Apple | Google | Spotify | Stitcher | Soundcloud | YouTube
In today’s episode, you’ll discover 5 things you should stop doing as a trader.
So tune in now…
How Long Does It Take to Become a Consistently Profitable Trader?
How to be a Profitable Trader Within the Next 180 Days (Even if You Are New to Trading)
Hey, hey, what’s up, my friend? In this episode, I want to share with 5 things that you should stop doing as a trader.
1. Stop following someone else’s opinion or analysis
It doesn’t matter whether that person is a multi-millionaire trader, whether that person drives a Lamborghini, whether that person has a huge following – stop following their opinion and their analysis. Why is that?
Because you do not know what their trading plan is. They’re not going to tell you when it’s time to sell those positions that they have shared two weeks ago which you followed, neither will they tell you how to manage those trades.
You don’t even know what’s the historical win rate of their strategy, except the chart they shared with you, based on some moving averages, support resistance, etc.
This is why you don’t want to use their opinions and analysis as the basis of your buying and selling decision. So never rely on these third party sources. The responsibility is all on you – you are on your own.
2. If you’re new, stop hopping from one trading strategy to another
Here’s the thing, there’s no holy grail out there with the best trading strategy that wins 90% of the time, with a minimum of a 1-to-5 risk-reward ratio. It doesn’t exist.
Stop hopping from one trading strategy to the next especially if you’re new to trading. Instead, focus on one trading methodology, be it systematic trading, swing trading or price action trading.
I don’t know what suits you, so you’ll have to dive deep into the methodologies and learn all you can about them, be it the trading setups, the reasons why your trading strategies work, managing your trades and developing your trading plans, etc.
So second thing, stop hopping from one trading strategy to the next especially if you’re new to trading.
3. If you’re an experienced trader, stop tweaking the same trading strategy that you’ve used for a long time
Instead, go out there and develop new trading strategies. Now, some of you might be thinking…
“Hey Rayner, isn’t your suggestion contradicting each other? Earlier, you say we should focus on one strategy, but now you’re telling us to develop multiple strategies. What’s going on now?”
I’ll explain to you where I’m coming from later. But for now, If you’re an experienced trader, stop tweaking that same trading strategy, that bread and butter trading strategy that you have.
Because here’s the thing, no matter how much you tweak there’s only so much upside, or that much better the trading strategy can get.
For example, if you have a trend following strategy, I can bet with you that the trend-following strategy, will still lose money in a range market condition no matter how you tweak it.
So no matter how you tweak a strategy, there’s only a limited amount of potential in it for you to capitalise on.
Instead of wasting so much energy on that one strategy, trying to get the best parameters or settings, which probably don’t exist, you should explore other different trading strategies which are uncorrelated to what you’re trading now.
For example, if you have a trend following strategy for forex and futures markets, then go and develop a trading strategy for the stock markets, maybe a mean reversion trading strategy for the stock markets, or maybe a momentum trading strategy for stock markets.
Develop something that’s uncorrelated to what you have now. Because when you bring those two uncorrelated strategies together, you’ll greatly improve your overall portfolio’s equity curve. That’s how it’s done.
4. Stop thinking in terms of absolute
This kind of drives home the point that I mentioned earlier, where I said if you’re new to trading, then focus on one strategy. The next thing I said was, if you’re an experienced trader, develop multiple trading strategies.
The key thing here is that there is nothing absolute in trading because the context matters. What I said earlier depends on the context.
If you’re new to trading with only six months experience, then focus all your time on that one strategy. But if you’re someone with 5 or even 10 years of trading experience, with a profitable trading strategy for the last few years, then go out there and explore multiple trading strategies.
The context matters and that’s the point I want to drive home to you. As a trader, don’t think in terms of absolute. It will get you nowhere because you’re closing your mind to the possibilities out there.
Always think in terms of the context, understand the why and that’s how you progress as a trader.
5. Stop comparing yourself to other traders
Especially now with social media, you’ll see other traders posting their P&L and you start to feel lousy about yourself. You wonder how this trader always makes money every single day, and his P&L always green, the screenshots are always beautiful.
Now here’s the thing, he might be on a demo account for all you know. Secondly, it might be a trading strategy with a small target profit and a very wide stop loss.
The truth is you’ll never know what the goals of other traders are, nor will you ever know how much experience or capital they have. So don’t compare yourself to them because you will make yourself feel lousy and inadequate.
And when you’re feeling lousy and inadequate, how much better do you think your trading results will get? Unlikely any better, it’ll probably get worse.
So stop comparing yourself to other traders. If you’re want to compare, then compare yourself to where you were 1 or 2 years ago and see how much you’ve progressed. That’s how you want to compare, not with someone else with different capabilities, tools experience and resources in their hands.
Here’s a quick recap of what we’ve discussed today…
- Stop relying on other traders’ opinions and analysis
- If you’re new to trading, stop strategy hopping
- If you’re an experienced trader, start developing multiple uncorrelated trading strategies
- Don’t think in terms of absolute, always think in terms of the context that’s presented to you
- Don’t compare yourself to other traders
With that said, I wish you good luck and good trading. I’ll talk to you soon.