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Old Habits/Patterns

Posted: Sat Apr 26, 2003 2:08 pm
by Jeff Richards

Where to start? I have heard it said that the road to successful trading is the road to self discovery. That being true here is my question offered in a story.

My first passion in life is/was music. Jazz guitar to be more specific. A good case of tendonitis cut short my mercurial rise to mediocraty. That's another story. In retrospect I can see that in some respect I had a lot of talent, specifically smart hands. But I always struggled musically because where I had loads of technique I never took the time to learn the vocabulary of Jazz. That is to learn to play like Charlie Parker or Coltrain etc. As a foundation for developing my own style. Why was that? Well looking back I think I lacked the personal discipline. Sometimes I think I lacked the intellectual horse power to become a great player. I always took the path of least resistance and practiced what came naturally for me, scales, argeggios and chords and not that hard tedious part of learning the vocabulary of jazz where you would actually take a famous solo by say Parker or Stitt and learn it at speed and then maybe take parts of it and learn some of your favorite parts in several keys.

Now if I havn't changed at all and I start to trade that lack of self discipline will translate into my trading life somehow. Only instead of being an average player I'll be an average trader which means BROKE!

How much of trading is grunt work?
How can you tell if you are taking short cuts and not focusing on what you should?

At this point I am so ignorant that I do not even know what I don't know but I am eager to learn and improve both professionaly and personaly.

Thanks and all the best,


Posted: Sat Apr 26, 2003 7:13 pm
by Kiwi
Well Jeff, you do at least seem to have started with self knowledge.

By way of background I system trade long term and very short term. Last year I was discretionary trading using andrews median lines and a cycle technique for entries. Both approaches are successful. I am not trading the discretionary technique because I needed to capitalize the short term system and wanted more time in my day :)

In the past though I have tried a lot of different things. Some were briefly wildly successful. Some were instant failures. What was clear was that to succeed I need to develop a systematic disciplined tested approach or I will fail. Winging it doesn't work here :lol:

So, in my opinion, you need to:
- decide on a trading strategy (system or discretionary)
- test the strategy
- have an absolute set of rules that you will always follow
- test the rules. paper trade the rules.
- realize that success is defined as following your rules (each individual trade can win or lose but you are only successful if you followed your rules).
- for most people then start off on the strategy by trading small (1/10 of your target trade size maybe) so that you expose what’s wrong with your rules without too much damage to yourself. this is where you also discover the unknowns you cant find out without being in the market. this is where you also find out how your psychology and your system match - if you can follow the system without too much pain then they match :wink:

Before you do this I'd suggest some reading. At the least read one of Mark Douglas's books to get a feeling for where trader psychology trips traders up. If I was me again, I'd hope that I'd read all the books I recommended in the topic:


and most of the others as well.

In the end if you have the discipline to follow a well tested strategy (discretionary or system) you will take money from the market. But it’s surprisingly hard for such a seemingly simple thing.

Good Luck,

Posted: Sun Apr 27, 2003 1:00 pm
by Jeff Richards

Thanks for the recommendations! :D I will look into those books. I have read all or part of;

The first Market Wizards :)
Trading for a living. Elder :!:
Welcome to my trading Room, Elder :!:
Trading Systems, Babcock :?
Profitable commodity futures trading from A to Z, Babcock
Trading as a business, Wright (?) a big commercial for Omega trade station
Rich Dad poor Dad, Kyosake :D
Cash flow Qaudrant, Kyosake :)

I want to be a long term futures trader using a system but..... I have a very small amount of money to start out with and am begining to think that I may have to shorten my time horizon and look at stock trading to build my account first.

Thanks for you help and suggestions.

All the best,


Posted: Sun Apr 27, 2003 7:52 pm
by Kiwi

You could be right but currencies trend much better than stocks - have a look at the thread for alternative approaches :


Spreadbetting in the UK (I do it from the pacific so you can do it from anywhere but be careful of the times that the company is open) provides a 1$ per point access to the currency markets, the major bonds, some commodities and stocks/stock indexes. This compares with $12.50 per point for a currency contract in chicago and $5 for a dow emini so you can trade at much smaller size.

You can use futures data because you can bet (trade) on the futures contracts or the cash contracts. If I was small I'd be looking at a couple of currencies (JY, SF) tbonds, eurodollars, bunds, oil, etc with a system to complement anything you were doing with stocks.

Instead of paying commissions you have a larger spread between bid and ask but for a small trader its a cheap commission.


Posted: Wed Apr 30, 2003 3:14 am
by edward kim
Hi Jeff,

"How much of trading is grunt work? How can you tell if you are taking short cuts and not focusing on what you should? At this point I am so ignorant that I do not even know what I don't know but I am eager to learn and improve both professionaly and personaly."

I wanted to point out that you are setting yourself up for disappointment, so try to enjoy the journey without beating yourself. At least you are smart enough to know that you are not discplined, so that IS a good start.

It won't seem like it's grunt work if you think of this way - Forum Mgmnt is one of the best (if not the best) to come out of what was probably one of the greatest group of trading disciples ever. He is giving you an environment where you can go as high as you want to go, and everyone on this forum wants to see that happen. Becoming a great trader is like marriage:

You make the commitment even if you are not 100% sure.
You make the commitment to make it work.
It's a lifetime adjustment. Growth is expected.
It's full of ups and downs - when you do things the right way, you'll probably end UP

So start now and pull a Nike .. JUST DO IT.