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Trader Learning Curve Deja Vu

** Originally posted at FINZ.tv’s POSSE Trader Journal, my new site with a few other great traders.  Reposted here because I’m sure all my readers here miss me too! **

Switching from trading fundamentals (“active investor”) to day trading on charts & technicals, I’d have to say the last 4 months have been a learning curve roller coaster. First few days I felt a little timid as the area of technical analysis seemed totally foreign to me. Even though I was still working with stocks, entering the same order ticket as I had been doing for over a year and a half. About a month into watching and learning from a few mentors, I was able to apply the beginner “simple rules” they taught of technical analysis and trading. I gained confidence bit by bit, first by being able to follow their trades then slowly using the same “simple rules” to make my own “simple trades.” No, i didn’t have any fancy moves but with that confidence I was able to make more and more of my own trades. Sometimes I’d trade the same direction with my mentors, sometimes against and still make money. In other words, I was becoming independent. For about a 2 month stretch I traded like a pro, even confident enough to post those trades publicly on twitter and earn some respect, gain some friends, and grow my account. All of a sudden, BAM! I hit a trading funk the last month or so. Yet, as I read through Mark Douglas’ “Trading in the Zone” as suggested by one of my mentors, friend, & fellow POSSE Daytrend, I realized I didn’t so much hit a trading funk as a growth funk.

I hit this trader growth funk as I was ready to “become my own trader,” i.e. stand on my own two feet trading charts and using technical analysis. It is a natural development (I think), and actually necessary if one wants to continue to grow and have sustainability as a professional (vs. just dabbling in stocks and having placed a few trades). These phases of development seems familiar. Yes, deja vu. I experienced all these phases when I first got into the market in 2006 and slowly learned to trade based on fundamentals, listening to conference calls, reading industry reports, etc. But that was my first swag at the stock market. Ever. Learning was very slow and took over a year to get to the point where I slowly let go of following others’ recommendations or ideas to stand on my own. However, getting my sea legs and trying to hold one’s own is not easy. It was definitely the hardest phase of development, but having been through that and finally creating my own style of trading on fundamentals, I can tell you the other side is clear skies. Well not completely! Obviously the market is never “clear”, but after that point I never felt I didn’t know what to do-even in uncertain times. And trusting in yourself is the greatest thing you’ll ever have because you will always be there for yourself…can’t necessarily say that about anyone else, even if they honestly care and try to help you every step along the way.

Now, back to my current development as a technical trader. While hitting this transition phase of trying to be my own trader has been difficult, I’m encouraged to have gotten to this point in over 3 months what took me over a year when I tried trading on fundamentals. Moreover, I know getting through this phase and becoming my own trader is where I want to and where I NEED to be. Still, there are several obstacles I have to work through and I’m sure a lot of other budding traders encounter everyday, maybe even for a long time as they’re trying to reach the next level. Having to depend only on yourself and not your mentors or certain indicators is probably the toughest part of being on your own. Sure, your mentor (hopefully) trained you well and gave you great tools and methods. But as no two people are the same, no two traders are the same and can trade exactly the same. Certain things you got from your mentor might not work for you and that’s fine. You take what works and gels with your personality while letting other things go that were only meant to be guides, training wheels. At a certain point will actually make your development harder if you try to follow your mentor step by step because what works for their personality doesn’t work for you. Same reason why it is hard to be the exact person your parents want you to be vs. who you were meant to be.

Also as your mentor stops carrying you on their back and you become an adult you’ll have to not put your mentor on a pedestal anymore. I’m not saying take a rebellious teen attitude but allow yourself to be a grownup trader. Of course you respect your mentor, their experience, wisdom…AND DON’T STOP LEARNING FROM THEM! Sure, maybe they make a lot of money and have great reputation, but it doesn’t mean you can’t be a decent trader and hold your own. This way, you’ll have TRUE confidence to make your own trades regardless of what your mentor or anyone else you respect says. Even the greatest traders make mistakes, and you could very well be right when they are wrong, but you’ll need the confidence in your own abilities to do so. Who knows? You could be the young player straight out of High School that becomes the star. However, its not possible to discover your true potential if you always shadow someone else and can’t call a winning trade your own (as well as a losing trade). View traders with better reputation with respect, but just like any other player out on the court, with strengths and weaknesses, then you simply take that into account when you make your OWN decisions.

In following articles, I’ll look a bit more into the psychology of this development. Concepts like “becoming a trader” that just blew my mind which my great friend and mentor Quint Tatro of Tickerville emphasizes in his bootcamp videos. Also, the psychology of truly wrapping your mind around the market as a “creative” endeavor, more “art than science.” And, as a creative endeavor, how to consider the “uncertainties” in a positive manner as “possibilities” just as magical fairy tales have lots of “uncertainties” but children love them because of the unlimited “possibilities.” Finally, “trade smarter not harder.” Heard that first from @EricBolling during first few shows of CNBC’s Fast Money. We only have so much time to do research each night and can only look at so many indicators. Keep things simple to only those you NEED instead of grabbing at any idea or indicator hoping it’ll help, but more likely add to the noise and confusion and distracting you from the market’s true message.

Have a great weekend everyone! Excited to spend a little time this Sunday with @higgstrader, one of my great mentors from Tickerville. And my family will be back Sunday as well so I’ll have survived my first 2 weeks home alone (& not having to go to the E.R. to boot!)

See ya’ll on twitter or our FINZ Live Trading Chat before, during, and after trading hours!

Bloomberg: Hong Kong Stocks Decline, Led by Property Shares

what’s the equivalent of the Proshares Ultrashort Dow Jones Real Estate ETF (SRS) in Hong Kong on the Heng Senk? The dominos of office buildings speading from the U.S. epicenter across the globe:

Bloomberg: Hong Kong Stocks Decline, Led by Property Shares

By Hanny Wan

Feb. 20 (Bloomberg) — Hong Kong stocks fell, with the benchmark index set for its steepest weekly drop in five weeks, as the slowing economy erodes demand for real estate.

Sun Hung Kai Properties Ltd., Hong Kong’s No. 1 property company by market value, retreated 3.8 percent after a real- estate agency said office rents slumped last month. Swire Pacific Ltd., one of the city’s biggest office landlords, dropped 2.5 percent. Chaoda Modern Agriculture (Holdings) Ltd., China’s largest listed vegetable grower, tumbled 7.1 percent as it sought HK$415.7 million ($54 million) in a share sale.

The Hang Seng Index declined 301.06, or 2.3 percent, to 12,722.30 as of 12:13 p.m. local time, extending its losses this week to 6.1 percent. That would be the gauge’s worst performance since the week ended Jan. 16.

The Hang Seng China Enterprise Index, which tracks so- called H-shares, lost 2.2 percent to 7,103.27.

The Hang Seng Index has lost 12 percent this year amid mounting signs of an economic slowdown. The benchmark is valued at 10 times estimated earnings, down from 18.7 times at the beginning of last year. Hong Kong’s commissioner to the U.S. said yesterday the city’s economy grew between 3 percent and 3.5 percent last year, about half the 6.4 percent pace in 2007.

Sun Hung Kai retreated 3.8 percent to HK$59.85. Cheung Kong (Holdings) Ltd., the city’s No. 2 real estate company by market value, fell 3 percent to HK$62.95. Swire Pacific dropped 2.7 percent to HK$46.70. The Hang Seng Property Index’s 2.8 percent decline was the sharpest among the four industry groups tracked by the Hang Seng Index.

Share Sale

Prime office rents in Hong Kong fell 17 percent in January from a year earlier as landlords sought to retain tenants amid a recession, Colliers International said yesterday.


P.S. Watch our first FINZ.tv episode on SRS “ETF in 60: IYR Real Estate ETF looks SRS-ly Toast (French Toast)