The Way to Trade. John Piper

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      To become risk orientated we must make progress on all fronts. Knowing ourselves, changing as need be, understanding the trading process better, adjusting our trading methodology to suit ourselves, learning to relax when trading; these are a few of the necessary requirements. Most people should immediately at least halve their trading size and that can bring immediate relief/relaxation.

      Risk orientation gets its name because you need to understand risk in order to win. Trading is a risk business, when you become risk orientated your orientation is right for the market.

      The key trading secret at this point is letting profits run. It is at this point that you may start to make consistent profits in the market. Before you reach that stage you should never trade more than the minimum size, i.e. one contract. Why pay more in tuition fees than you need?

      Once risk orientated you may learn the final trading secret, trade selectivity. Once you have that down pat it can all become less exciting. I make money consistently but I still find myself occasionally taking too many trades. To master trade selectivity you have to become an expert in your chosen approach. The key aspect of your approach is that you filter out a vast amount of market information and just focus on those factors which you need to know. It is a lot easier becoming expert in a narrow field than a wide one. The various sources of market information are so vast that it is not possible to take it all in. Let alone become an expert in it. You must decide what information you want, design your approach and then use it. Become an expert and you will find that you become intuitive, that is when you can select only the best trading positions, the low risk ones. Then it will all go the right way.

      The 55 steps (a personal journey to success)

       (A simplified summary of the key steps taken by John Piper to get where he is today.)

      1. We are intrigued by the market and start to do some preliminary reading and research.

      2. We buy a book or two and perhaps some newsletters.

      3. We find something we quite like and start doing some research using this particular technique.

      4. We dabble a bit in the market, trading every now and then, mainly losing money, but not much, and having the occasional winner.

      5. We generally forget about the losers and congratulate ourselves on our winners. Convincing ourselves that once we learn the techniques better there will be fewer of the former and more, lots more, of the latter.

      6. We keep manual charts, which may become quite large physically, and maybe plot a few indicators manually (this was before computers became quite so available).

      7. We spot an approach to the market we think cannot fail to win!

      8. We start to trade actively.

      9. The results make it clear that it is not as easy as appeared to be the case. There were a few key points we failed to fully appreciate.

      10. We continue to trade. Results are fairly indifferent (to bad) but there are enough profits to keep the interest up.

      11. We continue to expect great results.

      12. Trading volume increases and the amount of money in the market grows.

      13. We continue to read and take newsletters, but our research has only scratched the surface. We still have no real idea what we are involved with.

      14. Our technique scores a major success (the ‘87 Crash), but our lack of trading skills means that we do not profit from it as we might.

      15. The market begins to instill a little fear but we have yet to learn the first key lesson.

      16. We keep trading in size. We are overtrading and clearly act as a fugitive from the law of averages. It is only a matter of time.

      17. We make a big profit. It is all going well, we start to get overconfident.

      18. We suffer a big loss. Psychological problems start to develop.

      19. We buy a computer and start to monitor many more indicators.

      20. We look at other techniques and other markets.

      21. We get wiped out.

      22. It becomes clear this is not at all as easy as it looks.

      23. We become impossible to live with.

      24. It also becomes clear that the information available (in 1987/88) is not much use to those seeking to make money from trading.

      25. We determine to fill this void and look to create a newsletter telling it how it is.

      26. We work with an analyst in the USA. Note how inappropriate this is for someone who wants to trade. Much better to work with a trader!

      27. We continue to trade, but in a much reduced manner.

      28. We start our newsletter which is an immediate success.

      29. This requires a lot of research plus a lot of self analysis, but it is still not clear that trading is a psychological issue and that the externals (systems/software/computers/ brokers/advisers, etc.) are almost completely irrelevant until the internal is set up right.

      30. We are plagued with fear and have no clear methodology.

      31. It becomes clear that judgmental trading (without a clear methodology) is a dead end.

      32. We start to look for a suitable methodology.

      33. Those available on the market do not seem to be suitable and so we design our own.

      34. We start to trade using a clear methodology. This is not easy but some things start to become obvious.

      35. We find ourselves trading for no good reason (something that was impossible to detect before we had a clear methodology), but then realize that it is due to an argument earlier. Self esteem clearly plays a role.

      36. We realize that the key element in trading is our own mentality.

       Now we can start to make some real progress.

      37. We improve our systems and start to make some money on a one contract basis.

      38. But we are still fearful and this remains a big problem. We learnt, some time ago, the necessity of cutting losses, we cannot get to the second secret until we deal with the fear.

      39. We keep trading and we continue to do OK, we start to get more confident and the fear starts to dissipate.

      40. We take another big hit.

      41. We feel awful and think we should perhaps give up, should perhaps have given up some years ago when it all went wrong the first time.

      42. We keep trading and determine not to get overconfident again. We reinforce the stress management systems we had to learn in the early days and keep meditating (essential to СКАЧАТЬ