............quite an effort, time and money has been "invested" (read 'lost') that the there is a strong resistance to quit.
Also to some extent there is a hope that a trader feels that now he has a good experience of the market, has got hold of a system which suits his personality and things are working for him. And this hope creates an illusion that what is lost can be recovered and money can be made from the market.
But this illusion is sooner or later shattered by one act or the other. And then it starts all over again.
Given the above fact, I feel there should be a smooth transitionary phase when a trader moves out to look for alternatives outside (What the gentlemen in your case mentioned above is extremely rare act and the logic of 1 and 0 or On and Off will not work for most misfit traders).
One thing that comes to my mind is confiding with someone who is very close to you, maybe a close friend or spouse and start discussing how you have messed up and in what state you are. Yes I know the obvious response for people who are not related to trading will immediately and strongly react and give hundreds of reasons to explain that trading is gambling, but if a proper precusor is given to then, maybe they could help smoothen things a little bit.
Also, in trading profession there is hardly or no interaction with any physical being hence most of the traders spent their recent trading years in isolation, this creates a rift between them and their society / friends / colleagues. Hence if a trader iniatiates a concrete effort to redevelop relationships with people associated with his daily life, he could get some ideas on way forward for him.
I have also tried to figure out at times as to why dont people call it a day. the only reason I could think of is...
most of the individuals enter the market in an uptrend, when everyone around them is making money and the only discussion going around in social circles is stocks and how much money was made by x or y.
he then enters the mkt and fr a while whatever he touches becomes gold.then comes the crash and he looses everything n some more.
after a thorough analysis, he finds that most of his trades were good, it was just the last one or two trades which brought the loss.
now he sets off again trying to rectify the previous mistakes and learns to put in a stop loss.
after maybe an year he realizes that due to the use of sl his win loss ratio is not as good as it was before and on balance he is not making any money, maybe loosing some.
then he goes on the never ending journey of buying books, learning technicals, visting forums etc. but more often than not his results do not change.
after a few years he finds that he is not much better off frm the time he had started.
but by this time , he has invested so much in the form of money, effort and most importantly 'time' that quitting becomes difficult.
I am reminded of a small episode. many yrs back Ikm was a broker who had the biggest client base in Delhi. he had a trading room where there were atleast 50 traders/subbrokers sitting together. one gentleman who was sitting in that room frm the past 3 yrs., suddenly got up one day, shook hands with everybody and said that he was calling it a day. everyone was surprised as to what happened suddenly. his response was, " the bse sensex went up frm 3000 to 5000, I did not make any money, so I thought maybe I am a bear and would make money when the mkt. falls, now it has come down frm 5000 to 3000 and I am still breakeven. so I feel this business is not for me"
he just quit and never came back........ there are not many who can admit that they were wrong and move on in life.
In life we dont know about future.
In stock trading we know but does not accept.
We know Markets all activity is running by loser's money.
Market have to pay NSE-BSE to maintain their building and staff.
Market have to pay thousands of brokers and sub-brokers to maitain
their family
Market have to pay taxes aslo. And market to pay some winners.
Yes, bigbull, chhote bandhu, bade bandhu, chhota haathi,bada haathi.
Winner may be you also.
These all Gets money from market. Market have only one source to get
money to pay all of them and that is losers. So loser is must for stock
market. Without loser market can not run.
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I am in this stock market for more than a decade and has seen most of the ups & downs like everyone else.
Now let me ask you all people few simple questions.
WHY ARE YOU IN THIS MARKET?
WHAT ARE YOU IN THIS MARKET?
WHAT ARE YOUR PLANS/BLUEPRINTS?
HOW ARE YOUR MONEY MANAGEMENT ABILITY?
If you can answer these to yourself... you will never be a quitter. These questions are to be answered whatever business you venture into.
In all trading activities ... emotions always play a big role. (Even today I am influenced by emotions.) But by controlling these emotions, understanding+ eliminating the causes of them you can always make a come back.
Accepting the defeats do not make you a tiny. But losing the fighting spirit will sure doom you... not only here... anywhere you go and do any business.
I request all my (demoralised) TRADER friends to analyse themselves first and then start trading in stock market.
I wish, like lot of other professions with passage of time, one may eventually develop skills to perform the task, even if not at a pro level but still could manage to do it reasonably well to sustain himself and his family. But not trading. Here more experience not necessarily is any parameter to ensure success. Infact a trader lives by a day. No one is sure that a pro trader will always remain so. One bad day or a big wrong trade...and then the dominos' effect can just ruin everything. So trading is not simple or easy as it sounds in terms of sustenance. A trader is a daily wager.
Most of us may not be succussful traders and this is a fact, whether it is you or me or both only time will tell, but it is for sure. So how and where you think should you put your foot down and hang your boots.
...........................I call upon viewers to just state what are their strength areas (in terms of personality, skills, knowledge) and what profession they would have been (basis the strength areas) if they were not in trading profession. This could touch upon that side of a trader which may not be explored and might give us ideas to help nuture it.
over the years I have met maybe 2 or 3 naturally talented traders. broadly people who trade suffer from one of the following defects ( pardon me frm digressing frm the main topic):
a. compulsive trader.. he just looks at the screen and itches to do something..the thought of loosing never even once comes to his mind. he is constantly thinking of the millions that are there to be made frm the mkt.. I think he needs professional help.
b. too scared.. after a few beatings, he becomes too cautious and is afraid of putting a trade.he looses good oppertunities and never realises that trading is all about taking risks, not avoiding them.
c. plain ignorant... he dabbles with amounts that are not significant and his account keeps on alternating bet. green n red.
coming to the topic... I feel a trader who falls in any of the abovementioned categories is bound to fail and would be better off if he leaves trading and takes up a job which is more suited to his personality. but the most important factor is 'self realization till the time he does not realize that this particular vocation does not suit his personality, he cannot move on in life. sadly, I have seen many traders, who even after wasting many precious years of their life,do not realize this. for them the 'holy grail' is always just around the corner. the simple fact that someone can maybe be a good accountant and not a good photographer eludes them.
Trading is addictive and like any addiction to be removed there has to be a proper method which if followed could reduce or eliminate this addiction (E.g. we have NGOs which help people quit drinking etc) Infact I feel there is a big scope to start an institute / agency which could help rehabilitate failed traders. I am not doubting the ability and perseverance of traders but the fact is some of the 'traders' do not have that edge and howsoever you try they cannot succeed in trading (This is my opinion, others opinion could differ).
As you correctly said that most of the struggling traders always feel that the holy grail is round the corner and there is no self realisation that this is not their game.
.................................
Until and unless if you do not learn to Read the markets, you are not going to make consistent money. So we all start with learning the wrong skills but eventually you need to correct your learning.
The post below is written by a very successful S&P 500 futures trader Ziad. It may change your trading life for ever.
Hi XXXXXX,
I've been reading your blog for quite a while now but haven't commented yet. However, I feel I need to comment now.
If you don't mind I'm going to be very straight forward, and blunt even, but I hope you'll take it from a spirit of sincerity and genuine desire to help. It's going to be a long comment, so I'm going to break it up into 2 or 3 comments.
Here's the situation as I see it: For the last few months, and possibly much longer, you've just been spinning your wheels while thinking that you are getting somewhere. The reason for this is that you are going about learning how to trade in the wrong way, in my opinion. I say this because I've been trading much less than you, a little over 2 years now, and yet because of the way I went about learning and what I focused on, last year I netted $150k while nearly quintupling my account, without a single losing month, and while only risking a very small portion of my account on any single trade. Now there could be many reasons for the difference in performance, but I think one of the main reasons has to do with what you are focusing on and how you are going about the learning process.
To try to put it as succinctly as possible, in my view traders that are focusing all their attention on "set-ups" and finding out which combinations of indicators work are never going to become profitable. They are trying to follow the advice of trading books that say trading is simple and psychology is everything. So they search for set-ups that 'work', and that can take the guess work out of trading. They want to be "disciplined" and have simple rules that guide all their actions. But there's a few problems with this. Namely, while psychology is HUGE, it's not everything. And while trading is all about simple principles, actually having an edge is NOT simple. It's a myth that you can have a couple simple price or indicator set-ups and make money consistently if only you are disciplined. That's a load of crap. It keeps the dream alive for wannabe traders who never realize what it's truly about. Well let me tell you what it's truly about...
Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it. It's about not having an exact script of when to trade or not to trade, or what's really a high odds trade, and being okay with that. It's about exceptions to the rules. It's about contradiction. It's about uncertainty.
And yet traders left and right want to make it simple. They want to reduce it to a few simple set-ups to trade with discipline. And yet the market is not simple. The market is all about uncertainty, and complexity, and ambiguity. Simple set-ups could never capture that, and they can never give you a true lasting edge.
So what's the solution? Is the problem in the simple set-ups themselves? No, it's in how they're being used. The bottom line is, every trader needs to learn to READ the markets. This means that simple rules will not do. There has to be a synthesis of different elements (whether they be price action, indicators, inter-market themes or whatever), and real-time interpretation must take place. It has to be all about CONTEXT. Once you can read the markets, and don't fool yourself it is a very complex process, then you can choose to employ "simple" set-ups to enter and exit. But the real work will be in interpreting the market to see when you should use which kind of set-up. Seeing a hammer or whatever near a support means nothing unless you've identified the broader picture and gotten a sense of the kind of tactics you should be using, and what the odds are for different scenarios unfolding.
Now I know you, and most traders do this to a certain extent, but your main focus is on the set-ups. It's not on reading the market from minute to minute, hour to hour, figuring out the odds of it doing this or doing that, adapting dynamically, and thinking of trade ideas from all your observation as the day unfolds. Rather, it's waiting for some simple set-up to pop up and then taking it.
Now is it easier emotionally to have clear set-ups to wait for and trade in this simple manner? Absolutely. But who said 'easy' would make you money. If I've learned anything, it's that the market rewards what is hard to do. It's hard to have ambiguity surrounding your market reads. It's hard being uncertain. It's hard dealing with competing and sometimes conflicting signs. And yet, this is what it's all about. You have to stop trying to avoid this by needing things to be And yet, this is what it's all about. You have to stop trying to avoid this by needing things to be clear cut. And is it hard to be disciplined when there's so much uncertainty about what is the right trade to make? Of course. But instead of trying to avoid the uncertainty by looking for simple set-ups, or some straight-forward method, train your mind to be able to deal with the uncertainty.
As for the learning process of how you go about doing this, it's all about being constantly engaged with the markets, trying to figure things out and learn from experience. For me, for instance, what I did was each and every day take notes in a journal all about market action and what I think it means, and how I should trade, and what is working and what's not. I didn't write a journal describing the trades I took, or what my emotions were during the day. It was all about market action. And it was all my perception and interpretation. Day after day, week after week, making mistakes, wrong calls, being clueless as to what was going on, not knowing how I should trade, not knowing if my views made sense or not, and yet I continued taking notes and learning. Then I would view charts and combinations of historical intraday charts, and I'd note certain behavior. For example, I'd study trend day after trend day and try to notice what they had in common and how I could have picked up on it in real time. Then I'd study range days. Then I'd study a price chart of the ES versus the Advance decline line and see what the relationship was across many different days. Then I'd do the same with the ES and TICK chart. And on and on. Over time, this gave me a feel for the markets, and a certain understanding of how certain days differ and many subtle signs and tells for each type of environment and context.
As for set-ups, I didn't use any predefined ones. I just formed trading ideas and then tried to get in at good trade locations. Even this, which is the art of execution, is quite complicated and not straight forward. I started realizing that in some environments it's best to wait for pullbacks, in others I need to get in at market or I'll be left in the dust. In some markets I can buy low and sell high, in other markets the opposite is in order. And so on.
I became consistently profitable in a timeframe of a few months by doing this. But of course before that I had read 30 or 40 books and so I had all the technical background. I had also worked a lot on my psychology and personal issues. But all of this was in conjunction with a method of learning and trading the markets that was mostly in opposition to what the general wisdom says about simple set-ups and exact rules.
Now of course you might say that everyone has their own style, some discretionary and some not. Absolutely. But even the purely mechanical traders are very adept at reading markets, and are aware of all of the complexity and ambiguity inherent in it. Their system might end up being simple, but it will come about through a very deep and complex understanding of markets. And usually this system will take the market environment (i.e. context) into account. It wont just be simple mindless set-ups.
In the end, all of what I am saying is meaningless unless you come to a personal realization. Take a look at your trading career thus far. Do you truly believe that if you just learn to focus and take all of your set-ups then your equity curve will reverse and you'll be a consistently profitable trader? Why would the world's top institutions spend millions and billions on R&D when a few simple set-ups could make them all of the money. This doesn't mean that to make money you need extremely complex mathematical models. Far from it. What it does mean is that you need extremely complex mental maps that take time and experience to develop, and that will never develop if you spend the whole trading day simply waiting for set-ups to materialize. That just won't cut it.
Right now your learning curve is stagnant because you're not truly studying the markets. Your day is wasted in waiting mode. It's not in observing and absorbing mode. Also, because you fear loss, you aren't willing to experiment. This means that you aren't making mistakes and failing regularly, which is what you need to do to learn quickly.
So to conclude, based on all of the above, my advice to you would be to stop trading and make a mental shift. Realize what you need to do to become successful, and it's definitely not staying on this endlessly unfruitful path being supported by the hope of future profits. You're just running in your place unless you change your focus and your learning method. And if you thought the journey was tough so far, you haven't seen anything yet. Get ready for uncertainty and ambiguity like you've never seen it before. But this shouldn't be scary. It should be exciting, because this is what trading is all about. This is why it's called an ART. And it truly becomes one when you change your focus and your learning process. Then everything, including success, becomes possible. And until then, it'll be a distant dream that keeps appearing to be so close and yet stays so far away.
So you need to re-align with a new thought system and then get on the simulator and trade. Take losses. Make mistakes. Be clueless. Don't be afraid of it. It's okay, that's the only way you'll progress. And trust me, progress you will.
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