Trading - a way to get rich slowly, or not at all

Trading Discussion
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I’m writing this on my phone, so I apologize in advance for misspellings and a lack of anything but text.

Let’s start with some background. I first came to this forum back in 2008 just as the financial crisis had hit the global economies.
I, like many others, had a clever plan - use the amazing leverage that was available in retail forex trading to use my, at that time, limited funds and grow them into wealth quickly. Pipe dream calculations clearly showed I’d be a dollar millionaire in just a year or so.

That’s not how it turned out.

The big question that I asked myself for a long time was why I failed to make it. It was basically the first time I hadn’t succeeded as planned. Bragging aside, I knew I was a smart guy, grades and the years in school had showed I placed myself in 95th percentile. Same with dental school, top student etc etc. I know it sounds like bragging, but there’s a reason I’m telling you this.

Did I fail at trading? Well, it depends on how you look at it. What I now think, is that I made most of the beginner mistakes. But I never gave up, simply because I refused to accept that I couldn’t figure trading out.

So there we are, that’s how the first few years were for me, a slow agonizing period of being all over the place, thinking several times I had cracked it, just to be cruelly proven wrong by the markets.

The good news is that I did finally manage to put things together, and hopefully now maybe I can help some of you avoid a few of the mistakes I made.

I don’t know what this thread will become, if anything, we’ll see as we go.

Anyway, the point of this first post is that being a high achiever will not automatically make you a skilled and consistently profitable trader. Trust me, I’ve learned the hard way.

I used to ignore the boring soft stuff about psychology, or if I did read it I would either lie to myself that I was already fine in that departement, or even worse I would even think that such was the case. It was not.

Like someone said; “the most dangerous thing is what you think you know, that just aint so”

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As you may have guessed, I’d like to talk about the psychology side of trading first. If that is not in balance you will make irrational decisions, override your trading rules, revenge trade, be blind to see what the markets are telling you.

So, how do we find that balance?

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At some levels, everyone’s own inherent character spills over into their major trading decisions - I mean what style of trading to follow, time-frame, level of risk, number of trades open at one time etc.

Stress interrupts logical decision-making and causes a reliance on emotional feelings rather than technical analysis or fundamental events or issues.

I have found in my regular career and in life generally, the worst periods of stress were when I knew I had to make a decision but felt it might be a) wrong or b) it was a decision I didn’t have the power to take.My answer to these problems is in a detailed but simple trading plan. I know what I will enter and when, and I know when I will get out if losing and when I will get out if winning. I have no more decisions to take in trading, I only review my positions each evening in order to see if each has closed or if I should move the stop-loss to a better price, and that’s all based on TA anyway.

Have a good day, I intend to.

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I do agree with you! After all regardless what one have read/learned/tested it comes sometimes to a moment when your psychology is tested. In such moments I believe what tommor explained is the key to sustain the pressure of your personal emotions. No matter what happens we need to stick to the plan. Unfortunately I am not one of the most disciplined when it comes to trading :frowning: We all know what we need to do but actually doing it is difficult, exactly because of the different characters and psychologies.
Anyways thanks for the thread :wink:

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Hello sir and thanks for sharing your post
interesting reading, can say to have much similarities.

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hello
Me too, it took me time to understand that forex is not a magic formula to make money fast. You have to learn a lot and learn how to learn, know how to study and many patients to become a successful trader.

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Looking forward to hearing your lessons learned Magnus! We’ve been on the same journey together and have both ended up finding what works for us as individuals so it will be interesting to hear what made it ‘work’ for you and to see how that differs or relates to my own experiences.

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Hi Matt!

We have indeed been through much the same journey. Our daily schedules makes our trading conditions different, but I think that the foundation we both use is similar.

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Tommor makes a good or even a very good point. Remove as much as possible of your active decisions by having a rule based trading plan that covers as many situations and variations as possible.

Now, that’s not news, we read that all over the web. What they usually do not say is:

All of that is pointless if you cannot stick by the rules. It was that way for me in the beginning - I would make a plan or a system and apply it. But then a while later when push came to shove and things were going against me, I’d betray the system and not adhere to its rules. Which, without fail, would make things worse.

I’m not proud of those days, I thought I was smarter and better than that, but thinking back later I came to realize that the problem back then wasn’t the trading plans or systems, it was I.

There’s this psychological experiment I read about a long time ago, but I still remember it because it rhymes well with my own beliefs. It went something like this:

The objective of the test was to see how inherent strength of character affects how well you do in life in the long run. They gathered a group of children, the exact age escapes me right now, and the experiment went like this:
Each child was placed in an empty room, devoid of distractions or toys etc. Then they were told that they could either have one cookie now, placed on a table in front of them, or if they didn’t touch that cookie for a specified amount of time, they would instead get two cookies.

The result of the experiment was that those who had displayed strong character as children and patiently waited without touching the cookie right in front of them for the reward of two cookies - these individuals succeeded much better in life financially, regarding careers, education etc.

This makes sense, my go to version of saying the same thing is - quitters never win and winners never quit.

What I realized after some time was that by constantly breaking my own trading rules, I was being a quitter. It actually made me take somewhat of a break from trading, a few months. I was very disappointed in myself as I didn’t recognize myself as the quitter sort of person.

Now, many years after, I’ve understood that it was then everything turned around for me.

That was my personal psychological challenge. I didn’t quite understand the nature of it until afterwards.

And that’s maybe lesson number one, we all tend to be blind when it comes to ourselves. So the best advice I can give is: find a partner, if possible in your physical world, or if there’s nobody suitable, somebody online. Of course, never mix your money! But be each other’s study partners.

It works the same way as having a gym buddy (I should talk, I always train alone…) it creates accountability. And that’s key. Accountability is the difference between having a teacher watching you work, or you sitting in the school library “working”… I think you all get the idea.

Some of you will have better discipline than I had when I started out, and then this may not apply to you.

Over time, as any other muscle, you will train your character/discipline muscle to the point where you don’t really need a trading buddy.

I never had one, but I’m fairly certain my learning curve would have been shorter if I had.

If you get the idea to get a trading buddy, two points I’d like to stress: Never mix financially! And if possible - get a real physical buddy, it’ll be more effective since then there’s really no hiding from each other - better accountability.

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Frankly speaking, it’s the RICH part that has really killed traders, I believe that Forex is a business and you should look at it just like that. I am doing Forex trading without thinking about Rich or Poor, as I believe if I am good enough then I will get results in my favor. But, if I over try or do anything cross the rope then it will be difficult to work out, so that’s why we got to play it out safely.

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Happened on this TED talk which is really spot on. It explains eloquently why being smart is not enough. Goes for trading just as for life in general.

https://www.ted.com/talks/angela_lee_duckworth_grit_the_power_of_passion_and_perseverance

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A great video - I enjoy looking at the various TED talks, some of them a really quite amusing too. They certainly put a spin on some of the most well believed and thought out life lessons :slight_smile:

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Thank you for your candid and thought provoking post. I am just contemplating whether to get into trading or not. I am at the semi-retirement stage in life and thinking about developing skills to generate a small income independently. I have been working through the pipsology courses and have a ‘free seminar’ with Greg Secker’s ‘Learn to Trade’ organisation coming up, where I will be tempted no doubt to make some investment to get some trading training and practical support.
I went to one of these about a year ago, but discretion and cynicism prevailed and I didn’t bite. I wonder what other people’s view of ‘Learn to Trade’ and the like is? My previous experience left me feeling that there was too much hype and there might be an element of ‘scam’ about it (forum posts I read gave mixed views on this - certainly there are bitter customers about, but not sure whose fault that is).
On reflection, if you look past the hype, there must be some benefit in getting a bit of hand-holding when starting out and some guidance about tools to use and rules to set yourself. One can learn a lot of this on-line form ‘Babypips’, forums, etc., but this may be a long route. Advice and thoughts on this?
The other factor in my reticence is a moral one. Am I comfortable generating wealth while creating absolutely no ‘value-add’ to anything (deep!)? I think I am right in saying that whenever you ‘win’ on a trade, someone else loses. I don’t feel any misgivings about this per se, as I assume the winners and losers here are people who have decided they can afford to take the risks (one is not ‘robbing the poor’). A clear consequence however, is that to be successful you have to be consistently better (whatever that means) than the ‘average’ punter. Given that there are numerous professionals, heavyweight institutions, etc. involved, that ‘average’ bar is set very high. Your only hope is there are a lot of other amateurs out there destined to ‘fail’.
So the ‘scam’, if there is one, is that organisations ‘helping’ newbies like me to get into trading are improving their own prospects by dragging more ‘lambs to the slaughter’(with their pot of savings) into the business. That being said, we all have ‘free-will’. Like you, I consider myself smarter than average, and generally cautious/realistic but not sure if I will have the right psychology. The question is whether I am deluding myself if I think I will not be one of the sacrificial lambs!

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Hi, sorry for answering so late. I’ve been to Greece and Italy for vacation. The economy is worse down there in the south of Europe, but somehow life is still better.

You ask two different questions. The first, is Greg Secker and his likes scams? The answer, without doubt, is yes. I’ve never been to one of those “seminars” but they all seem to work just like you described, they attack you the same way mobile phone vendors attack you in shopping malls. Sign now before you can think it over…

The best learning resources are trading books, there are actually many good ones. And also forums like this one, though you have to sift through a lot of noise to find the value adding parts. Of course that argument applies to books as well, but the ratio of noise to value is at least better when it comes to trading books.

Handholding is basically what institutional traders get and have all the time as they start and continue trading. They have risk calculating people, desk bosses etc that keep them in line and make sure they trade as they should. It must be a huge advantage.

Problem is that in the retail world that is simply not accessible. Period. We have to be more disciplined and go it alone. Most fail, just like most institutional traders would fail if they were in our shoes.

To use a sports analogy, it’s easier to play soccer than tennis, because in the first case you’re part of a team, a herd, you just have to run where they point and get on the bus to be driven to games etc. The tennis player has no such luxuries, he or she has to get up every day and go practise out of their own willpower. No team mates to shout at them, no herd to just follow.

However, those big institutions we compete against also have the drawbacks of being just that - big. we can run circles around them if we know what we’re doing. Being small can be a big advantage is used properly. No need to think “we can never compete with hedge funds with hundreds of quants straight from Harvard” Those funds don’t compete with us, they compete with each other. We, the small guys aren’t even on their radar. So, in fact, in my humble opinion, the bar isn’t actually as high as some would think.

The second question, about adding value, I view it more like a very small Robin Hood like project, I try to take from the financial behemoths and give to a little guy - me. Zero sum game? Yeah, maybe, it depends on view. Some say that we do add value in adding liquidity to markets. To be honest I don’t really think much about that part. The financial world is so stacked against the little people as it is, so my opinion is that of Jack Sparrow - take what you can, and give nothing back!

A sacrificial lamb you’re not, by defintion a sacrificial lamb does not know what it is… The fact you didn’t bite the Greg Secker scam tells me you have the critical mind needed. I’m sure you can make it, but it’s not easy :wink:

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Hey 099, Dude, good to see you.

The All Seeing VIPER

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Likewise! Nice to see some familiar faces around here :slight_smile: