The Pre-Profit Days

[lurkerlurker]

A thread to share tales of your early days of trading, before you made consistent profits.

Things to consider:

1. How long did it take to become profitable (months / years, also how often did you trade in this period)
2. Your first big profit and loss
3. How much did you lose before you broke even?
4. What instruments did you trade
5. What kept you trading even though you were initially unsucessful
6. Since most traders never make it at trading, where is the line between determination and foolishness. That is to say at what point should a failing trader admit it and just quit?

For those of you who have worked at an exchange, or for a prop shop, any funny stories to tell?

Any other bits of advice, general chat, funny stories, soybeans bought with a mastercard, etc should go here.

 

[lurkerlurker]

I'll start

I've been spreadbetting on indices for almost 6 months. I've lost close to £2,000 and I think my trading is getting worse.

Best time: making £488 from £500 in a week.

Worst time: my first big loss (£300 in a day)

Fear: There must be some people who will never make good traders no matter how hard they work or how much money they lose. I fear I am one of them.

Hope: To learn to trade with a cool head. I think I have a sound system and money management, but I can't seem to stick to it.

Greed: To breakeven.

Observations: I only fail when I break my own rules. I did better with a larger stake size spreadbetting. £3pp was a happy medium. I didn't mind taking 3 points, because it was a tenner. Stoplosses were tight, and good trades were doubled. At £6pp, a good trade which has been added to can be closed quite quick for a decent profit.

The counter point to that is that I would have probably lost my shirt at £3pp, even though I did well for awhile.

Equities look interesting to me again....

 

[Charlton]

A 4 week challenge

. I've lost close to £2,000 and I think my trading is getting worse.

Best time: making £488 from £500 in a week.

Analyse - you have lost 2 grand cumulative and your best time is about £500 per week, therefore you can regain 2 grand in 4 weeks and reach breakeven

.
Fear: There must be some people who will never make good traders no matter how hard they work or how much money they lose. I fear I am one of them.

Analyse - you know this is not true if you put an end to your bad habits as discussed later, so put this fear behind you.

.
Hope: To learn to trade with a cool head. I think I have a sound system and money management, but I can't seem to stick to it.

Analyse - why not ? what is the self-destruct factor in your make-up ? You only have to stick to it for 4 good weeks to reach break-even. Treat each day as it comes and make the goal of that day to "stick to it". Walk away from the trading screen when you have achieved your target for the day.

.
Observations: I only fail when I break my own rules.

Analyse - you have re-iterated the problem. Stop now.

Equities look interesting to me again....

Analyse - equities are simple, although there are many more instruments from which to choose than others such as certain types of derivatives, currencies etc

Good consistent and profitable training. Report back to us at break-even, preferably beating the 4 week challenge I now set you

Charlton

 

[nkruger]

LL - Are you confident about your trading strategy ?

 

[Citizen2007]

Observations: I only fail when I break my own rules.

A question i have wanted to ask many traders, now seems to be a good opportuniy.

Why did you break your rules ?

Is it because of greed ? - Did you not plan your trade beforehand?
Is it because you expected more out of the market ? - Does this mean you are not defining the type of trdae that you are placing. For example, is it a quick one that will last maybe 20 mins or a longer one that may go on for hours?

Just some questions i came up with my previous experiences, maybe others cand add more.

Sorry .. dont mean to digress from the original topic, question just popped into my ead.

Thank you

 

[CJIA]

A thread to share tales of your early days of trading, before you made consistent profits.

Things to consider:

1. How long did it take to become profitable (months / years, also how often did you trade in this period)
2. Your first big profit and loss
3. How much did you lose before you broke even?
4. What instruments did you trade
5. What kept you trading even though you were initially unsucessful
6. Since most traders never make it at trading, where is the line between determination and foolishness. That is to say at what point should a failing trader admit it and just quit?

For those of you who have worked at an exchange, or for a prop shop, any funny stories to tell?

Any other bits of advice, general chat, funny stories, soybeans bought with a mastercard, etc should go here.

How long did it take to become profitable (months / years, also how often did you trade in this period?
It took me 5 years to break even,been trading for 6 years part time when i'm on onshore leave.

Your first big profit and loss?
I've had large profit trades at 50 and 100 pound a point.
Losses in the first few years amounted to 6 figure mark.

How much did you lose before you broke even?.
As i said a a 6 figure No.

What instruments did you trade?
Dow,Crude,Currencies Options on Ftse.

What kept you trading even though you were initially unsucessful
Self belief that i'm a good trader and it's my life path?

Since most traders never make it at trading, where is the line between determination and foolishness. That is to say at what point should a failing trader admit it and just quit?
If you have given up learning about yourself and you can't recognise the difference between gambling and trading.


My goal in the beginning was to make money then it changed to want to be a good trader now my goal is to make good trades and run a good buisness.
It's not about making money anymore.
If i make good trades then the money takes care of itself.

It's been a very difficult journey at times,but would i change it or do i have regrets NO.

 

[lurkerlurker]

A question i have wanted to ask many traders, now seems to be a good opportuniy.

Why did you break your rules ?

Is it because of greed ? - Did you not plan your trade beforehand?
Is it because you expected more out of the market ? - Does this mean you are not defining the type of trdae that you are placing. For example, is it a quick one that will last maybe 20 mins or a longer one that may go on for hours?

Just some questions i came up with my previous experiences, maybe others cand add more.

Sorry .. dont mean to digress from the original topic, question just popped into my ead.

Thank you

When I usually break my own rules, it is fear not greed which is the cause.

When I take an uncertain entry, it is through fear of missing a potential move, even though the setup hasn't fully crystallised.

When I take an early exit, it is through fear again. Premature profit taking is the single largest contributing factor to my losses.

Usually my initial profit targets on a trade (2x SL risk) are hit, except I have covered my position and the market moves ahead without me.

 

[lurkerlurker]

LL - Are you confident about your trading strategy ?

In a word, no.

 

[firewalker99]

In a word, no.

Which is what leads you to not following your rules.
Backtesting + papertrading leads to a build-up in confidence, confidence in return will help you follow your rules in real time. Once you follow your rules and trade as you should in real time the results will follow. When the results follow your confidence will increase. If your confidence increases you won't bother taking trades that aren't part of the plan. And ultimately, you won't bother staying stuck at the screen when in a trade because you know to a certain extent (based on the probabilities of your system) what will happen.

 

[2468steve]

A thread to share tales of your early days of trading, before you made consistent profits.

Things to consider:

1. How long did it take to become profitable (months / years, also how often did you trade in this period)
2. Your first big profit and loss
3. How much did you lose before you broke even?
4. What instruments did you trade
5. What kept you trading even though you were initially unsucessful
6. Since most traders never make it at trading, where is the line between determination and foolishness. That is to say at what point should a failing trader admit it and just quit?

1.been trading for 10 years now and it took the first 3 of those to learn to respect the market.My first ever trade made a 5k profit...this was the worst thing that ever happened to me...I thought it was easy money...the market swiftly took that back and then some...those first 3 years saw nice wins,but worse losses....year 4 slight profit,year 5 and subsequent years a positive return....

2.1st big profit was first ever trade...in hindsight a disaster
1st big loss....had a few in early years,always thinking I was right and the market is wrong...held on,didn't cut losses...took a while but I learnt the market is never wrong and the first loss is the cheapest...now look upon those losses as tuition fees,payment to learn a skill as you would have to do in any other profession

3. four figure sums.....twice ! On second occasion was long 10/09/2001...then we all know what happened...like a fool I added longs after Sep 11 happened thinking the Yanks wouldn't let their market collapse.patriotic pride would buy the market,you can't hurt us mentality...how wrong was I...!!

4. SPX swing trades....$/Yen swing.....Dax/FTSE occasionally on decent set ups...
Dow daily for the entertainment

5.Determination to get it right....I love the markets,find them fascinating...pitting your views and decisions against the world so to speak...

6. I've never ever thought about quitting,and never intend to,so can't really comment on that...sorry

cheers
Steve

 

[firewalker99]

Good consistent and profitable training. Report back to us at break-even, preferably beating the 4 week challenge I now set you

Charlton

Lurker, we are exactly 1 month from where Charlton dared you to the 4 week challenge...
Care to give us an update + explanation?

 

[lurkerlurker]

I must confess I have strayed from the path. I stopped the four week challenge, and indeed stopped daytrading due to exhaustion of capital. That is not to say I have no money left to trade with, that is to say I am no longer confident enough in my own trading to risk the last of my trading pot. You will note from the Dow thread that I mentioned I was switching to "plan B", which was continuation bets on news releases which affect the YM. I did a few of these trades to recover a little bit of capital. By and large this worked, with me taking the occasional small loss but a good deal of +15/+20 trades on news.

I've not managed to break even. During this period, I had stopped real trading for awhile and was paper trading the YM. While backtesting can be useful, I do not find paper trading to be helpful as I cannot force myself to behave in the same way with nothing at risk as I behave with even £1pp risk. Despite every effort, I find papertrading to be useless. Useless for predicting how well I can apply a system, but with regard to firewalkers request I will papertrade his system for 2 weeks, simply to restore faith in those here that I have the discipline to do so, and to prove to myself I have the discipline to do so. I genuinely don't care about the paper pips made or lost using this system- all that matters is that I consistently enter the orders into the NinjaTrader simulator, leave it running all day, and get either my -20 or my +40 at EOD. I will do this for 2 weeks and report stats. Meanwhile, I will still be learning to position trade.

Regarding Charlton's challenge, I have failed*. I have been unable to day trade every day, and take enough points every day to restore my balance. I have not had the capitalisation to match the stake sizes I used on my +£500 week. I have not wanted to trade every day when I was unsure of the markets or of myself. I have still made trading mistakes, but I believe I have shown more restraint than usual. I ended this week a mere 6 pips down on the YM - not a breakeven, not a profit, but much better than usual. I traded less. Some days I did not trade.

Day trading is not for me. I need to trade on larger timeframes and make more of my decisions outside of market hours.

I know firewalker especially wants more of an explanation than this, but I don't really feel I can offer any more than this. I think switching to position trading, doing enough backtesting of my system to be confident, doing enough paper trading of a system and posting reports to foster discipline, and not having to trade every day will help me in the long run.

Sorry for not making back the £2k this month. I have an account statement which came painfully close though. Damn bucketshops. On the prices I traded which were completely correct, I have had a pip and pound positive week. I have not been able to say this in awhile. I understand that bad trades can win and good trades can lose, and that P/L isn't everything, but I feel I have made a breakthrough with the move to position trading, and hope to make steady, measured, disciplined advances in the future.

Firewalker especially has been posting questions on various threads, and my answers ought to be on topic, so this will continue elsewhere.

* - I came remarkably close to recovering my losses on the foreign exchange markets, but my bucketshop took back a large chunk of my profits claiming that some of my trades were on "rogue price".

 

[Hoggums]

1.been trading for 10 years now and it took the first 3 of those to learn to respect the market.My first ever trade made a 5k profit...this was the worst thing that ever happened to me...I thought it was easy money...the market swiftly took that back and then some...those first 3 years saw nice wins,but worse losses....year 4 slight profit,year 5 and subsequent years a positive return....

2.1st big profit was first ever trade...in hindsight a disaster
1st big loss....had a few in early years,always thinking I was right and the market is wrong...held on,didn't cut losses...took a while but I learnt the market is never wrong and the first loss is the cheapest...now look upon those losses as tuition fees,payment to learn a skill as you would have to do in any other profession

3. four figure sums.....twice ! On second occasion was long 10/09/2001...then we all know what happened...like a fool I added longs after Sep 11 happened thinking the Yanks wouldn't let their market collapse.patriotic pride would buy the market,you can't hurt us mentality...how wrong was I...!!

4. SPX swing trades....$/Yen swing.....Dax/FTSE occasionally on decent set ups...
Dow daily for the entertainment

5.Determination to get it right....I love the markets,find them fascinating...pitting your views and decisions against the world so to speak...

6. I've never ever thought about quitting,and never intend to,so can't really comment on that...sorry

cheers
Steve

Gosh your early days sound so much like mine. I traded a demo account to start with and after a month I broke even - but I kidded myself that I would have made a profit if I'd have stuck to my rules. So I went live with £1000. I lost 50% in 2 weeks.

I then stopped and looked at my method and realised there was no way I could prove to myself if it was profitable or not. So I then started trading indicators with a new injection of money, I optimised them to the max so that based on past results I would be a millionaire in a year. Unfortunately for me this was just as a bull run started on the indices and currencies stuck to their trends and I nearly doubled my money over the next 2 months. I thought this was it! - my only bad trade was on gold which was dominated by the RSI indicator which constantly told me to sell it as it ran up to $700.

Then Oct 2005 disaster struck and I lost all my gains and 70% of my original capital in one account - my second account I was lucky enough to escape with break-even.

I then stopped trading altogether while I worked on a way to properly test my indicator strategy. Once I'd got a proper and decent back/forward test going I realised that my system would make be bankrupt sooner or later, there was no way to make money from it.

Armed with a fairly decent system to backtest any ideas I then set about finding a new trading method. I reckon I went through 20-30 ideas before the light bulb came on and I tried to stop being greedy and make my fortune in the space of 2-3 years. 6months after I started trading I went live - confident in the knowledge that I had properly backtested my ideas this time and that I could survive nasty market suprises.

I'm still trading that system today. My dreams of get rich quick have evaporated - but I know I'm well on the road now and making pretty respectable returns - (50-100%) a year.. Although I have tried more stats along the way - I always come back to the one I'm trading now.

 

[firewalker99]

Again, I feel the need to be quite critical, but as you know this is all meant with good intent

... that is to say I am no longer confident enough in my own trading to risk the last of my trading pot.

You say you are no longer confident but I don't think you've ever been confident in your setup working out because you have never tested it long enough nor thorougly enough to built any confidence.

Do you trust a stranger immediately? If your system is a stranger to you - and it might well be as you've adopted most of it from other people (which doesn't necessarily have to be a bad thing) - then you need to get acquinted with it. You need to know and understand it's flaws. Each system will have flaws and each system will undergo times where it's performance isn't up to what it used to be. It's your job to know whether it's the system that fails or whether it is you that is failing to follow the plan, regardless of how bad the current situation might look.

You will note from the Dow thread that I mentioned I was switching to "plan B", which was continuation bets on news releases which affect the YM. I did a few of these trades to recover a little bit of capital. By and large this worked, with me taking the occasional small loss but a good deal of +15/+20 trades on news.

Yes I have noticed that and I think your getting lucky on the news trades but be careful not getting caught out when it whipsaws in both directions.

Day trading is not for me. I need to trade on larger timeframes and make more of my decisions outside of market hours.

Whether you daytrade or position trade, you always need to plan ahead and then trade the plan. Only you can know whether daytrading suits your personality or not.

I know firewalker especially wants more of an explanation than this, but I don't really feel I can offer any more than this. I think switching to position trading, doing enough backtesting of my system to be confident, doing enough paper trading of a system and posting reports to foster discipline, and not having to trade every day will help me in the long run.

You don't owe me any explanation, you only owe it to yourself. Putting on less trades will definitely help you, as it will mean less commissions. The less time you are in the market, the less stress and emotions you will feel. But whether you daytrade or positiontrade, the principle remains the same: backtest, get confident, papertrade, get more confident, trade for real, try to stay objective and calm if not go back to backtesting. It's okay to go through this circle more than once you know.

 

[cshieldsx]

Hoggums, care to share the principles of your indicator system ? eg. which indicators do you use, what points you buy/sell etc

=================================================================

I'm new to trading, and all of your experience is so helpful. So far, I have been blessed with many lucky trades and I have very much had the "easy money" attitude. Previously I was getting ready to pump in much larger levels capital, but now I will be nowhere near as hasty. I think I'll paper trade for a year or so while I'm still at uni. Cheers all.

 

[london_lad]

When I usually break my own rules, it is fear not greed which is the cause.

When I take an uncertain entry, it is through fear of missing a potential move, even though the setup hasn't fully crystallised.

When I take an early exit, it is through fear again. Premature profit taking is the single largest contributing factor to my losses.

Usually my initial profit targets on a trade (2x SL risk) are hit, except I have covered my position and the market moves ahead without me.

Lurker, I am where you were in 2007. Would you care to discuss/explain your system? Apologies, if you have already done so, just send me the link and I will appreciate it.


Thanks

 

[clorets]

Have been trading for 3 years, got profitable when I stopped trading a rigid system, switched for longer time frames, started being more flexible, and dropped indicators + focus on risk management.