1 We are intrigued by the market and start to do some preliminary reading and research.
2 We buy a book or two and perhaps some trading newsletters.
3 We find something we can relate to and start doing some research using this particular technique.
4 We dabble a bit in the market, trading every now and then, mainly losing money, but not much, and having the occasional winner.
5 We generally forget about the losers and congratulate ourselves on our winners. Convincing ourselves that once we learn the techniques better there will be fewer of the former and lots more of the latter.
6 We keep manual charts, which may become quite large physically, and maybe plot a few indicators manually (this was before computers became quite so available).
7 We spot an approach to the market we think cannot fail to win!
8 We start to trade actively.
9 The results make it clear that it is not as easy as we imagined it would be. There were a few key points we failed to fully appreciate.
10 We continue to trade. Results are indifferent or worse, but there are sufficient profits to keep our interest alive.
11 We continue to expect great results.
12 Trading volume increases and the amount of money in the market grows.
13 We continue to read and take newsletters, but our research has only scratched the surface. We still have no real idea what we are involved with.
14 Our technique scores a major success (the 1987 Crash), but our lack of trading skill means that we do not profit from it as we might.
15 The market begins to instil a little fear in us but we have yet to learn the first key lesson.
16 We keep trading in size. We are overtrading and clearly act as a fugitive from the law of averages. It is only a matter of time.
17 We make a big profit. It is all going well, we start to get overconfident.
18 We suffer a big loss. Psychological problems start to develop.
19 We buy a computer and start to monitor many more indicators.
20 We look at other techniques and other markets.
21 We get wiped out.
22 It becomes clear this is not at all as easy as it looks.
23 We become impossible to live with.
24 It also becomes clear that the information available (in 1987/88) is not much use to those seeking to make money from trading.
25 We determine to fill this void and look to create a newsletter telling it how it is.
26 We work with an analyst in the USA. Note how inappropriate this is for someone who wants to trade. Much better to work with a trader!
27 We continue to trade, but in a much reduced manner.
28 We start our newsletter which is an immediate success.
29 This requires a lot of research plus a lot of self-analysis, but it is still not clear to us that trading is a psychological issue and that the externals (systems/software/computers/brokers/advisers, etc.) are almost completely irrelevant until the internal is set up right.
30 We are plagued with fear and have no clear methodology.
31 It becomes clear that judgmental trading (without a clear methodology) is a dead end.
32 We start to look for a suitable methodology.
33 Those available on the market do not seem to be suitable and so we design our own.
34 We start to trade using a clear methodology. This is not easy but some things start to become obvious.
35 We find ourselves trading for no good reason (something that was impossible to detect before we had a clear methodology), but then realize that it is due to an argument earlier. Self esteem clearly plays a role.
36 We realize that the key element in trading is our own mentality. Now we can start to make some real progress.
37 We improve our systems and start to make some money on a one contract basis.
38 But we are still fearful and this remains a big problem. We learnt, some time ago, the necessity of cutting losses, we cannot get to the second secret until we deal with the fear.
39 We keep trading and we continue to do OK, we start to get more confident and the fear starts to dissipate.
40 We take another big hit.
41 We feel awful and think we should perhaps give up, and that perhaps we should have given up some years ago when it all went wrong the first time.
42 We keep trading and determine not to get overconfident again. We reinforce the stress management systems we had to learn in the early days and keep meditating (essential to trading success). We realize the importance of remaining humble and also of being an “empty vessel.” If you are full of yourself there is no room to learn anything else.
43 We meet another trader who becomes a mentor. He introduces a new technique (Market Profile) which immediately “fits.” This is because we now have the right attitude.
44 We build on our successes. Systems improve, results improve, and our mental attitude improves, fear becomes less of a problem.
45 We decide to see a trading coach/psychologist (Adrienne Toghraie) and have an initial meeting in Switzerland.
46 We make a big profit by letting profits run. We have managed to do what every successful trader must. Can we repeat this trick?
47 We start to move away from fear, and start to become risk-orientated.
48 We realize that mental attitude is all. We see that it is vital to be relaxed. We reduce position size, again!
49 We spend a few days in the USA working in a group with our trading coach/psychologist.
50 We begin to make money with consistency.
51 We get a little overconfident, again! But this time we realize the fact and the damage is limited. But we learn, again, to remain humble.
52 We start to trade almost subconsciously some of the time. We are becoming expert.
53 We know there are still many challenges ahead but we are confident that we will deal with them.
54 Money ceases to be a problem, we truly live in a world of abundance.
55 We find that our lives improve across the board and that we are achieving in a wide range of areas.
John Piper has been trading markets since the mid-80s, writing options, trading futures, spread and binary betting. He founded The Technical Trader in 1989, which has become the leading trading newsletter in the UK. The newsletter filled a void and the business has helped many traders over the years and is now on the web. John also runs the BIG CALL service which is devoted to catching the big moves.
