الجمعة، 17 يونيو 2011

The goals should be broken down

Derek: The goals should be broken down. I think it should be a top down approach for most traders. The goal is a great situation. A trader should look at and say, “Hey, this is what I think is reasonable for the year divided by 250 because you’re not going to trade everyday of the year even though it’s available to you.” And boil that down to a daily goal, and then that should also be your stop discipline. If I’m going to have a stop per trading per day, I don’t want more than one trade. I don’t want a good trade to take out more than one bad trade, or one bad trade take out more than one good trade. I want a day to take out more than a good day. That’s how you set your stops, and I managed it from that standpoint. I think that’s the way it should be done. It’s a pretty simplistic approach, but you got to have some goals for yourself and then consistency. Based on your consistency, maybe it’s a 30-day consistency, 60-, 90-day, then you can raise that goal. But remember, as a trader, I don’t have to be right all the time. I’m not going to be right all the time. I just explained that. I mean, if the trade’s on the Euro dollar on Sunday and Monday, we’re out standing trades on Tuesday and on trades on dollar/CAD today didn’t work out so well. So you’re not always going to be right. That’s just all there is to it, but even if you blindfold me and let me enter the trade blindfolded, then let me take the blindfold off and manage the trade. If I can manage the winners, that’s the easy part. Just like I said if I can manage the losers with discipline and not let them run. It makes excuses and move stops. Moving stops averaging into a losing position, doubling down, those are all theories and things…all those are principal deployed by traders who won’t be trading very long. I mean, that’s cold in heart but that’s the fact. You want to double down on a losing position, so yeah, you’re going to be done soon. You want to add that losing position, so yeah, you’re going to be done soon. And you want to not have discipline and move your stops and stuff, guess what, it’s human nature. We don’t want to admit our wrong. It’s the ego. This all just boils to mental. So as guys, we don’t want to admit that we’re wrong, and that’s stopping in the car and asking for directions, another one of my analogies. And then after we do stop and ask for directions, what are we doing? We’re hitting the gas hard, hitting the break hard, and taking it out on our car. It wasn’t our fault we got lost. We couldn’t ask for directions. Well, in a trade, what happens with a trader in a trade? They make a bad trade. They don’t want to admit it. They finally do when it’s a trade wreck, and then guess what? We want all of our money back on the next trade. That’s not how it works. So you’ve got to control the emotions, and you’ve got to control the mistakes. Even if you’re only batting it 50% or less even, if I can have my losers be smaller than my winners on average, I’m going to make money. So as I raise my win percentages, suddenly I become monumentally profitable and that’s the key to success.
TraderInterviews.com: All right. One last thing, NFA, what are your thoughts on them trying to go to four to one margin and some other things they’ve done with the spot forks market lately?
Derek: Tragic for the US brokers and banks, won’t affect the market globally. They want to change and 101 were implemented globally. That needs to be given a chance to work out, and it’s a reasonable solution. It needs some time. If you can make a solution that’s one country based, then guess what? The jobs, and the moneys, and the assets, and the accounts are all going to go off outside the United States. It’ll be judgmental for you as banks and brokers. It won’t affect a trader. A real trader won’t be affected at all. We’ll be moving accounts to the UK, Switzerland. Some of these guys will build a Bahamas which probably is a good choice. But neither here nor there, the assets will just leave the United States. So if the current administration is trying to create jobs, then the CFTC Regulation should not be passed.
TraderInterviews.com: Derek, thanks for your time today. I really appreciate you taking the time to share some thoughts with us and best in luck with the trading.
Derek: Tim, thank you very much for the opportunity and I look forward to talking with you again.

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