Think Like A Trader Blog

Friday, 9 December 2016

T-Model Trader Blog Post 4

 Hello Traders.

It's time for the fourth blog post from T-Model Trader in our series of blogs from real beginners. Get an insight into their journey so you can see how they learn, progress and overcome the common difficulties.

I hope you've all had a great trading week.
James Orr

Blog 4 - The T-Model Trader
Do the Demo before you go-go…. (Live)
Like any good eager beaver with a fast track ticket to success in mind, I thought demo trading was only for the uncool and simply just a waste of time. I just wanted the real action. Unfortunately, it took way too long to admit to the dint in my trading account before I eventually woke up to reality unfolding.
As soon as I had winning demo trades, I was straight back live again not wanting to miss the real deal. As I lost a bit more skin on my already tender trading behind, I would head back forlornly to demo-land once again. This pattern yo-yoed repeatedly for many a moon, until I eventually made a commitment to not go live until I had proven myself worthy. Delightfully I can say, what I got from this demo experience was far from what I expected.

Now it really does need to be said……
……..that… can be a hell of a lot of fun placing a trade on demo with mega tons worth per point. All it has to do is glance in the right direction and you’re a gazillionare. However, if it resembles a pear, then the thought...… “Oh I wouldn’t have really placed that trade in the real trading world”, can fire up the neurons and pop out the mouth at light speed all too easily.   
If, like myself, you often make a beeline for fictional behaviour when you really should know better….well then…..demo can be a theme park full of wicked illusion. So tread carefully.
However, if done correctly, it is your best friend in the hour of need. Learn to love it.
So…… no particular order…..some thoughts around demo use to contemplate.
1.     Record every trade. No editing. No leaving out the kooky ones. This is the equivalent of your personal diary… is a warts and all account. Be brutally honest. No one is going to know anyway. But you have to.
2.     Make that money real. That demo money needs to be respected like the real stuff. Treat demo exactly the same as live trading. E-x-a-c-t-l-y. Don’t trade ridiculous amounts of dollars per point. Be real.
3.     No experimentation. Follow the plan. That is why you are on the demo….practice practice practice…….and more again. Remember that you are learning and this learning needs to see the methodology in repeating action. Mistakes are part of the process, so don’t beat yourself up as a trading failure. Forget the clock and aim for quality.
4.     Review always. Outside of trading times, go over and over what you have been doing. And then review it again. If possible, take the laptop/journal into a different location, away from where you normally sit to trade and do the review. The change of location can be truly helpful to keep it fresh. Keep trying to penetrate into the trade with greater insight.
5.     Keep going over the course material. Listen to all the DT YouTube postings over and over. You will know when it is getting thru to you simply because the voice in your head will have a new found Scottish flavor to it.
6.     Learn to write about what you are doing. Express yourself constantly, even if you feel you are writing the same thing day after day. This is mega important. Make the ongoing effort to get more subtlety into your journal writing. Get skillful at breaking apart the trades and the emotions. The more you get inside of “yourself” regarding your trading approach, the better the chances of creating the change needed.
7.     Realize that it is a process of development and you are in training. Give it all you have. You will fall over (this is the beginners trading reality), but fall over successfully by learning and then stand up again with commitment the next day.
8.     Repeat often….. “I am a trader”. Lock onto this like crocodile jaws and don’t let it go.  You have to ascend past the doubt factor. And do this ascending on demo…this is what it is for (and infinitely cheaper).
9.     Acknowledging openly and honestly the losses are truly important. These losses have so much to teach us beginner traders. Go find the reason for these losses and let go of grumbling (Oh how I have whined). It is good to remember, that we have chosen to do this trading business and the market has no personal grudge against us.

It was around week 4 that I forgot that I was actually demoing. I am truly serious. I had become so engrossed in just “doing” the trading business necessary that the demo reality faded away and became so completely real to me. I was in training and I was giving it all that I could. This was a great turning point. 
Around week 6 I went live again. I lasted 2 days and then went back to demo. It wasn’t that I lost every live trade. The difference this time was that I just knew within that I wasn’t ready yet. I didn’t feel fit enough to go live.  I still needed the sanctuary of Demo-land to refine my skills. I needed time to build more trading muscle. I knew that this was the case and was willing to acknowledge it to myself honestly.
That was a while ago now. However, the outcome of this experience is that I still use the demo. If I have a few losses in a row and feel a little unsteady on my still relatively new trading legs, I go back to Demo-land for a bit.
Muscle-up Traders!
I believe this notion of fitness is truly worth giving lots of consideration too. I think of myself these days regarding trading, in terms of fitness levels. This has allowed me to put my trading development into a context that is readily understandable.  I get this analogy clearly and in perspective, minus the self-criticisms that can spew forth in the emotional quagmire of live trading eruptions. Demo is the training before the actual event.
It can be a truly bewildering process of learning a “method” and then putting it altogether in live trading. All those examples captured within the course material, suspended in time, just look so different (because they are) in the context of decision making on the chart in the beginning.
For me, it was these times of transition between these two worlds of education and live trading that was the breeding ground of many a trading implosion.
In the early live trading days I was continually imprinting repetitive patterns of doubt and stress, simply because I wasn’t ready and should not have been there. This is where the “Demo-ology” world comes into play. If you are really struggling then I would suggest taking a large step away from live charts and take the time to re-calibrate on demo. Be patient and strive for “good” trades and keep in mind that it is a “process” that you have embarked upon. Process = time.
These “good” trades need to be “imprinted” within your psyche as something comfortable you can do.
It is then the “repetition” of the experience of “good trades” that will get you over the line and Demo-land is your means to do so. Repetitive imprinting of “good trades” gives you the mental fitness in order to deal with the doubt which is always lurking and causing havoc in the early days of trading.
It is important to realize that doubt cannot be banished at request. It can though, be offset and diminished by a demonstration of repetitive successes, proving that you have the capacity to do so. This in turn allows the “mind” to develop the fortitude to withstand the uprising when the emotions begin to go ballistic again (which they will). By having imprinted that you can have successful trades, the internal strength develops sufficiently to stand firm enough to weather the losses when they come your way (which they will). Over time, the balance gets tipped in the right direction through the consciously developed resilience (trading fitness).
So hang out in Demo-land and don’t rush the move to live trading. Get successful on demo first. Get really fit on demo and don’t rush this period of learning. Commit to it 100%. You won’t regret the time spent doing so.
The Transition
There will come a point in the demo learning curve when that inner voice starts to make plans for a move onto the live charts. In the last 2 weeks of my demo time I had racked up a string of successful trades. My demos felt good and the internal chatter was saying “live time”.
However, it actually took 3 attempts to get back onto live trading. On demo trading I had got to a point of feeling relaxed about the trades. I was trading the “method” and my emotions had quietly taken a back seat. This is a good sign to watch for, however, it only works if you have truly taken demo seriously.
As soon as I went live, all that anxiety flooded back again and I just froze up. The self-doubt just kicked back in again. So I went straight back to demo after a few losses. The challenge it seemed was to allow the understanding and poise that I had gained to get past the negative internal criticisms that seem to accompany live trading. Eventually that did happen, but it did take some time. So don’t rush this process. If you’re not ready, then just acknowledge this and go back to Demo-land.
The second attempt which failed was based on impatience and the final transition to live charts just seemed to happen without me doing much at all. There is the saying of “getting out of your own way”, in order to allow things to happen. This was true for me in this final transition time. It is about letting go to the process, rather than forcing the agenda. This point is worth lots of consideration.
Don’t forget…..that the demo doesn’t cease to be. Keep using it as much as you need to. I am constantly using demo to practice working on identifying key zones and so on in different markets. In sport, your body is learning to respond instinctually to the requirements necessary thru constant repetition of the specific actions. Trading, in my view, is no different.

Trading is becoming more integrated into my life now. I still have a very long way to go yet, but I am really starting to enjoy this process of development, as a greater subtlety is developing. To get to this point, I have had to let go of many preconceived notions and learn much patience.   
I also now know and accept that skinned trading knees are still odds on to happen again, just as I realize that I will more than likely re-visit the Demo-ville Rehabilitation Center once again for a brief respite and a good lie down.
I am, bit by bit, getting better at accepting that (add background soundtrack of deep sighing).
Till next time….
Be well….
The T-model Trader.