Trapped in Mordor?
Hands in the air, those of you who have a Short term / Day Trading style or if you’re winging it?
Hands in the air, those of you who mostly lose or achieve wildly inconsistent results?
Houston, we have a problem… and the question me must ask ourselves… how do we get Apollo 13 back to Earth safely? (if you’re too young to remember the Tom Hanks classic, perhaps “The Martian” with Matt Damon will resonate with you millennial’s out there)
I know most of you follow this blog / analysis because I have a straight forward approach to the market and I don’t like to over complicate it, because let’s be honest, does anyone like complications in their lives?
Certainly not me… you can give me bread and butter over an aggressively spicy Indonesian curry any day of the week…. actually, hold on… let me re-phrase that, because actually…. I’m rather fond of aggressive Indonesian curries…. and bread and butter is pretty bad, and I’m not even a fan of butter, unless it’s residing inside a nice hot bulletproof coffee… so let me give a better example…. you can give me a Snickers bar over fancy looking Creme Brulee any day of the week - but I think you get the point - I like the simple things.
Trading can either be incredibly lovely, or it can send you to the depths of Mordor and I don’t know anyone that would particularly welcome a nice beach side residence in Mordor, so the 1st (and most logical) step most traders really need to take, is recognizing which Trading style traps them with Gollum, and this is the purpose of this weeks blog.
I’m going to spell it out to you EXACTLY what you need to do, in order to achieve better success.
Understand that taking a stock from $50 to $53 or taking a stock from $100 to $105 and exiting your position is NONSENSE
The REAL money is made by taking a stock from $50 to $80 or $100 to $150 - you do want meaningful gains don’t you?
In order to generate REAL returns and success, you need to understand that optimal entries are critical to longevity
Trade Management becomes a huge KEY to success… and this is where most fail… they see a pull back and think they need to exit
Be disciplined in your approach… methodical even…. and carry zero attachment to ANY position you take
Have a thesis in place… if your thesis ISN’T playing out as you thought… exit the trade (as I have done hundreds of times)
Accept you will always get it wrong, but if you have your EDGE, you will be correct more than you are incorrect… so don’t sweat the small losses
Trade with a time horizon of weeks / months in a Trending market… if you find yourself trading in minutes & hours - you’re doing it WRONG
Short term traders will ALWAYS have spells in a trending market where they think they’re geniuses… they are not… they are only a coin flip away from re-discovering inconsistency
FORGET charting on small time frames… it’s horrible… it’s inconsistent… and it’ll trap you in Mordor too.
Who wants to live in Mordor? Certainly not me
Hands up again, those of you who would like to be better at Trading, but are desperately trying to learn Trading from YouTube, or following blogs (like mine) and reading books etc, trying to reverse engineer the holy grail of trading?
Now that we’ve identified some potential issues… and given the obscene number of conversations I’ve had with inconsistent traders all over the world… I feel I’m pretty well qualified to give my overall take on this, because most traders tend to say the same thing in some version or another… and it looks a little something like this.
They have MASSIVE inconsistency with Day Trading, they know Day Trading doesn’t work… but yet they STILL try to get better at Day Trading or worse still… they’ll pay OTHER people money to give signal services.
Do you see the problem?…
If you know a style is inherently flawed / horrifically difficult to master… why try to play that game? Would you not rather stack the odds in your favor?
The average trader will spend a couple of hundred hours watching YouTube video after YouTube video, or reading book after book… in search of the holy grail… and they will acquire an obscene amount of information over 2 years that will give them a false sense of confidence (I know because I did that too)… they’ll enter the market, and of course, some will thrive… but ultimately… most will fail, because nobody has shown them how to filter out all the noise and how to put all the information together for them.
Let me put it another way…. anyone can go onto YouTube and learn how to perform Heart Surgery, but you will never be a Heart Surgeon…. does that make sense?
The best thing one can do, is seek out the best… and I say it all the time… don’t feel like you need to approach me… because my services do cost money… and sometimes the costs are prohibitive to those with smaller Trading Capital amounts… so go out there and find Traders in your local area via Meetup Groups… go out there and connect with like minded people, and do your own due diligence on anyone you feel can teach you, and if it so happens that you cannot find a Meetup Group, or a wildly successful Trader with the required 10hrs per week spare to tutor you for free, then by all means have a chat with me and we’'ll discuss your needs, and see if we’re a good fit.
I’ll leave this little link, just in case you want to explore working together.