Well now that y’all know a little of what my first 4 years of ups and downs looked like thanks to Aaron’s awesome questions on the @chatwithtraders podcast. With that I thought it would be nice for the news guys to know what I would have done differently. First things first, if you think there is a way to trade without having a lot of losses I want you to know that the only thing I can and will ever grantee you is that it’s not possible AT ALL. If I knew that earlier I would have saved myself lots of time and money chasing “full proof” systems that would just pour money into my account and help me avoid any pitfalls. Now that we’ve gotten that out of the way let’s look at what I would have done differently.
I think the most obvious thing I would have done differently is to not dive head first into trading so quickly… Duh… But really if I just took that positive momentum from my early winning trades and studied the markets inside and out while getting a paycheck I would have saved myself lots of sleepless nights, screaming into pillows, and dark moments thinking I blew everything. Lets put this into perspective (I like using sports analogies because trading relates so much to elite sports). You’ve played golf off and on for a few years and you go play with some buddies one weekend. You’ve always been an ok player but holy crap this weekend you hit a hole in one! You run home and tell your family you’re quitting your job and going to compete against guys with more coaches, psychologists, physical trainers, etc. than you could ever even dream of. Yah it’s like that. Trading is hard enough as it is but when you have the added emotions of needing to earn money to live and battling traders/algos with tools you’ll never see, things can get out of hand quickly. Learn with a clear head and give yourself every chance to succeed in this game – I sure as hell wish I did.
Because that’s pretty obvious lets move on to what I would have done differently when I started. I make a couple of trades and realize pretty quickly I am in over my head – what next? Because I was now relying on trading for income and I had no idea what I was doing I thought I needed to follow guys in and out of trades that seemed to be doing well. I bet if you’ve been doing this for a while you’re probably nodding your head in agreement and you’ve been there. The problem with this is that let’s say these guys are legit and maybe have a 60-70% win rate (that’s great by the way) you have to literally get the exact entry and exit as them every. single. time. Or this doesn’t work because you’ll get less of their upside and more of their downside compounded with the fact you are going to trade someone else’s strategy TERRIBLY. Take a lot of time deciding who you are going to learn from and it never hurts to start with tried and true trading books that have lasted decades (I know I froze when trying to think of a few in the interview but I’ll list a few in the resource page). Just because some of those guys never placed a trade on a computer the psychology and overall theory is 100% the same. When learning from people, know that you are not going to take their strategy 100% but take parts and create something that works for you. I’ve yet to meet anyone successful in trading that has said they do exactly as someone else – guys that are good know themselves and have built something around that. You’ve gotta be honest with yourself and ask yourself questions like… Are you comfortable taking risks? Are you an extremely impatient person? Do you thrive under pressure? Are there times of the day you wont be able to be 100% focused? And then work backwards from there.
Pro tip: avoid heartache and pain by not looking for teachers in guys that post Ferrari and inspirational quote pics over and over. They’d be better off teaching classes in marketing than trading. Top 5 worst mistakes I made right there.
I really, really, really (I’d write more reallys, too) wish I journaled at least something in the beginning. I basically have a black hole for the first 1-2 years where all I have are broker statements and nothing concrete to learn from. I get that I really didn’t know what to write about because I realized I was clueless but I mean when something works, write the best you can about it. Same with if you have a devastating loss – write every single thing you can about it, take screen shots, and tally up all the losses. It might not help you at all for a while, but when you get enough big wins and losses (again I guarantee it will happen) under your belt you’ll say “HOLY SH*T most of my big losses come from… ” and “most of my big gains come from… ” then light bulbs start to go off. You can’t know what you suck at til’ you suck at it. That right there is how you find your edge amigos. The key here, and yes it can get really boring after a while, is to track every single day and every single trade. It will become your greatest weapon with time.
Demo trading… People smarter than me have argued both sides of whether its smart to demo trade so I’ll just say what I wish I did. When I went full time I only knew how to put orders in my broker page by clicking market order and buy. Now there is nothing too wrong with that but when I started getting to the intricacies of hitting the bid or selling the ask you wouldn’t believe how much money I lost doing absolutely ridiculous things. I wish I simply practiced the ins and outs of placing all different kinds of orders. If you want to go and be the guy who trades a demo $100k account taking huge risks and having both big losses and big wins thinking you know what it’s like – let me tell you homie – you’re in for a rudddeee awakening. Nothing can prepare you for the time your small error snowballs into a mind shattering loss where your heart is pounding so hard that every inch of your skin feels like it might split open. At the very least set a demo account up with the exact amount of money you’ll actually be using and sample how quickly it can come and go, but don’t spend too much time there. Trade real money with super small size, even if you have the big bucks to risk, and increase your size slowly over time. So go out there – make those losses – document them – learn from them – and enjoy the ride.
I set out to become a swing trader with dreams of hitting home runs left and right, but if I did more of the things above early on I would have quickly seen I was setting myself up for failure trading a style that really didn’t work for me. There’s a lot more I could write about on this subject but I’ve promised myself I’m going to try to keep these blogging sessions to under an hour so it doesn’t stress me out and I don’t over analyze everything. You might disagree with me on some of these points, but they are simply what I wish I did differently.
7 thoughts on “If I could get my time machine to work”
Hi Alex, thanks for these blog entries and for the interview. Can you write more about passing from swing trading to your current style? This is something I’ve recently realized myself. I mean the retail trading world is all for following the trend and looks down on anything that’s short-term and discretionary. what made you realize swing trading hitting home runs wasn’t for you? What made you change your mind to the way you trade now? Any difficult moments?
Yes that’s a great idea for a topic! I’ve added it to my list of things to write about and will make sure I address all your questions when I do. Thanks so much for the feedback and ideas 🙂
I listened to the podcast, great episode. looking forward to read more about your learnings and insights.
I really like your interview on @chatwithtraders you sound like a really nice guy & luck is on your side. I wish you much success in your trading journey!
Awesome post Alex! I love that you mention the very literal reason to paper trade… to learn the platform. Everyone glosses over this but it’s critical to actually know how to enter orders/sells and navigate through the platform. Really enjoyed your interview and look forward to reading more blog posts. Cheers!
Thank you very much for this post Alex!
Great podcast with CWT! Read your list and journaling really stands out for me. I use Edgewonk and man, is that program helpfull and very deep! Starting to see where I can make more money as I get more data into the program.
Keep up the great work!