March 4th

Well, here it is for all to see. Part of having a blog which is open and forthright is that my weaknesses and my errors are exposed to everyone. In that regard, I present to you my paper-trades for the day in RMBS and TIVO. I will preface by saying that I went 10 for 10 winners with a gain of just over $3,000. And I'm angry at myself for it. Why? The final eight of the ten winners were achieved by averaging up a better price by adding to the original losing trade. This dysfunction really seems to be pathological for me. I don't remember how far down I was at the high price but it was more than double, maybe thrice my eventual gains. Such is the power of the mind to avoid pain; avoid admittting I was wrong and of not truly accepting the risk.

For months and months I've been aware that this method of trading is the road to ruination because if this had been real money, I would not have been able to take being that far in the hole in a trade before the eventual turn. And, I KNEW the turn was coming, as sure as I know my own name. That is the kicker, knowing that you will be right eventually keeps you holding on. If you have been following this blog for a while, you have noticed that I make very, very few losing trades. That is a clue that I am doing this all wrong. The best traders take losses every day, because it is impossible to trade in this style and be right every time. It is unnatural to always win. If you do, you are either taking very little risk, or in my case, far too much risk. Either way, the outlook for success is bleak with this approach.

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This blog has never and may never be about trading education. While I certainly have progressed and do share some of the things I've learned, I am for the most part inexperienced at this. What this blog has been about from its inception is the journey of a regular guy living a regular North American life, doing blue-collar work, who aspires to trade stocks for a living; to transform himself at middle age without formal trading education and without paying much money in pursuit of the goal. And, to show that it can be done by anyone with the right attitude and the committment.

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So, that is why I do this. Lest anyone think this is a concession speech, I offer that I am more fiercely determined than ever to be a professional trader. I write this post as a way to express my frustration with my inability to change and make it clear that if you too want to be a successful trader, learn from my mistakes. Trade the way it should be done and don't try to cheat the devil. The devil will always win eventually...