From Maden's intreview....
Madan's Interview
How can a newbie trader turn successful?
A: One of the biggest difference between a successful trader and a non-consistent trader is the way in which they handle losses. We do not like losses. People tag losses with being a loser. A trader who is on a losing streak thinks he is a loser.
Normally, if a newbie trader faces a streak of 5-6 losses and if he has back-tested his strategy superficially, or for a few years, he would look out for an indicator that would have avoided these losses. This process would go on till he drops the system.
The problem is we are in a microwave culture, everyone wants instant. As I have mentioned in my trade statistics, I have a 28 percent winning rate system on a trade level basis but a 100 percent winning rate system on a yearly basis.
So one should not get perturbed by one trade or a streak of losing trades. One trade is just a small dot in the whole perspective.
What I tell in seminars is to start with the minimum amount. If you are trading in the cash market just buy one stock. If you have a big capital just buy one lot. The amount should be small but not so small that it does not hurt.
I generally give this example, if you are driving a car and focus on a point in the windshield you are going to lose track of the road, but if you focus on the road you are going to lose track of the single point. To gain that mindset you have to go through the process and actually trade but with a small quantity so that a few streaks of losses don’t destroy you.
It is important for the trader to have a system which has an edge. This is the foundation on which money management and trading psychology will be built.
The trader has to have a plan. Coming in the morning, listening to other’s recommendations and trading is not a plan. One should know the instrument he is going to trade in, the setups where he will enter and exit.
A very important point is that the trader has to come out of the ideology of predicting the market or the urge of knowing beforehand what is going to happen next.
The trader has to acknowledge and learn from his losses. He should treat losses and gains in trading as breathing in and breathing out, it is inevitable.
Back-testing your system is an absolute must.
Finally do not look at you P&L while you are in your trade. It is said in Blackjack and Poker that one should not count his money till he is on the table. Similarly, counting your profits while in a trade is not advisable.
The focus should be on the process and not on P&L. Have a process goal rather than a P&L goal.
There is only one Holy Grail in trading and that is execution. If you are right 95 percent of the time in execution, you are way ahead of the crowd
A: One of the biggest difference between a successful trader and a non-consistent trader is the way in which they handle losses. We do not like losses. People tag losses with being a loser. A trader who is on a losing streak thinks he is a loser.
Normally, if a newbie trader faces a streak of 5-6 losses and if he has back-tested his strategy superficially, or for a few years, he would look out for an indicator that would have avoided these losses. This process would go on till he drops the system.
The problem is we are in a microwave culture, everyone wants instant. As I have mentioned in my trade statistics, I have a 28 percent winning rate system on a trade level basis but a 100 percent winning rate system on a yearly basis.
So one should not get perturbed by one trade or a streak of losing trades. One trade is just a small dot in the whole perspective.
What I tell in seminars is to start with the minimum amount. If you are trading in the cash market just buy one stock. If you have a big capital just buy one lot. The amount should be small but not so small that it does not hurt.
I generally give this example, if you are driving a car and focus on a point in the windshield you are going to lose track of the road, but if you focus on the road you are going to lose track of the single point. To gain that mindset you have to go through the process and actually trade but with a small quantity so that a few streaks of losses don’t destroy you.
It is important for the trader to have a system which has an edge. This is the foundation on which money management and trading psychology will be built.
The trader has to have a plan. Coming in the morning, listening to other’s recommendations and trading is not a plan. One should know the instrument he is going to trade in, the setups where he will enter and exit.
A very important point is that the trader has to come out of the ideology of predicting the market or the urge of knowing beforehand what is going to happen next.
The trader has to acknowledge and learn from his losses. He should treat losses and gains in trading as breathing in and breathing out, it is inevitable.
Back-testing your system is an absolute must.
Finally do not look at you P&L while you are in your trade. It is said in Blackjack and Poker that one should not count his money till he is on the table. Similarly, counting your profits while in a trade is not advisable.
The focus should be on the process and not on P&L. Have a process goal rather than a P&L goal.
There is only one Holy Grail in trading and that is execution. If you are right 95 percent of the time in execution, you are way ahead of the crowd
