Hi chinapassage ,
Have you ever asked yourself a question : “ WHY WELL OVER 90% OF TRADERS FAIL IN THE LONG RUN ? “
Do
we believe that over 90% of all people who attempt trading stupid? Of
course not, I know lot’s of very successful professionals who failed in
trading. Are we to assume that over 90% of people did not prepare
themselves, by reading, taking courses, etc ?, doubt it, I am sure there
is a small percentage of people who dove right in, but for the most
part I don’t think that lack of education is the reason for such
astronomical failure rate.
What
separates those few that are very successful in the business of trading
from everyone else? Is it in the tools?, books read?, seminars?,
not to disregard above all together, there is some value in all of them,
but if that was the case, how could some of the traders I know make
multiple seven figures a year trading two moving averages crossover with
one oscillator ? There is a ton of material out there about
trading, and as you know, most of it was not written by really good
traders, most of it was written by very talented analysts, technicians,
professors even, and yet those very same brilliant people did not have
what it takes to be successful traders, they seem to know everything
there is to know about trading, and yet can not do it. They have
tremendous passion for Markets, but not what it takes to make money
trading.
I
am by no means advocating lack of education as a recipe to becoming a
good trader, of course not, but there is something that is missing in
most people who fail in trading, I am not going to pretend like I know
what it is, I don’t, if you ask really successful traders how they do
it, I don’t think they could give you a good explanations, best ones,
like best ones in any other field, are simply Naturals.
Now,
with all that said, of course not only Naturals make money in Markets,
but in order for the rest to make it in trading, it is important to
understand what really important elements in trading approach are.
The truth of the matter is, that all this stuff you read in trading
books for the most part is wrong. We often read and hear that
there are many different ways to make money in Markets, now there may be
many technical variations, but there is only one way to make “real”
money trading, and that is Market’s way. We hear a lot of advice like
take part of your position of for a point or two, and move rest to break
even, and never let your winner become a loser. All these sayings
sound logical, even though they are some of the worst things a trader
can do. Market does not care where your entry point is, and Market
also does not care that you feel comfortable with your strategy, of
course you do, most people would, lock in a small profit, and bring the
rest to break even, heck, that makes all kinds of sense, but what
happens most of the time in reality ? you get your small profit, and
then get stopped out on the rest 9 out of 10 times because your stop is
too tight, and five minutes later watch the Market move another 12
points but without you. And all that happened why? because you
took “sound” advice, and did not let your “winner” become half a point
loser, and that is the same advice that 90% of traders take, because it
gives them that safe feeling that they can not lose money anymore on
this trade, does 90% number ring a bell ? ,J. 
>>
Since
most of the people who give trading advice are not successful traders
themselves, they tell you what makes sense to them, but that is most of
the time what does not work out well in real trading.
Few
weeks back, “g” was kind enough to share good trigger template with the
Forum, and over the next few weeks, we have seen hundred’s of posts,
that quite honestly, made me sad. People were not just giving thanks for
a shared technique, but all kinds of desperate traders seeing it as
salvation, and “holly grail” for their trading, and some of those names I
have seen on the boards for a very long time. Now, I use a few
very good trigger templates for a long time now, unfortunately, mine are
all built on volume charts, and as soon as Wave59 will be able to
create volume charts, I will be sharing them for sure, but any solid
trading style consists of three parts, most important by far is trade
management once we are in the trade, second is solid set-up, and the
best trigger comes in distant third, again, not to take anything away
from ”g’s” generosity, that is just a fact, yet out of those three, most
failing traders concentrate most on the trigger, I have no idea why,
maybe because it’s a part of the approach that calls for action J.
Best
trigger template will chop you up most days, but when trigger is taken
after a proven set-up, odds for successful trade go up exponentially, in
the 80% plus range. And
“g” himself warned people about trying to automate trading with his
template, saying that results will not be impressive, as an experienced
trader he understands exactly when to take the trigger and when not to.
Larry Williams, a big advocate of trade management, proved over and
over, how using the same triggers but managing trades differently, makes
a difference of millions of dollars over the years, trading one ( it
was large SP contract at that time ) lot, by adjusting exits only.
Traders learn all kinds of techniques to time CIT's or continuation entry,
just to be satisfied with small gain. A good trader, based on today’s
Market conditions, will make 2K/day trading 4 lots, not twenty. That is the only way, a trader with an average account size can
manage risk, give Market breathing room while waiting for his trade to
work, and not sweating every tick and being thrown out of the trade
because every tick on twenty lots is way too much fluctuation for their account size.
Finally, I will try to answer your question, J. I have read Neal’s books, and there is a great deal of knowledge in them,
and in all that information, ( I hope you don’t take it the wrong way
Neal ) the most important statement/question, which really pertains to
every day trading : “ CAN YOU STAY IN THE TRADE AS LONG AS BARS KEEP
GOING YOUR WAY ? “ The answer to this seemingly simple question is the difference between long term success and failure.
Whichever
book you read, you need to be able to extract usable information for
trading. Select, test and practice techniques which you will be able to
trust without any hesitation, thinking, or procrastinating, there is no
time for it during real time trading. As good as technique can be for
someone else, if you don’t trust it enough to pull the trigger every
single time, it has no use to you. Unfortunately, you will most
likely never find a trading style, which at the same time will make you
comfortable, and allow you to make “real” money, you have to develop and
use approach that works in the Markets, and train yourself to be
comfortable with it over time, and If that means trading one lot for a
long while, so be it, It will serve you much better in the long run then
trading larger size but in the wrong way. Gann said: “ Real money in
Markets are made during large moves” and that translates to day trading
also. The most important skill to master, once we are in a trade is
“sitting” , best techniques are wasted if you do not have patience and
resolve to let you trade work out to its full potential. Overwhelming
amount of time that trader dedicates to educating oneself should be
spent on seeking out information in educating materials on how to
maximize return of every single trade, that is where the hidden success
is found over time. >>
Sorry
about the length of my post, I am sure it will not be very popular with
a lot of people here, but as someone who has been trading for a long
time, my objective was to be honest, and not necessarily score
popularity points, and hopefully reduce learning curve for some novice
traders. It is very easy to get “ analysis paralysis “ in this business,
too much information can do more harm than good, where after a while,
things begin to contradict them self’s, and make you virtually unable to
do anything.
So
read on, take seminars etc, but use some common sense and logic,
trader’s work does not end with closing bell, examine every day’s
activity, your trades, and select educational venue which will help you
not only get in to a trade at the right time, but get every possible
tick based on the time frame you trade, you will be pleasantly surprised
with what Markets will give you if you learn to speak their “ language”
. Don’t’ subscribe blindly to the idea
that there are thousand’s of ways to make money in Markets, at the end
of the day, in principle, there is only one, participate in large moves,
I have never met a rich scalper, J
Whether
you agree with what I had to say or not, give it benefit of the doubt,
as you become more and more successful in the business of trading, more
and more of it will make sense.
Best,
> >
Simon B.
