It Ain’t So Easy
One night I dreamed I was only a few inches tall, and I was crossing a street that seemed a mile wide. I hopped down off the curb and started across.
Suddenly, out of nowhere there was this monstrous car, bearing down on me at an ungodly speed. I hesitated, then dodged left! Then right! Then left again! Then I froze! Oh My God I’m Gonna Die!!!
Then the car came to a screeching halt, its huge bumper just above my head. Out stepped a 15-foot tall squirrel. He walked around to the front of the car, bent over me, and with his hands on his hips, he said:
“See, it’s not so damned easy, IS IT??”
(from Steven Wright years ago, I think)
Many of the emails I get from new traders remind me of this story. They think I (or other trader/bloggers) have figured out some airtight, drink- coffee- and- watch- the- dollars- roll- in- system for making money, and they’re eager to do the same.
We bloggers are as much to blame as anyone. The vast majority of the trades we post are screaming winners. After all, who would want to click around and read a bunch of crap about all the do-nothing trades where we got stopped out? Might be quite a downer, and bad for traffic.
Well, I’m in the minority in that (so far) I don’t have a single ad and I do not have to focus on “what generates traffic.” [Not that I don’t enjoy seeing the hits grow]. But I want to make my money trading, not talking about trading and selling ads. (That may get me blacklisted from some of the “popular” sites, but I have a two-word response.)
My goal on this site is to try to get out there some ideas that may have saved me some agony 15 years ago, when all the info I could find was about “how easy” trading was and when I felt like a failure that it wasn’t easy for me.
Trading is NOT easy, and there’s been no better day than today to demonstrate that fact. This morning, on the beautiful gap up by virtually everything, I ran my normal Prophet.net scan which shows me all the up-gappers on solid volume in the $15-75 price range (that’s just my preference, usually gives fewer false positives). The scan popped up 32 stocks.
I automatically eliminate things like takeovers, and then I spend the first 30-60 minutes after the market opens narrowing my list by eliminating the stocks that don’t “act right.” This usually leaves me with 4-10 stocks, and I trade whichever ones show me a break first. First come, first serve.
Well, today a buttload of them “acted right”, the entire market was positive, and still only a handful ended up being “good” trades. The upshot? A bunch of stopped-out trades on a massively positive day.
You can never filter the stocks down to only the ones that are going to move in the right direction. There is always the chance they’ll go the wrong way. You can only select the ones which your experience tells you are probable setups, then manage your losses on the ones that don’t play nice. Remember, small losses are the real Holy Grail.
What I’m going to do is out of the ordinary: I’m gonna publish a ton of setups (not just the ones that ended well), then where they went. Most went to sh*t. I want the newer traders to see this– sometimes it’s not as simple as narrowing everything down to a good setup, then BANG! take the trade when it triggers. Sometimes you do that and you still get stopped out.
Look at these setups. See which ones you would have taken trades on. Look at where you would’ve gotten long, where you would’ve gotten stopped out, and how much money you would’ve made or lost. Since no one can just pick the winners, it’s your collective performance that really matters, not just a “1000R Gain” on a particular trade.
As you can imagine, this is a really long post, so I’ve gotta split it.
Here we go…
The setup:
The result:
The setup:
The result:
The setup:
The result:
The setup:
The result:
The setup:
The result:
The setup:
The result:
The setup:
The result:
The setup:
The result:
Andrew said,
November 7, 2006 @ 6:55 pm
Great Post! .. keep up the good work. i enjoyed reading your insights.
LP said,
November 7, 2006 @ 8:52 pm
Will thanks for that post. After last week I felt good even though I made marginal profits. However, Monday and Tuesday kicked my ass. Of the 4 trades 2 were just bad setups but the other 2 just didn’t work out. I was feeling a bit down until I read your post. It ain’t that easy and I needed to be reminded of it. While I could have done things to make it less painful, it still wouldn’t have been joyful. And there will be many more days and weeks like this and you just have to work hard and keep pluggin away. I have to constantly remind myself that hitting singles is ok, you hit enough of them and just maybe you’ll be luck enough to hit that home run. Untill then those singles will help you sleep happy and make you look forward to another day.
It doesn’t bother me when my setup fails. It really annoys me to know that my setup was poor. I too started posting my trades, I won’t get many people on mysite beacuse I don’t believe in link exchanges. My links are to some of the better and more honest bloggers out there. But by posting my bad trades, I can get good people like you to point a thing or two out. Those pointers may just get that mouse turning the wheels again.
Good post my friend…Good Post
BL said,
November 7, 2006 @ 10:24 pm
Thanks for the set up clues. Love the hammers, narrow bars and b/o and 5ema.
Will said,
November 8, 2006 @ 12:27 am
Thanks ya’ll.
Michael said,
November 8, 2006 @ 7:42 am
Good post. I feel the same way as you about posting both winners and losers.
Just because somebody has ads on their site doesn’t mean they have an ulterior motive or that they don’t actually trade. Some of us started our sites before even adsense was available and had no plans of making any money from our sites. The fact that I could throw up a piece of code and monetize all my hard work on the site was a no-brainer for me. I don’t write any differently than when I didn’t have ads. My site would have gone dormant long ago if not for the ad revenue — especially as my hosting costs have risen. For all the time I’ve spent on the site I’d be surprised if my hourly rate was much more than minimum wage. I have 2 words for anybody who has a problem with that!
Those same two words apply to anybody who would ban you from their site for this post.
Bill a.k.a. NO DooDahs! said,
November 8, 2006 @ 9:23 am
Nice. I really appreciate all the WORK it took to get that much detail on a post - because blogging IS WORK - and that variety of charts must have taken some time to assemble, post, etc.
Since blogging is work, and hosting ain’t free (or if it is, you get what you pay for), I’m totally supportive of those who choose to use ads. Similarly, I’m totally supportive of those who choose not to monetize in any way, even though I don’t think that path is right for me.
Posting every trade is WORK. You should get a return from it. If that return is purely your own satisfaction (similar to having no ads implying your return on blogging is your personal satisfaction), so be it. To me, it makes the most sense to post every trade if the poster is monetizing, i.e. to show results, but your mileage may vary. For the first 10 months of blogging I did the same route, no ads, but decided to start trying to monetize after some reading at steve pavlina dot com.
Saji said,
November 8, 2006 @ 9:52 am
Good post. This is an encouragement especially for me. I have been trading for the last 2 months- an absolute beginner :-). All my trade till now have failed except one. It does discourage you from going forward, but then I am just learning to walk.
Keep up the good work.
Joe Forsyth said,
November 8, 2006 @ 12:29 pm
Thanks for being real!
I actually learn more from my losing trades, than from the winners.
If i can get out of a losing trade with a small loss at my stop,
that I consider a winning trade as well.
john w said,
November 8, 2006 @ 1:37 pm
Nice concept - of the batch (I don’t normally trade 30-minute - I prefer 15’s but) I would have taken only BTE, CHL and, my bread and butter trade - ELOS. In fact in the last 4 days including today ELOS had a similar set-up. And just this morning I took a BTE-like set-up in HANS and made some nice coin. I even showed some other folks on Deh Trader how to recognize that set-up.
It isn’t easy - you need to study and understand your targets. You have to know how the target trades and that takes an understanding of trader psychology. You have to remember that for every trade you enter there is someone on the other side of the trade who is either selling to you or buying from you and they have their own agenda that is completely opposite of yours.
But most importantly if the set-up isn’t to your liking - you don’t take it. That is the hardest thing to learn. I have some extreme fixed rules in my process regarding set-ups and if they aren’t met - next.
You also have to have a “farm” - a set of stocks that you go to day after day after day for harvesting. You see - once you have a “farm” most of your work is done for you by other traders setting up your set-ups.
Keep up the good work.
Mike said,
November 8, 2006 @ 2:05 pm
Well said. I plan to come back regularly. Good luck and keep posting. I love no ads, some blogs are over run and you can’t find the content. I visit trading blogs for ideas, not to be bombarded with ads.
JR said,
November 8, 2006 @ 3:29 pm
It’s nice that you post the good and the bad, it’s refreshing.
I absolutely can’t stand blogs that post only winning trades and try to say posting losing trades serves no purpose. Let the reader be the judge of that.
There is one blogger that fits that description to a “T”. I’m sure most people reading this comment know who I’m talking about. Readers that post comments to that blog treat the moderator of the site as if they were “GOD” and a rock star all wrapped into one……gimme a break people!
The moderator of the aforementioned blog thinks highly of themself considering the mysterious name they use including a celebrity pic to describe themself. If that person truly made a living trading do you think they would allow someone else to post most of the charts and trade results. Something doesn’t add up if you ask me.
Anyways, for the the new traders reading this……..learn as much as you can about trading in the style you would like to trade and protect your $$$.
Lots of good info at this site and others. But don’t think that sites that post only winning trades are winners themselves.
Dummyspots.com has straight forward info on trading including the good, bad and ugly. No BS.
Will said,
November 8, 2006 @ 7:50 pm
Wow. I’m grateful for all the great feedback. Didn’t expect my Miller Lite-fueled venting to resonate like that.
I remember when I first ran across a trading-related blog… I think it was Trader Mike’s, and followed links from there, and from there, and from there. Michael’s links were always to high-quality sites, but after getting two or three sites down the line from his, I ran into tons of two different kinds of sites: 1) diary-like, basically posts of all of a trader’s trades, with little comment or explanation by the trader about what the heck they were thinking and 2) sites with beautiful winning trades posted day after day, and covered with ads over, under and on both sides of the posts.
The first kind is a good thing for the writer. Getting it out of here (pointing to head) and onto there (paper, pixels, group meeting) can be really therapeutic. Wears thin pretty fast for the reader, though, who may be looking for information as much as confession.
The second kind bugs me. All I can think when I see those sites is how much despair they must generate in the people who believe them, then fire up the computer next morning and try to imitate them, only to get slashed over and over.
I think one wonderful thing about the internet, and especially in pursuits that require active thought, is that CONTENT ends up winning out. I visit trading-related sites to learn, to get new ideas, to see how other people think and how it contrasts with and can improve my (often misguided) strategies. In turn, I try to post as many pitfall-avoidance tips and positive observations as I can (I seem to be better at finding the pitfalls).
From my calculations, I’ll need to approach 3.5 million hits per day, or about 800,000 page views per day in order to run over my host’s (BlueHost) bandwidth quota. Not a problem by a factor of many zeros, bit if I were ever to actually approach a fraction of that traffic, I’d probably get a nice note strongly recommending an upgrade to a dedicated server. If I had to deal with an expense like that, I’d definitely throw in some AdSense or similar to help “defer” those costs.
There are some high-traffic sites that have done exactly that. There are others which try to imitate radio stations, and play enough “hit music” to get the traffic, which they in turn “sell” to the advertisers. I’m a fan of the purist, who loves playing music and sells ads to support his passion. That’s the big difference, and you can spot it just by reading a bit on the blog, or listening a bit to the radio station. So far, I’ve been able to fund my little 5,000-watt station by myself.
On the sites which are overtly selling a product (book, software, newsletter), I completely agree with Bill that they should post the good AND the bad, and allow an objective look at the skills they purport to sell.
Jamie said,
November 8, 2006 @ 11:37 pm
Nice work!
Michelle B said,
November 9, 2006 @ 7:19 am
I will never forget when Gary B Smith aka The Chartman opened one of his RealMoney articles with the ‘confession’ that he blew his account because he did not follow any of the wise stuff he was recommending to his readers!
It was a cruel joke–a fake confession–designed to snap readers out of adulating him–as he well knows he is just a trader, like everybody else. His point is no matter how impressive a trader’s real or imagined record is, the reader will never know the reality. That is why it is a moot point for me to have a trader list money figures.
Much more useful and reliable is to present information and trades that show high reward to risk and some kind of edge, or some kind of important information, whether it is via a losing or winning trade. Winning trades are often not posted to encourage adulation or to bring in ad money, but to just to do the job of educating.
Losing trades for experienced traders are often boring, undramatical, routine, and in a way, unspecificially uneducational, like the list you have provided above. If you need to be educated that trading is rarely consistenly profitable for anyone, and an experienced trader does not have a 100% win rate, and if that is not clearly and abundantly evident via information on the Net, then you and I live in two different worlds.
I suppose some blogging traders may court adulation, but I think it more that we live in a culture where we are encouraged to defer to ‘experts’. And even if a blogger is not touting themselves as one, the reader could choose to perceive that anyway.
mrmike said,
November 9, 2006 @ 4:39 pm
Like seeing all those setups!
I just started blogging about my trades.. good and bad. Like you’ve probably found, the true benefit comes from going over the setups… over and over… again and again.
A wise trader once told me, “A pretty chart is like a pretty girl. You know what to do when you see one.”
After a while, it becomes natural to just enter those setups when seen. Blogging is helping me do this.
Will said,
November 9, 2006 @ 5:59 pm
Jamie- thanks, and great job w/ Wall St. Warrior
mrmike - glad you stopped by, and those QIDs may be seeing some action soon, no?
Michelle - thanks for the comment. I admire your writing and appreciate the thought you put into it. Please bear with me:
>>…or some kind of important information, whether it is via a losing or winning trade. Winning trades are often not posted to encourage adulation or to bring in ad money, but to just to do the job of educating.
I agree with that last sentence if you remove the word “Winning”. You’re absolutely correct that losing trades and winning trades both have a place as instruments to convey information or educate. And so traders intending to “share useful information” with others will be caught discussing the Don’ts at least as much as the Do’s.
>>>…unspecificially uneducational, like the list you have provided above.
As you can see from the rest of my site, it’s not my habit to list even a single trade with no commentary, much less a long string of trades like the one above. As the post accompanying those charts explains, I was displaying a day’s worth of setups not as individual trading examples, but to show how few of them turned out to be worth anything, as a reality check and possibly even encouragement to someone who felt their lack of success might mean they aren’t “getting it.” So the long boring list was exactly the point I was trying to make, and I’ve gotten some very kind emails from folks who found the entirety of the post to be quite useful.
>>If you need to be educated that trading is rarely consistenly profitable for anyone…
Cheers!
Traders are (usually) human, and the human tendencies that cause cancer patients to always believe they’re going to be in the 5%, not the 95%, are the same tendencies that make traders believe that they are going to be in the 5% (i.e. successful). This side of the planet Vulcan, the knowledge of the fact that it’s risky doesn’t deter many folks. Just showing them glowing winners is like some Cancer Treatment Centers’ ads preying on the hope, or worse, desperation of the “5% patient” by subtly implying that their chances are better. Any legitimate discussion about aggressive cancer, trading, or climbing Mt. Everest would necessarily include the caveats with the hopes, not just pretty pictures of the success stories, and “everyone knows people die from cancer,” “everyone knows Mt. Everest is hard to climb,” and “everyone knows success in trading is rare” aren’t sufficient to make the point. (Which is why it seems to be one of my missions to scream it from the streetcorner at every opportunity)
Michelle B said,
November 10, 2006 @ 3:55 am
Thanks for your excellent response.
I do hear you. However, folks who are bent on courting danger because they believe that they are different from the rest of us and will escape it, will not necessarily even listen to, less than heed your warning.
A trader recently commented on one of my posts on skill development and discipline that it seems that a trader actually has to sustain pain and damage before they can be motivated to structure their relationship with the market. Depending on the makeup of the trader, it is similar to telling an addict they should not fix up–just does not work. I have repeatedly told some traders how difficult trading is, with no avail. They still believe that they are the ones that will outfox the market, and even more alarmingly, think that I outfox the market!
The receptivity to such admonishment is low in general–not counting the appreciative readers of your recent list of dud-trade candidates. And I apologize if my previous comment was too harsh concerning the motivation of your post, as I was focusing on taking out of context the meaning of that post in its entireness. And perhaps you have what it takes to do what I have been unable to following that tack.
What TraderMike has done to a large degree, and what I have done to a lesser one–despite disgruntlement from some segment of the trading blogging circle–is to focus on risk managment so a trader does not blow out his account while climbing the ‘Mount Improbable’ of trading success. A mountain climber may think they can break a climbing record, but they still get the necessary gear before they set out. In this way, while they are doing the invincible gig, they are somewhat protected from their blind enthusiasm and determination and could possibly survive a spell during an icy blizzard.
I would rather spend time–and I know you would also–focusing on specific information to help develop knowledge and skill in other traders. And in this way we also increase our own. Rather than discusing the do’s or don’t of a particular trade, I want to discuss how and why a particular approach has a high probability of working. I would like to see more emphasis on the supply and demand and the footprints it leaves in analysis of trades. The mere listing/naming of trades is just about useless, whether they are losing or winning. Meaty analysis of trades are lacking in general. However, I see a wave of change in the blogging circle happening.
Traders need to find the blogs that focus on doing that, and in the style to which they can repond.