5 lessons it took almost a decade to learn

Beginner Questions Trading Psychology
1

It took me years before I became a competent trader.

I didn’t so much, blow up my account as suffer a death of thousand cuts.

I had stunning wins, handled my losses well – but over traded like it was going out of style

After 8 years finally, I was forced to take a trading hiatus – which turned out to be the best thing I ever did.

My weaknesses as a trader are many – I probably shouldn’t even be trading at all.

I am ADHD with all that that entails, I’ve an addictive personality, and I’m indecisive much of the time, or maybe not - lol.

Together that’s a part of the reason it took me so long to get my crap together.

The other part was sheer ignorance, stubbornness and an unwillingness to keep records.

Despite all that I have an insane ability to keep getting back up after being knocked down, and stubbornness to be a trader no matter what.

Anyway, here is a list of the top five lessons I have learned on the journey so far.

Silver is not going to da moon anytime soon

For about 3 years all I ever did was trade silver – and from the long side only. Looking back it was a miraculous feat because I was the ultimate patient trader.

Sometimes waiting weeks – even months for setups.

But I was convinced it was going to da moon. I followed every gold and silver website, guru and news report related to the metal.

I knew every conspiracy theory of how the evil bullion banks, particularly JP Morgan were artificially holding down the price so the even more evil Federal Reserve could inflate away the currency a la Weimar Republic.

These days I am much wiser – the Fed and JP Morgan are, probably evil in some way but there are much better markets to trade – rather than wasting years hoping JP Morgan would have to cover its shorts.

Intraday timeframes

When I stopped trading silver I wanted to make up for all those wasted years and I thought day trading was the way to do it.

But as an impulsive, impatience, indecisive, trader with an addictive personality, you can imagine how that went.

For the record, I think day trading isn’t suitable for most people, its hard real hard. But I was not cut out to do it for sure.

Sometimes I’d have big wins, and think this was going to be the new normal – it never was. I always returned to stupid impulsive trading, and just couldn’t stick to any trading plan for more than five minutes.

Trading non-farm payroll

While as I was day trading, I kept finding myself with open positions on the first Friday of every month. It was like groundhog day.

After losing pretty much every trade that day, I vowed I’d never trade NFPs again, only to be caught doing the same a month later.

I was too lazy to look at the economic calendar.

I swear I would still be getting killed by non-farm payrolls today if I hadn’t switched to a daily timeframe. As an end of day trader, economic releases just don’t trigger stops that much.

Patience

So many problems stem from a lack of patience and I was the most impatient person I had ever met.

I was also the most impatient person everyone else I knew had ever met.

The only thing that taught me patience was losing the money in my account; followed by a year in exile trading on a demo.

I am much better now, but patience is one of the hardest trading lessons of all to learn – especially if you are in a rush to make money.

Doing other things

The best advice I can give to a budding trader is don’t start – seriously.

The second-best bit of advice I’d give is to get a sideline business, calling, or mission in life - that isn’t trading.

The less interested we are in trading results, the better those results tend to be. It’s like when a guy gets oneitis for a certain female, she runs a mile. But the moment he has more than one option things get interesting.

You will do much better as a trader when it’s not a central focus of your life.

I just wish I’d learned that a lot sooner.

71 Likes
2

That’s why they say… Its takes a lot of time to get good at trading.

3 Likes
3

Thanks for sharing this info. Will be helpful for many traders.

4

Every trader face some problems in the beggining of his trade and can blow many accounts and lose their money. Forex is very risky business and you never depend on it if you have no knowledge and skills. Every trader learn it perfectly if he wants to become a successful trader.

2 Likes
5

Trading is difficult to learn because of unrealistic expectations that we have when we first begin learning how to trade.

When I jumped in I thought I would be making money right from the get go. Just buy when price is rising and sell when price is falling. What’s the big deal, right? :slight_smile:

You soon realize that there is a lot more to it than that. So then you go looking for the holy grail indicators that will usher you into profitability. You adjust the settings to fit what you want to see, in an attempt to find the perfect settings for all market conditions. I laugh at myself now when I think back on those days. The thought never crossed my mind that indicators have been around for years and if they were of any use and if one could trade mechanically using them then we would have many millionaire traders by now.

Now what? You expand your search and come across chart patterns. You find gartleys, triangles and pendants and wet your pants in excitement. If patterns worked then 5 year olds would be making money when price breaks out of a triangle. By the time you’re done applying your patterns, Elliot wave markings, Ichimoku and god knows what else you can barely see the price bars. Your charts looks like some esoteric abstract art. And you’re still losing money!

You join trading forums to seek advice and you get conflicting advice and information. Heck, you’ll get crap advice too from traders who are not profitable themselves. Not to mention having to deal with the disruptive members and trolls who don’t contribute anything useful but want to pick arguments and fights with everyone. Now you’re even more confused and lost. Perhaps you purchase some courses or EAs or signals, join a trading room, or attempt to copy trade. Nothing seems to work!

By this time months or years could have gone by and you’ve probably blown an account or two trying out all these losing tactics. Frustration sets in and you begin questioning whether anyone makes money trading at all. You’re also facing huge pressure from family members and probably your spouse, telling you that trading will not work and that you should give it up before you bet the farm and lose it all in the markets.

What I learned from my experience learning how to trade is that trading is a skill based endeavor. It’s like learning to play an instrument. That means that you need to learn how to trade the right way so that you don’t pick up bad habits along the way. Learn to identify what actually works. Keep the essentials and throw out everything else. Question everything. Don’t assume that the person who just gave you some advice knows what he/she’s talking about. Learn to figure things out for yourself and test your theories thoroughly. Be prepared to put in long hours of practice after you’ve identified what you should be practicing. Be goal oriented. Be lazy! They say a lazy programmer makes the best programmer because he learns to do things efficiently and doesn’t reinvent the wheel. Be lazy in your learning.

Once you do become profitable and trading becomes second nature for you, things become simple. Now you have achieved a certain degree of mastery over the instrument. You’re no longer consciously fingering the E chord. Your hands automatically play it without thinking. Trading becomes almost mechanical and simple.

57 Likes
6

You just about said it all - I’ll only add that once you have been through all that you realise how damn simple it really is.

14 Likes
7

“First problem for all of us, men and women, is not to learn but to unlearn.”

  • Neil Strauss

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”

  • Alvin Toffler

Howdy John. Your comments sound like many of my, (finally :joy:) honest to themselves - practicing acceptance - poker students. Patience is key. The market will always be there. Discipline, easier said than done, needs to be a foundation for growth. Also, I went through a lot of what you stated above during the beginning of my poker career. For myself, once record keeping became a habit, my career started to take off. Yes I was excellent at my poker play but keeping records reinforced I was trying to make a career out of it, showed me when I had a leak in my game, showed me where I was most profitable and helped with studying past play/hands.

My final 2 obstacles were my ego and my bankroll management. When on a losing streak I didn’t move down in stakes. I thought I was too good to play at lower stakes and worried what others would think if they saw me at the smaller tables. Also my bankroll management was horrendous. I would not put away funds for living expenses and regularly risk upwards of 50% of my bankroll. Theses actions always led me back to the 9-5 grind. And until I practiced my discipline and let go of my ego (definitely easier said than done), I wasn’t going anywhere.

I wish you the best of luck on your trading journey. Take care,

KCD

8 Likes
8

How long did your evolution last? Perhaps going through everything you went through is part of the necessary path for someone who wants to be successful at trading?

2 Likes
9

I agree on that. People think some things are really difficult, but they are not that tough too, It is all about one’s passion and skills.

10

I’ve been trading 17 yrs now - so actually many of the things I listed are even starting to fade in my mind.

I find the biggest problem I have these days is after a large increase in account size I always end up giving a portion of it back

Case in point at the start of the corona virus thing my account was up about 70% in a few short weeks - I then spent a few weeks making some stupid trades.

Always seems to be like that - the difference being in the past it was always boom bust - these days I probably only give up a small portion of the profit.

3 Likes
11

@Knowcandew

Ah record keeping - always had a love hate relationship with it. When I was trading well I’d keep meticulous records - then when I would go tilt and I’d just stop recording them - I could not face seeing my losses in front of me.

In fact the boom bust cycle was massive for me, I build up my account and then through overconfidence give it all back - first slowly and then all at once.

In those earlier years after every boom my busts took me to a lower equity level than before the boom.

I’d then get my head together - trade very well and repeat the process - it’s comical thinking about it now - but back then it wasn’t - I thought o was going insane at times.

4 Likes
12

Why do you think this happened? Over trading? Or your normal amount of trading and trades just went against you?

13

Sorry John, to intrude on your thread, but I just wanted to say that the above collation of your thoughts and findings is an excellent description of the side of trading that seems to get so little attention by new traders (and some older ones, too).

We see a lot about techniques, approaches and methods regarding when to enter and when to exit markets, but we see relatively little concerning what is perhaps far more important and even critical with regard to consistent profitability.

I am referring to understanding oneself as a person, learning to apply discipline and patience and setting up clear and functional parameters for risk and money management and control.

All the reasons you give for your troubles during your early years seem to derive from these other factors and clearly your money control has improved - and also your profit retention as a result.

It is not really so difficult to design a basic strategy for trade entries and only slightly more difficult to decide the exit criteria to go with it. But, in my opinion, it is the discipline (which includes the patience you refer to) and risk/money management that makes the difference between a poor, mediocre and substantial result, consistently and in all types of markets.

Just some thoughts. Just ignore me.

6 Likes
14

That was not my story. It is a typical progression that I was outlining. I came across some key information very early on and that pointed me to hone in on price action based trading. Even so it took me about 1 year to develop the methodology and refine my understanding of PA.

2 Likes
15

@Manx

No need to apologise, that was a valuable contribution to the thread!

I agree that it’s psychology which is the hard part - much harder than the technical aspects of trading

My own systems are so simple I’m sure they would be out and out dismissed by a newbie.

In those formative years I too thought it was about strategies - I kept swapping and changing them so regularly no wonder I found little consistency.

Actually a big wake up call in strategy was when I read Nicolas Darvis ’ How I made $2 million in the stock market’.

What a fascinating read and story - totally underated book - I’d advise any beginner to read that - you can’t get simpler than his box technique.

Im personally a big inside bar advocate but I really don’t talk technicals so much because I rarely have much to add to the conversation.

I mean I don’t use indicators, or support resistance so what’s there to say?

I do find breadth data of huge interest, as I do the COTs. Though these serve not to help with timing but position sizing and where I should be putting my focus.

3 Likes
16

@forexforexforex

It’s a human trait to think the immediate past will continue - I got overconfident and lapse in judgement.

I should have stepped aside as I could see the intra day volatility was insane - I’m an EoD trader but the daily ranges were incredible - I was getting trading setups but my stop losses in pips were so much more than what i would usually risk.

It only takes one or two of them to lose and you’ve given up 10% of your capital.

I was around in 2008 and did a similar thing - but eagerness to trade got the better.

I do believe for now at least the market has returned to kind of reasonable levels of volatility.

17

That’s so true. “I’ve done it once. It will surely happen again, just like last time.” It’s so easy to fall into that trap.

The volatility is there. That’s for sure.

Thanks so much for sharing!

18

Fx is a risky business , its known to all. the knowledge about trading is really important and experience and practically difficult to acquire. thats why traders quit after passing sometime.

19

news flash, you’re still mixed up

20

@FOK

Yes quite probably.

I can see the irony - however the waiting around for months for silver trades was a firm (and wrong) conviction it was moon bound.

I could afford to wait because I was going to be rich - so I thought!

When I finally quit trading silver I didn’t have nearly the same conviction for any market in particular so patience started becoming an issue.

Hope that clears things up.

1 Like