My Trading Journey, Part I
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August 25, 2008
This is the first of a three-part series on my trading journey. If you have been reading my weekly articles, you''ve probably noted that I keep knocking my readers’ heads with the importance of having the right psychology in this trading business.
I know there are some people who see trading as a quick to be rich [QBR] scheme. Are you one of them? Some people even think that they can be rich after paying a few thousand dollars for a trading seminar. Seriously, do you believe this? Now, if you were to ask me, my view is that trading can never be a QBR scheme because there is no short cut. From my observation and discussion with many successful traders, the main reason why many people fail in their trading business is their attitude. To be precise, it is the trader attitude.
Let me ask you a question. First, imagine you are running a new business. Do you see the need of having a comprehensive business plan before you start your business? Most professional traders I know consider trading a business. Unfortunately, retail traders tend to be on the other side of the coin. They approach trading without any plan. Instead, they trade with emotion – namely, greed and fear. So, if you do not have a business plan, i.e. the trader attitude towards this business, it is impossible for you to succeed in trading for lifetime. I guarantee that.
This is my fifth year of trading options. I was fortunate to be able to acquire many good trader habits and am able to control my emotion by having a trading plan before I place my trade. I drafted my trading business plan a few years ago, which provided me with a clear direction and things I must do in order to move towards the desired direction. I can say that it has been a case of "so far, so good." I see this as a business. I spent many hours learning the best practice of this business and, eventually, such effort paid off and now I can generate consistent returns from my options portfolio. A trading system I am currently teaching in the advanced classes – the Big Mouth Iron Condor System [BMIC] SystemTM – has been able to give me a monthly return of at least 10% based on the amount of my risked capital. The outcome, i.e. my consistent result using this trading system, however, did not come overnight.
This is what actually happened. I studied under many people via the Internet who are successful with trading the iron condor. I looked out for the best features in each of these iron condor trading systems and added my preferred filters. This is the birth of the Beta 1 BMIC SystemTM. The next step I took was to ask a few of my trading buddies to work together to backtest this system. We took three years of historical options data to run the system to make sure that the results were consistent. We used different instruments such as stocks and indices. After the process, I personally paper-traded the Beta 1 BMIC SystemTM for six months to further experience things that did not happen during the backtesting stage. It was only after the above processes that I finally put my first dollar in to trade the Beta 1 BMIC SystemTM live.
As much as you may wish, trading is never an easy game. I totally agreed with the observation from David (Newbiedavid) in the Optionetics Discussion Board. What else can I say? The result we all have been dreaming of, i.e., consistent profit, is the result of hard work and effort. As you have observed with the birth of the Beta 1 BMIC SystemTM, it did not come overnight.
Now, do you still think that trading is a QBR scheme?
To access previous articles written by Jack Wong, please click here.
Jack Wong
Staff Writer and Instructor
Optionetics.com ~ Your Options Education Site
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