|
PureBytes Links
Trading Reference Links
|
I have a few thoughts I thought I'd share with the group regarding traders
and trading. I have had a unique opportunity because I'm a broker to
observe many, many different trading styles. I also have friends who are or
have been brokers and through the years their experiences have very closely
matched mine in terms of the activity and habits of their clients. This has
been the most valuable experience one could hope to have to learn to trade.
I have almost literally been looking over the shoulders of traders for 13
years and I want to share some of what I've learned and observed.
My clients have been as diverse a group as you might well imagine, coming
from all walks of life and backgrounds. As a group they have been very well
educated, successful people in most of the ways we typically gauge success.
These people have collectively read, studied, subscribed to, and attended
more seminars and trading courses than one human could in a lifetime. Some
of these people are advisors in one capacity or another to traders. As
traders, some of the advisors are successful and some are not.
I have some very successful clients, and a lot of not so successful
clients. I have never had a client make a million dollars. I have had a
client lose more than a million dollars.
Again, I'm not trying to present THE answer (I don't have it). These are
simply observations of the collective experience of a large and diverse
group of traders. Some of these traders are long-term traders, some are
short-term traders. I am not aware of anyone who used or is using a purely
mechanical system.
The successful traders are those who have designed a system or method that
fits within their personality. They could care less if I'm doing something
that they are not that makes me money.They seem to have learned along the
way that it has to be right for them or it won't work, regardless of how it
works for someone else. Whatever method or system they employ, they do so
with consistency and discipline. They trust themselves. They are not always
in a trade. Even the successful daytraders do not trade every day. They use
various methods but almost all of the methods are very simple. Their money
management skills are excellent, meaning once they are in a trade they know
how to manage it.
The "strugglers" are comprised of beginning traders who are various stages
on the learning curve and those that have a considerable amount of
experience but have yet come to grips with what works and what doesn't.
There is little difference in terms of behavior between these two groups.
Both groups jump all over the place and never settle on one style or
method. Neither group has developed the discipline or patience that is
vital if one is going to be successful. They tend to overtrade and are very
concerned about missing a potentially good trade and as a result take a lot
of bad ones. They have a difficult time with losses and tend to look at
each trade as a discrete event rather than one event in an ongoing business
where the result of any given trade is insignificant to the whole. They
spend a lot of money on books, advisors, newsletters, systems, and computer
programs looking for the answer. They think that more is better: more
computers, more indicators, more screens, more advisors. The simple is
eschewed.
The strugglers that are successful in making the transition finally reach
the point where they realize they have to simplify. Once this point is
reached their confidence builds, their focus narrows, and the other
necessary qualities such as discipline and patience begin to evolve at a
rapid pace. Their search for what works becomes less externally oriented
and more internally driven. In other words, they become more concerned with
how they work as opposed to how a system, indicator, or computer program
works.
The ones that continue to struggle do so because they are forever
attempting to put a square peg in a round hole. They never reach the
conclusion that just because someone is successful with a method it does
not automatically follow that anyone can achieve the same success with that
method. They continue to try every method, system, indicator, guru,
computer program, etc., that is even rumored to be the road to riches.
Their search is entirely external.
Hopefully this will in some way be of help to those who trade, regardless
of where they may be on the learning curve. All the traders I have known,
myself included, have been a struggler at one time or another. It is a
necessary and in my experience unavoidable part of the process of learning
to trade. The one piece of advice I'd like to end with to those that are
still struggling is to begin immediately to try to simplify your trading.
Regards,
Tom Alexander
|