Is It Really Possible?
After my article on Traders’ Misbeliefs published in the September issue of the Your Trading Edge magazine, I received this email. I am withholding the surname of the correspondent. His Christian name is Chris.
Chris wrote: “I have read your article in the last issue of YTE. It is really interesting as are all your articles, but one thing doesn’t allow me to sleep at night. It is of course the 6-7 digit profits some traders made. I have heard that statement before, but I have lost faith that it is possible. Especially some time ago I was attending an ATAA (Australian Technical Analysts Association) meeting and I parked 2 streets away and saw a man coming out from his vehicle. He was the speaker for our ATAA meeting. His vehicle should have been at the wrecker’s yard 30 years ago. The person is noted for his articles in trading magazines, he wrote a good book about trading. I have a feeling that many educators are making seminars to make a living; they can’t make money from the market. They use ATAA meetings to promote their expensive seminars.
I have spent the last 5 years learning about the market and psychology; I have read many books and attended many seminars. I am an active trader; I have no problem with pulling the trigger. I have not made any good money from the market so far and I personally do not know anyone that has.
Can you tell me in percentage terms how much a good trader can make? Is it 100% or 200% in every year possible? Those traders with 6-7 digit profits, how big are their accounts?”
Chris’s email raises a whole host of issues and probably contains views that many potential traders hold. Through duty and courtesy I respond to every email that I receive. This is the reply I shot off to Chris.
“Hello Chris. Thank you for your email. Let me say you just won’t break out of the breakeven rut if you don’t think it is possible. I have a number of clients who return 6 figures and above. But they are people who have decided to be special and do things their own way. Reading books and going to seminars doesn’t make money. Your mental edge will and that’s where I come in. I have the knack of taking people from the breakeven rut into the superior performance class. If you choose I can help you too. But you have to be prepared to change what you are doing now because if you don’t you will achieve what you always did.
I can’t speak for the motives of other providers. Your observation is possibly apt. Please phone me if you want to discuss the issue further.
I have placed you on my newsletter list but if you don’t want this just hit reply with the word ‘No’. By the way, I drive a Subaru Forester.”
Here is Chris’s response to my reply.
“Thank you for your answer and the newsletter. Those sentences are full of wisdom. I will seriously consider it.”
Let’s examine some of the concerns and issues raised in Chris’s email.
You will have already spotted the contradiction about the ATAA speaker and his car. A wealthy person is entitled and free to live his or her life any way he or she chooses. A confident and secure person does not need to drive a status symbol although he or she has the means to do so. The presenter’s preference may have been to drive his old banger. What Chris is really saying is that if he were a supertrader then he would drive an expensive car which conforms to his stereotype of success. Presumably the ATAA speaker would be able to drive an expensive car because of the income from the book and the expensive seminars.
Chris is cynical towards presenters and authors about trading. If writers/ presenters are saying they made a fortune trading but in fact didn’t then this is a case of fraud. But Chris is laying a lesser accusation that the presenters are unable to put their money where their mouths are. They talk in terms of theory without the practical experience of becoming and staying a supertrader themselves. They make their money talking about trading rather than actually doing it. Chris has to learn to discriminate between the talkers and doers. It can be difficult I must admit because speakers can pontificate as if they do it and furthermore from their theoretical perspective talk as if the task were easy.
It is not the role of the ATAA to make people into supertraders. Its role is to educate its members and discuss issues that pertain to technical analysis, one form of analysis that is useful to traders. It is a naïve expectation to find supertraders at the ATAA. After all analysts analyse, authors write, educators educate and traders trade.
The ATAA meetings and the seminars have taken Chris as far as they can go. He has started his trading project and he is not losing money. But he is at an impasse. To advance, Chris has to change, to move forward from current limitations and to grow. The next part of the journey for Chris and all those whom are in the breakeven rut is a journey within. The journey involves courage, integrity, confidence and the commitment to advance into the unknown; to develop his own identity and methodology as a trader and then to go on with the process as long as he wants to do the job.
Of course there are techniques and strategies that can facilitate the process that make the journey much more efficient and productive than by trial and error alone. This is where my coaching comes in. Furthermore, learning from a legitimate professional trader with a strong and current track record would not only provide a good role model but also certainly enhance the process.
But there is a problem highlighted by Chris that many probably share. It’s this. Chris does not have such a model for the outcome of his growth. In fact he doesn’t believe it is possible because of the limitations of the formative experience he has had so far. This is why he is contemptuous that a 6-figure income is possible. Chris is asking, pleading almost, “Show me someone who has done it.” This would then reassure Chris that the leap of faith required for the next part of his journey is sensible.
Well such models exist. Let me share one with you and Chris.
Davin Clarke is a supertrader who trades his own money. Davin approached me as a client with a promising overall record. He was making around $100,000 per annum (a 95% return on his capital) but there was too much variability and unpredictability with his outcomes. Davin and I worked to make his results consistent. We quantified his edge. Actually I do this with all my clients to determine their baseline for trading. I asked Davin after our first session to implement a statistically significant 50 trades while applying a disciplined stop loss regime together with adding to profitable positions over the series. Davin emailed the spreadsheet of his 50 trades the next evening. Davin is an amazingly energetic trader.
Analysis of his results showed that Davin has a hit rate and edge ratio that he could rely on in the future. Since he had an edge my job as a coach was to challenge and equip him to extend his results. If he could make $100,000 per year beforehand he could surely stretch in the future. Davin has taken on this challenge and his current goal is $15,000 per week and he is exceeding it.
Davin is extremely disciplined and flexible in his approach. If he has an edge through riding winners and cutting losses early then our response is why not trade more and bigger. Davin has built up to 10 screens in his trading room and he works with intensity and purpose through the trading day. Of course coaching assists with his ability to focus on one position and switch focus to another in an instant as well as enabling him to remain relaxed yet centered. He has developed an acute intuitive capacity to stay in tune with the market. He constantly maintains his positions with the current direction of the market. If the market for a stock is moving in a direction then he is on it until the movement halts.
Some of the drivers for Davin are to be financially independent and to deliver the lifestyle he and his family enjoys. Money is a subsidiary outcome for Davin and other supertraders. The real motivation is the capacity to respond to the ever changing challenges that the market presents them, to be independent, to stay in complete control over their results and then to achieve the level of return they require from their market operations.
Davin is an ‘ordinary’ man with a young family. He lives opposite the beach and goes surfing every day. He is a quintessential nice guy displaying resourcefulness, diligence, humility and courage. The thing is that Davin has chosen to become special and to keep on growing.
I am only presenting this information about Davin to model to you and Chris that winning at trading is doable and doable by ordinary people who have the imagination and will to go for extraordinary outcomes. You should ask potential ‘teachers of trading’ who want your business for their current trading figures and compare them to Davin.
While Davin certainly has the credentials to teach you about trading, you and Chris can not be Davin. His story proves that you can conquer the breakeven rut and sustain superior returns. To achieve success you have to develop your own way, but you would greatly benefit from being exposed to Davin.
To become successful you have to be determined to leave aside the conventional wisdom and limiting beliefs espoused by those ‘teach’ but don’t trade and embark on and take responsibility for your own personal growth journey. The journey is not easy. It requires insight, commitment, diligence and perseverance. Again it is too difficult for most to do it alone. Personal coaching supports, encourages and focuses you on the psychological and personal demands for sustainable success in the business of trading.
Now that you have met Davin, it’s time for you and Chris to get started on your own fabulous journey in earnest. Yes, it is really possible.
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