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SNIPER Market Timing: Digest of our popular "quote of the week"

Dear visitor,

on this web page you will find a compilation of our popular "quote of the week". They were published on a weekly basis in our market timing newsletter.

More useful tips for traders could be found at: Trading tips

Newsletter 20/2005:
" Success in trading systems - Part 4:
... Next he must see if there is enough capital in his account to handle drawdowns. It is very easy to look at a system report and see that a system made x million but how many trades did it take, how long did it take... How much pain (drawdowns) did it have to go through??? Try to look as if today is this particular day your system is down 1000 dollars or 10.000 dollars... Try to find that pit in your stomach ... that level of uncomfort ... because you will have these days ...
- R., 12.01.1998 -

Newsletter 19/2005:
" Success in trading systems - Part 3:
... Another issue for success is simply: We can't jump around to the system of the month or flavor of the month as we said every system will have it's rough time and if you jump out there is a good chance that you just jumped out at the bottom. Then you feel "wonderful right". ... [to be continued] ...
- R., 12.01.1998 -

Newsletter 18/2005:
" Success in trading systems - Part 2:
... Interesting enough the markets want us to do the hard thing. This is what separates winning traders from losing traders. A winning trader knows he has to do the hard thing. Do a trade he isn't comfortable doing. If it was easy everyone could do it.
We must learn to do the uncomfortable thing ... [to be continued] ...
- R., 12.01.1998 -

Newsletter 17/2005:
" Success in trading systems - Part 1:
How many of us have thought that buying one of these magical black box systems our financial success would be at hand.. However this is far from truth! There are 2 problems ... Firstly there is no perfect or holy grail system ... there will be drawdowns!! This is a natural occurrence in trading inevitable event. Does that mean that after a series of losing trades we need to throw this system out the window?? Probably not if this is a time tested viable system .. The second problem and probably the greatest is us. Lets admit it after a series of losing trades it is emotionally hard to pull the trigger and take the next trade. IF WE DON'T THEN WE TRULY STAND TO LOSE ... [to be continued] ...
- R., 12.01.1998 -

Newsletter 16/2005:
" Question: To all the technical traders out there, I ask that you pick three indicators, that in combination, you could live with exclusively. Or if this is not possible, say that.

Answer: ... It doesn't matter what indicators are useful to someone else, it's what you make work for you, that counts. Heck all the oscillators are based on price and all are similar. You may get a dozen different answers. So what. I have a friend who uses an indicator he likes that sometimes doesn't work right. Doesn't matter, he's a trader and he makes it work for him. Point is it's not the indicator, it's YOU!"
- P., 13.01.1998 -

Newsletter 15/2005:
" ... [part 5] Hopefully this will in some way be of help to those who trade, regardless of where they may be on the learning curve. All the traders I have known, myself included, have been a struggler at one time or another. It is necessary and in my experience an unavoidable part of the process of learning to trade. The one piece of advice I'd like to end with to those that are still struggling is TO BEGIN IMMEDIATELY TO TRY TO SIMPLIFY YOUR TRADING. "
- T.A., 13.01.98 -

Newsletter 14/2005:
" ... [part 4]: Once this point is reached their confidence builds, their focus narrows, and the other necessary qualities such as discipline and patience begin to evolve at a rapid pace. Their search for what works becomes less externally oriented and more internally driven. In other words, they become more concerned with how they work as opposed to how a system, indicator, or computer program works. The ones that continue to struggle do so because they are forever attempting to put a square peg in a round hole. They never reach the conclusion that just because someone is successful with a method it does not automatically follow that anyone can achieve the same success with that method. They continue to try every method, system, indicator, guru, computer program, etc., that is even rumored to be the road to riches. Their search is entirely external. ... [to be continued]. "
- T.A., 13.01.98 -

Newsletter 13/2005:
" ... [part 3]: The "strugglers" are compromised of beginning traders who are on various stages on the learning curve and those that have a considerable amount of experience but have yet come to grips with what works and what doesn't. There is little difference in terms of behavior between those two groups. Both groups jump all over the place and never settle on one style or method. Neither group has developed the discipline or patience that is vital if one is going to be successful. They tend to overtrade and are very concerned about missing a potentially good trade and as a result take a lot of bad ones. They have a difficult time with losses and tend to look at each trade as a discrete event rather than one event in an ongoing business where the results of any given trade is insignificant to the whole. They spend a lot of money on books, advisors, newsletters, systems, and computer programs looking for the answer. They think that more is better: more computers, more indicators, more screens, more advisors. The simple is eschewed. The strugglers that are successful in making the transition finally reach the point where they realize they have to simplify. ... [to be continued]. "
- T.A., 13.01.98 -

Newsletter 12/2005:
" ... [part 2]: My clients have been a diverse group as you might well imagine, coming from all walks of life and backgrounds. As a group they have been very well educated, successful people in most of the ways we typically gauge success. These people have collectively read, studied, subscribed to, and attended more seminars and trading courses than one human could in a lifetime. Some of these people are advisors in one capacity or another to traders. As traders, some of the advisors are successful and some are not. I have some very successful clients, and a lot of not so successful clients. I have never had a client make a million dollars. I have had a client lose more than a million dollars. Again, I'm not trying to present THE answer (I don't have it). These are simply observations of the collective experience of a large and diverse group of traders. Some of these traders are long-term traders, some are short-term traders. I am not aware of anyone who used or is using a purely mechanical system. The successful traders are those who have designed a system or method that fits within their personality... Whatever method or system they employ, they do so with consistency and discipline. They trust themselves. They are not always in a trade. Even the successful day traders do not trade every day. They use various methods but almost all of the methods are very simple. Their money management skills are excellent, meaning once they are in a trade they know how to manage it. ... [to be continued]. "
- T.A., 13.01.98 -

Newsletter 11/2005:
" [part 1]: I have a few thoughts I thought I'd share with the group regarding traders and trading. I have had a unique opportunity because I'm a broker to observe many, many different trading styles. I have also friends who are or have been brokers and through the years their experiences have very closely matched mine in terms of the activity and habits of their clients.
This had been the most valuable experience one could hope to have to learn to trade. I have almost literally been looking over the shoulders of traders for 13 years and I want to share some of what I've learned and observed .... [to be continued].
- T.A., 13.01.98 -

Newsletter 10/2005:
" Question: When can you change it (= Trading plan)?

Answer: I recommend you trade a plan for at least 30 trades where there has been flawless execution. 30 is a number which statisticians say is the minimum number needed to produce meaningful data. There are two reasons why a plan may not produce a profit: a.) the plan is flawed or b.) the trader fails to execute flawlessly. As a trader you need to know whether it is you or the plan that needs amending if trading results are not up to expectation. 30 trades flawlessly executed will tell you if your plan needs amendment.
- R.B., 08.01.98 -

Newsletter 09/2005:
" Question: I would like feedback from people about what a trading plan is, is it a master plan?

Answer: Yes, in the sense that it is the standard by which you determine whether or not you take a trade. Trading is a continuous event - by that I mean a trade begins when the trader initiates a trade and ends when he liquidates a position. Accordingly it is of outmost importance that these events are clearly defined.
- R.B., 08.01.98 -

Newsletter 08/2005:
" ... In the past paragraphs we discussed 95% worth of psychology. The last 5% are the systems themselves. As said there are numerous. One can be a day trader: less capital intensive but more time consuming and emotionally draining. Or a trend follower or even be counter trend. The trader can be discretionary or a mechanical system follower. We feel to be ultimately successful one must be well capitalized and trade various non correlated markets. The trader must be on guard at all times. ANYTHING CAN HAPPEN AND THE TRADER MUST BE PREPARED. "
- R.A., 04.01.98 -

Newsletter 07/2005:
" ... Please note it doesn't take very many trades that you don't follow your [trading] plan to end your career as a trader. There are many trading systems that consistently take money out of the market. Ironically many are very simple in nature. HOWEVER THERE IS A TREMENDOUS DISCREPANCY BETWEEN SUCCESSFUL SYSTEMS AND SUCCESSFUL TRADERS. Unfortunately many people who trade systems try to outguess their systems ... [to be continued] "
- R.A., 04.01.98 -

Newsletter 06/2005:
" ... Please note it doesn't take very many trades that you don't follow your [trading] plan to end your career as a trader. There are many trading systems that consistently take money out of the market. Ironically many are very simple in nature. HOWEVER THERE IS A TREMENDOUS DISCREPANCY BETWEEN SUCCESSFUL SYSTEMS AND SUCCESSFUL TRADERS. Unfortunately many people who trade systems try to outguess their systems ... [to be continued] "
- R.A., 04.01.98 -

Newsletter 05/2005:
" ... One will probably learn from a successful trader that he isn't afraid to take losses (almost cherishes them)..that he knows what he has to do and actually pulls the trigger and does it. A successful trader knows why he is in the trade and also where the trade doesn't work. He doesn't attach any sense of personal worth on a trade..He is no less a person if the trade doesn't work..Interesting we are saying the trade doesn't work..not that we made a mistake..the only mistake is not following your trading plan...[to be continued] "
- R.A., 04.01.98 -

Newsletter 04/2005:
" [continuation] ... This truth we are talking about is simply discipline. The ability to properly execute trades. Most traders find it much easier to identify something in the market as an opportunity rather than act on it... The key is developing experience and confidence. But the next question is how does one develop this level of confidence.
Some say paper trading is a learning tool for utilizing a methodology but it is hard for us to agree. Real money is not on the line nor are those emotions we all must dealt with.
An analogy is a place kicker of a football. He can practice all the time but when the stadium lights are on he misses the goal posts. The pressure overwhelmed him. Unfortunately the same happens in trading. Fear. Greed take over our perfect thought out trading plan. We must overcome ourselves and really trust ourselves and our methodologies. We must not be too hard on ourselves. We are learning and really learning about ourselves. Would you be angry at a child learning to ride a bicycle?? Hopefully not. Trading takes and emotional fortitude. In short discipline. There are no easy shortcuts ... [to be continued]
- R.A., 04.01.98 -

Newsletter 03/2005:
" It seems that many are searching for that infallible indicator or that Holy grail system. Well I am very sorry to tell you it really just doesn't exist. I can't tell you things you want to hear but only the truth! The success of trading really isn't that far out of hand. Successful trading is both more or less what people think. However winners obviously know something that losers don't. What is this elusive thing??? Firstly one must know why he is trading and be responsible for all his actions. Your psychology is the most important factor determining your trading results. It is stated 95% of success is determined by psychology and only 5% by your analysis or trading system. Ironically most spend most time in trying to perfect that ultimate system when the truth is within all of us ... [to be continued] ... "
- R.A., 04.01.98 -

Newsletter 02/2005:
" The famous quote by Ed Seykota is "Everybody gets what they want out of the market". You will take yourself down to level of success you really deep-down believe you deserve. You fight an ingrained belief that easy money is wrong, and you find ways to make it hard. To become a winner, you must first give up being who you are, by becoming deserving of the money in your eyes. If you control your own actions, and if you act in your own best interest, the markets are powerless to hurt you. There is really nothing to stop you. Except yourself.
Your own power to ruin it all is immense, and unrelenting. Anybody ever massacre a really great system by trading it?
- W.M., 29.12.97 -

Newsletter 01/2005:
" When you aren't in a good frame of mind to trade, don't. When you are, trade like you mean it. ---
Basically, this means that when you aren't trading, get a life. Don't spend all your time thinking about it. Play with your kids. Rake up the leaves in the yard. Go to the movies. Whatever. This also means that when you ARE trading or analyzing, DO IT. No distractions. Make sure you create an environment that allows you to tune in on what you are doing.
- W.D., 14.12.97 -

Newsletter 52/2004:
" Watch the world around you. It provides excellent trading ideas every day ---
Did you know that many of the more popular martial arts are based on the movements of animals? The Masters were keen observers of Nature, and knew that acts displaying natural harmony carried intrinsic power. We can apply these concepts in modern terms. One (trading) system that I wrote, and it is one I still trade, had it's origins in watching the way a Frisbee behaved in flight.
Yes, I KNOW that sounds stupid, but it works ...
- W.D., 14.12.97 -

Newsletter 51/2004:
" Every trader has access to "The Holy Frail". It is that Cauliflower shaped organ in back of their eye-balls. --- The greatest trading tool you have is your brain. Don't take any trading idea you see or read at face value. Take it apart and spread it out. Add, subtract and divide it. What is your own good common sense telling you about it? Don't be afraid to use your brain to create a new system from the bits and pieces of others. And NEVER be afraid to strike out on your own and create a system for yourself. "
- W.D., 14.12.97 -

Newsletter 50/2004:
" Trading isn't about beautiful technical systems, or crystal trading epiphanies. Trading is about making more money that you lose ---
In the end, our egos won't put the Ramen noodles on the table. Scratch and fight for even the smallest sort of information that will give you an edge.
Examine every trading idea you come across in that light. Take the time to look at EVERYTHING, no matter how bizarre it might sound, because you will probably come away with at least one good idea from it.
- W.D., 14.12.97 -

Newsletter 49/2004:
" I've also read "The Way of the Warrior Trader", it is great for those with a lack of confidence or fear, and is good for those who need to fine tune the emotional aspect of trading since trading should be a more mechanical process. If the data looks good run with the trade long or short and determine a maximum acceptable loss before opening a position, some traders base stop losses on a percentage basis and others use a point basis. Work with the method you are more comfortable with. Trading is my sole source of income and cutting losses and preserving capital is the only way a trader can survive to trade another day. "
- W.J., 13.12.97 -

Newsletter 48/2004:
" Biggest problem in trading is not knowledge, but belief in knowledge. Trading is "executing knowledge". After 25 plus years in this crazy business of trading, the one and only thing that lets me put on trade after trade is this ... a stop order. I know my limit of downside so I can justify my trade. If after a few losing trades in a row, then confidence will start to wane again. Remember the stop order when the trade is placed. That limit of loss will give you the power to place the trade. If however, your fear of failure is based on not being able to play the game, and it must partially be viewed as a game, 'cause you are short on capital, and if by losing, this puts you closer to leaving the trading building, then cut back on the amount of your trades. All of my biggest fears have come from losing too much because I became complacent and did not place a stop. If trading is the ball-game, then placing the stop is the pitcher. Do not do one without the other. "
- D.B., 11.12.97 -

Newsletter 47/2004:
" If your trust your method, you'll be more afraid of missing a winner than of having a loser, so execution becomes automatic. If your analysis and timing are loose and intuitive, you build your confidence by trading (small) and getting a history. You might see that you are correct 75% of the time, and the longer you continue at that rate, the more you'll expect it to hold. Either way, you are never certain about the current trade, rather about a group of future trades as a set: if you execute your strategy you will make money. The current trade only seems important because you have to live through it, but it's no more important than the one you closed 3 weeks ago and have forgotten. The trick is to back off to an infinite perspective. "
- W.M., 11.12.97 -

Newsletter 46/2004:
" If you want to trade for the long term - the name of the game is survival, and survival all depends on how safe you make the game. "
- M.J., 11.12.97 -

Newsletter 45/2004:
" There is nothing inherently wrong with viewing the markets as a battleground, only in the way we trade that perception. To view yourself as taking an active role in the battle, is not good psychologically. If your mind deems itself to be in an environment which it perceives as being threatening to its existence, it will produce all sorts of nasty side effects, like increased production of adrenaline, and natural pain killers (Flight or Fight Response), all of which decrease a traders ability to function rationally, and often profitably! :)
One can view the markets as battleground, as long as one realizes that they must be an objective observer. For myself, I make no attempts to forecast the outcome of the battle, or choose sides. I simply wait until one side has a dominant advantage, then I let a trade hang out with them for a while. :)
- W.D., 11.12.97 -

Newsletter 44/2004:
" The biggest obstacle to a trader is the trader himself. If you don't have a successful trading plan combined with discipline, under capitalization is not your biggest concern. However, having the capital to stay in the game will allow you the time and experience to grow into a more adept trader.

The main difference is that even a trader with a successful trading plan can be knocked out of the game due to under capitalization.

Like most traders, I had to grow. My first trading ideas were amateurish. My early trading discipline was non-existent. Working as a clerk and trading for successful traders and hedge fund managers helped the growth process. Trading other peoples money also helps on the discipline front. I feel it may be harder to do the right thing when your own capital is on the line...
- S., 04.10.04 -

Newsletter 43/2004:
" I view it like this:

* Entry rules control risk.
* Exit rules determine profits and losses.
* Entry and exit rules together determine expectancy and opportunity.
* Position sizing determines your net profit or return, as well as maximum drawdown."
- A.M., 05.10.04 -

Newsletter 42/2004:
" A successful system should have very few variables, 3 at the max. Anything more than that is probably curve fit and won't continue to perform in the future.

Secondly I don't use the technical indicators built into the various software. For me they have never consistently worked. Instead what I do is look for some simple relationship such as the oddball system's use of advancing issues. Other examples might be the relationship of the daily close to the next day's open, today's open to close, the size and direction of the overnight gap, % of up or down volume, etc.

Once I find something promising I then take the back test results which should have at least 100 or more trades and using excel, resort the gains and losses to get a better idea of the possible maximum draw down. I also generally assume that the draw down in the future will be at least twice that shown on the back test. If these tests show the system is tradeable then I go forward recognizing the draw down I know I am going to face. Obviously if my capital or stomach can't handle the expected draw down, the system isn't tradeable, at least for me even if it is highly profitable.

I look for systems that have a large profit expectancy. That means they must trade often (usually at least once every other day) and have a reasonably large average trade profit. This type of trading does require a real time feed but nothing more than an e-signal with a minimum number of symbols. So far this method of trading futures has worked for me but not without some dry spells and some painful drawdowns.

Even given the simplicity of my systems and the fact that I work at trading full time everyday, I sometimes go for a couple of months before my testing comes up with a new successful system. Doing it part time would be even harder.

Lastly, if your trading is successful but you just don't have enough capital to make a decent living, your alternative is to manage other's money as well until you can grow your own capital to the size you need.
- R.S., 01.10.04 -

Newsletter 41/2004:
" In fact, the greatest variability of all is man, so why would man performing a complex task like trading be classified into a single percentage (i.e. compounded annual performance)? There is plenty of opportunity to make money, and even more to lose it. Its easier to make better percentages with less capital, and easier to make more money with more capital (or lose in both cases). I would assume though, that the distribution is paretoed near the bottom for returns. "
- P.B., 03.10.04 -

Newsletter 40/2004:
" List member: For me, anybody who characterizes trading as boring probably doesn't actually trade.

NW: ... I have been trading since 1972 and I have been a full time professional trader since 1975. When my trading is going well, it is really pretty boring. It is only when it is not going well that it gets "exciting". With excitement like that, I would much prefer to be bored.
- N.W., 10.12.97 -

Newsletter 39/2004:
" List member: Trading creates a situation that risks absolute failure for the potential of absolute success.

NW: Why must it be absolute failure or absolute success? On the contrary, trading is a process. Losing trades that follow one's winning trading plan are not a failure but rather part of the process and the cost of doing business.
There is a lot of gray area and seldom is it a case of black or white. A winning trade just means that you have made one step forward. A losing trade only means that a winning trade is probably one step closer. It is a process. It is not an end unto itself that can be judged in absolute terms.
- N.W., 10.12.97 -

Newsletter 38/2004:
" List member: You must learn to be an active observer, develop market sense, be tuned in, and capture the rhythm and the personality of the markets.

NW: I agree, but you don't have to watch every tick unless you are day trading. After many years of watching the market, it begins to look like re-runs.

List member: With all of that, I ask: How can trading ever be boring?"

NW: It's boring if it is done right
- N.W., 10.12.97 -

Newsletter 37/2004:
" ... This contradicts your previous statement about trading being a battleground. Now rather than confrontational you are adaptive and cooperative. I agree with the later philosophy. I think trading is like sailing where you get most out of your boat by setting the course and sails which best takes advantage of the natural forces. When the conditions are just right and you are sailing just right, you become one with the boat and with nature. This is the ideal model for trading where you become one with the market. Other times it is too stormy and then it is best to keep your boat docked. "
- N.W., 10.12.97 -

Newsletter 36/2004:
" I agree that you have to master your own human nature but thinking of the market as a battleground is not likely to do this. The way to master your human emotions is thru have an objective game plan and putting your emotions to side. Reducing trading to a match of egos is non-productive and likely to lead to financial self-destruction. When the market opens, you should bring your wallet, your trading plan, and leave your ego at home. "
- N.W., 10.12.97 -

Newsletter 35/2004:
" Your trading should not be an extension of personality, ego, etc. It should be as objective and as unemotional as possible. The ideal, if achievable, would be a robotic mechanical trading system where you need not be present. Although I have not achieved that level of robotic trading, I find myself often using market time to catch up on paper work, e-mail, floating in the pool, or taking a nap. Today I exited my long silver position. I last went long six weeks ago at equivalent basis March at 4.81 and today exited at 5.84 based on a target I generated shortly after entering this position. I could have entered a GTC order and gone on vacation and made the same $5,150 per contract (minus the transaction costs of rolling from my original December long contract to March for a 7 cent spread). Sitting and watching the market is boring and non-productive. Taking profits and depositing the money in the bank is where the fun is. Based on your comments, I would guess that your goal is to trade whereas my goal to make money trading. There is a big difference between these two minds sets. "
- N.W., 10.12.97 -

Newsletter 34/2004:
" Realtraders, there was a few e-mails circulating around the forum last week with regard to trading being boring. I closed a short position Wed.(OEXXN) for which I lost exactly $500.00 with commission. I entered the trade on Dec 1 with an OEX print around 470. The option churned out around, got ugly, and finally recovered with this weeks minor decline. I deleted all of the "Trading is Boring" threads mainly because I couldn't understand how trading could possibly be boring. After closing my trade, for which I considered a victory, I couldn't help but think trading can never be boring. I did not originate any of the thoughts below I have, however, adopted them as my own. My trading is an extension of any personality, belief system, values, hopes, fears and ambitions. The structure of my trading business is in short, my self-portrait, my autobiography, my signature. Furthermore, trading offers the battleground for the ultimate test of self control, self discipline and wisdom. You can not consistently win in the markets unless you have mastered your own human nature. Trading exposes you every weakness both to yourself and to others who may be watching. You will be successful in so far as you can master wisdom and learn to cooperate with the markets you trade. You must learn to be an active observer, develop market sense, be turned in, and capture the rhythm and the personality of the markets. With all of that, I ask: How can trading ever be boring? Trading creates a situation that risks absolute failure for the potential of absolute success. For me, anybody who characterizes trading as boring probably doesn't actually trade. "
- F.C., 10.12.97 -

Newsletter 33/2004:
" >> I am loosing small money at this time and I am looking at the S and P futures which are down 11 at this time prior to market opening. Oracle has tanked which makes me think that this may affect most companies with Asian exposure. The market was just ready to make us money and now this. I guess I'll duck for cover until the storm is over. Anyone else have comments on the market? Replies are appreciated early as the mailman is so slow.

My only comment is "keep your discipline". If you have a system, trade it. If you don't, then you might as well buy and hold.
- O.W., 11.12.97 -

Newsletter 32/2004:
" Whatever position you have is ok as long as you know why you are in, and you know when you should be out with a profit, or out at a loss. This may not apply to you at all, but I perceived something in your wording which does not work in favor of successful trading, and which reminds me of the usual trader talk or question: "are you long or short?", "look where I bought!", "I believe it goes down", "are we going to hit 9000" ... Just in case, I thought to share this. Please don't mind. Beware of "getting married" to your position: For one, stating your position to another person, is a first step toward identifying yourself with that position. As for a cocktail party where you introduce yourself, "(your name), Glad to meet you", here you say, "short march 11915, how to you do!". If you reflect upon this, you will notice that your position becomes part of you, is now you. Anything that goes against it, a retracement, a loss, news that comes out, becomes a threat to you, as it challenges your identity: At the same cocktail party, how would you react if the person you introduced yourself to, started mentioning "we are going to determine whether you are right or wrong": That is threatening. Any perceived threat will generate emotions and a response, which will be more or less controlled, and designed to protect you. In trading, the perceived threat of a retracement in your profits will make you exit too early to protect your profit, and the threat of taking a loss, will make you want to change that by taking the loss at a reduced level (to avoid getting hit too much). That is why, it is important not to think you "are" short from so and so, but to think: for the moment I have nothing to do, until an exit or a reverse signal pops up. This way, you will use your "perceived threat" (an unexpected event requiring a response) to generate action, in this case a trade at the price level indicated. After this you can relax, because you have successfully dealt with the threat: It is now gone, no signals to take = nothing to do = perfect balance = go play video games or go sun bathing, or swim or mow the lawn or clean your car ... (I do all of the above) until your next signal comes up. I trade 30min bars, so I know damn well there's no business for me watching the screen in meantime, what would I do with the price info that comes up anyway? Lastly, without watching, I don't know what the current price is and don't want to know. If you identify with your price, you will also identify with your P&L. So one day , you'll we be a good boy, and the next you'll be a bad boy. Of course, the trade outcome is irrelevant to your value as a person, but that's what your mind will register, and that is very unsettling. Ignore the price you got in, concentrate only on the price you have to exit, on the way you'll do it. One trade or even 50 trades are meaningless. Absolutely, totally meaningless. After 1000 trades, you will see your patterns clearly, whatever the markets did. You'll have gone through winning streaks and losing streaks. Notice the "s". You'll notice how you reacted streak after streak, and the trend in your attitudes, behaviors. If your trading needs improvement, and I believe there's always a little something one can improve, it will pay off big if you work on those aspects. Forget about indicators and filters and stuff. Concentrate on improving the most important tool: yourself, and how you use yourself, what you allow or don't allow yourself. Be your best. "
- G.G., 10.12.97 -

Newsletter 31/2004:
" I see you are talking about trading for a living. I have traded for about 25 years now...about 15 of that I have traded only my own account...all of this time has been on a trading floor. I am in the transition to trade off of the floor. A very big transition I might add. For those of you who are hopeful to trade full time let me suggest what has worked for me. First, the most important work that you can do is on yourself. This includes all area of your life. If you do not listen to tapes (motivational) the I would suggest Zig Ziglar and Tony Robbins...If you get Tony Robbins, order the CD's...They can be played on your PC first thing in the morning. Working on your self includes getting in great physical shape and staying here...when you are in shape you feel better, think better, and trade better ...when you make mistakes, you handle stress better. Second, find someone near you who does trade for a living...and buy him a dinner at a really expensive restaurant... consider this an investment in yourself. Ask him what he does, what he or she looks at, what markets to trade, when, why, size, risk. If you hit it off, ask this person to Mentor would be surprised how many traders are willing to share. It is a lonely business, and this is a way a trader can give something in return. This will be the best investment that you can make because you may be able to shave years off of the learning curve. The successful trader has already paid his dues (literally). Add some of his experiences to yours. Look inside yourself and find out how to make money. If you are really committed and have taken the other steps, then you are ready in my mind to begin the journey. This is a life long trip that will take up part of your thinking capacity 24 hours a day for the rest of your life. Every trader is different. What works for me might not work for you. Our ability to handle different levels of risk and stress are different. In the end, you must search for the key that will work for you. There are many techniques that will add insight but only trading will add experience. I believe that your mind is like a computer. Feed the data in, and the answer will eventually pop out. When you are glued to the box for hours on end, you are feeding data into your built in computer. Your subconscious is working on finding answers to questions 24 hours a day. Kind of like a TSR program. Be sure that you are asking yourself the right questions! "
- D.C., 07.12.97 -

Newsletter 30/2004:
" Regarding Dennis C.'s post about trading for a living; I second everything you said Dennis. I can especially identify with what you said about trading being a lonely occupation. I relocated to a small town when my son started school, and now office at home which really compounds the problem. No matter where you are, people do not understand the business of speculation, I think many simply regard us as lucky gamblers who will one day have to "pay the piper" when he catches up with us. (I guess they think I have been on one hell of a lucky streak, as I have been at this for over two decades, although not all of it full time). In any event, thanks for pointing out the emotional preparation that is necessary to trade successfully, it is something that can be easily overlooked until you are confronted with it. "
- B.S., 07.12.97 -

Newsletter 29/2004:
" Perverse trader that I am, I find winning BORING - the market went where I thought it would. I find losing EXCITING - 'cause what that means to me is I was WRONG, and, therefore, the market is giving me an opportunity to learn something new and as a result become a better trader. I LOVE MY LOSSES!!! They give me the opportunity to grow. "
- R.J., 05.12.97 -

Newsletter 28/2004:
" Your letter really struck a chord here. I have been poring over my bond charts, AdGET Elliot waves, point and figure, etc., patiently waiting for the move. I shortened at 119^14 but had my stop at 119^30, held into the report today, watched it plummet, looked at all my charts again and figured this is it. The top is in for a while. I expected the bonds to move sideways for the next few days and then go lower again. Much to my chagrin, like a deer caught in the headlights, I just kept staring at my chart constantly thinking NOW, NOW, NOW it is going to turn around and back off again. Totally ignored all signals which disagreed with my bearish turn. Felt very stupid at the end of the day. After trading for over a decade, I forgot the essential rule, when the cash register drawer is open and the bills are spilling out, it's my job to pick them up. "
- S., 05.12.97 -

Newsletter 27/2004:
" Sorry, but you are correct
...the discipline must take away any pleasure of being right
...if one is any good, ones job must be as banal as cleaning someone-else's drains
It must be totally without emotion.
- R.H., 06.12.97 -

Newsletter 26/2004:
" I had been diligently counting my Elliot Waves for weeks, waiting for the end of the 5th wave and anticipating a subsequent significant correction. Yesterday 12/4, I finally saw what I believed to be indications that a top was in place. I didn't wait for the market to verify my analysis, I jumped in because I just HAD TO GRAB THAT TOP! I sold my March T-Bonds at 119-11. Then I placed a stop-loss at 12 ticks above my entry. I figured that if I was wrong and the market moved up beyond 119-23, I wanted out; I didn't want to lose more than $375.00. Well the market went up to 119-26 and stopped me out. Now, every time I look at the chart for today I feel sick in the stomach. The market fell like a rock down to a low of 117-75! I am not proud of myself. I have been humbled. I write this so others may benefit but I know that you can't trade smart unless you have already traded foolishly. The key is to survive so you still have capital to trade smart once you graduate from the school of hard knocks. This experience of mine is an example of how a person can buy systems, subscribe to newsletters, study indicators, invest in data feeds, charting software and long term price charts. Despite all of the expert helpers, he alone must pull the trigger and his personal emotional influences easily cloud his judgment once he decides to push that speed dial button to his broker. Now to shake it off, get back to my charts and in the words of Scarlet O'Hara:"Tomorrow is another day." "
- A.E., 05.12.97 -

Newsletter 25/2004:
" ** I am making money but not to the extent that I want and I would like to evaluate myself next to what others opinions are of what the 5-10% of the winning traders are doing.

NW: Most are not trading for the profits. They trade for the excitement or to vent some neurosis. To paraphrase Woody Allen's famous: "sex is dirty ... if it's done right" - Trading is boring ... if it's done right.
- J., 05.12.97 -

Newsletter 24/2004:
" ** Norman, in a message on Realtraders you said: "And that only applies to the 5-10% of traders that have what it takes to be winners." I am fairly new to trading (1 year in futures) and I would be interested to know if you have an opinion on what it takes to be one of the 5%?

NW: Here are a few qualities: Discipline, patience but the ability to pounce without hesitation when an opportunity arises, perseverance without being overly stubborn, the ability to be brutally honest with oneself, an insatiable thirst for research with the ability to discriminate so that analysis does not become paralysis, an unsinkable belief in ones own ability to ultimately win in the long run, and finally and perhaps most importantly to know thyself to the point of being able to manage oneself and make intelligent decisions accordingly.
- J., 05.12.97 -

Newsletter 23/2004:
" Each day I read here about people who are struggling to trade for themselves,
people who are losing money, people who have bought dozen of systems and newsletters, people who are looking for the easy short cut to the holy grail. All I am saying is that if their goal is truly to make money in commodities, some of those people would be better to go a different route. Just because it is a "traders" forum, doesn't mean other related ideas shouldn't be mentioned. As traders, we all play a percentage game. We ware trying to use methodology and take the trades which have the best chance to be profitable. It is all odds. Well, the odds are HEAVILY stacked against the individual trader. That is a fact. The odds are against making money with a small account, the odds are against making money without a great deal of experience and discipline, the odds are against making money without a lot of "trading resources" at hand, the odds are against making money trading on a part time basis, the odds are against making money from a methodology/system sold by a public vendor. These are all realities and we are supposed to be trying to get the odds on our side. Of course, individuals can and do make lots of money in some cases. Some of the people in this forum are those profiteers, but most are not. And some of those that aren't may need to face reality a bit.
- E., 05.12.97 -

Newsletter 22/2004:
" Some say that a proven system will give you the confidence to trade, I believe it helps your confidence as you would be gambling to trade a system or method you did not believe gives you an edge, and yes I have experienced the pain of not trading a system which I continually see makes money in the market due to my own hang-ups, if you have never failed to take a trade you should have you most likely do not trade; So I would say the answer to both sides is yes.
Our individual personal views and state of mind effect both our choice of trading ideas and our execution of those ideas: Our own character and motives must be scrutinized as carefully as we would any system, software, or any other individual. Be very honest with yourself or waste a lot of your own life, time and money.
- G., 05.12.97 -

Newsletter 21/2004:
" I learned a long time ago that I had to look for ways to note a BUY or a SELL, and not to fixate on the "Asia" problems or the "inflation" problems, or now the "deflation" problems. All this stuff is fluff. Turn off the TV! "
- M.R., 04.12.97 -

Newsletter 20/2004:
" One of the best choices for would-be traders is to admit that they are not cut out for trading. You can have all the money in the world, but if you don't have the right mental makeup for taking and for being disciplined, then you are destined to fail. Return all software to the vendor, not just Tradestation. These are really some of the biggest mistakes I've have made, especially the "overtrading" part of it. This has been my demon to overcome, and so far so good. But it wasn't always like that and I'm still working to beat it. One day at a time. Trading is really an easy enough endeavor - it's just that our mental baggage makes it all that more difficult to execute the plan, and I think many people think it can't be this simple to make money. The adage "Trading is the toughest way to make an easy buck" sums it up. 80% or more lose their money because they aren't cut out for trading. Simple as that. I might want to be a pro hockey player, but if I don't have the skills, I won't cut it. Admittedly, trading is a mental pursuit, so there isn't the physical side that would be impossible to overcome if you weren't born with the requisite physical makeup. But if you can't execute the trading plan, then how can you expect to win? Case in point: XXXXXX XXXXXXXXXXXX. He was/is a great trader. But he broke his own rules (as far as his book is concerned) and look were he ended up. Trading happens to be one of those endeavors that is very unforgiving of mistakes. However, minor mistakes will almost never take you out. But a big one, like betting the farm, can and usually will. "
- C.N., 03.12.97 -

Newsletter 19/2004:
" Optimization is not the key to making money; it is the information about parameter stability, which is the only way to use it. Too many parameters do not make it better.

When testing remember to use money management and once you do that you will see how results will change once using REAL portfolio level money management. When using software that considers that you will see what I mean.
- V.K., 23.04.04 -

Newsletter 18/2004:
" **We want to do analysis of our trading systems.
**We are looking to analyze 10-50 variables used in each of
**10-30 stock trading systems.
**The goal would be variable set selection.

The first thing that leaps out at me is that you are analyzing FAR FAR too many variables. With that many degrees of freedom, you would need many thousands of trades (with each system) to have any confidence that your results are not curve-fit.

It sounds to me as though your models are extremely complex. Complex models, in my experience, seldom perform well out-of- sample. That's because no matter how much back testing you perform, you are almost always cherry-picking anomalous results that are caused more by random chance than by actual repeatable trading choices.
- G.F., 22.04.04 -

Newsletter 17/2004:
" As a trading "coach", I have found that an individual's unique psychology is the one, most important indicator of the trader's chance of success. I can teach a number of different methodologies using Tradestation. But if the trader cannot execute the signals properly, then success won't follow. Most of the time I find it's a problem of not pulling the trigger, but in 20% of the cases it's a problem of overtrading. Trading any kind of proven, successful strategies should give the average trader success. But after working with over 60 traders over the last 1.5 years, I have found that not to be the fact. No matter how hard I have tried, most traders refuse (for whatever reasons) to follow the strategy. I originally sold my methodology to raise trading capital. I now trade full time for a living. I guess it boils down to believing in one's self and the methodology one has chosen. If you can't do that, you are destined to fail and might as well try and get your money back from Bill Cruz if you can.

In order to be successful at this game:

1. Develop or buy a successful trading strategy.
2. Believe in it.
3. Trade it.
4. Modify, if necessary. (Probably not worth the effort).
5. Trade it.

The biggest problem I have seen, like I said above, is failure to pull the trigger. The 2nd biggest obstacle to success, is overtrading when there really isn't a signal evident.
- J.C., 027.12.97 -

Newsletter 16/2004:
" I have been trading for five years and it is only in the last year and a bit that I have started to develop the real skills that I need to learn a good living. The skills I am talking about are not EL (Note: EL = Easy Language) programming or AI routines or fancy technical analysis. I have a good, reliable, tradeable system for quite some time but it was and is my own limitations that have and do prevent me from really making a lot from my trading. I have given up looking for the Holy Grail of trading systems, because I realize that I can be easily tempted by the claims made by system vendors. I accept that my results and my future rests with my own liability to implement the system I have designed. "
- N.C., 27.11.97 -

Newsletter 15/2004:
" I make my living from it (= S&P 500-Index-Trading). I agree with Mark Douglas (author of "The Disciplined Trader") when he told me at his seminar that trading is actually more than 90% psychology and only 10% or less methodology. Of course, great psychology without a profitable method or system will not make any money. However I firmly believe that it is very unlikely that a profitable method can be traded profitably for an extended period of time without the trader first learning how to deal with their own unique limitations and strengths with regards to the method they have chosen. "
- N.C., 27.11.97 -

Newsletter 14/2004:
" There are two parts of trading, step one is knowing thyself, step two is trading. These are serial not parallel steps. A person should know themselves (motivations) before they start trading. If one is trying to prove a point to parents or relatives, trying to retire in one trade, or trying to become a Master of the Universe, they are in trouble. This is 100% psychology and step one. Once past step one, trading is 20% psychology (doubting signals) and 80% methodology (I use these numbers because I take 4/5 signals. "
- T.P., 02.12.97 -

Newsletter 13/2004:
" If you have the psych done - chances are that you have a system that kicks butt. The reason being is to have confidence, you need something that has been back tested, traded in realtime, and makes money. Otherwise you will not have the psych to trade correctly. Part of the psych is having the right system. They go hand to hand. "
- M.J., 01.12.97 -

Newsletter 12/2004:
" Plan the trade and trade the plan! How many times I failed to follow this simple advise and paid dearly for it. It pays to be disciplined in any market. Know what your max loss will be and bite the bullet and exit the trade before it is out of control. "
- D., 26.11.97 -

Newsletter 11/2004:
" 1. Money management is the most important aspect of trading.
2. Trading takes tremendous discipline and patience.
3. It is possible to make lots of money using very simple techniques.
- T.S., 26.11.97 -

Newsletter 10/2004:
" From my experience, I cannot overstate the importance of discipline in my own
trading regime, especially on exits. This discipline was a welcomed side effect of developing a trading system.
- R.W., 19.11.97 -

Newsletter 09/2004:
" There is no room for traders to have opinions! Investors maybe, but never traders. You have to let the market speak to you on a daily basis. "
- G.S., 14.11.97 -

Newsletter 08/2004:
" My trading was terrible when I chased after money. But when I focused on things other than making money through trading, my discipline improved dramatically. My trading improved tremendously when I decided not to have any expectation of the markets and be pro-active instead of being re-active. I totally have no expectation of the markets in terms of direction, trend, condition, etc. Also, the day I decided not to read newspapers and not to watch business TV or listen to any newsletter waiters or market experts, my trading was less stressful and more profitable. Of course, one has to continued to follow strict money management rules and have patience and discipline to follow a detailed written trading plan. "
- ?.?., 13.11.97 -

Newsletter 07/2004:
" Needless to say, I feel quite brilliant throwing away 1500 S&P points to save 30. "
- ?.?., 13.11.97 -

Newsletter 06/2004:
" I forgot charts and money management and played it with my inflated ego and lost my ass. "
- ?.?., 13.11.97 -

Newsletter 05/2004:
" I've always written symmetrical systems, with the same rules and parameters for long and short positions. I figure I have no idea which way the market is going to move, so I shouldn't try to predict it by running a system that favors longs or shorts.

My favorite system runs on intra day ND/NQ. It's performed very consistently since the start of trading in the ND in 1996. Over that whole period it made 48.8% of its profits on the long side. It changes a bit as the market changes -- for the 2 years ending mid-2000 (while the ND tripled in value) it made 68.4% on the long side, from mid-2000 through 2002 (when the ND dropped 80%) it made 31.9% on the long side -- but overall it acts pretty symmetrically. And even this robust system has been having a rough time of it for the last year. *sigh*)

Maybe I'd do better if I made it "faster" on short positions, but the simpler model requires fewer parameters (less curve-fitting) and it's worked pretty well for me.
- G.F., 19.01.04 -

Newsletter 04/2004:
" Goodbye.

This is a difficult post for me. After several years of roughly break-even day trading, I'm preparing to close my trading account -- break-even doesn't pay the bills. Its time to move on.

Trading is the most challenging task I've ever had before me. I've learned a lot about techniques and strategies, but mostly I've learned about myself and my own psychology. Its been a very valuable experience in many ways -- just not financially!

I am grateful to all of you for sharing over the years. And I'm especially grateful to the friends I've made here. I wouldn't have made it this far without you.

Good luck to each of you this year. May the break be with you.
- G.W., 05.01.04 -

Newsletter 03/2004:
" If I get a sell signal, I sell. If the fund goes up again even within a few days and my system generates another buy, I buy. It is a "no-brainer". Everyone got hit on Monday (27.10.1997). The question is "How do you let it affect you?". If you do not let it affect you, you are disciplined and, I think, a successful trader. "
- M.O., 02.11.97 -

Newsletter 02/2004:
" I have become wealthy trading simply because I have learned to trust the computer modeling and look myself in the mirror and admit I could not trade myself out of a paper bag. So by crutching on the computer, I have made it. "
- Zephyr, 30.10.97 -

Newsletter 01/2004:
" Path To Trading Success
I was struggling to learn how to trade. Like many developing traders, I was constantly searching for a great trading system that would make me successful. I was searching for a great trader who would tell me the secret of success. I spent many thousands of dollars on different trading systems. I found a very good system, but I did not have the right frame of mind to follow it. I spent thousands of dollars on a teacher who said that he had the magic potion for me and that I needed nothing else. But the magic potion turns out to be another system, and it did not help me.

One day, I came to truly realize that what I needed most to work on myself -- my thinking -- my issues -- my psychology. That was my turning point. That is the path to trading mastery. And that is the secret to trading success - a secret that almost everyone has read about, but it means nothing until one's heart knows it and applies it. Many will read this message, but only a few -- who need it -- will apply.

Disclaimer: This path has a risk of losing one's old thinking and may not be suitable for everyone. It takes commitment, time and effort to go through. It also has a potential strong side effect on your personal life over the long term.
- hc, 20.12.03 -

Newsletter 52/2003:
" My experience tells me to pick a system and trade it into the ground. That leaves a person:
1. leisure time: the decisions are made wholly objectively once the criteria are in place and objective decisions take very little time, so you do not spend your weekends agonizing about them.
2. Peace of mind: You do not have to second guess your decisions. You make them and stand fast until the numbers of criteria change.
3. Health: Worrying = stress, and that is not really good for you.
- MOW, 27.10.97 -

Newsletter 51/2003:
" Within a 10.000 US$ account and a full three months of paper-trading an extremely successful S&P day trading system, it took us two months and about 30 trades to run that account to 1.300 US$ (-87%!). Granted, some stupid mistakes were made such as my partner's thinking a 200 point-loss would give our position more breathing room rather than the 50 points we tested (three losing trades of about 600 total points brought him back to his senses) and my forgetting to place a stop loss (results: 150 point loss). However, since the emotions are so difficult to put aside, there simply is no similarity between real trading and paper trading. After another cash infusion we are back at it, adhering strictly to the rules (60-70 points target profits, 50 points stop loss no matter what) and following our three indicators, emotions aside, and is working. Of course, the answer is: discipline!, discipline!, discipline! "
- JDFO, 26.10.97 -

Newsletter 50/2003:
" Serious traders remain in a life-long "experimentation". "
- P.E.Z., 23.10.97 -

Newsletter 49/2003:
" Personalizing trading is a huge mistake. The market is totally impersonal and traders need to feel the same. If we personalize the outcome of trading decisions then, for example, taking a loss can be a threat to our ego. Speculators get paid to take (small) losses. Losses are simply a cost of doing business in markets "
- P.E.Z., 23.10.97 -

Newsletter 48/2003:
" We compete against the market and to an even greater degree we compete against ourselves - our own weaknesses of fear, greed, lack of discipline, etc. We do not have to look far to find our most significant market competitor "
- P.E.Z., 23.10.97 -

Newsletter 47/2003:
" The basis for feeling good about your trading is whether you followed your discipline - not whether a particular decision showed a profit or a loss. Some trader think a good decision is one that shows a profit and a bad decision one that shows a loss. Wrong criteria: A good decision is one for which you followed your discipline, irrespective of the outcome of the particular trade "
- P.E.Z., 23.10.97 -

Newsletter 46/2003:
" Because anything can happen in a trade, it is important to build a methodology which caters to all possibilities. Building this methodology seems to be a never ending process unless you keep it really simple.
To make a mistake, you have to fail in implementing your methodology. So even if you take a loss, you have not made a mistake if your methodology was to take that loss in order to reduce your risk. Every trade in which you apply your methodology correctly is a good trade, regardless of the financial outcome. So the real focus becomes building a profitable methodology, rather than the stress of taking a loss in any particular trade.
- ?.?., 10.10.97 -
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