From The Psychology of Profit Newsletter Issue #5: “Learn From Our Students”

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The Forum is an important feature of The Disciplined Trader Training & Support Program. It is the place where our students can share training experiences with others and ask questions to our Expert Advisors.  By limiting discussions to “all things trading discipline”, we can help our students stay focused on getting results.

In this section of the newsletter we’ll pull one pertinent question asked by one of our students on the forum and give you our expert response, so YOU can benefit from what our students are learning.

This week’s expert is Vadym Graifer, who is know as an expert Tape Reader (it’s an old-school art) … but we know him as an expert in Trading Plans …

“Vad” as I know him (and you will, too), is the author of several trading books, including “The Master Profit Plan”, on the topic of Trading Plans…  http://www.realitytrader.com/masterplan

I own it and you may want to, too.

Take a look at this week’s question from our student and response from Vad:

The Question:

Hi Vad,

As you would agree , a trader goes through some stages such as conservative to mid aggressive to Most aggressive. As I understand it, conservative would imply trading less number of lots and trading highest probability patterns and Most aggressive would be the opposite.

Can you please share your thoughts about milestones that must be met before one can graduate from say conservative to Mid aggressive?  Would it be appropriate to say in the trading plan that I would make the transition upon doubling/tripling my capital or is it based on a good winner:loser ratio after X trades ? Can  you please throw some light on this and any other thoughts on this matter?



The Response:


I would have defined the degree of aggressiveness somewhat differently. See, you consider the position size to be a function of aggressiveness – to me it’s a function of skill. I view a beginner as a trader who should operate with small shares, no matter what his personal level of aggressiveness is. It’s simply a common sense and instinct of self-preservation that should keep a newer trader on a smaller size. Control your risk tight while you don’t really know what you are doing. A surgeon doesn’t perform a triple bypass as his first operation, right? He starts with fixing smaller and easier things, collects experience, moves on to the bigger and more complicated…

Trading more frequently, jumping on marginal setups – well, it’s too a matter of discipline rather than deliberate aggressiveness. Why take a so-so setup, trade questionable odds and pray for luck instead of going after the highest odds? In both cases, size and odds, let the common sense and discipline guide you.

Now, here is what I would consider a deliberate choice of aggressiveness as trading style: http://blog.realitytrader.com/2007/07/how-aggressive-are-you.html

This is really a matter of choice, of personality dictating your preferences, going after what suits YOU best with reasonable expectations and after careful consideration of trade-offs.

– Vad

Tell us what you think… Did Vad’s response help you?  Leave us a comment below.

Category: Newsletter

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