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Gav's trading blog - Perseverance, Consistency, Confidence

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My dinner conversation with a new trader

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Dinner conversation with a new trader
A Dinner conversation with a new trader

I do not normally discuss or talk about my trading outside cyberspace. The longer I traded, the more I feel uncomfortable talking about it. Maybe, I am just being lazy to explain ‘what is currency trading…bla bla bla’ or maybe I am just a person who is really bad in explaining thing clearly 🙂

Conversation with a new trader

I was having a great dinner at my friend’s place. I still miss the delicious roasted turkey, baked rice, sweet potatoes, etc 🙂 One young gentleman from India mentioned that he is interested in learning Forex trading and consider taking some expensive trading courses. He saw his friends playing with Fibonacci lines, indicators, etc (wow, he knows these terms..) which is accurate 80% of the time. I kept quiet. I really did not want to get into the discussion. However, one of my friends who knows I am trading actively pointed him to me. Oh well…

In the hindsight, probably I was not too friendly to him. My ‘advice’ to him was:

“Yes, I am trading currency actively. However, I do not teach. The risk of this business is too high, so I do not encourage young people to go into that. I am in this business long enough to tell you that. 90% of retail traders failed. I am a little lucky to manage to earn some small money. But, seriously, I really don’t encourage”

Looking at his face…I know my words are not encouraging. ‘Go and try demo accounts, make sure you are able to make some money there, then only start thinking about forex trading’

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What kind of advice is this? I had just given a cold blanket to a young trader wannabe. My bad.

I am not sure if I did the right thing. He might probably go for some expensive trading courses and start with his friend’s 80% accuracy system. That’s not my problem. He might even think I am being arrogant by not sharing anything with him. At least, I did not commit a sin that by telling him, ‘forex is a wonderful 24-hour market, where you can make money anytime, anywhere you want’.

Well…I think I did the right thing after all.

The lesson here? Don’t ask Gav out for dinner and talk about trading.

This blog post was first written back in June 8, 2009. I review it and repost it again as I thought it might be useful to new traders.

If you really keen to learn trading, check out my posts in the Back to Basics of Trading series.

Next trade is more important

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I was having a walk after buying food from the supermarket with my fiancee.

The next trade is more important

I told her about my recent trades, I was pretty happy with my performance. She smiled and told me ‘ It is good, but the next trade is more important’.

This gives me some thoughts. Exactly, the next trade is always more important. And the very next trade has totally nothing to do with our recent trades which we turned a profit or loss. However, human natures make us think it may. We will end up with overconfident, or timid when making the next trade.

Forget about your past trades. Keep the focus on the price action, and the next trade is always more important. You have to give the best performance for the next trade, it might not be perfect, but it will be your best shot!

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Burn the boats

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Here is the latest addition to the “Videos worth watching” collection.

Burn the boats! by Andy Andrews

In February 1519, Hernando Cortez set sail on the final leg of a voyage that was to take him from Cuba, a stopover, to the shores of the Yucatán. He commanded 11 ships, with more than 500 soldiers, 100 sailors, and 16 horses, bound for Mexico to take the world’s richest treasure. The precious jewels, gold, silver, and sculptures sheltered on this limestone peninsula had been hoarded by the same army for over 600 years. As they listened, Cortez leaned in and said three simple words that changed everything: “Burn the boats.”

Really Simple Rules to kick start your trading year

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387432527Not another blog post of some glorious trading rules. But, here are couple of things that I have learnt (some of them, in the hard way) from the past. So , this blog post is really meant for myself as constant reminder, and maybe, help some of my 13 readers.

Stop Changing approach, Give yourself some time.

I shall admit that, I had this problem.  One of the key “discovery” of mine was really to stop changing, stop trying to “improve” something. Stick to one, during good time, and bad, master it, journal, repeat and repeat. You need time to master a skill, you need time to master a strategy, in other words, you need time to be a master of something. Stop changing approach, get good with it. You need data to analyze, you need trading records to evaluate, constant changing your approach gives you nothing to work on.

Journal it. Give yourself a chance to grow.

Face it, your memory sucks. You thought you have learnt the lesson, but after a couple of weeks, or months, memory fades. Write it down, record them, like it or not, just do it. You will need it later. Again, you will REALLY need it later. Be as detailed as possible.

Stop micro managing your position. Give your position time to work.

Give your trade time and space to develop. As matter of fact, in my day trading, I prefer let the target hit, or let the position stopped. Taking partial profit, move stop to break even etc hurts your long term expectancy if you don’t know what you are doing. Do your math, before implementing these strategies. “Feel better” is not a position management strategy. You can do better than that.

When you are not a master, stick to one market.

Even a season professional focuses on limited number of markets during the session. Face it, if you can’t make money focusing one market, your can’t make money looking at 2 at the same time. The “afraid of missing out” symptom will make you miss out more. Stay focus.

That’s it. You can always come out with another long list of rules (who doesn’t love trading rules? They are cheap), the key is really be a master. Start with the simplest thing and master it.  To end this blog post, here is the quote from Bruce lee:

I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.

Good trading.

Coffee thought: Learning to drive and trading

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Here is something I thought might be helpful to some new traders.
My wife recently started her driving lesson. She is very keen to drive, but lack of confidence (and experience). Last evening, before heading out for grocery shopping, I thought it might be a good idea to let her drive while the traffic was low at that time.

She replied ” I will try later when I am more confident, and ready”.
My immediate reply was ” You will never be ready if you don’t drive”

How much screen time, readings, or even demo trading do you need before start live trading? It is good to get yourself prepared before investing your money in the market.The problem is, you will never be more ready, there is no “Right time” to start trading. I am not discounting the importance of getting the basic knowledge before start, but sometimes, we take too long to take the first step. Experienced traders will tell you, the real learning experience starts from live trading.

While I can’t promise you profitability in trading, rest assured you will discover something new every single trading day. Regardless how many books you have read, or how much time you have spent backtesting, you will be confronted with dilemmas when market moves against you swiftly, or it grinds you to death, or punches you on face with a series of losses, or it gaps so much in your “predicted” direction that makes you want to kill yourself for exiting too early etc.

You thought you are a disciplined person, maybe not. Market will tell you that. You thought you are patient, maybe not, market will test your patience. You thought you are a calm person, market will make you lose your cool soon.

The point is, you can’t buy, read, watch these experience. Put your money on the table, enjoy the challenge, learn from the challenge.

So, hope this small thought helps some of you. Meanwhile, I am going back to make sure she starts practicing driving now.

Random trading thoughts : LOCATION LOCATION LOCATION

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I have been putting in a great deal of time and effort in futures trading lately. From refining strategy, writing plans (scrapping plans), back testing (not your fancy automated testing, I basically replayed markets), setting up accounts, negotiate commissions etc.

The intensive process has almost burnt me out sometimes, but it is also a good chance for me to refer back to my old journals, some worth-reading trading books, and also do some deep thinkings about things.

So if you start reading some random short posts with some trading Craps/Wisdoms from me, you know I am working hard.

Anyway, here is something in my mind when I was back testing.

LOCATION LOCATION LOCATION

20131101_180316In case you haven’t noticed, trading is very similar to property purchase or development, it about Location, Location, Location. (Of course, during crazy market cycle, like what is happening in Australia right now, properties at some waste lands, or crappy locations, can also be sold for a couple of hundreds thousands, who are those buyers?!, really.). But, we are looking for consistent result, and long term prospect, then location is a key consideration. This is common sense.

Would you build a house without considering the location and the surroundings?

The same applies to trading. Why would you want to trade your freaking, holy-grail like pattern in any place? Do you wonder why did your favourite chart pattern stop working? Maybe a quick refer back to your trading journal might help. Pull out the charts, figure out why it failed.

Sometimes, when things get complicated, I like to refer back to the basic. How to make a trade? The simple rule on the first page of my trading journal is Location, Path, Management. I think you can guess what are these 3 words referring to. If not, you need to spend sometimes to think about them before making your next trade.

I hope this short post gives you some food for thought.

Until next time, trade well.