Coaching Call Week 15

Just before Rob's weekly call I opened a position on MET. This was a classic swing entry following all of my rules and I triggered the entry manually by watching the intraday chart. It just happens that I caught a pullback that was 1 cent above the previous day's high. There was a deeper pullback later, but I was complimented on this being a good trade that followed my trading rules. In general, coach Rob was pleased with what he was hearing as I described the few open positions and trades that executed over the past week.

I was stopped out of my short position on TTI in a weird way. It seems I entered a bad stop-loss and bought it back for a very nice ~7% gain. I'm not really complaining, because that's a killer return in 2 days, but I would have squeezed nearly a percent more if I didn't accidentally violate my own management rules. We reviewed what happened there followed by other open positions and how they closed out.

I expressed some regret about not entering a trade yesterday on LNC, which had a very nice pullback and at this time it was going up very nicely. Coach Rob wasn't pleased with the emotion I was expressing on missing this trade on LNC. I can appreciate this, since there will always be missed trades and there's just no reason to be bothered by missed opportunities. The reason I didn't enter that position is that I was totally exhausted on Monday night. In retrospect I think I did the right thing by not trying to make such judgements when I'm unable to focus because of lack of sleep. I saw the direction, realized it was probably a good trade to enter and I was right. Cool. The fact that I didn't risk the entry under such a weakened mental state is probably a good thing. This is akin to not shopping or playing poker online after having a few drinks, no?

As pleased as Rob was with my progress, he remarked that that I was showing him the trades I wanted to show him. I quickly offered to show him the ones that went against me, started to pull up OSI & CEI, and he had a little chuckle.

After this run-thru of my current positions, coach Rob spent some time talking about Options. As you probably know from my previous posts, Rob is very knowledgeable with trading Options. The primary reason I'm focused on stocks is to reduce the complexity and practice all the good habits of a Professional Trader without having to deal with the additional complexities involved with Options. Options offer a lot of leverage, and good trading practices are essential in order to not have your account decimated by that very same leverage. Remember, the Bid-Ask spread insight I've offered in the past? When your trades come with a 5%-15% built-in loss, you better have your timing and discipline well honed.

Coach Rob covered how a Trader can leg out of an Option Spread depending on your outlook for a particular stock. He also went on to describe a way to aid in timing entry and exit based on the behavior of the Bid & Ask on a specific Option Contract. I'd describe it to you here, but why not sign up for coaching with Rob and get it directly from him? Tell him Mark sent ya! ;-) I can tell you that all such strategies are judgement calls and this is just another source of information to help you determine timing.

Before wrapping up this post I want to give credit where credit is due. Rob Craig has been a tremendous help in bridging the gap between the theory of trading taught in the classes to the actual practical application of that knowledge. My rapid progress is due in large part to the personal attention and feedback. If any of you are entering the Teach Me To Trade or Star Trader coaching program, I highly recommend asking specifically for Rob Craig. I inadvertently stole (or maybe borrowed) Rob's saying and titled a post last month based on it: Discipline, Patience & Timing! This was something that Rob ingrained in me right from the beginning and I didn't even realize I was quoting him when I titled my post as I did. Most of the practices and habits that I've formed have been forged out of Rob's guidance and I'm confident that if I consistently put all these practices together, I will be a successful professional trader.

Coaching Call Week 14

I greeted coach Rob (as I've taken to referring to him in my blog) with the statement: Rob, I have a problem... Oh? ... Yes, I have several trades that are working for me! Granted this is a very good problem to have, but it is a problem none-the-less. I had 5 trades going my way and 1 that was just doing so-so, which was probably going to go against me for a loss. Of course this is the kind of problem you want to have, but I don't have much experience with. We looked at how to manage these positions which for the most part was to just relax and update my stop position when the trades had moved enough to warrant it.

We got to narrow our focus in on a couple trades. First I wanted his feedback on my short-sale of ROK, which I was kicked out of yesterday. Basically what I did wasn't wrong, though I could have tightened a little or even bought back half of my position as the stock came very close to the move that I wanted, but aside from some institutional buying at the end of the day on Monday and a speculatively positive news item, there wasn't much that could have been done to make this trade much better.

We watched T fall down to my stop and see me get kicked out of the trade. This was fine, though once again I could see the trend on the daily chart and probably could have just closed the position earlier to realize a better gain. This was educational though as I could see the value of Technical Analysis on a different time scale.

That's one great argument for Technical Analysis. Since it's a study of mass psychology and sentiment, you can make judgements based on what the chart tells you no matter the time frame nor the underlying security (though I don't plan to trade futures nor commodities anytime soon). We could both see that T was in a downtrend on the intraday chart and I really should have exited my long position earlier and just taken the my profits. I'm not upset about it, but it does bring to light that the trade management rules need to be as mechanical as the entry rules. This has been easy enough when I was dealing with losses, but on these trades that actually went my way, I realize I need to have a consistent method for managing the trade.

Coaching Call Week 13

Now that we've completed the formal training manual, I get to pick Rob's brain and get some feedback on my trades. After a great deal of diligence on my part to get better stocks into my watchlists, I found some decent swing setups and opened a couple trades. Rob and I looked at how I entered a long position on T earlier that day. I was complimented on this being a nice swing entry and there wasn't much more to say about it. Likewise, I had entered a short position on ROK on Monday. This was a classic swing entry and was developing nicely. Once again I was complimented on my entry and we spent only a moment talking about managing this trade. I just followed the rules and this was a far better week of trades. You learn much more from your mistakes, so we went on to talk about other things.

Rob primarily trades Options and he wanted to talk a little about how options work and the Reward:Risk ratio that option trading involves. With Options, you're talking higher leverage trades and timing is even more critical. You can lose 20% or gain 80% (or more). Does that sound like a reasonable Reward:Risk? Sure does. Eventually I'm certain to trade options including spread trading (especially the strategies taught in the Trading PIT classes), but not until I have achieved a mastery of stock trading first. Rob's thinking behind this is that I'll benefit most from actually mastering on trading system in the realm of stocks. A master of one rather than being so-so with many. I'm quite new to trading and his guidance has helped me stay on track and given me some feedback that has been very useful in developing the discipline of being a trader. I think this approach is a great way to go about learning this profession.

Coaching Call Week 12

Today's call was rescheduled from my usual Wednesday morning time-slot because I was feeling a bit too ill and unprepared for the regular Wednesday morning call. Life has become very interesting recently and sleep, Trading and Music pursuits have all sacrificed a little. Since we finished the formal calls today's was free-form where we looked through my current open positions.

I suppose now is a good time to interject a little background to help set the scene. This posting is coming out of order, I'm actually writing this on 9/26 but am back-dating the post to 9/15 to keep the coaching calls in the order they actually happened rather than the order in which I finally get around to writing up my experience -- please forgive this minor inconsistency but I didn't find time to write up blog posts while all this was happening. As I've mentioned in a couple other postings I met a very special lady and well... those first couple weeks I put nearly everything on hold... Can you blame me?

So, in a hurried, impatient manner, and ignoring my normal good practices in finding a stock with a nice 2:1 (or better) Reward:Risk ratio and basically ignoring all my trading rules, experience and knowledge I opened 3 long positions while the markets and the individual stocks still had much more pulling back to do before it was time. I didn't have any open positions for the previous ~7 days and didn't want to have a coaching call with no open positions to discuss with coach Rob.

As you can imagine, at first glance Rob was bewildered by why I'd do such a thing. I believe the question was: "So you just wanted to tie a noose around your neck and hang yourself, yes?" I fessed up that I will not defend my positions and that impatience and wanting to have some open trades led me to entering these positions. Fair enough right?

I've already covered all this in another posting entitled: Discipline, Patience & TIMING! which is my confessional about all the sins I committed with those trades. I don't feel the need to rehash here, that would be far too much self-abasement for my taste and would be about as useful as actually beating myself up. Hey, I made some mistakes, and have that experience to draw from to not make them again. The great thing about making these mistakes is that I've been able to learn some lessons at no cost to my trading account. These are not mistakes that I'll soon repeat.

Coaching Call Week 11

Today was the last formal coaching call that covers a chapter of the manual. The chapter title is "Trading Systems: Pulling It All Together." As the chapter title implies, this covers the ideas of daily routines, money management, trading rules, etc...

Rob started out of the manual by asking me the question: "What is the first thing you do each day?" I initially started with "Look through your hotwatch stocks..." but paused and interrupted myself, feeling that I was slightly off. Rob then followed up with "If you were going sailing, what would be the first thing you need to..." I cut him off: "Of course, check the broad market indexes, which I am already in the habit of doing, I just skipped that step and got ahead of myself." These weekly calls are in the AM, and have I mentioned that I'm not really a morning person? ... Chalk the initial answer up to the caffeine not having quite hit the bloodstream yet.

The start of my daily routine is an analysis of the broad market sectors (S&P, DJI, COMPQ) followed by a look at what's in the news and any events that may be coming up that will affect the markets (economic announcements, etc...). Follow this up with a dash of analysts opinions, set the oven for 350 and let your dough rise. Along with the typical sources of news, Rob pointed me to the following free resources http://tradertim.blogspot.com/, and http://www.thekirkreport.com/. Both can be useful as they can supply you with another trader's opinion of market conditions.

After knowing pertinent market information and pending news it's time to manage our current open positions. Knowing the general market conditions can help evaluate the viability of each open trade. Some time should also be taken to look at news items affecting a given stock and sector. A look through the intraday charts with a keen eye on volume spikes can help offer some clues as to the strength or weakness of your position. Often times it's as simple as deciding how to adjust our stop-loss.

Finally, it's time to look through watchlists for trades that will likely match the current market setup. If you're expecting the general market sectors are about to go up because a recent round of profit-taking, you can look for bullish positions. Or if you're seeing an imminent round of profit taking or the early signs of a bearish market reversal, you can give a little more weight to your bears watchlist when looking for good setups as a general market pullback may be enough to send one of your bears plummeting.

What began as a bleary-eyed, stumbling, stammering start ended up being a very enjoyable call that really does help pull it all together.

Coaching Call Week 10

Today Rob and I went through Chapter 3 "Fundamental Analysis" of the coaching manual. This approach to fundamental analysis is based on scoring various aspects of the company's fundamental information, giving 1-20 points per item, with 100 being the highest possible score. Anything above 80 is a pretty good indication of a fundamentally strong company.

The potential value for each bit of fundamental information is added up based on certain thresholds and industry comparisons. For example if the Sales % is > 25%, 5 points are awarded; 5 points are also awarded if the EPS (Earnings Per Share) % is > 25%; if the EPS % is > the Sales % 10 points are awarded. Different aspects of the fundamentals get weighted with higher or lower possible points. Simply adding them up gives you a reasonably complete evaluation of the fundamental picture.

It's a fairly easy-to-follow system. Unfortunately, some of the directions in the printed coaching manual no longer match the software exactly. Some of the fundamental analysis information needed to be collected from Yahoo instead of in the area described in the print. This is the first worthwhile flaw I've found in the materials, but it doesn't invalidate the system, it just makes the evaluation process require a trifle more time & energy to perform.

More than just blindly filling in the worksheet with the above scores, this chapter explained how some fundamental aspects relate to others and what that can say about the company. Looking at earnings vs revenue could reveal that the company is having to cut back in order to continue the facade of a rosy general financial picture. I think one of the more powerful aspects of fundamental analysis for a trader is the ability to compare these aspects of a company's fundamentals in order to sense a strengthening fundamental picture versus a weakening fundamental picture.

As a trader, I don't know that I'll really ever spend a lot of time evaluating the fundamentals, but I do recognize that it is a worthwhile study in particular for longer term position trades. The big trouble with any kind of fundamental analysis is timing. And timing is everything. You may have the right analysis of the fundamentals of a company, but you must use technical analysis to ascertain when to enter and when to exit.

Coaching Call Week 9

In today's coaching call we decided to postpone chapter 3 about fundamental analysis for next weeks call, instead we favored doing a check in on my progress. This was perfect timing as I wanted to solicit Rob's feedback on several trades. It also flowed into my trading journal very nicely too and gave me an idea of what to write and track in said journal.

We looked over several of my trades to see how I was managing entry and exit. The main trade we looked at was a trade I placed on ABI. This went against me, which is why I was particularly interested in what Rob had to say about it. Let's file this one under "The Bad" (as in The Good, The Bad and The Ugly). Here's the closing chart showing where I entered and where I was stopped out for a loss:

With the information available to me on 8/14 (entry, marked by the green line), you can see that the stock was in an uptrend (black line), but had a deeper pullback than previous pullbacks and had violated it's trendline. Also, you can pretty clearly see that the uptrend showed some signs of weakening before I entered the trade. The previous 2 swing highs were not as high as they should have been for a strong uptrend, and it even retested the peak. It was looking suspiciously as if the peak became resistance and that it was forming a reversal pattern as the stock crossed the 50 day moving average. The volume charateristics weren't ideal, but they weren't too bad. The CMF was negative and the Stochastics were showing some divergence (highlighted in yellow). All of what I've writen so far is me evaluating the stock today after having discussed it with Rob. Hindsight is 20/20 right? So instead, let's look back into what I wrote in my trading journal upon entry:

ABI pulled back a little deeper than I’d like to see and volume on the selloff was higher than I’d like to see, however the Institutional Intent shows a buying pattern during the last week. Stochastic is setting up nicely and I’m expecting a return to at least retest the previous swing high.

Upon exit (8/23) I wrote the following:

Lost all of what I risked. Most likely it’s just a trade that I should not have entered. I entered when the stock dropped below the 50, near where it found support before. This was definitely a sign of a weakening trend. Additionally there was some divergence on the Stochastic. Note the previous dip and failure for a swing high in early July. Could it have gone up? Yes, of course, but I could have found a better stock to trade.

The basic mistake I made on this stock is that I did not reevaluated my outlook as the stock started to show signs of weakening. I decided I wanted the stock to go up because I thought it would go up 3 days before entry and since I wasn’t filled I would just get in for a better reward:risk. I think this is known as trying to argue with the market. My mistake, market, you are correct, I will listen to what you have to say and never attempt to tell you what to do again.

That's it, that's all I wrote, and that's all I saw at the time. Of course my knowledge and skills are growing and becoming more refined, and part of that has to do with reading, studying, coach Rob's calls, but quite important to this learning process has been my self evaluation and trading journal. The mistakes are great because they provide such a learning experience. I've gone into a bit more depth in this blog posting, and this is far more reflective of how I journal today, and I'm sure how I journal will evolve over time also.

Coaching Call Week 8

Today coach Rob and I reviewed Chapter 6: Intermarket Analysis. Although we did go through the chapter, the majority of our time was spent in a hands-on fashion, evaluating a couple of the stocks in my hotwatch folder. There are a number of free tools out there to aid evaluating a stock relative to it's sector, industry and competitors.

To figure out a stock's relative strength to a given sector we used SmartMoney.com's Sector Tracker . Sometimes it's a little tricky to discover which sector a stock belongs to because there isn't a clear standard. We ran into this difficulty with ORB however, by looking at ORB's competitors, the we figured that it's part of Aerospace & Defense. It's useful to know which sector a stock is part of not only to help evaluate its strength relative to the sector, but the sector's strength relative to other sectors and the market as a whole. It's yet another way to filter for best-of-breed stocks. Another benefit of drilling down into the sector is that you will likely come across another stock that you'd like to add to your hotwatch and/or trade instead of your original stock. After all, if the sector is performing well relative to the market, you may as well take a look at other stocks in that sector as it's not uncommon for the majority of stocks in a given sector to perform similarly.

After identifying the sector we used Yahoo! Finance to compare our stock (ORB) to the best of the sector. SmartMoney.com's Sector Tracker allows us to drill down into the sector to see what stocks comprise the sector. We chose the top 3 performers and entered them on Yahoo! Finance's charting "vs" feature. Yahoo! Finance allows you to enter a number of stocks to compare to the current stock (enter multiple symbols by separating them with a comma). This gives you a pretty good picture of how your stock's relative strength to its competitors.

Another handy feature that SmartMoney.com provides is insider buying and selling. It seems to make sense that if the employees of a company are actually buying shares of their own company, then the people on the inside think the value of the stock value will increase. On the surface it seems like a good indicator, however most of the time buying won't show because the stocks are given to the employees as incentive or reward, but they don't show up as a purchase. However, when an employee sells, it's most certainly going to show on the insider tracking. Consequently, you're more likely to see sell orders than buy. Once more, this information requires some interpretation.

Combine all of the above with all of the technical analysis tools, volume, indicators and last week's lesson on institutional intent and you have quite a bit more evidence to support your position & outlook for a given stock. There are no guarantees, but filling in the picture with more information can either give us a higher probability or it can be enough for us to decide to simply walk away from a trade.

No doubt that it takes some time and energy to do all this research, but it is your money and if you aren't happy with part of the picture, why risk it? There are so many stocks to choose from, it seems like good practice to choose the best-of-the-best and to not bother with the rest. Don't you think it's worth that bit of extra effort on each trade?

Coaching Call Week 7

On today's call Rob showed me a number of cool things. By far the coolest thing was the correlation between the MACD and the NDX (NASDAQ-100) during basically all of 2005. Check it out for yourself. Pull up a chart for NDX in 2005 and watch where you would enter and exit trades when the MACD crosses. I told you that was cool. Also notice that this strategy would not do well for you in 2006.

After that fascinating study, we reviewed some intraday charts to look for volume spikes. Paying attention to volume spikes helps you spot a great ground-floor entry to capture a bit more on the move. This does require being in front of the computer during market hours and I'm sure some practice to get down pat.

The volume spikes lead us to looking at Institutional Intent. We used The Trade Center software to pull up information on Institutional ownership and intent. You can get directly to I-Watch by clicking here. It seems pretty obvious that it is wise to heed what the big players are doing and I-Watch aids in discovering what the institutions are up to.

We then looked through my fledgling trading journal and my hotwatch lists. He provided me with some valuable feedback on the stocks that I had in my watchlist, in particular the bulls hotwatch folder. Honestly, I had some stocks in my hotwatch folder that did not belong there. It's great to have someone to give me that sort of feedback. My bears hotwatch list was far better than my bulls hotwatch and although my bulls hotwatch was embarrassing, it was great to have someone give me that feedback and keep me on track.

Coaching Call Week 6

You may have noticed that last week there was no coaching call posted. I had to reschedule last week's call for personal reasons and so we picked up this week where we left off. We reviewed the money management chapter and looked over some of the current stocks I have in my watchlists.

Money management & position sizing is essential to a savvy, professional trader. While the risks associated with trading can be mitigated, any given individual trade is risky. As a trader, the goal isn't to never lose money, it's to keep the losses to a minimum while maximizing your profits. There are times when a stock will move against you, gapping up or down either for your benefit or detriment. Even if 8 out of 10 trades move in the desired direction, if the first 2 wipe out your entire account, you're done. This is why position sizing and money management are essential. By only risking a set percentage of your account (say 5-10%), you can't be wiped out on a single trade and you also will naturally diversify your positions.

I don't mean what people generally think "diversify" means. I'm not referring to diversifying your portfolio by spreading your money over several sectors. I mean to say you can diversify your positions in terms of Bullish, Bearish, and Stagnant. Since an individual stock's movement is so heavily influenced by the market as a whole, diversifying your position by spreading out your account across multiple sectors only reduces volatility. Losing money slowly is still losing money. However, you can capitalize on the market's direction by placing bearish trades or just keep your money in cash during downtrends.

Another benefit that will likely come with this sort of money management plan is that you will probably have some cash available to put into a particularly appealing trade; it's not as likely that you'll have all of your money tied up in open positions. This will leave you some available capital to take advantage of a trade that you wouldn't want to miss.

To be clear, the above ramblings are pretty much my current interpretation of things. I'd mostly credit the coaching handbook, my coach, and the teachers of the classes I've attended, but that's my take. Any erroneous or poorly understood concept can be credited to me, hopefully I don't need to apologize to my teachers.

Rob and I also talked about journaling my trades. I'm to write up some free-form text explaining my position, with an honest evaluation of my emotions at the time of the trade, etc... I'll share some highlights here in the blog, both good and bad.

Coaching Call Week 5

This week Rob reviewed both chapters 4 & 5 with me. Chapter 4 is on trends, chart reading, and Moving Averages, whereas chapter 5 is on Stochastics & MACD. One point Rob drove home with me is that secondary technical indicators, such as Stochastic & MACD are used for confirmation of our position on a stock, not as a deciding factor. Something like evidence to support your position, but that your stance on a given stock is based on the current chart, looking for trends and support & resistance.

Today, for some unknown reason, we had trouble with NetMeeting so he was unable to connect to share my desktop like we have done in previous sessions. Perhaps my cable Internet provider was having trouble or something.

While we were working on getting NetMeeting to work, I managed to ask a question I should have asked earlier. I asked Rob about why, in his opinion, do 85% of traders quit within 6 months of trading? This was something he informed me of on our very first introductory call (see: Coaching and Catches). His answer was that most lack the discipline to improve and make it as a trader. I drilled into that statement a little for a clarification about what is meant by being a disciplined trader. In essence: maintaining a watchlist, waiting for the best opportunity to make the trade, and managing the trade. I can see how this isn't the easiest thing. For those of you who think this is "easy money" well... think again. You can't just do this as a hobby or casually. It requires a lot of time, effort & concentration.

After a review of the chapters we looked through some of the stocks that I have in my Hotlist and the position I currently have open on a Paper Trade. I was a little embarrassed for the position I currently have open on a paper trade. Although the trend looks good, it's volatile, cheap and trades thinner than normally preferred. Has the feel of an amateur trade. It's not something I'll repeat in the future, especially given that it's a bullish trade on a decently trending stock, but with the market bearish. I may be being to hard on myself though, but I don't plan to trade something like this again in the future, paper or otherwise. I'm learning, so mistakes are inevitable. This trade may work out, however I'll consider it luck more than skill if so.

Next week we'll be reviewing Chapter 7 and I'm to continue maintaining my hotwatch list, watchlist in general and to continue to paper trade.

Coaching Call Week 4

Today Rob and I began with a review of the trend concepts explained in Chapter 4 of the manual. We'll talk more about trends next week. We spent most of our time refining my watchlists. We broke down the Bulls folder into 3 subcategories: Waiting For Pullback, Setting Up (Pullback Started), Hotwatch (Risk/Reward & Candle). There are two additional subcategories to the Bulls category that we will eventually use: Buys (It's time to buy today) and Long (stocks I own). Rob explained what criteria constitutes where to place each. I'd say it's fairly obvious from the naming, but I'll breakdown the criteria a little to disambiguate ;-).

• Waiting For Pullback: We missed the most recent swing low and are waiting for the stock to pullback down to an area of support where we can enter.
• Hotwatch (Risk/Reward & Candle): We may be able to enter a trade on this as the stock is looking like it has come down to a level of support, but need to analyze the risk/reward and see if the setup makes sense for our target price (where the last swing high was).
• Setting Up (Pullback Started): These are stocks that are not quite ready for the Hotwatch, but have begun to move off their swing high.
• Buys (It's time to buy today): Our reward:risk is at least 2:1 and we should put in our stop limit order for controlled entry (along with a stop-loss) and hope to get filled today.
• Long (stocks I own): Stocks that have been filled that we should be watching to adjust our stop-loss and otherwise manage.

Next week I need to read Chapter 5 in the manual and I've been given the greenlight to paper trade any setups that I discover have a 2:1 reward:risk. I've also allowed to look for Bearish trending stocks. At the moment, the market isn't given a very clear direction. Even though I'm anxious to enter some paper trades, I probably would be on the sidelines with real money for at least a couple days. As I stated before, I plan to manage my paper trading as close to live trading as possible. However, I don't want to delay too much, favoring getting in there with my paper trades and learning my lessons sooner rather than later. I don't think it wise to avoid mistakes by not acting. After all: "Experience is that marvelous thing that enables you to recognize a mistake when you make it again." -- Franklyn P. Jones (a distant relative, as all Jones's are :-P)

Coaching Call Week 3

Rob Craig and I had our weekly call. This week we adjusted my historical chart settings in The Trade Center software. We switched the timeframe from 6 months to 1 year and adjusted the Moving Averages so my colors will match the standard coaching color scheme. After making the adjustments we looked at some bullish trending stocks. Unfortunately there aren't that many in the current market.

To identify the bullish stocks we used some select Trade Seeker scans and then looked at the chart (no secondary indicators) and took 1-5 seconds to identify if they look like a good trend. My assignment is to get 20 to 50 of these strongly trending stocks into my watchlist. Of course, bullish trending stocks aren't that common at the moment, and it seems silly to trade against the market. As much as I understand the motivation to start with the simplest direction (bullish) in order to identify trends, I'd just assume start with bearish setups given the current market conditions.

Coaching Call Week 2

This week Rob Craig and I reviewed chapter 1 of the coaching manual & workbook. Chapter 1 is about setting goals and developing a trading plan. It is also about expectations & what's realistic. It brings to light the concept that you don't need to have all your trades go your way. Actually, it's entirely possible to be profitable having the majority of trades not go your way. Rob emphasized this point in particular.

We also took a moment to setup and test NetMeeting, which we'll use for sharing my desktop to review the same thing at the same time. We successfully connected, slightly ahead of schedule. For next week, I'm to read Chapter 2 and go through the workbook for the same chapter.

Coaching and Catches

I spoke with my personal coach, Rob Craig, this morning. This was the first of sixteen of our regular Wednesday morning phone calls. I'm really looking forward to working with Rob. He's very honest and to the point about things. When we spoke I informed him of what I've paid etc... He explained to me that coaching alone is $3,500. I've paid $12,000 to participate in this special program that the Teach Me To Trade folks sold me (see: The Next Success Story). Both of us couldn't help but wonder what the balance of $8,500 went towards. After further review of the program I signed up for, I have an additional day in person with my mentor and another advanced training course. I also get a discount on additional training courses (which I do plan to follow through with after I'm trading successfully in the market). I'm not sure exactly how those all balance out, but courses officially sell for $5,900 and the extra day in person with my mentor is certainly worth some money... Let's assume the balance.

This is a huge amount of money for me to carry on my credit card and leaves me with little to trade with. I'm still happy to be on the path to Professional Trading, and truly see it as a viable future, but it seems I've handicapped myself for the short term. I guess the good part about having spent so much money on training is that I can't afford to not pay attention and not put the knowledge to use as soon as possible. I do expect that I'll be able to recoup the cost of the classes through the market within a year's time (hopefully sooner). I practically have to recoup my money through the market. How else can I dig myself out of this kind of debt?

Am I in a precarious position? Yes, and it's unlike any I've ever been in before as I am rather conservative, especially on the debt side of the equation. If you think it's some strange dichotomy for me to be debt conservative, yet willing to put my money (and livelihood) into trading... I can sum it up with the following statement: I have an aversion to debt.

Do I feel that I've been ripped off by EduTrades, Inc./TMTT? No, I don't think so. Certainly knowing what I know now I would have rather paid only $3,500 for the coaching and kept the rest for trading. I am very happy to have personal attention and individually tailored coaching, and I couldn't be happier with Rob as my coach. I see personal attention as one of the most valuable of the services TMTT offers. After all, every professional trader that I've read about has had a mentor that helped them become successful.

Rob is rather insistent that I only paper trade for the majority of the time I'm training with him. He also informed me that 85% of people that begin to take the path to becoming a professional trader quit within 6 months. As you must know by now, I'm not in this for the short term. I have made a real commitment to becoming a professional trader. I'm obviously not going to recoup my money until I'm actually doing live trades, which won't happen quite as soon as I was lead to believe when Tim Kane asked me to participate in the special package they offered. Being completely new to trading, I'm ok with running paper trades while I cut my teeth. It's much better to burn paper than real money and I would like to learn from my mistakes as safely as possible.

I'm feeling slightly desperate being this much in debt. I'm still awaiting an update on my credit report in order to figure out what can be done to make the loan less costly. I certainly hope TMTT is able to help me negotiate my card rate and balance with Chase (as they have offered and claimed that they've done successfully in the past) to make it possible for me to float that money with a lower usage cost.

Knowing all that I've just shared with you, what would you do differently? Comments are very welcome.