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Traders,
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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