the cases. I remember when this happened between 2005 and 2006.
I bought butterflies without an afterthought in the first part of 2007, when the market
went down without a hitch and I was earning from volatility, time or from direction,
but it was not difficult to bring money in, taking well judged risks.
I saw the break-even points of my options strategies fly from one side to the other
during the crashes of 2007, whatever the underlying. I then decided to operate buying monsters and gianty swaps, as we called them, to
earn from volatility without taking a risk on direction even when the market went on
moving violently and did not seem to want to stop.
I operated with options on the Vix, to earn rapidly during market crashes, with an
underlying that was maybe even more volatile than the market itself, simply
because the Vix represents the measure of the market's volatility.
I have been able to create, with the help of expert scalpers, an unshakeable
operating strategy for the Forex.
Besides all this, I had to face difficult, non-profitable or even loss periods.
But above all, why did I go on changing strategy if I had a strategy that worked?
The method is useful to understand how a determined strategy has to be applied.
In any case, you cannot think that the strategy you use is the only one for your
entire life.
Your ability as an experienced trader will allow you to understand the conditions in
which to use one strategy or the other.
No business lasts forever without innovation.
Trading needs to travel step by step with evolutions in the market.
The application method of a strategy can last for 6 months, a year or maybe 2
Then this method will end up in the drawer to make room for a new method, waiting
for one you used for the previous 2 years to come back into fashion. And when your method ends up in the drawer, what do you do?
The method is not wrong.
What is wrong is to always go on using the same method, at any cost.
The true method is the one of knowing how to recognise the method that works in a
defined, longer or shorter phase of the market, and to know that if you do not know
the right method, it is better not to risk your own money.
I expose myself to risk when I’m conscious of having the chance of earning a profit and definitely not when I‘m at the mercy of risk.
not working anymore, whose fault will this be?
whoever taught you the method ?
your emotions?
your lack of discipline?
Wake up!
The market could simply have changed and the moment has come for you to adapt.
When the system is not performing anymore, the only responsibility you have is to
notice it before having lost your entire capital and having given it away to whoever was already ready to receive new money, yours!
If you lose for 5-10-20 consecutive times, troubles will start.
You start losing your trust in the method, and then you start doubting the market
moment, and in the end you lose trust in yourself as a trader and as a person.
When you reach this stage, the first instinctive reaction is one of discomfort, then
the feeling grows and starts taking on the look of frustration, and then sadness
amplifies the feeling of frustration.
At this point, if you want to get out of the “corner” and not go k.o. you decide to quit,
looking for an alternative that justifies the fact that trading does not suit you, or
,simply that trading is a tool with which it is impossible to earn and in doing so you
feed the legend that “with trading people do not earn money”.
I decided that I would definitely stop trading when in only 6 months I managed to
accumulate a small fortune that allowed me to buy my parents' house in cash. At
that time those were modest dreams: I lost the same amount of money in around 3
months. The feelings I felt were so strong for me, that a wave of pure ammonia in a closed
elevator would have been nothing in comparison, even if the wave went on for 1
hour.
At that point I decided to definitely stop trading.
To rebuild the “neuronal” journey that allowed me to accept the loss and to start
facing the market again has not been easy.
It was like after the first free fall parachute jump , the emergency landing near a tree
made me completely forget the idea of carrying on jumping, and years later a
partner of mine suggested I try again.
Well, at that time I was already conscious that I wanted to trade again and I was
already earning money with it, which made it seem easier for me to do another
parachute jump. That's how I got my parachutist’s licence.
His fame and his mature age make him one of the best known traders in the world.
The other day I was surfing on Facebook, I was looking for some well-known name
in the trading world, and you know what? Joe Ross is on Facebook.
What do I do?
I send him a Friend request.
The next day I receive his confirmation: I am a friend of Joe Ross on Facebook!
But that’s another story. What I want to tell you here is a phrase that a trader told
me some days ago: “the trader's goal is to last”.
This trader did courses with me and then after 3 years of study finally started
operating with real money.
In 3 years he had not even opened an account.
He studied all sorts of books and collected all the information he could find on the
web.
I remember the hours spent coaching him, discussing all the details of option
strategies and even the most useless and hidden curiosities of trading. I sincerely thought that for him trading was a fascinating subject to study with an
academic approach.
Even if rare, his was not the first case I saw of a person who, after having attended
a course and traded virtually, did not start operating in real money after having
passed the critical limit of 6 months. By this time more or less everyone starts
trading, even the most risk averse, with the desire of challenging their own goals.
Well this person, who is now a friend of mine, comes into my office for a talk, after I
had not heard from him for a while,.
We meet and we discuss the latest trading news and what do I find out?
He started trading.
With an account of $100, you will think.
Absolutely not.
His first account was $100.000 and his profit in the first 3 months $30.000.
I have always told people to start trading virtually, with paper money, and then to
open a small account and then, goal by goal, to increase the managed amount.
In any case, starting is very important, once you feel ready, to get a feeling for the
market.
He did virtual trading for more than 2 years, he carefully consolidated his knowledge
and he started without losing 1 dollar. His first quarter has been a very good one for a beginner, not only because he has
proved that he can manage risk emotionally, but also by because he has gone on
the market with a such a significant amount of money for his first options account.
I strongly recommend not opening such a big account, during the first few months of
operations, but his story has been a lesson for me.
Just thinking of the number of books about trading he suggested I read, in only one
evening, his study time has not been too long or too short.
I also told him I would read them but I do not think he believed me, as I did not write
down one title or author he told me about.
This has been a period for him when he gained awareness of the risk and he
worked out his identity as a trader.
The job was so well done that when he started, he started with the confidence that
only a trader with at least 1 year’s experience on the markets could have had.
When you work with different people, you understand that what you can teach them
is simply the beginning. After a while, you will definitely learn far more from each of them.