Chronicles of a Million Dollar Trader E-Book

Don Miller

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 412

Veröffentlichungsjahr: 2013

Beschreibung

Trading strategies always look great on paper. But when it comes to trading in the real world, market chaos and human unpredictability often make even the best strategies seem inadequate to the task. The hard truth all traders eventually learn is that trading is far more difficult when your chips are down and the pressure is on. In the tradition of Edwin Lefèvre's legendary book Reminiscences of a Stock Operator, Don Miller's Chronicles of a Million Dollar Trader offers an inside look at the ups and downs, failures and victories of one of the few traders to have ever earned $1 million in a calendar year by trading futures intraday. In this detailed journal, Miller lets you peek over his shoulder as he tiptoes through a minefield of potential mistakes, miscalculations, and self-defeating behaviors in search of consistent profits. Along the way, he shares trading diary excerpts from 2008 to 2012, as well as his actual performance for every futures trading day from 2004 to 2011--almost 2,000 days worth of real trading results and analysis. You'll follow along as the challenge of everyday trading teaches Miller the importance of focus, motivation, controlled aggression, and just showing up--especially on those mornings he'd rather sleep in. As you track his progress hour by hour and day by day through the journal, you'll see how he recognizes his strengths and weaknesses, reaches or falls short of his daily goals, analyzes his results, and applies everything he learns to future trades, including valuable insights gleaned from sports, poker, and life. If you're thinking of quitting your day job to be a full-time trader, Miller offers a clear-eyed look at what you're getting into. His path to success was rocky, with ecstatic highs interspersed with intermittent setbacks. Despite his well-crafted plan, his intelligence, and his dedication, Miller began his trading career the way so many others do--with losses due to a lack of training and a poor business plan. Though he learned his lesson, ate his humble pie, and got back into the game successfully, there's no reason for you to repeat his mistakes. Chronicles of a Million Dollar Trader reveals how successful trading is about much more than reading charts, because you're not just playing the numbers--you're competing against the markets, other traders, and yourself. Much like a sport, winning is the result of good planning, practice, and execution, and if you're not on your game, then you're already on your way to losing. If you're a full-time trader, part-time trader, or just considering becoming one, this insightful, revealing look inside Miller's mind offers vital lessons on how to trade like a champion.

Leseprobe

Contents

Cover

Title Page

Copyright

Preface

The Call

Acknowledgements

Introduction

The “Race”

A Motivational Carrot

How This Book Is Organized

Intention and Use of the Trading Journal Entries

Journaling and Performance

Balancing Credibility and Humility

Bamboo Trees and Windows

A Book about Trading?

Part I: Beginnings

Early Tunnels of Life

A Late Bloomer

Early Vocations

Don't Quit Your Day Job

Out of the Abyss

Evolving Perspectives

A Sporting Chance

Part II: Journaling the Million Dollar Race

July 2008 Journal Excerpts

August 2008 Journal Excerpts

September 2008 Journal Excerpts

October 2008 Journal Excerpts

November 2008 Journal Excerpts

December 2008 Journal Excerpts

Part III: Beyond the Race: Best of the 2009 Journal Excerpts

Part IV: Birth of the Jellyfish

The Genesis

Selecting the Team

The Jellies Speak

Part V: Beyond the Tank: Best of the 2010–2012 Journal Excerpts

Part VI: The MF Global Bankruptcy

A Different Kind of Trade

Part VII: What Goes Up . . .

An Object in Motion Stays in Motion

Trailing Stops at the Macro Level

A Thousand Words

Part VIII: Final Thoughts

Appendix: Journal and Jellie Shorthand and Acronyms

About the Author

Bibliography

Index

Cover Design: Wiley.

Cover Image: background: © iStockphoto.com / gaffera;businessman © Getty Images / moodboard.

Copyright © 2013 by Don Miller. All rights reserved.

All charts created using TradeStation. ©TradeStation Technologies, Inc. 2001–2013. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750–8400, fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748–6011, fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762–2974, outside the United States at (317) 572–3993 or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data

Miller, Don, 1961-

Chronicles of a million dollar trader : my road, valleys, and peaks to final trading victory / Don Miller.

pages cm

Includes index.

ISBN 978-1-118-62789-1 (cloth); ISBN 978-1-118-62773-0 (ebk);

ISBN 978-1-118-62779-2 (ebk); ISBN 978-1-118-62778-5 (ebk)

1. Stocks. 2. Investments. I. Title.

HG4661.M55 2013

332.6092–dc23

[B]

2013005316

Preface

For years, I said no to numerous requests to write a book on trading for many reasons. First, I believed that my online trading journal at donmillerblog.com was a better way to get my thoughts across to the trading community on a current basis, initially as a detailed trading diary and then in a manner that shifted focus away from me and more toward intensive trader education, motivation, and industry activism. A book, on the other hand, unless properly crafted, runs the substantial risk of becoming dated the minute the ink dries. So, the first hurdle to be overcome by any bona fide author is to create lasting content that will forever stand the test of time.

Second, even though the title of this book, Chronicles of a Million Dollar Trader, accurately depicts my 2008 through 2009 journey in which I earned more than $2 million in 18 months by trading equity index futures intraday—largely as the result of a self-imposed one-year $1 million challenge—I didn't want to write a book that was a story primarily about success, nor did I want to put something forth that might encourage prospective readers to leave behind their current pursuits and talents to follow in my footprints. This is because as you'll read in the coming chapters, the virtual feet that created such prints have been bloodied, battered, and bruised as I stumbled and tripped my way through my own humanity toward a goal that seemed ever-elusive. And although I did ultimately reach my objective and beyond, the journey didn't come without a certain degree of personal and family sacrifice and hardship.

Third, there is substantial risk when writing what is largely an autobiography that despite best intentions, personal ego and pride will slip in. Yet, as any successful trader will tell you, both character flaws are among the leading causes of failure in the trading world, just as they are in life. Plus, any success I've been granted over the years has been largely rooted in the foundation of failure. Read that last line again and you may have unlocked several secrets to life itself! So, another challenge I'd have to overcome as an author would be to put forth content that would focus as much—if not more—on my failures than my successes.

Fourth, from a pure business perspective, a good trader can make far more profit from directing his or her energies toward trading than by writing. Any author of a trading book will tell you that the royalties are minimal at best and that the resulting “distraction” usually isn't worth the financial loss.

Finally, in terms of intended educational benefits, it's impossible to teach anyone to trade solely via a book. As is the case in any performance-based field, successful trading requires intensive education, years of experience, and the ability to hone and maintain the skills necessary to navigate the ever-changing seas of the financial markets. As such, for these reasons and more, for years I've turned down requests to write such a book.

The Call

Then came a call from Laura at John Wiley & Sons—a leading publisher in the financial world with a reputation for quality and high standards—who encouraged me to formally document and supplement my existing journal in permanent book format. As publishing ideas and discussions began, though, I was reluctant, as I made it clear from the outset that if we did something, it would have to be done in such a way to hold true to the values I've tried to maintain since beginning trader educational and advocacy efforts in the late 1990s.

Then the parallels began. Here was an opportunity to write a nonfiction version of my entire trading journey along the lines of the classic Reminiscences of a Stock Operator (Lefevre [1923] 1994), another Wiley book long regarded as one of the top trading books ever published. Much had changed since then, including the increased abundance of shorter-term trading opportunities, improved technologies, market access advances, and evolving regulation. Then, there was the opportunity to tell that rare story of someone who quietly but ardently prepared for years, reaped a substantial reward, and didn't subsequently give it back. Too often, we hear of investors, celebrities, professional athletes, and lottery winners who let it all slip away, sometimes as quickly as they earned it. There are also the modern-day real-life versions of Gordon Gekko (the lead character in the movie Wall Street) who have added new wrinkles to the long-running objective of ensuring that the market doesn't take your money, as now we have the game of ensuring that your broker doesn't abscond with your hard-earned money.

Suffice it to say that as time and discussions progressed, my thoughts slowly shifted from concerns of whether my story should be told to the growing possibility that my story must be told, if only (1) to prove once and for all that successful trading is downright possible with the proper mix of education, experience, patience, focus, and motivation; and (2) to chronicle my footprints in such a way that doing so might help just one person avoid the bloodied footprints that had disappeared into crevices.

I've often said that I wouldn't choose trading as a first career choice for my children given the necessary pain and hardship that is a fact of life in this field because (1) most small businesses fail, and (2) most traders fail. As such, every prospective trader begins with two strikes against him or her with a small remaining margin for error. Conversely, I've also said that (1) there is zero doubt in my mind that consistent and abundant success in the markets is possible, and (2) if, after weighing all the attributes of this field, my children or others made their own decisions to follow my pursuit, I'd do whatever I could to help make their way less painful. So, after many years of saying no to authoring a book on trading, I finally said yes.

So, welcome aboard as we journey together through a trip of a lifetime. Our journey will take us through the lowest valleys of despair that seem endless to beautiful bamboo forests that seem to grow to the sky before your very eyes. We'll travel through time and place, starting in my early years of immaturity. We'll travel through the puddles of tears, witness the self-inflicted wounds, see how I often poorly managed ongoing battles with interruptions and focus, and revisit battles with personal spirituality and life's true priorities. Through it all though, you'll see the path was forever moving forward.

One note of caution: As you begin reading, I strongly encourage you not to jump ahead and get right to what I call the “bamboo” years, where the fruits of time, effort, and grace finally blossomed. Although I recognize that traders by their nature can often be impatient beings and thus prefer to cut to the chase, Part I provides a necessary foundation for the later chapters.

Yes, this true story includes a certain level of accomplishment in the financial trading world, which will show that despite the tremendous imperfections of humanity—and this trader specifically—anything is possible when years of extreme dedication, preparation, and motivation collide with that special window of opportunity. Far more important however, is that these pages describe a tale about passion, humility, tears, triumph, redemption, and the constant struggle between humanity and the pursuit of ever-elusive perfection. Just as trading mirrors life, life mirrors trading. Succeed at one, and you'll likely succeed at the other. And if, when we reach the end of our virtual journey together, these words increase your perspective on life as much as it does on trading, we'll call it a mission accomplished.

Hold on tight as we witness the good, the bad, and the ugly. In the end however, as with the gift of life itself, it was and remains all good as you witness the unrelenting grace of God.

Acknowledgments

Where do I begin? I'll start with the two easy ones: my lord and savior Jesus Christ and my beloved wife, Debra, who so often bore the risk, brunt, and reward of my decisions. Without this incredible team, I wouldn't be breathing today. Together, they held me up during my most difficult times and stood beside me during better days.

Yes, I'm a follower of Jesus Christ. Perhaps better said, call me a forever bumbling, stumbling, always-battling-with-his-own-humanity, too-much-left-to-work-on Christian. And although you won't find me “bible-thumping” my way through these pages, I've lived long enough and have personally witnessed specific life events such that there is no debate in my mind as to whether God exists and who Jesus truly is. For those with differing religious views, I love you beyond that which you'll ever know and look forward to our virtual journey together.

As for my wife, Debra, although I touch on her incredible love, support, and patience in various segments, I could easily write another book about what she's meant to my life. Simply put, I've been richly blessed with the ability to journey life's ups and downs alongside my best friend and confidant, one who loves me despite all my human flaws.

The next two acknowledgments are also easy: our two daughters, Courtney and Chelsea (listed sequentially by date of arrival only!). They've likely taught me more than I've taught them. And yes, the apples don't fall far from the tree, which as we all know can be both a blessing and a curse, depending on which of my characteristics were passed on and to whom. They've both reached incredible heights in their young lives, while persevering through their own struggles as they continue to discover their place in this world. In Chelsea's case, she was diagnosed with type 1 diabetes at age 10, which was a devastating blow to us all and meant that she'd be forever dependent on doctors, needles, and insulin pumps. Since then, she's provided an incredible inspiration to me and others, as she's persevered to become valedictorian and an accomplished musician despite her hardship. She's also been the direct inspiration for our work with the American Diabetes Association and other charities, which receive a portion of the proceeds from our trading educational videos and services.

None of this, of course, would be possible without my parents, Betty and Burnie, who reared and guided me through some difficult early years, as well as my grandparents. In particular, my maternal grandfather, Frederick, had an especially strong influence in my young life prior to his passing in 1983, as did his wife, my grandmother Miriam, who—through my parents—would later provide me with a gift in her dying days that would provide a safe harbor for me and my family when life's sea got stormy.

On the industry front, although I admittedly learned the business through personal experience and trial and error, a few standouts have accompanied me during various phases of my journey. This list includes Dr. Brett Steenbarger, whose The Psychology of Trading 2003 work I consider to be among the best trading books ever written and who supported my initial efforts to begin publicly blogging my daily trading journal. Others include Larry Connors, Linda Raschke, Damon Pavlatos, and Pat Lafferty, all of whom have supported me over the years either by providing necessary infrastructure or simply as peers and friends.

With respect to the latter, there's an interesting dilemma for those of us who have found ourselves inadvertently placed in positions of perceived industry leadership, either through performance or other credible means. Although many look to us for guidance, it can be quite challenging and, frankly, a bit lonely when we find ourselves in need of our own sympathetic ear or shoulder on which to lean. At those times, a strong peer network of those who truly “get it” becomes a lifesaver.

I'd also like to acknowledge the initial 2009 “Jellie” trading team—which you'll read about more in Part IV—for their help in refining one of the more unique educational trading experiences ever crafted. Simply putting up with me for eight weeks (336 hours!) should earn them some kind of medal of valor.

Last, this book would not be possible, nor its final chapters complete, if not for the herculean efforts of James Koutoulas, John Roe, Greg Collett, and the Commodity Customer Coalition, which was created in late 2011 as the result of the MF Global bankruptcy that adversely affected tens of thousands of small business ranchers, farmers, hedgers, and traders. This team, and James in particular, was directly responsible for speeding the safe return of our assets that had been wrongfully taken during a very unfortunate time in this wonderful industry's life. Special heartfelt thanks go to Sandy Meyer and John Norquay, two dear friends who were placed in my path just prior to that tumultuous period and who helped me maintain some sort of personal and spiritual balance. Were our meetings simply happenstance or coincidence? Not in a million years.

To you all, I am eternally grateful for the gracious love and support you've provided me.

Introduction

In December 2007, at the age of 46 and after numerous starts, failures, restarts, and distractions, I decided to take a drastically different approach to my on-again off-again passion of trading equity index futures. Although successful by most standards, I believed that my results were simply not reflective of a far deeper potential, similar to an iceberg that has a significant proportion of its mass below the water's surface. Further, because I was only a few years away from the half-century mark with a retirement nest egg that in my view was less than optimal due primarily to a splintered focus over the years, I had a growing need to maximize opportunity in such a way that would provide longer-term financial security for my family.

In addition, as a multitasking trader, columnist, and trading educator with a deep personal conviction that people should develop self-sufficient financial management skills to the extent time and circumstance permit, I believed that I was becoming the proverbial jack of all these trades as it related to the financial markets yet master of none. Add a growing irritation with naysayers who didn't understand the true business of trading and suggested that trading was irresponsible gambling or that any degree of market success was either impossible to attain or due solely to dumb luck, and I felt a growing desire to “walk the talk.”

The “Race”

My solution? Dedicate myself for an extended period of time—in this case, one year—in such an extreme and intense manner that I would eat, sleep, drink, dream, and live the world of intraday index futures trading with the goal of increasing my retirement fund by $1 million. The purposes of this “Race,” as I would later label it and how I often refer to it throughout this book, were threefold. First, if accomplished, it would exponentially grow that modest nest egg such that financial security would be in reach and allow me the time and resource to pursue endeavors later in life that I truly enjoyed, including trading itself. Second, striving toward such a goal would provide a deep personal challenge to see how far I'd evolved my trading skills after roughly a decade of development. Third, doing so would provide a large sample size of factual data to show that successful trading was indeed possible, plausible, sustainable, and real.