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Painful and Demanding Practice Will Make Me a Great Trader

Wow, what can I say, after redefining my trading strategy at the end of August and making solemn promises to myself to stick to it, I’ve managed to ignore everything I promised myself I’d do and almost blow up my £500 account. Painful? Check.

In a series of about 10 trades over the space of 2 weeks, I’ve managed to get stopped out of almost £250 worth of positions. The really annoying thing is that in 80% if the cases, shortly after I was stopped out the price headed in my direction.

I mean, take barclays, for instance, I opened the positon on the 24th August at 187 with what I felt was a generous stop at 179 with a 12 point target of 199. On 5th September the position got stopped out, bang, £42 loss. Today, just 2 days later, the price has soared to 204. Words can’t express how fu**ing annoyed I am – but then, I know I’m supposed to find a way to disconnect myself from the emotion of it but honestly, over the last week I’ve found that increasingly more difficult.

Another cracker that just happened was Spot Gold. I opened a long position last week at 1675 and made the decision to hold until after the ECB announced their QE (or OMT) as they’ve called it with a target of somewhere in the region of 1800. For this position, I’d told myself to hold long, with a longer term target and look at the bigger picture trend.

I opened at 1675 and watched the price rise steadily to 1713 yesterday up to the announcement. I was sitting on a £380 paper profit on a single trade, which would have been my largest to date. I made the decision to sit and wait it out, expecting the price to fall and a ‘reaction’ to occur. This morning the price had fallen back to 1692 and I panicked and closed the position for £170 profit.

A few hours later I’ve logged back in and the price is now 1725, which would have been a £500 profit.

I actually feel physically sick and what I want to write here is a long list of vulgar expletives that might just convey how I’m feeling.

This pissed me off to no end so I just threw my hands in the air and spat my dummy out, figuratively speaking, and just started making a few rash trades on gold and even a few more rash trades on stocks.

After a few minutes, I realised I had to take some time out so I went and sat in the garden for a bit. It’s 23 degrees here so the sun is gorgeous. I sat drinking my coke with ice and just thought about throwing in the towel. I’m obviously shit at trading.

My mind wandered to other money-making ventures as I came to the conclusion that trading was not for me and I’m not very good at it – clearly. I started thinking about what other business I could get myself into that I would be better at. I let my mind excite itself at various possibilities but none could quell the sickening feeling I felt in the pit of my stomach and the constant urge to just shake my head and laugh at the irony of the gold trade. What a fucker, is all I could bring myself to say – over and over again.

After about an hour of mulling things over in my head, I realised that on both trades, the Barclays and the gold, fundamentally, technically, I’d actually been right. The price did go where I expected it to go, just not at the right time.

So maybe I’m not completely shit at trading, I’m just not good at it yet. Couple this with the fact that to start any other business, I’d be looking at startup costs and time costs and I’d probably always still remain interested in the markets so really, why bother with anything else if it’s going to take just as long to become an expert at that as what it will to become a better trader?

The reality is you just can’t build empires in days.

Things take time, knowledge and skill, and even the greatest traders in the world will make mistakes.

I’m leaving this post with a thought for the day; in the form of a great article which you can read by clicking the link below.

You can become an expert at anything, it just takes time, dedication and about 5 years.

 

 

 

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9 Responses to "Painful and Demanding Practice Will Make Me a Great Trader"

  • Diane
    September 13, 2012 - 2:19 pm Reply

    Hi, Spreadbetting Dad

    I have read your blog with interest. I am also a spreadbetter and daytrader. I can understand your frustration with trading as we have all been there. It seems that you getting direction correct on the trades you mentioned, that is a great start. However, I wonder if you have a system of managing the trade when you are in it? Also, if you are getting stopped out and then price is moving in the right direction, it could be the stops are not big enough.
    Trading is about drilling down into the detail of why a trade has exited at a loss and I assess each trade as it is completed. I ask did I stick to my plan, come out early, made a mistake when entering got in late, market reversed and so on. This allows me to focus on what has gone wrong because sometimes there is too wood about in those trees!
    I hope that some of this may help.

    • spreadbettingdad
      September 13, 2012 - 4:05 pm Reply

      Hi Diane,

      Thanks for your very useful comment. You’re the second person today to suggest that my stops may have been too tight and I have to say, I agree.

      I have another post planned that will look at at least one of my losing trades in great detail. In each case I want to, as you say, really drill down and find out why I lost.

      On the point about entering the market, I’m definitely never on time! I’m either way too early or just too late 🙂

      For instance, I just opened a FACEBOOK short at 2082 at £1 per point. GIven the recent lows and this, very recent high, I thought a short seemed a good guess. BUT, already I can identify several mistakes I’v made with the trade.

      1) Because my account balance is now so low, I never gave it too much thought and jumped in on a hunch.
      2) I don’t have much money in my account so can’t set up too wide a stop (15 points, in fact!, with a spread of 5)

      If this trade comes off, it’s been pure luck and a gamble. But I know this.

      After I assess my recent losses and analyse them to find out why I lost, I’ll top up my account with another £500, create a rigid system with as clear rules as possible and try again.

      Do you keep a spreadsheet of your trades to record all the answers to the questions you raised?

  • Diane
    September 13, 2012 - 5:10 pm Reply

    Hi, Spreadbetdad

    I do keep a spreadsheet of all my trades and do other monitoring to keep me on the straight and narrow. It sounds boring, I know but I see it as an essential task. Monitoring and analysis is one of the most important areas in trading and sadly, most books and materials really don’t cover the subject in any detail.

    I feel from what you have said that you may have a small number of pieces missing or not fully developed yet. I think you have guessed that. The key is to get your system, risk and money management correct and then you have the psychological aspects to deal with which are the hardest part.

    If you would like any assistance, please message or skype diane9998. I trade in the mornings and have time free after 11am and in the evenings. I am currently helping a few new traders get started or those who have got stuck.

    • spreadbettingdad
      September 14, 2012 - 9:01 am Reply

      Hi Diane,

      Thanks for the offer, I’ll take it up, I’m sure.

      Although I’m a bit susceptible to the odd bit of excitement, I am also of the opinion that post-trade analysis is key to long term success.

      I don’t suppose you have a blank template of that spreadsheet do you?

      • Diane
        September 14, 2012 - 9:35 am Reply

        Yes, I can let you have a copy. It is good to analyse post trade but I also have another useful tool.

        Pre Trade check list
        This check list makes sure that I only take the best valid setup by ticking my trade rules off. If I can’t tick all the boxes, then no trade. It is easy to enter trades on the spur of the moment, all traders (including experienced ones). If you are making mistakes entering a trade then you will increase your number of losers and your performance will be poorer for it.

        Post trade check list
        This is a simple document that I have I have put some examples of the criteria you may want to measure.

        Data analysis
        You already have a good sample of 100 trades and it would be a good exercise to identify what went well with the winners and what went wrong with the losers. I would recommend sorting out your trade rules that were relevant at the time, combine the pre trade and post trade lists and go back and review each trade.

        There are lots of other types of analysis you can do. Most of it takes a few minutes of your time and can revolutionise your trading. Being able to define where the issues are can give you confidence to move forward. Remember the old adage is true, What you can’t measure, you can’t manage!

        Drop me an email at diane1961@ymail.com and i will get the spreadsheet over to you.

        • spreadbettingdad
          September 14, 2012 - 10:23 am Reply

          Hi Diane,

          Really great info, thanks. I will send you an email privately.

  • paul
    September 13, 2012 - 9:55 pm Reply

    “The reality is you just can’t build empires in days.”
    There’s a lot of people ready to give you advice. Let me then give you some. You know when you’re making a move you know you shouldn’t be making. You know you cannot expect miracles in trading. Keep talking to yourself, keep trying to understand yourself and why you act in the way you do. You won’t ever understand everything but at least you can understand yourself. Life and trading will then be so much easier.

    • spreadbettingdad
      September 14, 2012 - 9:03 am Reply

      Hi Paul,

      Thanks for the insight. I was heading in that direction already, I think, and was certain that psychology and learning your own boundaries is key to successful trading. You’ve just reinforced my desire to try and understand my own weaknesses a little more.

      Thanks.

  • Trader No. 9
    January 14, 2014 - 6:19 pm Reply

    Great post.

    Look at the bigger picture. Easier said than done. And make sure your set ups are top quality setups.

    🙂

    With trading, discipline is key.

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