"Thank you very much for your comprehensive reply to my email on trading discipline. I will copy/paste and save it - and read it regularly to remind myself! Having lived 9 years in Vietnam and spent more than 2 years in India - I have no doubt that its only a question of time before both China and India will come back strongly."
"Probably everyone who has traded, as opposed to invested, can relate to the comments of a fellow subscriber on Tuesday. I know I can and while I cannot claim to be a consistently profitable day trader in the S&P, my rate of improvement has increased significantly due to a number of actions. I would recommend the following approach: Read Mark Douglas's Book "Trading in the Zone" and adopt his "5 Fundamental Truths of Trading" and his "7 Principles of Consistent Trading", as fundamental pillars in your Trading Plan. Then identify your edge and back test over a long period. I used 6 months of 5 minute bar by bar testing. Know your edge so well that you can verbalise it exactly as it appears. Then practice trade live until you are comfortable. It is this "Deep Practice" that will help maintain discipline under stress. Then trade in small lots and leverage up very gradually. I also utilised a trading coach, who helped me in the early stages of my development. Trading should be simple in execution but it is not easy to learn."
"In relation to yesterday's email on trading discipline I'd just like to add my own humble experience.
"I started spread-betting futures back in late 2009. I focused on the precious metals predominantly as gold was breaking through $1000 and the other metals were performing too. Fullermoney highlighted this daily. So I made some substantial profits (for me) right from the off and of course slipped into the mindset that this trading lark was a breeze and I'd be chucking in the 9-5 in a few months. However, I quickly learned an early win can be as dangerous as an early loss. My confidence grew and I have given it all back since, and then some.
"I suppose I've broken every trading rule in the book, in that time. Stop losses that were too tight/loose, trading on emotion (seeking revenge!), slavishly following tip sheets, and probably most egregious of all, not having a plan. Hell, I'd have consulted the Tarot cards if I thought they'd give me that ever elusive 'edge'.
"However, my one saving grace was I always respected leverage and traded within my available funds. So while my losses did sting, I wasn't wiped out. Like yesterday's subscriber, I consider those my tuition fees. I have since stepped back, but not abandoned, spread-betting and am now focusing on non-leveraged investments that follow the Fullermoney themes. They're small investments, but diversified, and most importantly, I'm sleeping at night. No more waking at 3am wondering if I put a stop on that quickly tanking EUR/USD long.
"My aim now is to properly know myself. You've spoken of this in the past David, and I must admit, at the time I did think it was bordering on psycho-babble. I now know it is easily the most important aspect of trading and all else falls behind it.
"To finish, the following quote, I think, sums up trading for many people:
"Leverage buys you a glimpse of a prosperity you haven't really earned."
"Taken from 'Boomerang', Michael Lewis' new collection of essays."
"Trading Discipline: this is indeed a huge yet fascinating subject. I certainly appreciated the question and your response on Tuesday Comment of the Day. www.youtube.com/watch?v=LiE1VgWdcQM is a song by Ed Seykota which may be new and useful to some subscribers. From what I have read, Mr Seykota seems to be one of the most successful trend following futures traders in the last 40 years."
David Fuller's view There is certainly wisdom in these emails and thank you for sharing your thoughts and experiences in the spirit of Empowerment Through Knowledge.Back to top