Here is a collection of quotes that are helpful to read when I’m struggling with my swing trading.

1) Never believe you are invincable
2) Remember the old saying that ” when you think you have the key to the market be prepared for the locks to get changed on you.”
3) When your trading system begins to fail do not get stubborn and press it. Best to sit back and take a break and rework a new strategy.

acesup – poster from EliteTrader.com

I treat it (trading) like a business and if I am trying to buy inventory I prefer to buy it at better and better prices

None of us trade exactly the same. We KNOW many of the same things. But we each have different strong and weak points which are refined into a personalized trading method that makes the most of our natural tendencies. Personally, I day trade to pay the bills, but counter trend swings over longer time frames to make the big money. I know when I begin to build a counter trend position for a swing, I’ll probably be feeling some pain. Other traders might say I was being “stupid” for staying in a loosing trade. Others might try it themselves only to loose a lot of sleep resulting in eventual capitulation. Others might also enjoy the same success and suddenly find themselves with a 2nd Mercedes. Finding a system that truly works for you and all your individual, special traits is what will allow you to take money from other traders on a consistent basis. They are always looking outside themselves for an edge like some traders’ ‘holy grail’. Each of us only need look to ourselves!

And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

But I won’t be quitting the day job this lifetime bailing out of trades early.

clicking the mouse can be detrimental to your trading capital. If you want action, join the marines.
Personally i don’t understand why people are taking years to become profitable in trading? All you need to do is put a moving average on a chart and you can make money… Or just draw trendlines connecting dots and play the breakouts… Or anything really.
I accept losses as part of the every day function of trading. They are inevitable. The only way to avoid losses is to not trade (“get a proper job then” – the wife!).
When you’ve done enough trading to see 5-10% drawdowns are likely, come back to us with your swing trades that aren’t dependent on a Jack Hershey mythical backtest. The mysticism goes only so far, and I’ve watched swing systems tolerate that level of drawdown before turning a profit. It’s not pleasant and until there’s more history most investor’s do get turned off by that level of drawdown but many more miss the multithousand percent profits that come to those traders afterward.
(trading)…It will probably be the hardest thing you ever do if you do it unless you are a very unusual person. It is doable, 90% desire for the tenacity to wade through the gator infested swamp of discovering yourself and 10% study of the mkts.
I’ve been a trader for 20 years. Some years I’ve struggled to do much more than break even. Other years, big winners. Luck has something to do with it, so it’s paramount to not let the market wreck you even at the expense of missing opportunity.
(trading)… it is not easy. It takes time and the ability to understand that it is a career. A combined experience of highs and lows.

Some food for thought

a) I always get a shiver down the spine when I hear the question “I need $X000 a month, can I make that with trading”. Yes, you can technically make any amount imaginable trading, the question is what risk are you taking on to achieve your goals (what % of your capital are you risking every day)? And what are you doing when you hit the inevitable dry spell of a drawdown (loss of capital for an extended period of time). A drawdown means weeks or even months of no income and an actual reduction of your trading capital. You have to be financially and emotionally prepared for that point, because sooner or later it will happen.

b) By all means, keep running your business. I’d suggest trading stocks “swing style” long/short (holding each position anywhere between a few days to a few weeks) for now, i.e. establishing positions e.g. in the first/last hour of a day, putting in stop loss orders on each open positions and then review all your positions each night. Thus you spend maybe 2-4 hours every day and can still run your company in the day time. Use the weekend for doing your homework and educating yourself as much as possible.

c) Here’s something to ponder on: $400 a day = $8k a month = ~$100k a year.

The very best traders make anywhere between 15-35% a year on their capital (without leverage) year in year out, over a complete market cycle. A good drawdown here would be 10-20%. 10% DD and 35% annually would be absolutely fantastic and probably only the top 0.2% of traders worldwide achieve such numbers, again, annualized over 5-10 years. (Please ignore the people telling you about returns of 500% year etc., it’s all bogus. Of course, it can happen just like people come to Vegas with $10 and go home with millions, it’s just not feasible to be replicated year after year)

If you want to make $100k a year consistently (year after year after year, rather than making $100k one year and making $22k the next) working from home, without big leverage and without taking out of this world risks then I would say you’d need anywhere between $250k-$500k in capital. I can’t wait for people to flame me on this but that’s how it is, I am sorry to spell out the facts.

d) Don’t waste too much time going from stocks to futures to forex to options and back and forth again. One market is not better than the other looking at risk/reward characteristics, however, they all have their own feel to them and it takes time getting used to them individually. If you jump between markets a lot you will waste a lot of time getting used to each before you know what you’re doing.

e) My approach would be: If you have experience with stocks, stick with them. There are something like 8000/9000 stocks listed. There are always some going up and going down.

f) Have realistic expectations: A transition from your brick and mortar business to full time professional trader will likely take anywhere between 12-24 months, maybe even longer. In between, you will go through phase of frustration and self-doubt. It’s part of the game, don’t get discouraged.

Keep risk low, be opportunistic, cut losers fast and don’t give back all your profits on winners. Good luck.

Hardest part of doing this as a means of income is sitting on the sidelines the majority of the time waiting for that risk/reward to really skew in your favor, patience really perseveres in this game.

It has taken me over a year of live automated trading before the emotional side of being in an (automated) trade vanished … the corollary of this emotional side being taking over control of random trades (usually to bail out).

I added a column (“cost of discipline error”) to my trade-log spreadsheet to track the cost of these discipline errors. It helped me realize how much I was hurting my system’s performance.

My next step was to walk away from my trading desk when a trade was on and I didn’t feel comfortable with it.

But in the end, it takes an immense amount of confidence to watch those automated trades without emotion, regardless of the outcome. For me, that confidence can only come from trading systems with thousands of trades in backtest, and knowing in advance the average level of drawdown I should expect from a system when traded for 1 year & 5 years.

Ironically, my new system (CL always-in) just made its worst drawdown in over 3 years right after I started trading it live (that account went -20% in 5 weeks). I kept trading it faithfully, and it recovered and has now made a new P&L peak (account +17% 4 weeks later). But I suspect many people would have stopped trading it right around the time of the max drawdown, purely for psychological reasons.