The following post is from a good trading friend of mine named Rick. About a month ago I discovered his website site and fell in love with what he had to offer. Since then we've been in contact and he's agreed to share some of his knowledge with us. I hope you enjoy this post as much as I did and for much more I highly recommend that that you check out his trading site at http://www.protradenetwork.com/ Ever wonder “What is the most significant trait shared among successful traders?” The answer is preparation. Doing most of the work before the trade occurs. Studying and knowing all of the possibilities before the trade is executed. Being ready to attack, not just react.
Remember the saying “Knowledge is power.” That is not entirely true . . . Knowledge is only potential power and what you do with that knowledge will determine its power.
We must be ready for anything. That means thorough knowledge of our trade plan, market structure and what constitutes a valid signal. All of these must be aligned before we place a trade. All most all of the work required takes place long before we ever enter the market.
Another essential trait successful traders share is the ability to be disciplined. They have the ability to control their trading state (emotions) and their focus. Always remember we cannot control the market, all we can do is control our response.
Why do traders hesitate even when they get a valid signal? The number one reason is they don’t know the probability of the outcome. Why? They have not thoroughly tested their trading system and plan to know the probabilities. If you know your entry, stops and targets beforehand, you can eliminate the emotional investment in any trade.
“Your life will not change when you know what to do; it will change when you do what you know.” – Anonymous
What are you doing every day to arm yourself with the knowledge to conquer the markets? What pain are you avoiding that is holding you back; preventing you from achieving the discipline and control necessary to be successful? What is keeping you from making the commitment to get the work done so you can experience the unlimited upside the market can provide?
The Success Equation:
Preparation = Confidence
Confidence = Execution
Execution = Repetition
Repetition = Habit
Habit = Discipline
Discipline = Serenity
Don’t be another market casualty. Dedicate yourself to winning the battle before it is fought; study, prepare and then attack. Let fear and pain be the other guy’s problem while you enter the markets with a well-crafted plan, relentless approach and a fearless attitude.
Be willing to do what others won’t and you’ll get what others can’t – acquisition of a lucrative skill and the payoff of consistent results that will provide limitless possibilities.
In the trading game, you’re either making money or making excuses.
Decide to start making money.
Pro Trader Network ( http://www.protradenetwork.com/
I got the idea for this post after picking out today's Quote of the Day from Auguste Rodin which read "Nothing is a waste of time if you use the experience wisely." I bring this topic up a lot in the live room a lot, but my greatest learning experiences as a trader came from losing money. After completing the Pro Trader Course I felt as if I had all of the tools necessary to be a dominant trader. HA! Was I ever wrong! I learned quickly that my trading psychology needed a lot of work and that although I learned about it, I really wasn't up to par on the trade management side of things. Over the past few weeks I've been making a lot of comparisons between trading and sports. Well here's one more. In both cases you can practice, practice, practice all you want, but as a rookie, you really don't learn the intricacies of the game until you get out on the field and start taking your bumps and bruises. Same thing with driving, when you're first on the road early in the morning when no traffic is around its awfully easy to master steering and accelerating and braking. However, it isn't until after we get our licenses and we start driving on a regular basis, that the real learning begins.
While watching the TV series Wall Street Warriors Season 2 (which is great by the way) there were a lot of good moments that caught my attention. In one case there was a newbie trader that just signed on to work for a day-trading company. After passing the interview, they told her that she would have to go through her first six weeks (I think) of trading using a demo account in order to learn the ropes. They also said that it takes about six months to become a consistently profitable trader. After hearing this I went back and looked at the results of my first six months trading and they went as follows:
Now check out the next six months after making a few changes:
As you can see I'm not perfect, (and there are only a handful of traders that are) and I still had losing months, which were expected. However, for me at least, what stood out was the fact that I didn't have two consecutive losing months.
So what was the key ingredient in turning my trading around? Well aside from psychology (which should be given to any new and experienced trader). I really focused on being a much smarter trader. This meant that I was more careful (less aggressive) in which trades I entered, as well as improving on how I managed my trades once I was involved. By managing my trades I'm not talking about money management skills, I'm talking about the skills needed to protect my stop losses at the correct moments, or trail my winners in certain instances instead of strictly taking off profit early. I didn't just create these rules out of the blue, I went back and studied my old PTC training videos along with a lot of back testing. More importantly, while I was losing money I would constantly record what happened in the market to cause me to lose or what I did wrong. Needless to say I had a lot of past mistakes to learn from. Since I was determined not to make the same mistake more than once, I slowly but surely became more efficient in my trading. Lastly, simply having the experience of being in the markets live day in and day out, really helped a lot. Jason taught me the basics of doing analysis and that was great, but after spending two years in the market, after staring at charts for thousands and thousands of hours, and after viewing each and every free video or training hosted by Triple Threat Trading multiple times, I knew that I still had a long way to go. And as I write this post today I feel as if I still do. (Kaizen: Continuous Improvement). I don't want to seem cocky or anything but I see myself as being like Neo from the Matrix movies. I was told everything I needed to know in order to be successful, but it was up to me to then build on those skills and take my trading to the next level. A "Twenty Percenter" as Jason would call it. I still haven't reached my peak, but I'm seeing things a lot clearer now and because of that I'm even able to add some new tactics to my arsenal. Anyway, I can rant on the Matrix comparison for days but I hope you enjoyed this post and attached are a few charting examples of the skills I talked about. Either skills used to stay out of a trade or skills used in trade management.
As many of you were aware of I have been on the road since Friday. Thirteen hours of driving gave me plenty of time to think of a good post to write up for the site for today. At first I wanted to work on one relating trading to sports. Then after reading a few comments on the T2T facebook group page (http://www.facebook.com/groups/216254371801237/
), I came up with an even better idea. Then once again, I got an even better idea after talking to my roommate this morning.
My roommate/best friend since high school was actually the person that first introduced me the FOREX market. We both started trading FOREX around the same time and went through similar struggles as rookie traders. You know, the usual demo account kings turned real account busts. The point where we split paths came when I discovered Triple Threat Trading and signed up for the Pro Trader Course. My friend actually wanted to do the same after I told him about how much I was learning but they wouldn't allow him to sign up for the course due to the financial situation that he was in. To be honest my friend was a little upset because he really wanted to learn, but at the same time he respected Jason and T2T for not wanting to take all of his money at the time. With that being said he continued to watch and attend every free video/seminar that Jason hosted. Just like many of us he started off using one system only to fail and switch to another and fail again. Eventually he excepted the fact that it wasn't the system that was failing him, it was his psychology. After coming to terms with this he sat down and rededicated himself to his craft. He finally picked a system he wanted to trade and proceeded to vigorously back testing his new strategy.
Since my friend only had a small amount of capital, he was forced to start his trading using micro lots (10 cents/pip). Although the profit gained from this position size was minimal, the more important lessons came gaining discipline and a comfort level with his system. Many traders would be outraged knowing that their system was a success yet they were not really making any money off of it. Which could lead to mismanaging their position sizes and money management system but during this period he continued to tell himself "it's not the actual profit that matters, it's the percentage change in equity." By the way, this entire time he continued to work a crazy amount of hours at his fulltime job, including any overtime he could get his hands on in order to save up enough money to seriously trade. Between actual trading profits and moving extra money into the account he has now grown his account to a respectable entry trading level but he wasn't done yet. I won't go into the details of his situation but he has been putting together a list of potential investors that are interested in loaning him money to use for his trading business and yesterday he got his first big check.
This is something that I have done in the past and it is a great way to grow your account. Now be warned, I wouldn't take this step until you are 100% confident that you are a CONSISTENTLY profitable trader. Let me say that again . Now be warned, I wouldn't take this step until you are 100% confident that you are a CONSISTENTLY profitable trader. Because if not, you run the risk of running into a financial/legal hole that will not be fun to dig out of. But for those who are ready I think it's a great move. I'm going to talk to my friend and see if he will write something up for the site that gives you a better picture of the path that he has taken. Either way it's a great example of how you can go from nothing to something from trading.
Hi friends, my name is Roy Painter and I am a professional currency trader from Detroit Michigan. This is my first time contributing here, and I was honored recently by being offered the opportunity by our esteemed benefactor, Akil Stokes. Akil and I share a lot of the same trading strategies and philosophies, maybe because of, or perhaps the reason for, having studied under the same mentor, Jason Stapleton. Either way, I have been a long time fan and reader of iambusiness.weebly, as I, like many of you I am sure, find the content here both education and highly introspective. This site is at the top of my ‘must have’ daily reads, and thus I am very happy to be here and amongst such great company.
Okay, now with the introductions out of the way, I will explain why I thought this to be the perfect time to start sharing some of my thoughts. This particular moment in my trading career is a very interesting and insightful one for me, for as you may have guessed by the title, I am currently losing money. Yes, you read that correctly, I am losing money. I am in a drawdown. 8 of my last 10 swing trades have been losers, with the last 5 being consecutive.
Bummer huh? Yep I know. But why is that important? Why is it worthy of your time to keep reading the ramblings of a losing trader? The simple answer is because it is O K. I am okay with it. I knew it would happen at some point, I enjoyed 15 months of mostly consistent profit, a drawdown was inevitable. I had expected it and I had prepared for it. That’s one of the huge advantages of extensive back testing. Just as important as knowing how well your model should perform when it works, is having a clear understanding of what to expect when it doesn’t. From my testing I knew I was due for a break. I also know the average number of losers to expect on this break, or what my worst case scenario might look like. Likewise, I can also tell you, with historical certainty, that this drawdown will indeed pass, and that long term the strategy does work and that it is profitable. And traders, having that knowledge, seeing that data in black and white, that is truly peace of mind.
Now don’t get me wrong, I do not enjoy losing money, and I definitely lack the stomach to sit and watch my trades bleed away tick by tick. But thankfully I have protective stops on my platform, and a power button on my monitor so that I don’t have to. Everything else is simply internal, it’s how I deal with it, or more accurately, how I choose to deal with it that matters. For me I made those choices long ago, and I wrote them down and made them part of my trading plan. I’ve rewritten my plan many times, always trying to better defining the “if, then” syntax of my strategy. In one re-write I tackled this ominous eventuality of a major drawdown and added an entire appendix on the topic. While I won’t recite the whole thing here, the basic gist of it is this:
1) Don’t panic… Remain calm! Check the account balance against your money management guidelines and adjust risk exposure as necessary.
2) Keep trading… You have to keep trading. Your system works. It has been back tested, and forward tested to heaven and back, stay in the game, keep cool, and keep trading.
3) Trade smart… Trade with your head not your heart. Don’t get emotional, don’t get angry, don’t over trade and try to take revenge on the market, it won’t happen. Just stick to your rules and it will all work out.
Pretty simple right? That’s all there is to it traders. If you’ve done the proper work ahead of time, the testing, preparation, and planning, then all that is left to do is keep ourselves in check. History repeats itself, so as certain that drawdown’s will occur, I am just as certain that they will end. This is may first, but it will not be my last, it is all a part of trading, and I am okay with that.
So why were those trades losers? Just because they were… No one was at fault here. Not myself, not the market, not some central bank with a sinister plan to take me out. They were losing trades, plain and simple. It happens all the time, just that this time the losers all got lumped together, that’s all it is. I have gone over them with a fine tooth comb, and every one meet my rules and every one was a valid entry. Over all these were good trades that went bad, it happens, it is what you do next that matters most. For me, I choose to deal with it, learn from it, and to move on to the next trade. Thank you traders, be well.
So it's been a while but after a lot of requests I've decided to bring back this blog. When I started moderating the T2T Live Room I figured it would be pointless to have 2 blogs on trading, but as I sat back and thought about it, although they both deal with trading as a whole, they both deal with totally different subjects. The purpose of "From the Live Room" is to give a recap of trades taken and lesson learned within the live room, while "Follow A Pro Trader"...well... follows my journey as a trader as well as an entrepreneur.
The decision to bring this blog back came yesterday while grabbing a bite to eat at a local Sheetz. I had just returned from Barne's & Nobles where I where I was on a quest to find a new book relating to business marketing. Although I didn't find a book that fit my desires, I did read a few chapters in a couple of books that gave me some good inspiration. Thinking about what I had read encouraged me to bring back this blog, but it wasn't until I finished reading "The Babylon Report" (www. freebabylonreport.com ) a few hours ago, that I knew I had to get back to writing about business. After all that's how this site started out.
Much has changed since I originally started this blog. At first my goal was to make trading my business simply by growing my account and managing others. During that time period (as my followers from day one know) I have had many trials and tribulations. Documenting these adventures has not only given me a place to vent and clear my mind, but it also gave others out there like me a chance to learn and relate. Because my story can relate to so many others out there I began to pick up a lot more followers than I expected as well as make a lot of new friends along the way. Fortunately for me, my words (and the comments left by readers such as yourself) allowed me to gain the attention of my trading mentor. The same man that showed me how to be a successful trader, gave me the opportunity to share my journey through his various networks. Between that, and the actual hard work it took to become a good trader I am rethinking my overall business plan.
I have recently been put in the position where I act as a moderator of a Live trading room. I don't want to call myself a teacher, because I believe teaching a skill such as trading is and in order be good at it I need to be at an entirely different level from where I'm at now. But I will say this, that I feel as if I'm sort of a consultant or at least a role model to many of the novice traders in the room. Being on the education side of thing is something I never expected to do, but you know what, I really enjoy it and feel like I'm getting better at it each day (Kaizen). I love the feeling of people people saying I helped them out because deep down that's what brings me joy.
I'm excited to bring this blog back because at the end of the day I've always had a business like mind and when the wheels start turning I like to share.