ABOUT ME

I am a professional who has had success in areas outside of trading. Tell this to anyone who trades for a living and they will immediately pay attention to your market forecasts............in order to take the other side of the trade. There is some validity in this approach, and up to now it would be profitable. Most people have little interest in the markets. I sometimes wish it were so with me. I don't know why, but I have been consumed with trading and markets for the past 15 years and I am still diligently working on a proper trading education. Learning to trade can be tough.

It started mildly enough of course, with my only childhood memory of anything similar being the image of my father holding the morning paper open to stock pages. He would do it quite regularly, but he would only check one stock.....that of his company, the one he worked for for 40 years. He would then calculate the value of his retirement portfolio mentally. I think he knew little of what makes a stock trade, and cared even less. In the early 90's I took my first job and promptly invested some money in a few chosen equities. These were chosen by the broker who had been assigned to me. Quite quickly I realized that he likely knew little more than me, and I knew nothing. In addition, this was in the days when it would cost $200 to make a trade. Quickly enough I could see that this was not going to work.

To my surprise and delight, soon enough there were companies willing to broker your trades for much less money, Schwabb, Ameritrade, Scottrade, etc. The cost kept going down. This was the 90's. I was single, no responsibility, good income, .........I made money. A lot of money. I was smart....very smart. I spent much of my time reading Morningstar, Value Line, brokerage research reports, and listening to a market commentator who gave his ideas on the future price action. He was dull, and not too easy to listen to, but he was correct all the time. Actually, in the end, it would turn out to be almost all the time. He told me and the rest of his radio listeners to get out of the markets around March of 2000. I had already gotten out, and I stayed out. I was going through a divorce at the time and had lost much of my interest in the markets. A divorce can do that to you. But I still listened to his analysis for some reason. Then later in the summer or fall of 2000, he predicted a bounce in the Nasdaq. He seemed quite sure of this. I was losing a large amount of money in my settlement, the specifics of which had already been defined. Now here was this guy saying that the market was going to bounce. He was never wrong.

I put my money back in the market in the QQQ. In addition, I leveraged my balance to allow for more buying power. My market forecaster turned out to be wrong. Not a little wrong,...... dead wrong.

I lost money. I lost a lot of money.

I was like a deer in the headlights as I watched my balance decline. What do I do? Do I get out now with huge losses? Do I wait for a bounce? Do I bet heavier now that the market is down even more? The problem was that I had made this investment, uh.... trade may be a better term, ....only because some guy said to do so. And now that guy wasn't talking. His radio program was only weekends, so I would have to wait to hear what he had to say.
I did wait. He said nothing.

So here I was losing money hand over fist and not knowing what to do. Surely my analyst would come to my rescue and explain what was happening and where to go from here. But he did not. He said little about his miscalculation. People would call him of course and he would respond, but to the best of my knowledge he never admitted that yes, in fact, this time he was wrong, dead wrong. Now I must admit that he never told me to invest all my money, nor did he tell me to leverage it. That was my (bad) idea.
But here I was grasping for help and his only advice was "hold"........the dreaded "HOLD" recommendation. I held. It was not good. I saw articles in magazines and newspapers that encouraged investors not to sell. I read about times like this being "the worst possible" time to sell. The problem was....I was leveraged. I was learning that leverage can be a very bad thing in the financial world. I could not sleep. I could not eat. I was lost.

My initial thought about my plan to trade was that it might prove to be difficult. I mean, I was cognizant of the fact that large sums of money could be made, likely indefinitely, if only I could solve the puzzle. If it were easy, everyone would be doing it. So this might take some time to learn, maybe a year or so.

In the beginning my motivation was strong and quite clear,..... money. The market had taken my money, and I wanted it back.

But as I thought about the money, I wondered how difficult this might prove to be. Surely others were thinking the same thoughts. But I kept reminding myself that I had done so many things before, things that were not easy, and I had accomplished all. I knew this would be like those. It might prove to be tough, but I knew that I could do it.

Where do you start when you decide you want to learn how to trade and you have never day traded before, have no connections in the industry, and really never even had any interraction with a successful trader. I knew about the stock market. In fact, I had made a lot of money in stocks. But then, I reminded myself, I lost it too. But the futures markets? I had only a vague understanding of commodities and when someone talked about front month I simply looked at them funny. Soon enough I knew that I would have to start the process of learning to trade. But where does somebody like me begin?

As I mentioned previously, my background is in other areas. In those realms, the majority of learning comes from textbooks with classroom lectures early on, and only later one on one training. The individualized training is generally at a minimum too and often the mentor is one who might not be best suited for mentoring . But books and journals are the primary means for both getting an introduction, and ongoing education. So in my efforts to learn to trade, I did what I had always done; I read books....a lot of books.

There are many, many trading books. There are books about understanding market behavior, books about charting, books about indicators, books about psychology, and books about every aspect of trading that you can imagine. Every trader that has ever made money has published a book. I felt like I read them all.

In the beginning I would go to the library and seek out the most isolated spot. I would of course have to bring my texts with me, and then I would begin to read. I would engross myself in every book. I would bring pen and paper, make notes, underline, and of course ocassionally use the yellow highlight pen for the very important details. I read for months. I learned a lot. I learned so many things that I had never known before and I even began to wonder how I had made money in the markets to begin with.

I was not trading. I was not stupid of course, I knew that I must learn to trade before I actually tried to trade. But after months of reading I began to realize that I was getting all this. I was starting to see what it took to be a trader. I was beginning to think I was ready to trade.....at least a little.

I recognized that even though I had read all these books, I might need a little hands on instruction before I finally stepped out to make the big bucks. I looked for the right place, the right person. Who would I turn to?

As fate would have it, I had somehow gotten on a mailing list for "The World Money Show". Wow. I didn't really know what it was, but with a name like that how could it lose? Linda Raschke was doing a presentation at minimal cost. It was only a morning session, but I had of course read all these books, so a morning session would be fine. I signed up.

The World Money Show that year was at the Gaylord Palms hotel in Orlando. It was nice. I was already beginning to "feel" wealthy. I went to the "Money Show". There was a lot to see, and I tried to see it all. I made my way to Linda Raschke's presentation and arrived quite a while before her. The audience would not be large, but several people were straggling into the room and though I kept to myself for the most part, I could not help but speak with a young lady who chose the seat next to me.

We made small talk for a moment or two and then she explained that she was a trader. HMMMM. My view of traders had been that of the stereotypical aggressive male, so it caught me a bit off gaurd that this young, attractive woman was a "trader". I wondered what she traded, but decided not to question her.

Her curiosity about me was less restrained.

"Do you trade?" she asked

Well......I did not trade of course...and knew I did not trade. But I Was Going to trade. Perhaps I could fudge. My honesty got the best of me and I meekly replied "Well no, but I am learning to trade". Somewhat demasculinized by the fact that she was a trader and I was not, I quickly added...."But I have read about 100 books on trading already". There. Take that.

With hardly a glance my way the young trader replied "haven't we all......".

Ouch!

About that time Ms. Raschke came into the room. Tall, blonde, nice figure....AND she was a trader. If I had harboured any doubts prior to that moment, they were all gone now. I knew I wanted to be a trader.

It took a few moments for me to get over the shock of the attractive blonde main speaker. As Ms. Raschke took a moment to get her things together and prepare for her presentation, I thought back about the comment the young lady next to me had made about my incredible book reading efforts at having read 100 books. "Haven't we all" she had said. That caught me a bit off guard. Was I to believe that each of those in attendance had been as diligent as I in their reading? Why would she say that? I got a small uncomfortable feeling in my stomach and the confidence that had accompanied me thus far, seemed slightly bruised.

I made the trip home the following day. The presentation by Linda Raschke had been a learning experience and I was soon to be placing winning trades, but I couldn't help but think about the comments made by my young trader friend in Orlando....."haven't we all". Was I really supposed to believe that everyone who was trying to learn trading had been preparing as hard as I? I chose to forget about the comments and move on into the next phase of my learning.

I had a brokerage account already set up with Interactive Brokers. I had seen Barrons rank them quite highly and my account was set. The platform (TWS) left a little to be desired in terms of utility and intuitiveness, but I.B. gave access to world markets and this was of course something that I was likely to need. I could anticipate that I might become so successful that I eventually needed to trade foreign markets to maximize profit. It was best therefore, that I be prepared.

So having read as much as I could, and having been to a seminar with Ms. Raschke, I was ready. I understood the markets and I began to trade. Then a bad thing happened. I made money. All of my techniques seemed to work. The outperformers kept on outperforming, and the break outs led to big runs.

It would take some time for me to realize that being profitable right out of the gate was a bad thing. Unfortunately, it was a bad thing. Making money led me to believe that I did in fact know as much as I thought I knew. That then led me to be a bit more unbridled with my investments. And once this happened, the inevitable came knocking. I began to lose money. When I began to lose it was as if nothing could go right. The guy who was initially making so much, now was making nothing, and was losing more and more.

In spite of my losses I had been successful initially so I knew that things would work out and that no major changes in technique were necessary. But things didn't work out. The break from balance that I had traded so successfully in the early days, now was always stopped out. The investments in outperforming stocks saw me get in at exactly the time when these stocks decided to no longer outperform. Nothing worked.

Eventually the losses continued and I had to stop trading.
But I would not quit. I just needed to study more, KNOW more about the markets.

I went to more seminars. I spent a week with Mark Cook in Ohio (who CAN trade). I bought more books.

Finally I was ready to trade more, I understood what I had done wrong. I simply had not known enough about the markets. But now I was ready. I understood more. I would make money.

I did make money.....for a while. I seemed to be consistent. I seemed to understand more and I made money. But then, eventually, I would lose again. And like before, the losses were more than the gains. So eventually, I stopped again. This time I recognized that maybe an indicator would help. I found one I liked, tested it......had to tweak it a bit to work, and I was back to trading.

My tweaked indicator failed me

I needed someone else to help me. I needed a DIFFERENT style of trading. I picked up market profile and immediately it made perfect sense. Why had I not known about this before? It was clear that I was bound to make money with this approach. I read Markets in Profile by Jim Dalton. He sure seemed to know a lot about the markets. Then I found out about a seminar he was giving and off I went. I spent two days with Terry Liberman and Jim Dalton and a room full of soon to be jobless oil traders. I learned a lot. It all made perfect sense. I traveled home from New York renewed.

With Market profile by my side I knew I would be successful. I watched the markets, I was able to predict what would happen quite often. I "knew" when a stock was going to revert to the mean. I "knew" when a breakout would happen. I made money.

Unfortunately, soon enough, I again lost money. I still did not know enough about the markets.

I traveled to Chicago and spent several days with some bond traders. I went back to a conference in Atlanta. I tuned in to every webinar made available. I read even more.

I went back to trading again, knowing this time I "knew" enough. But still, the results were the same.

I could go into much greater detail about my wins and bigger losses. I could explain how all the unbelievabe options in trading, together conspired to make me lose. But that is not always such a pleasant thing to recount. Instead, let me say that I have come to understand a few things about trading that most might not believe. One of those things is that being a better trader is most often not about knowing more about the market. It is not about using a better system. It is not about having the best indicator. Trading is mostly about what you know about, and can control about.....yourself.

Such a statement will sound ridiculous to most who read this. Those who will agree with it are those who have been there. Those traders who like me, have yearned for tips, traded too much and too often, changed systems frequently, traded without stops because they knew what the market would do,traded without a plan and then developed a plan only to ignore it, traded unprepared, traded unfamiliar markets, traded without regard to money management and mostly.....blamed someone (or something....like the market)else for the poor trading results.

I am still trying to improve, but now my focus is not on having the right charts, or learning more and more about the markets. My focus is on me. Why do I make the mistakes I make? How am I not able to manage my trades better? What can I do to prevent myself from overtrading? How can I be more disciplined?

I'm still learning!