Soul Trader Quits Day Trading
by Trader Rich
I've been following Soul Trader's blog for some time now. He is a forex trader from England and announced on his blog today that he is quitting the day trading game. One of the big reasons for him quitting is that he just cannot take the frustration and pain of discretionary trading. He states that he will continue to trade his mechanical system but will give up on being an "active" day trader. His post today is actually a good read as he gives the following advice for all of us:
The only way to make it in Forex is to trade with a completely mechanical system
That's it. It seems like 5 years of day trading has taken its toll on Soul Trader and I cannot speak from experience or even disagree that a totally mechanical system is the only way to go. I've only been doing this for a little less than a year now and I still don't know what the best way to trade is. I know that is is totally possible to do this for a living but the chances are pretty damn slim. It been a educational ride so far and as the months carry on, an expensive one.
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Hi Rich,
Whilst I don’t know what psychological and emotional reactions were going on when Soul Trader wrote that post, i’m not sure that I agree – when I first started out, my boss had no mechanical system whatsoever. We were managing over one hundred million with complete discretion and only a 10% stop loss on any accounts we managed.
Sometimes, on certain positions we got unnecessarily messed, and perhaps that had to do with managing too many positions without specific entry and exit criteria. However, his returns were frankly very good. He is still doing well today and is a millionaire many times over. He had a fund based out of Geneva and that folded for various reasons.
When he started out again, he had a tiny account to play with. At one point, he was very much under $100k and is now doing very well – I joined him when his AUM was around 150m.
Without any mechanical system. We did have risk management principles in place, but things like dollar exposure etc. The forex and futures portion was probably 20% of AUM, but he did it.
I’ve learnt a lot since then and it’s a damn hard business, but it can be done.
On Saturday, TraderFeed had a good posting on the differences between professional vs. amateurs traders.
http://www.traderfeed.blogspot.com/2006/04/how-professional-traders-differ-from.html
Checkout the link at the end of his post on the Psychology of Trading at his personal website as well.
Ali, I was thinking the same regarding his state of mind when he wrote this. He just seems burnt out. As always I appreciate the post coming from a professional because it once again inflates hope that one day I will be able to do this for a living. Whereas I understand how a mechanical system can be beneficial, I also understand that it is really based on your personality and some may be better at discretionary trading than others…
Ali, I’ve read Dr Brett Steenbarger entire website. He even has a few audio forums available on woodies cci site. The guy is amazing. I’d put him up there with Mark Douglas.