A wise man once said, “Luck is what happens when preparation meets opportunity”. However, many unsuccessful people seem to think luck is just something that happens by chance.  To the unsuccessful person who is just hoping to “get lucky” and hit it big, it may look like a successful person is “just lucky” but that does not tell the whole story, not even close…

‘Behind the scenes’ of any wealthy or successful person is thousands of hours of hard work and repetition. While the poor man was playing video games or binge-watching Netflix, the rich guy was putting in the ‘hard yards’, doing the ‘boring stuff’ that most people don’t want to do or that they make excuses for not doing.

Today’s lesson is all about how to put yourself in position to make money trading, about how to set yourself up for trading success rather than leaving it to chance. It’s not just going to happen because you want it to, I can tell you that for a fact. YOU must make it happen by proper preparation and effective routines. You have to love the process, love the routine, once you do that you will be well on your way to trading success.

Once you do the homework and have put in the ‘hard yards’ and your mind is aligned for trading success, when the proper trade setup comes along, all you must do is put the bullet in the chamber, so to speak, and fire away.

Your goal as a trader (or with anything really) should be to work so hard and be so dedicated to mastering your craft, that when the perfect opportunity comes along, you hardly even have to think, you literally just execute the plan. You can nail this down all the way to the expectation of the trade. Win or lose, you can know what to expect before you pull the trigger. Doing this, will allow you to eliminate fear and other negative emotions from dictating your behavior in the market.

Be CRYSTAL CLEAR about what your trading edge is!

It’s commonsense to say things like “If you don’t know what you’re looking for you will never achieve success…” but SO many traders start trading live with no real concrete trading strategy or trading edge. They literally don’t know what their trading edge is.

Obviously, you must pick a strategy, a trading edge – something that gives you a high-probability entry – and learn to trade it before you can really do anything else. Many people simply don’t even get this beginning part right. They switch from method to method, never really mastering one and they end up with a hodge-podge of ideas that they call a method. Usually this means their charts are plastered with multi-colored indicators, which really means they are just confusing themselves.

The entry is simple, perhaps the simplest part of trading, so don’t over complicate the trading process. I teach a number of high-probability price action patterns that you can use to enter the market from. Now, a high-probability entry doesn’t mean a guaranteed win every time. It just means that over a large enough series of trades, that edge will give you a better than 50%-win rate, which really is all you need if you’re managing your money right and not over-trading.

I have written multiple lessons on how to master your trading strategy, so check those out if you haven’t already. Remember to “keep it simple stupid”, and don’t think too much about this very elementary aspect of trading. All you’re doing is finding a repeating pattern in the market and using it to enter, it’s not rocket science, but it does require discipline. The biggest thing is finding your favorite price action pattern and committing to master it and to NOT trading if it’s NOT present! This is the first step to getting yourself into position to make money trading.

Develop a trading plan and routine

Boring, right? I know that’s probably what you thought when you read the words “trading plan and routine” above. But, if you read this little section you will be light years ahead of most traders…

Guess what? Boring stuff is how you make money, how you get rich! One big problem with our current society of constant iPhones in our faces is that everyone seems to need everything to be a blue-light filled screen in their face all the time or they think it’s boring. Well, do you think Warren Buffet or Bill Gates or even Donald Trump got to be where they are by playing video games constantly or watching T.V. all day? No. They learned to love the process. They found what they loved, and they GOT INTO IT hard core. They didn’t whine about the boringness of routine and processes, they made themselves love them because they knew if they did that, the money would come. A funny thing happens when you do this, along the way, you ACTUALLY start to enjoy the process and it stops becoming something you have to force yourself to do, you just start WANTING to do it.

This is about turning your trading strategy / edge from the first sub-point above into a ‘bite-size’ trading plan and routine that you can really dig into and start implementing. You can and should write this out and read it every time you plan on looking at price charts.

Your goal is to be following an objective plan that allows you to approach trading from a calculated business perspective, rather than a random ‘shoot from the hip’ gambler mentality that most traders end up with.

Once you have your plan and routine written out, start practicing it everyday by demo trading on real-time market conditions or even trading with VERY small amounts of money. Ideally you will demo trade for a few months then start risking VERY small amounts of money until you are seeing consistent success with what you’re doing.

The goal is to learn to trade your chosen pattern / method so well that all you are really doing is checking in with your plan, following it to the T and then checking the charts to see if the conditions are ripe for a trade. The conditions are defined in your plan. If you do not see those conditions you go away from the charts until the next scheduled time to check them. If you do see a trade that meets what you’ve pre-defined in your plan, then you simply execute the conditions of the trade, which typically means:

Identify best stop loss placement

Calculate position size that maintains your pre-defined 1R per trade risk amount

Identify profit target of 1:2 (or better) ideally.

Set the trade and forget it.

This is the second step in setting yourself up for success in the markets.

Master yourself to master the markets

The ‘glue’ that will allow you to do Step 2 above, is mastering yourself, mastering your own mind and therefore your behaviors in the markets.

Setting yourself up for trading success is about getting into the proper trading mindset and perhaps what’s harder, staying in that mindset. Most people can get into the right mindset and stay disciplined and focused for a few trades, but it’s often the results of those trades that throws people out of whack. They start getting emotional; over-confident or afraid, depending on the result of their last trade. Don’t allow this to happen to you. Stick to the plan, to the strategy you have mastered. If you feel yourself getting frazzled then just read your trading plan again and take some time off from the markets to regroup, you will come back refreshed and re-focused.

Discipline, patience, overcoming mental hurdles, sticking to routine, understanding that your mind is the key. Mastering your mind is how you master the markets, and this is the glue that holds all of this together and that allows you to stay positioned to take advantage of obvious price action setups when they form in the market. This is the third step to setting yourself up for trading success.

Money matters…

There are a couple of very key aspects of money and money management that I want to discuss briefly. The most important parts of managing your money as a trader are controlling your per-trade risk (1R = risk amount per trade) to a 1R dollar amount that you can realistically lose on any given trade without it affecting your personal finances or trading mindset.

The other big part of money management is not over-trading. Whilst this isn’t directly money management, it is in the sense that if you are over-trading you are also risking too much money and thus putting yourself into a position to become emotionally ‘charged’ if you do lose.

You should aim to be a low frequency trader who only trades when conditions in the market are favorable and match with what your trading plan says. You should only risk a dollar amount that you’re totally OK with losing on any given trade. If you do these two things, the rest will almost take care of itself.

Conclusion

There are basically two parts to setting yourself up for trading success: The ‘work’ of learning how to trade the market and then the implementation of your trading plan. You want to break both parts up into smaller and smaller chunks that you can more easily ‘digest’ and understand.

Once you have become crystal clear on what you’re looking for in the market and devised a trading plan and routine, it just becomes a waiting game. Sitting and waiting is mostly what successful traders do. You should be out of a position / flat the market more than you are in a position, if you’re doing that then you’re on the right track. There simply aren’t very many high-probability setups per month that are worth risking your hard-earned money on. So, if you find you’re trading all the time, you are just gambling.

Setting yourself up for trading success means that you have done the work so that you will be prepared when the opportunities on the charts come along.

Proper preparation starts by learning, either from my trading course or elsewhere, but whatever you do, remember: Success (or luck) is what happens when preparation meets opportunity.

What did you think of this lesson? Please share it with us in the comments below!

How much is enough? How much researching, chart-watching and just general thinking about your trading is harmful? How does doing too much trading related activity hurt your chances of trading success? In today’s lesson, we are going to discuss these topics and delve deeper into why you may indeed be self-sabotaging your trading simply by doing too much of everything.

You can call it “micro-management” or you can call it “over-thinking” or “over-analysis”, but no matter the label given, the intent is the same: Control.

Perhaps at the very root of this problem of micro-managing one’s trading, is fear. When a person is afraid of losing their money, they will do anything they can to try and take control. However, in trading, trying to control the market is futile, it’s actually impossible. The only thing within your control as a trader, is yourself and your thoughts and actions in the market, that’s it.

Here are 5 of the best pieces of insight I can share with you to help you let go of the need to control the market:

1. Learn what you can and cannot control

Many traders try to control everything, and this thinking leads them to being unable to mentally handle a trade that is quickly moving against them or a trade that just barely misses their profit target and then reverses. These are just two of many examples of the consequences of being afraid and thus trying to control everything in one’s trading.

First off, stop trying to know everything. You can never know every single piece of data that is underlying a swing up or down in a market. In other words, you can never really know why a market is moving in the direction it’s moving, all you can know for sure is what has happened before and what is happening now, from that, we can use several different price action strategies to build a framework into the future for what MIGHT happen next. But, it’s important to understand that digesting more and more and more trading news, or even staring at the charts for hours and hours, is simply not going to help you figure out what will happen next. You can’t know what WILL happen, only what MIGHT happen. Remember, we are ‘playing the odds’ of our trading edge in the market, not acting on certainties.

You can never know what will happen FOR SURE in the market, until it happens (and it’s too late to take advantage of). So, as traders, we are trying to make consistent money in a game with inconsistent outcomes, not easy to do, especially if you have not yet accepted the outcomes are going to be inconsistent. However, it can be done, you can make money trading but NOT if you are micro-managing every aspect of the trading process and trying to control the market. It’s what so many of us get caught up in when trying to run our trading or our businesses or even our relationships.

The need to control all the small things in our work place, our trading and our relationships, can and usually will back-fire on us and cause a world of stress and anxiety.

When you finally understand, accept and then LET GO of the primal urge to control the market and micro-manage every little detail by believing more information will give you more control over your trade outcomes, you will be entering the beginning phases of the proper trading mindset. Trading success is mostly the result of proper mental thinking patterns and then using those to control one’s behavior in the market; proper routines turn into proper habits, etc. Once you master yourself, you will begin to see improved trading performance over the long-run. That may sound cliché’, but it’s very true as well.

2. Plan the trade and trade the plan

Yes, it seems like an overused trading cliché to say, “Plan the trade and trade the plan”. However, if you have a simple trading plan that you stick to without exception, then you are on your way to trading mastery. You need to build into your trading plan rules that say you will not over-think, not micro-manage, you then read this plan before you look at the markets each day. Also, build in time away from the markets so that you have a way to reset and regroup. You need a scheduled daily trading routine, so you aren’t sitting there all day trying to think of everything that may affect a market a.k.a micromanage. Your goal should be to only think about your trades and the market when you are looking at the charts, if you find yourself otherwise consumed with them, you’re doing too much.

Also, if you insist on micromanaging your trading to the point of always waiting for the ‘perfect’ setup to form, you’re going to miss some profitable moves. There is no perfect setup because every price action setup is going to look a little different than the previous ones, so just take a good one and manage it properly – don’t miss good trades because you’re waiting for a ‘perfect’ one! Your trading plan should show you the general market conditions that you’re looking for as well as your favorite trade setups to use as entry criteria, but these will be guidelines and remember you aren’t going to find the exact same trade twice; there is some discretion and skill involved and over time, education and practice you will become more in-tune with the market and the particular conditions you look for to enter it.

3. Accept a potential loss before entering the trade

A big reason traders don’t accept losses is micro-managing. Micro-managing means you’re trying to control everything, every little detail. People who get caught up over-managing their trading tend to think if they can adjust for every little variable, they can avoid losses somehow. Or, they start to think that since they’ve spent such a huge amount of time studying and researching that they are somehow able to avoid losses due to their ‘vast knowledge’ of trading.

You can’t avoid losses – they are as much a part of trading as your blood is a part of you. So, all you can do is figure out how to best manage them and remember to always understand that any singular trade can result in a loss.

This will remove an element of stress as soon as you place your trade. There are costs and expenses associated with doing business. For traders, a loss is a running cost. Accept it.

4. The WORST side-effect of micro-managing your trading is…

Over-trading or trading too much is the biggest problem that results from micro-managing your trading and trying to control the market. When we start to pay too close attention and do too much research and thinking about the markets and trading, when inevitably start to come up with too many trade ideas and start seeing patterns that probably are nothing more than market noise.

When you are watching the charts for too long you are also micro-managing them. Sitting there all day watching the intraday charts trying to pick every little move in the market; THAT is micro-managing the market!

It’s just like a boss in a company watching his employees work all day instead of just minded his business and letting them be. Yes, by watching them work all day he will probably notice some things he doesn’t like, but is this tactic likely to cause more good than it harms? How annoyed will the employees be with this micro-managing and how excited will they be to return to work tomorrow and most importantly for the business, how productive will they feel like being?

The solution to this is to just find your edge, read this article (our last one) and stick to that edge – don’t’ trade if it’s not there. It’s really quite simple. This is where your trading routine comes in – follow your daily routine of analyzing the markets, checking for setups that meet your plan and if nothing is there, you WALK AWAY until tomorrow. Which leads me nicely into my next and final point…

5. The ultimate key to stop micro-managing your trading…

You can waste a gigantic amount of precious mental energy watching the market as it ticks up and down all day. Simply turning off your screens / closing the computer and walking away, may be the ultimate (and simplest) strategy to eliminate micro-management of your trading and of the market.

As mentioned earlier, you actually need to build into your trading routine some time off from the market, to reset and regroup so that you come back re-focused. Schedule when you will look at the markets and when you will not.

It’s a fact that longer-term investors do better than shorter-term or day traders, so start thinking more like a swing / position trader or even a long-term investor and less like a day trader. Investors do not look at the charts all the time, because they know this is counter-productive. Instead, they let their positions run their course without constantly watching them, knowing that watching them too much is going to hurt and not help.

Conclusion

If you are someone who feels the need to control everything and everyone around you and micro-manage everything, you honestly may want to re-think if trading is for you. That may sound harsh, but it’s either that or make some mental and behavioral changes if you want to be a successful trader. Trading success is largely the result of letting go of things. You must let of your trade once it’s live, set it and forget it. You have to let go of your desire to control and be in control of the market. Being too involved with ANYTHING, whether its relationships, business, or trading is usually a terrible idea that often brings you the opposite of what you want.

The market is an entirely separate entity from you that literally is not alive and has no idea that you exist, no emotions. It’s just a reflection of millions of participants buying and selling – you cannot control that. You can only find a trading edge and use that edge to exploit predictable movements that will repeat themselves over time. Humans are repetitive, and their trails are left on the charts by price action – you learn to read the price action and find the repetitive entries and market conditions and then you CONTROL YOURSELF and you can make money, that is really the only way.

What did you think of this lesson? Please share it with us in the comments below!

You might be shocked to hear this, but there aren’t many differences between you and a professional hedge fund manager. The only real differences are the balance of your trading account and your ability to control yourself. 

The world’s top money managers all started on a path similar to yours; they had to learn how to trade just like you, they had to master their craft, fine-tune their strategy and learn to master their emotions and control their behavior in the market. Mastering one’s emotions and controlling behavior is probably the biggest thing that separates the pros from the amateurs.

With enough screen time and experience, if you stick around long enough, just about anyone can begin to call a market quite confidently. But as many of you will all know by now, that alone isn’t enough.   

As I mentioned, what really separates the ‘men from the boys’, is the ability of the pros to treat each trade as just another execution of their edge, without little to no emotional connection to it. Trading multi-million or billion-dollar hedge funds is certainly no easy feat and definitely not for the weak-minded. 

The only way anyone could successfully trade these huge sizes and successfully trade for high net-worth clients, is by having complete and utter control of their minds and actions in the market. 

Remember, it’s just zeros.

The ability to change how you think about the money in your trading account is what you really need to succeed at this game. 

What professional hedge fund traders know and do, is think about the accounts they trade as score boards, keeping score in a giant world-wide game. The score is the trading account balance and to them, it’s nothing more than digits on a screen, the more zeros they rack up after the first couple digits the better they are doing.

Imagine managing a billion dollar position the same as you would manage a $1,000 position? The only way to accomplish this is by remembering it’s all just zeros; it’s just digits on a screen. If you start allowing yourself to truly “feel” the power of the money, you have already lost. 

The ONLY true weapon you have as a small retail trader, is not allowing yourself to be affected by the money you have at risk in your account. This can be accomplished a number of different ways:

Don’t trade with money you really can’t afford to lose.

Know your overall net-worth, liquid money left over after debt.

Risk a very small amount of your liquid money per trade. 

I like to do the “sleep test”; if you are able to sleep with your position on, then you’re good.

If you are doing all of the above, then the final step to trading your account like a hedge fund manager lies in how you think about the money you’re trading.

I can tell you from personal experience, that the only thing more potentially nerve-racking than trading your own real money, is trading someone else’s money. Thus, a hedge fund manager needs to have ‘ice in their veins’ (discipline, self-control), otherwise they are not going to get above average returns for their clients.

How do they do this?

By thinking of the money in your trading account as “just numbers”, a trader with a really big “baller” sized account, can remove the emotion from their trading decisions. They are simply thinking about their money differently than you are, and as a result, they are able to function in the market essentially as if they’re trading a demo account. 

Have you ever traded a demo account successfully and then when you transitioned over to a real account you blew it out in a month? Why did this happen? Well, it’s simple; you were letting the money control you on the real account rather than you controlling how you thought about it (like you did on demo). Don’t let it affect you. You do this by following the 4 bullet points above and then remembering it’s just numbers, nothing more, just zeros on a computer screen. 

You have to take the power back from the money, don’t let the money control you, you control you and as a result, you control the money in your account. 

This might sound like some type of gigantic cliché motivational speaker type stuff to you, especially if you’ve just come off a bad streak of trading losses. But, I am telling you, from personal experience, that it’s a FACT that how you think about the money in your trading account directly influences whether or not you succeed or fail at trading. 

Whether you think you can or you can’t, you’re right.

I don’t want to get all Tony Robbins on you (I do like him though) but your mindset really has everything to do with your trading performance. Whether you think you can become a successful trader or you think you can’t, you’re probably right. The first step in achieving anything in life is convincing yourself you can do it and really believing it.

In trading, you really have to “fake it till you make it” because that is the only way you will stay consistent and disciplined in your approach. 

Let me explain…

Do you think a hedge-fund manager or simply a trader with a million-dollar account is sitting in front of his screens everyday, day trading? Would you do that if you had a large trading account? 

No, you wouldn’t, and here’s why…

First, anyone who’s been around the trading world long enough knows that day-trading is the hardest way to make money and the most stressful. Put simply, there just aren’t a lot of high probability trading signals each week in the market to make a day-trading something that is more skill than gambling. 

Hedge-fund traders do a lot of research, they have access to information that regular retail traders do not. They take a macro view of events and then check for opportunities via the price action on the charts. They are not just diving in and out of the market all day because some line crossed over another line (sounds stupid because it is). 

The advantage that you have as a smaller retail trader, is price action is the great equalizer, the true footprint of money on the charts, it literally shows you what the hedge funds are doing. Then, you can combine that price action analysis with sickening self-control, consistency and discipline in your trading. This is literally the ‘recipe’ for retail trading success and the only way it’s possible, trust me, I know. 

Where does the “fake it till you make it” come in you ask? Simple…

You literally have to trade your small trading account AS IF it’s a big account! How would a hedge-fund trade a big account? Slowly. Consistently. Masterfully. This is what I teach, this is how I trade. 

You aren’t looking for quantity, you’re looking for quality of trades. One or two good trades a month is all you really need. You may have to wait patiently like a crocodile for days or even weeks either for an ideal trade to form or maybe for one you entered to play out. Either way, this slow, methodical approach, is what works. Using price action and intense self-discipline is how you will make your money as a smaller retail trader.

You aren’t going to ramp-up a tiny account into something you can live off of overnight. So, you have to fake it, until you make it. Trade that $1,000 account only risking $10 – $50 per trade for a year or two. Then, if you’ve proved to yourself you can do it, maybe you’ve doubled it. $1,000 profit may not sound like a lot over a year or two, but that’s a 100% return. Now, add a few zeros onto that $1,000 account and tell me if THAT amount matters? 

You see, if I can get brutally honest with you for a minute…

Where most traders fail is in not understanding this simple point…

Until you can trade a small account successfully over a significant period of time, you will not be able to trad a larger account successfully. Thus account size, simply doesn’t matter. 

Here’s what matters:

Your ability to trade with discipline

Your ability to trade with consistency

You having mastered a simple yet highly effective trading method like price action

Daily chart, end of day trading

Low-frequency trading

Money management

Bring it all together

You know that dream you have in your head? The one where you are trading from a beach and making thousands of dollars per week without having to be stuck in traffic or talked down to by some a-hole boss? Don’t give it up. Don’t even think about it. I’m here to tell you, as living, breathing proof, that it IS possible. I have done it, and so can you. 

What you have to understand and truly believe, is that trading is a game that is almost entirely mental. This is why I don’t just teach you how to analyze price charts in my trading course and I am not just teaching a trade entry system. Whilst that stuff IS important, what you do with the trading method you use and learning how and when to implement it, is more important. 

What professional hedge-fund managers either instinctively know or have learned through much trial and error, is that the trade entry is not the hardest part of trading. The hardest part is what happens after that; how you process the feelings that come along with trading, your thoughts, your hopes and fears. 

I have spent the better part of my adult life being intimately connected with global financial markets, trading and investing is quite frankly my life-force. The lessons I share with you on this blog and in my trading course and members area, are literally what keeps me going. My entire existence and happiness is pinned to the idea of sharing my experiences with aspiring traders so that they can feel what I feel every day. The feeling of not having to be to work “on time” or having to answer to some boss who doesn’t really care about you, the feeling of being able to make money from a beach or from a coffee shop, that is what keeps me going. I want you to have that feeling and am telling you that it is possible if you simply change how you think about the money in your trading account and remember that you have the power to control how you feel and how you behave. Once you take that power back, you are on the right track.

What did you think of this lesson? Please leave your comments & feedback below!    

So, you want to be a successful trader who makes money consistently in the markets? First, ask yourself this: Do you have a successful mind? You simply cannot achieve the former without first developing the latter. 

Before we go any further, I want you to know that this isn’t another boring article about “trader psychology” or beating the dead-horse of “controlling your emotions in the market”. I know you already know the importance of those things, and if you don’t… then go read this article.

This lesson is about real-world mental thought processes that professional traders use to succeed not just in trading, but in life. I’m going to show you what pro traders think and how they act that allows them to achieve massive success in the markets. 

We are going to go over specific thought processes and mental routines that you need to start practicing and mastering. I’m going to give you some exercises you can start working on today, to get real results. The key for you is going to be, sticking to them, religiously, day in and day out.

The primary divide between a newbie trader and a professional, is their trading mentality. In fact, the difference between successful people and those still struggling in any field or endeavor, is mentality. 

To put it a bit more succinctly; if you want to fix your trading, you first need to fix your mind. 

Here’s how:

1. Learn to completely detach yourself from live trades

Perhaps the single most defining characteristic of a professional trader is the ability to mentally detach from live trades. Beginning and losing traders are not yet able to do this, hence they struggle. 

Your goal is to literally feel nothing after you press that buy or sell button on a live trade. Once you get to this point, you stand a much better chance at making money in the markets because you will largely eliminate emotion-born trading mistakes. 

Once A Trade Is Live, Avoid the Charts

Professional traders have learned that the easiest way to detach mentally from a live trade is to simply avoid the charts. After you place the trade, simply walk away; turn off your computer and leave it be until tomorrow at least. 

Starring at the charts won’t help; you cannot control the market, you can only control yourself. It’s critical you let the trade play out without your involvement. In order for your trading edge to work, it needs to play out without you meddling with it, over a large sample size of trades. 

Screen Watching Will Ruin You, Second Guessing

Watching the charts as your trade is live, just for amusement, is stupid. If that sounds harsh, it’s meant to be. There is no bigger trading mistake than watching live trades tick by for no good reason. It’s like being on a diet and purposely driving yourself to McDonald’s every day when you’re hungry and trying not to eat the food. It’s. Not. Going. To. Work. 

You don’t need to feel the ups and downs of the market with a live trade on. You don’t need to and you shouldn’t want to. Save yourself the torture. 

What happens when traders watch the screens all day with live trades? A number of things, but most commonly it results in second-guessing. You will second-guess your trade idea when price starts moving against you a little bit. You will second-guess your profit target as price moves up then pulls back against you a little bit. There are many other scenarios that result from watching charts too much. The bottom line is, if you want to mentally detach, you have to physically detach from the charts.

Your goal, in order to mentally detach from live trades, is to set the trade up and forget about it, just walk away.

How to do it:

The way you solve any type of trading problem is by making a conscious effort to change your trading routine and that will lead to new, positive trading habits. 

As with anything, simply removing the problem (the charts) can be a massive part of solving the problem. You have a problem with a person? Removing that person from your life usually solves the problem. Don’t communicate with them anymore. You have a problem over trading and making stupid trading mistakes? Remove yourself from the charts when you have a live trade on.

Find a distraction, it can be an activity, a hobby, anything really. Just make it something you do every time you have a live trade on, so that you are building it into your trading routine to ultimately make it a habit.

Another way to mentally detach is to make sure you have no way to access the charts during the day while you’re at work or school or wherever. Delete that trading app from your phone. 

Perhaps you could even have someone else manage the trade for you and you give them instructions on what to do and what not to do. The bottom line is that you need to have a plan for how you will purposely remove yourself from the charts after putting a trade on so that you can learn to mentally detach and start trading like a professional trader.

2. Start thinking of trading as a mental ‘war’

Your competition in the market is fierce. You are competing against players who are better capitalized, better educated and perhaps more intelligent than you. 

However, you have one thing they may not; a sickening desire to be the best and to play the game with more discipline than them, because that is how you will beat them.

Imagine there’s a gun to your head as you’re trading and each click of the buy or sell button is literally a life or death decision. Sounds extreme maybe, but that is how serious you have to take this if you want to be in the top 10% of traders, you certainly aren’t going to get there by taking it lightly. 

The point here is that you are competing against real people, it’s not just you and a computer screen and the charts, not at all. Trading should be thought of as the ultimate mental sport, a true battle of wits, if you will. You’re in the land of big boys, hedge fund managers, time to get your ‘war paint’ on and stop pretending this is some get rich quick Hollywood movie.

The opponent is the enemy and you are here to defeat them, you are literally trying to take their money. If you don’t think like this, I promise you won’t take it serious enough to maintain the consistent discipline required to win.

Don’t come unprepared:

Whatever you do, don’t show up to the battle unprepared. Many traders open their charts after funding their live accounts and they are literally like a solider showing up to fight a battle with a pocket knife. 

If you don’t want to lose all your money in a week, you need to be 100% prepared for the mental test that is waiting every time you open your laptop and click on that Metatrader platform icon.

Important note: Whilst we are aiming to be prepared and extremely self-confident in our trading approach, we are not reckless or foolish. Being well prepared and confident is very different from taking stupid risks and being overly aggressive in the market. In fact, part of being prepared is understanding money management and having everything planned out before you push the buy or sell button. 

We are not gambling or playing around, this is serious and we are ready to take on the competition in all areas: Mind, Method and Money management, the 3ms.

How to do it:

To master anything in life, you must learn, practice, repeat. Trading is no different. Except that in trading, there are many people online offering education and advice who perhaps aren’t the best to learn from. 

I am probably the most competitive person you will ever met when it comes to trading, business and entrepreneurship. So, when it comes to conveying to you the mindset you need to succeed in the market, I am the man you want. Here are some tips on how to start viewing trading as a competition and how to prepare for it:

View each trade as a negotiation, a deal. It’s a contract of sorts, so take it seriously and make sure you dot all the I’s and cross all the T’s. If you were sitting next to someone in a room and either you lose money or they lose money, you would be much more focused than you are just trading by yourself. Starting thinking of this as a competition where other people are trying to take your money. Do this, and you’ll naturally start focusing more on the important things like money management and being consistent in all aspects of your trading approach.

Train and prepare. Does a boxer just show up to the boxing match without months of preparation and training? No, of course not, and if he did, he would be pummeled. You develop confidence through honing your skills and learning, mastering your craft. 

Stay motivated to stay on track. You have to work on this, at least initially. Motivation isn’t something only “lucky people” have. It’s a lifestyle, a mindset that you have to train yourself to achieve through reading and repetition of proper actions. 

Understand chart psychology what your opponent is doing and thinking. You can do this by learning to interpret the price action bar by bar, by following the footprint of money.

Get yourself psyched up when you open your charts. You can do this by reading trading affirmations that you like. You can even use music or motivational videos on YouTube for this. I use to listen to Highway to the Danger Zone in my early days, every day before looking at the charts. I still do sometimes. It always gets me psyched for the “danger zone” of the market.

Bottom line; trading the market is basically a mental war. Think of it as such and treat is as such. If not, you will surely be defeated in battle.

3. Don’t let money make you ‘funny’.

Money screws with peoples’ minds. Whether you’re making it or losing it, there will probably be some psychological side effects that come with it. Professional traders know that to make money consistently they have to fix this problem. You want to fix your trading? You have to fix your money mindset.

The primary mental hurdles that face traders in regards to their money, are the following:

Fear of loss, fear of missing out. Fear of loss causes traders to let small losses turn into big ones, because they are simply afraid of taking any loss. Fear of loss also can cause traders to be afraid to trade, letting good trades pass because they’re too afraid of a potential loss. Fear of missing out generally means you are chasing trades that you missed for one reason or another. You get mad at yourself and you start getting afraid of missing out on the profits, so you jump in at a terrible entry point, typically this results in a loss.

Risking too much per trade and all the problems that come as a result. I’ve written myriad articles on this.

Not knowing where to exit the market or how to exit. Self-explanatory, see solution below.

Generally speaking, having no capital preservation plan is the reason most traders fail and it’s the reason they let the money make them ‘funny’. Your money management plan IS the most important part of your entire trading approach, don’t think you can skip this part.

Here’s how to do it:

The only way to overcome money management problems is to predefined, preplan and just be prepared for losing before you enter a trade. Remember, any trade can lose, there’s a random distribution of wins and losses for any given trading edge. So, go into every trade understanding and accepting that it could be a loss. 

A capital management plan is the only way to train yourself out of any bad habits in regards to risk management, risk reward and so on. Your capital preservation and risk management approach are your life-line in the market, it’s your oxygen. Without it, you will quickly suffocate. 

You need an exit plan for stops and targets, etc. Don’t just ‘wing it’ on every trade. Plan out where you will exit for a target and a stop loss BEFORE you push the buy or sell button.

No matter how small your account is, treat it with the same respect and approach you would if it was a $1 million account or even $1 billion. Same principles apply.

Electronic digits on a computer screen can seem fake, cold, not real. To counter this, get some monopoly money or casino chips and get two jars. Each time you win put some in the winning jar, each time you lose put some in the losing jar. It will make the money seem more real to you as you touch it. I even suggest withdrawing profits from your account regularly and taking them out of your bank and touching the actual money. 

Can you sleep at night with the money you have at risk? Ask yourself, how do I feel going to bed, can I live with this amount? If you can’t fall asleep because you’re thinking about the money you have at risk, it’s time to lower your risk amount.

You need to remain disciplined and consistent. If you stay disciplined with your money management approach for a year and then you go full-tilt and gamble it all on one trade like an idiot, not only will you risk losing all that money, but all the work you spent staying disciplined will be for nothing. You owe it to yourself to stay CONSISTENTLY DISCIPLINED. It’s the only way to make money OVER TIME. Never deviate.

Make this stuff into mantras that you repeat to yourself daily. Believe in it, own it like a seasoned pro. Do this if you want to join the big boys.

 Conclusion

The core foundation of all great business people including traders, investors, etc. is their mindset. The foundation upon which their success is built, is the ability to handle pressure and temptation whilst remaining consistently disciplined. The ability to stick to a plan and remain almost emotionless whilst carrying out their chosen profession, be it trading, managing a company or even being an entrepreneur, is what puts someone in the top 10% of their field. 

I have spent well over 15 years practicing what I preach. I am a living, breathing testament to what we discussed in today’s lesson. I do more than just help traders with entry strategies and price action techniques in my courses, because there are other things in trading that are just as important, if not more. 

When I started trading, about 16 years ago, nobody was around to teach me or explain to me the seriousness of the three points discussed in this lesson, or the many other ones we didn’t even touch on today. This is the main reason that I combine my price action analysis trading strategy with a solid mental and capital management plan to help traders achieve long-term success. It’s my hope that with ongoing study, you can master these disciplines to improve your trading, state of mind and ultimately, grow your trading account.

What did you think of this lesson? Please leave your comments & feedback below!  

I have been learning about the markets and trading them for nearly two decades now. Trust me, when I see this written out in text, it makes me realize two things:

I am getting old, lol.

I have learned A LOT in those 18 years.

In fact, I have learned so much that it can be difficult to even decide where to begin sometimes, when it comes to helping beginning traders. The industry has changed dramatically since I first started trading. I remember actually calling in my buy and sell orders to my broker, who does that anymore??!

As I grow older, I feel a deeper and deeper desire to give back and to help younger traders and those who are new to the game. Trading can be a very deceiving profession and if you do not spend the time to learn from those who have already been around the ‘block’ a few times, you’re going to waste a lot of time and money.

I sat down at a coffee shop whilst writing this and I had a very long think about the most important lessons I have learned in 18 years of trading the markets.

In no particular order and all equally important, here is what I decided are the top 10 things I’ve learned on my trading journey…

1. Be a defensive-minded trader.

The famous quote by Warren Buffet about losing money goes something like:

“Rule #1, Never lose money. Rule #2, never forget rule number one”.

Beginning traders often approach the market from the complete wrong mindset. They are just trying to make money as fast as possible, when in reality, they should be trying to protect their money as much as possible. You really cannot operate in both mental states at the same time. You have to pick between the two and if you do not choose to protect your money as much as possible, you’re probably going to lose it.

The best offense? A good defense.

You hear this a lot in the sporting world but it also applies to trading: The best offense is a good defense. Here’s why:

The way you achieve long-term consistent trading success is by being defensive in your approach. That means, you only trade when the market conditions are right, when all your trading plan criteria has been met. The goal of trading is not just to “make money”, but also to not lose money you have made! These are two different things that require extreme mental fortitude.

It is not surprising for a beginning trader to get lucky and hit a few good trades, or even to simply do well for a while by following their plan (not just lucky). However, it’s after doing well for a while that many, if not most, blow it. Traders get confident, cocky, arrogant, whatever you want to call it. The point is that winning feels good and it OFTEN goes to a trader’s head, quickly. All that good, defensive, slow, methodical work that you did to hit those winners tends to go flying out the window when the sensation of winning floods your brain with feel-good chemicals.

Preservation of trading capital is key to success

Working to preserve your trading capital is essentially how you behave in a defensive manner in the market.

Think about it like this: you want to have as much ‘ammo’ (money) in your ‘gun’ (trading account) as possible when the easy prey comes along. You do not want to be out there shooting at difficult prey that you aren’t going to catch, then when an easy subject comes along you only have one bullet left. You want that chamber full of bullets so you can secure the prey.

In trading, you want to preserve your risk capital for the ‘easy’ trade setups, those high probability price action signals that are so obvious they are literally speaking to you! You don’t want to waste your money on those ‘on the fence’ signals that you go digging for confirmation on the internet for. The best signals are super obvious, most of the time, and that is something I’ve definitely learned over the years.

You will never get upset with yourself (at least you shouldn’t) for taking a strong and confluent trade signal that fails, as long as you managed your risk properly. But, if you take a signal that you weren’t sure about, that “sort of” looked like a signal but “not really”, and you lose, you’re going to be kicking yourself.

My goal as a trader is to never feel like I want to kick myself after a trade, win, lose or draw.

2. Watching Charts & Monitoring Trades Will Actually Hurt Your Results

Often, in life, the more we meddle with something the worse it becomes. If you’re in an argument with your significant other and you continue to bring up that argument and rehash it, is that it going to be better than just dropping it and moving on? No, of course not. Most of the time, over-involvement is a negative thing and when we are too involved with our trades, it typically is a very, very bad thing.

How many times have you been in a trade and you kept checking it and you ended up adding to the position, closing it out too soon or doing something else that you otherwise wouldn’t have, and it ended up back-firing? This is very common and one of the biggest trading mistakes that causes traders to lose money.

 Enter your trades and then stop thinking about them

The easiest way to avoid the pitfall of over-watching and over-thinking about your trades? Set and forget. I know I’ve said it a lot, but I will say it again because it’s perhaps the most important trading lesson I have ever learned: the less involved you are with your trades, the better you’re going to do. This is why I have written articles on the set and forget trading approach and on focusing on daily chart time frames. You see, when you simply follow your trading plan and let the trades play out, let your trading edge play out uninterrupted, THAT is real skill, that is real discipline and passion. These traders who are just “running and gunning” instead of trading like a sniper, are not trading with skill or discipline, they are gambling. They can’t stop trading because they can’t forget about the market.

You have to literally forget about the market for a while when you have a trade on. The most effective way to do this is to not risk more than you are comfortable with losing. The number one reason traders start watching the charts too much and meddling with their trades, is that they’ve risked too much money on that trade.

3. The results of your last trade should not affect your next trade.

Another very, very important lesson that traders often do not learn or understand until years into their trading journey is that the outcome of your last trade has (and should have) zero bearing on your next trade. In other words, you should never let your last trade influence your next trade.

Every single trade you take is different and unique from the previous one(s). There literally are no two trade signals that are exactly the same. Even if they look the same, the surrounding market context will be different, so they aren’t the same. This is important to understand because traders often make assumptions about their next trade based off their last trade or past trades.

Winners and losers are random

The results of any trading edge / strategy are randomly distributed. What this means is, if you take 100 trades in a year and you had say 50 wins and 50 losses, the pattern of those wins and losses is totally random. You could have 10 losses in a row followed by 2 winners followed by 10 more losers, then followed by 20 winners. The question is, how are you going to handle such a random distribution of wins and losses? If you’re anything like most traders, you’re going to let it affect you very, very negatively. Can you handle 2 losses in a row? 5? How about 10? Most people can’t and that is why most people fail. It can be very hard to see the forest from the trees as a trader, but you have to if you want to succeed long-term.

What I mean by “see the forest from the trees” is not letting any single trade result distract you. If you start letting single trades influence you, you will lose sight of the bigger picture of what you’re supposed to be doing and what it takes to succeed long-term.

Be extra-careful after a big winner

Traders often become overly-fearful after a losing trade and overly-confident after a winner. Now, whilst neither is good, I feel it’s riskier to become over-confident. When you get over-confident you end up taking bigger risks in the market and this can obviously result in bigger losses, kicking off a cascade of emotions and trading mistakes that can literally wipe your account out in a day’s time. It’s important to take some time off after a trade closes out and calm down, reflect, breathe. The market will be there tomorrow, so always remember that. You should never feel like it’s “urgent” to be in a trade.

4. Doing LESS will actually get you MORE…

Most traders fail simply because they do too much. They do too much research (yes you can do too much research), too much reading, too much thinking about trading, too much watching the charts, too much trading in general.

It’s important to realize the power of doing nothing as a trader. Many times, if not most of the time, doing nothing is the most PROFITABLE thing you can do! Here’s why:

Low-frequency trading

Ok, I know this isn’t probably what you want to hear, but since when have I been worried about telling people what they want to hear and not what they NEED to hear?? Never.

There aren’t that many good trade signals on any given month in the markets. What I mean is, there simply is not a large amount of high-probability entry signals on any given week or month. Why? Well, because most of the price action in a market is just random meaningless noise.

Your mission, as a price action analysis trader, is to learn to filter the good trade signals from the bad by learning how to read the footprint of the market; the price action. Once you master this, you will quickly realize that good trades that are worth risking your money on are relatively infrequent. But, the good part is, you do not need to trade a lot to make a lot of money in the markets.

Hedge-fund trader’s mindset

A hedge-fund trader, controlling millions or billions in money, is not thinking about trading constantly. Instead, they are meticulously ‘combing’ through the price data of the markets they trade to find that ‘diamond in the rough’. They are looking for a high-probability trade that is WORTHY of risking their client’s precious capital on.

You should think like this too. It’s your money on the line, that you worked HARD for. So, do not throw it away on “so-so” setups that you think are “kinda, maybe” a good setup. Wait for those higher time frame trades on the 4-hour or daily chart time frame that are so obvious you’d feel stupid for not taking them.

Also, don’t overthink this. Often, traders think themselves right out of perfectly good trade setups. We have a tendency to start thinking “This trade is too good to be true” and so we settle for lower-probability trades that we feel good about because we spent 3 hours finding confirming news pieces on the internet that agree with the trade.

I am telling you, from 18 years of live-trading experience, the best trades are almost always the most obvious ones!

5. Know where you’re getting out BEFORE you get in!

When trading the markets, there is no boss, no “authority” figure telling you what to do. Hence, you have to make the rules. You have to discipline yourself and you have to hold yourself accountable. These are the reasons why most traders fail. Most people, left to their own devices, simply are not disciplined or self-controlled enough to do these things.

One mission-critical component of the trading process is determining your trade exit, BEFORE you click that buy or sell button. This is a huge lesson that took me multiple years early-on, to learn. Don’t let it take you that long!

The exit is MUCH harder than the entry!

The only way you’re going to make money as a trader is to remove yourself from the trade exit process as much as possible. The exit is where most people screw the whole thing up. I’ve written many articles on trade exits, but one you should definitely check out is this one on a simple trade exit plan, it will help you see why simple is better with trade exits.

Most traders exit based on emotion. Doing so, typically results in either a very small win or a large loss. Rarely do many traders exit when a trade is heavily in their favor. Why? Emotions. When you’re up big all you can think about are all the “reasons why” that winning position will grow even more. It doesn’t cross your mind that YOU’RE BEING GREEDY or that the best time to exit is when you’re up BIG. It’s exactly the same mindset of a casino-goer. They keep pulling that slot machine arm even when they’re up and they know they will probably give that money back.

You have to find a way to force yourself to exit when a trade is in your favor, not when it’s crashing back against you about to turn into a loser. The only fool-proof way to do this is to have a strict profit-taking plan that you follow religiously. If you leave the exit up to the moment, you will be left to exiting on your own discretion, which typically doesn’t end well for most people

6. Be out of the market much more than you’re in.

One of the most important lessons I have learned over my 18+ years of trading the markets, is that trading too much is a quick way to lose all your money.

Most traders come into the market and as soon as they fund their first live account they are off to the ‘races’, over-trading and dealing with the consequences later. It’s a difficult lesson to learn, and most traders don’t actually learn it until they’ve lost more money than they can stand to think about, but the fact is, if you do not learn to trade with low-frequency, you’re going to find yourself losing at a high-frequency.

Get comfortable with the daily chart time frame

If you’ve followed me for any length of time, you know that I have written many articles about the power of higher time frame charts and why you should focus on them. One of the biggest reasons to focus on higher time frames is that they act as a natural ‘filter’ for all the noise of the market and if you follow your trading plan strictly you will naturally trade less often just by focusing on them.

The daily chart is really the key to technical analysis in my opinion. Learn to trade the daily chart first and foremost and center your entire trading strategy around it and you will already be light-years ahead of the masses of traders out there day trading all their money away.

7. Can you fall asleep and sleep soundly at night?

You will find a million different risk management strategies on the internet, but most of them either don’t work, are illogical or overly-complicated. In all my years of trading I have found no better way to gauge if I’m risking too much than the sleep test.

The most important measure of risk for a trader is their per-trade dollar (or whatever currency your account is in) risk. Meaning, what is your R-number, or your dollars risked per trade? If you don’t know this number, you’re already failing.

The money management sleep-test

The single best way to test if you’re risking too much money per trade is to determine if you are preoccupied with that trade. In other words, are you thinking about the trade even when you’re away from your charts? Are you laying in bed thinking about that money you have risked? Are you waking up at night and sneaking downstairs to check the charts on your laptop? Or worse, laying in your bed checking on your phone?

If you are doing any or all of the above, you have a serious issue that needs fixed ASAP.

The ONLY way to have a fighting chance at sticking around long enough in the market to hit enough big market moves to make money, is by making sure you aren’t risking too much money per trade.

If you find you are overly-worried about your trades and you cannot sleep because of it, then back off the risk until you can easily fall asleep. Reduce your position size on your next trade and keep reducing it until you can confidently close up your charts and not be worried or overly preoccupied with your trades. Trust me on this, it works and it will help you avoid many other trading mistakes that are the result of risking too much!

8. Know what the h$%! you’re doing before you start trading real money!

This one may seem obvious, but many traders start trading real money without actually understanding how to use the platform their using or having a trading strategy. They are, for all practical purposes, gambling. Don’t be like them.

There are a few things you NEED to do before you star trading real money, if you don’t want to lose it all right away that is.

Master your trading strategy

I feel like this point is so obvious, but or many traders it is something they gloss over. You simply cannot start trading live without having mastered your trading strategy. Doing so is like trying to fly a commercial airliner without any training and hoping you don’t crash. Not gonna happen.

I obviously recommend you learn and trading with my price action strategies that I detail in my trading courses, but more important FOR YOU, is to make sure that whatever strategy you do use, you both commit to it and master is before going live. Don’t waffle and wander. Don’t try combining a bunch of different trading methods, this doesn’t work, trust me.

Master your money management

As I said in point 7 above, you have to be able to sleep at night with the money you are risking in the market if you want to have a chance at long-term success, so first figure out what that dollar amount is for YOU. Don’t stray from that dollar amount or increase it until you’re seeing consistent success.

Demo trade it first

Both of the two sub-points above, mastering your trading strategy and money management are things you need to demo trade for 2-4 months before going live. You must learn the mechanics of the platform you’re using before you start risking real money on it, or else you will lose money just to making stupid mistakes like inputting the wrong position size, etc.

9. Have you mastered yourself yet? If not, you need to.

If I had to give you just once piece of trading advice, the most important lesson I have learned in 18 years of trading, it is to master yourself if you want to master the markets.

Until you deal with the mental / emotional weaknesses that you have (we all have some), you will never make consistent money as a trader. Trading success is much more the result of going on a personal journey and conquering the pitfalls and ‘enemies’ in your mind, than  the trading method you use. Most traders don’t realize this fact until it’s too late.

Check your ego at the door

Ego-check. Leave it at the door or it will eat you alive in the markets, every time. Being confident is a great quality in life and for a trader, but there’s a very fine line between being “confident” and being overly-confident, and it’s a line you cannot afford to cross, literally. Over-confidence sneaks up on even the greatest of traders, leading them to take a trade they probably shouldn’t have taken or leading them to make other mistakes. Typically, a trader becomes over-confident after hitting a few good winning trades, they then let this go to their heads and start over-trading because they feel like they have some secret trading power now. This is very, very dangerous.

Show me a disciplined person and I’ll show you a good trader

What is self-discipline in regards to trading? We talk about it “discipline” a lot, but what does it look like as a trader? It looks like this: You just exited a very profitable trade, you’re feeling great, feeling wonderful. What you do next will tell me if you’re disciplined enough to KEEP making money, or not.

A disciplined trader will do nothing out of the ordinary at this point. They will continue with their trading plan. In fact, they will probably close the computer and come back tomorrow when the euphoric-feeling they got from winning subsides. You can and should build things like this into your trading plan. For example, you have a section called “What to do after a winning trade” where you detail how you will leave the market along for 24-48 hours after a winner,

An undisciplined trader, upon closing out a nice winner, will immediately jump back into the market, or jump back into a trade that same day. This is almost always a mistake. RARELY is there going to be a high-probability trade signal waiting for you right after you just exited a big winning trade. Trust me.

10. Confluence is King

As far as your actual trade entries go, the most important lesson I’ve learned over my 18+ years in the market is that the more confluence a trade has, the better. Confluence in trading means multiple supporting factors intersecting or lining up in support of a trade.

Typically, on the charts this looks like a clear signal combined with a key chart level in the context of a trending market. I call this the T.L.S. method or Trend, Level, Signal. Ideally, you’ll have all 3 lining up, but you can get away with just 2 of the 3.

If you want a trade entry “system”, here it is:

Many traders want mechanical trading systems with strict rules to follow, to eliminate the potential for human error. Whilst I am generally not a proponent of mechanical / rigid trading systems like robot trading, the T.L.S. method can be a form of mechanical trading for a price action trader.

You simply write into your trading plan that any trade you take MUST have the trend, level and signal in agreement, or you don’t enter it. These types of things are good for beginning traders, to build confidence and discipline. I recommend you try this if you’re new or struggling.

Conclusion

As you can see, I could write an entire library on all the things I have learned from my 18+ years trading the markets. However, everything must come to an end, so I am going to wrap up today’s lesson with the following insight I’ve learned from my time “in the trenches”:

The best traders are humble and open-minded. They know they could lose on any trade and they trade accordingly. Traders start losing and doing poorly when they start believing they know something “for sure” in the market and (or) they start getting careless and undisciplined.

Trading the markets is truly a double-edged sword in that it can be the best way to make money; don’t have to drive anywhere, no boss, unlimited profit potential, very low barrier to entry and low ongoing costs. Or, it can be the fastest way to lose money IF YOU let it be. Always remember, you are in control of yourself and THAT is your real power in the market and the only chance you have at beating your opponents at this game. Self-control is something that you will either learn from mentors like me or that you’ll learn the hard, expensive way. Given enough time, the market will eventually teach you every lesson you need to know but you’ve got to ask yourself, do you have enough money and mental fortitude to stick around long enough to learn the hard way?

What Did You Think Of This Lesson ? Post Your Thoughts In The Comments Below 🙂

Like most traders, I was obsessed with day trading at the start of my career, it’s what I studied, it’s how I traded, it was how I lived. However, I quickly discovered that something was wrong. I just couldn’t seem to make any money trading this way. It was stressful, time-consuming, difficult and even maddening at times. I would make money on a trade and then give it right back. It seemed like I would take one step forward and then two steps back.

In short, it quickly became very clear to me that dodging in and out of the market all day, trading short time frames was really no different than gambling on a slot machine at the casino, I was just doing it from my home. I had spent more than enough time in the trenches early in my career to realize that day trading was unnecessarily difficult, I knew it wasn’t going to work for me and I hadn’t met anyone else it was working for. So, I had to evolve and try a different approach to trading or I was going to lose all my money, quickly.

This was when I decided to stop day-trading and start thinking differently about the market. I began looking into higher time frame charts and taking a lower-frequency approach to trading. I quickly found my groove once I began focusing on the daily chart and trading less often. It was a far less time-consuming, less stressful and just an overall friendlier approach to how I wanted to live my life.

I found that not only was I suffering less losing trades, I also would catch bigger moves and my trading costs (spreads / commissions) went way down because I wasn’t entering and exiting the market so often. Instead of taking 30 to 50 trades a month (or more) as with day trading, I was now only taking 4 to 5 trades a month some months.

Currently, I trade just 30 minutes a day from anywhere I want; I don’t need to be plugged into some multi-monitor trading desk all day. I actually get to live my life on my own terms; free and flexible. Ultimately, this style of trading and the life it lets me lead, allows me to enjoy the fruits of my trading much more than day trading ever could.

Day Trading Won’t Give You A Great Lifestyle

In Hollywood movies, day traders are often portrayed as young rich guys living a fast-paced life of fast cars, big houses and risky behavior that seems to always end up working out somehow. Hence, when someone first gets interested in trading this is usually pretty close to the image they have in their minds of what day trading will be like and what it will offer them.

My issue with this is that it’s basically completely wrong and totally misleading. Also, this misrepresentation of reality causes many traders to blow out numerous accounts and lose a lot of money before they figure out they need to take a different approach.

Do you like sitting in a chair all day staring at your computer screen? Well, this is basically what day traders do. You literally have to be at your computer for 6-8 hours a day to properly execute most day trading strategies. You have to take many, many trades in order to see the edge (potentially) play out over the course of hundreds and thousands of trades. Even if you manage to do this, most day trading systems require you endure a lot of losses simply because it’s a numbers game, not a high-probability edge like higher-time frame trading can provide.

The very reason we become traders is to make money and ENJOY a lifestyle that is different from a 9 to 5 office job where you are essentially a slave-drone worker to a company all day. If you choose to be a day trader you are basically a slave to the screens all day and your head is filled with information overload, stress, pressure and on and on, not much different than that 9 to 5 office job except that you might actually make money at the office!

Here’s How a Trader Gets a Great Lifestyle

When you make the shift from day trading / constant chart-watching to a higher time frame, end of day trading approach, a lot of things quickly change.

You suddenly gain a massive amount of time (which you’ll need to fill), your trading mindset becomes better and clearer and you are now moving closer to becoming a successful trader.

I recently wrote an article on how to trade like a hedge fund manager and in that article I discussed how hedge fund traders are not day-trading. They are not sitting there taking a 5 minute view of the market trying to duck in and out of it all day, to them that is just stupid, and it should seem that way to you too.

Trading higher time frames means you don’t have to be checking the charts all the time. You can spend just 30 minutes a day, trading from a coffee shop or wherever, it’s up to you. The point is, when it comes to lifestyle, the end-of-day trader wins easily against the day trader, it’s not even close.

You Won’t Make More Money Day Trading

A lot of newbie traders believe they will make more money day-trading than position or swing trading the higher time frames. It seems logical; you trade more you make more, right? WRONG. It’s so wrong that it makes me mad just thinking about the misinformation that is spread online, enticing beginners into day-trading, which is why I’m writing this article!

Here’s Why You’ll Make More Money If You Don’t Day Trade

Have you ever met a profitable, successful day trader like you see in the movies? No? Me either. There’s a good reason for this, it’s nearly impossible to achieve great success day-trading, let alone maintain that success over time.

Day-trading involves dealing with a lot of meaningless lower time frame market noise. This noise that is essentially random price movement on short time frame charts, is something that can easily slice your trading account into a million pieces that quickly flow down the ‘drain’ and out of your account.

As mentioned earlier, spreads, broker fees, etc. rack up very quickly when you’re day trading. Every transaction you make in the market costs you money, so when you’re trading 30 – 100 times a month (or more) those seemingly small costs will add up to a significant sum of money over the course of a year.

However, that is just the tip of the iceberg, so to speak. You’re going to have a lot of losing trades with a day trading method. In fact, most day trading strategies involve poor risk reward scenarios, like 1:1 or less. This is because you’re aiming for small wins when you’re day trading, also known as “scalping the market”, so you’re not holding trades long enough for them to turn into big winners. With small risk rewards of 1:1 or worse, just to breakeven you need to win more than 50% of the time, to offset spreads and commissions, this is very hard to do with a day-trading system that falls prey to the random market noise and intraday “churn” of the price action in the market.

If you decide to trade end-of-day strategies, higher time frames and focus on the daily chart time frame like I teach in my courses and members area, you’re going to have an easier time making money because you are not fighting the intraday churn of meaningless market noise. Instead, you are waiting strategically for a high-probability price action signal to form in confluence with the surrounding market context. These signals will produce bigger movements since you’re on the higher time frames. Also, since the higher time frames carry more weight, you’re more likely to get a win on any given daily chart signal compared to any given 5 or 1 minute chart signal. This means, you’re risk reward can become more favorable now, think 1:2, 1:3 or even higher! Hence, you do not have to trade as much nor do you have to win as much (as with day trading) to actually make a profit!

I don’t know about you but I am all about DOING LESS TO GET MORE!

You’re Not Going to Be Able to Quit Your Day Job and Day Trade All Day

A lot of traders seem to get the fantasy in their heads that they will simply be able to quit their day job and start day trading all day and somehow magically make money. This is not reality. Sadly, I know quite a few traders who quit their day jobs too soon because they thought they could make money day trading, only to find that not only were they not making any money anymore, they were now losing money from day trading!

How to Trade Around Your Day Job

Thankfully, there is a perfectly effective way to maintain your current job while you are trading. I’ve written many articles about trading with a day job, but the most important thing to know is that not only does higher time frame trading allow you to trade around your current schedule, but doing so will actually accelerate your trading progress for a number of reasons…

A day job is a natural distraction from the market, and may people need this because they simply become addicted to the charts otherwise. It’s important to realize that not only is day-trading very difficult to profit at but even if you manage to do so, the temptation from constantly being in front of the chart is just too much for most people to handle.

Your goal should be to make a trading routine wherein you are checking the markets sometime in the morning for 15 – 20 minutes and sometime in the evening / before bed for 15 – 20 minutes. Once you have learned how to trade properly, there really is no need to spend more than 1 hour per day looking at your charts. In fact, I would argue that after about 45 minutes to an hour a day, each additional minute you spend analyzing the charts will negatively impact your long-term trading success.

Don’t think about “quitting your job” right now. Instead, utilize your job to keep the income flowing steadily (this will help maintain a clear and calm mindset that you need for trading) and also to maintain a natural distraction from the intraday market noise that costs many traders their trading accounts. IF you are ever able to quit your job and become a “full time” trader, you will know when the time comes. Whatever you do, don’t go quitting because you “think” you can make money trading. Wait until you’ve BEEN making money consistently for one year or more.

Day Trading Does Not Give You More Opportunities

One of the most widespread misconceptions about day trading is that it provides traders with “more opportunities” (to make money). Sure, I won’t argue that you will enter more trades as a day trader, but are those really good opportunities to profit? I would say no, they are not.

In my opinion, an “opportunity” is something that will likely lead to something positive for you, and the greater “opportunities” people speak of in regards to to day trading are certainly not all positive. Hence, the higher quantity of ‘opportunities’ that day trading offers is not at all what it seems. I look at it as more opportunities to lose your money!

The Real Opportunities in the Market

The opportunities that a higher time frame, swing trader has are much, much better than those of the day trading variety.

Not only are the trading opportunities on the daily chart much higher probability than those on small time frames, they are also much better for your mind and your body. You are not sitting all day slouched over in a chair frantically combing the 1 minute charts for your signal to pop up. This is mentally and physically draining! Instead, an end of day trader simply follows their routine, checking the higher time frame charts at their predesignated times each day, for 20-30 minutes. They execute their trading plan and then walk away.

This is an opportunity to live the life you have always dreamed, and in my opinion, ONLY higher time frame trading affords you such an opportunity.

Conclusion

If there was any doubt as to why I am not a day trader, today’s lesson should have removed it from your mind. However, I didn’t just write this lesson to tell you why I don’t day trade, I wrote it to (hopefully) convince you not to day trade either. My number one concern is helping traders and teaching trading concepts that actually work. I don’t want you to lose money unnecessarily, so I don’t want you to day trade.

Trading the daily chart time frame in an end-of-day manner provides you with the best possible shot at making money over the long-run as a trader. I can tell you without a doubt, from 18 years of live market trading experience, if you go down the day trading route you are taking a huge detour that is only going to push you far off the path that will lead you to successful long-term trading.

If you are interested in learning more about the end-of-day trading approach discussed in today’s article and exactly how it all works and how I trade, you will learn this and a lot more in my trading courses. The concepts and strategies I teach in my price action trading course are the exact same ones that I use today and hopefully they will change the way you think about and trade the market as well as improve your results and ultimately give you the lifestyle you’ve always dreamed of.

Are you ready to stop toying around and start making a serious attempt at trading profitably? If you want to trade with the big boys you will have to act like a big boy and stop behaving like a child in the market. That’s right, today’s lesson is a no-holds-barred in-your-face mother-load of brutal honesty that only yours truly would dare serve up, and I’m serving it up ice cold with zero apologies, because you NEED to hear this if you want to WIN!

It’s time to get your sh!t together if you want to compete with the big boys of the trading world. There is absolutely no other route to trading success other than taking a cold hard look at yourself in the mirror and deciding if your current trading behavior and mental processes are pushing you in the right or wrong direction.

I’m not saying you have to be Superman, you’re only human, but to make it as a trader you ARE going to HAVE TO step things up a notch by thinking and operating in a more efficient, pro-success manner. Clearly, what you have been doing has probably not been working or you wouldn’t be reading this article most likely. So, if you continue to do the same things and are just too lazy to figure out the problem and fix it, you have only yourself to blame for your failures (in trading or other areas of life as well).

Mental Fortitude

Mental fortitude is defined as the ability to focus on and execute solutions when in the face of uncertainty or adversity. Ask yourself this, in what other field is there as much uncertainty or adversity than in trading? Hard to think of any besides being in an active combat zone in a war.

If you hope to make money as a trader on a regular basis, you have to have the mental fortitude of an Oak tree; unwavering discipline in the face of the near constant temptation and uncertainty that IS the market.

Emotional discipline – If you want to succeed at trading you have to be emotionally disciplined. What this means is, you cannot chase every single ‘rabbit’ you see. You have to wait, wait and wait some more for the slow, weak, easy trading prey. This is called conserving your limited risk capital for the high-quality trade setups. What does it take to be emotionally disciplined? Mental fortitude. You must have the ability to focus on and execute your trading plan with MILITARY PRECISION even in the face of constant temptation.

Survival of the fittest? – Is trading only for the genetically gifted in discipline and mental fortitude? Whilst some people may have an easier time with this than others, I truly believe anyone, if they want it enough, can develop the mental tools needed to become a consistently profitable trader. To read more about becoming a consistent trader, check out my article on consistency in trading.

Money discipline – Not only do you need to be disciplined with your trading plan and trading strategy, you MUST be disciplined when it comes to money management and this means discipline in both risk and reward. To understand how to be disciplined in managing risk, check out this article on how to trade with discipline. For more info on managing rewards and profit targets, check out this lesson on the psychology of taking profits.

State of Mind

Your state of mind, even when you are not in front of the charts or thinking about the markets, plays an absolutely critical role in your ability to successfully trade the markets.

Self control – Similar to what we discussed above about discipline, but what I’m talking about here is more of a general sense of self-control. Typically, people who have high levels of self-control in other areas of their lives, make good traders. If you are someone who is very disorganized, physically very out of shape or otherwise lacking in major forms of self-control, you will need to fix this if you want to make money trading. It’s very difficult to ONLY be a highly controlled person in trading if you aren’t controlled in other areas as well.

Self-confidence – Anyone who knows me personally knows I am a VERY confident person. You have to be this way to make money as a trader. There is no room for self-doubt and hesitation in the markets. To learn more about this, read about the role that confidence plays in trading. You must act like you’re already a winner and think and behave like a hedge fund trader even though you’re not yet there. This is the only way to ever get there!

Be counter-intuitive – You have to train yourself to be someone who thinks counter-intuitively. What that means is, basically you have to think different from the masses of traders who fail, from the “herd” of sheep, so to speak. When a market looks like it wants to breakout, it’s likely to be a false breakout, but most traders get sucked into the first breakout they see, only to get stopped out as the false break materializes. This is just one of many, many examples where a market looks and even ‘feels’ like it’s going one way, and just when everyone is onboard it reverses sharply the other direction. I’m not saying you will always avoid losing trades, not by a long shot. I’m saying you should be patient, have a trading plan, don’t jump the gun.

Belief Systems

I believe that trading should be viewed and treated as a business. Your trading plan should also be your business strategy in the markets. It should include things like, the overall style you’re trading, examples of ideal setups, risk management plans, stop loss placement strategies, profit target placement strategies, daily trading affirmations and more.

Any business has a plan and systems in place. You should do the same with your trading. If you don’t have a plan then you’re really just gambling.

Reinforcement – Whatever your trading strategy is, you need to reinforce it on a regular basis so that it becomes part of a winning traders mindset. My personal trading strategy and the one I teach to my students is essentially a “less is more” approach, or K.I.S.S. (keep it simple stupid). I focus on higher time frame charts and I BELIEVE in the edge that my select price action signals provide for me. This is all built into my trading plan and I go over it daily to reinforce it into my psyche.

Self-belief / confidence – You must truly believe in yourself and in your ability and in your trading strategy. As I said earlier, there is no room for hesitation if you want to succeed long-term in the market. That said, do not get overly confident, as too much confidence in a trader is just as bad or worse than too little.

Structured Daily Trading Routine

What does your daily trading routine consist of currently? Do you even have one? If you aren’t sure, then you don’t. You should be able to easily tell someone else what your daily trading routine looks like and you should have designated times for analyzing the markets each day.

Routine lead to habits – The value and power of a structured daily trading routine cannot be emphasized enough. Repetition of the brain ‘muscle’ by way of routines is how you form habits and habits either make you or break you, depending on what type they are. Read more about routines in my article on the the power of trading routines.

Daily routines of winners – Winning traders think differently from you. They act differently from you. Their days are more planned and structured than yours. It is just a fact that the more organized and focused you are, the more successful you’ll be, at anything. Winning traders are not easily distracted from their end game, from the long-term prize. They have long-term and short-term goals and they write them all out, the short-term goals build up and lead to the long-term goals. These things are what winning traders think about everyday. They aren’t wasting tons of time on T.V. or out with friends. They are busy learning, staying fit, staying focused and following their trading plan with discipline.

Accountability and enjoying the fruits of trading

One of the key components to developing a winning trader’s mindset is keeping yourself accountable. There are no “bosses” for a trader, other than yourself and your family (if you let them know what you’re doing with the trading money lol). Hence, you MUST be accountable to something, that something is your trading plan and your trading routine (mentioned previously).

Trading plan – Once again, you need a trading plan, a tangible one, not one that’s all mental. Print or write it out, tweak it as needed, just make sure you review it weekly at least, daily at best. This is one way you stay accountable and staying accountable helps you maintain discipline and maintaining discipline helps you forge positive trading habits and positive trading habits make you money consistently.

Trading journal – Along with your trading plan, you need a trading journal in which you log your trades and the details of them. This is essentially where you will write a daily market commentary, similar to what I provide my members each day. You can do this on your computer or write it out, just make sure you do it. This will help you stay accountable.

Enjoy your life, NOW – Don’t wait for the trading profits to start rolling in to begin enjoying the low-frequency, end of day trading style that you will learn on my site and in my courses. Instead, start implementing this approach now and start enjoying its fruits. Trade and think less about your trades and you will end up making more money in the long-run, this is a core tenet of my trading philosophy. Trading in this manner allows you to take a set and forget approach where everything is slowed down and you have time to live your life and fit trading in around your busy schedule.

Real goals – You need to make each point in the above lesson small goals that you work on one by one. The bigger, end goal of “trading success” is attained by breaking it down into many smaller goals that are more easily attainable on a weekly and daily basis. Trading success is like a puzzle and you will not complete the puzzle until you have each piece mastered and in its rightful place.

Going Forward

If you put two traders side by side, trader A has a million dollar account and a huge multi-monitor setup, access to the best data, etc. and trader B has a simple laptop and just $1,000 but is armed with a winning mindset, I would put my money on trader B Every. Single. Time.

It’s often been said that trading is 80% mental and 20% technical. I teach both the technical and mental aspects in my trading course and members area but by and large the mental aspects are more difficult to master, this is why I write articles like this one. It’s not enough to just learn a trading strategy and fund an account, you have to ACTIVELY make an ongoing effort to not just attain but MAINTAIN the proper trading mindset. One simple and easy thing you can do to start priming your brain for how it needs to work to win in the market, is getting organized. Get more organized in your house, in your job, heck, organize your car. You need to generally be an all around better person if you want to make money trading. A better version of yourself, I should say, and don’t you want to be that anyways?

So, I say to you, are you ready? Are you ready to become a better, stronger and more efficient and successful version of yourself? Only you can decide. If your answer is yes, then you better get ready to make some meaningful changes because nothing different is going to happen without change.

Please Leave A Comment Below With Your Thoughts On This Lesson…

Have you ever wished you had a time machine so you could go back in time and avoid all the costly mistakes you made early-on in your trading career? Unfortunately, there is no time machine, but for all you beginning traders out there, you have the enormous advantage of being able to learn from those traders who are more experienced than you. If you apply a little commonsense and humility, you can learn a lot from mentors like myself who have been trading for decades.

I’m not saying you will be able to avoid losing trades by reading this article, but I am saying you will be able to avoid making most of the stupid mistakes that traders typically make when starting out or because they are misinformed. Avoiding such mistakes can save you A LOT of money, time and mental anguish.

Here are the biggest things I wish I knew about trading back when I first started:

Pick one trading strategy, master it, stick with it

Many beginners come into the market and start trading live without even being sure what their entry and exit criteria are, they are literally just pushing buttons and hoping for the best, just like at a casino.

The first thing is to make sure you have an actual trading strategy and learn it. Don’t just learn it, master it. You need to become a master of one trading strategy and stick with it, otherwise you’ll never stand a chance in the markets.

Preserve capital in the early days

Traders tend to blow through their risk capital quickly in the early days, not really even thinking twice about the need for capital preservation. The ironic thing is, you will learn many lessons in the early days of trading but if you blow through all your money you will have little to no capital left by the time you actually know what you’re doing.

You need to survive long enough to get to the point where you can thrive. You don’t want to be so burnt out and blown out that you give up before you reach expert status. Trading isn’t only for the super-intelligent or super well-funded as many think. But you do have to persevere and overcome difficulty, especially in the early days. You need to learn to manage your capital and risk and make it last. Don’t go “all in” and get trigger happy or you will soon find yourself joining the ranks of losing traders. You don’t want to be a broke, expert trader.

Don’t focus on one asset class

Don’t just trade Forex, don’t just trade stocks, don’t just trade commodities, etc. I look at the major markets across different asset classes, because that is how you have the best overall opportunity to profit. I look at the major FX pairs, major indices and major commodities as well as researching potentially lucrative investments in companies. I keep my options open and don’t limit myself when it comes to the types of markets I trade or the investments I make.

However, that does not mean I am looking at every market under the sun. I actually don’t look at most markets, rather, I have several in each asset class that are my favorites and for the most part I stick to those. You can learn more about this in my article on the most profitable markets I trade.

Focus on trading performance not on the money

Most traders become fixated on their trading account balance. So much so that they only think it’s going to go up, and if it goes down they totally panic. This is perhaps the root cause of most trading failures; being overly-concerned with the money in your account instead of the performance of your account. Yes, they are two different things.

Your trading account performance is easily reflected in the equity curve of your account, which is something most trading platforms will provide you with via a report. Once you start being more concerned with a consistently rising equity curve, instead of the dollar value of your account, you will naturally start trading better.

That equity curve is not just a reflection of your trading account, it is also a reflection of you, your strengths, your weaknesses. Show me a consistently rising equity curve (even with some dips in between rises) and you will also be showing me a consistently disciplined, organized and properly focused person, not just a trader.

Your trading account performance is what you stay accountable to, not your account dollar value. You need to view that equity curve as an extension of yourself. If it starts nose-diving and you start blowing out all the progress you made, something is seriously wrong with your trading mindset and you need to address that asap. Keep the natural rise of the equity curve intact, gently rising over time, in an uptrend. That doesn’t mean there won’t be losses in between wins, but it should look like a pretty solid uptrend; higher highs and higher lows.

One of the keys to switching focus from account dollar value to equity curve, is realizing that you simply aren’t going to make a lot of money fast in the market. Unless you are starting with a large account (most of you aren’t) there is no way to safely and consistently make a lot of money quickly in the market. Just remove this notion from your head ASAP and you will be much further along than most. If you’re not trying to make “fast money”, your equity curve is probably going to be rising slowly but steadily over time, that is what you want.

“Don’t be a dick for a tick”

This is some of the most important advice you’ll ever get about trading: Don’t be a “dick” for a tick. Not to be crude, but this is important.

STOP trying to squeeze every last little pip or point out of a trade, because this is called GREED. It may not feel like it in the moment, but when a trade is up nicely for you (say 2 to 1 or more) and you are sitting there staring at it, still not taking the profit, you’re being greedy. The market is offering you a winner and you are saying “no, I want more!”. Well, the market doesn’t give a crap about what you want and it is just as happy to turn right back around and fall 200 pips against you as fast as it rose.

Bottom line: IF the market is near your desired / predetermined profit target but seems to be struggling there, just take the damn profit off the table or at least trail up your stop loss to lock in most of it. DO NOT let that winning trade end up a loser or breakeven, take the money and run!

You really don’t need indicators

Being a new trader this day in age has its advantages over 18 years ago when I started, but it also has its disadvantages. I’m sure it’s very confusing to a newbie because you see so many slick looking ads on facebook and google for trading systems and different gurus teaching you how to trade their fancy strategies. How do you know what to do or who to believe?

Really, truthfully, as far as technical analysis and trade entries / exits go, all you need is price action and an understanding of how to read the footprint on the chart. There is no magic indicator recipe, trust me, I researched and tried everything in my early days of trading. Moving averages are helpful in showing support / resistance and value areas, but beyond those I really don’t use indicators. ATR (average true range) for stop loss placement and I may look at volume in shares or commodity trades. That’s it.

If you really want to spend hours messing around with technical analysis indicators on your charts, be my guest, but I can think of 50 other ways to spend your time that are far more lucrative.

Be OK with being out of the market

Here’s something that might be a “newsflash” for you: Being out of the market is considered a position by the pros, the best traders know this but rarely is it talked about online or in discussion forums. Brokers want you in the market constantly, it’s in THEIR best interest but not yours! What is in your best interest is making money in the market, and the way you do that is from low frequency trading, which means the broker makes a lot less money from you.

When I was younger, I’d enter a trade, watch it all week then as soon as it closed I felt compelled to enter another one. It was very, very hard for me to not be in the market, and I suspect many of you still have this problem. This, honestly, is the biggest issue you must conquer to achieve winning months in the market, month after month. Say you take one good trade early on in the month, and you make say, 5% on your account from it. From there, you have two options; 1. find any reason under the sun to enter another trade right away, then do that again and again and see how you end up at month’s end (you will likely be negative instead of +5%) OR, wait patiently, likely how you did for the last winning trade and if that means not trading for a week or two, then at least you’re still up 5%!

You should view the market as a dangerous place that you can potentially profit from, but that you want to avoid risking your money in unless there’s a really obvious reason to do so.

Don’t get overly fixated on trading

Trading, more specifically speculating, should not be viewed as your only income source. When you start viewing it this way you become overly attached to it and you generate a NEED for it to work out instead of it being an optional thing that you can be OK without.

You should have retirement funds, slower long-term investments, cash savings, your job income, and trading, amongst other things. Don’t view trading as your ONLY option for life, liberty and happiness, or I promise you it will not work out.

I even hear of newbies quitting their day jobs as soon as they fund their live trading accounts. This is just lunacy. You NEED that consistent regular income coming in ESPECIALLY if you’re speculating in financial markets, not just to pay your bills but to keep a sound, calm mind, which you need if you want to have a chance at winning over the long-run in the markets.

Look at and trade what’s moving

One of the biggest reasons traders fail is trading low-volatility markets. Trades need volatility to have a chance of moving enough to make you money, you won’t make money without it. Instead, you will enter random trades when the market is just churning sideways and you will sit there watching your money churn and eventually take a loss or a tiny win that will just make you angry and cause you to want to jump back in the market again, losing more money. Look for strong trends and obvious price action signals that have confluence in the context of a market that is moving. Try to avoid sideways choppy markets.

Stick to higher time frame charts

If someone had come to me and told me to simply ignore any time frame under the 1 hour chart when I first got into trading, it would have saved me a lot of time and money.

You really need to avoid low time frames and ultra short-term trading if you want to have a chance at lasting trading success.

If you’ve followed me for a while now, you have probably stumbled across some of my articles on why I trade higher time frame charts. There are many good reasons why I believe the daily chart is the most important time frame for a trader to look at it. But, perhaps most importantly, is that the daily chart is going to “smooth out” all the B.S. of the short time frames and show you the most useful view of any market.

Conclusion

Unfortunately, time machines haven’t been invented yet. Fortunately, however, you can learn from my past mistakes and figure out how to avoid them, potentially saving you thousands. So, in an indirect way, you sort of can go “back in time”. You see, I’ve been in your shoes, I’ve thought what you’re thinking and I’ve experienced the same trading frustrations you’re experiencing and I’ve made it through to the “other side”. I have a virtual blueprint of what you should and should not do in regards to trading the market.

The 10 points of wisdom discussed above are critical components to trading success that, if you follow, will potentially save you thousands of dollars and countless hours of time. Many mistakes that traders make are pretty predictable, as we are all human and tend to behave the same way when trading the markets. Every trading hardship I’ve had, every “stupid” trading mistake I’ve made and every crazy trading approach I’ve tried have made me into the trader I am today. Many of these mistakes are discussed above and the lessons I’ve learned from them form a big part of the chapters and teachings in my professional trading course. If you want to succeed at trading, it’s critical that you put time and effort into learning and developing the winning mindset that is required to make money in the markets.

Please Leave A Comment Below With Your Thoughts On This Lesson…

Your trading account balance matters much more as you advance in your trading skill than when you’re beginning, yet in order to advance and learn you must risk real money, which in the early-days can be risky and lead to significant damage to your account. Seems like some type of “cruel” paradox, right?

What good is it to be a skilled and accurate chart technician if you have lost all your risk capital along the way? You see, in the early days of your trading career, it’s not enough to just be focused on learning to trade, you also must be focused on preserving and (ideally) slowly building your bankroll (money in your account) so that as you progress and learn you have sufficient funds to properly take advantage of your trading abilities in the future.

All too often, I see traders blowing out their accounts in the early days and they end up years later with a very keen eye for predicting price action movements, with little to no money to trade with.

This lesson aims to open your eyes to the significance of the capital in your trading account and how you can protect it, keeping you in the game long enough to reach your goals of becoming a consistent and profitable trader.

Can you and your bankroll survive long enough?

If you spend enough time analyzing and watching the price action on the charts, eventually things will really start making sense, you will start seeing the market as a professional trader does. However, as you may have gathered from the title of this lesson, all the experience / screen time and education in the world won’t mean a thing if you don’t still have your bankroll intact by the time you reach the point of trading mastery.

If a person decides to go solo skydiving for the for the first time and jumps out of the plane without first getting any training, instruction or practice from experienced skydivers, it would be potential suicide. The same holds true for a trader who jumps into the market head-first, trading real money without any formal training, it’s financial suicide. Yet, everyday, droves of retail traders do it.

For some reason, most traders don’t seem to connect the dots that in order to survive in trading and produce long-term profits, they have to have money to trade with! So, I want to help YOU, the aspiring trader, truly understand both the importance of protecting the capital in your trading account and just as importantly, HOW to go about doing so.

Capital is the price of admission, without a ticket, you can’t play.

Ever hear the saying “You’ve got to pay to play”? Well, that is pretty much true for everything, especially trading. If you don’t have any money, you can’t make any money.

Think of your trading account balance as the price of admission to the markets; a daily ticket to watch, learn and improve. If you run out of money, you can’t buy a ticket, and your learning journey and career are all but over.

Obviously, many traders run out of actual money to trade with and then do stupid things like fund their trading accounts on credit, this is simply lunacy and will dig you a financial grave faster than you can imagine. Don’t ever do this.

This leads me into my next point…

What should you be risking?

I’m not going to tell you how much to risk per trade, or what % of your account to trade, because it’s not my place do so due to the many complicated factors involved. However, I will say, in the early days of your trading career, be sure you can survive losing 50 or 100 trades and still have a very large amount of your account left. Remember, you need to survive, that is the only goal here, not profits (yet), but capital preservation at all costs. You are trying to preserve your trading capital as much as possible for as long as you can so that as you learn and grow as a trader you still have money left to trade with, to take advantage of your improving skills.

I am also going to ask you to look at your overall net worth. Look at your income vs. your monthly bills and decide how much money you actually have right now to risk, as well as how much you will invest each year from your disposable income/savings to continue your trading pursuits and learning journey.

Once you have figured out your financial situation, budget accordingly and stick to that plan and don’t deviate on a whim like a gambler. Think about what’s in your account today and what you might put in your account each month/year, if you don’t, you’re going to go broke and destroy your chances of making it. The investment into trading has to be methodical and disciplined, stick to your capital plan each month/year. Most importantly, do not commit funds to trading that you can’t afford to lose or that if lost will impact your way of life significantly, never do this, especially when you don’t totally know what you’re doing yet.

Don’t run out of bullets. Plan for the battle to last a long time.

It’s no secret that I love military metaphors to teach traders the type of mindset they need.  Those of you who follow my blog know I am a fan of the sniper trading approach, which is essentially a low-frequency, higher conviction trading style. Trading is a war against your opponent that lasts decades, so you need to take inventory, prepare and plan, and dig in for the long-term. When you have money in your account, you have ammunition to go into battle but if you are out of ammunition you obviously cannot win the battle.

Trade A Smaller Positions In The Early Days

Whatever lot size you’re trading now, even if it feels comfortable, you may want to think about reducing it by 50% or even 75% and take a step back and start doing some math…

If you lost 10 trades in a row risking what you currently are, where will you be? Will you survive, or will you nosedive? Do you have enough ammunition on reserve to make it through? Think logically here and don’t believe that you’re somehow going to be the lucky one who never experiences a drawdown, because they can and will happen to you at some point.

As discussed in my recent article on why you need wider stop losses; you can trade wide stops or tight stops, and still risk the same amount of money, it just comes down to position size. Change the contracts / lots traded and the dollar risk changes, it’s that simple.

It’s wise for any newer trader to start out risking a very small amount relative to their overall capital and then gradually increase risk over the years as their skill, confidence and trading account grows.

Trade Smarter In General

Play your ‘strong hands’ (poker metaphor) by picking the best price action pattern that you understand and have a knack of picking up on charts and trading successfully, stick with it and master it over time. Know your strength and don’t deviate from it just because you can; apply discipline.

Be on the defense not always on the offensive; play the long-game and grind it out. Don’t think there’s a shortcut (because there’s not!); you need to always be thinking of your risks and not just the rewards.

Don’t be fooled by your subconscious

So, you had a run of winning trades. Great job! But, ease up buddy, slow down and take a breath, it isn’t going to stay this easy and you better believe it. You need to prepare for that string of winners to revert to normality and don’t over expose yourself just because you’re feeling confident. View strings of winners as a “blessing” and remember that there’s a random distribution of trade results for any given trading edge (so a string of losers could be around the corner)!

Remember, the trades that seem the easiest to spot and that you have the most confidence in are the ones you need to be worried about. Often, the market is ‘setting you up’ to fail, so don’t bet big on a trade that’s giving you that over-confident feeling because those are the most dangerous ones.

I’m not saying you should over-think and over-analyze potential trades, I still want you to play the best and most obvious setups. However, I am saying that you should not double-up on those obvious looking ones just because you “feel good” about them, because remember that any trade can fail and it only takes one misplaced card to bring down the house.

Stick to your pre-defined risk parameters and when you see a quality trade setup that meets your trading plan, enter it with conviction.

Only Pick Trades Offering Sound Risk Reward.

If you want to preserve your bankroll, you need to only pick trades that offer a sound risk:reward ratio. If you aren’t sure what risk reward ratio means, check out my article on risk reward and money management.

Ideally, you will only take trades that offer a decent risk reward of 1 to 1.5 or 1 to 2 or greater, nothing less. When you start taking trades with risk rewards of 1:1 or less, it becomes incredibly hard to impossible to make money over the long-run and preserve / build your bankroll.

Don’t Risk Money On “Hero Trades”. Warning: You Will be Tempted.

There’s FAR more money to be made trading with the trend when everyone else thinks “The market can’t possibly keep moving in that direction” than there is trying to pick tops and bottoms.

Remember this: markets can go further than you think and they often will. These big moves take time to play out and many, many amateur traders will be betting against that trend the whole way up or down, thinking it will end at every swing. Hence, sometimes being contrarian is actually going with the ‘herd’ because everybody else is betting against them!

Next time you want to waste a bullet from your trading account trying to be a hero and pick the next big reversal in a one-way market, take a step back and think about if it’s worth it in the longer-term scheme of things. Your aim is to survive monetarily, not boost your ego.

Conclusion

When it comes to long-term trading success there is one contributing factor that stands head and shoulders above the rest: Capital preservation. Many traders end up blowing through so much money in their early days that by the time they know what they’re doing they are all out of trading capital to properly take advantage of their ability. Blowing through money in the early days of trading also leads many traders to simply give up citing “trading is too hard” or “impossible” before they actually know what they’re doing.

Any way you slice it, when you first start out trading real money, you need to be extra careful because the emotions are high, your hopes are high and your expectations may not be in-line with reality. You have two choices: don’t listen to the insight I’ve shared with you in today’s lesson and that I expand upon in my professional trading courses, or listen to it and implement it. There really is no in between. At the end of the day, only YOU know how much money you can afford to lose both financially and mentally and still be in the trading game long-term. Hence, it’s up to you to make the call and do what needs to be done because no one can stop you from blowing out your trading account, except you.

Please Leave A Comment Below With Your Thoughts On This Lesson…