The Early Days

In my last post, I started telling you about my early days trading the market. Being as I had so much success trading puts and calls on stocks, I did what any self respecting trader would do. I changed markets. I figured if calls and puts on the stock market weren’t making me any money, I must be trading the wrong market. (I knew it couldn’t be me, it had to be the market.) I went to the CBOT and traded options on futures.

I know what you’re thinking; trading options is risky, and trading futures is even riskier. Therefore, trading options on futures had to be what the amateur stock trading genius needed.

So I proceeded to lose money on gold, soybeans, wheat and pork bellies. (I had to make at least one trade in pork bellies, I only made one, but I had to make it. I was compelled by the trading gods; after all, it’s what you always hear about.)

I tried silver, I tried heating oil. At least I never tried lumber. My broker loved me. I single handedly sent his kids though college. Actually, several brokers loved me, I had several accounts. Just in case trading with a different firm would make a difference. If I had just the broker fees back that I wasted in the first couple of years, I’d have a ton of money.

I heard about a new product, I had to try it. If there was a new charting software, I got it. It there was a training seminar, I attended. I was an info junkie. If I could just get the next missing piece of information, I’d be the next Warren Buffet, but I just wouldn’t have to hold the stocks as long.

I knew the way to fame and glory was quick trades. Get in, get out, and make a quick buck. It wasn’t unusual for me to make 6 or 10 trades in a single day. I was what they called an active trader. You bet. It just meant that I lost more money faster.

Well, long story short. I lost a lot of money. When I did my taxes and told my accountant how much I lost, he laughed at me. He apologized, and then he laughed again. Finally, he controlled his laughter (but not the snickers and giggles) and helped me with my taxes. I had a good write off for about five years. One thing I learned, trading options was a lot easier at tax time. Trading stocks was a killer, especially for a trader with an itchy trading finger.

Some of you seasoned traders may see yourself in me, because you may have done the same thing. I can hear you saying, I’d never tell all this about myself. Well, for a long time I never did. But it is kinda therapeutic to cleanse yourself of the trading demons. So here I am telling you about my abject failure as a trader. Maybe, I can help the newbies to trading avoid some of the pitfalls that snared me. At least I tried.

When I started out, I heard you traded what you knew about. I had worked in the oil patch, so I bought and sold Halliburton (HAL) and Slumberger (SLB). I had a friend that work for Southwest; they had a cool symbol (LUV) so I traded that too. I traded Ford and GM, I traded the drug market (I didn’t know anything about pharmaceuticals, but I traded them). I traded everything. It still didn’t make any difference. I lost money.

Well enough for now. I’ll tell you how I started bringing it all together in the next post.