Getting Into Trading Shape: A Trader’s Story

Hi Mike,

September 1st 2013 makes it three years that I have been trading full time. I’m writing this email to seek your experienced trader’s counsel. I don’t have any job and I’ve been thinking about my experiences trading, which for the most part have left me bitter. You must be wondering how I’m still continuing to trade after three years of non-success. Well, I have a wonderful family that is supporting me financially; I’m only 24 years old. It’s not that I’m dependent on them each day, but some months when I’ve been down then, yeah, they support me.

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I have a volatile pattern of P&L and it is net-negative. I am being truthful in this e-mail. I have read your books and I’ve been trying to imbibe your lessons, although I have always ignored the basic principles which you have mentioned in your books and headed towards strategy development without any pleasant results. The only thing I have accomplished is “top notch technical analysis skills minus the execution”  which translates to bulls***.  I have managed money for my college friends and I gave them decent returns and even now I am running a spread trading fund for my sister’s funds. I am constantly learning new things in the markets, but I don’t have rewards to show for any of it since I am net-negative for my own funds but positive for other people’s funds. You mention those who are serious about trading should seek to work in a prop firm.

In India I couldn’t get in any of them as they recruit fresh graduates and not net negative P&L guys even if they are more passionate than the majority of those who do apply for such positions. I have ignored a lot of relationships and my health to find the “elixir” of profits in the market to no avail. I feel I have wasted years in “predicting” rather than “participating”. I did an experiment to document my analytical abilities and the shocker is I am “right” a lot and despite that I am wrong in the bank statements.

One night last month I woke up in the night so frustrated about:
a) No breakthrough in my career
b) Struggle with obesity. Well, I weigh around 134 Kgs, 185 cms is my height
c) 24 years old with a high BP
Something clicked that night which made me make a lot of changes. I diagnosed myself with “indiscipline & having doses of unrealistic expectations”  which was ruining every facet of my life. I think the main problem with me is that I don’t have a targeted approach to achieve realistic goals. I hope to change these anomalies. Another thing I decided was to not try too hard to find a trading job (I know they won’t hire me unless I do an MBA. Passion is irrelevant here truth be told.)

In the last 31 days I have managed to lose 10 kg weight, control my BP. And I have taken body building as a sport, which is making me disciplined in facets of life other than trading. I was so engrossed in systematic discretionary  trading that I failed to exploit risk/reward opportunities by sticking to lagging biases thanks to the wonderful technical analysis tools. I have decided to do things I consider myself good at.

a) The “Mush Trade” you have mentioned in your book, if big offers get lifted I stay long till I see signs of bid hitting.
b) I have removed everything from my chart (will enclose the pic), unbiased  breakout momentum intraday plays (basic setup along with the tape, nothing fancy) 

All the things I am not good at I will stop doing them. These approaches were bad for me as a discretionary trader as I keep doubting myself. But that that doesn’t mean they are bad approaches. If automated, my “bad approach” has potential to churn out rewards. I don’t want to burden my parents  as they have already done so much for me. Earlier I was taking multiple timeframe sync trades, but algorithmically “letting winners run” is easy. But as a discretionary trader, it’s very very hard for me as I was covering losses and not maximizing winners, spending every moment afraid to give up gains.

Earlier I was doing positional trades/spread trades/intra day trades, and it was so haphazard that I feel it was pure lack of discipline.

Just like I have a blog for analysis/health, now I will start another for trades starting Monday (9th September 2013).

My goals are:

a) Only breakout trades & “mush trade” during sideways intra ranges and nothing else.
b) 1 lot for 1 months & additional 1 lot for loading up on promising R/R setups
c) Positive 1 month net P&L
d) 2 lot for 2nd month & additional 2 lot for loading up on promising R/R setups
e) Positive 2 month net P&L
and so on…..

Mike, since I have no experienced-trader mentor I would like to discuss my performance for feedback once a month from you. Your insights would be appreciated a lot. Thanks for taking the time to read such a long mail.

@mikebellafiore

In trading, first comes a solid foundation. You must learn how to manage risk, how to think like a pro, how to review your work, learn which types of trades make the most sense to you, etc. Too many first search for trade strategies without any base to trade them properly. What good is a trade strategy if you cannot trade?

Taking one more step back, before developing a solid foundation often comes working on yourself. In The PlayBook Rudy is an example of one of the smartest I ever trained but needed to work on himself before he could succeed at our sport. If you are not patient this will come out in your trading. If you easily become frustrated you will lead the desk in broken keyboards. The market places a mirror to you as a person.

You are on the right track here. Becoming a more disciplined person will help you become a more disciplined trader. Keep archiving the setups that work for you. Find more of them now. Trade them more often with more size. Contemporaneously add new plays that make sense to you.

The way I am trading today will change in a few years. It is the way I think, the way I manage risk, the willingness to adapt that helps me sustain. Even fully automated trading systems require daily tweaking. It is your trading foundation that is most important not a set up that is working in this market, in the product you are trading.

Keep working on your trading game!

Related blog posts:
Two Lessons from an Improving Trader
What is the Best Preparation to Be a Trader?

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade

The PlayBook

no relevant positions

4 Comments on “Getting Into Trading Shape: A Trader’s Story”

  1. Great honesty, perseverance and self awareness. Imagine your castles in the sky, which is where they should be, but put in the foundations before starting the real build. Or buy a lottery ticket.

    I don’t know how you manage to trade comfortably with other peoples money alongside your own struggling trading. For me this would be immensely stressful.

    What I’ve found works best is only a few on screen hours each day, on the UK open. This doesn’t make me into the best trader I can be,(yet) but I am more relaxed, consistently profitable – albeit in a small way – and consistently building financial and psyche capital. Anyway there are other parts to life which need attention. I am twice your age, don’t really need more money, but love the trading game and seeing myself getting better. I intend to keep going to find out how good I can get.

    Archiving my best set ups and trading only when they appear is without doubt the single most profitable step I’ve made in the past 6 months. Thanks in no small way to Mike’s constant harping on and on about it in this blog, OGT and The Playbook. All the mentoring you need is there if you listen.

    I agree with Mike that creating discipline in non trading aspects of life is important, for many reasons, not least because it builds psychological capital. That helps you in so many parts of life.

    Keep on keeping on.

  2. The fact that you started weight training/loosing weight is an excellent sign…I have no scientific articles to point to , but my gut feeling is there is a strong correlation between “physical” discipline and trading discipline…good luck.

  3. Still, new comers to this sport are not willing to put the money for their foundation and mentoring, no wonder they will not step forward. If he just sum all the loses until now and compare it to a foundation + mentoring course + the later normal losing stage, he would have put the money to learn better.

  4. One more thing, he should be back to the demo until he is consistent with his result.

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