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Okay, Mad Bomber, here's my story, just so you won't be misled. You want the truth? Can you handle the truth??? Okay, here goes.
I did not intend to infer that I am a successful daytrader. I don't believe I said that, and I am sorry I gave that impression. Unfortunately, at this point, being totally honest, I must say that I am not. I have learned a lot and am improving regularly, but I do not consider myself successful yet. I have been daytrading for 1 1/2 years and feel I am just now beginning to turn the corner and start doing well. I don't know if I am typical, but I am being honest with you.
I have seen enough to believe that I can eventually become successful. I have a ways to go, but I think I am on the right track now (finally). I just need to get more disciplined and follow all the rules (which I already know) more consistently.
Regarding your comment about I.Q., big stake, nerves of steel.....I have my doubts about all of them. I had a big stake and it made me lazy and take too many big risks, and you can imagine the results. I have seen traders with very modest-looking I.Q.'s do quite well. And I think nerves of steel can sometimes get in your way. I think patience and discipline and a willingness to be open-minded, study hard, learn, and keep a clear head may be more important. I also believe good traders may have some instinct that other people do not have.
But I also think that lots and lots of good, solid experience is the single-most important ingredient. Just watch and learn and evaluate everything, for a long, long time. I personally think this is so difficult because it is neither an art nor a science, and most of us would like to make it one or the other. It is partially both, and slightly something else altogether....maybe like a very disciplined gambler who treats it strictly like a business and doesn't drink, do drugs, or let emotions get in the way. I tell you, if you find a trader who really, truly lives off his or her trading, study that person and you may find the answer to what makes a good trader. Some folks appear to be born with it, others learn it, and many very wealthy, highly educated, intelligent people just never seem to get it. Not to say, of course, that the Jerry Springer crowd does either.
I have met and talked with many traders, and I have noticed that the ones who were very methodical, watched a lot, traded little....were the best, more successful ones. Made fewer trades, but all more "high quality" trades....high probability trades...had lots of good trading rules and stuck with them religiously....took small but consistent profits, let the profits get bigger with time and experience. I have also noticed that women, on average, seem to do better than men, and I don't know exactly why that is. Lots of guys do well, too, of course....but it seems to me that the women, on percentage, do even better. Must be something about the way they think. I believe they study harder, have more patience, and take less risk. Maybe you could find one and ask.
I would suggest a prospective new daytrader start out with maybe $10,000 in a modest account......trading only one stock at a time, only 100-200 shares per trade....nothing to get excited about, making no big profits. The goal here is to NOT lose money. That's it. Plain and simple. If you can do this for a month or two, fine, step up to 500 share trades until maybe 80% are good trades before moving up to 1,000 share trades, still never more than one at a time. I would avoid using margin until I was consistently successful and totally confident in my ability to manage a proper stop-loss (which is the biggest, most important part of it, imho). Get the right broker for you with the right software and the best, most powerful computer (with at least two large monitors) that you can afford. Do not skimp on these tools. And make sure you do NOT overtrade, especially when on a losing streak. Only makes things worse.
I did not do this. I was too impatient to sit and watch and learn, never did a single papertrade, used to play 1,000 or more shares on 2-3 positions at a time. I was in a hurry to make a fortune, couldn't take the time to learn daytrading. I thought you just bought a stock, waited for it to go up, then take profits. Seemed like so much fun, and at first that's what happened. The market at that time let me get away with a lot of things that I later learned were bad (stupid) habits. And the "education" cost me a fortune, I might add. I saw other traders papertrading, and I wondered why they would waste their time doing that when there was so much money to be made. Now I know why.
Up to that point, I had never traded a stock in my life. I had some mutual funds in an IRA and "maybe" looked at my statements once a quarter. That was the extent of my investing career. I didn't realize the difference between investing, long-term trading, short term trading, swing trading, position trading, and pure daytrading. I got started in the wrong chat-rooms and wasted a whole year learning all these things were very different and needed to be treated that way and with a certain amount of respect. Big money needs to be treated with respect.
I mistakenly believed that just because I had been somewhat successful in business that I could do anything (like trading). I should have (and now do) know better. It is different from anything I have ever done. But I do love it and I have not given up. But please do not assume I am a successful trader. Not yet. Maybe one day. I'm just like you, except I have lost more money than you so far. Maybe you'll be able to learn from me and keep it that way.
Maybe, since you are relatively young and making good money, maybe you should keep at it another five years or so, build up a nice nest-egg for yourself, continue investing wisely, do some short term position trades or swing trades from time to time to get more experience and keep your pulse on the market, and take a morning several times a month and try some daytrading. Stay away from anything related to Wade Cook.......avoid spending a ton of your $$$ on videotapes and get rick schemes, newsletters, seminars. Be very careful about acting on what you hear in chatrooms, get a broker you are comfortable with. Find a good trader you feel comfortable with who lives near you, and try to learn what you can that way. It might save you lots of grief and $$$. Just my opinion. I bet others may agree and some may disagree. If I knew the true answer, I'd be selling you videotapes and very elaborate (and expensive) software. <g>
I apologize for this long post, but I thought you might benefit from hearing these points. Gives you something to think about before, or as, you are jumping in.
Good luck!
Bill |
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