- 1997: Volume 6, No. 4 Trader's Coach

Dear Coach:

I hired a trading coach to work with me about a year ago and it's been very good for my trading. The problem is that lately he acts irritated when I call and ask for help. I don't understand why since I'm paying him. Is this a normal reaction?

Confused

Dear Confused:

It is only normal if you are asking the same question over and over again (in which case, it would also be a normal reaction for him to want to leap through the phone and shake some sense into you). If you are acting dependent and unwilling to take responsibility, calling on him constantly to make decisions for you and to bale you out emotionally when you break your trading rules and agreements, it would be normal for your coach to show you that something is wrong by becoming irritable. After a year, it's time to take an assessment of your own expectations, reactions and attitudes. Do you think that because you are paying your coach, you are also paying him to do your growing for you? If so, cut the cord.

Dear Coach:

I'm just starting out and have not done any actual trading yet. After reading all of the trading magazines and financial newspapers I can find, I keep seeing ads for systems. I have been working on one of my own at the same time. Would I be better off buying a successful system or using my own when I finish it?

In the Market for a System

Dear In the Market:

That's like asking which is a better way to win a race, by a nose or by a mile? The answer is, it depends on how you ran it. Whether you needed the thrill of a close call or the security of a wide margin, you still won, didn't you? In the case of which system is better, the one you bought or the one you created, the critical issue is how you trade your system. If you believe in the system because you have tested it, if you understand the system and how to use it, if you have studied the markets, if the risk/ reward parameters built into the system are consistent with your ability to handle them, and if you have the emotional stability to stick to the rules of the system, you'll win. Send me a photo of the finish.

Dear Coach:

I am doing everything right and I'm still not making enough from my trading. I follow my rules, keep to my system and I study the market. I have read every book on the subject and I'm about to put my money (I have about ,000 in trading capital) back into the stock market. What do you think?

Deeply Frustrated

Dear Frustrated:

Putting your money back into the stock market. Hmmmm. Maybe that's not a terrible idea. It's very likely that you are trading with too little capital, thereby putting it at too great a risk. Is it possible that you are asking too much of your trading capital considering its size? Undercapitalization is one of the most serious and common causes for traders to lose their money. Go back into the stock market and build up considerably more trading capital for the next time. Remember: the slow, patient, giant tortoise will run over the skinny, anxious, leaping hare who's down with the knee injury, every time.

Dear Coach:

I started breaking my trading rules a few months back by accident. Suddenly, I found that I was doing better than I have ever done. I've had a few losses, but basically, they are less than I used to have. I seem to be more in control than I was before. But, I'm feeling guilty that I'm doing this. What should I do?

Rule-breaker

Dear Rule-breaker:

This is not a simple question to answer. Like you, it is a common experience for traders to find that breaking their rules can result in temporary gains that are larger than the consistent wins of their system faithfully followed. Then, suddenly, without warning, the losses can begin to mount up and the trader has no solid ground on which to stand. His entire operation can start tumbling around him. Unfortunately, he is no longer able to trust in his ability to follow his rules and he starts trading wildly. But, sometimes, a trader accidentally discovers an improvement on his system. The only way he can know this, however, is to test it and to be absolutely consistent with his new practice. If it tests out, it becomes his new system. Now, these are the new rules. So, stick to them!

Dear Coach:

When I broke up with my girlfriend, my trading suddenly took off. I had more time and more focus for my trading. But now, I have lost the taste for my trading and I keep thinking about my ex-girlfriend and missing her. Can a relationship have that much to do with trading?

Missing Her

Dear Missing:

Yes. It can and it does. You don't live in a vacuum and you don't trade in one either. Your relationship may have had some stresses that were lifted temporarily when you ended it. Then the stresses of loneliness and the need for love replaced the old ones. These emotional stresses will consume your attention like an itch that needs scratching, taking your focus away from your trading. Go scratch that itch, but, this time, work on yourself and on your relationship to make it itch-proof.