DO WHAT A SAY NOT WHAT I DO
I thought of this topic as I listened to a fat person with a terrible physique talk about how children need to eat better and lose weight. Of course as I looked at the first lady with that huge ass and legs saying this, it was so reminiscent of a problem in our world. There are experts all over the place telling you/coaching you, for a fee, on how to do something they themselves cannot do. Maybe she should start with herself first, if I looked like her I would hide in a weight watchers program not bark at people about how they should eat better. Why in the world would anyone fall for this? At age 50 I have 8% bodyfat or less, and ripped abs. I am qualified to tell people how to get fit, I have accomplished it. When I seek advice on any topic, I want someone who has done what I am trying to accomplish. How could someone who hasn't done what I am trying to do, possibly guide me to a place they cannot get to?
How is this relevant? I show actual trades I do with real money on this blog. The above trade is the GOLD trade I entered on the short side this morning. You can see at the red arrow where the order was filled. I talk alot about GOLD here for a couple of reasons. First, it has become such a hot topic due to hype from people like Peter Schiff as well as prominent economists. Second, because I see trading opportunities here to make quite a bit of money. Volatility is what we want as traders, the direction does not matter. When you get a market that is being moved by speculators and not fundamentals, there are big swings that can be played.
To relate this back to the subject of today, I commit actual money in real time to my comments here. I am not a paper champion. At times I might make very opinionated remarks, so be it. I state what my research tells me, I do not care if it matches consensus or not. The "consensus" won't reimburse me if their views are wrong for the money I lose by following them. I always suggest that people be careful about listening to ecnomists. If they could trade they would be traders, they would make alot more money. These folks are just classroom geeks who have read about what should be. They have never hit a ball out of the infield. They will not make you wealthy.
Do your own research and make your own decisions. I do that and would have it no other way. I will give you an example of one of the best things I ever did that actually cost me money. I was attending a Larry Williams seminar in Rancho Santa Fe many years ago. He of course is someone I look up to a great deal, and have a good relationship with at this point. Back at that time I barely new him. He was teaching a bond trading system, and actually trading a million dollars live with his own money with that system. He entered a short trade during the seminar. At the time I was long due to what my own system was telling me. I stuck with my trade, which was against Larry's. His wound up being correct, and mine was wrong and I lost on it.
What I told him afterward was that one of the most important things I learned that day was that you have to be disciplined and stick to what you know to do regardless of what anyone else might tell you. I to this day am about as good as anyone at doing that. I trade based on my own tools and really don't care what anyone else is doing. It does not always result in every trade being great. However, how do you reconcile in your mind a loss that you took based on what someone else told you instead of what you yourself decided to do?
I throw out what I do in here as food for thought. I do not think anyone should blindly take a trade just because I am in it or I say to take it. Put together your own plan based on what people that have had success tell you. Make it your own. If you want to trade just based on someone else's ideas alone, give them your money and let them manage it.
Within the realm of that advice, the opposite extreme is something you also should not do. I had lunch with a friend yesterday who trades. He had just returned from a very intense two day seminar hosted by a top trader. His goal is to try and catch larger moves. He tends to be very jumpy and trade almost in a random fashion. He loses money consistently. In spite of all my attempts to get him out of this, he does not change. He is a swashbuckler. I asked him to give me a general overview of what he learned. As he is doing so, he shows me one example after another and at one point he says the following. "I don't care what anybody tells me, if the low of this bar goes I'm gone." He was referring a where he would have a stop loss, and it was completely contradictory to what he had just learned from a master. He said "I know if this low goes the price will go down." My reply was to ask him if he had researched that particular pattern and knew the statistics on it. The answer was of course no.
Next I went on to state that if you are losing money doing what you are doing and you just spent alot of time and effort in an attempt to change that, why are you interjecting your own arbitrary opinions based on no research and overriding the pro? He also has no money management system whatsoever. He trades the dollars, not the logic. I have tried to get him to be more organized with money management and have not been able to. At the seminar, the instructor told him his biggest problem was money management!
The moral of the story of all of this is as follows. Find some people who have actually traded and made money to learn from. Next take what you learn from them and blend it into your own style. Stick with what you know. No matter how good you are there are periods where you will lose money. I just had one last month. They are not easy to deal with, but they are a reality of this business. You have to understand the parameters, be organized, be disciplined and be persistent. This it not an easy busines, it is difficult. However, you can be successful if you stick to it and operate with prudence.