Many aspiring traders are excited about the possibility of making consistent profits in the markets.
Then you’ll have the freedom to do the things you love, better provide the needs of your family, and never be a slave to your job again.
Or perhaps, you just want to know you’re the top 5% of traders who are consistently beating the markets.
Whatever the case is, you’ve seen that it’s a definite possibility. Take the story of King for example, who made 24R in the past year and has been in the green ever since.
It’s possible! But it isn’t easy.
In fact, when I started out, I was completely overwhelmed and all over the place.
I was hanging out in trading forums, studying courses, reading books and blogs.
There were so many questions in my mind like…
Should I be a day trader, swing trader, or long-term trader?
Should I study indicators, price action, or candlestick patterns?
Which timeframes should I be trading on?
How do I know if my trading strategy works?
When is the best time to enter and exit my trades?
And what the heck is a Gartley pattern?
I was lost and confused.
My enthusiasm wavered but I knew I had to find answers…
…but would I really be able to figure this out?
Well, it took me years before I had my “AHA” moment and figured this trading thing out.
And I made a few serious mistakes along the way which I want you to avoid…
You’re trading the wrong timeframe
Here’s the thing…
You probably have a full-time job or you’re running a business on your own — working anywhere from 10 to 12 hours a day.
So imagine this:
After a long day and gruelling day at work, you get back home and rush to your trading platform.
You try to scalp the markets for a few pips here and there while having dinner in front of your monitor.
The next thing you know, you’re feeling the heat as your position is trading against you — and your losses are slowly getting larger.
3 hours have passed and it’s almost time for bed, but you’re still in a losing position and you don’t want to take the loss.
You decide to hold up another hour and see if it improves.
In the end, it doesn’t.
So you decided to take the loss and head for bed. The next day you wake up for work and rinse repeat the process all over again.
And all these while you miss the opportunity to spend time with your family and friends.
Is this what you really want?
Here’s what I realised…
If you have a full-time job, you shouldn’t day trade or scalp the markets — that’s a surefire way to kill your relationship and mental health.
Don’t worry, there’s a better way to trade. More on that later…
You don’t have this most important thing in trading
I used to think…
Trading is 80% psychology.
Trading is about following your plan.
Trading is having proper risk management.
And it’s true.
What use is that if you don’t have an edge in the markets?
You’re still going to bleed your account consistently over time.
Let me explain…
Let’s say you’re going to a casino to gamble.
You adopt a strict risk management approach and keep your bets small.
You psyche yourself up by having positive affirmations like…
“I will make a killing today.”
“Lady Luck is shining on me!”
Well, guess what?
You’re still going to lose money.
Because you don’t have an edge over the casino. Without it, even the best risk management and psychology will not save you.
So to make money consistently, you must have an edge over the house — and it’s the same for trading.
Loneliness is killing you
Remember back in your younger days when you were in school?
You had a teacher for every subject to impart knowledge to you so you can pass your exams.
And outside of the classes when you’re active in sports… you had a coach to provide feedback on how you can improve your game (whether it’s football, basket, swimming, and etc.)
Even when you’re “chasing” after the girl of your dreams, you have buddies (who were expert at the game), giving you advice, tips & tricks on how to win her over.
Clearly, at every stage of your life, you had someone experienced to give you feedback, advice, and knowledge. But when it comes to your trading career…
…you’re doing it alone.
And because you’re trying to figure things out by yourself, you face questions like…
Does this trading strategy work?
Do I have an edge in the markets?
How do I know what works and what doesn’t?
Now I’m not saying you can’t make it on your own.
You can… with hard work, determination and paying your fees to Mr Market.
But won’t the cost be lower and your probability of success higher — when you have someone to rely on?
In case you’re unaware…
Paul Tudor Jones had Eli Tulis as his mentor.
Jerry Parker had Richard Dennis as his mentor.
Stan Druckenmiller had George Soros as his mentor.
Every one of these legendary traders had someone to guide them through their learning curve and take their trading to the highest level.
You’re focusing on the wrong things — and no it’s not your strategy
Can you imagine someone building a house without designing a plan first?
I sure as hell wouldn’t want to live in that house — not even for a night!
You don’t build a house without first drawing up a plan, a “blueprint” for how the house will look, where the rooms will go, and so on.
And the same is true for trading.
Many people start out by trying different strategies, different patterns, different indicators they might have learned in an online forum but, they don’t see the “bigger picture”, so these only get them limited results.
What you need is a process to follow, which serves as a “blueprint”, so you can see how every element fits together, just as a house plan shows you where every room in the house fits together.
You don’t have the correct expectations — here’s the reality
Let me share with you a secret…
During my university days, I had a dream of becoming a full-time trader straight after graduation.
No need to work for any company.
No need to participate in any politics.
No bosses to answer to.
My plan was to take my entire savings of about $5,000 and borrow another $5,000 from my dad (for a total of $10,000) to trade full-time.
I figured if I could make $3000 per month, then it’s enough for me to survive and fulfil my dream.
And that’s what I did.
But 6 months into my “trading career”, things didn’t work out the way it’s supposed to.
Not only was I bleeding my trading account, I relied on my parents for financial support.
It’s then I realised I didn’t have the correct expectations to start with.
1. I didn’t have the proper skillset
Here’s the thing… I attempted to trade full-time without having the proper skill set. Let me ask you… would you allow a surgeon to operate on you if all he/she did was read a few books?
Of course not.
2. I lacked trading capital
If you think about it, I needed a return of 30% each month to meet my living needs — which isn’t realistic at all.
This resulted in the “need to make money” syndrome and caused me to break my rules. This led me to take on losses larger than expected.
You should realise that trading isn’t a get rich quick scheme. You should look at it as money making tool to grow your wealth steadily — in bull and bear markets.
At this point:
I’ve covered a lot in this post and shared with you some of the biggest mistakes I’ve made in my trading career — and how you can avoid it.
In my next post, I’ll share with you my 3 biggest secrets that transformed my trading completely (and it’s not trading psychology or risk management).
Leave a comment below and share with me the biggest mistake you’ve made in your trading career.
I look forward to hearing from you.