Good intentions won’t pay the bills

skinheadsIt seems no matter how good someone’s intentions are, they’re rarely what you want to hear. And rarely give you anything other than an unnecessary headache. Like my partners brother got one time by listening to good intentions from their mum… more on that in a minute.

When I was learning the foundations of financial trading I soon realised that trying to explain to anyone what I was do was only ever met with negativity or good intensions that were only negative. So I stopped telling anyone or discussing it.

In the beginning of my trading career I had invitations to follow Vince Stanziones trades via monthly subscription. And a couple of other offers from other financial marketers; I never took any of them up at the time because I felt that they were, in a way just good intentions. Let me explain.

If I had taken any of these offers up so early on my trading journey, it could have negatively affected my own trading skills developing. Yes I could have copied the trades but I’d have learnt very little. And what if one day for whatever reason the service I subscribed to stopped? I’d be up the creek without a paddle for sure.

So I decided to go it alone and learn from my own mistakes. This way I had a trade/career that I could operate independently whatever.

Other good intentions tend to be advice on why you can’t, or shouldn’t or why you might need to see a doctor regarding your mental health. These good intentions often come from the ones closest to you. They are only telling you all this because they love you so much. But these good intentions can be totally debilitating in more ways than one.

Taking on someone’s good intentions is often useless. You’ll never learn and you’re always left wondering what might have been if you never took action.

Other good intentions can be physical in nature but equally costly… like this true story.

My partner’s brother is half caste as is my partner. When they were growing up in London the Southall riots broke out a few miles away from them. There was huge tension in London and ugly racial scenes were all over the place.

Some of the local skin heads in the area had taken to following and waiting for my partner’s brother when he was coming and going to school. They’d chase him and bully and slap him around if they caught him.

So one day my partners mum had an idea. This time on his way to school, brother was going to have a trick up his sleeve. She decided to make him take a briefcase to school instead of his usual bag. But unbeknown to the bully skin heads, in the briefcase with all his school books were some bricks so he could take them out and throw them at the bully’s instead of running…

So brother sets off to school as usual, and as usual the skinheads see him and start to run after briefcasehim. But as he stops to open his briefcase to get his hands on the bricks, he can’t open one of the locks on the heavy brick filled case. So he’s off on his toes, but the awkward shape and weight of the case only slows him down and makes it easier for the skin heads to catch him. Slap, bang, wallop…

And what makes it worse is he turns up to school black and blue with a businessman’s briefcase filled with bricks and his school books inside that he can’t even use.

It’s funny now and they still laugh about it to this day. But the moral of the story, if someone has some advice to give you, with all good intentions, make sure it’s not just going to be bricks in your briefcase.

 

 

 

How to manage your trading bank

Your trading bank needs to be preserved at all costs. It makes no difference if you have been Trading Banktrading for a week or a year, that rule is law.

When I first started trading using Vince’s system I paper traded for months and months. And even after that, when I finally moved onto real money, I was still unprepared for the live markets.

I had many a shaky moment because I was still nervous, but in hindsight my bank was always well safe. As a beginner though and even as positive as I was you still imagine all sorts of crap.

So what and how did I manage my bank? Well it’s nothing new but this is what worked for me.

First I divided my bank into 20 unit blocks. Each block was my liability that I was willing to lose on a single trade. This took away a lot of the fear of losing my money. If I was to fail after all the paper trading, it meant that I’d have to have 20 continuous losing bets.

I could not see that happening after my test results. And I was right, it didn’t happen, not even close.

Each block was then divided into whatever number of units it had to be so that I could trade the market properly. If I needed 50 points to trade a particular share that was the price per a point. If I needed 300 points that’s what I divided it by; I never deviated. I remember once trading at 10p a point on certain markets.

I only ever had 6-8 separate positions open at any one time. So even if there was a stock market crash or something that wiped me out, I’d still have enough of a bank to start again.

At certain points I let my trades expire/closed as many as viably possible and then divided my bank by 20 again. Although this was not really necessary, there was something about looking at my bank as a whole in the early days. It gave me a clear picture of where I was.

Once this was done I’d increase the price per a point. I only had to decrease my point size once.
I also regularly use a sliding stop so I locked in profits and reduced my liability along the way.

There are many ways to manage your bank and of course it’s whatever suits you. But that is what and how I have done it. Add to your winning trades and cut out your losers.