Monday, 22 February 2010

Learning to Trade - Where Do You Start

No Chart today as I'm traveling back from Europe.  Trading resumes tomorrow.

I have covered quite a bit of what was involved in Kiki's learning to trade in this blog. That was the prime motivation for me starting it until the blog seemed to take on a life of its own.

But where do you start if you don't have someone pointing you in the right direction? I guess, with the internet so prolific, you start with someone else's ideas and see where it takes you.

Trading can be broken down into components - a vision of where the market is going in your timeframe, a setup, a trigger, trade management and the exit.

OK, you're a newby and have no vision and the rest is a tall mountain to climb. How do you eat an elephant? One bite at a time.

You look at the trades posted in the blog and try to reverse engineer the setups. What do the trades have in common? Read the posts and the comments and replies. Then start SIM replay, really slowly. Try and fit the posted trades into the running sequences you see in the replay. Most software has the replay facility and a lot of brokers will let you run a demo account for quite a while. You can also get delayed data from vendors or history from a friend. Kiki used to get up early before work and also when she came home and shared her Dungeons and Dragons' time with SIM replay. Once you get CP on replay you graduate to live SIM.


  1. Lol..haven't heard the old D&D term thrown around in a long time!

  2. Hi- great blog. I'm CP with my sped up non-realtime replay. Now it's time to go for realtime sim. Hope it will be as successful. The sim really is the holy grail - that and context. I use mini intraday market profiles - simple as that. Thanks Nick

  3. Great work on the site!

    On a side note I find it interesting that what Charlie Munger has said in the following article is becoming true to a certain extent all over the world and not just in America. The young IT/engineers of the world are leaving in droves to work in the derivatives industry.

  4. Hi

    You recently mentioned "belief" Steidlmayer lectures, I have heard him say "that he(she) who believes the most, makes the most!"

    The knowledge,skill and generosity shown in this blog are exceptional. (many thanks)


  5. i stumbled on your blog a few weeks ago, and i have enjoyed reading your thoughts.


  6. Hello Mr Local,
    Thanks for your insights on trading here. However, I was wondering how you cater for changes in markets? I read your comments about back testing set-ups and configurations in charts. If volatility or other characteristic changed causing smaller or no profit from your current settings, would you stop until you had enough data to back test new configurations, or just trade a new market where there will be data already to back test. I imagine the later.


  7. Anon 16:32, The range bars take care of volatility except the extreme. I would shorten or lengthen them if backtesting showed it was required. Also, adjusting your first scale out and drop dead stop take care of volatility changes too. This is something I do much more often.