Why I'm NOT A Good Trader

Gross: +$682.00
Net: +$565.64
Loss From Top: $67.26
Trades: 80
Shares Traded: 113200

Stocks Traded Today (net profit/loss):
Motorola (MOT): +$633.85
Corning (GLW): +$199.04
Walmart (WMT): +$85.99
Home Depot (HD): +$8.88
Exxon Mobil (XOM): -$33.47
AT&T (T): -$90.64
Pfizer (PFE): -$97.69
Advanced Micro Devices (AMD): -$140.30

There are lots of resources out there that tell you what a good trader should and should not do as well as lots of info about how a good trader should and should not think.

I would say that most dedicated traders know what they should and should not do/think, but yet why is it still so hard?

Well, I was thinking about my trading problems late last night and I thought to myself that instead of focusing on what I should or should not do/think, why don't I focus on the trader that I am and work on the weaknesses that are part of me.

I vaguely know what my weaknesses are (they're all in the back of my mind somewhere) and I have a vague idea of what I should do about them (like devising a trading plan that works with your weaknesses).

But I have never really physically put them down on paper (or electronic form), and I thought it would be a great exercise for myself so that it all becomes much more concrete and hopefully it really forces me to actually think about them.

I believe if that I acknowledge these problems, only then can I begin working on correcting them. It's very similar to an alcoholic - they first have to admit they have a problem before they can begin working on it (otherwise they are in denial).

And so, without further ado, why I'm NOT a good trader and what I'm doing about it:

1) I don't have patience. I don't have patience when it comes to riding winners and I don't have patience to wait for good setups.

What I'm Doing About It

• I must follow my trading rules - these dictate when I should get into a position and when I should get out
• If I'm in a position, take a deep breath and slow down - it seems like everytime I'm in a position, time seems to be stuck in fast-forward - just slow down and keep assessing and analyzing the position
• Patience is a virtue and can be difficult to come by; by far this one is one of the more difficult things for me to obtain, but I will work hard at achieving this
  

2) I don't like taking risks. Often times I don't act on my gut feelings and as a result, I miss great opportunities. I also don't put on position sizes big enough.

What I'm Doing About It

• I just have to realize the difference between taking a risk blindly and taking a calculated risk
• I should know by now what kind of trades have higher probability of working out and thus I should adjust my share size accordingly
• I must also acknowledge that trading will involve losers and the sooner I accept that fact, the sooner I can accept risk
  

3) I don't like change. I don't do enough to change the way I trade for the better and often times I just do what's comfortable. Doing what's comfortable leads to unimpressive results and won't lead me to my goals

What I'm Doing About It

• From here on in, I must make a conscious effort to change or even try new things and strategies
• I must also take a more active part in education and learning new ways to do things
  

4) I worry about what others think of me. I worry about what my family, my friends, even co-workers think, especially since I've been at this for more than a year and a half; I think they all expect much more of me

What I'm Doing About It

• I will leave all worries at the door and focus completely on trading during the trading day - results will come if I just focus
• I should think of the entrance to the office building as a barrier - once I enter through it, I become Trader JC, when I exit through it, I become regular JC. All worries and problems will stay on their respective sides of this barrier
• One of the reasons I started this blog was to have everything out there for everyone to see - I had hopes that by doing this, I would become numb to what others think (i.e. I was hoping that eventually I didn't care what others think)
  

5) I get bored easily. I tend to trade when the markets are flat which leads to losses and overtrading.

What I'm Doing About It

• I'm starting to bring more things into work - MP3 player, books, newspaper
  
• When the weather is nice, go outside to do something
• I've taken Richard's example (from Move The Markets) and I'm learning a new language during quiet periods of the trading day
  

6) I worry or think too much about my trading problems. I'm sometime overly critical especially when I have a bad day. All the worries add more stress to the trading day.

What I'm Doing About It

• A reader left a comment mentioning having balance in your life - which I believe is essential
• I'm doing more to get my mind off things when the markets close - I need to do these things to release stress
• These things include: exercise, learning Mandarin by watching movies, TV show and by listening and learning lyrics to music, and watching sports
• I should start looking for other hobbies
  

7) My mood is too coffee dependent. If I haven't had my morning coffee, I'm moody and irritable when I'm trading and if I don't have coffee during the day, I get sleepy, have trouble concentrating or I get headaches. This ultimately affects the way I trade.

What I'm Doing About It

• One thing I've done is I'm exercising again - I feel as though I have more energy and my mood is lifted and I do not feel as tired without my morning coffee as before
• Have all my coffees without sugar (I think I was taking in too much of it) and use small cups at home and use the small styrofoam cups (instead of the big cups in the office)
• Reduce your intake gradually - currently I'm down to three cups a daily (from 6 cups daily)
  

8) I trust the Level II too much which causes me to exit early. The setups, the charts, the Futures - everything could be going my way, but I get spooked and exit out of a great position because I saw something on the Level II

What I'm Doing About It

• I am currently working on relying more on charts and what the Futures do instead of what I see on the Level II
• I should make more of an effort to know exactly where I want to get out and stick to your trailing stop loss - don't jump out of your entire position just because big size suddenly appears
  

9) I hate losers too much - perhaps a little too much. I estimate that about 70% of my 1-cent and 2-cent losers eventually go in the direction I originally had intended. I'm jumping ship too early without giving the position time to work itself out.

What I'm Doing About It

• I've really become more patient with my positions and really do give it more time to work out
• One thing I should do is really stick to my intial stop loss. I always have one in mind when I enter a position, but for some reason I keep jumping out of my positions once they've become a 1 or 2-cent loser
  

10) I get too emotionally involved. I take offence personally when I take a string of losers and I tend to spiral out of control.

What I'm Doing About It

• After every single trade, just forget it ever happened
• Hide your P/L so you don't really know what kind of damage a loser had on your profits
• If you feel like you are getting frustrated, take a break
• Do not reverse your positions because you are angry - if you find yourself doing so, stop and think back to all those really bad days and all the profits you lost and remember how you felt at the end of that day - you never want to feel that way again
  

Wow! This took me a long time to write and once I started I kept thinking of more! Obviously this isn't an exhaustive list, but at least it's a start. I hope with time I can eliminate some of these items and I should review this every once in a while.

Now that this list is in front of me, I feel much more comfortable and I now have a clearer idea of what needs to be done. I shall start working on all of these things tomorrow. What better place to put these things in than in my diary!

Anyways, this post has become huge and I've had to reduce the font size.

Quick recap for today: I found it quite choppy today, but I managed to catch a good trade on Motorola. One good trade and one bad trade. I really focused on taking more risks by increasing my share size on my positions today.

And of course any comments are welcome!

Good Trades
1:00PM - Motorola (MOT) had a strong uptrend going while the Futures were flat. MOT reached resistance at $25.50 and since MOT was uptrending strongly, I went long 10,000 shares. I got out as follows: 5-cent winner (7700 shares), 6-cent winner (2300 shares) ($523 profit before fees ; In: 1:00:09PM ; Long 10,000 shares @ $25.50 ; Out: 1:02:25PM)

Bad Trades
12:52PM - Advanced Micro Devices (AMD) was downtrending while the Futures were flat. AMD reached some support at $24.90 and when it looked like it was going to break, I went short 3000 shares. I probably held this position for a little too long and I was forced out. I got out as follows: 5-cent loser (1000 shares), 6-cent loser (1100 shares), 7-cent loser (900 shares) ($179 loser before fees ; In: 12:52:36PM ; Short 3000 shares @ $24.90 ; Out: 12:55:12PM)

• AMD was giving me troubles all day long and everytime I got in it always seemed to chop me out - I should have stayed away from AMD for the rest of the day
• I shouldn't have gone in with soo many shares - it was AMD (thin, choppy stock) and it was the tail end of lunch
• The Futures weren't confirming the move either