OK hope my browser stays with me this time haha.
Shakone, I totally agree, being realistic is necessary.
But at the same time my firm belief is that blowing up or not achieving your goals has far more to do with lack of discipline in following the rules of your system than anything else, going in for revenge trading, overtrading both frequency and position sizing wise, wanting to be right over wanting to make money, and severely overestimating what is possible in the short term while severely underestimating what is possible in the long term.
An Analysis of the Profiles and Motivations of Habitual Commodity Speculators
The focus of this study is the habitual speculator in commodity futures markets. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorist and policy makers.Responses to a 73 question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time.
The typical trader studied is a married, white male, age 52. He is affluent and well educated. He is a self-employed business owner who can recover from financial setbacks. He is a politically right wing conservative involved in the political process.
He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler.
This trader does not consider preservation of his commodity capital to be a very high trading priority.
As a result, he rarely uses stop loss orders.
He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms.
In spite of recurring trading losses, he has never made any substantial change in his basic trading style.
To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss.
Thus he consistently cuts his profits short while letting his losses run.
He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; i.e., being in the action is more important than the financial consequences.
Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.
THAT is why traders lose or never achieve their goals.
Net profitable trading is not rocket science. It's about having the will, absolute faith in outcome, and consistency and iron discipline to do what needs to be done that makes the difference between those who make it and those who don't.
Dan Zanger or Peter L Brandt, the latter who started out at Commodities Corp with Seykota, Kovner, Marcus et al, both attribute their eventual success once they'd learned discipline down to simple, classical charting patterns out of Schabacker, Edwards and Magee that have withstood the test of time through the ages.
Our twi who is now at a hedge fund started at Enron before he went to a prop shop and was talking about his colleagues there, they weren't compounding, they were keeping their funds under 50K but making anything from 20 to over 50% / month out of that.
To be very blunt and honest here:
If someone wants to become a short term trader, but is not able to -
on average- generate returns of a minimum of 10% / month on a small account they are simply in the wrong job.
Again, it's not the method.
Every successful trader I know has a pretty simple method, be it mean reversion or trend trading, the two essential possibilities in directional trading.
All I do is look at breakouts or pullbacks in the direction of major trends, that's it, along with letting my winners run and cutting my losers and being highly disciplined and sticking to strict money management rules.
Twi was going on and aon about the necessity of keeping it simple also:
Simplify, simplify, there is no complex secret out there.
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I just look at daily to 30min timeframe charts, with most emphasis on 30min and see previous highs/lows/trends/retracements/breakouts and candlestick suggestions. Have a slowstoch on there too but don't use as signal for anything just to normalise the price to show overbought/oversold.
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I do indeed mean simplistic. The basic rules are simple and I think anybody can grasp them, after that it is about sticking to them.
It's not the coming up with what needs to be done that's rocket science anymore than understanding what buttons need to be pushed to lose weight or exercise on a regular basis.
It's the discipline to stick to what needs to be done that's the thing, and accepting that losses and even streaks of em are part and parcel of trading what makes or breaks traders.
And then the difference between someone like twis colleagues making a good to great living from trading to those that go on to become seriously rich through becoming longer term and thsu being able to compound again isn't down to the latter having discovered a superior holy grail, they're doing what they always did, but just with more money.
Some can't handle the longer term, some have a glass ceiling of numer of cointracts / stocks whatever they can deal with before getting a heart attack, but none of it is rocket science.
If you can make 10% a month, you CAN will yourself to start compounding that IF that is what you truly want.
I posted something here once about a guy who won a trading championship at the then ABN AMRO with 55 000 % plus in ONE month.
Ok that was play money, but he moved on to a direct access broker, and is a millionaire by now, and he only graduated a few years ago, and his system is the essence of simplicity, and he is no gunslinger betting the ranch either. Just a good robust system coupled with good robust compounding and a burning desire and absolute faith in himslef to do what needs to be done to get to where he wants to go.
The biggest problem is that most people don't know what they want, don't have the will, nor the faith in themselves, and not the discipline to follow through.
Christ writing this lot up I'vemissed some really great moves on the Dax now lol !
Honestly, I was reasonably amazed that such a thread got anywhere near five pages - given how many wise and sensible folk reside here... :innocent:
