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Sunday, April 19, 2020

TTP - Re-Inventing Himself as a Trader

Feb 27, 2020

Dear Ed,

I think about a talk with you some months ago. I remember mentioning my huge losses and my unsuccessful trading endevors. Your comment still resounds in my head:

"You change yourself to turn into a successful father and husband. To be a successful trader, you have to change yourself again."

We discuss my risk proneness. My default reaction to "fear" is to brave it and not to be timid. While acting in this way, I get a record of many exceptional career achievements, but it does not work in the markets.

I recall you telling me "there are old traders and bold traders, but very few old bold traders."

You remember me swimming offshore in Puerto Rico and almost getting sucked by the current. While we talk about this I have a glance of myself as a child. I am in the second class. Two other children bully me and I pee on (myself). I feel extremely ashamed as I return to the classroom and have to face my teacher in my wet trousers. I guess that this event shapes my reaction to "fear“.

After our talk I re-calculate my risk and position sizing algorithms. I realize that it is possible to bet less than 2% of my equity in each trade and still be extremely profitable. I spend more than six months designing, back-testing and forward-testing a system. I start trading it in December 2019. In these first three months it reproduces my calculations. Trading turns a natural activity, free of excitement, like a bank transaction or... peeing.

I learn to follow my system. When I try to outsmart it, I make less money. When I try to predict the markets, I make less money. After a series of huge winners I get greedy. My trading turns more difficult. It is like you say about superior laws in link. I learn to experience and enjoy the ever changing moment of now and to accept any outcome as inevitable and the result of my intention.

Thank you for sharing your process.

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