John Piper is one of the world’s most respected and able market analysts, and is the UK’s most experienced independent trader in futures and options on the web. John’s acclaimed book The Way To Trade has sold thousands of copies worldwide helping traders in 49 separate countries.
If you have been trading for sometime and you read John’s book then you will find that it almost reads like your Autobiography! Strange isn’t it, but true. Evolution of a Trader is a Journey! Almost all good traders go thru stages of loss, negativity and destructive emotions. While few of them never make it. Those who make it always look back and say it with a smile, “well…that wasn’t bad!”
John provides you with a clean architecture for trading. His trading pyramid can help you to create focus areas. In each of those focus areas John suggests and recommends strategies to overcome common trader problems. This book can be used as traders manual to refer weak trading areas. This book is blessed with an very interesting foreward by Alexander Elder.
Here is my favorite part of the book.
I strongly recommend to create a poster and use it for inspiration!
Please note all of these steps does’t apply to everyone and some of them are very Irrelevant especially in Indian trading ecosystem…but general understanding of these steps can give you good reflection of where you are!
55 steps to becoming a Trader!
(simplified summary of the key steps taken by John Piper to get where he
We are intrigued by the market and start to do some preliminary
reading and research.
We buy a book or two and perhaps some newsletters.
We find something we quite like and start doing some research using
this particular technique.
We dabble a bit in the market, trading every now and then, mainly
losing money, but not much, and having the occasional winner.
- We generally forget about the losers and congratulate ourselves on
our winners. Convincing ourselves that once we learn the techniques
better there will be fewer of the former and more, lots more,
of the latter.
We keep manual charts, which may become quite large physically,
and maybe plot a few indicators manually (this was before computers
became quite so available).
We spot an approach to the market we think cannot fail to win!
We start to trade actively.
The results make it clear that it is not as easy as appeared to be the
case. There were a few key points we failed to fully appreciate.
You must decide what information you want, design
your approach and then use it.
We continue to trade. Results are fairly indifferent (to bad) but there
are enough profits to keep the interest up.
We continue to expect great results.
Trading volume increases and the amount of money in the market
We continue to read and take newsletters, but our research has only
scratched the surface. We still have no real idea what we are
Our technique scores a major success (the ‘87 Crash), but our lack of
trading skills means that we do not profit from it as we might.
The market begins to instill a little fear but we have yet to learn the
first key lesson.
We keep trading in size. We are over trading and clearly act as a fugitive
from the law of averages. It is only a matter of time.
- We make a big profit. It is all going well, we start to get overconfident.
We suffer a big loss. Psychological problems start to develop.
We buy a computer and start to monitor many more indicators.
We look at other techniques and other markets.
We get wiped out.
It becomes clear this is not at all as easy as it looks.
We become impossible to live with.
It also becomes clear that the information available (in 1987/88) is
not much use to those seeking to make money from trading.
We determine to fill this void and look to create a newsletter telling
it how it is.
We work with an analyst in the USA. Note how inappropriate this is
for someone who wants to trade. Much better to work with a trader!
We continue to trade, but in a much reduced manner.
We start our newsletter which is an immediate success.
This requires a lot of research plus a lot of self analysis, but it is still
not clear that trading is a psychological issue and that the externals
(systems/software/computers/ brokers/advisers, etc.) are almost
completely irrelevant until the internal is set up right.
We are plagued with fear and have no clear methodology.
It becomes clear that judgmental trading (without a clear methodology)
is a dead end.
We start to look for a suitable methodology.
Those available on the market do not seem to be suitable and so we
design our own.
We start to trade using a clear methodology. This is not easy but
some things start to become obvious.
We find ourselves trading for no good reason (something that was
impossible to detect before we had a clear methodology), but then
realize that it is due to an argument earlier. Self esteem clearly plays
We realize that the key element in trading is our own mentality.
Now we can start to make some real progress.
We improve our systems and start to make some money on a one
But we are still fearful and this remains a big problem. We learnt,
some time ago, the necessity of cutting losses, we cannot get to the
second secret until we deal with the fear.
We keep trading and we continue to do OK, we start to get more confident
and the fear starts to dissipate.
- We take another big hit.
We feel awful and think we should perhaps give up, should perhaps
have given up some years ago when it all went wrong the first time.
We keep trading and determine not to get overconfident again. We
reinforce the stress management systems we had to learn in the
early days and keep meditating (essential to trading success). We
realize the importance of remaining humble and also of being an
“empty vessel.” If you are full of yourself there is no room to learn
We meet another trader who becomes a mentor. He introduces a new
(to us) technique (Market Profile) which immediately “fits.” This is
because we now have the right attitude.
We build on our successes. Systems improve, results improve, and
our mental attitude improves, fear becomes less of a problem.
We decide to see a trading coach/psychologist (Adrienne Toghraie)
and have an initial meeting in Switzerland.
We make a big profit by letting profits run. We have managed to do
what every successful trader must. Can we repeat this trick?
We start to move away from fear, and start to become risk orientated.
We realize that mental attitude is all. We see that it is vital to be
relaxed, we reduce position size, again!
We spend a few days in the USA working in a group with our trading
We begin to make money with consistency.
We get a little overconfident, again! But this time we realize the fact
and the damage is limited. But we learn, again, to remain humble.
- We start to trade almost subconsciously some of the time. We are
We know there are still many challenges ahead but we are confident
that we will deal with them.
Money ceases to be a problem, we truly live in a world of abundance.
We find that our lives improve across the board and that we are
achieving in a wide range of areas.
This one is worthy addition to Traders collection, Do buy it.
In case, If you have missed this series which is a good addition to above…