Tag Archives: patience

First time in a trading room – fun and very useful

So here’s a new experience for me that’s been something of an eye opener.

I had Thursday and Friday completely off work so took up Mike’s (@FtseDay on the twitter) kind offer to hang out with him and the crew in the trading room he’s created all focussed on trading the FTSE100 using a few really simple setups.

It was great fun since trading can be an entirely solitary experience plus the banter keeps everyone on their toes. The last thing you want to do is trade like a total d**k-head in front of a bunch of people 😉

I’m pretty gutted that due to me work commitments I’m unable to spend more time in this environment because as a learning experience I’d reckon it’s pretty awesome. To come back to a previous post (here) I’d suggest that in order to be successful at trading you need someone to teach you. Books on trading don’t work. Books on psychology are on the other hand extremely useful. I’ll come back to this point in another post.

Anyway, being in a trading room would (imho) be the top of the list for the fastest way to learn and importantly make money at the same time. Some of the advantages:

  1. Multiple people looking at the same chart – many hands make light work
  2. Can see the same thing from lots of angles – you may be wrong but someone else is probably gonna nail it.
  3. See other people’s psychology at work – if someone’s more patient then it’s easier to ask/learn from them how they do it
  4. Quickly learn from others what not to do 😉
  5. Moral support
  6. It is competitive and that’s a good thing. Props to eddie and especially James for winning the ‘balls of steel’ award last thing on Friday.
  7. Nothing worse than someone taking a trade (which you didn’t) and see them making their target while you sit on the bench – thanks eddie (lol)
  8. You learn faster as you’re learning from the ‘collective’ not just yourself
  9. The market is live and you’re trading it. You’re not learning from some static chart where the resolution (and success) is obvious with hindsight… This is a key advantage

Now this was all based on everyone learning/trading using the same kind of approach that Mike trades the FTSE100 with. I can imagine that if it was a ‘free for all’ room with no underlying ‘this is our approach’ theme then it wouldn’t be half as effective. However it was extremely useful.

If you’re new to all this and want to learn to trade effectively straight off the bat then I could do a lot worse than recommend you go check out what Mike is offering. Major bonus for the newbies is that he’s not taking the piss by charging stupid amounts of money for stuff that doesn’t work.

BUT before anyone gets way too excited though I’m going to point something out that I hope is obvious by now… There are still no short-cuts. No-one is going to hand you a guarantee that trade ‘x’ is going to work because it’s still your own psychology and experience that will determine whether you take a trade/setup or not.

I missed some absolute corking opportunities on both days but I still made some money while having a blast. So if this sounds interesting to you then go check out Mike on the twitter or here

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 😉

A glimmer of hope

Note: I’m not suggesting anyone do the following. It ‘kinda’ worked out but a test group of ‘1 trade’ is not statistically significant in any way 😉 so I need to find some more opportunities to do this.

This last week, following my sojourn in a field in the Welsh hills, I’ve been trying to appreciate the small things in life more than usual and to just bloody well relax.

We all run around like freaking lunatics half the time worrying about all sorts of things that are frankly a complete waste of energy. I’m not going to make any attempt to link anything metaphysical to trading 😉 but it’s been great to take some of the mental pressure off myself and just re-examine what I’ve been doing. Looking at a couple of things with fresh eyes and a more chilled perspective…

Now, I’ve not had any significant ‘lightbulb’ moments but I have come to a new respect for RSI divergence. No, it’s not happening all day/every day for everything however when it happens (and you spot it) then it’s worth paying attention to…

On this basis I was looking at a bunch of stocks (yes, you read that correctly) because IG Index Advanced Charts has a module in it called ‘Pro Real Trend Detection’ that will filter instruments against mechanically generated support, resistance and other pattern criteria. This is still supposed to be a business and manually wading through hundreds of charts isn’t a good use of anyone’s time.

I’d seen a number of interesting results from RSI divergence. In truth I’ve probably read at least three books that highlight this as useful or at least something of significance and I’ve probably ignored them all 😉

However, with my slightly more relaxed mind I’ve been spotting these more and more often… So girding my loins, grabbing my 1 hour chart and a suitable candidate I plucked up the courage to go long on Wolseley (WOS) somewhere mid-Tuesday afternoon. There’s a 4pt spread off 1800 points so not bad at all plus the down-trend seemed to have halted forming a pretty solid ‘base’ under which to plant my stop.

If anyone’s under the impression I know what I’m doing go to my results page then keep reading. Just thought I better point this out before I continue… clear? Good.

Now in the trade but relaxed about the whole thing. Committed. Number of other factors in my favour…

  1. Price has got down to 6+month low from previous resistance in Nov 2010 – should provide some support now
  2. Price fall has not dropped below 1812 all day on the hourly chart
So on this basis I’m in long at 1834 and the following morning WOS gaps up >10 points and end the day with me +46 which is sweet. Now I, more than most, appreciate examples after the fact are completely sod all use to anyone so the rest of this post will not bang on about RSI divergence and how it’s the answer to my trading woes so far 😉

There are probably a stack of other technical and possibly non-technical reasons why this entry worked that I’ve not looked at yet. Maybe the 200 EMA got hit, maybe there was some news release or some other reason I don’t know about.

What I will say though is I’ll be looking for more opportunities like this to check which criteria (levels/price action/others) result in creating similar successes. Watson! The games afoot!

The bit I got wrong (again) was my stop management.

Having seen a +40point gain at the end of the day I moved my stop to something like +18 above my entry. Retrospectively this was due to lack of emotional management and wanting to bank something. I didn’t consider the context of what I was doing.

All prices retrace and I’m going long at the bottom of a six month low. So I’d assume that there are people desperate to get out of their positions but looking to claw back at least something before getting out. Had I personally not been greedy or anxious I could have put my stop just a point above my entry, been in ‘profit’ (psychologically), survived the retracement drop and been >60 points up the following day rather than getting stopped out about +18 as well as still being in the trade with a good ‘buffer’.

Hindsight is awesome. However the main point being is that even with my new found appreciation for green hills, rolling countryside and inner calm I still managed to get too ‘graspy’

Slight detour back to the RSI divergence point on Gold in the last few days…

Ok, so you could also make the point that 1580 is the new support but this is also backed up by RSI divergence too… Hence, a glimmer of hope 😉

Patience

I think my biggest challenge in trading can be summed up in one word… patience.

It’s such a small word too but has so many implications…

  • Having the patience to wait for the entry conditions to be right
  • Having the patience to wait as the trade moves far enough to confirm you were right or wrong
  • Having the patience to wait before thinking about moving my stop to point 1
  • Having the patience to stay out of the market when I don’t understand what’s going on
  • Having the patience to wait and think rather than get emotional when I lose
  • Having enough patience to wait rather than snatch profits early…
When I’ve taken a trade and patiently waited for it to work out, it’s all gone ok… When I’ve been rushed or made snap decisions… It all goes pear shaped. Maybe everything does truly come to those who wait… and then take the trade 😉