In Retrospect: A Fantastic Story
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     stickman
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Username: stickman
Post Number: 933
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Thursday, August 24, 2006 - 05:44 pm: |  
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Hi All
I had to post this one
cheers
Over the past five years, many Innerworth subscribers have said that they wanted to hear how true winning traders approached trading in their own words. It's easy to understand why. Many traders are happy to brag about how well they have done, but few are willing to back up their claims with financial records. On the other hand, it's hard to get winning traders to talk. They are modest and keep to themselves. But we convinced some of them to tell us their secrets, and share their financial records. One of the most fascinating stories we heard was from a former pool man named Dan. After a lifetime of successive winning and losing streaks, he eventually built up his trading skills to turn a stake of $11,000 into $18 million in 18 months during the early 1990s, a return of over 150,000%. Dan's 1999 tax return showed capital gains of $14,232,878. It's an amazing story, a story that we like to hear because it is objective proof that with enough hard work and determination, even people of modest means can make huge profits in the markets. His talents were not restricted to bull markets of the late 1990s. He made a 50% return using short sells when the markets fell in April 2000. Maybe it will take a generation before the markets of the 1990s come back, making a 150,000% return unlikely until then, but if you are like most traders, you will settle for a 100% return, right?
Dan was one of the first traders we interviewed. A lifelong fascination with charts and stock prices helped him migrate into full-time trading. There were a few things about his trading style that we found interesting. He was naturally good at picking stocks. He spent a great deal of effort learning how to manage risk. He trained himself to understand the markets by retroactively analyzing price moves. He had a true passion for studying the markets, as shown by his tendency to monitor market activity until the close, even when he decided to stop trading for the day. He tried to stay as objective as possible while trading. He also tried to maintain discipline. Making a stupid mistake was more painful than losing money.
Dan was interested in trading at an early age. He watched the business channel on UHF, before cable, and learned to read the tape by watching prices move up and down across the television screen. When he figured out how to make a profit, he was hooked. In his interview, he told us some of his secrets. Dan was not obsessed with winning or losing. He tried to stay as objective as possible: "Many investors keep their P&L scrolling on the screen in dollar terms, which can affect them emotionally. That's a huge mistake. I try not to let it affect me." In addition, Dan was not in a constant battle with the markets. He just let things happen: "I'm more or less in a Zen-like state. I'm at one with the market. I don't get exhilarated. I don't get sad. Sometimes I feel frustration. I never look at the balance sheet, though. I never say I made X number of dollars a day and get excited. I never say I lost X number of dollars a day and feel sad.
Dan monitored the markets closely, but he did not let the news impact his decisions: "I don't do anything with the news other than to note how the stock is responding to the news. Most people want concrete evidence, such as a storyline, in order to buy a stock. More often than not, when the storyline comes out, the stock's move is long gone. Money management was key for Dan: "I try to stay within 10 percent. It depends on how fast the market is moving, the liquidity in the stock, how many shares I have, etc. Sometimes I am nailed for 20 percent." Did he ever blow his stops? "Sure. That happens all the time. There's nothing I can do about it. That's one of the continuous challenges that engross me. Do you hold them or do you fold them?"
When asked what it takes to be successful when trading the markets, Dan said, "You need to be very alert. You need to see things clearly. People call it being cold. You need to be dedicated to understanding chart patterns and how they work. You need to understand that institutions are trading off of these patterns and the more you know about them, the more you can be in front of the curve. So I guess it's dedication, desire, and lots and lots and lots of homework."
Trade to Learn, Not to Earn.
when you lose,don't lose the lesson.
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macca888
Member
Username: macca888
Post Number: 25
Registered: 10-2002Rating: N/A
Votes: 0
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| | Thursday, August 24, 2006 - 06:18 pm: |
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G'day Stickman
I suspected this Innerworth email refers to Dan Zanger.
You may be familiar with his work.
A google search will turn up his chartpattern site.
regards
macca888
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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stickman
Member
Username: stickman
Post Number: 937
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Thursday, August 31, 2006 - 09:48 am: |
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HI Macca
cheers
Trade to Learn, Not to Earn.
when you lose,don't lose the lesson.
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