Sunday, January 15, 2012

"55 steps" by John Piper

The 55 steps
(a personal journey to success)
(A simplified summary of the key steps taken by John Piper, the legendary trader, to get where he
is today.)
1 We are intrigued by the market and start to do some preliminary
reading and research.
2 We buy a book or two and perhaps some newsletters.
3 We find something we quite like and start doing some research using
this particular technique.
4 We dabble a bit in the market, trading every now and then, mainly
losing money, but not much, and having the occasional winner.
5 We generally forget about the losers and congratulate ourselves on
our winners. Convincing ourselves that once we learn the techniques
better there will be fewer of the former and more, lots more,
of the latter.
6 We keep manual charts, which may become quite large physically,
and maybe plot a few indicators manually (this was before computers
became quite so available).
7 We spot an approach to the market we think cannot fail to win!
8 We start to trade actively.
9 The results make it clear that it is not as easy as appeared to be the
case. There were a few key points we failed to fully appreciate.
10 We continue to trade. Results are fairly indifferent (to bad) but there
are enough profits to keep the interest up.
11 We continue to expect great results.
12 Trading volume increases and the amount of money in the market
13 We continue to read and take newsletters, but our research has only
scratched the surface. We still have no real idea what we are
involved with.
14 Our technique scores a major success (the ‘87 Crash), but our lack of
trading skills means that we do not profit from it as we might.
15 The market begins to instill a little fear but we have yet to learn the
first key lesson.
16 We keep trading in size. We are overtrading and clearly act as a fugitive
from the law of averages. It is only a matter of time.
17 We make a big profit. It is all going well, we start to get overconfident.
18 We suffer a big loss. Psychological problems start to develop.
19 We buy a computer and start to monitor many more indicators.
20 We look at other techniques and other markets.
21 We get wiped out.
22 It becomes clear this is not at all as easy as it looks.
23 We become impossible to live with.
24 It also becomes clear that the information available (in 1987/88) is
not much use to those seeking to make money from trading.
25 We determine to fill this void and look to create a newsletter telling
it how it is.
26 We work with an analyst in the USA. Note how inappropriate this is
for someone who wants to trade. Much better to work with a trader!
27 We continue to trade, but in a much reduced manner.
28 We start our newsletter which is an immediate success.
29 This requires a lot of research plus a lot of self analysis, but it is still
not clear that trading is a psychological issue and that the externals
(systems/software/computers/ brokers/advisers, etc.) are almost
completely irrelevant until the internal is set up right.
30 We are plagued with fear and have no clear methodology.
31 It becomes clear that judgmental trading (without a clear methodology)
is a dead end.
32 We start to look for a suitable methodology.
33 Those available on the market do not seem to be suitable and so we
design our own.
34 We start to trade using a clear methodology. This is not easy but
some things start to become obvious.
35 We find ourselves trading for no good reason (something that was
impossible to detect before we had a clear methodology), but then
realize that it is due to an argument earlier. Self esteem clearly plays
a role.
36 We realize that the key element in trading is our own mentality.
Now we can start to make some real progress.
37 We improve our systems and start to make some money on a one
contract basis.
38 But we are still fearful and this remains a big problem. We learnt,
some time ago, the necessity of cutting losses, we cannot get to the
second secret until we deal with the fear.
39 We keep trading and we continue to do OK, we start to get more confident
and the fear starts to dissipate.
40 We take another big hit.
41 We feel awful and think we should perhaps give up, should perhaps
have given up some years ago when it all went wrong the first time.
42 We keep trading and determine not to get overconfident again. We
reinforce the stress management systems we had to learn in the
early days and keep meditating (essential to trading success). We
realize the importance of remaining humble and also of being an
“empty vessel.” If you are full of yourself there is no room to learn
anything else.
43 We meet another trader who becomes a mentor. He introduces a new
(to us) technique (Market Profile) which immediately “fits.” This is
because we now have the right attitude.
44 We build on our successes. Systems improve, results improve, and
our mental attitude improves, fear becomes less of a problem.
45 We decide to see a trading coach/psychologist (Adrienne Toghraie)
and have an initial meeting in Switzerland.
46 We make a big profit by letting profits run. We have managed to do
what every successful trader must. Can we repeat this trick?
47 We start to move away from fear, and start to become risk orientated.
48 We realize that mental attitude is all. We see that it is vital to be
relaxed, we reduce position size, again!
49 We spend a few days in the USA working in a group with our trading
50 We begin to make money with consistency.
51 We get a little overconfident, again! But this time we realize the fact
and the damage is limited. But we learn, again, to remain humble.
52 We start to trade almost subconsciously some of the time. We are
becoming expert.
53 We know there are still many challenges ahead but we are confident
that we will deal with them.
54 Money ceases to be a problem, we truly live in a world of abundance.
55 We find that our lives improve across the board and that we are
achieving in a wide range of areas.

7 lessons from Bruce Lee

Monday, January 2, 2012

elliot wave chart practice

don't have indicator boats? ride elliot waves!!!

if u r not a friend of indicators but still want to conquer the trading fort
try elliot waves.
one of the simple explanations can be downloaded from

20 trading principles

wish i had written these!!!
thanks ANANTH J ACHARYA for these.
he seems to have struggled and got the real thing.
many points i totally agree. rather all.
these are simple but not simplistic. worth framing and reading again and again.

pl download from

(thank u JP for sharing these with me)

why markets have a tendency to remain weak in jan?

7 out of last 11 years the market has slipped in january
out of remaining 4 times,
it has remained unchanged once,
slight up after minor dip twice,
and clear up once.


this is clearly skewed towards weakness

what can be the reasons?

1. the first reason lies in the "christmas factor". christmas (like diwali and id) is the pinnacle of celebration of spirit of life! nobody sells-off during christmas. record superduper buying takes place. not so much of stocks but stuff and services. and all that on cash and credit. why i said "cash and credit" is because all in all, as the christmas and new year hangover ends, the following happen
a. cash in hand goes down, fresh investment dips and redemption pressure increases.
b. credit card shopping stares in face, and further risk taking takes the back seat.

2. second reason has something to do with the "31 march" factor, especially in india
a. tax investments take the driver seat instead of stocks.
b. tax liabilities etc. take control of the available resources.