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The problem with being a trader is that you have to admit you are wrong. In
corporate life, designation of blame is the secret to success. In trading,
realizing you can be wrong is the secret to success. Ira.
Dennis Conn wrote:
> Dick Webb wrote:
>
> >Does anyone have experience with asking yourself questions that lead
> >to good answers?
>
> As regards systems fine-tuning, no. As regards psychological shortcomings
> which affect trading results, yes. For the benefit of those who are new to
> trading, here is my offering.
>
> Flashback:
>
> Several years ago, I bet on pro football - excessively. After writing an
> involved program to factor all the variables I felt were necessary, I
> backtested a few years of data and decided to give it a shot with real
> money. During the first 3 - 4 weeks of each season, my winning percentage
> exceeded 75% (betting only $100 per game). Then I'd get cocky and forget
> about money management and discipline - I'd start to bet $500 - $1000 per
> game and that week I'd lose 5 out of 6 wagers. Then I'd have to suck it up,
> go back to $100 - $200 per game, and spend the rest of the season sweating
> it out right through the Super Bowl just to break above even for the year.
> This cycle continued season after season, and even though my winning
> percentage was over 60% each year, my bankroll didn't increase by more than
> 5% in all that time. To avoid the stress on my marriage, I decided to stop
> gambling.
>
> Fast forward:
>
> Some years ago (and since my football gambling), I learned about a great way
> to make money - commodities! After paper-trading for some time, and
> backtesting several months worth of data in most of the markets, I decided
> it was time to give it a shot with real money. Over the first 4-5 months, my
> winning percentage was over 85% - then I got cocky, forgot about money
> management and discipline, and decided to write a number of calls in a
> market that decided it was time to explode. After giving back just over
> half my account, I decided to go long a few contracts in feeder cattle. I
> could have sworn there was about to be a fifth wave advance, but what I
> thought was just a fourth wave correction never stopped - and neither did
> the margin calls. After stampeding downhill for a few days, those cows
> decided to jump off the edge - the gap down on that final morning's open
> took the rest of my account and put me into debit. As a result of the
> sleepless nights during the call-writing and nearly vomiting when watching
> the feeders gap down, a number of questions occurred to me. Over the next
> several months, I had to face a few hard facts about myself - so to get back
> to the subject of questions, here are mine with the answers I had to
> contemplate.
>
> 1) Do I rely too much on luck as opposed to skill? Answer: Yes
> 2) Am I trading or just gambling with my money? " : Gambling
> 3) Do I have a gambling problem? " :
> Yes
> 4) Do I want to be a gambler or a trader? " :
> Trader
> 5) What do I need to change? "
> : Self-discipline
> 6) Have I ever demonstrated self-discipline? " : No
> 7) Is it possible for me to be disciplined? " :
> Yes
> 8) Can I take responsibility for my trading results? " : Yes
>
> I think it was Brent who once pointed out that doing what doesn't work over
> and over again is the definition of insanity. If I ask myself those
> questions now, the answers that need to be different are different, with one
> exception: I still honestly believe I have a gambling problem, because it's
> still hard to take those losses when I know I have to exit a trade that's
> not working. I am disciplined enough to take the loss anyway, and I don't
> risk an inordinate amount of my account on a trade. Maybe someday, I'll be
> happy with all my answers to these and the other questions I haven't yet had
> to face - I guess learning the truth about oneself is the biggest part of
> becoming a successful trader and, more than even the potential profits, can
> be the most enjoyable part of the game. The truth does set you free, but
> only if you're willing to accept it.
>
> Regards,
>
> Dennis C.
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