Extracted from an email from Sam:
The reason I am writing is that I am a beginner trader and still papertrading US equities with losses most of the time. I would like to learn your techniques and methodology as they seems very sophisticated. Could you please give me a background on how you got started on trading, your reading material, and how you developed your skills.
Sam, my response is going to disappoint you.
First, I don't have a sophisticated trading technique or method. In fact, I don't have any technique, let alone a sophisticated one.
Whatever that I do to prepare for each trading session, I've documented them on this blog. You can look for the entries under the label "How I Trade The ER2" and "Premarket Analysis". Whatever that I do after market open, I've also documented them, and you can find the entries under the labels "Trades (wins)", "Trades (losses)", "AAR", "Emini Futures".
After you've gone through what I've written, you'll notice that I don't really have a system or method on which I depend to make my trading decisions.
Perhaps my interpretation of "technique" and "methodology" differs from yours. But having been asked on numerous occasions similar questions, I assume your definition of these words is what I think it is.
If you're looking for trading systems, you'll find a lot being offered on trading forums. You'll be given a set of indicators with specific parameters, and step-by-step instructions that you'll be told that you have to follow EXACTLY if you wish to replicate the success of the person who's shared the system. And most are very sophisticated.
I'm a chart reader, and that's all I am. Day in day out, I feel like I'm trading not just the market but my own psychology as well.
I read the news daily, but individual events that are reported do not have any bearing on the preparation of my trading day. I've written a fair bit on that on my postings that you'll find under "How I Trade The ER2".
I check the market internals prior to market open, and during the trading session, but I don't care about statistics like the following (because I have yet to appreciate their relevance):
"......During the month of December and January, Nikkei hit a closing high of 8760 never going above the 9000 level while the S&P had 4 days in December and 5 days in January (the first 5) above 900. The correlation between the daily changes in the S&P and the change in the dollar versus yen, over the last year has been about 70%, with hardly a contemporaneous day with the dollar down big and the S&P up, or the dollar up big with the S&P down...."
HOW I GOT STARTED
You asked how I got started on trading. I don't really know where you want me to begin, and I'm going to assume that what you really want to know is a) if it's a push or pull factor, and b) the journey I took to make a switch from working for someone to trading for a living.
Re a)
I was never interested in investment and trading related matters when I was with the public sector. Before that I was with a local bank selling investment-related products, and I hated my job (which makes me wonder why I chose to go back to banking after I quit the public sector....)
To cut a long story short:
I was to sit for several exams for this new banking job. I was a relationship manager and my customers were those that got to wait in nice lounges sipping lattes while waiting for their transactions to go through. The part I loved in my very short stint there was the studying for the exams bit. I really thought that whatever that I was supposed to know before I stepped into my new role, I was going to get a lot of hands-on experience through serving my customers. Little did I know that what I had liked about my job was actually handled by the bank's Investment Analysts, and what I was hired to do was simply to sell. I quit after a couple of months, coz I didn't want to spend the rest of my life doing something I hated.
Re b)
My trading journey began when I took a 4-session trading course after I left the bank, and I paid USD2500 for the course. The one thing I'm still benefitting from that class til today is a friend I got to know there. Ken and I spent many afternoons sharing information and ideas about trading, and it was Ken that introduced me to the concept of price actions. It was through him that I came to know about Elliot Waves, chart patterns, trading the futures and forex market, and the importance of staying the course and managing my emotions. I was paper-trading on and off, and Ken was always the one that gently nudge me to start getting serious with trading. In a nutshell, when I think "trading", Ken will always be the first person to come to mind. He was both my trading buddy and my mentor, coz he had started trading years before and was always ready to share his experiences. Most of the books that I read were recommended by Ken. And I read A LOT of books (not cover-to-cover for every one of them of course).
9 months after I first knew anything about trading, I started trading real money. A few months ago, I attended a course that Michael was conducting, and through his course, I learnt things that I was never taught before - coz I had totally skipped the "beginner"'s phase when I first started out. To know more about Michael's course, please go to the label "Trading Coaches and Courses" and check out my entries there.
To be fair to Michael, my lack of a disciplined approach and system is not the result of his teachings. I learnt what I had to know about trading from him, but I made a choice to seek my own path, coz I knew from the bottom of my heart that THAT's the only way that I would make it to where Michael is today. There is no short cut for me. I can't simply take his system, trade it, and expect to get his result, coz I'm not him. There might be many who are more like him, who can trade his way, and those are the really fortunate ones.
All in all, I've paid $3700 for the 2 courses (Michael's was a 5-month course that cost about USD1200), read too many books (which I will be posting on a separate blog entry), spent nothing on hardwares (the PCs, monitors, and laptops that I'm using have been around for the longest time coz D is a systems network fanatic and we always have TOO MANY of these stuff - my studies occupies the biggest space in my home), spent nothing on softwares (I use a free charting service - Think or Swim; my only trading expense is commision to my broker - IB - which is USD 4.80 per TF contract per round trade), going to be spending nothing for subscription to vendors (I've cancelled my briefing.com subscription coz I don't use the service at all) and I don't pay for others to give me advice on what to trade and when to push the buttons.
It's a very long-winded response to your question, and not the least bit direct. My apologies. I don't know how else to describe how I ventured into this strange arena called daytrading.
And after making you read such a lengthy note, I'm actually not sure that I am the right person to answer your question. Because I really don't think I have developed the skills that I need to be successful in trading. I am still very much a student of the market. The learning could take years, maybe decades. And really, how does one even go about defining "success" when it comes to trading? How much do I have to be making per week/month/year for me to feel "successful"? What are the other factors, other than those measured in monetary terms, do I have to consider when deciding what constitutes "success"? And the list goes on. Very basic questions that typical novices ask. And I'm just another novice in the field of trading.
If you're still reading this, I have this to say to you: don't go looking for a sophisticated methodology. You might want to enrol in a reasonably priced course that teaches you the basics of trading. Better still, first read books like "Come into my trading room" by Alexander Elder, and "Stock Market Wizards" by Jack Schwager. Dr Brett's blog (on my blogroll) has a lot of valuable advice on money management, and you should really check them out. Being able to keep and grow their trading capital is what separates the successful traders from those who are not. Then read a lot of good blogs to get a sense of what to expect when you're trading with real money.
After you've done the above, and if you think you still want to attend classes, look for credible trainers like Michael.
Again, I'm sorry if I made you feel like you've wasted your time reading this. Fact is, if you're like the majority of those who think that trading is like learning how to ride a bicycle ie. once you can balance on 2 instead of 4 wheels, you can look forward to many hours of joyous rides in the woods forever (you'll never FORGET how to cycle and how to balance), you're going to be sorely disappointed when you go into the market. The market is ever-changing, and no systems or methods will work forever in it. But as a living breathing entity, YOU can make the necessary adjustments to stay in the game, PROVIDED that you have a solid foundation: sound knowledge of the market and yourself, and of what trading is about.
Based on the questions that you asked me, I figure you've not read beyond the last few entries I posted. My answers are actually all over my blog. :-)
The reason I am writing is that I am a beginner trader and still papertrading US equities with losses most of the time. I would like to learn your techniques and methodology as they seems very sophisticated. Could you please give me a background on how you got started on trading, your reading material, and how you developed your skills.
Sam, my response is going to disappoint you.
First, I don't have a sophisticated trading technique or method. In fact, I don't have any technique, let alone a sophisticated one.
Whatever that I do to prepare for each trading session, I've documented them on this blog. You can look for the entries under the label "How I Trade The ER2" and "Premarket Analysis". Whatever that I do after market open, I've also documented them, and you can find the entries under the labels "Trades (wins)", "Trades (losses)", "AAR", "Emini Futures".
After you've gone through what I've written, you'll notice that I don't really have a system or method on which I depend to make my trading decisions.
Perhaps my interpretation of "technique" and "methodology" differs from yours. But having been asked on numerous occasions similar questions, I assume your definition of these words is what I think it is.
If you're looking for trading systems, you'll find a lot being offered on trading forums. You'll be given a set of indicators with specific parameters, and step-by-step instructions that you'll be told that you have to follow EXACTLY if you wish to replicate the success of the person who's shared the system. And most are very sophisticated.
I'm a chart reader, and that's all I am. Day in day out, I feel like I'm trading not just the market but my own psychology as well.
I read the news daily, but individual events that are reported do not have any bearing on the preparation of my trading day. I've written a fair bit on that on my postings that you'll find under "How I Trade The ER2".
I check the market internals prior to market open, and during the trading session, but I don't care about statistics like the following (because I have yet to appreciate their relevance):
"......During the month of December and January, Nikkei hit a closing high of 8760 never going above the 9000 level while the S&P had 4 days in December and 5 days in January (the first 5) above 900. The correlation between the daily changes in the S&P and the change in the dollar versus yen, over the last year has been about 70%, with hardly a contemporaneous day with the dollar down big and the S&P up, or the dollar up big with the S&P down...."
HOW I GOT STARTED
You asked how I got started on trading. I don't really know where you want me to begin, and I'm going to assume that what you really want to know is a) if it's a push or pull factor, and b) the journey I took to make a switch from working for someone to trading for a living.
Re a)
I was never interested in investment and trading related matters when I was with the public sector. Before that I was with a local bank selling investment-related products, and I hated my job (which makes me wonder why I chose to go back to banking after I quit the public sector....)
To cut a long story short:
I was to sit for several exams for this new banking job. I was a relationship manager and my customers were those that got to wait in nice lounges sipping lattes while waiting for their transactions to go through. The part I loved in my very short stint there was the studying for the exams bit. I really thought that whatever that I was supposed to know before I stepped into my new role, I was going to get a lot of hands-on experience through serving my customers. Little did I know that what I had liked about my job was actually handled by the bank's Investment Analysts, and what I was hired to do was simply to sell. I quit after a couple of months, coz I didn't want to spend the rest of my life doing something I hated.
Re b)
My trading journey began when I took a 4-session trading course after I left the bank, and I paid USD2500 for the course. The one thing I'm still benefitting from that class til today is a friend I got to know there. Ken and I spent many afternoons sharing information and ideas about trading, and it was Ken that introduced me to the concept of price actions. It was through him that I came to know about Elliot Waves, chart patterns, trading the futures and forex market, and the importance of staying the course and managing my emotions. I was paper-trading on and off, and Ken was always the one that gently nudge me to start getting serious with trading. In a nutshell, when I think "trading", Ken will always be the first person to come to mind. He was both my trading buddy and my mentor, coz he had started trading years before and was always ready to share his experiences. Most of the books that I read were recommended by Ken. And I read A LOT of books (not cover-to-cover for every one of them of course).
9 months after I first knew anything about trading, I started trading real money. A few months ago, I attended a course that Michael was conducting, and through his course, I learnt things that I was never taught before - coz I had totally skipped the "beginner"'s phase when I first started out. To know more about Michael's course, please go to the label "Trading Coaches and Courses" and check out my entries there.
To be fair to Michael, my lack of a disciplined approach and system is not the result of his teachings. I learnt what I had to know about trading from him, but I made a choice to seek my own path, coz I knew from the bottom of my heart that THAT's the only way that I would make it to where Michael is today. There is no short cut for me. I can't simply take his system, trade it, and expect to get his result, coz I'm not him. There might be many who are more like him, who can trade his way, and those are the really fortunate ones.
All in all, I've paid $3700 for the 2 courses (Michael's was a 5-month course that cost about USD1200), read too many books (which I will be posting on a separate blog entry), spent nothing on hardwares (the PCs, monitors, and laptops that I'm using have been around for the longest time coz D is a systems network fanatic and we always have TOO MANY of these stuff - my studies occupies the biggest space in my home), spent nothing on softwares (I use a free charting service - Think or Swim; my only trading expense is commision to my broker - IB - which is USD 4.80 per TF contract per round trade), going to be spending nothing for subscription to vendors (I've cancelled my briefing.com subscription coz I don't use the service at all) and I don't pay for others to give me advice on what to trade and when to push the buttons.
It's a very long-winded response to your question, and not the least bit direct. My apologies. I don't know how else to describe how I ventured into this strange arena called daytrading.
And after making you read such a lengthy note, I'm actually not sure that I am the right person to answer your question. Because I really don't think I have developed the skills that I need to be successful in trading. I am still very much a student of the market. The learning could take years, maybe decades. And really, how does one even go about defining "success" when it comes to trading? How much do I have to be making per week/month/year for me to feel "successful"? What are the other factors, other than those measured in monetary terms, do I have to consider when deciding what constitutes "success"? And the list goes on. Very basic questions that typical novices ask. And I'm just another novice in the field of trading.
If you're still reading this, I have this to say to you: don't go looking for a sophisticated methodology. You might want to enrol in a reasonably priced course that teaches you the basics of trading. Better still, first read books like "Come into my trading room" by Alexander Elder, and "Stock Market Wizards" by Jack Schwager. Dr Brett's blog (on my blogroll) has a lot of valuable advice on money management, and you should really check them out. Being able to keep and grow their trading capital is what separates the successful traders from those who are not. Then read a lot of good blogs to get a sense of what to expect when you're trading with real money.
After you've done the above, and if you think you still want to attend classes, look for credible trainers like Michael.
Again, I'm sorry if I made you feel like you've wasted your time reading this. Fact is, if you're like the majority of those who think that trading is like learning how to ride a bicycle ie. once you can balance on 2 instead of 4 wheels, you can look forward to many hours of joyous rides in the woods forever (you'll never FORGET how to cycle and how to balance), you're going to be sorely disappointed when you go into the market. The market is ever-changing, and no systems or methods will work forever in it. But as a living breathing entity, YOU can make the necessary adjustments to stay in the game, PROVIDED that you have a solid foundation: sound knowledge of the market and yourself, and of what trading is about.
Based on the questions that you asked me, I figure you've not read beyond the last few entries I posted. My answers are actually all over my blog. :-)
