Wednesday, September 24, 2008

Trading Wife

No I’m not trading in my wife. (She’s irreplaceable). She’s expressed an interest in learning to trade. All these years I thought she was absolutely uninterested in trading, but actually she was interested yet worried about taking over “my thing”. I guess I understand that. But trading isn’t exactly like a bachelor’s party…

So I’m having her start off learning the important things (many of which I did learn in the early years), without all the fluff and snake oil (which is almost impossible to avoid). I’m having her start with Forex because it was what I started with and because I still think in many ways it’s the easiest to trade (yes I’m sure some of you disagree with that statement). Also it has the advantage of having its best trading hours during the late P.M. early A.M. our time which is most conducive to her schedule (since she is still working during the day). We will split the trading duties into roughly 4 hour blocks and basically trade from about 12:00 a.m. our time to about 8:00 a.m.

We’re going to trade an old favorite of mine – Phil McGrew’s dots. And for the first time in a long time I’ll (actually we’ll) be able to trade on the 15 minute timeframe (which is what Phil himself trades). I’ve not been able to juggle this and trade other markets like the eminis so it had been put aside for the last couple years (which is too bad since it is a great methodology). I think this system will be a good one for her to learn on since it is not entirely mechanical or discretionary but a little bit of both. It’s mechanical enough that someone new to the markets isn’t overwhelmed with information, but discretionary enough to take advantage of intelligent insight.

So for the next 4-6 months I’m having her learn the basics plus get familiar with the dots (Phil has a wonderful 100 page + manual that I deeply admire). Also during that time I’ll have her start testing the system the same way I do (candle by candle) to gain confidence in trading it and understand how drawdowns work. After that we’ll have her start with a demo account for another 3 months to understand mechanical execution, and then we’ll start with a small account trading live and see where things go from there.

The best part about all of this? I can talk about trading with her now and not receive the glassy eyed look. Priceless :)


PS The picture is of a week I traded the 15 min dots back in April 2006. Good then, still good now. That's a robust system IMHO.


thelonelytrader said...

My wife and I had talked about this several years ago. Because I was new to the game, I just gave her a book. She learns by doing. So that didn't go over too well. Your mention of McGrew's dots was fortuitous. But to back up a bit -- I remember back in 2004(I think) when Booker and McGrew started working together. Booker emailed a few people a word file with the MACD Dots code. It looked intriguing. (I never had any direct contact with McGrew.)

I brought up the subject again. And she's interested! We both have demanding jobs, so I have no idea how we will get this done. But she expressed an interest in something easy to trade, just to get her feet wet. So we may just give this a try....

Anyway, good luck to both of you. That would be Waaaay cool if you guys could form your own trading team and "keep it in the family".

Lord Tedders said...


I don't suppose you went to an LA convention with Booker in 2004 did you?

Yeah the 4 hour or daily dots would probably be best for a person with a demanding schedule. Probably won't get too many signals a year (even with multiple pairs) but its perfect for the person with little time on their hands.

Yes I definately like having a trading partner I know I can trust and I know has both of our best interests at heart.


the incredibly dumb investor said...

can u tell me roughly what are the basics i need to get me started on real or paper trading?how do i size my position and determine my initial risk?how do i backtest using candlesticks or backtesting software.everytime i open my TOS paper trading software to practise i have no friggin idea what to do except mess with the candlesticks

Lord Tedders said...

incredibly dumb investor,

As Ed Seykota often advises on his website - you may need to do some of your own homework.

The questions you ask are good ones but frankly can't be summed up in a few paragraphs. Also me telling you is less valuable then you doing the research, finding what works for you, and actually doing it.

I will say that asking these questions is a good start. There are numerous websites on the internet that can help you start answering those questions, but ultimately the real work/research will have to be done by you.

To get you started:

You might also start asking yourself (if you don't already know) what your goals are for trading. Most beginners skip this step but I assure you it is not a frivolous question.

Good luck.