The Traders Journey
Experienced traders, who have reached the level of mastery, trade based on factors that they are not even conscious of any more. They have internalized their knowledge of the market to the extent that much of their expertise lies in their unconscious. Thus, unlike the amateur, their intuition is to be trusted. This knowledge, developed through massive experience and putting in their “10,000 hours” is so internalized that they cannot even express it consciously to teach others or program into an algorithmic formula to be replicated through a trading computer. Quote Dr B Burns
I am certainly no “master trader” yet – even after coming up to nearly 9 years of purely Forex trading. I did not go full time until my fourth year and I worked out my “journey” as follows -
Years 1 and 2 – part time – approx 15 hrs a week over 44* weeks – 660 hrs pa
Year 3 – part time / but concentrating more to going full time - 1100 hrs pa
Year 4 -6 – Full time but still winding down other businesses - 1450 hr pa
Year 7 -9 – Full time and spending between 35-50 hrs per wk - 1850 hrs pa
* taken out holidays and time off
So my total hrs to date – watching chart movements and actual trading as now reached approximately – 12200 hrs
Please forget counting back testing etc etc – It just not the same as trying to trade “live” – its just so easy in hindsight ;-)
I did not start to become fairly consistent and making money to year 3 – ie by about 2000 hrs of watching and understanding market movement.
By year 5 – I was Full Time and making money – but not day in day out – I had still not really found my “edge” to be consistent etc
By Year 6 and 7 I had moved up too quickly and hit a big psychological problem of trading at over £100 per pip and compounding too quickly. My “wall” was approximately £150 per pip or approx 20 full lots. Year 7 was a step backwards to regain confidence and to enjoy trading rather than it stressing me out.
Today – I am still learning as I only rate myself as average on swings and longer term trades. As ForeXmosgate members know from following my intraday trades – I do not believe in having even losing days – even though I might get a few intraday trades wrong. Losing weeks to me are like several years ago – and losing months – 5yrs+ ago. I think they now know why and hopefully might have worked out what I am doing as my overall method or strategy.
My trading style is fairly unusual – I basically micro manage – and adjust to every trading day and so one day I might only take 8 trades and have a fantastic day and the 2 days later I take 18 trades and only get an average result.
I think many traders have no plans to go full time and just want to complement their existing income – which is fine - so to reach the 10K hrs might take over 2 decades. Yes – you can make profits by year 1 or 2 – but you will have losing weeks and even months – that really can be psychologically draining and that why so many do give up.
If you have only been trading 3 or 6+ months and you are making money - please accept its “beginners luck” and I sincerely hope it does stay with you and when you do have the bad week or month – you carry on knowing you can get there – but it will be over time.
Remember Guys – how long does it take to become a qualified Doctor or Lawyer or say an Electrical Engineer etc etc. 3 -5 -7 yrs plus
Many studies now reckon 80% of new traders are drawn to Forex trading simply because its has been “painted” as a quick road to riches ;-)
I blame the industry and the market makers as they have allowed this perception to grow knowing the “sharks” will come on board and pull in more new traders expecting to earn more than they have ever achieved in their whole life in the first year.
I would love to hear your trading Journeys (so far). We will all be different and so some will be profitable after year 1 - others will still be “so so” after 3 or 5 years?
It is a journey believe me – but it can be such a great one if you can keep going
Have a great September and look forward to seeing you in the "gate" group
Regards
Peter
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Comment by Peter jcp on August 26, 2012 at 9:36am -
Hi Guys - Thanks for your comments. First, Sir Gissa - who I know as been on the trading "journey" a lot longer time than me. I know you have developed the "subconscious" master level through years of study and experience.Furthermore you have been able to organise your own "mental abilities" to master the negative thought of "fear" and all the tricks the market plays to psychologically destroy any trading plan.
Many trainers / educators etc would love to have a third eye - (never mind a third leg) to help speed up their own journey. I suffered heavily by believing a lot of false statements in this industry - it set me back a few years and also cost me a lot of money. Even more of my money was lost in investing heavily in schemes that we all know about. In fact in 1999 before I came into the Forex and Investment world my net worth was far higher than today. Between late 2007 and 2009 I have lost very heavily with the Lehmans collapse and the effect it had on many other funds- including two of my pension funds.
Hi Lisa - yes I already had my own "small hedge fund" years ago but unfortunately the last 4/5 years has not been financially "kind" to me - due to the reasons already mentioned. Its now time to rebuild my asset wealth to get back to were I was over a decade ago - but not quite at the rate you mention ;-))
I actually got up to over 20+ full lots per pip for about 2 weeks. Since then I have never been back to that level - even though today I could psychologically handle it far better than I could first time round.
Lets look at your figures OK - 8 trades a day average say ( today it's a lot higher than that) so on 70% accuracy ( recently been up to 80%) you have 5.6 trades correct and 2.4 wrong (lets round it both sides)
So on my old methods you would have 5 trades winning 50pips and 3 trades losing 30 pips ( if i kept to a 10 pip stop loss) so net result would be 20 pips a day but round up to 30 pips ( which was my daily target in the old days) - making £3000 approx per day - which equals £15000 per week over 44 weeks ( holidays and time off ) equals £660,000 per annum.
I can tell you I would be very happy with even that amount per annum - but have never achieved it ( yet).
Why? - Because after failing at compounding heavily - today I rarely go over £50 per pip and the majority of my trades range from 2 -5 lots. Remember I am in my mid 50's age wise - I still think I am fit and healthy for my age ( touch wood) - but I just do not want added stress and the heart palpitations caused by trying over £100+ per pip. ( honestly - it can be a different ball game )
By going down to smaller stakes - i am relaxed and can take more trades and even have more mistakes etc- simply because I feel more in control. That's given me more confidence etc - but I am not keen on having a few hundred thousand of cash in any broker account ( that's just after my own experiences).
Maybe in another year or two I will be content with all my trades being on £50 to £100 per pip- simply because I have more faith again in the whole industry and can risk the funds once more.
Please remember - don't let my past problems put anyone off. Normally you don't expect Banks to go Bust - the World Economies to collapse and the Financial regulators not to spot how millions of investors have been "fried" / ripped off ;-((
Lets hope its does not happen again.
Regards
Peter
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Comment by Keith Shaw on August 26, 2012 at 1:03pm -
Interesting post Peter, thanks for sharing some of the details of your personal JOURNEY.
The weekend is always a good time to do some home work, dust of that trade plan look back at last weeks trades, review some educational material or do some research.
Others on their JOURNEY may find the below presentation by Rande Howell of interest.
Rande has done a few interesting webinars here at FxStreet, Direct Link Here
Regards
Keith
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Comment by Brendon on August 26, 2012 at 5:26pm -
Peter, Thanks for the "what to expect when your expecting" point of view. I changed from the higher timeframes to the lower timeframes (Lance Beggs & Mike Reed) , and feel that bieng exposed to the price movement on the 5min , 1min rather than the 4hr, daily has quickened my assimilation to the market rhythm or flow. It's been 7 mo. with the new strategy and the small improvments are adding up trading the London session 4 days a week before a full time job. TRADE-RECORD-REVIEW-IMPROVE. I strive to ensure my survival until it all sinks in. Brendon
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Comment by Surjya Gogoi on August 26, 2012 at 7:54pm -
Hi Peter,
Felt good reading your post. I have been trying to trade successfully consistently for the last one and half years but although there were a few wins overall I am at a loss with my account getting blown off. Your post has given me more confidence that forex trading will be a continuous learning process.
Initially, I had just read a small book and jumped into the fx market and got my account blown off. I then read another book where I got to know some more about the fx market but then again my renewed account got blown off. I then went for more books and read about the fx market since its inception, about some of the indicators such as Bollinger bands & candlesticks, about charts patterns, trading psychology, etc. With each new book, I tend to learn something new. But even then I tend to miss out a signal on the charts and thus lose my money. So, although I am losing money, I am surely getting enriched through my experiences which I hope will turn me into a better trader.
Regards,
Surjya
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Comment by colinwbarnes on August 26, 2012 at 9:46pm -
Hi Peter..thanks once again for an interesting blog and we are truly blessed to have someone such as you..within our midst...i have had a varied and interesting life so far with a lot of experience in blue chip business..that is specifically doing business with blue chip companies which also by the way has been a journey with learning curves of losses and gains along the way...however for me this particular part of my journey in life has become the most interesting and somewhat frustrating at times..only to discover..once again..that i am my own greatest enemy...forex trading for me at this stage..is somewhat similair to the challenge of a golfer...i am competing against myself.
Once again thanks and have a great week ahead/regards/
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Comment by 2ndSkiesForex on August 26, 2012 at 9:53pm -
Hello Peter,
Thanks for sharing this post and interesting quote. You definitely have put in your hours which I'm sure shows in your trading. This made me take some time to think about it and compile my hours which are below;
2001 - 2004 spent no less than 12hrs trading/chart time and many times 14hrs behind the charts (min. 12 per day at 5 days min per week at 44weeks = 12x5=44 = 3300/yr x 4 = 13200hrs)
2004 - 2006 a min of 10+ and up to 14 since working/trading for broker (min. 10 x 5 days / week x 44 weeks = 2200 x 3 = 6600hrs)
2007 - 2009 a min of 8+ (8 x 5days / week x 44 weeks = 1760hrs x 3yrs = 5280hrs)
2009 - 2011 a min of 5+ (5 x 5days / week x 44 weeks = 1100hrs x 4yrs = 4400hrs)
2012 TBD
So more or less a total of 29400hrs trading and behind charts live charts. This does not include of course sunday/market open days, along with the saturdays I spend studying charts, doing simulators, etc, but roughly 30k hours behind the charts.
In regards to intuition playing a role, I have talked about intuition in trading many times which I think is an often overlooked subject in trading psychology. But I can understand as it really depends on a persons style of thinking.
For example, a hardcore engineer like my brother probably would not rely on intuition too much if he were a trader - but I would.
Intuition and my experience is what helped me call the top in 2010 in the EURUSD in a live interview, along with the exact price range it would end the year two months later. How did I do that - experience, hours behind the chart and intuition.
But I disagree with the author these things that come from intuition cannot be put into rules or expressed consciously. Anytime I have a trade that is based off pure intuition and experience, I always go back to review the video (if I recorded it) or the trade via my journal and parse out exactly what I see in the chart which alluded to the intuition and trade. I then put this into simple rules to be broken down, then test it and if it pans out, I make into a system.
Sometimes they are just once in a moment things that occur, but I've studied charts from over 80yrs ago, and the same patterns that occurred then occur today, so they usually can be formed into a system or set of rules to trade.
Anyways, it's important for developing traders to not look at this as a get rich quick scheme, but look at it as an ongoing process, digging into ever deeper levels of skill, patience, understanding and practice. If they do, like you have discovered, the fruits will come, but no highly skilled person at anything today didn't go through hundreds of hours of practice (both ups and down) before really hitting their stride imo.
Anyways, good post and thanks for sharing.
Kind Regards,
Chris
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Comment by Peter jcp on August 26, 2012 at 10:54pm
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Hi guys - thank you for all your comments and it is good for new and experienced traders to share their "journeys".
I do hope this blog will at least explain to the newer trader that "wonders" do not normally happen after just say 3 or 6 months (even at 60 hrs a week you have still not got to even 1500 hrs of chart watching ). Time, effort ,study , experience, intuition etc will all play apart and of course another main component - actually taking live trades on an ongoing basis
I think today there are better tutors and more experienced traders - like Chris - whereas during my first few part time years I spent good money on courses run by so called "experts" who had only been forex trading themselves 3 or 5 years and I honestly think they had not got even a few thousand live trading and watching chart movements "under their belts"
I used to think - they must know a lot and after that many years they are bound to be really good. Little did I really understand how much devotion is required to get to a "master level"
Chris - thank you for sharing your journey. You have certainly put in lots of hard work study , devotion commitment etc and it shows.
I know at my age I will not be exceeding more than say 1600 hrs a year now. I do not plan to do less than a 1000 hrs per year as I still want to improve and not slowly fall by the "wayside" by not keeping on top of new development etc.
Look forward to hearing more from all traders from 6 months to 20 years and please don't worry about asking any questions etc as I will and I am sure guys like Sir Gissa - Chris and many others will try and answer them as best as we can.
Meanwhile - Have a great trading week ;-)
Regards
Peter
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Comment by tracy on August 27, 2012 at 12:51am
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Thank's Peter enjoyed !
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Comment by Surjya Gogoi on August 27, 2012 at 7:02am
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Hi Lisa,
I have passed Phase I and I think at present I am between Phase II & Phase III.
Regards,
Surjya
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Comment by Francesc Riverola on August 27, 2012 at 10:54am -
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Francesc
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