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: 

SEPT: Profitable  
OCT: Profitable  
NOV: Drawdown 
DEC: Drawdown
JAN: Drawdown
FEB: Drawdown

Now check out the next six months after making a few changes:

MAR: Drawdown
APR: Profit
MAY: Profit
JUN: Profit
JUL: Drawdown
AUG: Profit

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. 

6/6/2012 10:11:22 pm

Ohh it’s really cool to have such amazing post Thanks and regards...


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