I had to watch the market go against me 30 points or so before it tanked.. it went past my entry point and I took profits at the round number 9700 for 40 points which wasn’t bad. However, the market is still going down, as I write, it’s at 9672 meaning that I left another 30 odd points on the table… nevermind!

The market just dropped further and hit 9660….. double nevermind!

I haven’t been playing with Betfair all too much but this weekend, I thought I would return and play my usual strategy… bet on the favourites (yep, that’s it!). A simple yet effective strategy which has yielded me £185! I know that there are people who trade the sports markets (particularly Horse racing but that involves staring at the markets and that just takes so much time).

Anyway, here’s a screenshot of the bets and my winnings… happy days!

Market Wizards by Jack Schwagner – profiles a series of traders, it’s like looking over their shoulders over these great masters

Adventures of a Currency Trader by Rob Booker – a story about a trader, it’s fictional but there are some useful lessons to be learnt

Forex Patterns and Probabilities by Ed Ponsi – very good book on Forex technical patterns and the probability that certain patterns will repeat… after all, human nature repeats itself

Mastering Futures Trading by Bo Yoder – excellent technical trading book

Trading in the Zone by Mark Douglas – the book which talks about trading psychology. This book is an absolutely must have.. trading is 80% psychology, if you can’t get this right, then you have no chance of making it

I have spent a lot of time reading on blogs and trading forums and something which stuck out is that a lot of successful traders trade simple systems. When you’re a rookie trader, you think that trading is some super complicated thing and you end up with charts with all sorts of patterns and stuff… you end up confusing yourself and losing money as you are just moving from one way of trading to another. For those that persist and become successful, they realise that trading is a probability game.. losing trades are inevitable.. you need to have more wins than losses.

Anyway, a quick trade that I put on today was a long with the S&P… the markets aren’t moving very decisively so I took profit before the previous high got reached.. however, the market has gone beyond so may well fly… I took 2 points however and was happy with this…

However, my long at 1.4241 last night with an exit price of 1.4290 yield a nice 49 pips.

I have just entered long 1.4175 now with a stop at 1.4135.. let’s see how it goes…

I search high and low for an answer, I look at myself to see what was going on. I even managed to talk to a guy who was trying to sell me a trading course but I think I have got enough out of him to find the answer….

I want to start at the beginning with the evolution of how one becomes a trader….

It all starts when you read about the amount of money you can make…. you then read a few books, understand a few terms and how to read a chart and usually, off you go. You maybe lucky to start off with and make a few bob but in time, you will lose. You will find that you get angry and frustrated which then furthers you to read more books and/or even go to seminars. You will try some new things which you have learnt from these books/seminars and find that these also don’t work…  you go on more and more and you start to build quite an amount of knowledge to be able to speak the lingo and understand most of the terms which are presented. However, success as a trader still eludes you. You keep trying through more education and more seminars, more testing and doing anything you can to succeed….

Most people after losing a sizeable amount of money or finding themselves getting frustrated stop at this point. It’s an endeavour which they close their doors to…

I’m at the stage where I have seen some short term success…. and then to lose it. The thing is, trading isn’t what you expect it to be. It’s not a road to quick riches.. to be successful, you need to gradually build your stake and trade larger and larger sizes as you become more successful. Trading is a very personal endeavour too… it can be lonely and quite frankly, boring! However, the financial rewards can be huge!!

What I have learnt is that it is about discipline, it is about pulling the trigger when the time is right and it’s about sticking to a system which gives you a positive expectancy. The system you use will not be foolproof however, you will not get a 100% winning system… that is what most people find hard to cope with. A trading system that works can lose you money even if you follow it and make you money when you don’t. It is your discipline to follow through which makes trading work… you cannot be emotional about your trades… you just pull the trigger and wait to see what happens.

There are a lot of systems out there which do work.. however, where it fails is usually with the trader. The trader is unable to pull the trigger or tries to refine the system. It gets to a point, as a result of the refinements, that the system is no longer the system you started with but something completely different and non profitable.

Also, there is the tendancy to think that trading is a highly complex endeavour and people will design these systems with elaborate and over complex indicators.

Find a simple system and follow it…… after many years of pursuing trading, I think I’m finally coming to the answer and it’s been within my reach all along. It’s about believing yourself and being disciplined enough to follow through a trading system. You need to find one which suits your personality… Trading is about finding yourself and learning what works with you and what doesn’t…. it’s a journey that can lead to a lot of frustration yet joy!

As the annotation goes, I’m glad that I didn’t take it.. the markets may well go south but from the initial point of where I thought could have been an entry, it would have been a disaster for a daytrade. The market shoots up to 161.90 before it dwindling around doing not much. A daytrader would be quite nervous at this stage…..

I am just not sure what it is but my instinct tells me to be careful… I attribute it to a couple of things, all trading psychology related:

• The possibility of losing my 47 pips that I have already made.. it’s always nice to finish the week a winner!
• The re-entry looks too obvious a trade… a bear trap perhaps?

Maybe I am thinking too much but once needs to feel comfortable. If the market goes down more I need to be composed, opportunities present themselves all the time.. I am not forced to enter.

We’ll see.. I’ll post another chart later to see what happened…