Trading can be fun!

So as a newbie trader (relatively) the work is in sorting all the internal obstacles to actually enjoy the process of trading. I’ve posted previously about some negative aspects (fear) which I’m now pleased to report I’ve overcome.

If you’re new to trading and feel like you’re putting your life in the hands of your enemy or you get extremely nervous when in a position then you really need to pay attention to the following.

The bit which isn’t exciting (not so much) is that I’ve beaten this in an extremely boring way… rather than transforming into some sort of warrior trader ninja/samurai 😉 I’ve done the following: –

1. Decreased my trade size. Yes, this is extremely un-sexy but if you’re new to trading and feel under pressure immediately when placing a trade it’s likely to be ’cause you’re risking too much in a single trade. Risk less, decrease your position size and you’ll be able to manage the whole process out WAY better than you would previously.

2. Gotten to a point where I’ve at least have half a clue what I’m doing. This is the bit that takes some time and (IMHO) involves learning from real people as to what to do. When I’ve made some consistent progress I’ll be more than happy to recommend various people and explain what component of my trading approach I learned from where.

For me the main task is now practising trading and really getting my head around using what I’ve been taught. This is setting up to be my mission for 2012. Trading as much as possible given that I work full time. I’m looking at changing back up to 1Hr/4Hr timeframes to do this.

3. Learn patience. Really this is invaluable (and I’m still learning this). Once you understand even a little (as I now do) about how prices move and where professional traders enter positions then you’ll be more than happy to wait for the price to get to where you want it to before getting in.

There is no reason to rush into a trade where you’re likely to lose money or get panicked into bailing out of a trade early. Decide in advance where you want to get in and then wait. If you miss an opportunity to get into a move then wait for a pull-back and then get it in if the reason for the trade is still valid.

Now of course you can go look at my actual trading results and notice that they’re less than stellar. So why should I be dispensing advice? Well, I guess what I’m trying to do with this blog is highlight what is actually really involved in going from not having a clue to having consistent trading success.

Jan 2010
Started thinking about trading, opened a small account and blew it up as I was utterly clueless

Oct 2010
Signed up for some very over-priced training, this didn’t help, re-committed

Jan 2011
Started this blog while still trading and consistently losing money

Oct 2011
Got the first bit of proper training, stopped losing money and started really studying

I know how far I’ve come since I started looking at this topic…

Looking back even 3 months I’ve learnt more about what it takes to really succeed at this than I did in the entire 12 months of 2010 and most of 2011 too. Scary huh?! 😉

So I’m now, as I mentioned above, at the practice, practice, practice stage and concentrating on executing good, well thought out, risk managed trades.

It’s not exciting or sexy or like it is in the movies but it’s at least becoming much more fun 😉

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7 thoughts on “Trading can be fun!

  1. Simon

    Good to hear Robert. I wonder how many people give up within the initial tough leaning period. Probably most people, who, if they were as tenacious as you may have made a job of it. I’ll send you an email if that’s ok to tap into some of your learning.

    On a side note I attended part 1 of Mike from FTSEday’s training. Seems a top guy. Are you trading indicies as a result of his training?

    Reply
    1. robertsweetman Post author

      Hi Simon – yep email me here robertiansweetman at gmail dot com (sorry, annoying but to avoid web crawlers picking up my email address and sending me shite – lol – although I’m guessing that doesn’t work anymore as the robots are now smarter than me) anyway I’ll tell you whatever I can.

      To answer your question honestly I’m not trading indices because IG have a £2 per point minimum on them and I’m not prepared to trade at that rate till I’m consistent. Now, demo accounts could be an option but I’ve tried using them and discovered that I don’t care about the outcome. I have no skin in the game so it’s too much like mucking about.

      So on this basis I’ve taken pointers from Mike, the psychological perspective is very useful to hear someone go through in person and especially regards keeping it simple. The approach I’m taking is (1) learn to trade and achieve consistent results (2) practice until this becomes second nature and only then go anywhere near leverage and look to use this component to (3) make money.

      It’s not sexy and it’s not Hollywood but like I wouldn’t want the new guy to do brain surgery I wouldn’t want the rookie to trade my money. That rookie is me, obviously and it’s always going to be my own money 😉 Learn the skill first, make sure you’ve completely got it down and THEN scale up. Even at a small scale (where I’m at) this is actually compelling. Say you have a very small goal per day of 20pts which is 100pts per week and you reach an 80% hit at £0.5 per point that is £40 per week or £160 per month. Now if you don’t change anything this is £1,920 per year.

      This is the point where I guess a few people reading might laugh BUT I also work full time and no-one’s handing me this amount tax free anytime soon 😉 Anyway, I digress and the alternative is to trade at £4-£10 per point without knowing what you’re doing or having gained the experience to deal with the impact of this (positive and negative)… I know people who’ve spent less time than me on this who will trade at this level and obviously losing really f**ks their day. My losses are there to teach me something and so I can carry on learning. My belief is that while this type of risk is exciting it’s not the foundation for getting to the point where it’s consistent/repeatable/runs like a business.

      Why should I learn ‘at risk’ when I can learn without real risk? When I get to maybe three months without a losing month or maybe 10 or so weeks without a losing week (I’ve not decided) and win/loss ratio is high plus pts won per trade > pts lost on losing trades then I’ll think about scaling up. Why wait? Well because I’d suggest you want to be able to move up a level without actually even noticing it. That’s why I’ve moved to concentrate on the pts won/lost rather than the money side at the moment.

      Was it a good trade? Yes, did I manage it well? No, I sucked 😉 Why? etc. Course this makes scaling in/out etc. something I have to wait to practice how to do but there’s plenty of time for that.

      Hopefully that wasn’t too long an answer! Send me an email. I should be adding more actual useful stuff to my blog over the Xmas period rather than just me banging on 😉

      Thanks for the comment

      Robert

      Reply
      1. Simon

        Nice reply. I fully agree reducing risk and exposure of capital greatly helps with the psychological aspect. I try to only risk 1% of the money I can afford to lose per trade – try being the pertinent word. One of the ‘bad’ things that has happened to me is when I have over-leveraged I’ve managed to get lucky and make some money. Looking at the % gains it’s clear that isn’t sustainable when I have patch of bad luck. I’ve not really been bitten yet. I’m trying hard to learn the lesson of avoiding over-exposure and risk without having sat in that class (if that makes sense!). I’m confident I can do it and need to reward myself more for only risking 1% per trade and remembering one gets rich slowly. Like you say, learning the game and learning how to consistently win is key our our respective stages.

  2. Jon

    Great blog, i find it very helpful to read your perspective and how long you have been learning.

    I follow intermittently through twitter but tend to read the monthly blogs, which are well written and varied. I actually picked up your account through the spreadbetter on twitter, who i assume must have thrown in the towel a while back?

    Your latest blog rings true for me; i think it is somewhat alarming how the day jobs are so uncertain in this work climate. Self employment would be a great alternative if achievable.

    I got into trading in may 2011 after the company i was working in was bought out. I too wasted some time on overpriced seminar, though it did force me to keep going in a way!

    The ftseday tweet was an excellent recommendation. Thanks for that. Done both part 1 & 2. Given me a different perspective on entry points and timeframes and managing stops whenever possible.

    Thanks again!

    Reply
    1. robertsweetman Post author

      Thanks Jon

      As with anything there’s an inevitability to reaching your goal if you simply refuse to give up. It helps if you’ve had some experience of how this works outside of trading (luckily I have) so when you feel like quitting it’s simply not an option. Maybe this is a topic for another blog 😉

      If you speak to successful traders these are the people who’ve figured out what works for them and it’s usually taken them anything from 2 to 6 years to nail it. The only remaining question then becomes ‘How badly do you want it?’ and to make sure you don’t somehow blow your account up as you’re essentially teaching yourself to trade.

      Recent book recommendation I need to make on this point is by Brett N. Steenbarger ‘The Daily Trading Coach’ which is full of very useful tips/ideas to help bring some discipline to the learning process.

      Best regards

      Rob

      Reply

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