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**daytradingjunky** · 10-13-2003, 12:18 PM

Hey Ramoutar

I saw your name when I registered today. I took training with you in 1996, and I'm so glad to see you're going strong. ive seen your posts on other boards but never replied. Glad to see you here on esignal, they are a great company and lucky to have you here.

Please discuss the trading plan a bit more. I have changed my strategy several times in the last year, and i dont know if I have my plan as good as it should be. Maybe you can give a few bullet points on what the plan should be..

look forward to your posts.

junky

**helenquenet** · 10-13-2003, 01:51 PM

Hi Raj,

Look forward to reading your posts. I do have a couple of degrees in Psychology so we should have some good discussions I hope

Cheers

**Jai Ramoutar** · 10-13-2003, 02:58 PM

Hi Junky!

That's a very cool username. Here's something that may help you when it comes to a Personal Trading Plan....

We as traders put our primary focus on the profit, which is the result we seek. Isn’t that why we’re trading? The $64,000 question is how do we make profits consistently? They say repetition is the mother of success, what many fail to realize, is that it’s also the “mother of failure”. Doing the same thing over and over again, the same exact way will almost always produce the same results. A recipe is a combination of components that when followed, produce a result. We all know that when we change any of the ingredients the result will change. Eight years ago, during my transition from a clueless trader, to a consistently profitable trader, I focused on the ingredients and stopped focusing on the end result. A few years back, I had the rare opportunity to see Phil Mickelson warming up for a charity outing, and the press was there. A reporter asked him, “Phil, if there is one word that you could use to attribute to your success as a golfer, what would it be?” Phil replied, “repetition”. That answer further confirmed for me, what is required for trading success. Let’s take Phil’s answer a few steps further with the recipe approach.

Here’s what I attribute to my trading success:

1)A “realistic” Personal Trading Plan that I know intimately, respect and follow: When I evaluate traders and review their plans, I find that not only are plans unrealistic, but the trader will fail an oral exam of their own plan. You must know your plan inside and out. When someone asks you a question, your answer must be “reflexive”, no umms and uhhs. Ask someone to test you on your plan. If you can’t answer the questions immediately, you are doomed to fail.

2) A Daily Trading Plan, which is hinged upon the Personal Trading Plan: the predeterminations of entry, stop, and target and risk reward are derived from a specific method of scanning. The scans and predeterminations are always done the same way. Repetition! After you have reassessed all other components and still feel you’re missing something, you’re method or interpretation of your method may be faulty. At that point, you need to get the right education.

3)A “Trading Stable”: I know every single stock in my “stable” inside and out. This is the group of stocks I scan. I don’t have an interest in any stock outside of my “stable”.

4)Right before I enter the trade (like the pro-golfer addressing the ball), I repeat my mantra: “ I know the entry, I know the stop, I know the target, I accept the risk, and the risk outweighs the reward by “X”. I have nothing to fear. I will act.”

5)"I have acted", I enter my stop (AN AUTOMATED STOP), “load up” or prepare the target, and manage the trade. I neither have fear nor greed. I know that the stock will either be stopped out, or reach my target. Everything in between is noise.

6)Like a horse with blinders, I ignore everything else that does not fit in points 1 through 5.

What is the pro-golfer thinking when they address the ball with the club? “Wow! I’m being watched by millions of people, so I can’t screw this shot up”, or “I hope I make a great shot.” No, most of them are reevaluating their grip, making sure their foot is properly aligned with the ball, etc, etc. What is the result of their swing? When I enter a trade, I am reviewing everything that has brought me to that point. If you don’t know what your stop, target and risk reward is before you open the position…”you’re finished”. That repetition will continue to take money out of your pocket, and give it to those who have a plan.

Reevaluate your recipe, finalize your recipe, respect and follow your recipe, and repeat it over and over again. If you’re willing to give this a try, it may be tough in the beginning, because you will find yourself in a lot less trades, but I can assure you that you that most of your trades will be higher quality.

**Jai Ramoutar** · 10-13-2003, 03:02 PM

Hi Helen

You're degrees will surely help in this forum! The most amazing thing to me is the importance of the psychological affects on how we interact with the markets. I was told a very long time ago that trading was mostly a mind game. I really didn't understand it back then...suffice it to say, now I REALLY DO.

It would be great to have your input here. As long as we all share our experiences, we can really help one another become better market participants.

By the way...its Jai. I take Raj as a compliment...I believe the Hindu definition is "king".

**mickson1** · 10-14-2003, 08:27 AM

THE KEY TO SUCCESS

Hi All

I run a small private hedge fund.

This is a new position as I was previously doing the same thing for a larger corporate and now I am on my own.

The last few months have been tough for me from a trading point of view. I decided 3 months ago to consult a psychologist strong on executive coaching but new to trading.

Wow, thats all I can say. Although my trading profits are still a bit volatile I have grown so much as a person as well as a trader.

Looking forward to being a part of this forum.

Mike

**helenquenet** · 10-14-2003, 09:47 AM

Re: Hi Helen

Originally posted by Jai Ramoutar
. I take Raj as a compliment...I believe the Hindu definition is "king".

Gosh I'm so sorry!! I There's psychology working there and that's my excuse. So many of the good UK traders I know are Asian and a couple of them are called Raj

(Actually I wish the degrees helped more on my own practical level

)

Cheers

Helen

**Jharvey407** · 10-17-2003, 04:51 PM

Jai,

I think that this is going to be a very useful forum for many of us.

I have been trading for about 4 months and have developed a system that follows your rules almost to the letter. I have a simple routine for picking entry points. I have extensively back tested my system to optimize my stop and limit numbers, which I strictly adhere too. I remove myself from the emotion of trading by setting stops and limits, and then walking away until I get a signal on my phone indicating a stop or a limit. I also stay away from the charts until I get a message on my phone indicating that a signal has been generated.

I am slowly building confidence in my system, and becoming more comfortable with the 'hands off' approach. My trades have reached as high as 77% profitable with a profit to loss ratio of about 1.6 to 1.

I am making less trades, but making more money.

My daily trading plan is much more simple and realistic, now that I have reasonable expectations.

I hope that your forum can help me deal with the emotional rollercoaster that I am experiencing with every trade!

James

**Jai Ramoutar** · 10-17-2003, 06:17 PM

Re: THE KEY TO SUCCESS

Originally posted by mickson1
Hi All

I run a small private hedge fund.

This is a new position as I was previously doing the same thing for a larger corporate and now I am on my own.

The last few months have been tough for me from a trading point of view. I decided 3 months ago to consult a psychologist strong on executive coaching but new to trading.

Wow, thats all I can say. Although my trading profits are still a bit volatile I have grown so much as a person as well as a trader.

Looking forward to being a part of this forum.

Mike

Mickson,

Doing it on your own is a very big challenge. I was a financial consultant and managed money for clients. Taking the jump into trading full-time was quite a sobering experience. I quickly learned that I had no higher authority to report to, I was accountable to myself and no one or nothing to regulate my actions. When working for someone else, we are always fearful and use extra caution in making sure that we get the job done. That shift in thinking took quite a long time to get used to. You may be experiencing the same thing.

All of this changed drastically when I developed a personal trading plan. The first thing you should do is review your trading plan, if you don't have one, get one. The trading plan becomes the higher authority. When assembled correctly, it will regulate every area of your trading activity: money & risk management, scanning, parameters for the stocks (or other vehicles) in your trading stable, predetermining entry, stop, target and risk reward, etc, etc.

Personal weaknesses as they relate to trading can really be effectively identified by an experienced trader. Not to say that the individual you began consulting with could not help you.

Supplement this coaching by taking inventory of your personal trading weaknesses, then start addressing, understanding and battling them one by one. Good luck!!

**Jai Ramoutar** · 10-17-2003, 06:33 PM

Originally posted by Jharvey407
Jai,

I think that this is going to be a very useful forum for many of us.

I have been trading for about 4 months and have developed a system that follows your rules almost to the letter. I have a simple routine for picking entry points. I have extensively back tested my system to optimize my stop and limit numbers, which I strictly adhere too. I remove myself from the emotion of trading by setting stops and limits, and then walking away until I get a signal on my phone indicating a stop or a limit. I also stay away from the charts until I get a message on my phone indicating that a signal has been generated.

I am slowly building confidence in my system, and becoming more comfortable with the 'hands off' approach. My trades have reached as high as 77% profitable with a profit to loss ratio of about 1.6 to 1.

I am making less trades, but making more money.

My daily trading plan is much more simple and realistic, now that I have reasonable expectations.

I hope that your forum can help me deal with the emotional rollercoaster that I am experiencing with every trade!

James

James,

What a great post! I think alot of the emotional pressures increase when someone does not have a personal trading plan. Just today while I was trading, I was coaching a trader and he couldn't believe (neither could I

) how calm I was in a trade as it reversed. My stop was hit and I was out of the trade, the re-entered to trade the other side.

Trading...when done properly...is quite boring. That may seem like a profound statement, but trading is no where near as exciting when you don't have a plan.

Fortunately, when you have a plan, the emotional roller coaster of trading is much more manageable.

I believe this forum will help you. Good luck!

**Jai Ramoutar** · 10-17-2003, 06:42 PM

Here is an article I wrote about fear and trading...enjoy

FEAR AND THE MARKET

By Jai Ramoutar, Jr.

There are many emotions that we as traders and market participants, must wrestle with in order to reach success in what we do. Now, I do not possess a license, certification or degree of any kind in psychology. However, I have personally managed to overcome many of the emotional obstacles, which erode and strip away our chances of becoming successful traders in each passing day, and helped many traders do the same. By far, the most damaging emotion is fear. Once a trader is overtaken by fear, their trading is now being led by that emotion, and those results can drive a trader’s self-esteem into the ground. If we don’t recognize it, we start second guessing and looking in all the wrong places: commissions, strategy, scanning, basket, astrology, etc. Our fear can affect just about everything we do in trading: opening a position, managing a position, closing a position, etc, etc. It’s almost as if “ether” is being released from the trading screen and we become stupefied, euphoric and somewhat paralyzed. There are many more ways fear affects us. However, fear cost us the most amount of capital. What is fear? Why is it so powerful? Fear like any other “trading demon” must be acknowledged, looked right in the eye, fought and then ultimately conquered.

Ok, fear means that we’re afraid of something. Let’s take a look at some of the things we fear or have feared. The boogieman, we believed that the boogieman was real, what’s really interesting, is that we were never introduced to the boogieman and don’t know what he looks like. Watching a scary movie, and feeling your heart pump faster as the squirming of the person next to you made you even more afraid, afraid of going to the dentist, buying the first piece of real estate, asking for a raise, telling someone how you really feel, telling someone you supervised that they were laid off, making your first trade, taking your first loss, taking your first profit, deep down inside being afraid to be successful, and so on and so on.

Do you see what’s going on here? What did we fear? We feared the unknown:

- Boogieman: never saw him, but the name scared us
- Scary movie: the music, the darkness, the director
did a great job
- Buying 1st piece of real estate: what’s going to happen (what does happen) at the closing table
- Asking for a raise: Never having asked before
- Telling someone how you really feel: What will they think?
- Telling a subordinate that they’re laid off: Afraid of what they’ll say. Giving them terrible news
- Making your first trade: “Should I be entering here?”
- Taking your first loss: “Should I take this loss, or wait for it to come back?”
- Taking your first profit: “Maybe I should hold on to it, it’s going become more profitable.”
- Afraid of being successful: rising out of your mediocrity, leaving your comfort zone.

What do all of these things have in common? The unknown. Once we have been through one of the events (except the boogieman), we realize that our perception alone created the fear. After we have experienced the reality, we rise to a higher level of understanding. If we have to return to any one of these events, we have fear, but now the fear is controlled and regulated by our new approach, then the fear becomes caution. Right? I’ve been through several real estate closings; at the end of each closing I am wiser, and better prepared for the next. At the end of each trade, I am wiser, more empowered and better prepared for the next trade. Since I am very honest with myself, I can take an objective eye and analyze exactly what I did wrong. If you followed and adhered to your entry and exits, and the trade didn’t work, you did nothing wrong. There was one of two other factors that created the loss: first the trade was stopped out, and or two you didn’t set the right entry and exit points. That’s easy: you need to go back to your determination of entry and exit points. To correct that you need to get the right education. The right education is the one that works best for your approach, strategy and timeframe. What is the other factor? The market. You can’t control that and you never will. Losses are a part of trading and investing, and you must take the risk with the reward. Risk has a direct percentage relationship with reward. If you want low risk open a savings account with no more than $100,000 at an FDIC insured bank. What’s the reward there? Success is a journey, not a destination, as one of those motivational posters say. We will never be perfect, but if help the process, we will evolve. To achieve greatness, we must evolve. Again, I’m not a psychologist; I’m a trader and an educator. What I did learn is, there are some things we have complete control over, and many other things we can’t control.

The only way to increase control over a situation is to have control over each of its components. When I trade, I try to have control over as many components as possible:

- Technology: I learned about networking, firewalls, viruses, install memory, change hard drives, etc. Get comfortable with it, your livelihood, retirement money, and children’s education is hinged up on it. You may not be able to fix every problem, but you’ll be calmer. When something goes wrong, and you can’t fix it, learn as much as you can from the person that’s fixing it. If you don’t have an interest in learning it, make sure that you have someone who will get the job done…. the right way.

- Quote and Execution Platform: I must know my platform inside and out. I’ve been using the same platform for years, and I have taught so many people how to use it. Yet, I learn something new about it everyday. It’s a great feeling when you can identify a problem, and communicate it to the customer support rep (if you can’t fix it yourself). Soon enough, you may know more about the system than the rep does. One day you’ll ask the rep, “You’re new there aren’t you?”

- Money & Risk Management Skills and The Respect For Them: I can’t believe that there are still so many people out there, that hold positions and they have no predetermined entries, stops and targets, and reentries. That means that they have submitted to the market and they’re letting it control them. If you don’t manage your money and risk, it’s no different than sitting on a sailboat in the middle of the ocean, and letting the wind carry you.

- A Plan: This is one of the most important parts of becoming a successful trader or investor. This document is very much like a faith. The “Personal Trading Plan” takes all of the components and puts them into perspective. You need to establish, document, respect, follow and review every component of the plan to be successful. It’s like the Code of Hammurabi.

- A List Of Trading Vehicles: Some people refer to this as basket, portfolio, universe, hit list, etc. I refer to it as the “Trading Stable”. I find it much easier to draw my candidates from a list of stocks that meet very specific criteria. The criterion is calibrated with my “Personal Trading Plan”. I do not envy other traders that invest time and money in scanning programs looking for the movers and shakers. I have nothing against it; I just find it easier to trade stocks that I know. I have said this for years, “The Trading Stable is very much like the people in my life. Once I feel pretty comfortable with them, trust them, and can predict how they will react in any given situation.” Now I’m not saying that you’ll predict what a stock, ETF or future will do, but you’ll feel much more comfortable with it, than trading or investing in something you have no “relationship” with. I know each stock in my “Trading Stable” intimately. I can’t remember anniversaries, birthdays or doctor appointments, but I know support, resistance, MA s, etc of those stocks.

When I was a teen, I remember my friend complaining about mathematics. He asked his father, “Dad why do I need math, I’m not going to need this in life.” The father said, “When you take over my company, you need to know math and watch the numbers.” My friend said, “Dad, we have a manager who does the inventory, he knows math, we have an accountant and he knows math. I still don’t understand why do I need math?” The father said, “How will you know if they’re robbing the company?” Now I’m not saying that the customer service rep or tech person is going to rob you, but you’ll be more at ease knowing what’s going on around you. Once you get your arms around as many components as you can, you’ll be on the road to improving your results. Look at this as a business. If you were a publicly traded company where would your stock price be? Would you go long or short yourself? What would the board of directors do, how would they vote? Now, what about trading?

When we trade we’re afraid of losing money, and that fear becomes stronger anytime we lose money. Losses are a part of trading they will always exist. We must assume a degree of risk in the pursuit of reward. So, in most cases it’s the risk that we FEAR. You know there is a risk, so why do you fear it? What most people FEAR, is the unknown. One way we can reduce or eliminate our fear is to know the unknown.

Now, we can perform some sort of analysis to arrive at some entry and exit points. If you do not perform any analysis of any kind, what are you using? Are you trading or investing by the seat of your pants, listening to and following someone else’s advice? In that case, you have everything to be afraid of, because you are in the abyss. One of the first ways to take control of your trades, is to have predetermined entry and exit points:

- Entry: Where will I enter, at what price will I open the position?
- Stop: At what price will I close the position for a loss?
- Target: At what price will I take a profit?
- Risk Reward Ratio: Is the presumed gain, better than the expected loss

The difference between the entry and the stop is the loss. The difference between the entry and the target is the reward. From there you can determine whether or not the trade or investment is worth taking by looking at and weighing the risk reward. It seems pretty simple right? Well it’s a lot easier than staying up at all hours of the night, trying to come up with formulas and test models. So many people belabor themselves to arrive at their win and loss percentage. The result of which will either be a negative reinforcement or a short-lived positive reinforcement. I’ve seen thousands of trading screens that had “spaghetti” all over the charts, and the traders still couldn’t answer those four questions….Entry? Stop? Target? Risk Reward Ratio? All technical studies point back to two things… price and volume. If you’re having a tough time, go back to the basics. Give it a sot. Now I don’t want to crush the grapes of anyone who has been working hard on scanning and test models, but I need to ask you this. Do you think Tiger Woods, Mark McGuire, Anna Kournikova, Patrick Ewing, Warren Buffet, and Bill Gates looked at their winning and losing percentages? I think they focused on becoming better at what they did. When they focused on that, the results improved. If they focused on the winning and losing percentages, they would ultimately stay locked in to those percentages, because their human instinct incarcerates them in the comfort zone or the status quo, and never become better at what they did. I knew I turned the corner as a trader when I stopped focusing on becoming a successful trader, and focused on making successful trades. I also reached the point many years ago when I set goals fro myself, “If I could make $500 day trading I’ll be happy.” Not to long after I said that, I made $500 in the first ½ hour. Then I was fearful to keep going. “Was I going back to the well one too many times?” What do I mean? What is the result of 72 successful golf strokes? What is the result of focusing on building a software operating system and having it on every PC? Do you get the idea? What would have happened if these people focused on something else, like their winning and losing percentage? Start focusing on making successful trades, and less on becoming a successful trader. Focus on predetermining your entry, stop and target. Think EST (Entry, Stop, Target). If you focus on predetermining EST, risk reward, sticking to EST, taking action, open the position, manage the position and closing the position (either at a stop or target) the net result will be successful trading. Focus more on the cause and not the effect.

Now let’s get back to risk and reward. When someone refers to this they always put the words in that order…risk…reward. Maybe you can explain what this is…3to1, 2:1? Why do they put the words in one order, and the actual ratio in the reverse order? Are they talking odds? I don’t think so. They speak one way, and think another. They think of the reward first. I think of the risk first, and then reward. I say it and think of it the same way…risk…reward…1:3. For every dollar I am risking, my reward is three dollars. My stop (risk) will cost me $1,000 and my target (reward) will yield me $3,000.

Now back to the FEAR, what an ugly word. Are you still afraid of it? Don’t be. Here’s how you can start minimizing it.

First and foremost, you must identify the risk, stare it right in the eye, and accept it. Once you have accepted your risk, you have absolutely nothing to fear. Now you might say that’s easier than done, but you know it will be much easier to become a successful trader or investor if you take as much emotion out of positions as possible. There is a little person in each of us, which does not want to succeed. The fear of success can sometimes be just as powerful as the fear of failure. We are afraid to come out of our comfort zone, afraid to become consistently profitable and successful. Part of that fear is becoming better and then continuing to raise the bar. We’ll always have to make the next trade or investment better than the one before it. To achieve success in anything we must overcome the fear of failure, success and becoming more successful.

The best methods, strategies, and systems are useless until you start tackling your fear. As I stated earlier, if you focus on the actions you take rather than the results you will ultimately improve the results. Sticking to your plan, adhering to your entry and exits, and proper education will minimize your fear, increase you confidence and make you a better trader.

I believe that once you have come to terms with this “king of the trading demons” the rest of the demons will fall like a house of cards…over time of course!

**fabrizio** · 10-26-2003, 08:12 AM

Jay

Your words are full of good common sense , a main rule of success.

For this you'll be of sure help to many and I do warmly wish you the greatest success (even) on this BB.

As a trader I jsut humbly like to add my 2 cents of "basics"

- This Job Is a 18 hrs a day job.
- This Job is very hard; there is no final point in Education; there is no bullet proof formulas or system.
- This Job is not for everyone. One MUST at a certain point recognise it. And quit ASAP.
-This job is a Real HAMBURGER HILL.
- This job is really beautyfull and challenging

PLease remind that to those who have the will but not the strenght to put in practice your words. And avoid them to have a dream turn into the deepest nightmare.

If I am allowed, I like to quote Mr.Jay West.

["Hesitation comes from fear of losing usually. We want a guarantee or at least the knowledge that it is going the right direction before we enter a trade. That makes you late on your entries and late = loser trade usually. It takes a long time to develop a trading style and find a system that 'speaks to you' well enough to overcome the fear and apprehension of entering a trade. It has to be a total faith, trust, and confidence thing. It has to become automatic. You have to not only know that your system works, but that YOU can make it work. To get that level of competency you have to totally understand your system and have a conscious realization that it works. Then it is a matter of paper trading a lot so that entering a trade is automatic. That may take 3 months, 6 months, or even years. Some never get there. Pay attention and try to learn the nuances of the system and more importantly the market you are trading. You have to learn the personality of the system and the market and that's not easy. It takes a lot of screen time and dedicated 'watching' with a purpose. You have to be focused on learning the personalities and how things work. Then once you get that down you are ready to deal with the enemy. That enemy is you. You have to understand yourself and what makes you tick. Ego has to be thrashed to death and put outside your trading. That is one of the hardest things you will ever attempt to do in your lifetime. No egos, no opinions, and no hunting for the answer to 'why'. Why is the market doing this? Why is it going up? Why is it going down? Once you spend valuable time finding the answer to that, it is history, the move is over, and you missed the trade. Truth is, who cares? All you care about as a trader is which way is it going and what is my system telling me to do about it? Read the charts and do what the system dictates. I've known great minds who were the best at analyzing the market etc and couldn't pull the trigger to save their lives. They were so hung up on that 'why' or 'is this a good signal or a bad one' issues that they just couldn't bring themselves to do it and were total failures at trading. Brilliant guys who couldn't put what they knew into action.

**Jai Ramoutar** · 10-27-2003, 03:08 PM

Originally posted by fabrizio
Jay

Your words are full of good common sense , a main rule of success.

For this you'll be of sure help to many and I do warmly wish you the greatest success (even) on this BB.

As a trader I jsut humbly like to add my 2 cents of "basics"

- This Job Is a 18 hrs a day job.
- This Job is very hard; there is no final point in Education; there is no bullet proof formulas or system.
- This Job is not for everyone. One MUST at a certain point recognise it. And quit ASAP.
-This job is a Real HAMBURGER HILL.
- This job is really beautyfull and challenging

PLease remind that to those who have the will but not the strenght to put in practice your words. And avoid them to have a dream turn into the deepest nightmare.

If I am allowed, I like to quote Mr.Jay West.

Thank you for adding those great words. All of which is very true, specifically the second one. Education is an ongoing process and there are no"holy grails". The holy grail resides within us, we are the ones who make a strategy and method work.

**Jai Ramoutar** · 11-01-2003, 03:59 PM

Originally posted by linus71
I must say I really enjoy this forum.
Refreshing words by Jai Ramoutar.
Also big thanks to Fabrizio for his post.
Since I was child I wanted to become a trader.
Becoming - and being - a trader is truely a daring and challenging endeavor.

Considering this I'd like to quote the great Benjamin Franklin:
"They that can give up essential liberty to obtain a little temporary safety
deserve neither liberty nor safety."

Keep it going!

Linus

Thanks Linus, and glad you're enjoying. It's truly amazing that even with the best technologies, strategies and markets...our success is still hampered by us. I've kept a trading diary for several years now, and from time to time I come across one of my biggest trading demons, and find a way to conquer it.

My definition of a successful trader is one that has conquered himself. Look forward to your participation. Be well, Linus!

**Enlighten** · 05-19-2004, 09:02 PM

This is a very refreshing forum! ahhh the trading mind

lots of good stuff here

hope all is well jai.....

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