Life, Business and Determination.

"I found every single successful person I've ever spoken to had a turning point. The turning point was when they made a clear,specific unequivocal decision that they were not going to live like this anymore;they were going to achieve success.Some people make that decision at 15 and some people make it at 50,and most people never make it all"
- Brian Tracey

Repeat. There IS a unequivocal point in every millionaire's life where you decide that you do not want to live like this anymore. As I build my fortune, several things become clear and only time can make them clear. Over the past year I have transformed my life from a unorganized mess of a blind-sighted trader, to a strict fully (some-what) functional business. When you look at what someone has accomplished, and you realize that you should be in the same place as them and you begin to ask why am I not there. One must build on their strengths to further their goals. As I am about to partake on my first of several goals, I am reflecting on the struggle to get this far.

I should start off by saying I have in the past, just been here for the ride. This view was simply that good things come to myself naturally, and that hard work and determination isn't needed, just abstract thinking. This lead to my first major loss (or tuition payment) in the Markets. One cannot simply study strategy, one must learn that the world is constantly creating paradigms that you need to be prepared for. Always anticipating what would happen next, my stint into FOREX didn't go as I had planned. Ignorance caused this. I was constantly told "market never does the same thing twice" and now I finally understand. Ironically, all this came to be at a craps game. Go with what the market is doing. One man cannot move the market, you must do what the market is doing, and you can make a lot of money (+$360 to be precise). When the dice are rolling outside numbers, bet on the outside, collect the profits. I (while in FOREX) was too busy trying to predict the future and bend the market to myself to pay attention to what is happening now. This caused me to close my first FOREX account with a 30% loss from being nickle and dimed to near death (of the account, and my patience). A great man once said:

"If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle"
-Sun Tzu

This is where things become interesting. The first time at post secondary education, I didn't know what I wanted to get into, so I managed to wander aimlessly through Business Admin/Business Marketing, not receiving the best marks. I then became highly interested in trading, started reading everything I could (my book collection is now close to or over $2000.00) and began trading instead of paying attention in class. Now, after accomplishing many tasks (being published in Ottawa Business Journal, blowing up an Equity account, and amassing a few thousand of student debt) I began to put myself back on track. Started my blog, The Trader's Journal, where I state my thoughts as I climb the ladder to my Financial Freedom, using it as a written place where I could consult myself when I stray too far from the path.

I have used the blog to break down what I have done wrong in the past, reflect upon it, and rectify it. I have since paid off all student debts, as well as current tuition (paid it off in 2 weeks :) ). The new paradigm that I need to face is the adjustment/balancing between achieving good grades (as I am considered a "special student" at Carleton due to not having pre-req. classes done) to receive full time status, providing for myself (while keeping within my means) and progressing on my trading. This means 60-70 hour weeks, demands that I begin to focus on both mental, physical, and financial well-being. Whatever it throws at me I will be ready.

"Victory is sweetest if you've known defeat"
-Malcolm S. Forbes

Arbitrage

Came across this cool website the other day:

http://www.arbitrageview.com/

basically lists ideas on risk arbitrage, where you profit from mergers & acquisitions.

Site has me thinking if similar things happened when European countries signed onto Euro.

Update.

Ok so just a little update.


Due to current market positions I have taken cash over the trading account for now.

Will focus on working so that I can pay tuition cash.

Markets are very unforgiving right now, nickles and dimes. As I cant see anyone taking long term positions in this market, and I am a positional trader, it is in my best interests to focus elsewhere until "normality" returns.

Know yourself, Know your Enemy, 100 Victories.

September PnL

September 22, 2008 PnL

This is a list of this week's PnL so far:

Trading

So I am now live (was live this past Wednesday).

Started off to a bad start, sitting off -50 for opening week.

Financial turmoil should have made me stand aside and watch until a trend has formed. Which I am now doing so.

Developing my edge

"He who knows when he can fight and when he cannot will be victorious" -SUN TZU

Going to be spending some time away from charts and various other distractions working on what trading is to me, and where I wish to take it. I want to develop a structural trading plan that I can refer to when I am questioning the markets (basically my psychology). And even though I am acting on the now, and the market is never the same, I feel that I need a system in place so I learn to discipline my mind early on in my trading to try and force myself away from bad habits. I have all the tools, I just need to organize myself. I will be going live when I am finished this.

-Patrick

The Market.

He who is prudent and lies in wait for an enemy who is not, will be victorious. -SUN TZU.

Learned more tonight than I have in the past month. Several things became clear all at once. Market Sentiment, Price action, and market timing.

Watch what the market is doing, and then trade the secondary movement. Pros assess risk, Amateurs assess potential. This is true. The secondary movement always has less risk than the initial movement, greed takes over the amateurs trading and makes them swing for the fences trying to hit the ball as far as they can. If the general market is down NOW, then you will look for signals of slowing in an over extended market, and then trade the pullback. Now if the price goes against you, and the market is trying to stop hunt/shake off the short's (in a bear market for example) then you would add once that movement begins to slow and show signs of taking back into the short.

Positions

Closed USDJPY +102 at 108.57
EURUSD +75 @ 1.4853.
USDCHF +85 @ 1.0882.


that brings total to +739 for the week.

Positions

entered a few trades that I will try to hold longer term last night.

Short USDJPY @ 109.59, SL is now at Breakeven.
Short USDCHF @ 1.0967, SL is 1.1075.
Long EURUSD @ 1.4778, SL is 1.4628.

currently sitting +101 pips for the day.

brings weekly pip count to +578.

Positions

was stopped out -10 @ 1.4765

weekly pip count: +477

Positions

Took a EURUSD Short @ 1.4755 looking for +/- 10

Positions

Flat Positions

Flat USDSEK +70 @ 6.3511
Flat EURUSD +32 @ 1.4736


weekly pip count: +487

Positions

Long EURUSD @ 1.4704 SL 1.4684.
Short USDSEK @ 6.3581 SL 6.3783.

Positions

Flat all positions.

USDSEK closed @ 6.3420, +299.
EURUSD closed @ 1.4746, +63.
USDJPY closed @ 110.24 +23.

total pips for the week: +385 pips.

Current positions

USD was overextended, so I took various USD short positions.

USDSEK Short @ 6.3719, currently +360 pips, SL moved to Breakeven.
USDJPY Short @ 110.47, currently +28, SL moved to Breakeven.
EURUSD Long @ 1.4683, Currently +77 pips, SL locked in +20 at 1.4703.

Held over the weekend, still to early to get profit targets.

Motovational Trading Quotes

"At least eighty percent of millionaires are self-made.That is,they started with nothing but ambition and energy,the same way most of us start." -Brian Tracy

"I found every single successful person I've ever spoken to had a turning point. The turning point was when they made a clear,specific unequivocal decision that they were not going to live like this anymore;they were going to achieve success.Some people make that decision at 15 and some people make it at 50,and most people never make it all"- Brian Tracey

"The Market never sleeps pal, Now get to work!" - Gordon Gekko

"I'm talking liquid. Enough money to have your own jet. Enough money not to waste time. Fifty, one hundred million dollars. A player. " - Gordon Gekko

"It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or gained its simple transferred from one perception to another." - Gordon Gekko

Systems and Strategies

When you are new to trading you are quite gullible. You go to Google and type in trading systems and get lured in by "$3000 a month or your money back!". You begin to thing right off the back that trading is easy and you will be able to make a living off of this. WRONG.

You load up your Megaultratrader5000 and begin watching the entry/exits.

Two days pass after your first trade, and you have blown up your account.

This is not the way to get into technical trading.

If you really want to become good at something you need time. Open a demo account and try different things from there. Only you can know what works well with you and what doesn't.

Over the past year I have tried everything. Pivots, Stoch, MACD, ADX, DMI, RSI, EMA, Henken Ashi, Ichimoku Kinko Hyo, etc.

All of these have made ok results but have been quite mixed in Forex.

I have come to the conclusion that nothing is more true than price action.

The reasoning behind this is that market is never the same.

It is a living, breathing animal. What works today, may not work tomorrow. This is why I have gone back to the very basics of working on what happens in the market during certain times of the day.

Goals

Revamped the goals post as I was not satisfied with it.

With the end goal already posted (see the beginning), I need to create a stairway to becoming a Trader.

Two Goals need to be worked simultaneously:

A. Getting into Macroeconomics major possibly Mathematics minor Undergrad.
B. Build a track Record.

Those two are needed to help further my career in FX trading. The education to build on the abstract of collecting and testing of fundamental ideas to help produce current market trends. The mathematics minor to help with my work with derivatives.

For goal A, I need to do several things which I will call Ai and Aii.

Ai. Pre-Calc university course.
Aii. Pre-Algebra university course.

As I didn't take advanced math in high school I need these two to get into the university program (See the education debate).

The track record is to apply what I am learning at school to the markets, as well as help me get a job further down the line. Although I have debated earlier that you do not necessarily need University for trading, it certainly does help with getting placements in the workforce to help fund your personal trading account, or get you an institutional trading position.

C. I want to develop my knowledge of derivatives. Currently signed up into the CME FX Derivatives program, which will cover a bit, will have to look into more in depth programs for options, such as 888options.com.

This will help me obtain some personal interests on Future-Spot convergence, Delta-Neutral trading, and Arbitrage.

D. Take a trading position at a trading firm.

This would be the current long term objective. Once this is obtained, a whole new set of goals needs to be created.

Next post will be on systems and strategies.

The Education Debate

We are the Makers of our own demise.

This debate will sound odd, and although I know the final answer is school it is possible to argue the time value of money. The logical place to start would be high school I guess.

Attended A.Y Jackson S.S here in Ottawa, Canada. Wasn't my best period, but I made it through. Main flaw happened here. Like most young teens, I hated mathematics at the time, and figuring that I would never use Calculus or other such maths, I never took them. This, unknown to me at the time with the "you don't need school" attitude, would bite me in the ass later.

Onto College.

While at Algonquin College, I was a marketing major. Kind of funny when I was so interested in Financial markets, but I decided to keep into it. Not the best marks yet again, same "why am I here" attitude. Growing tired fast of constant B.S'ing my way through projects (not to say I was slacking off, moreso what the premise of marketing is) and wanting to further myself in the trading world. I decided to focus on a trading career and left the school.

This is where the problems of my education collide; Not taking calculus and dropping out of College created a bad position for myself. One of the times you can tell your parents that they can say I told you so about school. I have, instead of making my path easier, placed boulders in the way. Now, to prove myself worthy of a Macroeconomics undergrad, I need get exceptional grades in the prep courses, applying as a mature student. No problem with this, just makes the progress through the program all the more difficult, creating a longer tangent before I begin my institutional career path. Not to mention the cash for 4 years of school, books, rent, expenses.

Now there are two things going against me. Past performance in school, and the great expense to partake on post secondary education. This lead me to looking to alternative routes for my education. I began to look into proprietary trading firms that accepted mentors. Now the cost of a mentorship is also quite high, as you pay the operating costs during your time with the mentor, and usually you also pay the mentor. I looked into TCA Markets, where you are paying $15 000 in data fees over the course of 6 months. They give you an account to trade, and you split 50/50 on the profits. That looked cool. But 15k is a lot for something that might not score you a job.

The time value of money.

So now I can debate the cost of going to school over 4 years vs. the cost of a 6 month mentorship. The school will get you fundamentally thinking as well as more rounded for a position with a firm. This however will not help you apply the fundamentals you are learning to the markets. You need to be able to draw that line yourself, as everyone sees the market through a different set of eyes. The mentorship will get you a track record which is practical for trading, which helps apply inter-market fundamental movement to the markets, but not necessarily helpful when getting a job at a trading floor.

Why not do both?

The most obvious reason has to be costs. Age is a factor going against the youth of the world. They are becoming debt ridden students, forced to go to school to get a job to pay their interest rates on their absurdly large student loans. I've been there, and I refuse to go back. It is difficult when your hard earned money goes straight to paying off school, so you cannot afford the luxury to begin building a bank roll. This is why I have been sluggish about applying for the program. Still paying off part of my Algonquin College experience, I do not want to go back into debt such as this. Having looked into other ways of paying for school, the only option has come down to getting student line of credit to pay for it.

The Beginning/Background

Ok. So I decided to start a blog to help me force myself on the road to becoming a full time trader or Institutional Trader. Been finding lately that I have been recklessly trading, acting on intuition and not fact. Trying to predict the future, not whats happening in the present. This blog is to force me to describe my trade ideas, or just ideas in general, in detail to further myself along this path.

Basically I'll describe where I stand now (Or over the past two years).

Attended Algonquin College here in Ottawa for Business Administration. During the first month (although I do not recall what got me into it) I began getting a heavy interest in the financial markets. Bought my first stock in September 2006, Ticker SYBD, bought 1000 shares around $0.11 US or about $110.00 plus $30.00 commission (TD Waterhouse has large commissions). This was a fundamental News play. I had not even heard of Technical Analysis (T.A) at this point in my trading (and as you will read later on, I did not really use T.A for equities markets). They had a small article on them on Yahoo In-Play news ticker. Not really knowing what I was doing I took the trade. Being a new trader, I had my QuoteTracker open in the background of my school Laptop and would constantly look over at it to see if I was profitable. Fast Foreward to the end of October, news of the Oxycyte, their "Synthetic Blood" would be featured in Popular Science Magazine (November 2006, Page 88, yes I have a copy beside me while I type this). AWESOME! exactly what I thought as I clicked Sell at $0.21/Share. 100% profit!!! Now realistic profit would have been $210 - $60.00 ($30.00 per execution) or $40.00 profits. Great at the time, this is where my equity trading began to implode.

I was fishing around a few Equities facebook groups, started sharing ideas, and was invited to a PalTalk investing group. WillyWizardsUnderground. This is where I began to become a reckless trader. Unknown to many, but the Equities market is full of fraud. Specific kind called stock pumping. Due to the liquidity of "penny stocks" or "stinky pinkys" as I call them, where the originator front loads (buys before the others) and then creates rumors on the stock, such as large gold claim, or lawsuit in favor of said firm, and others buy in. As the others are buying in, the originator sells to them, hence creating manipulated profits. Now I'm not saying this happened in this room, but there were some rumors spread around, and me being the N00B so to speak I bought in with rather large portions. This is where I started losing, and losing fast. Not mentioning tickers as I am quite embarrassed that I bought in. After suffering 75% losses I took time off.

After mentioning this loss I was contacted by several other members that were rather upset with the recent fraud. These traders were different. They didn't talk rumors or news. They talked Moving Averages, Parabolic Sar, Trend lines, Fibonacci Retracements, Price action. This was real trading. During the time here I developed most of my analytical skills. I learned how to properly scan for a stock, how to make precise entries/exits, and a lot of T.A. This is where I began to focus my trading.

After the 75% loss I stopped trading live markets. I went into research mode. After reading Adventures of a Currency trader the first time (I have read the book seven or eight times now) I opened a FOREX account at CMS FX. This brought me into a whole new world. Also I should mention that by this time, I had dropped out of school on my own terms to focus on my personal learning (controversial, but will touch this in another post). I began reading up on Macro-economics, I began to get back into scouring news for hits of strength in the Dollar or the Euro, or the Yen. Results started to become quite well as I was playing on the volitality of the current sub-prime market. My fundamentals began to become stronger as I looked into inter-market correlations such as the price of gold and commodity indexes vs. the USD. This sparked several long heated debates between several people on the gold standard, and the current actions of the US Fed.

At the time I worked at Starbucks, which I highly recommend to everyone as a networking tool. I met several wealthy investors, and business owners. This lead me to my previous job to being unemployed. While at this job I was constantly surrounded by currency markets. Fundamentally and T.A. While there I helped created the daily market reports published in the local business journal. This furthered my understanding but began to created mixed feelings on currency trading, as I was open to too many different opinions, which clouded my understanding of current situations, leaving me to try to predict the impossible...future price actions.

So this is pretty much where I stand now. Hungry for the action, but strapped down to financial restraints. One thing came to mind. The quote that I base majority of life on:

"Like a Phoenix, I have Arisen from the Ashes...And Into My fire, You shall Fall"