The Trader's Academy - by Traders for Traders

I'm sure I and others have written about demo accounts in this thread, though I cannot remember exactly, so here's my view on them.

I'm sure many people reading this thread will have or are currently trading demo accounts. I traded a demo account for a couple of years before I ever placed a live trade. I was working full time, so educated myself about the markets in whatever spare time I had, and I knew that I was nowhere near ready to put on a live trade until I actually understood what I was doing, but then again, I was in no rush to achieve anything..I was in it for the long term.

For me, trading demo was great, as I could learn by trial and error, without worrying about losing money, and I knew that I would be far better prepared to face the psychological challenges of trading once I was turning a consistent profit on demo, because this proved that I did at least have the technical know how to put on winning trades, and not only to put them on, but to understand why I put a trade on, why I exited where I did, why I won a trade, and why I lost one. In short, trading demo showed me that I was capable to making money in this game.

Once I traded live, then it was a different ball game as we all know, but not completely, because even when I was kicking myself for letting my emotions get in the way, I always knew that, emotions aside, I could trade, and trade well. I had proved this to myself on demo, and if I could do it there, I sure as hell could do it live with the required self-control.

The really important thing about trading demo though is that you have got to treat it like a live account, or at least try your damnedest to do so. This means applying the right amount of risk to your account, which in my case was always 1%. Any deviation from this, so for example, applying higher leverage just to make up for a previous loss etc, and the whole thing is null and void, because this is the sort of thing that will kill a trader very quickly in a live situation. So trading demo requires iron self-discipline, because if you haven't got that trading demo, then you are not going to have it trading live either.

As always, this is just my own point of view, and I know that we all approach the markets very differently. What kept me in the game was that I was never in a rush to ' get there ' as it were. I knew how long it was going to take, and I was prepared to pay the cost, whatever that may be.

I think getting emotionally involved in trade is inevitable. It helps the trader if he knows what he is thinking and why he is thinking. If these two questions are answered correctly by a trader then trading can become a good experience. Always know the "Why I'm taking this trade?"

[quote=maverick2017;10253733]I think getting emotionally involved in trade is inevitable. It helps the trader if he knows what he is thinking and why he is thinking. If these two questions are answered correctly by a trader then trading can become a good experience. Always know the "Why I'm taking this trade?"[/quote]

and just as important.." why am I exiting this trade ?"

Yes and yes.
If an individual becomes too emotionally attached to the trade then how would an exit strategy work?

Imo..
"Why am I taking this trade" - should be part of your businessplan. You should always know what you are looking for and only act according to your entry rules. You should limit your thoughtprocess to very few things while trading.
Finding exit strategies according to your individual trading method can be really tough, but keep in mind that even highly professionals struggle with that and take it as a challenge. Nothing comes easy.

Yes. Discipline is of great advantage to a trader.

"You should limit your thoughtprocess to very few things while trading"
What could be those few things?

What do you mean when you say treating trading like business?

Typical thoughts for me:
- any news events ahead?
- is my position size correct?
- Fixed TP or should I let it run? Manual exit?


Your Businessplan is a consumption of everything you think might happen and everything you dont believe might happen. Preparation. Rules. Goals. It is like a construct for your mind to be able to act without hesitation accordingly to your rules in realtime market conditions.

For me it is like if the reason for entering a trade was present earlier then it should be present now. So, I stay in the trade for as long as the reason is there.

A lot of people say the same but how many of us have business knowledge?
Discipline comes from believing the trading method applied.

Not quite sure what you mean by this question. Emotions will always be a part of our trading, unless we're robots, which unfortunately we aren't. So the best we can do is to manage those emotions the same way we manage anything. Our trading decisions must therefore be subject to rational thought processes, not emotional ones. So for example, are we exiting a trade because it has reached a pre-determined level or some other objectively defined criteria, or are we exiting it upon impulse? Are other traders also likely to be exiting their trades at this level. or not?

If ' too emotionally involved ' means being vulnerable to the typical emotionally charged mistakes many traders make, then no strategy is going to work over the long run.

' too emotionally involved ' means taking a trade after a lot of research and thought and trade is in loss or taking a position after a series of losing trades. In such a case emotions can play a big role in determining a losing trade and a winning trade. Or suppose capital left after a series of losing trades is the only capital one can afford to use in trading. In such cases emotions play a big role because we tend to forget the "why we entered a trade".

If you are a full-time trader, you are an elite athlete, a maestro in your field, a highly trained, multi-skilled professional who has mastered his/her trade by conquering the many challenges and obstacles necessary to become one of the finest traders in the world. Just by profiting each week, month, year, no matter how much by, you are the creme de la creme..one of the best out there.

If you are an aspiring full-time trader, then you are no different except that you have yet to attain all the skills and experience necessary to make the top grade. There is nothing to stop you going all the way...only yourself.

As traders, we have to be proud of who we are, whatever stage of the learning cycle we are at. We must never allow ourselves to be afflicted by low self-esteem because of some perceived negative image we may have of ourselves or of what we are trying to achieve. Trading is a noble art, as noble as any, in that it gives those who succeed the freedom to live the life they choose, not the life others choose for them, and there can be no more noble purpose in life than that.

To those who sneer and criticize who we are and what we do, they do so only through ignorance, envy, and most likely a lack of fulfillment in their own lives.

You are a trader, so hold your head up high, and show yourself just what you are capable of achieving.

"show yourself just what you are capable of achieving."

Nice thoughts.

POSITIVE THINKING

This is massively important in life and in trading. If when taking a trade or thinking of taking a trade, you are thinking about what might go wrong as opposed to what should go right, you are going to miss trade after trade after trade. More than that, you are more likely to have losing trades if there is any degree of negativity as you enter a trade, because this means that you are not sure of the set up, there is doubt in your mind, and the end result will most likely be a losing trade.

You will have read no doubt that it is best to be completely neutral when taking a trade - you get the signal, and you pull the trigger, no fuss. That sounds great, but we are not robots - there will be emotive impulses in our brains when we take a trade whether we like it or not. What I learned to do was to cast any negative thoughts aside, and force myself into positive ones, to concentrate on what might go right and not on what might go wrong. It made a big difference to my trading.

Good morning Traders.
Good morning cat, sir.
I'm going to post now something I prepared yesterday evening, thinking it could be useful to all.
Nothing new. “Old as the hills” as Livermore said.
It's nothing more than the good “OLD SCHOOL” approach.
I preferred to post here because of the theoretical implications of my reasoning.

Double premise: Objectivity/Subjectivity. Bias vs Adaptation.

"Want what the Market wants."
- Bill Williams

"A good trader must "get rid of ego."
The quality of a good trader is located not in personal characteristics but in the talent to transcend individuality."
- Caitlin Zaloom

The attached chart “freezes” my exit point from the Market: 18.00 GMT +1.
I didn't want to be tempted by The final Countertrend offer.

The day: Market is speaking. Market is always right.

D1 was UP.
H1 was UP.

We had a test of Yesterday's Low, Rejected.
A Change of Direction (High + 1° HL – 3 Buddha)
A series of HH-HL, up to Yesterday's High.

IMHO? It was “a telephone call from Market Makers”.
Ema9 H1 offered a perfect Support all the way up...
H1 players were strong buyers!
Price at High level (12559,35) was still accelerating.

Conclusion: Obey. Yield. No clinging.

Don't think. Flow.

This is what I read every morning at the start of my new day in front of my screens.
Jesse Livermore: - "We know that prices move up and down. They always have and they always will.
My theory is that behind these major movements is an Irresistible Force. That is all one needs to know...
Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide."

Thank you Jupiter! Your input is greatly appreciated!

Don't post on Trader's Academy much these days, but sometimes a new post emerges from something that has happened or something I've observed.

This concerns the sort of people who come into trading, and which, I think, explains much about the high failure rate.

I may be mistaken in this, but with risk of over-generalizing, the typical male ( it is mostly men in this business after all, though I do personally know one or two very good female traders ) who seeks to become a trader has a pretty high opinion of himself. He knows that few people succeed in this business, but somehow he thinks he is smarter than the rest and will soon figure it out. He may even have quite a bit of early success, which makes him even more of a car crash waiting to happen, and then, inevitably, his dreams come crashing down to reality just when he thought that he was or was soon going to be a trading God.

I say this because diffident people, those who lack confidence in themselves and their abilities, are pretty unlikely to attempt a career in trading anyway. It is the person who believes they can conquer the world more quickly than anyone else who is attracted to trading in the first place, but these people are usually the first to fall unless they humble themselves pretty quickly.

Self confidence is necessary to succeed in most areas in life, but there is no place for arrogance, because with the individual who believes that he or she is bigger than the market, and there are many though they do not last long, the latter will always have the last laugh.

That's right, Sir. Good point.
I meditate for ages about the true meaning of the words “Humility in front of the Market”
that was so often the reference for the Father Founders of modern trading in late '800, first '900.

Just to try a conversation....
I would like to stimulate the readers proposing again my previous quote from Ms Zaloom:
“The quality of a good trader is to transcend individuality."

And offering now the transcription I did of the classic Intro Bill Williams in person used in his seminars in the '70s...
Here we go:

“.. the first part of this problem is that
you as a group (as a group of traders) are in the top 10% intelligence wise of the entire nation!
We're in the top category as a group.
That doesn't mean that every one of us is in there... but as a group we're in the top 10 percentile!

Most of the people who come to trading commodities have already been successful.
And that is a second characteristic of it,
the number two is that we've had previous success.

And then the third thing is that we have...
(unless you have found a broker -that I haven't found yet - who will open up an account on a credit card...)
you have to have accumulated some kind of amount of money.

So there are three things then.. 1) you're in the top 10% 2) you have had previous success and 3) you have money
and guess what that ends up?
That ends up as... “over 90% failure”

In fact the average trader coming into the market is blown out in a little bit more than three months!
If we can understand this...
then we can go a long way in understanding how to make money in the markets
and how to trade the market ….

Einstein Albert Einstein (toward the end of his life) was asked a question by fellow scientists
and the question they asked is
“What is the most important question we could possibly ask?”
And they thought that Einstein was going to ask that, say...
that something about the unified field theory which was what he was working on that particular time
But...
His answer is intriguing!
Without any hesitation he said:
<< The most important question you can ever ask is “Is the Universe a friendly place?” >>
And today the question I hope we can ask, after this is over, is ...“Is the Market a friendly place?”


I always found this Bill's approach absolutely perfect... so catching for the audience.
fti, in his thread TAF, used to say that a monkey would be a better trader than an human being.
Gann in all his book refers to the insurmountable enemy as “The Human Factor...”

So “Humility”. “Being humble.” "Observant."
The"I don't know" attitude.

I have now a certain age. I'm an ex-young boy. LOL
After these seven years as humble student of the markets, absolutely from scratch...,
(after having been, OK I must admit, a man of success in my previous life)
I BEGIN only now to see and understand the real meaning of these words.

We think too much. We do too much. We are too much.
Where this idea of "Trascending individuality" could lead our comprehension of the Markets's dynamics?
How could the Market become a friendly place?

There is much wisdom in this for us traders, because we all have a tendency to make trading more difficult than it really is. This is not to say trading is easy, I'd be a fool to say that it was, but we do make the mistake of over complicating our approach and our strategies in an effort ' beat the market '. The way to succeed in my own experience is first to understand the complexity within the market place, and then to de-construct it to its simplest formula. Only then are we able to truly make sense of it.

How true. Question is “How?”. And Bill Williams' answer is "Want what market wants!"

So, today I'm here...
Learn as much as you can about price models and price behaviour. Because knowledge is power.
Then forget all.
Free yourself and simply accept.
Only then you can find in yourself the conviction and the determination to just follow the market flow, dancing the Dance.
It's the Tao:
So the flexible overcomes the adamant, the yielding overcome the forceful. Everyone knows this, but no one can do it.
Therefore the Master remains serene in the midst of sorrow. Evil cannot enter his heart.
Straightforward words seem paradoxical. "

It's a long, long story. Surely, easier said than done.
I try everyday. Look at the chart just above. And study and do your research.
Market Structure and "You"...
and in the end, as fti says in his complex and vast thread,... it's all about "You".

The chart is there for everybody to see ... The indicators and the patterns are available for everybody to learn ... But at the end of the day, what separates winners and losers is the art of knowing when to wait and when to act ...