Rags to Richeswho have become live traders convene to share their experiences,
strategies, etc, and learn about new developments I may be working
on. It’s a good support network as past students share experiences
amongst themselves.
Q: What is the number-one rule or tip that you would give to
new traders?
A: I think it is discipline, perseverance, don’t give up if you don’t
succeed initially. When you teach a person a strategy or a system, he
wins his first trade and he’s absolutely ecstatic. He wins the second
one, he loses the third one, and suddenly the system doesn’t work.
It is not that the system doesn’t work; it is usually a problem that is
easy solve. He probably traded when there was a news release, for
example. What people do not want to do is actually analyze those
losing trades—find out, “Why did I lose?” They do not want to ask
themselves that question. Instead, they just say that the system is
useless and they move onto to the next one. But the same thing
happens with the next system, and they lose one or two trades, and
then they move to another system and the cycle happens over and
over again.
Q: How do you help people figure out why they lose?
A: One of my questions to a trainee was, “When do you actually
trade?” His answer to me was that he goes to work, he comes
home, has supper, spends a little time with the wife, and by the
time he switches on his laptop and he gets to trading, it is about
8:00p.m.South African time. He will place a trade, he doesn’t get
the profits immediately, and he will leave it on overnight. When
he wakes up the next morning, he’ll find that he has lost 20 pips.
I immediately told the guy that he is trading at the end of the
U.S. session, and he’s then heading into the Asian session, which
is normally quite flat and that is where his loses are coming from.
I asked him if it is possible that he could trade between 7 and 9
a.m.South African time because that would mean that he would