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John Locke Roundtable

Discussion in 'Round Table Presentations' started by Luke, Aug 2, 2017.

  1. Luke

    Luke Well-Known Member

    I was finally able to listen to last week's roundtable presentation and I appreciated it. That's the first presentation or interview that I've listed to from him. I shouldn't have watched it so late into the night when I was spent, so I probably didn't get as much from it as I could, but it was interesting. Especially that we both started trading options around the same time and I wasted so much time with binary gambling and he progressed like he did! That was pretty encouraging because it means I just need to focus.

    But, overall, I'm struggling a little to remember what the point I got from the presentation. Here's what I think he was saying: Be willing to take risks and accept that losses come with the risks. We can plan a max loss amount, but it's not always necessary to honor that during intra-day moves. This resonated with me because I've closed positions down when I thought I'm supposed to cut out, even though I didn't think it was the right move, because I wanted to honor the rules I wrote at the beginning of the trade.

    I think the biggest advice I want to teach my son is that a losing trade doesn't mean it's not working. The only time I don't like the loss is when I knew I should have made an adjustment or started protecting profits and I didn't because I was waiting on a signal or some sort of confirmation from a friend or forum (see July M3 in my journal). I'm in a weird spot in my trading because I never had a goal of trading not to lose money, but to learn and follow a process, so I've already accepted losses are part o trading, but I haven't forced myself into a rule based system of adjustments, regularly taking profits, and taking losses.

    That's what I'm working on: have a regular system for taking and protecting profits, keep losers in a place where they make statistical sense with the overall plan.

    Hopefully this isn't too much of a ramble, but I'd like to read what you all got from the presentation and what were John's main points? What are you working on and how does this help you?
     
  2. Kevin Lee

    Kevin Lee Well-Known Member

    The following quote is what I learned early in my trading career from this book... https://www.amazon.com/One-Good-Trade-Competitive-Proprietary/dp/0470529407

    "Do not judge a trade based upon its results! A profitable trade may or may not have been a good trade, what I call One Good Trade.
    A loser may have been One Good Trade. If your fundamentals for a trade are sound, then that is One Good Trade.
    Consistently profitable traders obsess about making One Good Trade and not money. Your job is to make One Good Trade and then One Good Trade and then One Good trade."
     
    Luke likes this.
  3. SVL

    SVL Well-Known Member

    If you want to be completely hooked and never look back, then please listen to the interview of Kevin Lee by John Locke which took place in January 2016.
     
    Lim Hock Leong, DavidF and Kevin Lee like this.
  4. Luke

    Luke Well-Known Member

    I take that back, I did watch this one, but in my mind that was @Kevin Lee presenting. That was an excellent presentation and was very motivating.
     
  5. Kevin Lee

    Kevin Lee Well-Known Member

    If a beginner tennis player plays against Roger Federer, the chance of winning even one game is essentially zero. But trading is different. A novice trader can win in the short term against professionals based solely on luck. This will give the beginner a false sense of achievement and leads him to believe he is more skillful than he really is.

    Short term performance is meaningless in trading. Winning and losing are part of the game. The only thing that matters is the long term expected value.

    Trying too hard to avoid losses is often counter productive too and sometimes create even greater unforeseeable risks as a result. What I learned is that a good trader should think like casinos. They have no idea whether they will win or lose the next hand, but they know as long as the players aren't cheating, over the long run, casinos are guaranteed to be profitable.

    Once I understood this concept, I stopped worrying about whether my current position will win or lose and I stopped worrying about black swans as long as my trading size is kept at a comfortable level.
     
    john, PK, Luke and 3 others like this.
  6. Luke

    Luke Well-Known Member

    Excellent point, @Kevin Lee. I think I understand this on a principle level, but I've got to build my track record of success against a long term track record and keep ensuring the long term expected value isn't violated by letting losers run and cutting winners early. Thanks for your thoughts here...
     
  7. ACS

    ACS Well-Known Member

    The thing about trading that makes it so different (and tempting) is that you can step into the professional arena as a complete novice. Try getting into a pro sports game, championship poker or headline a Vegas show with zero experience.
     
  8. Luke

    Luke Well-Known Member

    Combined with leverage and it's even more tempting. On a 10 year time frame, I'm only down about $2k over the total time, but it's only been based on some luck, some training, and the desire to keep coming back to learn how to protect myself. It's almost cringe worthy how much retail accounts are advertised, much less the so called gurus selling strategies. But it feeds the market and gives us an opportunity to keep scalping off a little bit.

    I think the point on the casino mentality is so dead on and that was an interesting part of John's presentation. Out of curiosity, does anyone here trade his bull spread or a similar spread strategy? Between the parking trade, his bull spread, and the Alper's credit spread presentation, it seems like that's the best place for a novice to compete against the pros.
     
  9. SVL

    SVL Well-Known Member

    John is the advocate of not being glued to the screen all day as this leads to overtrading, overadjusting and underperforming. He always recommends to make the decisions to adjust/close the trade only once a day and preferably during the last 30 minutes. He actually talked about this topic for almost 15 minutes during yesterday's community coaching session.
    Kevin Lee’s talked about the same thing in his presentation when he showed his live Jan 2016 trade where he adjusted during the mid day and then the market reversed and rallied up almost 3 %.
    I am not sure if you are aware but John Locke has on his YouTube channel over 200 free recordings of weekly Monday webinars where he goes through 4 different trades ( M3. Bearish Butterfly, Rock and V-Condor) during the period of almost 4 years. When I was learning M3 strategy last year, I watched those recordings where John Locke showed M3 positions and back traded the same positions in OptionVue. It really helped me to understand the mechanics of M3 trade.
     
    Luke likes this.
  10. PK

    PK Well-Known Member

    Kevin made a point that has also been crucial for me as a trader: size matters. As long as it mentally hurts to close a losing position and as long as it boosts your adrenaline levels when you start making money, you will not progress in a sustainable way. Scale down until it becomes a game, learn to play the game, confirm that you win consistently, start scaling up slowly, convert it into a (boring) business. Be patient, be slow and you will achieve your goals much earlier than those who are running behind the big jack pot.
     
    Kevin Lee, john, SVL and 1 other person like this.
  11. Luke

    Luke Well-Known Member

    That's a really interesting point to scale down until it doesn't hurt and you don't get an adrenaline rush. That's a really good perspective and self test on how business-like it is...
     

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