Two Lessons from an Improving New Trader

I received this email from an improving new trader. It’s a terrific anecdote on two lessons learned by a developing trader making progress:

Bella,

I just wanted to send a quick note to thank you for all you do to help new traders, you have helped me immensely!

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Your book One Good Trade has been a tremendous influence on my growth as a trader. In fact it was the biggest factor in giving me the confidence to get started with live trading. I have read it cover to cover a few times and some sections 10 times or more. As I have gained some experience in live trading different items standout and “speak” to me that initially did not grab my attention before I had truly tangled with the market.

Starting my intraday trading career this April I have been trading nearly everyday. My results have been steadily improving and I just closed out my 10th profitable day in a row today. Those profits are still small as I have been trading small lot sizes and still need to work on holding my winning trades for the real move but I know I am on the right track.

I know you have a large audience of aspiring traders and would like to tell you what have been the two most important lessons for myself as an at home trader. First was reviewing all of my trades after the market close, I could not believe the errors I was making in the heat of the trading day that were completely obvious when I had a clear head and no pressure. By reviewing all of my trades I have become much more effective at making decisions under fire during the day eliminating many of my early mistakes and saving myself plenty in “tuition” to the market. Second and most difficult for me was learning to obey my stops. I finally had to set a rule for myself at the end of July that if I did not obey a stop I would shut my trading down for the day. If I could have convinced myself to obey my stops from day 1 that correction alone would have made me net positive in my trading almost immediately.

Keep up the great work, and thanks again for all you do for the trading community.

Bella

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade

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6 Comments on “Two Lessons from an Improving New Trader”

  1. Hi Bella, this trader above in regard to his stops , I am assuming that he is referring to taking himself out the trade before his stops are hit huh ? I do that a lot too and find myself taking a hit when it never hit my exit R ( Risk ) target.

  2. Bella,

    Thanks for continuing to post great topics.  The letter from your reader hit home with me, since reviewing my trades has also helped me significantly.  Here’s what I’ve recently done:

    I’ve taken the last several months of trades and imported over 900 historical trades into an online trading journal a couple weeks ago.  For those who don’t have a trading journal setup yet, http://www.tradervue.com is a great new online trading journal that’s free.  I really like it after reviewing many others (free doesn’t hurt), and the reports are also useful.  Simple and elegant to use, but powerful.

    By reviewing each of my historical trades carefully one by one (and trying to relive the moment — why I took it, how I felt, etc.), and then writing journal notes and placing appropriate tags with useful metrics (grade, setup type, outcome, market conditions, target met or not, etc.), I can run reports to see what setups are working for me, how much those setups make, win/loss %, how well I executed, what type of trades are NOT working for me, etc.  To get these types of reports, the “trick” is to spend the big effort to add meaningful tags into your trade journal records. 

    As you, Dr. Brett, and others have mentioned, I want to focus on my strengths.  This journal is helping me significantly to discover what my strengths are, via facts from my actual trading results.

    Updating each trade is taking a lot longer than I expected (it’s a real grind) and I’m not quite done yet.  But with what I have so far, what I’m learning about myself is on the verge of shocking, or maybe not.  It’s now easy for me to query how I would have done if I only took A and/or B quality setups (surprisingly big money with good accuracy), how much money I lost in “choppy” conditions (a lot), how much I lost when I took a trade while in tilt/revenge mode (don’t even want to think about it), which setups work best for me, etc.

    I’m also realizing that like an elite professional athlete that continues to reviews their tapes, monitors their stats, performs their drills and practices at 110%, etc., I will also need to maintain this high level of effort to understand and improve myself on a daily basis.  This level of effort has become the new normal.

    Thanks again!

  3. agree tradervue.com is a very cool new product.  Greg did an awesome job!  awesome job by you with your work above!  keep at it!

  4. i think he was no obeying his stops.  so a stock would exceed his stop and he just would not exit.  i know a few traders like that 🙂  See blog post- When you deserve to be screamed at as a trader

  5. i think he was no obeying his stops.  so a stock would exceed his stop and he just would not exit.  i know a few traders like that 🙂  See blog post- When you deserve to be screamed at as a trader

  6. i think he was no obeying his stops.  so a stock would exceed his stop and he just would not exit.  i know a few traders like that 🙂  See blog post- When you deserve to be screamed at as a trader

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