The Only Thread I Will Ever Create
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Author: Ken Wolff
Recently, a couple of people I know packed up and quit trading after struggling for a long time to hold their heads above water. They didn't make it. This isn't unusual, of course. This profession has a high failure rate. But it frustrated me.
It frustrated me because I could see potential in them. I don't believe you have to be particularly talented or intelligent to be a successful trader, but these people seemed to have a grasp on the market and the love of trading that's necessary.
They had the tools, the knowledge, the time and the funds. It also frustrated me because I could see the pressure they were under that contributed to their failures. Most of all, though, it frustrated me because I could clearly see what they were doing wrong, but they couldn't stop repeating the same mistakes.
This happens a lot. I see a lot of people making the same mistakes. So I thought I'd share my list of the seven most frustrating things that struggling traders do.
1. When people won't do their own homework. Too many people want to make money, but aren't willing to put the time in and do what it takes. I love answering questions, and I have a passion to help people learn, but when I notice someone asking the same questions over and over, and they are basic questions that anyone could Google, and gave it 30 seconds worth of effort, I know that person is lazy and probably won't make it.
You want to know what makes successful traders? People who glue their butts to their chairs. Look at their computer desks and you're likely to see lots of coffee rings and crumbs. You get out of something only what you put into it. If you aren't willing to take notes, take some initiative, keep a journal and spend a lot of time watching stocks, I don't see much hope for you as a trader.
2. When people can't explain their reasoning for a trade. If your reason for entering a trade is something vague like, "I thought I saw buyers, and last week it had news, and I dunno, it just looked good," then you don't belong in that trade! People like this usually have no clearly conceived, written, organized trading strategy because they are lazy. They are doomed to failure.
If you have no solid reason for a trade, you will have no confidence in it. You will wind up mistiming, misjudging, fumbling and losing. Here's a quote from my partner Phil Rosten, who is a brilliant technician:
I think the most important thing to do is to develop a system that you have confidence in. You will get nowhere if you are second-guessing what you are doing. When the market is open, you need to know what you are doing, and why you are doing it, without thinking too much about it. If you start thinking too much about what you are doing or second-guessing yourself, you will quickly get taken out of the game.
Believe it or not, it doesn't matter much what your reason is, as long as you are consistent with that reasoning. But you'd better have a reason.
3. When people make things more complicated than they need to be. Let me give you an example. One of the leaders in my chat room finally unveiled a new trading system he had developed after more than a year of extensive testing. The system works just as it is. It isn't perfect (no trading system will be 100%), but it is highly profitable.
People's initial reactions were interesting. Instead of saying, "Wow, great. Let me give it a try," a common first response was, "I wonder if it would work even better if we changed this and that, and instead of a 15-day moving average we used a 10-day moving average," and on and on. Before they even tried or understood the system, before ever becoming profitable and successful with it, they immediately set about trying to improve it.
Maybe it's human nature. We love trying to reinvent the wheel. Many of us see trading as a puzzle. If we could just find that solution or formula that no one else has thought of yet, we would be rich and happy. A lot of people think that the more indicators they pile on, the better their trading results will be. So they wind up with analysis paralysis, unprofitable and frustrated, convinced that trading is an unwinnable gamble.
I can't say this enough: What matters is not the system itself, but what you do with the system -- your discipline to use it and keep stops. You won't find a system that always works, so you'd better limit those losses. Two percent of your trades can easily wipe out 98% of your gains if you can't keep stops.
4. When people enter a trade for a good reason, then lose their nerve and exit too soon. This is a lot like walking across a log over a river. If you keep focused on your goal, you will get to the other side. You know how to walk a straight line, and you would have no problems if the log was on the ground. But once you are out there, if you start second-guessing yourself and looking down at the rocks below, you will fall. Too often emotions set in and sabotage good trades.
If you have a reason, stick with it. Stay in the trade until your target is reached, you have an exit signal, or the reason for your entry is no longer valid.
5. When people hesitate, or follow others, and enter a trade too late. I understand traders' lack of confidence and I can empathize because I've been there. If they don't get a grip on it, though, it will be their downfall. Calls are great and gurus are great, but if you follow, you will always be late. You need to learn to rely on your own reasoning. Otherwise you will be too slow and you'll become fish bait.
Inexperience is often the reason for this, and that will take care of itself with time. That's why I recommend starting with small shares until you gain confidence in your system and your ability to keep stops. But this problem frequently has to do with deeper emotions, pressures and self-esteem problems that may not go away as easily.
This is hard stuff because it's all about confidence. When you are under pressure from a spouse who disapproves of your trading, or under pressure to pay bills, etc., you are working under an enormous amount of fear and pressure. And that is automatically going to cause hesitation. I know that's a hard situation.
But I tell you, if you don't get that under control and learn to trade like you don't need the money -- with control and a system, leaving out emotion -- you are not going to make it. You must find a way to ease that pressure. Get a part-time job if things are that rough and you still believe trading is the job for you. If you cut back and trade a couple of days a week without the pressure, you'll probably trade better for it and wind up making more money than you did trading five days a week under pressure. I've seen it happen many times.
6. When people will not contemplate the real reasons for their failures. I don't know how many times I have heard this: "The market was tough today. I had one good early trade and then gave it all back in the afternoon in a few bad trades."
Let's be honest here. The market wasn't making you do those stupid later trades. It was you. Don't blame it on the market when in reality you were chasing longs all day when the market was tanking.
Then people will say something like "I need help with risk management," "I need help learning to find good entries," "I need help learning executions" or some other topic not really related to their true mistake. What they need instead is a dose of self-restraint and some personal accountability. They need to stop making trades out of boredom, frustration, regret or any other reason other than "it met my trading criteria." They also need to be honest about these criteria and not stretch things into "well, it kind of meets my criteria -- if I look at it cross-eyed."
I know this is hard. It's tough to sit there all day and stare at these numbers, especially when things are slow and there have been no good trading opportunities that day. It's like fishing. Fishing can be really boring. But if you aren't sitting there waiting with your hook in the water, you won't catch anything when the big fish come by. And it won't help if you jump in the water every time you see a ripple, trying to convince yourself you had a bite.
7. A defeatist attitude, especially in me. The potential in our lives far exceeds what we ordinarily imagine. Too often we put limitations on ourselves with Eeyore-like thinking. We say "I can't do this" or "I am just not smart enough" or "I'm just unlucky." In doing so, we fail to challenge ourselves and develop new potential because we've lost faith in ourselves.
We are like circus elephants tied with small weak chains to a stake, believing we could never get free, unaware of our own strength. We possess tremendous potential, but if we develop the bad habit of convincing ourselves that our potential is limited, we will not actively challenge ourselves and grow. Like the elephant, we will be held captive by our own beliefs.
If you have a defeatist attitude, you've already lost. So let's keep a positive mindset and try to see each mistake as a stepping stone to growth.
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Author: Unknown
The 5 Steps to becoming a trader
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. you know that its a good way of making money because you've heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be? Price either moves up or down - what's the big secret to that then - lets get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again .. and again, and again.
You may have initial success, and thats even worse - cos it tells your brain that this really is simple and you start to risk more money.
You try to turn around your losses by doubling up every time you trade. Sometimes you'll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.
This step can last for a week or two of trading but the market is usually swift and you move onth the next stage.
Step Two - Conscious Incompetence
Step two is where you realise that there is more work involved in trading and that you might actually have to work a few things out. You consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.
You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine. and begin your search for the holy grail. During this time you will be a system nomad - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
You will test out automated systems on Metatrader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today. You'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them because you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount because you've studied and you don't make that, you know as much as they do and they must be lying. But they're in there day after day and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and overtrade your account even though everyone says you are mad to - but you know better. You'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.
You might even approach a 'guru' like Rob Booker or someone on a chat board who promises to make you into a trader(usually for a fee of course). Whether the guru is good or not you wont win because there is no replacement for screen time and you still think you know best.
This step can last ages and ages - in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration.
Around 60% of new traders die out in the first 3 months - they give up and this is good - think about it - if trading was easy we would all be millionaires. another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does.
What may suprise you is that of the remaining 20% all of them will last around 3 years - and they will think they are safe in the water - but even at 3 years only a further 5-10% will continue and go on to actually make money consistently.
By the way - they are real figures, not just some ive picked out of my head - so when you get to 3 years in the game dont think its plain sailing from there.
Iv had many people argue with me about these timescales - funny enough none of them have been trading for more that 3 years - if you think you know better then ask on a board for someone who's been trading 5 years and ask them how long it takes to become fully 100% proficient. Sure i guess there will be exceptions to the rle - but i havent met any yet.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times but now its in your blood
One day - im a split second moment you will enter stage 3.
Step 3 - The Eureka Moment
Towards the end of stage two you begin to realise that it's not the system that is making the difference. You realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain. You suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.
Because of this revelation you stop taking any notice of what anyone thinks - what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading
You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold.
You start to take every trade that your 'edge' shows has a good probability of winning with. When the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade or the one after it or the one after that will have higher odds of success because you know your system works.
You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not a poor system make.
You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what as you know the probabilities stack in your favour.
You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren't ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.
Step 4 - Conscious Competence
You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it looses and when you're on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
You'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
This lasts about 6 months
Step Five - Unconscious Competence
Now we’re cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesnt make you any more excited that getting 1 pips.
You see the newbies in the forum shouting 'go dollar go' as if they are urging on a horse to win in the grand national and you see yourself - but many years ago now.
This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.
You're a star in the trading chat room and people listen to what you say. You recognise yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two, but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.
Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all.
All the time you are honing your methods to extract the maximum profit from the market without increasing risk. Your method of trading doesnt change - it just gets better - you now have what women call 'intuition'
You can now say with your head held high "I'm a currency trader" but to be honest you dont even bother telling anyone - it's a job like any other.
I hope youve enjoyed reading this journey into a traders mind and that hopefully youve identified with some points in here.
Remember that only 5% will actually make it - but the reason for that isnt ability, its staying power and the ability to change your perceptions and paradigms as new information comes available.
The losers are those who wanted to 'get rich quick' but approached the market and within 6 months put on a pair of blinkers so they couldnt see the obvious - a kind of "this is the way i see it and thats that" scenario - refusing to assimilate new information that changes that perception.
Im happy to tell you that the reason i started trading was because of the 'get rich quick' mindset. Just that now i see it as 'get rich slow'
If youre thinking about giving up i have one piece of advice for you ....
Ask yourself the question "how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it?
Take care and good trading to you all.
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And finally, I will end this post with my own philosophy
"I'd prefer to miss a good trade then to make a bad trade"
"If you say to yourself I think there is a trend, well, you don't really know there is a trend then"
"If you're psychologically unfit to trade, take a break- breath, and come back when you're ready"
"Money is money- closed profit is money in your pocket, don't fret if you missed the majority of the trend"
"If you're a speculator, your job isn't making sure you make money, your job is to make sure you're dammed right"
"Learn to trade with your personality- you dress with style, you walk and talk with a certain style, your trading style should be the same"
This is obviously all my direct and unadulterated opinion, you can digest the information as you'd like, but please leave trash outside the thread door.
Cheers,
Walander.
but how does it work?? 
Just remember, cut across, not down the river make it count! 
Hope you enjoyed the read.
but how does it work??
Walander,
Nice bits. Unfortunately, most TSD members are in the "20,000 pips in 3 hours" thread right now.
MM
Basket trades in "Black" October would have made that! =)
Walander,
Nice bits. Unfortunately, most TSD members are in the "20,000 pips in 3 hours" thread right now.
hi
very long post guys, but thanks it's useful 
. basic chart knowledge regarding trend etc should be understood first for every trader before they're using advance system . forex chart consist of 2 parameter, time and value , we're here trying to find a correlation between those parameter. WHEN and WHERE , basic question of this business
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Gosh W., you come over as rather harsh, in which case, as a newcomer around here, I hardly dare comment. But I will ... :-)
Funnily enough, I'd just begun to get seriously interested in "volume" some weeks ago, figuring that it had to be relevant in trading generally. Whether it was relevant in trading Forex appears to be somewhat controversial. I'm completely open-minded on the subject (being a relatively inexperienced trader).
I'd noticed VSA being mentioned elsewhere a few times, and did a brief series of googles around. On first look, it looked rather more complicated than I wanted to be getting into for now, so I've put it aside for the time being. I've seen some criticisms, not so much of VSA, but of some people's approach to it that is rather too indicator-oriented (too many indicators), but that does not mean that the basic approach is not valid.
In my own mind I differentiate between using "volume" (and other volume-oriented tools or measurements), and VSA, e.g. just using volume to confirm or otherwise, an indicator or candlestick pattern.
One of the pieces of advice that you quote reminds us of the need not to overcomplicate things, and that is certainly close to my own feeling.
BTW, at the risk of wasting your time on a trivial question, is your forum nickname inspired by the fictional Swedish detective? The BBC have just started a TV version of those stories (starring Kenneth Branagh).
Regards,
M.
(my forum nickname, at least the original version, is inspired by J.K.Jerome's "Three Men in a boat (to say nothing of the dog)." (Montmorency was the dog).
Hey,
I come off harsh because there's no sense to sugar coat things, I'm not here to baby anyone nor am I here to be a saint. I'm here to be the level ground- some people are purely lazy and it just comes off as annoying at best.
VSA is rather complicated- I'm reading the book right now. I believe since I'm not trading somedays, I need to do something productive! If you would like the link to the .pdf book by Tom Williams shoot me over a PM.
My name is derived of a horrible typing mistake I didn't bother correcting. My true name should be Waylander, a gruesome old man from a fantasy book written by David Gemmel. If you read what type of character he is, you'll understand why I choose him as my online Alias.
Gosh W., you come over as rather harsh, in which case, as a newcomer around here, I hardly dare comment. But I will ... :-)
Funnily enough, I'd just begun to get seriously interested in "volume" some weeks ago, figuring that it had to be relevant in trading generally. Whether it was relevant in trading Forex appears to be somewhat controversial. I'm completely open-minded on the subject (being a relatively inexperienced trader).
I'd noticed VSA being mentioned elsewhere a few times, and did a brief series of googles around. On first look, it looked rather more complicated than I wanted to be getting into for now, so I've put it aside for the time being. I've seen some criticisms, not so much of VSA, but of some people's approach to it that is rather too indicator-oriented (too many indicators), but that does not mean that the basic approach is not valid.
In my own mind I differentiate between using "volume" (and other volume-oriented tools or measurements), and VSA, e.g. just using volume to confirm or otherwise, an indicator or candlestick pattern.
One of the pieces of advice that you quote reminds us of the need not to overcomplicate things, and that is certainly close to my own feeling.
BTW, at the risk of wasting your time on a trivial question, is your forum nickname inspired by the fictional Swedish detective? The BBC have just started a TV version of those stories (starring Kenneth Branagh).
Regards,
M.
(my forum nickname, at least the original version, is inspired by J.K.Jerome's "Three Men in a boat (to say nothing of the dog)." (Montmorency was the dog).
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It’s quite curious to notice that a majority of the forum posters here lack the foundation of any seasoned and or experienced trader but provide advice as if they are so. On top of that, a majority of posters here seemingly lack the fundamentals of general common sense. I will go through my thoughts step by step, and you yourself then can let yourself know, can you really trade competently?
(If you stopped reading here, you’re obviously not competent enough to trade- if you don’t take the time to read and learn, then take all the time you’d like to drop your balance to $0)
Several posters (some of which you’ll notice through my posting history), post questions like “does this work?” – First of all, if anyone comes onto this forum asking “does this work?” not only are you not fit to trade- you should be back in your baby crib being spoon fed. We’re not here to tell you “does this work” and I will say for the record that some things will work for some people, and some things will work for others. That is the fact of life- accept it, embrace it, make love to it, I don’t really care how you take it because you won’t change reality. Secondly, you yourself have no “credible” right to say otherwise and even more so if your first question in a thread is, “does this work?”
On that “secondly” note, if you come into a thread stating, “this has already been done … or … this doesn’t work” are you really fit to trade? Your ego is the size of the room in which you type in, and then it fills all the gaps and spaces on this forum. Who exactly are you to say that “this doesn’t work?” This will bring up two very obvious facts- a personality that will drag down your ability to competently and technically identify a trade(trend / pattern) because of your stubbornness, and secondly that for some reason without even doing your homework (backtesting/forward testing/analyzing) you’re just plain lazy.
Then there are the posters that post questions that the “search” function is for. A great example is people who don’t understand volume trading. An amusing thought is that I don’t know volume trading at all so rather than posting a “spoon feed me, I’m lazy, I don’t understand, someone hold my hand to the washroom because I’m scared to get lost” type of post, I simply took the time to read the journals on ForexFactory which then lead me to Tom Williams and Volume Spread Analysis, this all took a wonderful 15 minutes- this will actually only take you maybe 10 seconds depending on your typing speed to type “Volume Trading Forex” in the Google search bar! So- as simple as that is, still many people don’t bother, so still think you’re fit to trade if you fit that category?
Now we have people who are looking for the Holy Grail. I myself have had many intellectually stimulating conversations with people who are very open minded and sharp to discuss such a topic. Yes, there are things that are holy grails, but they are the makings of one or many people’s hard work, and the question is why are they going to sell it to you? A man with a million dollar bill comes up to you and says “I don’t want it anymore, it’s too much of a burden to carry such a bill.” Now for the sake of this horrible storyline I’m about to create, let’s just state there is such a thing, a million dollar bill. The man now says “I will sell it to you for $100,000”. Would common sense not dictate a big “WTF” to come smashing through your reality? If someone came onto this forum (Bon…o) stating a PERFECT scalper that works of a ECN server that provides 100% ROI with 1%DD- you should be dammed well skeptical of such results. If you didn’t take the time to look over their statements, check their background, do a WHOIS search on their website- well then- you fall again in the category of plain lazy.
Another loving category is the people who don’t believe in fundamentals and think they can just trade without understand the bare basics. Well, this should be a no brainer, but it is quite evident it’s not. (WARNING: This is my opinion of fundamentals.) If you cannot easily identify trend lines, support and resistance points, channels, triangle patterns, and understand the difference between stop and limit orders- YOU ARE NOT FIT TO TRADE. Some people may think and or disagree with this paragraph, but I’d like to see someone who doesn’t know the number 1…10 by heart, then attempt to do calculus.
As I continue writing this, you’ll notice there’s a common theme- LAZINESS. There’s an obvious reason why a furniture Company is called “LA-Z-BOY.” If you’re too lazy to get out of your comfort zone to understand something, what makes you think you’ll ever be in the top 5% that makes a living in Forex? Reality sucks, and simple statistics states the probability of a trader being in the “lazy” category in the top 5% is rather thin, probably close to non-existent.
As one famous angel investor said, “Tears and money don’t mix, so don’t waste my time.” Such a saying can be used for trading Forex. It would be something like, “Emotions, arrogance, ignorance, and laziness don’t mix with Forex so stop wasting your own time. If you can’t push your own limits beyond such personality trait limitations, you’re not going push your profits anywhere either”
So to end this off, I am adding some very important quotes that keep my profits in the black.