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This story is a continuation of 'A Tale of Two Traders' and assumes you have read their case study. Both Jan and Antonio had been surprised the others trading system could make money! They had gone from initial rejection to agreeing to paper trade, to actually trading, in small units, the new (for them) trading system. Both discovered a new source of profits. Both are beginning to ask more searching questions and express more confidence in their trading. It is as if both have begun to understand more clearly, by way of contrast with their original trading approach, how their original trading approach could be enhanced. But what have they done? Jan has probably moved forward the farthest, quickly progressing from paper trading to small unit sized trading of the new (to her) system. Then, using risk of ruin calculations, she twice optimised the relative trade size weighting for her volatility breakout system and a relative trade size weighting for the new (to her) market making system. She has adjusted to a multiple entry concept very quickly and has achieved her objective of more even monthly profits. She reports that her expectations of an even profit profile have been exceeded. Her risk of ruin has gone down six-fold while her average monthly profits are 15% higher. Although Jan does not feel any different, her questions demonstrate a much-improved level of confidence. Perhaps this is reflected in her determination to extract the maximum leverage from her new experiences and her feeling of confidence will show itself when she feels this process has run its course. Antonio has had more difficulties in applying the new (to him) trading system. Like Jan, he reacted emotionally to the trading system description. Like Jan he has paper traded the new (for him) system, traded using small unit sizes and is making money with the new system. But it was'nt until he decided to concentrate on the S & P 500 market that he has begun to get what he was searching for - more even profits. With some encouragement from TradersCALM, Antonio has used his risk of ruin calculations to more appropriately select relative trade sizes for the two trading systems. He reports more even trading profits (this time in terms of a lower maximum drawdown rather than more even monthly profits) and a tentative halving of risk of ruin with a provisional 25% increase in overall profits. Once again improvements in confidence are expressed in the nature of the questions Antonio is asking. This time Antonio can feel the improved confidence and plans to rest on his success while planning ways to further exploit his experiences. Lessons Learnt These are a little different from last time. We learn best from experience. Everyone is different and needs different encouragement. Emotional reactions can be just that - reactions not responses. We can equally benefit from going with our gut-feelings as we can from getting past our initial emotional reactions. To distinguish between whether it is our higher-self speaking to us, or just an emotional reaction, we can ask ourselves the simple question - 'Am I emotional at this time?' Full integration of a trading system into your very being as trader takes more experience - a trading system takes a while to become yours. What seems to happen to many who trade one system is that the trading system starts to own them rather than the trader owning the system. Experience is still a powerful route to behaviour change. There is no limit to the opportunities to learn provided by first getting past denial and inertia and gaining experience. Go for it! TradersCALM home page |