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OK, I know I might change my mind tommorrow, but here goes......
I have had enough! Enough losses. Enough adreneline fueled hope.
Hope is not a strategy. I can say with certainty, anyone who thinks hope is a strategy is a fool. They will pay some very expensive lessons. I have proof. See my trading history from October 2008 to March 2009.
I didn't lose much money today, maybe $150. But it just isn't fun. I'm tired of losing money. I've still got plenty of money to trade with. And I think every great investor will have a story of how they lost money while learning to trade. Some of the greatest traders turned $1K or so into $50K, and then lost it all, sometimes more than once. Having some losses in the market is all part of the tuition that must be paid.
But enough! I'm dropping out of that school. I'm tired of spending money on the school of lost trades. I've decided I've lost enough.
Am I giving up on the stock market? Many of my friends think I should.
| Who said it | What they said (paraphrased) | Agree-ing with them | What I think |
| B: | "Ellen G. White says we shouldn't play the stock market." | Funny, I have all of her writings searchable on my computer, and I didn't find that. What I did find is that we shouldn't play extremely speculative things like lotteries and other get rich quick schemes, they waste money that should be just given directly to preach the gospel. She watched many people get ruined by oil schemes. A pastor, I really respect, recently spoke about nigerian scams, and other nonsense in our markets that people give money to. EGW was right to warn us against those things.... | Stock trading, if done right, is more like running a store. Your stocks are your inventory. Occassionally you must market something down and sell it at clearance, at a loss, but for the most part, if you understand your market, and buy things that you can sell at a higher price, you'll make money. The key is control, knowledge, and discipline (ok, another word for control). I don't think she ever condemned merchandising. |
| Another B: | ....... | ||
| S: | "It scares me." | Several great investors say that fear of losing your trading capital is very scary. | So jealously guard your trading capital from mortal wounds. In other words limit your losses quickly. |
So am I giving up? Nope.
I've made a lot of money with my computers. Sure, I have been employed in the computer industry for many years. But I've made some really great money on the side, as an entrepreneur. With just my own wits, a glimpse of an opportunity, and the drive to seize the opportunity. Sure, I've wasted a lot of time. But I've had some real winners: A 1,000,000 page website which I sold for 6 figures, another site that made $100-$200 like clockwork, another that made $500-$600 a day for months, others that in agregate made even more a day, others that got noticed and got me mentioned in scholarly studies at Harvard, the Vatican, and in Wikipedia.
The thing most of them have in common are these:
- I leveraged automation to take advantage of opportunities
- The opportunities are mostly gone at this point, too many other people have learned how to write robots that generate websites.
- They were clientless, I didn't have to bug anyone to pay me, the money came in automatically
Now they are still plenty of opportunities around:
- the friend who thinks his idea is equivalent to four months of your effort
- Since your time doesn't cost anything, your friend has no penalty if he wastes your time - And you should be happy to pay the bills he said he would pay for, because if you're good and you do what he thinks are the right things, he might give you a share in his next big payoff, although he'll never put himself in a position to be legally required to do so.
There is no end to ideas for underfunded startups that will be happy for you to give your time, blood, sweat, and tears, while someone else controls the purse strings and dolls out the success to you in whatever minimal measure they later convince themselves is fair.
Compare this with the opportunity the stock market presents: If you can learn the discipline, the skills, and apply them, the trading of stocks will reward you. You won't have to deal with customers who don't pay their bills, or clients who change their minds. You just have to learn when best to buy stocks, and when best to sell them. If you sell the right stocks, when you need to sell them you'll always have ready buyers. No begging, no cajoling. Money flows in and flows out, you're responsible for your decisions. And if you do it right, you may have the opportunity to make a million dollars in a relatively short period of time, maybe a couple of years. Others have done it, you can to. It won't discriminate against you because of your accent, the size of your muscles, the color of your eyes. It's all in can you learn to play by the rules, and react to the circumstances that the market presents.
Compared to the past, today there is no end of books to learn from, practice accounts to try, information to digest. We should have it easier than any time in the past to learn to be great traders.
This is what I like. An opportunity to benefit from my skills, without artificial constraints.
When I compare the opportunities to work for free, and a maybe payoff someday, that my friends present, and the market, I think it is clear I need to stick with learning the market. So if their projects want to take me away from the market, they need to be contributing to fund my stock market account. And without their projects as distractions, I need to make much greater efforts to preserve my trading capital.
So from this point on, my plan is to use paper trading, and only very limited real market trading. Maybe one or two trades a day, at most. But my plan is to still be very active with the market. But I will use TradeStation in it's simulated mode. I'll do just enough real trades to make sure that the software continues to be free to use. I'll probably follow Timothy Sykes trades until I get back to real trading of my own.
Some authors say that trading on paper doesn't work, because it may not seem as real, the psychological issues aren't the same. For my situation, I think I've figured out how to make it more real. I am setting a profit target on simulated trading before I can go back to regular real trading. I've reset the simulated account to just $25K. My goal is to make $25K in profit, and then return to real trading. If I wipe my account down to less than $10K, then I do get to start over. But my plan is to wait on real trading until I see $25K in gains. At that point, I should have a winning strategy to apply in the real world.
I also need to finish the Online Trading Academy course. I need to watch all 32 DVD disks, and make notes on them. And finish one or two more books. I would like to finish a book on Day Trading, a book on Momentum Trading, and a book on Swing Trading. I also need to go back over Dr. Elder's "Welcome to my Trading Room", and understand his stop loss strategies.
Then I should be prepared to step back into the market and start making money.
So here are my goals to allow myself back into regular real trading:
- Simulated trade to go from $25K to $50K
- Finish OTA course
- Finish a book on Momentum Trading
- Finish a book on Swing Trading
- Finish a book on Day Trading
- Review some more of the electronic books I have copies of
- Develop TradeStation programs to test various trading theories
- Develop trading diary pages for my best and worst trades over the last 6 months
I hope you come back regularly for updates on my progress.
