Episode 241: For Andy Russell – On Trading for a Living

by producer on March 31, 2014

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For Episode 241, your host Rob Booker brings us a memorable solocast. A trader named Andy Russell recently wrote to Rob and asked how one successfully trades for a living. Rob answers.

He addresses Andy about transforming a 50/50 proposition into a winning proposition. Rob also gives four recommendations that make trading sustainable for the long-term. And Rob talks about how important it is not to close winning trades too fast. If you’ve been struggling with trading for a living, this episode is not just for Andy Russell, it’s for you! Thanks for listening.

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{ 10 comments… read them below or add one }

tim martin April 1, 2014 at 11:26 am

hi rob and Jason it Tim from episode 99
i got a message for Andy i think you need to stop trading real money and go back testing you have identified that you get some small gains to your account then to only have some big loser and give it all back and some you are in the same place i was a few years back what i did was to flip on it head and do the opposite take a losing system and back test the in to a wining system with just one or two indicators on you charts i think you are there now to turn it around by you writing to rob you are just saying i have had it with keep losing
all the best to every one Tim

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Brian April 11, 2014 at 6:59 am

My sentiments exactly. I think Andy is very close to where he wants to be, otherwise he wouldn’t have successfully traded for long periods only to give it all back in big losses. He should make those adjustments during backtesting and paper trading, not with his remaining account. He has to focus on the big losses, so that means watching position size, closing losers fast, and as Rob points out, over and over again through countless podcasts, never do anything spontaneous, because spontaneous never works out. Your advice is great, especially about keeping it simple with only a few indicators. In my opinion, that advice was needed because Andy wrote about getting a professional service for trade selection. I think most of the problems we are discussing are part of the defense not the offense (trade selection and edge), so that kind of assistance won’t help with these problems.

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Brian Fortin April 2, 2014 at 10:37 am

Dear Mark,

You have $4800 left in what was a $12k account. You now need a 160% gain to get back to zero. You blew out.
1. I can make a number of good guesses why you blew out based on your comments, but the number one thing to do is STOP TRADING.
2. Given the amounts of money involved, it would be a LOT quicker and easier working and saving to replenish your account than trading for a 160% gain, which could take years. Every dollar you don’t spend yields a 100% return. You will never achieve these results trading, so go for the easy money and stop spending what you earn.
3. Your head is so far up your ass you can’t see reality anymore. Feeling sorry for yourself, you deny reality and say that you seem to pick the wrong side in each trade. However, you also said you go through long periods of time where you slowly build your account and then blow it all on one big loss. Well, which is it? If you are not even honest with yourself, don’t go whining to Rob about how to fix it
4. Trading is about edge, position size, choosing smart entries, holding time, and exits. That and drawdown rules. Do you even HAVE drawdown rules? What frigging position size are you using? Depending upon their time frame, many winners try to trade positions around 1% of their account. Why? Most of them have been in your shoes. They don’t want to attempt a comeback on a reduced account size. If you stay at a 1% position size, you can lose 72 times in a row before you blow out (-50% drawdown). Did you EVER lose 72 times in a row? No? Then maybe you should examine your drawdown rules and position sizing, because I can guarantee they are flawed.
5. Did you paper trade or did you just jump in and live trade? If you can’t make money paper trading, you WON’T make money live trading. While you are busy working to replenish your account, you should try to paper trade it back to your original balance. Stay out of the markets until you get your money management issues resolved.
6. Trading correctly involves doing what works over 1000 trades, not just the one at hand. Therefore, stop thinking in terms of the “highest probability” trades, or talking about entry optimization. Think in terms of expectancy. Every trade is a balance between likelihood of winning versus the potential payout. For example, the side of the trade with the 60% chance of payout sounds good, but the one with a 40% chance of winning might have a disparate payout and be a better position. I’d rather make more money with less wins, the public just wants to win. You can’t afford to think like them. This will enable you to take trades the public wouldn’t touch and achieve a different result than them, because most of them lose.
7. Sorry to tell you this, but you are a human being, everybody’s different, and you may never master day trading. But why bother? Trading is about money, so go where the easy money is and forget bragging rights about your percentage wins or time frame traded. Rob’s recently spoken about how much easier life is trading higher time frames. Take the hint. The price of admission to the winners circle gets cheaper as you increase your time frame, until you reach buy and hold, where complete idiots think they invented the quadratic equation. Follow the money. Increase your holding time until you achieve positive results.

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Cavex April 3, 2014 at 10:53 pm

For Andy, if you are a real person? Here is more advice whether you want it or not.

You don’t need anyone $#@! insulting you for losing your OWN money. Tell mockers to save to save the insults for people that cut them off in traffic and for people who lose their money for them, like his spouse and kids.

1. My advice is DON’T STOP TRADING EVER, not if that’s you dream.

2. Rob’s advice is good. Take a break, watch and figure out what you are doing wrong. Trading take years to workout your system, confidence & the correct mindset, just like any pro golfer or any other athlete has to do. They cultivate success and they know what it feels like.
2.5 Journal it. YOU MUST JOURNAL. it creates discipline as far as making a strategy clear in your own mind and taking the time to have a plan before the trade. And the don’t make it complicated advice is good too. Complicated is for paper traders and snake-oil salesmen.

3. TRADE LIVE! I know it sounds funny and wrong. Always trade live! if you keep drawing down and making the wrong moves you are trading too big. Reduce the size of your trades until it doesn’t matter if you lose; even if it is only pennies with a Micro-Lot. Then work diligently on your your strategy and confidence. At the micro-lot rate you could trade LIVE on a few hundred dollars. Even if you keep losing you could be trading for years. Rob’s friend Boris Schlossberg has a great article about this. Paper trading is great for getting to know the software but that’s it. After that you have to, you must go live.

Boris Schlossberg Article
http://www.bkforex.com/boris-schlossberg/demo-billionaires-not-welcome/

4. Keep listening to Rob’s Podcast and join a group like TFL360. I was a member of a couple of groups for over three years during my first four. It will do you good to be online live trading live with live money with live people who can guide you. Even then you’ll be amazed how some will make money and you can see it on their live calls, but you can still lose money at the same time. Keep you lot size down to a size you’d be embarrassed to tell Brian about.

Yeah I lost money too. We all do. Even Brian lost money, unless he’s perfect. Mmmm, nope I doubt it.

Don’t quit cause that’s what mockers want you to do.
Keep it up,

Cavex
https://www.tradingview.com/u/Cavex/#published-charts

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Brian April 5, 2014 at 1:16 pm

“Yeah I lost money too. We all do. Even Brian lost money, unless he’s perfect. Mmmm, nope I doubt it.”

LOL, I wish.

Hey, where’s the love? I spent a lot of time thinking about that advice. No, I’m definitely not perfect. AND I also didn’t mean to “mock” anybody, so my apologies if I was a little rough with the head up the ass statement, but I would think that’s a given after suffering a 60% drawdown. Hang tough, think about what went wrong, and start again slow and careful.

Great advice from Cavex. I agree that paper trading isn’t like live trading and can never simulate the psychology of live trading, but paper trading will tell you if your money management issues are squared away, things like:

1. Edge
2. Position sizing
3. Entry locations
4. Holding Time
5. Exit strategies

So no, I can’t agree paper trading is just about getting used to the software. And I stand by the statement: If you can’t make money paper trading, you won’t make money live. Therefore, paper trading is a good way to get ready for the real game.

Brian

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Brian April 5, 2014 at 3:30 pm

One other clarification Cavex. You wrote:

“1. My advice is DON’T STOP TRADING EVER, not if that’s you dream.”

and,

“Don’t quit cause that’s what mockers want you to do.”

WTF???

When someone says “stop trading” and then goes on about how to replenish your account and begin again, it probably means stop until you fix what’s wrong, NOT give up trading altogether. You might want to consider that in light of the fact that you misread the obvious, you may have misread other things too and are mistaken about my motivations. People who just want to troll someone on the internet don’t usually spend a half hour typing advice, they just hurl insults.

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Cavex April 8, 2014 at 11:47 pm

Is Brian another name for “Dark Rob”?

Whoa! Whiskey Tango Foxtrot? Almost an F#@!-bomb

Seems to me… Yes, Mockers do want people to stop trading and it was part of a recent podcast. infact it was the one before this one. Episode 240: Being Negative Always, Always Costs Money “…Rob Booker talking with Matt LaCoco about all the negativity that’s thrown at brand-new traders. Rob and Matt discuss why there are so many naysayers. ”

Hmmm Yes it sounds familiar. Listen to minute 3:30 and then Matt says it about the guy in the yearbook “… it’s not enough that I succeed, everyone else must fail…” Yes? No?

Hey Andy, Where are you? Why am I the only one standing up for you? Get in here!

If I am mistaken about Brian I hope so. But Did I misread the head up his Ar@$S. Nope, I heard that negativity part right. Yes Brian had some suggestions. He stands by them. Good.
I stand by mine as well because I took plenty of non-trolling time writing this too. If I was trolling I’d be insulting people first, with my first sentence, I would not be not sticking up for people.

Yeah it is hard to hear a person’s tone, and body language on website comments & posts, but easy to read the actual words.

Starting over should be a badge of honor.

This is my last response to this,

Good Trading for Every-1!
Keep on trading Andy!
.

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tim martin April 11, 2014 at 5:33 am

hi i am back sorry but i am no mocker
i stand behind my advice to tell some one stop trading and go back testing
why because i have taken 30 trades a week on euro/usd in the live market and ave 450 pips a week from the 1st January 2014 and i have done it all from back testing system i do not look for market news or listen to market news or watch it because i do not have a tv in home
he do not need to trade live because he has had live experience what is to have draw-drown he do not need to draw-down any more which he will if he keeps live trading
and as for the Boris Schlossberg Article i think he has got his head some-were
why because i ask Kathy lien Boris partner to see some live trade she had taken thou out the year once at a trade show but she decline
now i know why she not show me her trade she took that year if she as been listening to Boris she is still working it out anyway it all smoke and mirrors
ok cavex which one is it in your email keep trading or take a break
in my book take a break IS STOP TRADING
and you say pro golfer only swings in a live tournament ok

1. My advice is DON’T STOP TRADING EVER, not if that’s you dream.

2. Rob’s advice is good. Take a break, watch and figure out what you are doing wrong. Trading take years to workout your system, confidence & the correct mindset, just like any pro golfer or any other athlete has to do. They cultivate success and they know what it feels like.
2.5 Journal it. YOU MUST JOURNAL. it creates discipline as far as making a strategy clear in your own mind and taking the time to have a plan before the trade. And the don’t make it complicated advice is good too. Complicated is for paper traders and snake-oil salesmen.

happy pips every one tim

Reply

FxCave April 15, 2014 at 5:33 pm

Well, I had more to say before this but I guess it got curated (=moderated), even though I didn’t cuss anyone out. Maybe I used too many ALL caps for emphasis, not meaning to shout. So here i’ll try again as a shorter and, again, non-trolling reply.

Golf is such a bad metaphor for trading, I hate using it. If the Master’s Golf Tournament was 250 days a year 24/5.5 with millions of people joining and leaving it everyday, and strokes below par meant you made money and above par meant you owed the PGA money, then I’d say it’d be a ok as a metaphor for trading.

Which is it? Yes, it’s Both, Stop and take a break, but don’t quit, Keep Trading.

And, Oh yeah… Boris is a good friend of Rob’s.

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Brian April 15, 2014 at 7:30 pm

That was very nice. I’m definitely not upset at anyone, especially at you who took a lot of time to give good advice to help a fellow trader. The internet is a perfect venue to take offense, or misunderstand somebody’s motivations, so I would amend my tough coach talk in my initial post, but for some reason you can’t edit these posts.

What I really think is trading is 10% offense and 90% defense, and when a trader like Andy says he makes incremental progress and then blows it all on big losses, it tells me he needs to focus on defense and stop obsessing on trade selection and professional assistance with systems. No matter how good your offense is, you can’t overcome a crappy defense. You’ll never make more money than your wife can spend, or bad money management can squander.

Today was a very exciting day. The Mrs. had a huge day trading the ES. Every day, I get back from my job, tired and angry at the commute, and she wants to tell me how much she made. Every day, I wait patiently, and ask what her biggest loss was for the day, knowing if she controls losses, her day will come. Today, I think she gets it, plug all the holes in your game, and wait for those big days to pay you.

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