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A moment of significant enlightenment

Posted: Wed Apr 16, 2003 2:37 pm
by Sir G
I am wanting to make a meaningful contribution to this forum while finding myself not really focused on how to do that. I thought an open question to all participants would be nice place to start as it might remove some “wallsâ€

Sir G's moment

Posted: Wed Apr 16, 2003 2:43 pm
by Sir G
A meaningful experience that I had was back in 1992ish. I was working on TradeStation and my spreadsheets searching as we have all done. I lived and breathed the markets and would typically spend 14 hours a day on my superfast 386 (or was a 286) computer. The other 10 hours I had a notepad and pencil by my side.

The Moment:

I used to have TradeStation print out basic test results at the completion of each market, this way I could view them on paper and also place the information into spreadsheets and have a peak within the trades themselves with my macros. I assumed I was getting close (hope springs eternal) but I had no idea, the moment was upon me. The moment was like any other moment in my many hours of sitting in front of the computer. Once I looked at the print out, I knew I had tapped into a rich vein. Those were the answers I was looking for, so it was one of those rare moments when I found what I was searching for.

First Reaction:

I actually started to get dressed so I could go out and play some golf! My thoughts bounced from…. “I did it!â€

Learning that it's not what you know but do you do it

Posted: Wed Apr 16, 2003 4:51 pm
by Forum Mgmnt
I remember just after the initial Turtle class in December 1983, we were a bit anxious to begin trading after a return from the New Years holiday. Each of us was given a desk in a large office on the 8th floor of the Insurance Exchange building which was right next to the Board of Trade building. The desks were arranged in six pairs with six foot partitions between the pairs. We each chose our desks which implied choosing the person we would be sitting next to for the indefinite future. Each desk had a telephone with a private line which rang directly at our desk.

We each received an account where we were to begin trading in units of three contracts for each of the commodities we were trading. We were to take a position of at most four units or twelve contracts for each commodity we traded. This roughly corresponded to an account size of $50K to $100K.

We had full discretion over our accounts and could make any trades we wanted as long as we could justify the reasons behind the trade. We had to keep a log for the first month indicating the reasons behind every trade that we made.

A few days or so into the new year February Heating Oil started to rise from about $0.73 to $0.75, so I followed the system and bought three contracts, the trade was immediately profitable and in just a few days I had bought the maximum twelve contracts.

The room was abuzz with the heating oil trade over the next few days. Heating Oil rose to over $0.95 in less than a week. We all had rather large profits and things were looking good.

It was about this time that I noticed something that struck me as bizarre. I was the only turtle with a full position. Every single other turtle had decided for some reason or other not to follow the system as Rich and Bill had outlined.

I don’t know if it was fear of losing too soon after starting, the fact that the February contract of Heating Oil was going to expire in a few weeks, or simply a much more conservative trading style, but I could not figure out how everyone could have attended the same training session as I did and not be completely loaded in February Heating Oil. The next few days were volatile, Heating Oil dropped in price from a high of something like $0.98 to $0.85.

I noted another interesting thing, all of the other turtles liquidated most or all of their Heating Oil position when the price dropped. Based on the way Rich and Bill had just taught us, it seemed very clear to me that the right thing to do was to hold on and let the profits run. I held all twelve contracts down to the low. This represented a draw-down from about up 40% to up 20% in just a couple of days.

Shortly after most of the other turtles liquidated, the price began to rise again. Soon it passed the previous high of $0.98 and kept rising to over $1.16. It reached its peak a day or two before contract expiration and I ended up getting out of all twelve contracts very near the highs at around $1.14.

After the trade my account was up $78,000 which represented about a 100% increase in just under a few weeks. The other turtles made far less money than I did on this trade. In fact, the next best win was $28,000. This was amazing. We had all been taught exactly the same thing but my return for January was three times or more than the best of the other turtles.

The difference in return had nothing to do with knowledge and everything to do with emotional and psychological factors. Over the years, I keep finding evidence that emotional and psychological strength are the most important ingredients in successful trading.

- Forum Mgmnt

P.S. Rich must have thought so as well, he ended up giving me a $2 million account in February, a few other received $1 million and many received $500,000 or were asked to continue trading the provisional account. The guy who made $28,000 was one of the few who received a $1 million starting account.

Posted: Wed Apr 16, 2003 11:11 pm
by damian
I have had some great moments, however shortly after they happen I usually neutralise my feelings and view the episode as nothing more than a stepping stone to the next level. This is helpful for aggressive growth, but tends to deprive me the joy of the moment. I will acknowledge them as significant moments and then tell myself to get over it and move on. Having said that I have had a great time recalling some moments in the past. I am not sure if many were moments of significant enlightenment, but they were significant for me at the time. I don't think I have had any true moments of enlightenment.

A trading moment that is still with me was my first trade. Reading the post got me thinking about it again. I had been a trainee dealer for a bank for about 6 months. My job was as a cash dealer (I would have been called a Fed Funds dealer in America). I was quite young at 22 years old, but had been reading around about the futures market since I was in my teens. Motivation in late high school and university was often lacking and I would keep myself keen by focusing on my goal. I was going to be a futures trader. I was always going to the library and borrowing books about futures to get me excited and focused on my exams. Any how, futures had been on my mind for some years and I stopped in my tracks one day at work when my boss turned to me and said "so, you want to trade futures? Pick up the phone and place a trade. You can trade up to 10 contracts. Open a position, now!!". I always watched the market and had a short term fundamental view on interest rates. However I was mainly watching so called technical levels in the market. He was hanging over me and other people on the desk were watching (they loved it when I got picked on). I checked my pretend dealing sheet where, amongst other things, I wrote my opinion each morning on support and resistance, RSI etc. I really didn't have any plan, and had a very wrong (in retrospect) approach to determining where my exits should be. I decided what my stop loss would be and sought out the line to the most user friendly floor broker on my phone board and said "hi, this is damian, sell 1 sep at market". Right away she came back over the speaker box, loud and clear for all to hear "sold 1 sep at 59" (or what ever the price was). Everyone on the desk heard the broker over the box and I got instantly lampooned for doing a 1 lot, and particularly for selling at market rather than trying to get filled on the offer. The guys were giving me a hard time but you could tell that for the most they were really happy for the 'young guy'. Later on some of them even said well done and welcomed me to the world of trading as they saw it. My boss just nodded and walked off. I quickly booked the deal ticket and then, like a hawk, I watched the market tick against my position for about 30 minutes and then hit the line again and said "buy 1 sep at market". This again caused an uproar with the guys sitting around me. That was the only trading I did that day. I was amazed at how quickly I could be stopped out.

I was thrilled. I had placed a trade and closed it out at a loss all within half an hour. At the time I felt like I had finally arrived. I stayed late after work that night and printed out the chart of my trade and wrote out my rational, for what it was, for the short position plus all the info that I thought was relevant and put it in a folder. I then replaced my paper trading spreadsheet with the real thing. I left the office that night down a whole $200 and very, very happy. All the reading I had done said that I should cut my losses quickly and I was so happy that under those circumstances I managed to do it. I remember being pleased that my first trade was a loss and that I managed it in the correct manner. It may sound all very easy and appropriate to say this now, but at the time this was honestly the way I was thinking. I can remember that from then on I became immensely obsessed with trading strategies.

Posted: Thu Apr 17, 2003 2:09 am
by bloom
I have read the Richard Dennis interview in Market Wizard for don't know how many times for the last couple of years and the small sections on the turtles inspires me everytime I read it. IMHO The turtle experiment prove beyond a doubt that trading can taught and you don't need to have the
"trading talent" in order to trade. I was very disappointed by the "silence of the turtles" in MWII because I really wanted to know the details in the turtle story.

Well, My wish came through today. Thank You That was a great post, Please Keep It coming!!! and thank you, Sir g for bringing the subject, your posts on traderclub has always been inspring. I really want to hear some of the little known adventures in the legend of the turtles!!

I hasn't been trading for a long time(3 years) and my moment of enlightenment was actually quite recent. Novermber and December last year was a horrible period for me and I was in the biggest drawdown ever since I traded. There was one instance when I brought the day high on first day, sold the day low on the second day. On the third day, this might like I made it up, but I manage to sell the two points from the day low again, the market did a strong reversal almost immediately, I got out and brought a large position. I was still in "control" at that point and pretty confident the trade is going to work out because the weak guys has been shaken out. Well, that was at least one weakling who was still in the trade and market decides to reverse again and make a deep dive back into the trading range and I got stop out again.

At that point, I just gave up. My confidence was totally shattered and I remember I felt I just COULDN'T take another loss again, at least for that day. I told my broker, " I am done for the day. it is just go on like this forever, taking another trade now is just too risky." My broker then went on to console me and gave me a analysis on why the market is going to be in a congestion for the next few day.

As we were talking, the market start to move up again, and suddenly, it hit me, I remember thinking "Everybody is looking at the same chart and feeling the same way I am, EVERYBODY HAS ENOUGH PAIN ALREADY AND GAVE UP JUST AS I AM DOING RIGHT NOW. I CAN'T GIVE UP NOW."

The market went back to my entryprice and I brought my position back, I was pretty much in a "altered state" at that point and the pain wasn't there anymore,...IT DIDN'T MATTER WHETHER THE TRADE WORK OUT OR NOT..I WAS DOING THE RIGHT THING...

The market then went on to explode upwards and trended very nicely. It made up for all my previous losses in spades and I made a equity new high. That's when I truly realize the markets are all about psychology and it will goto the extremes to tests the psychological weakness and discipline of the traders. It will reward those with the most mental toughness and emotional strength. That's enlightenment for me!!


Other Turtles?

Posted: Thu Apr 17, 2003 7:57 am
by TK
Forum Mgmnt, many thanks for the interesting story. From what you can read on the or in the Turtle Trading Rules, it seems that the project also involves other original turtles. Do you think there is any chance that some other turtles (or maybe Dennis or Eckhardt themselves) will drop by to share their views on the art of system trading or just to say ‘Hello’? :wink:

Posted: Thu Apr 17, 2003 4:52 pm
by Karakoram
Forum Mgmnt, would you consider writing a book about your experiences?

An autobiography of your trading history, with your thoughts, feelings, etc during each event?

My "Ahah" Moment

Posted: Thu Apr 17, 2003 8:29 pm
by Cantley
After losing a little money in a couple of forays into discretionary trading, I purchased Aberration. I weathered a few small drawdowns, but my equity mostly went up -- from the first trade, actually.

Anyway, I'd been trading Aberration for about a year and a half, and I was in a drawdown as big as any I'd experienced. I knew that the system was good, I was just getting uncomfortable with the drawdown. Along came a cotton signal -- short. The risk on the trade would have been at the higher end of my threshold for initiating the trade, and it was a short trade into a price that was awfully awfully low already.

It was the first time I was actually tempted not to take the trade. I knew it was going to be a loser, and I knew it was going to bump my equity down another few thousand. I didn't want to take the trade.

But I sold my contract, and I rolled my contract at all the appropriate points, and $12,500 later, I closed my single contract position.

There's knowing that you're supposed to take the trades intellectually, and there's having it demonstrated for you in a way you'll never forget. I sold into really low prices, and the prices just kept moving down. Now, I'm not at all concerned with taking the trades. It's a lot easier. I think that counts as an "Ahah" moment.

It wasn't quite the trade that made my year, because there were a couple of other nice moves along with Cotton. But it made up for a lot of small losing trades (as a good trend-following system should), and it was the best reinforcement I could ever have had about the correct way to trade a system.


Reply to other posts

Posted: Sat Apr 19, 2003 6:56 am
by Forum Mgmnt
I'll try and answer some of the previous posts.

TK, I'll try and get some of the other turtles, or perhaps Rich or Bill, to participate but I can't promise anything. Their pretty busy and many of them are pretty private and like to keep a low profile.

I talked to or emailed any of the other turtles I had contact information for. Many of them were in complete agreement and loved the idea. Some said they would participate but I haven't received any charity or comments from them, yet.

Karakoram, I've often thought that the Turtle story would make a great book. I'm not sure that I'm the best person to do this. There are others who are better historians and probably would remember many more interesting details.

I suppose I consider the Turtles just one part of my life. I've learned a lot and been through a lot of other amazing experiences, but I think that is true of most of us, if we stop and think about it.

I've also sometimes thought that writing an autobiography is a fairly self-centered or egotistical act. At the same, I admit that I'll eventually do that. Does that make me egotistical? Hmmm...

I'll probably write a book on trading soon, I've started on but I'm not ready to finish it yet. I think that's one of the reasons I decided to start this forum after getting a few requests. I don't know enough about what others, don't know, or would like to know to be able to write a great book. I don't want to write one unless it will be a great one.

I learned about trading while I was in High School and was taught at 19 by one of the best in the world, and probably the most famous of the time, so I missed the learning process of the typical trader. Getting that perspective is educational for me. That's one of the reasons I'm really trying to develop this Roundtable as a place for learning traders, and trying to figure out ways to get them to post beginner level questions.

Posted: Sat Apr 19, 2003 7:47 am
by damian
I've also sometimes thought that writing an autobiography is a fairly self-centered or egotistical act. At the same, I admit that I'll eventually do that. Does that make me egotistical? Hmmm...
Writing an autobio would be a fantastic experience for nearly all people. I will do it one day.

The difference is, only some peoples stories are interesting/marketable. Mine wouldn't be, but if it were I would publish it if I thought it would help others.

I can see how it can be deemed egotistical and certainly some ego is required to publish. I for one am glad that certain people have had enough ego to publish their life story. They have been of great benefit to me.

Ego is not always a bad thing and is often an incorrectly used word (used with negative connotations), just like the word selfish.

I for one would almost automatically buy an autobiography published by an original turtle.

Biography, autobiography, and Turtles

Posted: Sat Apr 19, 2003 11:12 am
by Dave S.
Hi Forum Mgmnt,

I think that stories like your above lend credibilty to you, the Forum, and Turtle trading.

As I've mentioned to you before, people get inundated with claims of expertise form every corner, and on many forums, there is NO way to verify the authenticity of ANY of these people or their claims. Over time, I think this breeds real cynicism in people.

We've also discussed the idea that people would really like to have credible information, from sources they can trust. I think your participation, and that of others who obviously have real-world experience is what sets this forum apart.

I don't think that people hear ego when you talk, I think they hear experience and expertise they can believe.

We can all benefit from your experiences, and the experiences of each other, so keep the stories and lessons coming!


Posted: Mon Apr 21, 2003 3:55 pm
by Chuck B
I guess one of my major "moments" came back in 1993 when I first ran some portfolio tests with Trading Recipes using a simple breakout big deal until you start playing with risk management which is what created that "holy crap" moment :D . Up until that time I was in the "TradeStation paradigm".

The following story isn't one of those moments per se, as it stretched out over a few months, but in the grand scheme of things it was a very important step for me to hurdle:

It can be very tough emotionally to trade a system with potentially long cycles between equity highs like most long term, diversified, "traditional" trendfollowing methods produce. I put my main system into production in early 1995, and I recall during the summer of 1998 thinking something along the lines of, "damn, here I have taken every signal, run the system every night, placed tons of orders, and I'm down 20+% from last equity high and it's been 14 months!"

Think about've done everything, busted ass to ensure all is done correctly, and you've not made a new equity high in 14 months. Of course this was all expected in my system testing and I had extensively rehearsed it, rehearsed feeling like crap and how I would respond, etc. However, although I knew all of that both logically and to some extent emotionally from rehearsal, to have the feeling in real time was significantly important. I recall two things sticking with me at the time: (1) all my rehearsals and research showed nothing was inherently "wrong"; (2) John Henry's talk about not de-leveraging in a drawdown. I knew that if I didn't like the depth of this DD, one thing I was not going to do was lower my risk parameters at that point...only when I got to a new equity high would I allow that to occur (my position risk was 1.5% of equity for new positions and 4% equity max open risk for any open position, i.e. open positions were held to that max by scaling out).

I was on vacation in New England that summer while all these feelings were occurring so that helped a bit as I was able to simply run the system at night and not be near the markets at all during the day. The Canadian dollar took off to the downside during that time which helped to offset small losses elsewhere. The drawdown bottomed on Aug 20.

Little did I know that I would shortly be in some explosive trends in currencies and financials. By the first part of October I was at new equity highs for many days in a row, in fact one so explosive that I scaled out of my positions to a great extent by going to very tight exits using discretion (and saving a ton of equity giveback). This was part of my trading plan but not something I could code into the system. This was October 7th and 8th -- just 6 weeks from the DD bottom.

Having lived through this cycle, I guess I "grew up" a bit as a trader since it's one thing to think about it ahead of time and emotionally rehearse it, but it is entirely another universe to experience it first hand. :)

Chuck B

Posted: Mon Apr 21, 2003 4:16 pm
by Karakoram
I've also sometimes thought that writing an autobiography is a fairly self-centered or egotistical act. At the same, I admit that I'll eventually do that. Does that make me egotistical? Hmmm...

I'll probably write a book on trading soon, I've started on but I'm not ready to finish it yet. I think that's one of the reasons I decided to start this forum after getting a few requests. I don't know enough about what others, don't know, or would like to know to be able to write a great book. I don't want to write one unless it will be a great one.
I don't think it would be egotistical at all provided that:
1) you don't spend a lot of time blowing your own horn in the book
2) you have something worthwhile to say

Have you read "God in the Pits" Mark Ritchie I think. He is also a Market Wizard, and its a good read, but i wished he would have talked more about trading.

If you share your emotional experiences during the really bad times, as well as good, I think that alone would make it a great book. How many books can you think of that are like that? I can only thing of Remininces of a Stock Operator--Lefavre/Livermore.

Posted: Tue Apr 22, 2003 6:14 am
by damian
I should point out that the situation I described above in my "moment" post was not one that I look back at as being 'cool'. The whole episode was one driven by my immediate boss/supervisor trying to appear like a hero. He thought he was teaching me how to trade by doing this. Truth be told, if I had my wits about me I would have refused to open a position on the basis that I had no real market view at the current level.

None the less, I was still very happy that I had at last been able to pick up the phone and take a position. As crappy as the environment was, this was my start.

Posted: Sat May 03, 2003 3:14 am
by edward kim
Hi Forum Mgmnt,

I have always believed that doing something (like writing an autobiography) is neither good nor bad, egotistical and self-centered. The deed is not as important as the intent. If the intent is to share experiences because people can learn from them, then writing the book is a way of helping of others to better themselves and definitely not being self-centered.

As far as having that "moment" goes, it's been a gradual learning experience learning what people are really like when it comes to investing and trading in the markets. In 1999, people here in Silicon Valley were all about money and how great they were in picking stocks that went up like crazy. In 2000, 2001, 2002, and 2003, people here blamed politicians, fraudulent accounting, their broker for their lossess .. blaming everything except themselves. Over the past few years, I realized that the only kind of person who can truly succeed in this business is the one that takes full responsibility for their decisions. When that moment occurred, I made a commitment to discover what makes me different from a very successful trader, why I had those differences, and how to model the traits of successful traders. I also analyzed all the very successful trades I have had over the last ten years, and I noticed that all of those trades would have been caught with a good trend-following system. One thing seemed to flow after another from there ...

In effect, it was a kind of "re-programming" of my mind, and it has changed the way I do everything - both inside and outside of trading.


stepping stone

Posted: Wed Jun 11, 2003 7:45 pm
by Jester
My first big jump was about 10+ years ago, I was working on a metals desk for a big dealer and I had a sizable gain in silver. I used half of my gains to purchased OTM options. After the market stalled, It began it's ST trend and I learned the value of pressing bet size with profits.


Posted: Tue Jun 08, 2004 5:57 pm
by bniceb
Forum Mgmnt,
I find this a fascinating read. The group of you were in training for 2 weeks with arguably the best traders of that time, they gave you the money to trade , the method and right out of the box most of the traders couldn’t deal with simply following the rules. This post of yours should be included as the forward in every book on trading. Clearly this shows it is not the method, the market , the money or the Broker, it is the trader. Maybe this is my AHA moment.

I am sure with all the other traders bailing out of their positions the temptation to follow suite would have been very strong. I am curious though if after seeing your performance in that heating oil trade did any of the other traders come to trust the system more?
Lastly, Thank you for posting the Turtle rules.