No Brussel Sprouts!

Over on ASF a discussion about the possibility of taking consistent income out of the market from a modest account size has been going on. Whenever these discussions start, people always fall into two camps. The YES camp, mostly traders that are hoping to do it or people that are doing it. And the NO camp with their main argument being if you can do it consistently with $50,000 then with compounding you will be richer than Buffett in 10 years. Which is a crap argument. Traders don't compound all their gains they live off them. Also every trader will concede at some level trading 1 to 5 contracts is a lot easier than trading 20 and trading 100 a totally different game. As always the NO camp still won't accept that so I posted a challenge to the doubters to say I would do it if they took the other side of the trade ie double my profit. And then posted account statement showing that I have done it with far less. Turning a friend's account of $1000 into $50,000 in 7 days (here). Which is not a bad week's work!!(although folks don't try this at home)

After all the excitement has gone out of the results I have been getting a lot of questions about how I did it, comparisons and questions about other people's trading plans etc. The two common themes from those that may be struggling a bit with trading has been the trade setup question and the lack of discipline line. Which on both accounts what I believe to be the truth hasn't been taken all that well. Firstly my set ups. They are dead simple. Absolutely nothing fancy about them all simple chart patterns with thousands of hours staring at the DOM. Along with the do no harm line as far as money management goes and religiously keeping and tracking results to ALWAYS have something to work on. Either repeating the positive or avoiding the negative. So any trader knows the setups already. I know nothing special as far as that goes. Probably all the hours watching the DOM has enabled me to internalize the ticker patterns and act quickly to them. That is work that I have happily done not a chart pattern that I can put in writing.

Secondly the discipline line. We aren't robots, I know that. We make silly unplanned mistakes. That is where the name of this Blog comes from, with the best intentions and plans for some reason we still stuff things up. But if after taking 100s of trades most of your errors are ones of discipline then your trading is equivalent to eating Brussel Sprouts. That is, you know they are good for you, you know that you should eat green vegs but stuff it, you just don't like them. And you are never going to be good at doing something you don't like. If you are doing something that YOU know works AND fits with YOUR personality I just don't see you needing discipline to stick to it. If you can't take the trade, bad days aside, its either because you don't know your plan works or it simply doesn't gel with your personality. Don't confuse an old market cliche with a problem. When you find something that fits you as per the last post, you won’t want to do anything else.

Best Tip I have is find what you like. Get creative and then learn and practice it until your doing it  automatically, without any need for discipline. Find your chocolate ice-cream and stop forcing Brussel Sprouts down your neck.

Comments

[Hoa]

Hi, I stumbled onto your blog from a stock forum. You probably know/feel this already, but great work on the blog :)

I've always been interested and schooled in economics and I've been gradually investing heavier in equities in my spare time (I 26 and working in IT).

Just on your latest postings, you've given me a wealth of information that hit on knowledge gaps that I've come across during this last couple of months of trading. No doubt I'll be trudging through your older posts in the next couple of days :)

Thanks, and keep up the good work.

[Broadway]

How do you use the DOM, TH?

Do you look for high numbers in the first bid/offer space?

Or is it more to do with the action, or higher numbers further up and down the columns representing support/resistance?

I personally find the spi to be full of alot of 'bluffers', especially before 10am, so the pros can pick up the volume they want.
When the price looks to be around hod or lod, I find the high numbers more reliable and predictive. I find the hsi alot more honest, not so many bluffers.

Have you tried using the volume tracker that comes with BT? It allows you to capture high bid/offer numbers on a table and you can set a threshold, eg spi above 30. Means you dont have to stare so much.

[The ASX Gorilla]

It's a good tip...ironically I find that I like what I'm good at...what comes first, the chicken or the egg? :)