Humbled

Since I wrote the “Facing Reality and My Dilemma” post, I have received a lot of feedback. Everything from “You can be a successful trader” to “Your tools help me–don’t stop!” I was surprised and humbled by the outreach. I also received a gift of “Trading in the Zone”. This put me over the edge. I’m blown away. It placed a bid under me. I thank all of you. All this time I had hoped that my stuff would help someone to be successful. I didn’t think it would come back to me in this way. Traders consistently surprise me by the depths of their generosity and camaraderie.

I’m going to make another try at trading. It will probably be another few months of preparation, but I will be back sometime in 2012. In the meantime, I will also work new tools and scripts for you readers. I had my moment of existential crisis, and now I’m back on solid footing, thanks to you.

Thank you, sincerely, to all of my friends out there.

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13 Responses to “Humbled”

  1. John Says:

    It’s in your blood and you’ve grown immensely. How could you stop?

    We’re glad you’re back!

  2. Will Says:

    P (Q), my old friend. Lol, I just wrote you a 2-page long comment then lost it when my backspace key took me to the previous page instead of backspacing. Which of course is a sign.

    One paragraph ended in the words “endless swirling eddy of relentless mediocrity”, describing my 20 years of trading. And I still trade.

    That last post of yours really caught my attention. I think you’ve seen something out of the corner of your eye, and it bears discussing.

    Would love to get back in touch. Email me if you get the chance.

  3. Gregory P Says:

    I don’t get it. Do not dive back into trading before documenting right here your last 3 trades, that makes no sense. You have all of us here to help you figure out what you did or were doing wrong.

    Simply write a post, on what your rules were for entering the trade, what your rules for exiting the trades, what the pre-conditions were, your investment thesis, fundamental versus technical conditions, etc …

    IF you can not answer all those questions, then you ALREADY know your problem.

    Here is the most important thing, you are an engineer. You know that any project you do as an engineer would require all the knowledge of those requirements before starting work on any, as it is just too costly to proceed with the work before a compete design, yet most people will not put that much thought and effort into a trade simply because it only requires 2 clicks to execute a trade.

    I can not repeat this enough. Document right here on this blog your last trades to understand what you did wrong. It is somewhat annoying to do it, but doing it makes sure you are actually doing the necessary preparation work for each trade.

  4. james Says:

    never give up your passion, and happy holidays !

  5. Mike Shanley, CPA Says:

    Right there with you, pal. 2011 is my first year trading, mostly in the simulator, but live once or twice and lost control. I’m also in the DFW are and would love to grab coffee and talk shop. Curious about your methodology, rules, etc. I have a journal that might be worthy of discussion, too. Look me up if you get a chance, coffee’s already brewing somewhere.

    ms

  6. Benjamin Says:

    You sound like a good guy which is great, but the problem seems really obvious to me just from reading these last two posts. You’re too emotional when it comes to trading.

    I suggest that you paper trade from here on out. Here is my checklist whenever I’m trading.

    1. Come up with the exact criteria for a trade and WRITE IT DOWN.
    2. Backtest the strategy and keep track of P/L.
    3. Trade it with paper money for awhile.
    4. If all goes well up to this point, trade with real money. Otherwise, go back to #1 and keep testing strategies until you find one that seems to work.

    As a side note, when I come up with a strategy I also like to constantly ask “why”. For instance, if my strategy only traded on a Wednesday, why is Wednesday so special?

    Think of trading more as a game rather than a way to make money and soon you’ll find that you are making money. 😉

  7. alex Says:

    I stopped trading for almost the last 2 years. No longer had the money to invest into a losing game. But the last few months I have been thinking about my trading a lot and wondered how to keep the hopium from clouding my judgement.

    I’m inspired by your tenacity but also dismayed, if you can’t make it work how can a regular non rocket scientist joe like myself make it work?

    The information overload doesn’t help either, do I spend endless hours looking for the stocks to trade or do I pick something like spy futures and try to learn a one pony trick? I’m starting to lean toward the one pony trick.

    I will be getting back to paper trading, hopefully with a plan I can follow.

    Thank you for sharing,
    Alex

  8. Prospectus Says:

    Alex: I have said for a long time that my engineering background is a liability as a trader. Instead of thinking in probabilities and edges, I’ve been conditioned to think of the right answer, and needing to know everything before making a decision. I judge a decision based on the outcome, not on the picture at the time I made it. These are huge setbacks! So don’t think that you are less equipped if you don’t share those traits. IQ is not needed for trading. Far more important is your own personal discipline and mindset. Trading is simple; it’s the traders that are complicated. I hope nobody thinks themselves inferior to my background.

    I too think it’s best to just pick one thing that fits your personal traits and just do that. And that’s what I’m working on now. There are an infinite number of ways to trade, but you only need one that works in the market and that works for you.

  9. Fifth_Street Says:

    IQ is a HUGE component for trading!

  10. Prospectus Says:

    Semantically you are right. You need mental quickness and dexterity. I’m just trying to get across the idea that formal training as an intellectual professional is not necessary, and is also a hindrance in many ways. That’s why so many successful doctors, engineers and other educated professionals are horrible traders. I will still maintain that emotional control trumps IQ as the foundational skill, though both are important.

  11. Gregory P Says:

    Stop the excuses, Prospectus. I know plenty of top lawyers and doctors who are great investors. Micheal Burry was a top doctor and a top trader/investor.

    If you do not have the skills or psychology to be a day trader, try other styles of trading until you find what suits you. Stop with the excuses.

    Document your trades, and you have plenty of people here to tell you what you are doing wrong, and what style of trading would suit you. Not everyone has to be a day trader, or in the markets every day to be successful at it. Most of us just choose to do it because we enjoy it.

  12. Prospectus Says:

    I’m not sure where I’m making excuses, just pointing out a generalization I see. There will always be exceptions to any generalization, and admittedly my perception could be wrong. I’m not sure why I’ve seemed to strike a nerve with my comments about IQ and professional education and training vs trading ability. I’m not trying to disparage those things. They can be an asset of course. I know I am responsible for all of my trading results, good or bad.

    As far as my own trading is concerned, I am still searching and testing. I will be posting a plan when it’s finalized and then will post all my trades when I decide to go live.

  13. Action Says:

    Just +1 for not giving up Prospectus, I’ve been a follower since I read your site regarding MC I believe.

    Have you considered a relative strategy instead of market timing? It seems to me you are big on timing index futures, but studies show this is one of the hardest (if not impossible) things to be able to do successfully. By contrast, momentum trading, http://www.mebanefaber.com/2012/01/06/momentum-for-dummies/ (as an example) does show a statistically significant trading opportunities that are confirmed by numerous papers year over year.

    I’m in the same boat you are, been at this about 2 years now, blown out 2 small accounts, and i’m a computer programmer. My discretionary trading period ended about 6 mo ago after I chased some open interest, went all in, and got burned big time. Someone knew something and I took the wrong side of the signal. At that point I was up 300%, and in a week I was down to 20% of total.

    Since then I’ve read literature on probability within trading, and sobered up after reading David Aronsons Evidence Based Technical Analysis.

    My new approach is to focus on securities against each other, and then using TA only as a way to rank and hard stop if necessary. I haven’t had the time to implement it yet since TOS/thinkscript makes it VERY hard to compare items visually. Ever think about that? A significant portion of the platform is about timing a single security. It’s almost like they want us to fail.

    Best of luck, don’t give up!

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