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Thank you for your story! I am a new trader (in commodities) and
appreciate those who share in this group, I believe there is much that can
be learned from the failures and successes of others.
Adam Hefner
-----Original Message-----
From: Jeff Walker <jwalker@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Saturday, July 18, 1998 4:10 PM
Subject: Re: Learning how to trade and paying people to divulge their
"know-how"
>Traders,
>
>I don't like to cross post, but since almost the identical discussion is on
>Realtraders I decided to put this on both.
>
>I thought long and hard about adding my two cents to this thread. I finally
>decided that I have something to add to it. But a word of warning, this is
>long.
>
>I have been mentored for several years by a trader that I consider to be in
>the Market Wizard category (although he scoffs at that). I never paid him
>a cent. Here is the story:
>
>Almost 10 years ago I was exposed to neural nets. At that time I was
>dabbling with applying TA to mutual funds. I quickly became engrossed with
>modeling the SP500 using neural nets. I was obsessed, in search of the holy
>grail. After two years I thought I had a system that was good enough to
>trade. I started trading one NYFE contract and was immediately successful.
>I quickly moved up to one SP contract. At about the time I started trading
>I was invited into a email group for stock index traders. It was a lot like
>Realtraders, but much smaller - about 20 people. Most of the members traded
>the OEX, and there were many different methodologies. It was a tight knit
>group but often very contentious. One of the traders, Mike, was a futures
>daytrader whom I gradually got to know via email. Our trading styles could
>not be more different. I was trading short term swings with a fully
>mechanical, black box system. He was a 100% discretionary daytrader whose
>methods were closest to the old time tape readers.
>
>At this point I was trading successfully. In my first six months I was up
>50% on my account, about 150% on minimum margin. But I knew that I was
>still a beginner and had much to learn. Mike had been a full time trader
>for 15 years and obviously knew his stuff. For whatever reason, Mike took
>an interest in me and patiently answered my questions via email. I was
>eager to learn, and every reply he sent me generated more questions. Some
>days Mike answered three or four sets of questions. Many of my questions
>were about how he got started, etc. Just the fact that he existed was an
>inspiration to me - I knew that it was possible to make a living trading.
>
>After about a year of trading, my neural net blew up (as I am convinced all
>will) and I started losing. Then I started second guessing the model and
>losing even more. I finally stopped trading when I had lost all my profits
>and half my original stake. Then I started daytrading, recklessly. I knew
>just about enough of Mike's methods to be dangerous. And I quickly found
>that my weakness as a trader was overtrading - I was a plunger. It took
>about 9 months to completely blow out. In that time, I had consistently
>analyzed the market very well. Over the years, Mike had given me all the
>tools and training. But I didn't have the money management or my emotions
>under control.
>
>After lots of reflection, I decided I needed to give trading another try.
>Confessing to Mike that I had blown out was one of the toughest things I
>have done. He had seen my analysis, knew that I had a feel for the
>markets...but I had still lost everything. It would take a long time for me
>to save up another trading stake, but I knew that I could use that time to
>get myself ready to trade. For a couple of years I continued to pester Mike
>with questions, and I sent him my analysis of the market for critique. We
>spent a lot of time on money management and trade management. I confessed
>all my errors and weaknesses and we discussed them. We are both big sports
>fans, and Mike usually had a good football or baseball analogy for me. We
>focused on setting profit goals, the cornerstone of his method. Eventually
>I built up a trading stake again. I started trading, slowly. And now I am a
>profitable, off floor trader who meets his monthly profit goal nearly every
>month. I still have a very long way to go. Mike tells me he has a long way
>to go also, that you have to continue to strive to get better.
>
>There is a lot more to tell and a lot more to the story, but this has
>gotten far too long and it is far too nice a day today. I guess the bottom
>line is that there are great traders out there, and at least one of them
>was willing to share all his knowledge.
>
>Oh, a couple of more things. Mike does not suffer fools very well. He often
>has little patience for beginners. I thought it was sorta funny that I had
>slipped through his "fool filter". Recently I asked him how I made the cut,
>since I was certainly clueless. He said "You made it because you didn't
>know it all already and said so. And you were the ONLY one there who showed
>any gratitude for what you were getting. The rest thought they had some
>holy grail system or were trying to emulate one."
>
>
>The other thing was that Mike often shared his wisdom with that email
>trading group. Once he even gave the formula for an indicator that can pick
>intermediate term bottoms at an 80%+ rate. But I was the ONLY one who
>recognized what he had to offer. Everyone else in the group either ignored
>him or ostracized him. Made me realize that you can dangle REAL VALUE in
>front of a group of traders and almost no one will see it.
>
>good trading,
>Jeff Walker
>
>
>jwalker@xxxxxxxxxxx
>
>http://www.lowrisk.com
>
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