Connors' Weekly Battle Plan

A Letter From A Member

For this week's lesson, I had intended to focus on Wednesday's reversal. It was the type of reversal day that happens about 2-3 times every quarter and we can all learn a lot from days like that.

As I was writing about Wednesday's trading, an e-mail came into my box from a TradingMarkets member. As I read it, I saw that there was an enormous amount of wisdom in it. It was wisdom gained from the journey...the path that many traders have to take before becoming successful. Therefore, my lesson on Wednesday's reversal will wait until next weekend. I feel that more can be learned from this gentleman's letter.

As I've written over and over again, becoming a successful trader doesn't happen overnight. It many times takes years and even then, there is "No Guarantee" of success. But, as we learned from the "Market Wizards" and "New Market Wizards" books, success happens for some, but only after they have paid the tuition. And that tuition is a combination of learning to master how to trade (some people never get there) and experience. This letter helps us all see that there really is no quick-fix solutions to making trading a profession. The only way to get there is to learn as much as possible about the markets...and more importantly, learn as much as possible about yourself.

Here is the email, reprinted with this gentleman's permission:

Larry....

I have been with TM now close to 3 years. It has taught me greatly and contributed significantly to my development. I have a close friend who is eager to leave his job and become a trader. In showing him an RST setup that beat me over the head after the fact, I somehow flowed into a revelation for myself about trading that I wish I understood before I started this journey. As a teacher, I am sure you are interested in the journey of your students, even the ones you don't know you have. I have tried to explain the trading process before, but this time it seemed to come clear to me. I thought you would find it interesting. Thank you for all you have done to move me down the path.

This gentleman included a letter he wrote to his friend in which he wrote about a trade that he took and discussed the amount of money that could be made from the trade. He then went further and discussed how by doing this with a certain number of contracts one could potentially make a nice income on a monthly basis. The best part of his e-mail, though, is where he discussed the mental aspects of trading, and I'll pick up his letter at that point:

The money is not the road block. The process of developing the ability to make 5 pts per week is the road block. Working through all the mental and emotional garbage that sits under the surface in your soul to free yourself so you can consistently accomplish your goal. It is about finding those demons that you don't even know exist that will sabotage you, and purging them from your being so that you can trade with out emotion. We all have demons that sit in us undetected. It requires an honesty with yourself that very few are able to get to. Nothing shows you your demons like trading. I have purged many and as a result, I am genuinely more at peace with myself as a result of the process. I have others still to purge. Most people fail because they are unwilling to put certain things on the table that sit deep in their soul. Hidden beliefs about life and self and money and security and identity and fairness that have to be dealt with. Every month I change. All for the good because the more honest I am with myself the better I can see God and be honest with Him. It also allows you to see the world through a new set of eyes. It is very liberating. Most people do not want to fundamentally change b/c it means putting beliefs that they have taken a lifetime to establish and build a life around on the table. To do that would practically nullify their existence up to the current time. To me that is the crux of trading. Are you willing to take yourself through the process of finding your demons and one by one purging them from your system. Everyone's demons are different, because each person has a unique life experience that God takes them through. So no one can really help you except yourself. I have gone from losing less money each year to the point where I am now recently a break even trader as of late. I am moving in the right direction, and I believe that after 3 1/2 years I am about to turn the corner, but even if I can step over these last few hurdles the gift that trading has given me in terms of my life will have been money well spent. Ultimately, it is not about the money, it is about finding yourself, the self that God created free from all the emotional bondage that life has shackled you with. Okay enough said. I write this, because it was 2 years before I really started realizing what the battle really was. It is not about making money. It is about reaching a state of emotional freedom. The money takes care of itself from there.  

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I very much like this letter because it is brutally honest. You have the mutual fund industry which tries to tell the public they know what they are doing and all they do is achieve returns in-line with the averages (the same as an index fund does, but without all the nonsense). And even though we're having a lot of fun with the stock-picking contest and seeing a bunch of 5-year olds beat the overwhelming number of money managers in this country, it's not real. What's real is the fact that to beat the averages consistently and/or to make a living from trading/investing requires brains and experience. And it doesn't happen overnight. We have a bunch of 5-year olds in this contest who, with no knowledge whatsoever on how markets work, have achieved returns that are staggering. It further points out the fact that buy-and-hold money management returns are many times more a function of either luck or the market's direction, not a methodology that really has an edge.

I do not know whether or not this gentleman will succeed as a professional trader. But he does have some very important things going for him. First, he's committed, something that is probably the most important factor in anything one attempts to achieve in life. Second, he's making continued progress in his trading. And third, he's brutally honest with himself and has learned that trading is not only about perfect execution of trading strategies, its also about reaching the level of perfect execution with one's mind. It doesn't matter whether you're new to trading or you've been successfully trading for 40 years. In my opinion, it's the combination of the mastery of the markets and of your mind that will ultimately dictate the success you'll achieve at this game.

Have a great week trading (and if Natalie's mother is interested in the biotechnology company idea, please let me know)!