The learning cycle for a newbie trader - PART 2

[magicaldragon]

Thanks Soul-Trader, Your thread is wise and motivating. I'm developing a similar system, where I turn on the computer once a day, and use self made indicators to go long or short with a large 50 pip stop. If I'm correct 55% of the time I will succeed. When the markets good, I trade stocks full time, but I'm tired of trading, and just want a steady streams of income. Thanks again, Magical Dragon

[Soul-Trader2004]

good luck with it sir!

ps, if you think 50 pips is a big stop, it isnt

[liquidrock]

great post! and we are listening.

[ginx10k]

Great post Soultrader. I've missed ur updates. keep up the good work. Maybe you'll reach that plateau sooner than any of us.

[jaymac]

Originally Posted by Soul-Trader2004

That's why I laugh when I see people posting that they are consistently profitable after a few months or even a couple of years - they may be, but it wont be for long. I think that even if you say this in chat rooms and on forums like this you know the truth yourself.

I've been live trading for 4 months. I am consistently profitable, was from day one of live trading, and know for a fact I will continue to be because my trading method is based on price in real time, not backtested systems.

I have a lot to learn and am not making the kind of money I will make in the future after I have more knowledge and experience, but I enjoy an extremely high percentage of winning trades. I won't even state it here because no one would believe me, since most people on this forum believe they can make money with 51% wins by "cutting their losses short and letting their profits run." (Although like you said, I think they know the truth themselves -- or at least they soon will.)

I have personally met a couple of professional traders who make serious money. They don't trade from mechanical systems and they shake their heads and roll their eyes if you ask them about backtesting.

I was lucky. I learned how professionals trade while I was still trading a demo, and I never had to go through all the sh** you mention. I 100% agree that you're in trouble if trading is a source of excitement, but I enjoy trading and I'm very interested in the business -- the economic, political, cultural, and psychological issues that impact the market value of a currency.

When I contrast my experience with the burnout that occurs from untold hours of backtesting systems, I'm doubly grateful. I wouldn't want to earn my living from a job that bores me.

But I have to tell you, I've never heard a professional claim they can kick back on the beach and let a mechanical system make money for them. In fact, people like Linda Bradford Raschke and other well-known successful traders go to some trouble to disabuse newbies of the notion.

When newbies hear these claims, it encourages them to continue seeking the holy grail system instead of knuckling down and learning how to trade currency. Consequently, 90% of them will fail, just as the pundits predict.

Just my opinion.

[lavista4u]

Soul-trader4,

Thanks, Your thoughts are very inspiring and it made me cut my learning curve significantly, knowing that the mistake every newbie makes defined by you are true to the core for most of us and i adjust my thoughts acourdingly and surprisingly, in a short period of time..i have learned that its all phycology and nothing else...."THE HOLY GRAIL AIN"T OUTSIDE, IT"S VERY YOU" just find yourself and you have perfected trading.....it may take few weeks to master yourself or few years....matkets, news, indicators, systems have nothing to do with your success..but its along bieng me...who would make everything loose or fail.

Thanks again...

I think you have reached a point of nirvana..where success and failure does not matter to you any more.. ...I think your next 8th* thread would be all about spirituality

[Soul-Trader2004]

hi Jaymac, normally i dont respond to obvious newbie comments but your post makes such sweeping statements without evidence that i felt i had to rebuke. Please don't take this personally (tho i'm sure you will, you're the market teenager all over

I would seriously suggest that you curtail your advice and comments until you have actually made it to five years, however i have the following oservations to mention.

4 months is not consistently profitable even if you won every day or every trade - particularly when the market was in a triangle accross most pairs for the whole of that 4 months - consistently profitable is when you can show at least a year of monthly gains, not just a few weeks.

also arrogance is the biggest killer of traders - you say "i know for a fact that i will continue" - statements like that come from teenagers. I dont have a clue if i will continue to make money using the methods i use - i just play the odds that it will continue to work - but i sure as hell dont 'know for a fact'

you also said "most people on this forum believe they can make money with 51% wins by "cutting their losses short and letting their profits run." (Although like you said, I think they know the truth themselves -- or at least they soon will.)"

not sure i understand what you are saying here - that you dont believe it? - well i can tell you that the system i use is only 54% win/loss and it makes me a lot of money - i also have a system that is only 20% win / loss and that makes money too. as well as another one which is about 93% win loss which also makes money - win/loss means buggar all mate unless you are looking to use specific staking plans in which case a >50% is whats needed.

you also said "I have personally met a couple of professional traders who make serious money. They don't trade from mechanical systems and they shake their heads and roll their eyes if you ask them about backtesting."

well, im a professional trader - i trade my own money not just somebody elses and i can tell you that whoever laughs when you talk about back testing and mechanics in forex is an asshole that will never make money. Im not talking about computer backtesting here im talking about hand testing - proving or disproving a hypothesis that your method has a greater chance of success than failure. Ok you may think that the past does not equal the future but if it's worked in the past then the chances are higher that it will work in the future than if it had failed in the past. - ive never heard such b****cks in all my life

You said

"was lucky. I learned how professionals trade while I was still trading a demo, and I never had to go through all the sh** you mention"

all this means is that you havent gone through it yet - you will go through it or you wont make it.

you said

"But I have to tell you, I've never heard a professional claim they can kick back on the beach and let a mechanical system make money for them. In fact, people like Linda Bradford Raschke and other well-known successful traders go to some trouble to disabuse newbies of the notion.
"

well, open your ears. I am a professional trader and i have a mechanical system where i could kick back on the beach and it would make money for me.

there, now you've heard of one.

I also have automatic robots that execute the system trades

Finally you said

"When newbies hear these claims, it encourages them to continue seeking the holy grail system instead of knuckling down and learning how to trade currency. Consequently, 90% of them will fail, just as the pundits predict."

Well, the words 'learning how to trade" make me giggle. There is no 'learning how to trade' - the only thing you need to make money out of the currency markets is a method which has a higher probability of a win than a loss.

lets just analyse this for a sec - you and many others think that trading is all about news, economics, the weather effect on crops,technical analysis, moon phases,geometric shapes, elliot waves etc etc etc.

I'm sorry to tell you this - but you must read this bit and read it hard.

ITS ALL BOLLOCKS

let me tell you why people invent all these different indicators, waves, shapes and theories - because they dont understand what moves the market and they want to understand - they think that by understanding what moves the market they will be able to make money.

Analysts are paid huge fees for their view on which way the market will move - and they get it right about 50% of the time - those paying them would be better off flipping a coin.

There is one thing that moves the markets and one thing only - people's emotions.

ok, now youre saying oh yes, greed and fear - thats easy but i have to know the news so i can work out what people will do. really? ... do you??

thousands of people try to do this in the market every day and never get it right - tell you what, i'm married and if i could understand what went on in my wife's head i'd class it as a miracle let alone being able to work out what thousands of traders are going to feel.

I'll say this again - forget 'learning to trade' and then learn to find an edge.

My final note is probarbly the most important thing that you will read as a trader. its three words long and could make you or break you . that final note is ....

Its all Mathematics.


Remember before you take this personally - you don't know what you don't know.

good luck.

[initialsBB]

Jaymac wrote some interesting points, but I do agree with Soul-Trader that 4 months of profitable trading does not mean anything in particular. I've been trading one mechanical system for (also) 4 months and thus far it has been consistently profitable - but i don't think it's the end of the road and that i've avoided all the s***, nor i think it's an unfailable method.
For me personally backtesting was huge breakthrough and eyes opener. Before i learnt to do backtests, after several losses i thought that i was doing something wrong and that my system was bad. Backtesting showed me that you just can't avoid string of losses and that you CAN be profitable with 6 or 10 losses in a row. It had taught me also a great deal about risk/reward, money management and discipline. Backtests are a must for every trader's development.