I tell traders what they NEED to hear, not what they WANT to hear, and that is one of the aspects of my teaching approach that I take great pride in. The fastest route to trading success is learning the honest truth about what trading is and what it takes to succeed at it.
The Top 5 Trading Tips No One Else Will Tell You
The following five trading tips are things that you will be hard-pressed to find on other trading websites or blogs, and that is exactly why I am giving them to you here. As I often say, this may not be what you ‘want’ to hear, but it’s what you NEED to hear and that is what will ultimately help you succeed the fastest in trading.
Trading is about mastering yourself, not the market
With so many fancy looking trading systems and strategies out there, it’s easy to believe that trading success comes from figuring out how to ‘master the market’. But, in reality, trading success comes only when you’ve mastered yourself as the market cannot ‘be mastered’.
So, rather than spending time and money looking outward for trading success, traders should look inward, at themselves. Do you need a good trading method / trading strategy? Yes, of course you do. But, my point is that the trading method is by no means the only component to trading success or even the most important, and yet most traders seem to focus mainly or entirely on it.
It may be difficult to accept that YOU are the primary impediment to market success or failure, but it is the truth. Until you learn to conquer your own mental trading ‘demons’, such as giving into greed, fear and revenge, you will not make money in the market.
Of course you should learn a trading strategy, you need one, but that’s only one piece of the puzzle, the rest of the ‘pieces’ of the puzzle lie within you, not in the market or in some trading robot.
If your goal is to make money, don’t trade.
Trading is essentially a giant mental trap for most people because the allure of “easy money” and “financial freedom” is what pulls people in, but if those things are your “goal,” you won’t succeed.
As I discussed in my recent article about realistic goals for traders, whilst focusing on big lofty goals like “getting rich” or “quitting my job” is indeed worth-while and ambitious, it is not in fact HOW you achieve them. Thus, your focus in trading cannot be fixed on these types of things, because if it is you ironically will obtain the opposite result; losing money.
It sounds cliché, I know, but the honest-to-goodness truth of trading is that to make money at it, you really have to enjoy the process, the game, and the challenge of trading. That means enjoying the self-mastery challenge that I discussed previously, enjoying the game of analyzing the charts and price action, finding optimal trade entries and trade exits, and enjoying properly managing risk. To truly enjoy these things, you must enjoy discipline and patience and understand that this is self-mastery, not “market mastery.”
You have to trans mutate your desire to make money into desire to trade properly and develop good trading habits and routines. You do this by realizing, believing and acting in-line with the FACT that HOW you make money as a trader is by focusing on the process, not on the money.
Have no memory
The main reason you need to have no memory in trading is that your last trade doesn’t matter; it literally has NO effect on the outcome of your next trade. Now, it can be very easy to read that last sentence and understand it, but it’s an altogether different thing to put it into practice in the ‘heat of the moment’, e.g. right after a trade closes out.
Think about this: the market is never exactly the same, it’s always changing. Even the same trade setup is never going to play out the same exact way twice in the market. Also, your trading edge / strategy has a random distribution of winners and losers over a given sample size of trades. For these reasons, you cannot let past trade outcomes influence future trades. By that I mean, just because you took a losing pin bar trade signal for example on your last trade, does not mean the next one will be a loser.
It can be very easy to get down or discouraged after you lose some money. You may feel like your trading method doesn’t work and so you begin to let that past losing trade influence your future behaviour in the market. The second you start thinking and behaving in this way, you are no longer trading with skill, objectivity and clarity, but with confusion, emotion and frustration.
A trader has an edge, and to see that edge work for him or her, they need to execute it over and over, over a large series of trades. No single trade in that series is very important, rather it’s the consistent execution (requiring discipline and patience) of that edge over a large enough sample size of trades, that IS important. You must remain emotionally detached from the results of your previous trades and basically just forget about them.
Obviously, this assumes you are following your trading . method… If you are deviating and overtrading, then you should learn from that mistake and remember not to make it again. The point here is that if you’re following your trading strategy, a losing trade is normal and nothing to get emotional about. A winning trade should also not make you emotional. Forget about the last trade and continue on with your trading plan.
It will take longer than you think to succeed
Most new traders are not mentally prepared for how long it can take to start trading consistently well. If you aren’t in it for the “long haul,” you will quickly give in to temptations like overtrading and overleveraging your trading account in an attempt to “speed up” your trading success. However, the opposite is what happens when you behave like this: you end up losing money, putting yourself further behind where you were, and making trading success seem more and more elusive.
The only way most people can stick around long enough in the market to develop the type of habits that lead to consistently profitable trading, is by having real passion for the trading process and everything that goes with it, as I discussed previously in this lesson. Having a short-sighted approach and thinking you’ll ‘get rich quick’ in the market are recipes for losing money, not making it.
Adapt and improve to remain profitable
Markets change, this is a fact, and it’s also the main reason why automated / robotic trading systems don’t hold up over time, as I discuss in my article on the human mind vs computers in trading.
If markets are constantly changing, then you need to adapt to stay in tune with them; doing the same thing over and over will not yield you consistent profits. This is one reason why price action is such an excellent trading method: it gives you the ability to adapt to changing market conditions. You are not stuck with a rigid set of rules or indicators when you learn to trade with price action; instead, you can read the changing market conditions and spot high-probability price patterns that form within those conditions.
“If you don't find a way to make money while you sleep, you will work until you die.”
- Warren Buffett
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