Original Trader’s Corner by Sam Shenker – Part 1

I’m a trader, that what defines me as me. In order to become a trader, a person must identify him or herself as a trader. In order to be a trader one must become one with the market, with the price, with one’s self. As I meditate on the price there is nothing else, no time, no distractions, and no world outside of the purity of the price.

Meditations of a Trader:
I’m a trader, that what defines me as me. In order to become a trader, a person must identify him or herself as a trader. In order to be a trader one must become one with the market, with the price, with one’s self. As I meditate on the price there is nothing else, no time, no distractions, and no world outside of the purity of the price.
Original Traders Corner:
It’s hard to take a loss, but as a trader that what you do, you take losses along with profits, its how you handle them, that is the ultimate resolve. Cut your losses and let your profit run, but over 95% of traders tend to grab a quick profit and let the losses run, and in the long run they run out of trading capital and move on with their lives. It’s easy to take profits and hard to let them run and it’s easy to let the losses run and hard to take them, because psychologically it’s not a loss if it’s not taken, but reality dictates otherwise. In order to become a successful trader you must go against the human nature of hopes and dreams and learn how to face reality.
It is psychologically hard to take a loss, most traders try not to take losses and let them run, but an unrealized loss is still a loss and by not covering it a trader will face a dilemma of shirking capital. Capital is trader’s inventory, something to be deployed when the right opportunity comes around, but by letting the loses run and hanging to such notions as hopes and dreams, which do not exist in a market, something that this trader learned the hard way, the trader will eventually run out of trading capital and will face a dilemma of taking a loss or adding more money to a losing position. In order to become a successful, a trader must first learn how to take the loss, loses are inevitable no matter if you are professional or a novice, its how the trader deals with them that what separates novices from professionals.
What fascinates me the most about traders is how they deploy their capital, they will nurse losses and quickly grab profits, but that just negates the risk/reward ratio. Risk/reward ratio is something a trader must establish before he or she enters and exits the trade. Always keep the risk/reward at least at one, because if the trader takes a loss it will take one successful trade to recover the loss. If the risk/reward is below one it becomes negative and unfavorable as trader need to make a higher number successful trades to make up the loss and by doing so once again exposes the capital to a higher loss. I as a trader I never enter a trade unless I can have at least between 4 to 10 risk/reward, but I do not trade often and wait for extended periods of time for a potential trade to surface. The tradeoff is this, if the trader trades short-term keep the risk/reward lower, anywhere between 2 and 3 to 1 when entering a large number of trades. The reason behind the lower risk reward is lower profit targets and shorter holding period because it’s very hard to make more than you can within lower timeframe. This trader trades long-term, I can be in a position for weeks and months at a time, that is why I seek a higher risk reward, but once again the downside is I trade less frequently and my stops sometimes exceed over 100 pips.
As a trader one of the hardest lessons I learned is humility and how to be humble when trading the market. When the trader becomes successful he or she feels invulnerable that is when the market will remind you who you are. The best trade sometimes is the one not taken. The best thing to do sometimes is to walk away. Always be humble, no matter if you are running a $10,000 mini account or a multi-billion dollar hedge fund, the market will take your money equally, and it does not discriminate. As a trader I always treat the market with respect, because if you respect and listen to the market it will give you the answers that you seek, always remember that in a market you are alone, its only you and the market no matter what happens the market is always right, it’s the trader who can be on the wrong side of it. Learn humility and be humble, respect and listen to the market and in turn you will be a successful trader, but never let success go into your head because the market will punish you for your arrogance and always be thankful for the lessons the market teaches you, no matter what the price is.
Why do we trade? Money, financial freedom, recognition, success, maybe. Those all good reasons to trade, but they ultimately lead to vanity and greed and that leads to devastation. Greed is the worst motivation for trading; market will always punish greed and will always reward moderation. Never try to make all of the money in one trade; you can’t place everything on the outcome of one trade, if the trader does that, than I see no future for that trader, because he or she is not trading, but gambling. There is a fine line between traders and gamblers, because when there is money there are always those taking blind chances. If you want to succeed as a trader, do not think like a gambler, do not take blind chances and do not rely on luck because luck comes and goes just like a gambler, it’s the trader who remains.
As a trader I learned never to add to a losing position, a common mistake made by most traders. Yes I will agree with critics that will say that is will lower the breakeven level for the trade, but that only works when the price reverses its direction and heads in the direction of the trade. But what if the price continues to go against the trader, what now, losses are beginning to mount at a greater pace because trader increased the size, most traders just add to the position and hope for a break and a reversal, and that is where they get their break, its called a margin call, not the best stop a trader can use. The worst is seeing the market reverse direction and “runaway” from the trader. So the trader is now sitting with a big loss, being right in his or her initial judgment and seeing the market move their way adding an insult to the injury. DON’T BLAME THE MARKET FOR YOUR MISTAKES, BLAME YOURSELF. Mistake number one is adding size to a losing position, (if you are long/short and wrong don’t add size until position shows you a profit) and next mistake blaming the market for your own mistakes.
As a trader I’m the only one responsible for my own decisions and for my own actions, because I’m the only one who has to live with the consequences of the decisions that are made by me. It does not matter whether you will be right or will be wrong, eventually you will be proven to be either way, the trick is to understand and accept the consequence of the decision. When I trade I know that there are two outcomes, a gain or a loss and mentally ready for both, because if you can’t accept the responsibility for your own actions that you should not be in the market to begin with. As a trader I rely on my own choices and draw my own conclusions, I will listen for an advice but will act according to my own judgment; I never let someone else make decision for me. Why do most traders instantly turn to someone else for help when their trades go bad, the answer is simple, it’s a human trait, shift the blame on someone else, let someone else make the decision for you. What happens when there is no one around to stop you, learn to make your own mistakes, learn how to learn from them and learn to make your own decisions, only than you will become a real trader.

As I mediate on the direction of the price and ask market for guidance, I remain humble and thankful for every lesson the market is willing to teach me for I’m a willing student, a trader and myself. As I become one with the price and seek the future path, I’m a trader and understand that there is no direct route where I want to get, but I’m not lost because I follow the price. Only the price knows where it wants to go, it speaks and I listen, and if I listen correctly I will be rewarded and if I make a mistake I will be punished, but I remain a patient and willing student, a trader and myself. And I thank the market for every lesson that I learned, continue to learn and will learn in the future, for I’m a trader and that is my true self.