- 1998: Volume 7, No. 4 Trader's Coach

Dear Coach:

I have been reading about trading for quite some time now. I find it the most fascinating subject ever! At first, it was just interesting reading about it. But, now I am thinking that perhaps I could succeed as a trader. I have the capital that is needed. I am a very disciplined, patient person who would like to make some money; and do not consider myself greedy. I am reasonably intelligent, as I have a Bachelor's degree in Economics. My problem is that I do not know how to get started. I have some idea of basic trading rules that I think would be good to follow. But, I have no system. Are any of these trading systems that can be purchased a good idea?

Searching

Dear Searching:

It sounds like you have the perfect psychological profile for a good trader.

Your first step is to put together a business plan for trading, which is basically a typical business plan which eventually includes all of your rules for a trading methodology and money management. You can buy a business plan in a bookstore-or use the one I've developed specifically for traders-yes, I'm on commission. It is important to be very complete in your plan. It should include the type of trading you want to do in stocks or commodities, the time frame that you would want to trade in and all other pertinent information necessary for establishing your methodology.

Your second step is to develop your methodology. I would caution you before buying any system because many of the systems now marketed have outrun the course of their effectiveness. If you decide to purchase a system, make it your own by back-testing it so that you can trust it enough to follow your rules. If you take this route, you're going to need a Sherlock Holmes hat and magnifying glass. I would be happy to provide you with some names if you call my office (no, not on commission for these recommendations).

Dear Coach:

My wife told me recently that I have lost my sense of humor completely. She says that it was one of my best features when she met me and attributes it to my becoming a trader. I bounced this notion off one of my long-term friends and he agreed with her. I've been trading full-time for three years and I'm just beginning to make a living at it. Do I need a sense of humor for my trading or was losing it the reason that I'm doing better in my trading?

Not A Laughing Matter

Dear Not Laughing:

One thing has nothing to do with the other, unless you decide to tie them together and make it so. Go to a bookstore and start reading about humor, surf for jokes on the web or better yet take a class to understand where your sense of humor came from. You can bring it back by modeling on your old self. Then, send me your best jokes-I need them for my Toastmasters' Meetings.

Dear Coach:

Is it possible to return to trading after a burn-out? I walked away from trading about four years ago after burning out badly. Now, after a long rest and some therapy, I feel like I have new energy and I'm back to normal. So, I've tried to go back to trading, which I really loved. But, I find that I can't seem to create the same sense of commitment and focus.

A Phoenix Wannabe

Dear Wannabe:

You have not handled all of the issues or you would have the focus for something you love. Part of you is trying to protect yourself from getting hurt again emotionally as well as financially. A trader can come back after burn-out if he has handled all the issues. So, it is back on the couch for you.