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At 02:52 PM 7/21/00 -0400, Anthony wrote:
>...exactly how did you find your trading style? Was it by
>trial-and-error?
>--
>Anthony
Dear Anthony,
There is a proverb: "A smart man is learning from other people mistakes, a
fool is learning from his own mistakes, and only an idiot does not learn at
all". Try to be a smart man. I will outline general plan how I wish I have
started my trading. (Please, do not ask me how I actually started. But to
give you a hint: I am an imbecile.)
First, I would read and reread and think through a few books left by great
traders and teachers of the past: Richard W. Schabacker, Jesse L.
Livermore, for example. I would skip initially their trading technique and
concentrate on strategy of trading, on logic of trading on cardinal rules
of trading business.
Second, I would read a basic literature on trading (classics are the must).
I would ask any trader who makes living from the trading and had survived
doing so for more then ten years (let say) to give a list of his favorite
books. When you collect those books, you will see many of the same names.
Make a note of different techniques that excite you (get your attention).
Check them out - do they work on the charts of what you attempt to trade?
Do they work in all kind of markets or only in specific ones (trending
market, sideways market)? If only in specific markets how to recognize the
market they are working in? If they do not work go to next one. It may take
a long time to find techniques that work, but if you do not have them, if
you do not know how to make money from the history chart, what are your
chances to make money trading?
Three. After you found an acceptable techniques of trading, you need to
come up with a trading plan (trading strategy). It should specify what and
when you buy, and when you sell if you trade is successful or not. Take
your plan and go over all history of the instrument you will trade (stock,
commodity). If it is working to your satisfaction go to next step, if it
does not, improve it. If you can not make money on paper you can not make
money if real life (do not tell me about luck, I know all about it).
Four. Start trading with the smallest position you can take. Do not
increase your position until you are very confident that you plan is
working under different market conditions. Trade you minimal position for a
year, two or better a full market cycle in your instrument. Do not rash. If
you could figure out how to make a penny a year for sure you will be a
zillioner in no time. In business of trading you could increase your
business manyfold any time and you could have practically unlimited
leverage. Plus, if you know how to make money, everyone would love to give
a lot of money to trade (like banks, for instance).
Five. Analyze your every trade. Go to step one.
Good luck.
Yours, Alex.
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