After I leave the office Friday around 7PM I generally grab some dinner (last night at Pomodoro on the UWS….delicious!) and then shut things down for the day.  So I missed an important email sent to me last night.  An email that a new and developing trader can learn from.  One that we should all write to someone who we consider a mentor.  Let’s discuss.

This email is an example of the little things that people must do to be a successful trader. Yesterday we were interviewing Connor, one of our better traders, for a video blog series we are creating.  We will ask questions of some of our traders and then release the video for our blog audience to learn from.

Question: Connor, what is most important for a new trader when they begin?

Connor: To learn the basics………

Connor explained that you can’t skip steps in the learning process.  It is brick by brick.

I meet too many transitioning professionals, developing and new traders, who think trading is about making calls, loading up, and “holding like a man”.  This is straight from fantasy trading land.  Trading is like building a brick house.  It is brick by brick.  And then sometimes even after you have built a house, you have to tear down the home and build a new one (develop a new trading system).  Or build a significant extension to your existing house (add new trading setups to your quiver).  But to do this you must develop the skills to be able to build this house, rebuild a new one, or significantly alter your existing home.  Skills such as thoughtfully and constructively reviewing your work.

And this email that I received is a first step, the first brick, for this young trader/author on building his house, his trading system.  This young trader who after his third day live, spent his Friday evening, reviewing his trading in great detail.  His email shows thoughtfulness, a passion for trading, an ability to admit mistakes, a desire to get better everyday, a realistic understanding of his learning curve, and pretty good writing skills (ok this last thing is not determinative of your chance of success as a trader but will earn points with this mentor).  His email is drunk with all of the little things.

I will share this email.  But after you read it, ask yourself if this is the kind of work that you do.  And if you are underperforming as a trader, the reason is simple.  You are not doing the work necessary like this young trader just did.

Hey Mike, I was thinking some more about the MOS trade this evening and I just wanted to share one other thing that I think caused me to rip up some money.

When the stock dropped I think I got into the mind set of trying to scalp money off the trade. I was sweeping in and out of the stock trying to catch a quick .20 or .30 or even more. I got greedy trying to get this “easy money” that was actually probably the hardest to make of all my trades today. What made me money earlier in the day was staying disciplined and being patient. I waited for good set ups, I looked for the good levels and I traded off of them. Only once or twice did I not hit out when a stock went against me, and other than that I thought I was trading very well. However, that MOS simply came down to greed or perhaps over-confidence with how I had been trading. I ignored the fundamentals of making good trades and was more or less gambling, and that’s how I ripped up the money. I don’t think I can read the tape well enough nor am I fast enough to get in and out of a stock moving as quickly as MOS was moving. I think this is what I meant when I said it was a hard stock too. While the programs and set ups were acting a little crazy, I simply think my skills aren’t developed enough to really trade MOS, EXCEPT for the plays you mentioned. Those set ups were relatively clear and slow around those levels. That .75 held well and for a while, there was clear buying at 49. These really are the only plays that I should have been playing and they are the only ones where my lack of speed and tape reading skills wouldn’t hinder my ability to make a good trade. All in all, I learned a lot today, I thought I traded well all day, for very specific reasons (Discipline, patience, levels, “the fundamentals”) and I ripped up money because I got greedy with finding a situation where I thought I could make an “easy” chop… instead I made a lot of very easy rips.

That having been said, I feel like I improved today. Not only because I improved on my mistakes from Thursdays trading session, but also because I learned a lot with this MOS breaking news play. I am glad I got to learn this lesson so early in my trading career when I was still trading with a small amount of size. I am going to make $100 dollars on Monday, I promise you that. I actually have a feeling that I won’t be the only one either. But I know what I need to do to get there and I’m going to execute well. Have a good weekend and I will see you on Monday!

He has placed his first brick, an ability to review his work.

Enjoy your weekend. Don’t forget to follow us on Twitter!