Millionaire Traders: How to Beat the Wall Street Pros in Their Own Field. Katty Lin, Boris Schlossberg

FOREWORD
How many times have you heard that 90 percent of traders fail? And yet, every day, millions of people around the world sit down at the computer and try to earn a living by trading in the financial markets. As in any business, there are successes and failures. A similar picture can be observed, for example, in the restaurant business. Almost every day in our hometown of New York, new restaurants pop up, some succeed, most go bust, but nothing can stop those who hope to succeed from trying again.

The heroes of our book are eleven people who have achieved brilliant results by playing on the stock exchange. We are not talking about hedge fund managers or big bank employees, these people are mere mortals who started with very modest amounts and managed to turn their start-up capital into a six- or seven-figure fortune. They belong to different social strata, live in different parts of the world and play on the stock exchange via the Internet. Some trade in the stock market, others specialize in futures or currency transactions. Each of them has their own strategy, and often their approaches are radically different from each other, which shows that there are many paths to success in the financial markets. However, they all strictly observe discipline, adhere to the chosen strategy and know how to stop in time if they suffer losses. None of the people we interviewed were successful overnight. Several people have lost funds on at least one trading account. But they did not leave the market, but learned from their mistakes, improved from bad experiences, and eventually succeeded. They talk about how they got started, their successes and failures, the rules they follow, and the lessons they have learned from their experience. We hope these people's stories will help you believe that success is possible and that the average person can beat Wall Street at its own game.

Katty and Boris, New York, January 2010

CHAPTER 1
THE ART OF THE GAME ON THE EXCHANGE
It doesn't matter how hard you hit, what matters is how much punch you can take without losing your will to win. This is what success depends on!

Rocky Balboa1
Playing on the stock exchange is a struggle with the market. The traders we interviewed for this book had many profound thoughts on the art of trading. We have selected some of the most important ideas - one from each trader - and compiled a short list of recommendations to help those who went out to fight the market.

1. If the news is favorable but stocks are falling, buy what is falling.
Buying crashed stocks is not for the faint of heart. For many, venturing into something like this is like jumping out of an airplane without a parachute. And yet Dana Allen earns a living just like that. How does he manage to profit from the losses of other traders? He looks for clear signs of divergence. The discrepancy between a price that keeps going up and momentum indicators that go down allows many successful traders to successfully make a living. However, Dana Allen goes further, considering fundamental factors. When buying stocks that sell off on good news, he knows that the initial reaction is often driven by short-term profit-taking. Dana waits for the sellers to do their job, buys shares cheaply and resells them at a profit as soon as there is a demand for them again. At the same time, he monitors the fundamentals, trying to buy only quality companies, and his trades are mostly profitable.

2. Know yourself and your style of playing on the stock exchange
If you play on the stock exchange, knowing yourself is much more important than choosing one or another trading strategy. Your methodology must match your character, otherwise it will be difficult for you to follow your own rules. Knowing your strengths and weaknesses is the first rule of a successful trader. Here is what Rob Booker says in his interview:

I am a trader who makes 50-100 pips a week. According to my observations, these are the limits of my personal possibilities: when my profit exceeds 50-100 points, I start to get carried away. I am overcome with euphoria, and I, to put it mildly, lose the ability to maintain discipline. Therefore, I usually try not to exceed this level, although the systems that I have built allow for higher profits.

If you are not too focused and are looking for immediate rewards, long-term strategies, even the most reliable ones, are not suitable for you - you simply do not have the patience to bring the matter to the end. Conversely, trying to become a scalper who speculates on rapid price fluctuations is suicidal for a trader who prefers to analyze the situation thoughtfully rather than rely on intuition. It is extremely important to understand what type you belong to and trade in your comfort zone. There are many ways to succeed in stock trading, but they must match your personality.

3. Triple your demo account twice before switching to real money
The brilliant traders who became the heroes of our book give the reader a lot of useful advice. One of the most efficient gave Hussein Harnecker. No one is able to master professional skills instantly. Doctors practice on corpses, lawyers participate in mock trials, and auto mechanics work long hours in a practice garage. Practice does not guarantee success, but lack of it will almost certainly lead to failure. Hussain works in the FOREX market, where each dealer has a trading platform that allows traders to experiment with virtual money before trading with real money. In other financial markets, there are many software tools that make it possible to engage in paper trading. Another hero of our book, Paul Willett, already having a successful experience in stock trading, was engaged in paper trading for three months, deciding to switch to index futures.

Hussain advises to achieve solid success on a demo account before moving on to real money. Implementing this extremely valuable recommendation is not easy. To triple the amount in a demo account, you need your trading methodology to have clear advantages, which will serve you in good stead later. While Hussein's rules are not easy to follow, they will teach you the discipline you need to succeed in the real market.

4. Keep your cool - control risk with stop orders
While any professional trader follows this rule of risk control, Frankie Lowe, a Hong Kong FOREX trader, offers additional insights into the importance of this tactic. Here's what he says:

Many bull traders continue to pour money into their accounts after receiving a margin call and buy falling, hoping to make up for losses when the market recovers. For example, if you open 10 lots up and the price falls, you add another 20 when it falls even lower, and you open 30 more, etc. Although it is very tempting to quickly recover losses, this tactic is very dangerous, and I I use it very rarely. By depositing money into a margin account and adding to a losing position, I am exposing myself to the whims of the market. I can only hope that the price will move in the right direction, but I am deprived of the opportunity to make decisions. Price action may require a short trade, but since I'm deep in a long position, the market will take me where it pleases. Therefore, when I receive a call for additional margin, I close the position and wait for an opportunity to enter the market again - this way I do not allow the market to impose its conditions on me and I can again make independent decisions. I have the ability to choose when to enter the market, what product and how much to trade, and such control is extremely important to me.

By not using stop orders, you are putting yourself at the mercy of the market and losing control of your trades. Because trading is the art of controlling a chaotic, often unpredictable market, stop orders are needed to be successful in the long run.

5. Protecting your capital means protecting yourself
This is an extremely important aspect of the game on the stock exchange, which is often underestimated. Indy Jones says:

Clint Eastwood would have made a great commodity futures trader, not for nothing he said to the “million dollar baby”: the number one rule in boxing is to protect yourself. I think this also applies to the game on the stock exchange. Your capital is everything. If you want to trade, protect your capital. No capital, no trading, no life, and whether you want to be the number one boxer or make a million in commodity futures, I think it makes no difference, you need to protect your capital.

The market will forgive you a lot, including bad, even stupid trades, but it will not forgive you for losing capital. If you lose capital, you will not be able to compensate for the losses. Therefore, all the traders with whom we talked, first of all, cared about the preservation of capital.

6. Averaging down is for losers, but gradual entry into the market can ensure your success.
Most traders will tell you that averaging down is for fools. However, some of the people we interviewed have used a staged market entry strategy with great success. What is the difference between the first and the second? Setting the task. A trader who enters a position in parts assumes that he may have made a mistake in the price at