldn't watch all the information and make decisions because i would just find myself wondering about other things. For me, live trading was always significantly more profitable than paper trading to the extent that even now i think i would struggle to profit through paper-trading...
I know this all sounds taboo and rubbish but seriously this is how i trade.
In terms of trading stocks, i've always put my success down to volatility; Markets are volatile and so if i enter a position; I probably haven't entered long @ the high... I don't quite have a stock trading methodology, nor do i have intuition; I've always said that i can predict short-term direction but not magnitude, the longer the 'term' the less accurate my trades became....
When i enter a position, i study the chart technically - Again this was very natural for me, i didn't really need to be taught Charts, it just made sense to me intuitively... I use to draw support and resistance on charts before knowing it existed 'for the masses' - I never really liked indicators telling me the trend because by looking at a chart i could figure it all out and through being able to sepparate my emotions from these thoughts i was able to say what i think would happen rather than what i want to happen...
Even then, when i win in stocks, i think the reasons are literally that markets move up and down and aren't entirely directional the entire time...
I'm sure all this sounds like a load of rubbish to you; but was just presenting my contrary opinion from experience from some of the things you said...
Hope this isn't too laughable
Last edited by GladiatorX; Sep 13, 2009 at 7:21pm.
|Sep 13, 2009, 7:21pm||#53|
Joined Nov 2001
You have to convey the impression that you are always broke and go to them for money. You'd be surprised how quickly you find out who your friends are!
If you did that, Travis, he would get the impression that your systems are better left alone.
|Sep 13, 2009, 8:19pm||#54|
Joined Mar 2003
Thanks for your compliments.
Well, but paper trading is meant for those who do not have a successful methodology. If you find out that you can make money from the start with real money trading, then nothing's stopping you from doing it. But my assumption was that it's very rare that people will make money consistently from the start, so I didn't even think about that case. My case is that after 12 years of trading with real money, I still haven't figured out a profitable discretionary method - so you can understand where my advice is coming from.
Charts seemed to make sense to me from the start, just like it was for you. And everything about the market seemed clear and easy to understand. Only problem: I never made any money, month after month, and I almost blew out my account on a monthly basis.
As long as your impression of clarity in the markets matches the success of your trades, I don't think you have any problems. You are profitable? Keep doing it. You're not? Paper-trade. I've lost money consistently for 12 years, so now I definitely know what one should not do. And that is, trading real money and losing it, month after month and year after year, thinking profitability is just around the corner.
It might be useful to add, that, unlike you, I definitely was never able to separate my emotions from my analysis. Got really frustrated about losing, was rarely able to take losses. Got really high on myself if I made money. I am not a balanced person, and I took that into trading. I have a narcissistic personality disorder. I have an immoderate and excessive need for success, approval, being right. I can't really take criticism, contradictions, dissent, disapproval, without them throwing me off balance emotionally. This comes from receiving too much criticism as a child and teenager from my father. For him I had to be the best of the world - it was impossible to satisfy him and to gain his approval. He ruined my life. But he made me a precise person. Was it worth it? Living a sad life and doing things right, or happy life and being sloppy person? He didn't use the reward and punishment method, he used punishment and punishment, or at best punishment and lack of punishment. When I did things perfectly, as a reward, he told me "don't rejoice, because trouble is around the corner". I still strongly resent him.
Last edited by Yamato; Sep 13, 2009 at 8:26pm.
|Sep 13, 2009, 8:30pm||#55|
Joined Mar 2003
|Sep 13, 2009, 11:18pm||#56|
Joined Mar 2003
Some more thoughts before going to bed. Tomorrow I have work. I was falling asleep earlier, but I didn't go to bed and decided to stay up a little longer. Had I gone to bed, I would have slept perfectly for tomorrow. For some reason, I couldn't do it. Why can't I go to bed on time, even when I am tired, and I have nothing to do? There's something blocking me. Is it because:
1) I am getting back at my parents who told me so often to go to bed on time?
2) I'd feel guilty about feeling perfectly rested? (My parents taught me it's not ok to be too happy, to not have problems, and when I sleep well, I feel perfectly fine).
3) Is it because I don't like to put my mind to sleep (being sleep in some ways close to death)?
4) other reasons?
I think I follow the same mechanisms into discretionary trading, and somehow don't want to do things that will cause a positive outcome, or maybe I lose for the reasons I listed at length in all my previous posts (impatience, taking losses personally, not accepting to be wrong, etc.). A perfectly reasonable explanation could be wrong. I have to watch out with my explanation. I am good at giving reasonable explanations but that turn out to be wrong.
Whatever is the case, trading (in my case automated) has been forcing me to somehow do my own good. Or at least it has opened my eyes to the fact that I am hurting myself. Or at least to the fact that I don't conceive "losing money" as hurting myself. This has been very clear lately, when I was making money with automated systems but at the same time losing even more with discretionary trading. This opens your eyes and makes you say "wait a minute: what the hell am I doing?" and "am I even trading to make money then?". If I don't get a woman or if I lose her, I can find many explanations justifying what happens, and I can pretend it's not a defeat. But if I am out to make money, and my balance shows losses, I can only admit that I'm failing and that I'm doing something wrong, and then wonder what that is. Immediate and clear feedback is what trading gives you. But I don't want to get too theoretical and academic, because that ruins always my points.
What I wanted to say I think is that trading tells you how your mind works. And it lets you find out that your mind is good at deceiving itself. We all possess minds that deceive us. Not completely - mostly they tell us what goes on. But for a small part they see things in varying ways. They tell us one thing, and later they tell us another thing. And we often forget it, or we don't even realize it. But I am sure we all do. The more we are balanced the less they deceive us. The bigger our ego, the more they deceive us, because we lose objectivity. In the sense, that I have a big ego and unconsciously that means I think "I am always right". But then if my mind changes how it perceives things according to the time of the day (for example at night I want to stay up, and in the morning I regret not having slept enough) then I must be wrong at least part of the time, so the people who are wrong the most are the people who think they are always right - those with a big ego. How did I find this out through trading?
For example, the market always seemed easy to figure out, with success around the corner, but for 12 years so far I haven't figured it out. It's a clear sign that I have been deceived. How could I go on for 12 years and still believe that my feeling it was easy was not an illusion? It was. I finally realized it after 12 years. I realized that I am doing something wrong, and that, until I'll have figured it out, I'll keep on losing.
Also I realized that, amazingly, my systems trade profitably, whereas I, who created them, cannot do it. They are simpler than me. But they always remember in an objective way what statistics say. They do not get mad at the market for proving them wrong, and do not get excited when they win. They wait for the statistically most probably successful moment to enter and to exit.
I can't do that. My desire to succeed will make me anticipate that entry and exit. That desire to succeed is so strong that it will push me to anticipate. And to trade when there are no opportunities. That confidence I'll get from winning will affect my assessment of the markets. That anger I get from losing will make me want to get back at the market. That surprise from being wrong will make me stay longer than I should. Then also a negative role in my objectivity will be played by a natural impatience, incapability of staring at the chart for hours without doing anything. Another problem is my inability to go with the flow and to do things that are easy, like following the trend. I have to do things that are challenging. And I tend to go against the trend, when statistical tests say a reversal is unlikely. I do it invariably, even after having discovered when it's most likely to happen. The chart to me always seems like it's near to a bottom or to a top, but it's usually a deception. So I am deceived by the charts first of all. Then I am deceived by myself. I say that I won't do a thing and then I do it.
Without the markets this would have been hard to realize, because in my daily life it never has consequences that are so clear like a positive versus negative balance. The markets provide like a laboratory setting. You do something, you lose money. When you go and find out why you lost money, then you have to look for the cause, and that's when you find out that you didn't do what you said you were going to do. So I found out that I am two different people. The person when markets are closed, and the person that is staring at a chart. One is rational, and the other one is like a drug addict. And so on. I don't want to construe more theories because I tend to do that, even without enough material to do so.
Why, with all this insight, can't I find a way to trade discretionary and be profitable? Because understanding the limits I have that interfere with my objectivity doesn't get rid of them. I know when I can go against the trend and I know when I can go with the trend, when that behaviour is most likely rewarded. But, once I am in front of the chart, I won't wait for hours - I will get bored sooner and act. And when I'll have to cut losses, I'll be so upset at the market, that I will not want to get out with a loss. I will say "you ****er, now you're going to go my way". I mean, obviously I created the automated systems so I know exactly what's likely to work and what isn't. But if I trade manually not only I won't execute them, but I will even do things differently trying to gain some extra edge, which will not happen overall.
So once again the lesson is: understanding my limits, doesn't mean I got rid of them. Understanding that the mind deceives itself, doesn't mean the mind won't do it again. Final conclusion: if your mind is not fit to do discretionary trading, you're better off working on automated trading.
Last edited by Yamato; Sep 13, 2009 at 11:58pm.
|Sep 14, 2009, 5:07am||#57|
Joined Nov 2001
|Sep 14, 2009, 7:58am||#58|
Joined Mar 2003
"Lesson learned"... yeah, but on the other hand I can't do that either because I feel the need to open up. Sorry, I seem to go on and on and never to be happy with any solutions proposed, but this is precisely one of the purposes of this journal - I write here so I can keep my business to myself as much as possible in the "real" world. I will keep on opening myself up here in future, not because I am looking for solutions, but because writing here partly solves my problem. On top of it, it's a section created on purpose, and I enjoy being read and the feedback I get, so this place is just perfect for me.
|Sep 14, 2009, 8:27am||#59|
Joined Mar 2003
It's funny: another person has contacted me to learn how to day-trade forex. Once again, I don't know how to trade discretionary profitably, but once again (like for my other friend) I will teach him most of the things that I know, that might be 80% of what is needed to be profitable: finding the right securities, the right broker, and knowing the statistics of markets. What's missing is the ability to apply that knowledge, plus something more that I don't know. Hopefully I'll find out once he has learned. If he ever does, because usually it's not the case.
I'll write an outline of what I'll tell him.
1) premise: whatever you do, paper trade until you find a consistently profitable method.
2) Then you need to answer these two questions: how much money do you have and how much money do you want/need to make?
Depending on the answer you may do one of the following:
a) trade end-of-day on many stocks, to diversify (if you have a lot of money, but no need to make money fast)
b) trade end-of-day on many futures (if you have a lot of money, and need to make money fast)
c) focus on one future intraday (if you have little money and need to make money fast)
Automated systems is out of the question for a beginner or anyone who doesn't get to it by himself, because they won't have what it takes to keep doing it for years. I will mention it and say it's the best, but I won't tell him "you should do this", because then, like the other guy, he'll want me to do it for him. And I'll tell him that as well, and that I won't be doing it for him.
|Sep 15, 2009, 1:20am||#60|
Joined May 2008
I now feel slightly guilty for mentioning the idea of your writing systems for other people, and/or have other people trade for you, with or without using your money. It opened a whole can of worms which of course I had no idea about.
Just to be clear, the sort of thing I had in mind was along the lines of one or more of the following:
- you become a professional writer of trading software, either for a firm or your own business
- You use the systems you have already developed and / or will develop to go into partnership with someone you trust. Ideally, it should be an equal partnership, e.g. you contributing the techie skills, him contributing the business, financial, money-management, etc, skills, but also to some extent he could act as your "agent" when investing your money in the automated trading, e.g. for a share of the profits, and/or the right to trade the same systems with his own money.
In the latter case, it would clearly have to be an utterly reliable person, with proven business prowess, and another income - not a "needy" person. It could be quite hard to find such a person.
Still learning my trade.
Just because it worked, it doesn't mean that it works.
Think of losing trades as your training fees.
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