A few thoughts about trading, and what matters.

Hi guys,

For those of you that don't have kids, the above picture really is a baby. I swear. I know it doesn't really look like one yet....but give him/her time.

The point of this picture is to reiterate the point of the last post. I think that for those of us that are "driven", sometimes we can be "driven to distraction". Trading takes a lot of patience, study, and discipline. It also can take a lot of time. This is especially true during the "formative years", which is the time period I am in right now. I shutter to think of all the screen time I have put in watching charts.

However, I have started to get a grasp on this trading thing. Because of this, I should be spending less time on it. However, it is hard to not try to better our results. This in and of itself is not a bad thing. Regardless, there are more important things.

If you are profitable, is it really necessary to bust your ass "optimizing" a system? I think that the solution lies somewhere between trading as usual, and paper trading your "new ideas".

This way, you have the continued growth that you have come to expect, as well as the possibility of discovery....all without the added stress of your new ideas busting.

As new traders, we are lured into the game with the possibilities of astronomical returns. We get a few trades that reinforce this possibility, and begin to think of "What could be". But, as we finally learn to track our performance, we see that these high-yielding trades are not making up for the bad ones. This is where we either wash out, or begin to truly learn to trade. Expectations start to become more realistic. We no longer expect to double our money every month, etc. We also begin to accept the fact that it is true that the "Big Boys" are making 20-30% a year. We start to see the wisdom of compounding interest. Compounding Interest is where the keys to the Kingdom are.

A perfect example of how far I have come is that EUR/CHF trade. I could have loaded up on the daily hammer, maybe playing 5 times the size I normally do. (As I have found this to be a highly reliable signal.) But, could I have psychologically handled that same trade when I was 70 pips down? It is easy to look back and say, "I should have played large, as I am up 120 pips now." It is entirely different to actually do it. And ask yourself this: What would you do if that hammer failed? It does happen. You can never look back and fret all of the "could have, should have" moments. I know it's hard, and there will always be a part of me that sees that. But this is a marathon, not a sprint.

It never ceases to amaze me how many of the old pearls of wisdom prove themselves true. Some of the best points about trading I have ever read were from 90+ years ago. The "new systems" out there are mainly gimmicks. If it is a system that is being sold, it's not worth it. In fact, I would submit that if you aren't willing to work out a system for you, then you won't ever make it. You are just wanting the easy money, which in the end is neither.

Let's take my 4% last month. I am rounding down I guess, but 4% is a nice, solid, and more importantly - round number. It sounds paltry. I looks paltry. But as I posted last night, it adds up. Take this example:

Starting balance: $500 USD
Monthly gain (%): 4%
Yearly gain (%): 60%
After ten years, what do you get? A balance of $54,831.28 - and an increase of 10,966.26%. All this for a measly $500.

Of course, that is a ridiculous expectation, but it does illustrate how this works. Our problem as traders is learning patience. After all, in the above example, it does take ten years. But, if I told you to give me $500, and in 2017, I would give you back $54,813.28, I am sure you would consider that a good use of the initial deposit.

So, if you are profitable, don't necessarily feel the need to push it harder. Go ahead, look around for a few things that will make it better, but not in live trading. And take your time. Even just 1% a month can do wonders with time. Remember, the faster you gain, the faster you lose. Besides, this will leave more time for other things. Like that kid in the picture above.

At the end of the day, he/she doesn't care about my account. Kids have a wonderful way of cutting to what really matters. Spongebob, a full bottle, and playing. Somewhere along the way, we adults forget that.