June 27, 2015 – Trading Diaries – Why I Kept Trading (Reflections after 2.5 years) (Throwback)

Personal Confessions.  These were handwritten notes.  I simply digitized it and uploaded it now in FT.

these notes were handwritten after trading for 2.5 years, so this post dates around year 2010

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I got into the markets just like everyone else’s starting point.  I have read from Jack Schwagers’ books and learned from friends that trading is a game where you can dig as much gold as you wanted.

There were no limits in terms of the rewards.  Although each of them has warned me of the risks inherent in the game, each of my close friends and relatives gave me enough courage to bid me into “finding my fortune” in the crazy world of financial markets.

What I’ve come to realise after trading for 2 1/2 years is that I couldn’t have ever prepared myself for what lay ahead.  No amount of books, helpful advice nor close mentorship could have steered me from my own trading hell.  In my own quest to dig as much gold as I possibly can, I dug so deep only to realise I’ve already been stuck digging my own grave.

I’ve always said before it would have been best if I never really got used to making huge lucky trades for fear that I may think I know something that the market doesn’t know.

Being foolishly overconfident and placing out-of-whack all-in sized trades made me a huge winner and yet didn’t make me any better of a trader.  It’s been a really personal journey for me in trying to make myself a profitable an consistent trader.  You can be right 9 times in a row but if you don’t manage every single trade, your 10th trade can eat all of your previous gains.  This has never been more true to me than any written book or statement by profitable peers.

I guess trading in the end offered me so much to think about other than making a lot of money.  It revealed to me my inherent “proud” and “aggressive” personality to place big bets on high-conviction trades.  It humbled me to know that you still need to be wary of your risk levels because volatility can take you out of an otherwise very good trade.  Trading made me realise the importance of having a system and allowing probabilities to work in your favour.  It’s not as easy as people believe/perceive it to be.  It’s filled with lots of hard work and sleepless nights (which I’ve learned to manage over the years; Jesse Livermore’s quotes of securing a size to a sleeping point taught me to know my risk.) frustrations and emotional stress.

Over time, I’ve learned that less attachment to the markets works better for me.  (Although I still can’t sleep without knowing whether US markets or forex currencies are moving even after Asian markets close.)  I’ll be a hypocrite if I say that there weren’t times when I was so down with my capital (monetary and non-monetary /psychologically) that I literally cried over my mistakes.  Jim Horning once said “good judgment comes from experience and experiences comes from bad judgment.”

I’ve made huge bad judgments in my very short span of a trading career (2.5 years) that taught me the most simple rules are the ones that need to be ingrained in my psyche.

Follow a trading plan, implement discipline in your trades and the money will just follow.  There’s nothing 100% sure in the markets.  A hint of certainty is the traders’ worst friend.

An essential step to every recovery is finding out the root cause of the problem and then start finding a cure.  My trading journey is similar to a roller coaster that turned itself into a haunted house.  Trading consumed every part of me.  I literally live, breathe and think about the markets 24/7 and it has probably cause me to have a few moments of “burn out.”  There are times when I can’t distinguish my passion for the markets with a gambler’s addiction to the casinos.

Despite all of these, I never regretted the day I told myself that I wanted to pursue a career in trading.  I can still recall how happy I was devouring books of Jesse Livermore, Benjamin Graham, Richard Dennis, Warren Buffett amongst others.  Even until now, I’ve become habitually interested reading lives of successful traders.  Market Wizards remains one of my favourites.  I guess the only difference between then and now is that I’ve finally realised why there are too few successful traders in the markets.  Simple.  It’s not as easy as it seems.

Trading is a game of probabilities.  More than that, it’s a game of discipline and consistency.  Day in and day out, you’ll have to work hard finding the setups with the highest chance of working in your favour.  Also, you have to be on top of your game early on every single day with every single trade.  Some people can last a few days in a  month but not every single day.  A successful trader also realises that there are going to be days and weeks of droughts and drawdowns despite sticking well to a system.  It takes a mental toll.

Trading and life aren’t so different at all.  You need balance (controlled size), proper entries at the proper times (discipline to wait, patience) and hard work.

– Faceless Trader

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