Revelation from the professionals

[pb]

A few questions to professional traders who are making a living out of trading full time. Some similar questions have been discussed elsewhere in T2W, but I hope not these exactly. Thanks very much for your time guys.

1. Looking back to the days when you were a losing trader, what are you doing differently now, without which you simply wouldn't be able to operate as a pro?

2. Are you now dramatically better in risk management, or dramatically better in entries/exits, or both, compared to your losing days? In other words, are you now able to make a living because you are applying common-sense and discipline, or because you've now got a fantastic strategy?

3. Did you discover your own strategy, or did you first purchase it and then modified it to your style?

4. If you have a losing period, how do you decide if it's just a bad patch, or your strategy needs tuning/changing?

5. How often do you tune the parameters of your system? Is your strategy simple, i.e., if you taught it to an intelligent 12 year old, would s/he be able to apply it?

 

[Mr. Charts]

1. I've never been a losing trader as I paper traded first till I was really very consistent.
2. We all improve with the benefit of experience.
3. Developed it myself but was influenced by the thinking of a few people
4. If I start with two losing trades in succession, I stop for at least an hour, sometimes the day.
5. I don't mess with what has proved successful day to day for the last five years of trading for a living - this might be laziness, but if it works why change.
A 12 year old? - No, someone that age wouldn't have the emotional self control or maturity to trade.
successfully so wouldn't be able to apply my methods. Understand them them, yes - apply them, no.
HTH
Richard

 

[TraderPattern]

My success was positively related to the evolving simplicity of my approaches.

There is no Holy Grail approach. However an optimal outcome arises when whatever approach/es you are using happen to coincide with your trading personality (unique to you). Then you have arrived.

 

[Robertral]

1. I've never been a losing trader as I paper traded first till I was really very consistent.
2. We all improve with the benefit of experience.
3. Developed it myself but was influenced by the thinking of a few people
4. If I start with two losing trades in succession, I stop for at least an hour, sometimes the day.
5. I don't mess with what has proved successful day to day for the last five years of trading for a living - this might be laziness, but if it works why change.
A 12 year old? - No, someone that age wouldn't have the emotional self control or maturity to trade.
successfully so wouldn't be able to apply my methods. Understand them them, yes - apply them, no.
HTH
Richard

1. That is total rubbish. Every trader has loses, no matter how good....I make losses and the best traders I know make losses, but overall we come out on top. So if everyone paper traded before they started trading then everyone, by your reasoning, should be millionaires...ermmmmmmm ??????

 

[frugi]

Robertral your post is a somewhat offensive misinterpetation.
A trader who takes losses in the course of their business is not necessarily a net losing trader.
Please refrain from effectively accusing other members of lying.

 

[Mr. Charts]

The statement was
"1. Looking back to the days when you were a losing trader, what are you doing differently now, without which you simply wouldn't be able to operate as a pro?"

Obviously I like everyone else has losing trades.
However, the question implies that there was a period of time when a trader was a net loser and the questioner is asking what has made the difference between that period and now.
My reply was that I personally did not have a period of time when I first started trading when I was a net loser because I was very disciplined and didn't start trading live till I was consistently "profitable" on paper.
I managed to carry over the self discipline into real trading (which was not easy emotionally) and so never had the experience implied in the question.
Now you may choose to say as you do, "That is total rubbish." and thus suggest that I am not telling the truth.
At best I think you have not read my reply carefully, at worst you may be being rather unpleasant and unnecessarily so.
Either way, I do not care sir, as I do not value your views as a result of your response.
I will not engage in flame wars or dialogue with those who are gratuitously offensive
I have better things to do with my life.

 

[peto]

pratbh
it was a good question, and thanks to those who've replied intelligently. I for one would appreciate a few more replies, and hope that the offencive, illogical and unnecessary reply of one member will not put off others.

pete

 

[pb]

Guys, guys: peace.

Let's keep the discussion civilised and stick to the topic. I really appreciate the coments so far and am looking forward to more comments by other pro's here.

 

[Salty Gibbon]

I'm with you on this one Richard.

I am also firmly of the belief that one does not necessarily have to suffer a period where one is a significant net loser during the initial learning period. I have never lost a large proportion of my capital due mainly to trading very small size ( rather than paper ) during the first 12 months at this game.

Thanks to following your philosophy of being very selective about taking trades, I also now only take a few trades a day but they are ones which I regard as high probability of success trades or as you tend to call them, "no brainers". There are enough of these potential trades presented on a plate every day and if you zero in on these then your overall success rate will be pretty high - as mine is.

It is important that I operate in this way because I simply do not like losing trades - I regard them as time wasted.

But " net loser" ?

I wouldn't know the meaning of the expression.

 

[neil]

Salty,
Agreed. I started out as you did by trading cautiously within limits. Prior study taught me the importance of stops. The hardest but most fruitful skill I learnt was to sit on my hands and wait for high probability trades to appear. Some trades lose, most of them win.Net loser I am not.

 

[Salty Gibbon]

Yes Neil

Provided you put in the initial hundreds/ thousands of hours to learn the nuts and bolts of trading and then develop a large degree of patience, this game suddenly becomes fairly straightforward.

 

[TWI]

1. Looking back to the days when you were a losing trader, what are you doing differently now, without which you simply wouldn't be able to operate as a pro?

I learnt to trade while trading other peoples money. That was useful. It changes a lot when you start trading your own money but essentials are patience, discipline and self confidence to get involved and continue through losing trades in the same manner as through winners. The latter is much easier when executing a large number of trades per day, IMO if you get screwed up over losers you will lose more.

2. Are you now dramatically better in risk management, or dramatically better in entries/exits, or both, compared to your losing days? In other words, are you now able to make a living because you are applying common-sense and discipline, or because you've now got a fantastic strategy?

Better in making decisions, execution and waiting for the appropriate time to act. Also find it easy to exit losers.

3. Did you discover your own strategy, or did you first purchase it and then modified it to your style?

Combination of learning from others and finding out what worked for me. After a long period of over complicating things I realised that the best and most consistent strategies are fairly simple ones. It took a long time to work out what in reality worked vs. what I thought should work. Once you work this out, you just have to have the patience and discipline to follow them.

4. If you have a losing period, how do you decide if it's just a bad patch, or your strategy needs tuning/changing?

I do not think I have worked this out yet. I still spend a great deal of time testing ideas and so there is a continuous but slow evolution. My spread trading is very different now to what I was doing even 2 years ago but the change was gradual so I did not have to suddenly go back to the drawiing board. Actually it wasn't me who changed but more the market that changed and I had to adapt to it.

5. How often do you tune the parameters of your system? Is your strategy simple, i.e., if you taught it to an intelligent 12 year old, would s/he be able to apply it?

System is simple. I am sure that an intelligent 12 year old could understand the principles but doubt if they could apply it.

 

[TraderPattern]

Yes Neil

Provided you put in the initial hundreds/ thousands of hours to learn the nuts and bolts of trading and then develop a large degree of patience, this game suddenly becomes fairly straightforward.

This is a short but profoundly true statement.

 

[wasp]

I totally agree with that GJ,

The system I use is that simple that without the emotion and fear/greed of financial requirements and commitments, 'playing the game' would be a lot easier ands simpler.

Until I traded FT, although the desire/need for the money was there, I was trading smaller and with less neccesities that exit losers was much easier, and letting it run till a decent, obvious exit was apparant, much less concerning.

The game is easy enough, and I think that a 12 year old would probably make pips than me as they aren't concerned about the money so much.

Like your reference to Michael Owen, it would be a game rather than a money earner/career move and as long as the system works, it could be done.

Just my thoughts!

 

[TWI]

Discipline could be encouraged in the kid with the use of electrodes. I think the main enemy of anyboody who simply executes somebody elses system is boredom and 12 year olds get bored very quickly.

 

[wasp]

1. Looking back to the days when you were a losing trader, what are you doing differently now, without which you simply wouldn't be able to operate as a pro?

Everything! Unlike everyone else I'd love to say I wasn't a big loser to begin with but, I was! At the beginning I thought I could just jump in whenever and make a fortune! How quick you learn!

2. Are you now dramatically better in risk management, or dramatically better in entries/exits, or both, compared to your losing days? In other words, are you now able to make a living because you are applying common-sense and discipline, or because you've now got a fantastic strategy?

A combination of everything. After a few months of losing more than wanted, I stopped, took a step back, studied, watched, and read T2W and similar, and learnt everything again (and sometimes for the first time!) My risk mangement is tight and my strategy doesn't allow for large losses and as long as I let the winners run! And, like said before, sit on hands until the obvious easy trades appear.

3. Did you discover your own strategy, or did you first purchase it and then modified it to your style?

After losing far too much, my confidence was shattered and I started studying many different strategies in various markets and then once I moved to FX, I stripped it all down and took all I'd learnt and took what I'd felt the best parts and built my own strategy from that. Never paid for any books but owe many thanks to this website and its contributors for all their knowledge.

4. If you have a losing period, how do you decide if it's just a bad patch, or your strategy needs tuning/changing?

Turn off the computer after 3 or 4 trades wrong in a row, come back the next day and try again. If it happens again, I look at why it went wrong? Usually its my eagerness and not folowing my own rules. I know my system works as long as i stick to it!

5. How often do you tune the parameters of your system? Is your strategy simple, i.e., if you taught it to an intelligent 12 year old, would s/he be able to apply it?

I'm always looking at improving my system but only small fractions. Something that makes a profit should not be played with too much. Yes, I think a 12 year old with a decent interest would succeed.

Chris

 

[starspacer]

1. I've never been a losing trader as I paper traded first till I was really very consistent.

Mr. Charts
US Trader and Coach

I always found that when I paper traded, because my hard earned cash wasn't on the line and my emotions weren't stretched, I could make trades that I simply wouldn't have been able to do if it were real cash.

I remember, in an earlier life, making a Nymex Crude trade where I was on an emotional rollercoaster, and it was very hard to make rational trading decisions. This trade resulted in a loss. I would have preferred to hold onto the trade but had to cut my losses and exit the position. 2 days later the trade moved substantially in the direction of my analysis. Had I paper traded this, I would have netted a substantial profit as my emotions wouldn't have been on the line.

I guess that it is more practical to paper trade if someone uses a mechanical system. I don't, so for me, paper trading was of limited use.

 

[roguetrader]

II remember, in an earlier life, making a Nymex Crude trade where I was on an emotional rollercoaster, and it was very hard to make rational trading decisions. This trade resulted in a loss. I would have preferred to hold onto the trade but had to cut my losses and exit the position. 2 days later the trade moved substantially in the direction of my analysis. Had I paper traded this, I would have netted a substantial profit as my emotions wouldn't have been on the line.

I guess that it is more practical to paper trade if someone uses a mechanical system. I don't, so for me, paper trading was of limited use.

Hi starspacer, I agree paper trading is no use for the emotional experience however, when you paper trade you should be going through the exact same plan as doing it for real, therefore when the trade hit your stop you would be out .....cash or paper. If as you say had you paper traded you would have made substantial profit then I can only conclude that when you paper trade since there is no risk you do not honour your stops. As such psper trading for you would be of no use as this is a discipline issue. A stop is a stop it is selected as the point of proof that your trade was wrong, paper or cash makes no difference. This is a good example of why so many people get so little benefit from paper trading.

 

[henry766]

my experience is that emotional demands and money managment slip merrily to the background when you mostly win !!winning doesn't seem emotionally demanding at all !!!

 

[starspacer]

If as you say had you paper traded you would have made substantial profit then I can only conclude that when you paper trade since there is no risk you do not honour your stops. As such psper trading for you would be of no use as this is a discipline issue. A stop is a stop it is selected as the point of proof that your trade was wrong, paper or cash makes no difference. This is a good example of why so many people get so little benefit from paper trading.

Roguetrader, I only use stops (trailing) for longer term holds, not for short term ones. The reason for this is I trade largely on price action. So, if price action tells me that the the trade is wrong, I get out, no ifs or buts. I have often exited the trade at par, simply because price action told me that the trade was not acting how it 'should have'. The decision is immediate without procrastination. On the NYMEX trade, price action was, at that time, volatile. I was short, the price spiked up, I exited the trade and of course the price had one of the largest 1 day falls ever a day or two afterwards. But, hey, that's trading.

I remember at that time, being as certain as one can be, that the price was going to fall. The mistake I made was placing a trade with too high a monetary (and therefore emotional) value attached to it (hence the term 'earlier life'). I learnt trading the hard way, by losing money, so I would fully endorse the view that if paper trading works then it should be used before putting real money on the line..