CMU: To be a successful trader, don’t be like this guy

By Jani Ziedins | Free CMU

Sep 05

Cracked.Market University

Put yourself out there long enough and inevitably you run into the angry cynics that try to knock everyone down to their level. Rather than learn from the people who are more successful, these people criticize everyone doing a better job. That is their natural ego defense. When they cannot do something, they automatically assume everyone else doing it successfully must be a cheater and fraud.

I’ve had more than my share of hecklers over the years and I learned to ignore them a long time ago. But the comments I got the other day are great examples of the wrong way to approach the market. I wanted to share this with other readers so they could learn from them and avoid making the same mistakes:

This guy is a 100% jackass. A few months ago he was encouraging to “take profits” and now he’s saying “told you so”. Complete blowhard, waste of space. People like this need to disappear.

I will call you out again. Your blog is horseshit, always has been. Here you say “take profits” and previous blog “we are going much much higher”. This way you’ve covered both your bases..if it goes up, you say I told you so, if it goes down, you remind to take profits. Utter bullshit and this is what i would expect from a paid service. A self important blowhard who speaks from both sides of the mouth without committing to one or the other. Please, go into a cave and save us the trouble from reading this garbage.

The first thing I want to acknowledge is I have complete control over this blog and could easily delete negative comments like these. But that’s not who I am and I definitely don’t shy away from criticism. Instead, I embrace it. I leave these critical comments for everyone to see, even when I disagree. Recognizing a difference of opinion is always useful when trying to understand how other people think about the market. This is a zero-sum game and my profits come out of someone else’s pockets, just as his profits come out of mine. Understanding how the other participants think is a very valuable tool when figuring out what to trade next.

I don’t know who this guy is and I don’t care. I’m not going to cyber-stalk him and I don’t want anyone else to either. We’re traders, not bullies. In fact, we should thank him for giving us these great examples to learn from. Even though I don’t know anything about him, there are quite a few things we can learn by analyzing his comments.

This guy is definitely angry. Between the swear words and personal attacks, he is directing a lot of negative energy toward me. If there is one thing I noticed in all my years of trading, people who are making money are in a good mood. They don’t kick their dog and attack random people on the internet. If anything, people having a good year are far more likely to brag obnoxiously about their good fortunes than criticize other people. (A great topic for a future CMU post. Subscribe to Free Email Alerts so you don’t miss it.)

If this guy is angry, it is safe to assume he is losing money and he is looking for someone to blame. He mentioned what I wrote a few months ago, so it appears he has been reading my free blog for a while. That also tells me he is relatively inexperienced since most professionals come up with their own trading ideas, they don’t browse the free educational blogs.

Last week the stock market made all-time highs and everyone invested in this market is loving the ride. What that tells me is my heckler sold this strong market months ago and is bitter because it left him behind. And if it wasn’t already obvious, he made it clear when he criticized me for suggesting traders “take profits” during one of the market’s numerous up-waves this spring and summer.

I’ve seen this often enough to know exactly what happened. This guy was cynical about the market and was looking for an excuse to sell. He read my blog post suggesting people take profits and that is all the encouragement he needed to bailout. Unfortunatly for him, that is only half the story.

I’ve been buying weakness and selling strength all year. While the market is up a very respectable 10%, I’m up a lot more than that selling each surge higher and buying the inevitable dip that happens a few weeks later. Do that with leveraged ETFs and a good year becomes a great year.

The problem is this guy followed my advice to take profits, but that is where he stopped listening. Rather than buy the next dip, his bearish bias took over and he refused to jump back in. He missed the rebound and the higher the market went, the more bitter he became. But rather than acknowledge and correct his mistake, he decided he wanted to blame someone else. This time it happened to be me.

I don’t mind. It is been a good year for me and I’m definitely one of the traders that is in a good mood. There isn’t anything he can say that bothers me. The only reason I even acknowledged his unjustified accusations is to share his story so the rest of my readers could learn from his mistakes.

First lesson: Never get emotional about the market. Losses are a part of this game and are no different than inventory expense for a retailer. As long as we make more money than we lose, everything is good.

Second lesson: When things don’t go well, be honest with yourself and don’t blame other people. If you lost money, it isn’t Trump’s fault. It isn’t some CEO’s fault. It isn’t the Fed’s fault. Or some blogger on the internet. You and only you made that decision to place a trade. Own up to it and take responsibility. Sometimes things don’t work out and that is just the way it is. Learn from your mistake and move on.

Third lesson: Respect and learn from everyone around us. There are traders with a lot of experience willing to share their knowledge with others. Hecklers stroking their fragile ego by putting down other people will never get better. (But to be brutally honest, I don’t mind. My profits need to come from somewhere, so it might as well be their pockets.)

And just to remove any doubt about this heckler’s accusations, I charted the various calls I made this year. How did I do? (Subscribe to Free Email Alerts so you don’t miss any more calls like these.)

January 25th: “Enjoy this rally higher over the near-term, but stay alert and keep close to the exits.”

January 27th: “there always comes a point where we run out of buyers. And it looks like we reached that point last Friday”

February 5th: “For those of us that took risk off the table during this run-up and have cash to spend, this dip is extremely attractive.”

February 9th: “Risk is a function of height and this is the least risky point in several months. Traders should be embracing these discounts, not running from them.”

March 6th: “we should expect a lot more volatility over the near-term as the trade war rhetoric ramps up. We will likely see further weakness over the next week.”

April 3rd: “Even though prices could slip a little further, this is still a very attractive place to be buying. We were asking for a dip and the market gave it to us. Don’t lose your nerve now just because everyone else is freaked out.”

April 24th: “If this market was going to crash, there have been more than enough excuses to send us tumbling a long time ago. Instead of selling these bearish headlines, confident owners are holding for higher prices. When owners don’t sell bad news, it stops mattering.”

June 12th: “Things still look good for our medium-term stock positions and long-term investments and we should leave them alone, but for short-term swing-trades, this is a better place to be taking profits than adding new money.”

June 28th: “Two-weeks ago we should have taken profits into that strength and this week we should be buying the subsequent dip. Everyone knows markets move in waves, so get with the program and trade the waves!”

August 9th: “The risk/reward has shifted against us and this is now a better place to be taking profits than adding new money…..we cannot buy the next dip if we don’t have any cash. Buy weakness, sell strength, and repeat until a good year becomes a great year.”

August 14th: “While it already looks like the Turkish selloff is dead, we need to hold this bounce for a few more days to be certain. There is a chance this bounce could fizzle and we continue slipping back to 2,800 support. If that happens, that will be a far more attractive entry point.”

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Jani

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer who has successfully traded stocks and options for more than a decade. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, structural engineering, small business consultant, collegiate instructor, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.

Leave a Comment:

(10) comments

[email protected] September 5, 2018

Yes. completely agree with your comments today Jani and clever to turn this angry comment into a positive learning method.

I find your expert advice very helpful indeed.

By the way, what do you think of Elliott Wave analysis and could you one day give us a brief appraisal ?

Thank you so much for your analyses. Oliver Sellars, Perth Western Australia.

PS: there are not many out there willing to put their reputations on the line the way you do almost daily. Admirable.

Reply
    Jani Ziedins September 6, 2018

    I’m glad you find my blog posts useful.

    I’m familiar with Elliot Wave and believe in the idea, but I don’t use it directly in my trading analysis so I cannot comment about the more technical aspects of it. I primarily use sentiment and the market’s resulting price-action to decide how to trade the market. While I come at it from a different angle, much of my analysis ends up agreeing nicely with Elliot Wave.

    Reply
David September 6, 2018

Your calls have been spot on since I’ve been following you Jani!

We get these same types of people in the gym. For example, if you’re bigger, stronger, leaner than someone else then you “must be on steroids”.

It’s annoying, I’ve been consistently training for 25 years without any “assistance”, yet these people will discount any hard work and consistency someone else put in in order to make themselves feel better as opposed to asking themselves what they can do to get better.

The “victim” mentality has never and will never get them anywhere… I really feel sorry for these people.

I wish you continued success with your trading and your blog.

Reply
    Jani Ziedins September 6, 2018

    Thank you and I’m glad you find my blog posts insightful. Good luck with your continued success!

    Reply
Jim Smith September 6, 2018

Thank you Jani for more bullshit disguised as advice!

1. Clearly you are missing the point of my targeted criticism. You are boasting about your “correct” calls and how you’ve perfectly timed the market this year. I don’t know a single trader (and you can claim to be the first, but I am highly skeptical) who has successful over the LONG TERM by cycling in and out of the market via a series of short term trades. Essentially you are promoting day trading (sell strength, buy weakness) which has been shown to fail, over and over.

A. Every single blog post of yours has a bullish and bearish comment. Therefore you can claim to be making the right calls, however you are just hedging and in no way useful to the average investor. Read your own blog to yourself, out loud. Maybe you don’t realize what you are doing, but its fairly clear.

B. If you’ve ever heard the term MONDAY MORNING QUARTERBACK – this is YOU, to perfection. Read through the tone of your titles and your posts. Quite annoying actually.

C. If you are SO SUCCESSFUL as a trader, why the f#$%$#$# do you need a blog and a subscription service? Any good trader knows they can make $10-20-50-100k on a good day trading. No need to waste your time with a blog or self promotion.

2. I read your blog as well as thousands of stocktwit posts daily. Of course I read to see where everyone is positioned and what they are thinking. Sentiment is the only reliable method of predicting the market, on a long term basis. I do not read out of respect for your opinion, which I think is garbage. By no means am I following you, and I never would do so.

3. FYI I have made significant profits this year, 25%. I am happy with this return. I am 100% cash at the moment and sold everything on 8/30/2018. No need to buy until the market proves itself.

4. I will continue to post and call you out until you make a commitment to one side of the trade or the other. State your position, your entry, and your exits. Show proof of your success, not boastful and unproven commentary. And then own it, either way.

Reply
    Jani Ziedins September 6, 2018

    I put myself out there every single day and am proud of my very public track record. What do you do other than take pot shots at other people?

    And yes, you are correct, I am very vocal about my split approach to the market. 3/4 of my net-worth sits in long-term index investments and I haven’t moved that money in nearly 9 years. This is a fantastic bull market and there is nothing to do other than enjoy the ride higher. The other 1/4 is in my trading account and I move that money in and out of the market multiple times a year, taking advantage of short-term swings in sentiment.

    Last year my buy-and-hold positions did really well because the smooth ride higher didn’t give us many swing-trading opportunities. This year my trading account is making most of my money because of the increased volatility and largely sideways trade.

    And the reason for the blog and subscription is #1 I like money, #2 I like helping other people, and #3 the public accountability helps my trading. A lot of my stuff is available for free. For people who want more, I give them that option and I think it is fair to ask premium subscribers share a small piece of the money I help them make.

    As for your comment, I’m a little confused. You start by claiming no one can beat the market by timing trades. Yet a few sentences later you brag about beating the market by timing trades. Which is it?

    Reply
      Jim Smith September 6, 2018

      I take pot shots at people that put themselves out there claiming to be successful but nothing to back it up. You don’t put yourself out there, you Monday Morning Quarterback. Zero accountability in your blog.

      Attempting to rapidly cycle time the market is a fool’s approach. Nor do I practice that. I am not bragging about my success, only pointing out your error:

      <>
      WRONG WRONG WRONG WRONG WRONG

      Again, prove your worth. You have nothing to back up your claims other than hot air, and to say “I’ve made money”. Show percentages, entries, and exits. Back it up. If you have a multiyear consistent record of beating the market, you wouldn’t be here hawking a service to small fry retail, you would be employed by Goldman or USB or any other number of large banks.

      Reply
        Jim Smith September 6, 2018

        Apparently cut and paste doesn’t work on this blog

        The point that is dead wrong – I am not angry or losing money. Or looking for someone to blame. No reason to do that.

        Reply
        Jani Ziedins September 6, 2018

        I used to publish and promote my track record, but I stopped doing that a long time ago because it attracted the wrong audience. I grew tired of dealing with lazy people who don’t want to understand the market and are only looking for a shortcut by blindly copying my trades. I want to assist people in becoming better traders, I don’t want to trade for them.

        As for the Goldman/UBS comment, I’m good at what I do, but a big part of my advantage is my size. I can liquidate an entire position in a few minutes and that lets me jump in and out of the market quickly as conditions change. The way I trade definitely wouldn’t work for a fund that manages hundreds of millions or billions of dollars.

        And how about this for accountability. Your moving everything to cash on 8/30 was a mistake. This is a strong market and we will finish the year higher. Come back to me on January 1st and we’ll see who was right. (You claim “Attempting to rapidly cycle time the market is a fool’s approach. Nor do I practice that.” The way I interpret that is you moved everything to cash because you believe this market is topping and you expect prices to fall from here.)

        Reply
          Jim Smith September 6, 2018

          I do believe the market has topped, or in a topping formation. At least for the near term. I am more comfortable in a 2% money market account. If prices eclipse the current high then I will admit my mistake and buy back. However I don’t like the risk reward profile right now.

          Reply
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