Wednesday, May 21, 2008

How Trading Dreams Come True

There is no lack of market charlatans who promote the idea that trading is easy and that riches are around the corner. These, like all get rich quick idiots, prey upon the fantasy that anyone can have it all, without really working for it.

When I wrote Enhancing Trader Performance, my goal was to describe actual successful traders I had personally observed and worked with and to capture how they became successful. I noticed a difference between the learning curves of those who succeed and those who don't, and it was my conviction that most traders fail to reach their potential because they don't go about learning markets in the right ways.

Yesterday I received two emails from traders who were doing it the right way.

The first trader had gone through a frustrating period of reduced performance, particularly as markets had become less volatile. He made conscious efforts to adjust his trading by taking profits more aggressively and reducing his trading during periods of low opportunity. He took time to visit other traders and attend a seminar, where he learned a few trading techniques that seemed promising. The input from others convinced him that he needed to narrow his stock picking and focus on areas of greatest opportunity, eliminating lower volatility names. He did that and reported in his email that it was like "a light bulb went off in my head". He had his best day in months and regained much of his enthusiasm and optimism.

Instead of simply becoming frustrated and trading more when he was trading poorly, that trader managed his risk well and sought new learning. He adjusted to markets and tweaked his trading to find enhanced opportunity. That is what winners do, and I'm very optimistic that he will find long-term success as a result.

The second trader, an insightful contributor of comments to this blog, wrote to me of hitting a trading milestone. He went through two months of unprofitable trading about a year ago and then pulled back, studied markets, and traded actively in simulation mode. He found areas of opportunity in that way and returned to live trading in December. Since that time, he has doubled his trading account, while keeping risk moderate.

This trader was unusually good at pulling good ideas from various sources and integrating them into his own trading style and niche. He didn't try to imitate anyone else, and he didn't put making money first in priority. Instead, he focused on learning and discovering his own opportunity in markets. Because he put learning ahead of trading, he is now trading very successfully.

I do see dreams dashed among traders, but I also observe trading dreams that come true. It isn't easy; it requires ongoing learning and effort. My two correspondents are a shining reminder to me--and hopefully to all readers--that success in any life endeavor is possible if you find what you love, what you're good at, and devote yourself to building skills through structured practice.

RELATED POSTS:

What Makes Expertise

A Look at a World-Class Trader
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8 comments:

Ryan said...

Doc,

Thanks again for another inspiring post.

Dgov

itrade4real said...

I found this statement, "This trader was unusually good at pulling good ideas from various sources and integrating them into his own trading style and niche.", particularly important. This trait, combined with decisiveness, are the most important in a trader's growth. This has been my observation many times over the last several years.

itrade4real said...

I've found the following statement to be especially true in my own experiences, "This trader was unusually good at pulling good ideas from various sources and integrating them into his own trading style and niche." Combined with decisiveness, this is a winning combination.

Marc said...

Hi Brett,

Thanks for your insight. It seems that psychology plays such a huge role in trading. I started seriously trading in...August 2002. Now you can guess that I had it easy until last year and you'd be right. It seems that experience is the best way to learn lessons.

Thanks,
Marc

hilowtrader said...

Being an independent trader I like networking and meeting other traders. I find this is very beneficial to my trading as we can bounce ideas and strategies around. If either of the 2 traders in the post want to contact me that would be great. Or anyone else that wants to talk trading can contact me at hilowtrader@gmail.com.

-Ryan

Salvador Diablo said...

Thanks for the post. I started trading (as a side, I still have my day job to pay the rent and electric bill) last July and had an early run of good luck. As volatility collapsed and trends I was following went in the toilet lately (I was slow to recognize the slow motion rally), I've been having second thoughts about trading. After adjusting my strategy and pulling back from making trades things have looked up slightly this week.

This post definitely hits the spot and helps to encourage me to keep learning and trading despite a recent speed bumps.

samlostyforyou said...

Don't give up guys or gals. I highly agree with one of the comments about networking with other traders.

I know without a doubt I would not be where I am if I did not know people who make their living from trading. It really is the difference between being on the inside and the outside.

Another great point was the one about getting ideas from others and putting your own twist on them.

Those that make their living from trading can help you get your focus off stuff it shouldn't be on. This alone can save you so much time.

One networking method people may want to consider is meetup.com, and meeting up with other traders in your city.

hrgreen said...

Thanks for the post. My experience is in line with this post. My trading has improved by leaps and bounds. I pulled a variety of stuff together from podcasts, your blog and other blogs. when it all fit my style and my success ratio began to improve my confidence improved. But the biggest contribution was the 2 months I spent doing my own statistical study of the markets and that allowed me to quantify what I was seeing as working for me. I integrated my actual trades and my algorithm which allows me to focus on one or two set ups that work... Great stuff.. Thanks Brett....