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     ingot54
Member
Username: ingot54
Post Number: 1568
Registered: 05-2004
Rating: 
Votes: 1
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| | Thursday, August 10, 2006 - 09:14 pm: |  
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Recently I have been having a long, hard think about what I am doing with my involvement in the stock market.
When the 11th May correction ushered in the Bear Market (still waiting for others to call this thing by its name), I took some time out, waiting for conditions to stabilize.
Since then, I have had a couple of trades, mostly going through to my stop loss points, but only two actually turning a profit.
This is not why I am involved in this.
When I looked at learning to trade stocks in March 2004, I was as green as grass, and today, I have the exact same feeling - I'm just fodder for the markets.
Sure, I can speak the language, and have actually made a couple of very good trades.
Initially I crawled all over this site, soaking up all that I could. I read posts and links, contributed and shared, researched and even tried to re-invent the wheel. Remember the Rainbow charts - eventually I found that the Guppy MMA's were fairly similar.
I have bought over 40 trading books, and borrowed at least that number - closer to 60 - from my library.
I have crawled over the Internet, saving links, and printing out reams of information about candles, indicators, methods, strategies and trading plans.
I have about 60 days reading stored up in private emails from knowledgeable traders like Bundy, Snifter, and a host of you folk reading this, and others who have since moved on.
Sound familiar.
Today I am faced with the reality - not of having failed, because I have not given up. I am faced with the reality that I have either something more to learn, or something to let go.
It's not for lack of passion, or ability to understand, though I am not up to some standards aptly displayed on this board.
If I had to name a single quality which I have yet to master, it would have to be DISCIPLINE
Yet I feel it is more than that.
I have been to a very good coach a couple of times, both sessions of which did immensely help my approach, and kept me out of trouble, as well as getting me in to some good trades.
I am not up to trading the current market conditions ... yet.
So, what to do.
I am no quitter.
I am going to go back to square one - take out all those books, and read them with the eyes of someone who is hungry to discover what was missed the first (and in some cases, the second and third) time.
Do I know what I am looking for? No!
Will I find it? I don't know.
I am not going to settle for a mediocre approach, mediocre success, and will never settle for failure.
In the meantime, I continue to read your posts, and enjoy the participation.
Keep the good stuff coming - I'm one of your fans - all of you. 
Keep Smiling
Trading style :CFD's predominantly long term.
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peter1
Member
Username: peter1
Post Number: 87
Registered: 12-2005Rating: N/A
Votes: 0
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| | Thursday, August 10, 2006 - 10:39 pm: |
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Ivan, you have my support and I know the support of most of the forum contributors. We have all felt the same way at one time during the journey to find what works for us or should I say what we want to work with. You know enough about the way the market moves and you should know what methods appeal to you. For example, you know that the current market volatility and lack of trending are not suitable for your current methods. There is nothing wrong with being out of a market that doesn't suit your trading style. In fact it is the correct thing to do.
You have to wait for conditions to suit. Will you be able to recognise when the conditions are suitable? If yes, then no problem go fishing. Oh, you have done that already. So you can wait for the right conditions and do nothing or you can research some methods that might be suitable for these conditions. I think that the market will stay volatile forever espec. as cfd trading becomes a significant part of the daily volume (25% in UK). I am sure some of the ol'timers will say that the market has always been volatile.
If you can't recognise when the conditions are favorable then you had better work on this before conditions do change. The best way to know if the market conditions are suitable is seen in your trading results. If the loses become more frequent then lower your position size until the frequency of wins increases. I presume that you have reached a critical level and have stopped trading as your money mgt has dictated.
So what are going to do now? Re-reading 40 books will pass the time but I don't think it will help much. Using the 80/20 rule, only eight books and allowing for the duplication in most trading books, four books will be sufficient. Which four is up to you.
Enough empathy. Trading is one on one warfare. The one on one is against yourself! It is a tough business and 80% of the money is made by 20% of the people. Which side do you want to be on? If you don't get your psychological act together, then seek professional help.
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smallworld
Member
Username: smallworld
Post Number: 474
Registered: 01-2004Rating: N/A
Votes: 0
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| | Thursday, August 10, 2006 - 11:13 pm: |
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So, what to do
Go back to your coach, ask him to tell you your blind spot, and be coachable!
Be prosperous
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vermante
Member
Username: vermante
Post Number: 582
Registered: 11-2002Rating: N/A
Votes: 0
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| | Friday, August 11, 2006 - 08:03 am: |
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Ivan
Leave the books on the shelf . What you now require is some strategic thinking time . Commit to paper one or two trading strategies and then work hard to make them winners.
Cheers
Vermante
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mosaic1996
Member
Username: mosaic1996
Post Number: 1384
Registered: 01-2003
Rating: N/A
Votes: 0
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| | Friday, August 11, 2006 - 01:41 pm: |
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Ivan,
A Strategy
I agree with Vermante in that you need too take a broader view first to get a base idea of what type of system suits you.
I too read many, many books. Fortunately I had a fairly good trading track record when I started reading books. For this reason it was fairly easy to determine which books/ideas would add value to my approach, and which ones wouldn't add any value.
Possibly your problem is that you have too many incompatible/inconsistent ideas floating around in your head.
I would suggest that you select a basic approach that suits you, and then read books that cover that approach, and seek out IC members that have a similar approach.
Research member's track record on IC to select competent mentors. Don't rely on what they say, just because it sounds right, nor select them because you like them socially - this is a business not a social club. If they don't post charts, you can't assess their competence, so be sceptical.
You mentioned Snifter as a possible model. OK, if his approach can work for you, then read Active Investing by Allan Hull, and possibly Weinstein; suck up to member like Stevo and TonyM as they have similar approaches. Stevo and TonyM may be suffering a bit in this market, but you never know.
OK to sit it out
As Perter said, if you are a bull in a bear or choppy market, then the best strategy is to sit on the sidelines.
CFD leverage
Stay away from it. If you are not willing to take this advice, the rest probably will not help either.
Cheers,
Mosaic
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davkell
Member
Username: davkell
Post Number: 452
Registered: 07-2004
Rating: N/A
Votes: 0
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| | Friday, August 11, 2006 - 03:10 pm: |
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I've taken the 'clear the desk' approach to my trading. I've had all the books, all the internet links, emails filling my inbox everyday, attending all the FREE seminars, downloading all the free trading advice etc etc!
Information overload!!!!!!!!!!!!!!!!!!!
I've done a virtual clearing of the desk. I've dumped many of the links from my favourite's folder and am slowly cancelling subscriptions to many trading sites. My books are still in the bookshelf for reference, but won't be buying any more too soon. I'm going to attend my ATAA meetings still, because it is a great way to keep in touch with like minded individuals, and information received can easily be sorted into what's relevant to me and what's not.
Then (when the capital base increases sufficiently!), it is the KISS approach. Keep it simple stupid! Define my rules, test my strategies and then implement them. And stick with the rules, give the strategy time to work and hopefully reach the ultimate goal of becoming a successful trader.
"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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chart_rider
Member
Username: chart_rider
Post Number: 186
Registered: 01-2005Rating: N/A
Votes: 0
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| | Friday, August 11, 2006 - 07:01 pm: |
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Ingot
You haven’t fully defined what the problem actually is. Perhaps that is a good place to start - to define the problem to yourself - and after two years you should have sufficient historical information to work with.
Firstly, is the problem your system, yourself, or a mixture of both?
Evaluating your system:
If your trading actions and results are not yet in a spreadsheet, then that’s where they need to go.
Analyse the mathematical outcome of the two years of trading by calculating, most importantly, the win / loss ratio, average win / average loss size, maximum drawdown size, maximum consecutive winning trades and maximum consecutive losing trades. Other secondary stats may be derived from these, such as expectation per trade, profit factor and so forth.
The validity of such an evaluation depends upon your system being well defined and your prior adherence to the system rules. If neither of these requirements are met, then there may be a need for more emphasis upon self evaluation.
Evaluating yourself, and compatibility with the trading plan:
You mentioned an issue with discipline. Is this a case of the trading plan being well defined, but a failure to follow the rules 100% of the time? If so, is there something about the trading plan that makes it hard to follow, such as excessive risk - trade size too large, stops too wide, stops too narrow…….?
It may be necessary to scrutinise each trade, one by one, write down the problems encountered each time and try to determine a common cause. Only after the cause(s) is known will it be possible to develop an effective rectification plan, be it re-design of the system or re-alignment of your psychology. There are various ways to achieve both and this is when reverting to books, tapes and so forth can help. To jump into a bunch of books before proper analysis is carried out will (I believe) divert your focus to the wrong areas and waste the valuable information available from the past two years.
It is important to keep a high level view when evaluating trading performance. The past three months are a blip in the big picture and they will, for many traders (including myself), constitute a drawdown period. However, that does not mean systems suddenly require updating, as drawdown periods are a normal part of the overall scheme of things.
CR
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mosaic1996
Member
Username: mosaic1996
Post Number: 1385
Registered: 01-2003
Rating: N/A
Votes: 0
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| | Saturday, August 12, 2006 - 09:12 am: |
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Ingot,
I agree with CR that collecting performance data is very informative.
Whilst CR doesn't mention tracking your Equity Curve, I suspect that he would also track it.
I would add annualised return by trade to CR's list as it gives insight into time/opportunity cost considerations.
I have always collected some basic data (mainly equity curve/net assets), and closed trade data (including percent return) primarily for tax purposes.
I started to analyse my performance in more detail about 18 months ago. This analysis allowed me to identify weak links/areas of under-performance in my approach. Once I had identified the problem/opportunity, I was able to improve my performance significantly.
CR also mentioned that draw-downs are part of the game.
To put this into perspective.
a) the market is off about 2.34% this financial/tax year
b) the market id off about 7.5% from the peak close
In my case
a) I am up a little (paid wages only) this financial year
b) I am down approximately 15% from my equity curve peak (which occurred roughly the same time as the market peak)
I aim to outperform the market by a good margin, hence I will sometimes come off by a larger percentage than the market. I consider this a normal part of business.
Whilst, you believe this is a bear market, I believe that it looks more like a consolidation. Time will tell us who is right.
Clearly my approach wouldn't work if I had a leverage factor of 10 as I would have been wiped-out.
Cheers,
Mosaic
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ingot54
Member
Username: ingot54
Post Number: 1570
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Saturday, August 12, 2006 - 11:10 am: |
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Firstly - thank you all for your responses here. I am very reassured because some of your suggestions have both confirmed what I am already doing AND given me stimulus to examine new ideas for trading.
The general consensus is that returning to books really is not the answer. I tend to agree now, but initially thought this would help. I wondered "Did I miss a key point?" Now, I don't think so. I know that I have everything I need, right here in my head, right now.
My strategy is to look at strongly trending sectors, and find ASX 200 stocks within those sectors (bullish or bearish - no problem) which have tradable liquidity and stable weekly charts to confirm longer term trends. I then use the Snifter approach - discover dips in daily charts which have moved off support/resistance to place an entry.
What is happening to me is I am losing my cool with the markets - I get a good entry, only to find the market reverses on the tiniest snippet of news.
Take the DOW yo-yo for example: The Fed did not increase basic rates this past week, but the DOW sold off "on fears of a dampening economy". My problem is, had the Fed raised rates, the DOW would have sold off "on fears of inflation and an overheating economy".
Just what do these people want? They can't answer that either. I feel there is still too much gambling and speculative money in the system. That might explain the unreasonable volatility we see with such news.
Anyway - the problem is me - my trading plan does not fit this knee-jerk market.
It is not the fault of the market.
I keep a diary of trades, plus a journal/ledger (whatever - I'm no clerk), of every financial detail. I do have a spreadsheet, but have not been using it. It's a bit complicated, but probably just needs to be used so that I become familiar with it.
I don't think my use of CFD's is the problem - I am adhering to my stops, and the reason I have pulled the pin on trading right now, is that I simply can not get a trade to work. They are starting OK but either stopping out on correction, or I take them out before stops are hit. (Only one trade would have been a winner had I allowed it to go through to the stops - it didn't, and turned back into profit. So I am pleased with my judgement there.)
I believe my solution lies in this:
1) Either stand aside and wait until conditions return to accommodate my method, or ...
2) Revise my method to account for the volatility.
I could do this by shortening my time frame. I could use daily charts instead of weekly ones, and then enter and exit more on intra-day signals.
As I am unwilling to do intra-day trading, I rule this one out.
It is a kind of anxiety for me, to be involved in some action. THAT is purely an over-trading mentality. This is where the frustration is coming from - the lack of suitable stocks right now to fit into my method. (Telling the market what to do!)
The solution is to just learn to be patient, and meanwhile, paper-trade and hone skills such as entry/exit/selection/money management.
Finally, Smallworld touched a raw nerve when he said "Go back to your Coach." I felt a twinge of horror. I asked myself: "What would he say?" A few things came flooding back. The strongest lesson I had from the coach was to visualise and deal with my demons.
Obviously this takes time and practice, because it was something I had placed little importance upon. Yet, after my last session with the coach, I had such confidence and peace about my trades. I know how to deal with over-trading, impulsiveness, greed and fear, yet I failed to apply the principles I was taught.
Usually the solution will lie in the area of highest sensitivity - where the nerves are touchy, and this is where I will begin.
Thanks for all your input - I am still reviewing your suggestions.
(Message edited by ingot54 on August 12, 2006)
Keep Smiling
Trading style :CFD's predominantly long term.
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qed
Member
Username: qed
Post Number: 17
Registered: 01-2006Rating: N/A
Votes: 0
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| | Saturday, August 12, 2006 - 01:28 pm: |
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afternoon all, heres the conundrum, do I pay a mentor/coach to tell me what I know im doing wrong and will this help,or do I keep on trying to overcome my known shortcomings by winning /losing practice by myself.I have questions written down that I would ask coach but have answers written down in brackets at end of Q. So in essence will coach help me overcome.Q1 fear.Q2 greed,Q3 greed,Q4 fear Q5 action paralysis. Hope this dosent seem to be a friviolus question Regards Qed
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hilarius
Member
Username: hilarius
Post Number: 1886
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Saturday, August 12, 2006 - 01:51 pm: |
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Hello QED
If the coach is an Olympic Gold Medallist and I am trying to run faster I will be inclined to follow his or her advice to the letter, if I want to run better and faster
It all depends on the credibility of the coach based on the proven track record
I will suspend my own bad habits if the coach can demonstrate on a case by case basis that his or her methods produce better results
If the coach is any good he or she will be willing to do some examples as paper trades ... comparing your decision process with his or hers ... and comparing the differing outcomes
This should provide a basis of trust if enough good examples are experienced jointly before backing your new trading plan and coach with cash
There may be a shortage of good coaches offering such free trials. I wonder why.
With Best Wishes
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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qed
Member
Username: qed
Post Number: 18
Registered: 01-2006Rating: N/A
Votes: 0
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| | Saturday, August 12, 2006 - 02:09 pm: |
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