17th May 06 - What makes a Great Trader ???

Let's me share with you a story....

John, an aspiring trader learnt a wonderful trading theory. The theory itself is wonderful, scoring a remarkable 87% over 20yrs of back-testing. For 2 weeks, John did some intensive mock trading and make sure he knows the theory at the tip of his fingers. The mock trading turned out well for John and he made his virtual account grew 10% in a week. Marvelous, isn't it?

The day came when John decided to trade with real $$. First trade came, though very nervous, he followed the system and made $100. Second trade came, he repeated the feat and made $200. He began to feel that all his efforts are paying dividends and imagine that possibly in 5 yrs time, he can retire financially free through trading.

Well, as you know it, that's only PART 1 of the story ... pls read on ...

Third trade came and John got stopped out for the trade, losing $300. To John, he thinks that it's okay as he understands that there's no holy grail in trading. So, naturally, there will be losing trades. John was still feeling fine although he has lost his gains from the 1st two trades, at least his capital was still untouched.

The fourth and fifth trades turned out to be losing trades too, wiping $1,000 off his account. John was devastated as he can't believe that a supposedly 87% system can generate 3 losing trades from 5 trades. He started to doubt whether the system still can help him to achieve financial freedom or will he crash his whole account before even coming close to the dream. He really don't know what to do and decided to take a break off trading.

During his break, the system generated a string of 8 successive trades. Should he have traded all of them, he could have made back everything he lost and even bagged a profit of $1,500. He decided to give the system one last chance.

On the D-day, the trade came. John followed the entry signal and went in. Things looked well and the market was going to his profit level. It was just a few ticks to his profit when the market suddenly reversed. Within seconds, all his paper profits were gone and the market was sprinting towards his stop loss level. Suddenly, in John's mind, images of the last 2 losing trades flashed by... John decided that he cannot take another steep loss if the market was to trigger his stops. Using his own discretion, he decided to end the misery and cut the loss early. After he got out of his trade, the market reversed again and went ahead to hit the profit level. Looking at the screen, John was totally destroyed mentally. After this trade, John went ahead with a spat of revenge trading and soon his trading account was wiped out.

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Dear friends, how many of you have experienced what John has gone through however different or similar your story might be?

I too have gone through what John has experienced, in fact more than 1 time.

What really makes a Great Trader??

What happens when you suffered a big loss? Do you cry over spilt milk or do you seek to repair the trade? A great trader sees trading as a business and seeks to finish each day as a positive day. Shall he suffer a big loss, he becomes more sharp and hunts for opportunities to make back bit by bit. He don't believe in making back in "1 big trade". As you can see, there's a fine line between revenge trading and repairing/damage control.
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