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Wednesday, October 18, 2006

Blog Juice From Traders

There have been a few happenings lately in the traders blog community. First, the launch of Wallstrip, nothing kinky here, but an info-tainment site with daily videos hosted by Lindsay Campbell and article contributions (or shall I say conversation?) by some of the well known trader bloggers. Want to know how to trade AAPL for earnings? Here's a post by Brian Shannon in Wallstrip. Here's another take on AAPL earnings by Adam

I would also like to introduce Michelle here. She is now a regular contributor to Trader Mike's blog. Her articles & comments are always well articulated and seems to go right into a trader's mind. Highly regarded by all, I recommend you read her contributions regularly.

In her latest write up, Out of the SKILL(let)into the Fire, she said

"Recently, I had reduced my trading rules to three, and I proudly presented this reduced list to my husband, who often plays the role of trading counselor. He was quiet, but his eyes said, two rules too many. So I had a think, and realized that the only rule is this one: Execute perceived opportunity according to my risk parameters. When a trader is surrounded by a flurry of rules, he wastes his focus and energy on not breaking them. They are actually a hindrance and not an aid. The rebel within says, no way, I am not going to obey these rules. Many rules also assuage the gnawing doubt that one does not really have a methodology, and therefore that problem, the fact that one's methodology is non-existent, risks never getting solved."

This is true because the day when I can cut down my trading rules to the bare minimum, I think I have made it as a trader as it means that these rules are so well embedded in me that they are part of me & I no longer think of them as rules! But of course till then, I still have to remind myself every now & then to follow my trading rules.

"We don't expect beginning pilots to fly huge planes at high altitudes all alone, and yet we expect that we can somehow do the equivalent in trading when we are first starting out. This common perception is fueled by the fact that making money by trading appears easy. It is possible that a trader can make the amount of money in an hour or even less which had taken several days to make at his previous job. This rather exciting aspect makes him think that trading must be easy; he does not need to have years of schooling and training as a surgeon needs to do in order to move up the salary ladder. He can just jump right in and mint the coin. Instead, he gives his money back to the market, again, again, and again, completely flummoxed as to why he cannot accumulate profits. Ironically, down the road, when he does trade in a consistently disciplined manner, making money does become easy-what he first thought it would be like before it turned into a nightmarish struggle with himself and the market."

I cannot agree more with Michelle on this. So many non-traders, and even traders themselves have the misconception that making money by trading is easy & expect to have windfalls right away. Trading, like any other skills or profession, takes time to be polished. And I think its better for you to pay your fees to the market when you first start out and learn from them than much later. Those who make huge windfalls when they first start out will usually not last in this market. Because their overconfidence, lack of money management and respect for the market will be their eventual downfall. Learn to trade well first, and the money will come later.


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