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     davkell
Member
Username: davkell
Post Number: 537
Registered: 07-2004
Rating: N/A
Votes: 0
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| | Saturday, September 15, 2007 - 09:50 am: |  
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One of the strong points to good trading that is spoken of by many of our favourite authors/traders is the fact that one should focus on the trade, not on the money.
I believe this point should be taken into account by all of us small time traders trying to find their way in the market, as it is a positive aspect that may assist us in reaching our goals in the market.
I have come to this conclusion by my CFD trading with a small account. The wins (and losses!) are pretty small in dollar terms (especially when sticking with proper money management techniques minimising Trade Risk to 5% or less.) But when you focus on the success of the trade in terms of your system, then you become accustomed to trading via system rules and rewards, and forget about the monetary reward.
I think this will be of great benefit when our trading levels reach the levels of a professional trader. You will hopefully still be focussing on the trade outcome..... the monetary reward will flow in automatically.
For some thought.
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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eric
Member
Username: eric
Post Number: 139
Registered: 09-2006Rating: N/A
Votes: 0
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| | Saturday, September 15, 2007 - 12:15 pm: |
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Dave, a very good post. I have learned that lesson many years ago and will always stick to it - small or large trades.
Eric
Time frame: as long as it takes
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ingot54
Member
Username: ingot54
Post Number: 1935
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Monday, September 17, 2007 - 02:30 am: |
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That is an excellent principle Dave.
But does it/will it hold when the positions sizes build up?
For example ... trading CFD's with $250 at risk in a $4000 position or $2500 at risk in a $40,000 position?
The figures tend to make us wobble at the knees, yet the method is perfectly identical to the smaller example. (By the way, I would not take such a highly leveraged possie - I would probably look at 60% leveraged positions.)
But you get the meaning I hope - if the method is right, it should not matter too much about the position size.
These things need to be elevated gradually in order for the emotional brain to gain confidence in the intellectual calculation.
Would you agree?
Eric? I would also value your view.
Keep Smiling - Don't look back
Trading style: Chartist Artist _ Breakouts and Shakeouts.
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lafee
Member
Username: lafee
Post Number: 704
Registered: 04-2003
Rating: N/A
Votes: 0
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| | Monday, September 17, 2007 - 02:43 pm: |
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Downside to 1000k account is 1000k. Downside to 5k account is 5k. It's much easier to find 5k if you wipe out than 1000k.
You should risk a higher % with a small account. Even if you have to fail a few times, you are more likely to reach your goal to be professional sooner.
The practical trader will always beat the academic.
Cheers Lafee
(Message edited by lafee on September 17, 2007)
Don't ask an academic if what he does is relevant
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eric
Member
Username: eric
Post Number: 142
Registered: 09-2006Rating: N/A
Votes: 0
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| | Monday, September 17, 2007 - 06:31 pm: |
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Ingot, concentrating on the trade instead of on the money works as long as you have a trading plan, stick to your stop loss and don't put more than a certain percentage of your trading capital at risk. But start small and you will get used to it.
Lafee, you said:
Downside to 1000k account is 1000k. Downside to 5k account is 5k. It's much easier to find 5k if you wipe out than 1000k.
I don't quite understand what you mean
Eric
Time frame: as long as it takes
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lafee
Member
Username: lafee
Post Number: 705
Registered: 04-2003
Rating: N/A
Votes: 0
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| | Monday, September 17, 2007 - 08:24 pm: |
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Eric,
Say you have a low paid job. It is feasible that you can save 5k in a relatively short period of time. Even though that money might represent a large percentage of your total net worth.
Because it is easier to save (obtain) you can justify being more aggressive in your trading. 1000k is a lot of money for most to be able to save. It is more valuable than the mathematical factor of 200.
To illustrate further, consider one can invest 1000k in a bank term deposit and survive on the interest.
Cheers Lafee
Don't ask an academic if what he does is relevant
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davkell
Member
Username: davkell
Post Number: 538
Registered: 07-2004
Rating: N/A
Votes: 0
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| | Tuesday, September 18, 2007 - 08:16 pm: |
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Ingot;
Yes, the numbers might start to wobble your knees but the principles should still be the same.
A 2R profit is a 2R profit, regardless if your R is $50 or $2500.
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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smallworld
Member
Username: smallworld
Post Number: 649
Registered: 01-2004Rating: N/A
Votes: 0
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| | Tuesday, September 18, 2007 - 09:21 pm: |
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Is climbing Mount Cook the same as climbing Mount Everest?
The principle could be the same? But dont kid yourself that just because you've done Mount Cook, you're equipped for Mount Everest. it is a good start, but it is not the same thing.
Rugby is just a game, it isnt a matter of life or death, it is more important that that
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eric
Member
Username: eric
Post Number: 143
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 09:37 am: |
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small world, it all depends on your frame of mind. Keep the risk to a reasonable percentage of your trading capital and your thinking should adjust to OK.
If you risk the rent money, sure you will be stressed and can't sleep.
Eric
Time frame: as long as it takes
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smallworld
Member
Username: smallworld
Post Number: 650
Registered: 01-2004Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 11:36 am: |
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Eric
it all depends on your frame of mind."
That I agree with. Climbing Mt Cook is not better or worse than climbing Mt everest. It all depends on your mind set. Similarly, trading with your pocket money is not better or worse than trading for a living. But if you are wanting to be a trade for a living trader, trading with only pocket money is not the same.
Keep the risk to a reasonable percentage of your trading capital and your thinking should adjust to OK"
I think the original principal of this posting is focusing on the trade and the money looks after itself, a principal that I agree with. However, while its easy to focus on the trade when you're playing with your pocket money, you havent tested yourself enough to know you have the required conviction to do the same when you're trading for a living, when the chips are down. You might know a reasonable percentage risk of your pocket money is, but you probably dont know what that should be when you upscale your capital, or worse still, you think it is the same, only to find out the hard way later on. Your position sizing will have to be different, your slippage will be different as well.
People who have backtested their systems have at least a system they could trade rightaway, but discretionary traders would have to learn to modify their system in real life trading, as well as mastering the necessary psychology as they move off the play pan to the playing field.
Rugby is just a game, it isnt a matter of life or death, it is more important that that
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eric
Member
Username: eric
Post Number: 146
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 11:59 am: |
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We all have to modify our trading plan to fine tune it. Just watch your psychology, that is the secret.
Eric
Time frame: as long as it takes
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lafee
Member
Username: lafee
Post Number: 706
Registered: 04-2003
Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 01:57 pm: |
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Your psychology is your ability to be rational. To be rational your focus needs to be on your current situation. There is a time when all mechanical systems fails. Believe me I know, I've been through it many times. It is where the R concept fails.
Trading is not that easy or simple.
Cheers Lafee
Don't ask an academic if what he does is relevant
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eric
Member
Username: eric
Post Number: 147
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 02:28 pm: |
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who said that trading is simple
Eric
Time frame: as long as it takes
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smallworld
Member
Username: smallworld
Post Number: 651
Registered: 01-2004Rating: N/A
Votes: 0
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