Trading 101: The Key Ingredient to Sustained Success is Failure

My trading style uses fairly tight stop loss settings, which demands that my entries be pretty accurate with a small margin of error. In some trading circles, this would be seen as being “amateurish” for not allowing your trade to have breathing room to deal with the range of market volatility. Of course, most of those same trading circles view the market as mostly random in the short term that must be met with a ball park entry with a wide stop loss.

I used to trade with wide stop loss settings, or threw caution to the wind with “mental stops” rather than actual programmed stops. The market can gyrate so much that it’s an easy habit to get into. The market rarely moves in a straight line and can drift back and forth before making a definitive move in a particular direction. When stops are tight, it’s easy for price to move just enough against you to trip the stop loss before moving in the anticipated direction. This often happens enough to be a common frustrating experience among traders.

Using wide stops gives you more leeway when in a trade, but that also means your losses will be greater when they are tripped. Of course some traders don’t use stops at all- as that guarantees you will never be whipsawed out of a trade, but that also leaves you without protection if the market makes a big move against your position.

Not using stops is high risk, yet most traders including myself have engaged in such behavior due to the frustrations of getting whipsawed out of trades that would have eventually worked. But eventually the Grim “Stopless” Reaper cometh and will make you pay for not using stops. Eventually one learns to incorporate hard exits via stops, or the market will do it for you with severe losses that can blow out your account.

Over time I’ve learned that while using stops can be frustrating, and using tight stops VERY frustrating, it forces you to really focus on your trading system to find ways of improvement. Typically when a trade is entered that doesn’t work out, it’s one of three things:

  1. System is correct, but market had a random spike/dip due to some late breaking news.
  2. System is correct but the application of system was wrong.
  3. System has flaws that need to be worked out.

Out of most events encountered, #1, is VERY rare, while #2 is more common and #3 is typically the most common. One could say that #2 is a subset of #3 since proper execution is also part of the system.

I’ve been working on precision trading, where one can trade the daily battle between resistance and support with a fair amount of accuracy so as to not need to use wide area stops. Using tight stops and the ensuing failed trades and frustrations that resulted were actually great motivation in improving my trading system.

I find that my post trade analysis of failed trades have been responsible for the bulk of my trading system evolution. Preparation and planning can only go so far but I seem to be able to pick up so many more fine details of what went right and wrong when the analysis is done right after the trade is finished- likely because my plan is fresh in memory so it’s easier to pinpoint the aberrations. It’s a great feeling to spot a problem that was previous missed that when fixed, improves the accuracy of my system.

It’s a lesson I like to forget – that failure is a part of progress, since it opens the window for improvement. To get the best out of failing, it helps tremendously to have a clear and concise system trading plan that you can back track step by step to see what went wrong as well as what went right. A big mistake I’ve seen other traders make is “winging” trade entries in real time without a clear plan of specific entry and exit strategy. The point of system trading is the eliminating of seat of your pants “ad lib” style trading.

 

 

 

My Final Xanga Update: After over a “Year’s Silence”, Xanga Finally Opens its Mouth and Sings its Swan Song

September 9th, 2013, was the last mass update provided by the “XangaTeam” when they went over to the “new” Xanga 2.0 “WordPress” format. After that,..silence….and more silence.

Unanswered were questions running through the mind of many- here are a few:

1) Why is Xanga 2.0, which is costing $48/yr, operating with less functionality and features than free WordPress?

2) What happened to the “Front Page” and other user and community friendly features Xanga 1.0 had?

3) When can we expect to see improvements to restore all the community centric features of Xanga 1.0?

4) if Xanga 2.0 is on the WordPress platform, why is it still shut off from the rest of the blogging community so that not even free WordPress users can leave comments?

5) I thought you guys said Xanga 2.0 was going to keep all the community features as “1.0” and would be a better deal than the free blogs like Blogspot and WordPress?

 

Days, weeks, and months passed by with nary a peep from Xanga as to what their status was and what they were doing. NOT ONE WORD. The only one saying anything was the volunteer Xanga helper EdLives who did his best to provide a positive spin to the situation.

During this time, the subscription clock was running – meaning folks were being charged to blog on a site that looks like the pre alpha version of free WordPress.

What was delivered was NOT what was offered – a new site that would have all the rich community features that made Xanga 1.0 stand out from the rest. People were NOT told the system they had pledged money to would be a bare bones version of free blogging sites and would remain in that state until further notice.

People wondered if Xanga had pulled a “bait and switch” and had taken the near $70 grand of crowdsource moula just for their own amusement.

After a year of silence the “volunteer cheerleader” EdLives mentioned that he had finally been able to communicate with Xanga CEO John and that an update would be forthcoming.

That statement became a reality on October 1 when The XangaTeam blog finally issued an update. Let’s review this update line by line to fully understand what it means…

Before I begin, remember what Xanga 2.0 was marketed as – having the SAME community features as Xanga 1.0. A direct quote from an update from them last year:

Community

Whenever anyone asks me what Xanga is all about, I always answer: “blog community.” To me, that’s what makes the site fun: you can blog, and there’s a community of people generally excited to read your posts (and vice versa).

I know a lot of people who have tried other blogging platforms, and they’ll often say that they feel they’re publishing into a vacuum… and that nobody is reading their blogs. We’re working to keep that warm community feeling on Xanga… so that when you post, your subs can quickly and easily chime in with a comment. (As part of that, we’ll be importing every single login over – along with all subscriptions/friends – so that your subs can continue to read your posts even if they’re not blogging on Xanga 2.0).

We’re incredibly excited about using the WordPress platform, as the publishing software is incredibly powerful. As we adapt it for use for Xanga 2.0, we’re working to make sure that all that power is combined with the warm fuzzy feeling of Xanga community love as well.”

 

Also, they noted that they would be more communicative going forward with the arrival of Xanga 2.0, with the community playing a greater role in guidance and control. The year of silence appears to contradict that notion however.

Anyway, EdLives’ answer to mine and others complaints about this lack of response was that we didn’t have all the info to justify our criticism and when the John’s update came to light, all would make sense. You can be the judge if this is the case. Here we go (my comments in blue)….

_________________________________

Update

We want to thank everyone for being there for us.  Without your involvement, we wouldn’t be where we are today.

Here are a few of the things that we’ve been working on over this past year:

* We built out a new server system, and migrated thousands of websites over to the new servers
* We fought off ongoing DDOS and brute password attacks that were slowing the site down
* We’ve made further upgrades to our server setup over the past six months, to use new more powerful servers as they became available.
* We’re planning one more server upgrade later this year, to take advantage of better and cheaper server systems that have become available.

(These hardware updates are nice, but this is the “back end” stuff- the stuff that is invisible to the customer, the blogger. For the PAYING customer, the more important items would be front end stuff like the user interface along with user features and operations.)

One area where we’ve dropped the ball is providing updates on all of the above.  Initially we were fighting off the DDOS attacks, and didn’t want to tip off our attackers on our progress.  So we focused on talking to our users one at a time, through our email support and help forums.

 (So this is their excuse for over  a YEAR of SILENCE? They act like no other company has to deal with “denial of service attacks”. Newflash- it happens to just about ALL major internet entities such as Facebook, Google, Blogspot, Amazon, and a host of other popular internet companies. It’s nothing new.

Besides that, how on earth do they think that justifies ZERO updates for a YEAR? They didn’t want to “tip off” the attackers?  What does that have to do with any upgrades or new hardware purchased? And if this were the REAL reason for lack of updates, why not just state that as a simple update – that they are dealing with internet attacks without going into any details?

Two Words: LAME EXCUSE

IMO: They should just admit this was a screw up with no decent excuse and fully ACCEPT the blame rather than try to deflect it.

On to the next LIE – they focused on talking to users “one at a time”? I guess all the folks saying their emails and attempt at contacting Xanga went unanswered must be hallucinating…)

But more recently, we’ve largely defeated the ongoing DDOS and password attacks.  The site has been up and stable, and we’re gearing up to make the further upgrades mentioned above.  We’ll be providing more regular updates and communication, both on this blog and also on our Facebook page.

(The site may be stable, but it still has subpar functionality than that of free blogging sites. And didn’t they ALREADY say last year that they would be updating more? Xanga needs to learn that WORDS are CHEAPACTION Counts.)

 So we’re working to communicate more regularly, and to start building the community teams that we mentioned earlier.

(As in a YEAR ago before they collected the funds and went silent)

First up: we’ve asked Joel of edlives.xanga.com to serve as a community liaison.  You can reach him at his blog at edlives.xanga.com, or through Xanga’s facebook page at http://www.facebook.com/xanga.  We will have a regular call with Joel to discuss feedback and ideas.

(Uh, really? Isn’t this what he was doing ALREADY? The only difference now is you are making it “official”?)

We’re also going to be working together to pull together a list of other areas where we could use help.  If any come to mind, please let us know and we’ll discuss it with Joel in our next call!  And as a thank you for sticking with us, we’re offering 6 months of free blog hosting to all of our paid members.  Just email Eugenia at help@xanga.net, and she’ll add it the extra months to your account!

 (So lets see- in return for one year of horrible blogging conditions with no updates that whole time, the reward to the diehards is 6 more months of broken website? Really? Even worse is folks who want this offer will have to request it as it isn’t being given out automatically.

Let’s take a moment to think about this- Xanga hasn’t updated for over a year – so most folks that did pay for subs have no idea there is a new Xanga update and a free six month offer. Why not just extend everyone’s sub by six months automatically? Oh yeah, if they did that, some folks who would have PAID another $48 to blog may put off doing that.

So it’s okay to leave paying users in the dark for over a year on a subpar blogging site, but it’s NOT OKAY to extend them the additional time automatically, because making money is more important, got it.)

Thank you for sticking with us over the past year.  We’re looking forward to working together to build Xanga in the coming year.

_____________________________________________________________________________

 

That was it with no mention of any restoration of ANY of the community features of Xanga 1.0.  This was it after a year of silence.

So was EdLives right? Does the above “update” adequately explain the year plus long silence and massively degraded service so that prior complaints were not justified?

 

To me the update did explain quite a bit- it made it CRYSTAL CLEAR that Xanga is finished and “Xanga 1.0” is history, not to be duplicated by anything Xanga offers for the foreseeable future.

It’s crystal clear that any business sense Xanga had at the beginning of its existence has left the building long ago. The first and most important rule in any business is that CUSTOMERS COME FIRST. You MUST do what it takes to convince new people to pay for your service and current customers to continue paying.

Imagine if Facebook, Google, or Amazon decided to offer extremely subpar service for an ENTIRE YEAR. Do you think they would still retain their customer base, or would the vast majority of folks migrate to other companies? And those are FREE sites! But Xanga thinks charging people for a service inferior to free blogging sites, and ignoring their customer base is the ticket to success.

The reality of the situation is Xanga already lost most of their users when they decided to put up a pay wall. Then they lost many of the folks who paid to blog during the continued poor functionality of their “new” Xanga 2.0 site. Now the 1 year subs are expiring and there is no incentive for anyone to continue to pay to blog under such poor conditions.

Xanga needed to restore the community features ASAP and they FAILED MISERABLY and don’t seem the least concerned about it.

There are so few people left that there’s little hope for any type of recovery and more subs expiring will be the final nails in the coffin.

If people want to restore the old “Xanga Style Community”, it will have to be done elsewhere without Xanga’s “help”.

In summary, this is my response to Xanga CEO John’s latest “Update“:

 

 

RIP Xanga 1.0 you deserved to go out better than this.

 

 

The Paradox of Failure and Success

Everyone loves to succeed. We love the feeling of being successful. On the other hand, everyone wants to avoid failure and the negative feelings associated with it.

The paradox is success is typically built on the shoulders of failure. Before we can hope to succeed, we have to step up and try and achieve.

To try is to risk failing that task, but it sows the seeds of experience that can grow into further progress on continued attempts.

Failure is also the seasoning that makes the taste of success so sweet. The more difficult and complex the task, the more energy and effort one puts in, the greater the feeling of satisfaction felt achieving the desired goals. Success easily obtained doesn’t feel as special as that which is hard fought for.

Success and failure are intertwined – those who allow themselves to be scared off from trying due to fear of failure will also limit their opportunities for success.

Fed Chairman Faces the Music at Senate Reappointment Hearing

Fed Chairman Ben Bernanke is attending the Senate Hearings on whether he gets appointed to a second term. Kentucky Senator Jum Bunning had a few choice words to say on the matter.

Before I show the video, a little set up is needed…

Here’s the low down on bailed out company AIG. When a company is in serious financial trouble, one of the first things they do is try to renegotiate the debt obligations to their lenders….as in pay them 60 or 70 cents on the dollar rather than the full value amount, known as “par value”. The lenders may not like to take a loss, but they are motivated to negotiate because the losses could be far greater if the company goes bankrupt. Anyway, that’s what normally happens- but it didn’t with AIG. The Fed bailed out AIG and paid 100% of their debt (par value) to the lenders…..all with US taxpayer money and more debt. So basically AIG allowed other banks to engage in risky counter-party investments that went bust- and US citizens get stuck with the bill. So AIG and their lenders get the benefit of only gains and NO RISK of any losses. This, my friends, SUCKS and is NOT what capitalism is about.

This video starts in where Bunning is talking about the AIG bailout having no negotiated cuts to lenders:

Notice how Bernanke tries to weasel out by saying he was “powerless” to do anything and that the lenders had the upper hand. This is hogwash. If AIG went belly up, the lenders would have got squat, and had NO leverage. This is yet another example of Bernanke making excuses instead of taking accountability for his mistakes….that is, if you want to call this a “mistake”. I think this was a deliberate move in favor of Wall Street cronies.

Here’s the longer version of the video to see the full verbal smack down given to Bernanke:

Sen. Bunning (R-KY) to Fed Chair Bernanke: ‘You Are the Definition of Moral Hazard’