That’s a bloody heavy title… Definitely not going to be able to address it within one blog post, but…
I just listened to an enjoyable podcast with Warren Berger and Shane Parish on Fs.blog and they talk a fair amount about questions…
Here’s a quote from Warren Berger that explains why I believe asking the right questions is key
Now, yes, that can easily be understood for engineers, for entrepreneurs and scientists, but what about traders?
Questions for traders
What is the market?
It helps to think about the entire market, what is the stock market? why does the stock market (on average) go up? Why do currencies exist? Why are there several currencies? Why is the price of a certain currency worth more than another one? How can I forecast that?
Now this won’t improve your trading 10-fold I’ll give you that, but having a larger understanding makes the next steps a lot easier…
Plus, the more you learn the more intrigued you’ll be trust me, I’ve fallen into a dark rabbit hole more times than I wish to admit
You can easily ask yourself, why do I trade FX? Why do I trade this way? Why do I need a trading plan? (I hope by now you know why you need one!!!! Otherwise this blog has failed you I’m sorry! :S ) What are the positives and downsides of having a trading plan? What will I learn from my trading plan?
Knowing the answers will give you the motivation to build one? You can ask yourself the same questions about anything btw, would that be why you want to trade full-time, why you need a routine, why you should eat healthy etc
How do I trade?
How do I build the right foundations to become a full-time trader? What is the process I should follow to achieve my goals? What set-ups am I allowed to trade? Why can I trade those set-ups and not others? Why is limiting the number of trades I take good?
Those questions will probably make you understand that sticking to your plan has way more benefits than downsides, you will understand that the only reason you trade those set-ups is because you are playing out an edge with a positive expected value and you definitely don’t want to start playing around because that will costly…
What questions to ask?
Now I’m not going to list hundreds (I easily could) questions instead here are a few questions I like to ask myself
Why did I take this trade? Does this trade fit my trading plan? Did I forecast it?
Why will the price go in that direction? What is the structure telling me?
Should I stay out? Why shouldn’t I pull the trigger on this position
What would my mentor say if I took this trade?
Would my mentor take this trade? Does it fit with his previous “behavior?”
Why would this trade turn out to be a loss?
How will I feel after taking this loss?
Am I still happy taking this trade?
Hope those questions help you.
I truly believe that everyone has the answers to the right questions (yes even you!) you just need to ask yourself the right questions…
If you can’t answer a question, then dig into it? Ask yourself what do you need to know in order to answer it?
Ask yourself questions and the following questions
How do you make money trading while traveling?
I trade currencies
How do you I make money trading?
By betting that a currency is going to be worth more than another one
Why are currencies worth something?
Because it’s a store of value
How do we know what value that is?
Ugh… I’m not digging my own hole, I’d need an entire semester to debate this
How can you analyze that one currency is going to be worth more than another?
It’s looking at the historical movement of price and forecasting that it will do something similar in the future
How do you forecast it?….
You get it by now right? I can stop this game?
Please.. Say yes…
Ask yourself the right questions and your trading and life will improve. Sometimes those answers will force you to look up something else to be able to answer it but in the end you’ll be better off
It’s easy to make something sound complicated, the truly hard part is to make something that’s really complicated sound simple
Once you are able to explain your trading strategy, why you take certain trades and not others you’ll have truly mastered your trading plan, and that’s exactly what successful traders do – it makes executing it a lot easier!
It’s only with the right questions that our lives can improve
Most of the biggest discoveries started with why or how, so get used to those two words and use them!
Anyway, I will definitely fall into a rabbit hole if I keep writing this post, I hope you enjoyed it! If you did, please do leave a like or a comment 🙂
Forecasting, backtesting and having a trading plan are the three pillars of successful in the FX market.
Do you have a forecasting routine? If so, keep it up! (let me know what it is)
If you want to become a full-time FX trader, you will have to develop a trading plan, backtest it, and forecast potential moves.
That’s (more or less) everything you need.
What is forecasting?
Figured I probably should do a quick explanation of what I mean by forecasting…
It’s basically “guessing” where the market will go next and how…
Sounds rather easy right? It doesn’t even take that much time
This is my forecast for EUR/CAD, I just drew on trading-view the potential scenarios that could happen, I know there are many other potential ways the market could evolve during the day, but in my view, this is the most likely.
You could use different drawing colors based on “I’m willing to take this scenario” & “Not willing to take this scenario” (that’s actually a good idea, I should do that)
If it’s this easy what’s the benefit
Let me start this section with: I go a lot more in depth with my forecasting process, just scroll down if you already know the benefits
There’s five key benefits for a trader, but I was lazy while building this infographic so here’s 3 key points...
1- It will increase your confidence, you are able to track whenever or not your forecast actually took place, which in turn will increase your confidence in your ability to be a few steps ahead of the market (which is key to be profitable)
2- You’ll be prepared, doing your forecasting is basically drawing out all the possible/probably scenarios – you’ll be able to decide ahead of time what price action you’ll want to see before taking a trade – all you need to do is execute your plan
3- It’s easier to profit, having done your forecast in the morning you are a less likely going to miss a trade during the day since you are able to place your alerts at all the key areas. Plus, it also increases the likelihood of you sticking to your trading plan
And the bonus two…
4- It will decrease your emotional attachment to potential trades, and trades you are currently holding: by drawing out several possibility you know that there is no guarantee that the price will do exactly what you want it to, it doesn’t care, instead it makes you realize, we are only playing an edge
5- It allows you to switch from analyst to a trader.
It’s really important to be an analyst when it’s the weekend and when doing your forecasting, however, when the markets are live, and there’s a potential trade set-up in the making you need to become a trader, not an analyst. Having done the analysis that morning will help you execute.
Here’s a video explaining it if you don’t like reading…
My forecasting process
Now let’s dig into my process, that’s probably why you’re here (sorry for making you wait)
I recently did a tweak so here’s a breakdown of what I used to do and what I do now, not a huge difference, but really happy so far
I used to draw at least three possible scenarios:
Two potential entries, so how the price gets there and where I’d be interest
One scenario where I wouldn’t be able to take the trade, either the market goes in the opposite direction or just impulses through everything I was eyeing up
That was done first thing in the morning and last thing before going to bed, because that way I would force myself to think about the possible, the probable and admit, the price isn’t necessarily going to go where I want it to
In the morning it was to plan the day ahead, at night it was to have my subconscious think about the market while I was sleeping, and once again, forecast where the price would go over the next seven/eight hours
It was a really cool exercise, but I wasn’t getting the most out of it…
Now I do my forecasting somewhat differently
I use my trading journal to track those morning forecasts (I keep everything in my excel file, from reason to trade, to monthly asr, to journal, to forecasting etc, I like having everything in one place)
So to quickly explain, I track the day of the forecast, the pairs I’m interested in, the direction, then three potential scenarios that could play out (out of many), a screenshot of the potential moves + drawings.
Then here’s the addition, I then come back the next morning and figure out which one happened, sometimes it was a fourth option, that happens.
But here, you can see I had forecasted the move 12 times out of 15 – not picture perfect but pretty darn close.
How do you think that makes me feel? How would that make you feel?
More confident in your skill? Yes
Happy because you get to collect more data? Yes
More likely to execute the next time you see a trade set-up? Yes
I highly recommend you to do the same
It takes less than thirty minutes in the morning, yet you have the entire day planned ahead
You know what you want to see before taking a trade – that’s key, it reduces your hesitation to trigger a trade, and avoids you from taking low quality trades
You are also able to be “free” and that’s one of the main reasons people start trading, they want to have free time. If you don’t know what you want to see in order to take a trade you’ll just stay in front of your computer, and basically be a slave to the market.
Don’t be a slave to the FX market: Forecast in the morning
I hope you enjoyed this blog post! If you did, please leave a like or share it? ❤ Would mean the world to me!
Having your own trading plan, is (probably) the most important part to become a successful trader, would that be stocks, FX, commodities or whatever you want to trade.
Why is a trading plan so important?
It gives you the opportunity to write down exactly what you can do and how you should do it.
It’s like a cooking book, the only way to really improve a receipe is to know what ingredients to use, the amounts and how long you should cook it for.
I’m awful at cooking (Really bad, my old roommates refused to eat anything I cooked)
Why do you think I spend so much time in cheap countries where I can eat out three times a day?? (Maybe it’s because I don’t need to cook)
Anyway, back to the subject at hand…
Becoming a good cook is relatively easy, you just follow instructions, it’s the “chef” that makes up the dish and writes down how to do it properly.
You can work in a great restaurant and make a lot of money if you’re a really good cook, especially if you work well with a famous chef.
Trading, is rather similar to working in a restaurant (not talking about the insane hours, but sometimes…)
The only way to become a chef (a really really good trader) is to become a cook (someone that can implement a trading plan), it will take time, but the more practice you get as a cook the easier it will be for you to become a chef.
Ask for help building your first trading plan
You become a good cook by learning from others how to cook, would it be your parents, siblings, a cooking book, youtube videos, an online course, a bootcamp etc etc
It’s the same with trading.
Learn from someone else
Find yourself a mentor, whoever that is (not me) and ask them if they can explain to you their trading style and share trades they took.
Once you know how they look at the market, the trades they took you can break it down.
Bring a bottle of coke to a lab and they can reverse engineer it.
You could know the exact ingredients Coca Cola use for their famous drink.
Do the same with a trading plan.
Create your first trading plan based on someone else, even better, if you can copy it. My mentor shared his to all his students, that’s what I used at first.
The entry types
What he wants to see in order to take a position
How he manages trades
How he records them
His risk profile
That’s all I needed, I more or less copy pasted it at first.
Once you have a trading plan, backtest it
Now it’s time for you to work, you can’t let someone else do all the work for you…
You know what set-ups your mentor looks for so go and backtest.
Try them out, figure out their results and ask yourself
Do they have a good strike rate?
What is their average return?
Do I like trading them?
Based on those questions and the answers you have for them you can quite easily make your mind up, should you keep those set-ups in your trading plan? It’s up to you.
Those are my results with a backtesting exercise I did earlier this year.
I was able to figure out which trade set-ups I prefer and how I wanted to manage them.
It also gave me a lot more confidence in my trading, I saw what was possible, and it became way easier for me to execute on my trading plan.
Once you’ve backtested your plan you can then decide what to edit, what to change, what to ignore, what you want to focus on etc…
Make it your own.
Make sure it becomes your own, don’t copy the exact same trades if they don’t fit you, adjust the trading plan to your own personality – and backtest it once again – it’s all about refinement,
To go back to the cooking comparison, a chef will try out so many variations of the same dish just to make sure he has the perfect mix of flavors, smells and texture.
It’s the same with trading, just keep trying it out.
Tweak it until it becomes your own, your precious, your trading plan.
Now, you can easily argue that you don’t need to write it down, it’s in your mind, or you can easily draw it.
The best way to learn is to teach someone else.
But you don’t need to teach someone else, you just need to be able to explain it on a word document.
Take screenshots of your favorite set-ups
Write down what you want to see before being able to take a position
Explain how you are going to manage your position once in the trade
What are your rules in term of taking a second trade once you got tagged out of a position, are you allowed to re-enter? Once? Twice? Three times?… Create rules and put it in your trading plan.
If you want a video about creating a trading plan, check-out this interview on Chat with Traders, I’ll admit, I have only watched it once, but Chat with Traders is hands down one of the best podcasts out there for anyone interested in trading.
Now I feel like I’m probably rambling… but…
GET YOURSELF A TRADING PLAN.
Honestly, I truly believe it’s the best way to improve your results if you’re in the FX market.
Yep, you read that right, I’m here to say that doing absolutely nothing is (a hell of a lot) better than taking trades every single day.
Okay, this subject is mainly going to be about trading and investing,
but it may apply to over industries too…
Do you know why you shouldn’t take too many trades? (Think
about it for a few seconds)
There are three key reasons you may have thought about:
1- Trades in your trading plan don’t happen every single day so you definitely shouldn’t be taking more trades than what your plan tells you to. (Absolutely agree with this one)
2- Your broker commission, hell, I enjoy trading with FXCM, I don’t have (too many) issues with them, yet I’m still paying 5% of the risk I am willing to take per trade on average… (Fuck… I just realized it, it’s way too much )
3- Focusing on quality trades instead of just average trades.
I’ll mainly focus on this third point (even though the
commission one just pissed me off ugh)
The importance of focusing on quality trades & not over-trading.
This may sound pretty obvious, but sadly it’s a lot harder
to actually follow this rule. Mark Hutchinson (from Falcon Trading) brought up
an interesting concept.
80% of the trades taken should be high probability trades and the other 20% can be valid trades.
You want to wait for those high probability set-ups before putting a trade on, but sometimes you can have a gut-feeling the trade will just go in your favor before you see the perfect set-up and you should still act on it.
I really like that rule, usually my trading follows a very similar breakdown between valid and high probability, and I do believe it’s really beneficial for me.
That being said, I didn’t stick to it last month (July) and I ended up having a negative month… Yep… It happened I have no shame, I committed a few mistakes, anyway, that’s not the subject.
You may know of Michael Marcus (he was one of the traders interviewed in Market Wizards) who, in less than 20 years, managed to turn 30,000$ into $80 million trading commodities.
One of the quotes of his I really enjoyed is:
“One of the secrets to trading success is cutting down the number of trades you take”
When someone with his track record talks, I tend to listen,
and that advice, is (I think) spot on.
Taking too many trades reduces the quality of your
Now let’s think about an investment portfolio, your returns will
be the sum of all the trades and opportunity cost is really important here (in
FX too due to leverage requirements) …
If you take trades that have a lower expected value you’ll reduce your overall yearly return and therefore make less money while increasing your risk, is that something you’re into? (I’m definitely not, I want the opposite)
I came across a cool website by Safal Niveshak – which I would highly recommend checking out (especially if you’re into investing)
In it he argues that we want our stock portfolio to be a museum and not a warehouse, which makes sense, so do go and check-it out
In it he quotes Jason Fried book Rework (a book I really enjoyed) :
“You don’t make a great museum by putting all the art in the world into a single room. That’s a warehouse. What makes a museum great is the stuff that’s not on the walls. Someone says no … There is an editing process. There’s a lot more stuff off the walls than on the walls. The best is a sub-sub-subset of all the possibilities.”
Jason Fried – Reword
Makes sense when explained like that? Right? We want our trade portfolio to be a “sub-sub-subset of all the possibilities” and only the ones where we truly believe to have an edge in.
From there, he picks the explain of Costco v. Walmart
We want to focus on returns on
invested capital, 28% sounds a lot more attractive to me than 12% (which is
Less is better – quality over
Now in this part of the post I’m
really tempted to bring up Bruce Lee quote about not fearing a man that practiced
a thousand kicks once, but fearing a man that practiced one kick a thousand
times (see what I did here?) but that won’t be my main focus.
Instead I’ll just pick a recent
One of my friends (Aldo) realized
that taking better trades is not only more enjoyable but also doesn’t necessarily
reduce your trading returns. Especially while traveling and not being able to
spend as much time on trading.
That being said, I’m kinda forced
to bring it up, I mean I love the guy…
Bruce Lee has another quote (not
about the number of kicks this time)
He probably didn’t say this quote
thinking about investing or trading, but it applies to everything in life.
Anyway, I hope this was
If this was useful and you enjoyed reading it, it would mean the world to me if you’d leave a like or even commented 🙂
If you’ve recently came to realize you could take your side hustle/passion
and make it your primary source of income congrats! That’s amazing, I still remember
the day I realized I could sustain myself trading forex – was when I was
writing cover letters for jobs just before graduation, I didn’t end up applying
for those jobs after that realization (except one, McKinsey but they shot me
down – something I’m grateful for)😊
But yeah, congrats, that’s really impressive! Would it be trading, photography, your blog, designing cool tee-shirts or whatever it makes me so happy when I hear people are making a living doing what they love.
Maybe you take photos of fruits and vegetables and somehow managed to turn it into a business… I mean it looks cool!
That being said, it’s not because you are able to go and turn
your hobby into your sole income that you should quit your job or become a
digital nomad – first you need to transform it from a hobby into a business and
start looking at it that way.
When it’s a hobby it’s amazing, you get most of the upsides and
you are quite blind to the downsides while being able to stop whenever you wish
since that’s not the only thing you do.
Be prepared for the transition!
If you decide to take your trading and make it your income
source and quit your job then be prepared for:
Having lower returns that what you’ve come to expect
in the first first few months since you’ll have some added stress, it happens
to a lot of people who just took the jump
Create a rather strict routine, it’s not because
you don’t need to be at the office at 8 or 9am that you should still be in bed…
You will have nearly no external barriers to becoming a couch potato, you will
be the responsible for everything. While making sure you prioritize sleep, I
didn’t in the past, and that’s one of my biggest regrets, making sure the brain
gets its off time is really important
See your income fluctuating, you won’t be making
the exact same amount every month/every quarter (which is why I believe it is
extremely important to have a six-month cash buffer before taking the step
(mainly to reduce the pressure)) That being said, if you make three times more
(on average) than what you spend you can probably just take out a fixed amount
every month/quarter depending on your choice.
You’ll spend way more time on your computer (next to an ikea plant)thinking that it will mean you will make more money – sadly that doesn’t go in hand, I wish it did, but instead it’s actually important to start disconnecting from the charts, if you spend too much time looking at them you will likely want to take a trade or micro-manage them – which in turn will probably have a negative impact on your income/returns.
Accept the fact that your passion is now your job,
which means you will need to find a new hobby and start learning something new
in order to maintain your self development and your brain plasticity.
An advice I would give to anyone
about to go full-time with their trading or side hustle would be to measure the
amount of time they spend on it while still spending time at their job. Why?
If you spend an hour and half on
the charts while working per day, make sure you don’t spend more than three
hours (the double amount).
I understand that it may sound counter-productive,
after all, you have now way more time to improve your craft and boost those
returns, but if you were able to get to this point and replace your income with
if there’s no need to spend that much more time working on it. There’s a point
where spending more time will not only bring you diminishing returns but also
reduce the enjoyment you get from it.
Something Neil Cartwright also points out is keep doing what brought you to this point, keep doing the exact same thing, don’t become too cocky, it’s not because your trading as really improved that you should stop your previous routine, if you used to watch content everyday, keep doing it, if you were meditating, keep doing it, if you were back testing three times a week, keep doing it. You probably got the point by now, but, just keep doing whatever you used to do.
It brought you here so it must be
a good thing!
Now it’s your primary income… It’s a business
Now it’s a business, so start thinking about your monthly
costs, how can you optimize and streamline the process, how can you leverage up
and increase your profits, get in touch with a great accountant and figure out
how to reduce your taxation etc etc.
While talking about the business side it’s also important to mention the fact that most successful businesses don’t pay out a 100% dividend, instead they constantly re-invest in the company (usually they do it to buy new machines or have more marketing or hire more staff, for us that just means leaving money in the trading account).
Now, if you’ve already been on this blog you’ll have noticed
I also provide a monthly trade recap, which is basically an overview of my
month (I have one way more detailed that I keep for myself) but the reason I do
this, is because I’m treating my trading as a business.
Businesses need to publish quarterly income statement and
all the other stuff, why wouldn’t you? If you run a business selling tee-shirts,
wouldn’t you be looking at your revenue/profit/ad spend/ROI etc? If you don’t I
would be surprised if your store keeps on going.
If you own a coffee shop, I’m sure you will be looking at
your profits, revenue, costs etc while trying to figure out a way to boost your
profits and potentially open in a new location?
Trading is a business, so make sure you spend time treating
it as one. Don’t forget to think about the monthly reports, create a trading
report where you will write down every single trade you took, the return, the
reason for the entry and exit and all of this.
Obviously, you will have to keep doing your Advanced Self
Review and spend time trying to find the tweaks you need to go through in order
A good example would be my mentors, even tho they have been
trading for more than five years profitably they are still reviewing their
months in order to make sure they are still on their top game and continuously improving.
Make sure you still enjoy it – and don’t only do it for the
It’s not because you are going to turn your hobby/passion into your primary income source that you’ll start to despise it, I still enjoy trading and learning about the market remains one of my favorite things to do. But, you must start treating trading as a business instead of a fun activity you do because you think it’s nice side income or just because you want to keep yourself busy. We all get what we want from the market, so make sure you align your wants to this new reality.
Lastly, it’s something I’ve only recently started to realize
but it’s not because you are now making money doing something you love that you
should be blind to other opportunities. Diversity in your income source makes
you anti-fragile and that should be the end goal.
Aim to become anti-fragile – being self-employed and having turned your passion into your income source is fantastic but keep in mind there’s no shame starting something new on top of that or even potentially getting a job in a industry you’re really interested in.
For example, I’m really into space because my long-term goal
is in that world, if I get the opportunity to work in a cool start-up with
really smart individuals in that industry I’d jump on that chance.
Anyway, I hope this was helpful.
I hope this was useful! If it was it would mean the world to
me if you’d like this post or even leave a comment if you’d add something to
Let’s face it, trading isn’t as easy as it appears to be
while trading either demo or (especially) on Instagram if you follow any of
those gurus or even ever posted a photo with #forex and heard about how Mr. X. just
sends you signals and you can become a multi-millionaire following them
starting with 50$.
But it’s possible, I mean yes it’s hard, but running a mile under 4 minutes is possible, more than 1,400 individuals have beaten it, but no-one had ever managed until one person did – and he didn’t have any super powers knowing that others have now managed (and beaten him).
I’m in no way comparing running a mile under four minutes to
being a profitable trader, I think the run is a hell of a lot harder – and the
numbers probably prove that.
BUT, in both cases it required a lot of training, visualization and time in order to achieve it. I think it’s rather similar
Anyways, here’s what I think are ten small challenges that
traders are often faced with
1- No patience, they expect to be profitable from the get-go
We all dream to be able to pick up trading within a month, but that’s not really the truth, I mean you can learn quite a lot in a month, (highly recommend reading Scott H Young blog) but a to become a lawyer you’ll have to study for around five years? A doctor? Even more no?
I mean, the same goes with anything, you can’t expect to
become a professional footballer by just playing for a month
Another example would be video games, I mean if you start playing League of Legends to playing professionally within a month? It’s possible, but good luck
(I already wrote about this, but during the first three years I lost money every single time… Yep… That happened)
2- Do not understand the true nature of variance
Trading is all about probabilities, I mean screw that, it’s
not even exact probabilities, but yep, it’s all about applying your edge over
and over again.
Variance is the technical term that we use to describe the
routine ups and downs that are built into trading, poker and so many different “industries”
in which there is a large amount of short term luck involved.
It’s important to remember that it’s possible to “run bad”,
sometimes even if you only take high quality trades you can still take three,
four, five losses in a row, you need to accept it.
Even if you have a 60% probability of getting a winning
trade (so 40% chance of a loss) you can still take a loss – I mean there’s a 1%
chance of taking 5 losses in a row if you have a 60% probability of success.
There’s not much you can do about it, it’s just
probabilities. That’s why you shouldn’t focus on the short term, instead look
at your results on a monthly (and even that) basis, even better look at them on
a quarterly and yearly basis.
Trading is and always will be a long term game. That not only applies to Forex trading, or penny stocks or even equity trading, anything that is a question of probability will be a long term game.
3- Failing to maintain their risk profile the same
The issue with changing your risk profile is that it screws
up the entire probability model – if on one trade you risk 1% and another one
4% but the probabilities of them happening is the exact same – can you please
tell me why?
The only reason I see is because somewhere your confidence
increased or you wanted to make more money without really considering it
That being said, if one type of trade you take has a 70%
probability of playing out, and another one a 40% and you know those stats
because you have taken those trades a hundred times or more then that’s fair.
I personally only risk 1% while trading because I believe my
trading plan is profitable.
4- Don’t stick to their trading plan
If you have a strategy, stick to it.
Don’t change your type of trading and chase a shiny object
all the bloody time.
Don’t try tweaking your strategy after a month and decide to
follow a completely different way of trading every month, that just isn’t going
to workout sadly – you will just get stuck in this negative environment and get
stuck – never fully seeing the results you want.
(Sorry not writing much on this one, it’s pretty straight
Don’t get me wrong, thinking and making sure you take the
right trades is bloody important – but there’s a point where it’s too much.
If it’s in your trading plan, take the trade, if it’s not
Make sure you are a trader during the week, not an analyst.
By that I mean, during the weekend it’s really important to forecast
all potential scenarios and figuring shit out. Once the market is live tho, you
must be willing to jump into trades if they are in your plan. Don’t hesitate,
just pull the trigger.
Another issue can be learning too many strategies – don’t
get me wrong, I love learning more about macro trading, trading news and all
those cool different ways to trade the FX market, afterall it’s my passion, but
make sure you stick to what works fo you and don’t try to mix up too many
things, find your niche and work on it. Once you have an extremely solid
foundation then you can start adding more confluence factors on top of it, but
it’s important to keep it simple.
I love the “KISS” acronym, I think that’s key to trading too
– keep it simple stupid (short).
6- Not enough capital
If you are planning on going full-time within a year that’s
more than possible, people have done and people will keep doing it, but it also
depends on how much capital you have and how much you need to maintain your
If you need 4k per month to maintain your current lifestyle,
trading with a 20k account is probably not enough, you’d need to make 20% per
month to achieve that monetary return and that’s without even including taxes.
But if you have 100k accessible to you – it becomes a lot easier – instead of having to make 20% you could just make 4% – which is still a lot tho…
If you have a lot more then it becomes easier yep
So make sure you don’t have unrealistic expectations, you will need some capital in order to make it & on top of that will need to have money saved up on the side – you don’t want to feel the need to make money every month, and accept the fact that you will never make the exact same amount month to month, this isn’t a job.
7- Not being willing to spend the time in front of the charts to learn
You will have to sacrifice a certain amount of time, would
it be a few hundreds or more you will have to there’s no choice.
If you’re reading this pretty obscure blog I’m sure you’ve
already heard of the 10,000 hour idea to become a master at any craft – would that
number be right or not, it’s for sure going to take time.
As much as I wish you could learn all about it by reading
blogs and books it’s not really possible. You will definitely have to spend
time back testing your strategy but also spend time learning in a live
environment, it’s way different than paper trading, trust me on that.
On top of that, even once you are full-time you’ll need to
actually be in front of the charts when there’s a trade.
The 4hour work week isn’t really a thing, you will have to
be in front of the charts when a trade alert is triggered. But sadly, trade
alerts don’t always happen exactly when you want. It’s important to realize
that. A lot of people talk about taking trades while going to the bathroom
while working – it’s never been to that point for me, I just have trading view
open on my laptop but… It could be your reality
8- Not studying their past trades – both willing and losses
Best way to discover what you are good at and also missing
out on is to review your own actions. It’s great to learn how someone else
trades and getting their own perspective on how to do something, but in the tend
trading is a lonely game, it’s all about you.
The only way to get to the next step is review what you do
right and what you do wrong and work on improving those things.
In life we are the average of what’s great and what’s shit about
us. To improve you need to get your positive even further along that side of “greatness”
but you also need to improve the lower end on that curve, things you suck at,
because once again, you are the average of those great and “shitty” things.
Make sure you know what you are doing good, and what you suck
at, that’s the only way to improve.
9- Revenge trading
It feels good to take another trade after being tagged out –
I swear – it gives you control on what’s happening instead of being incapable of
controlling the market (I wish my trading account was big enough, SEC come to
me (please don’t use this against me in a case).
But, taking a trade because you just got tagged out isn’t
the best thing, make sure it’s a valid trade, heck, sometimes it’s worth taking
another shot at a potential trade, but… as a rule of thumb, it’s not.
Understanding your emotions is key, acting on them less so,
especially in trading, when it comes to relationships it can be useful, but not
Denise Shull is my go to when it comes to emotions and trading, highly recommend it. I think it’s called Market Mind Games – it’s basically Wendy Rhoades in Billions.
Denise Shull has a great series of videos with Real Vision
10- Not knowing when to disconnect from the charts
That’s one of my favorites, the reason most people get stuck
into a bad spree is that they decide to micro-manage all their positions, jump
on the 15 minutes then the 5minutes.
Not disconnecting from the charts will really make you want
to trade more often, it will also make you want to micro-manage your positions,
it’s really not going to be any good.
Go out, enjoy life, spend time with friends and family, learn how to do something new, enjoy it.
That’s probably the hardest part of trading, or at least it is for me, I mean it’s human, we correlate making money to doing good because that’s how we are brought up – if you do well you will be rewarded. It’s pretty counter-intuitive that doing something great will end up making you lose money.
(Maybe if we were to give more to charity that wouldn’t be the case, but I am myself not the biggest donor out-there so I am not going to preach you to do something I personally do not do)
But in trading you will have to accept the fact, sometimes a “perfect” trade will be a loser.
Sometimes a shitty trade you definitely shouldn’t have taken will result in a winning trade.
Yet, you should feel bad about yourself when you make money by taking trades that aren’t part of your trading plan, and feel great when you end up losing capital when taking a trade that fits your trading plan.
We are in the industry of playing out our edge, the aim is to stick to it and in the long-run avoid fucking it up.
One trick you can do to start accepting the fact that you will take amazing trades – that result in losses is look at the balance statement of your favorite company. Are you thinking about Amazon? Tesla? Blizzard? Starbucks?… Whatever it is, they all have costs associated with their business, even your local coffee shop (even if you live in Amsterdam)
Try to understand and see trading as a business, not as something entirely different.
Another trick to trade your plan instead of your profit and loss is, once you are in a trade, hide your risk reward – instead of managing it according to your potential return it really increases the likelihood of you moving your stop according to the structure instead of potential return
For example, I am currently short on EUR/USD my stop is “randomly” placed a 1.14% profit, had I placed it at 1.25% or 1.5% I would be out of this trade by now, I barely stayed in it
The only reason I placed it at that level is because I didn’t know it was 1.14%, otherwise I would’ve made it a round number
If you use tradingview to get your charts, here’s how to hide your RR tool:
Don’t forget, trading is a business, you will incur a loss and a similar business model to ours would be a casino, they make insane amount of money every single year, but they have down days too when there’s a really good/lucky player betting big
Like read this:
The University of Las Vegas found that the 23 Vegas casinos bringing in over $72 million each in the 2013 fiscal year ended up with over $5 billion of their visitors’ money, altogether. That’s an average of over $630,000 a day, per casino
All they do is apply their small edge day in day out and they don’t care about the daily or even weekly profit, they know that in the end, they’ll make money.
Thought I should talk about a few tips that have helped me progress with my trading journey, hope this post can be helpful if it is!
Having a routine & time blocking
This has been a real game changer,
especially when traveling around, since I always have an urge to go out and
explore and it becomes extremely easy to jump off the wagon.
I believe that having a morning routine, (I’m not talking about your beauty routine) will really enable you to level up. I can’t recommend enough to always wake up at the same time and do the exact same things in the same order every single day. This will really enable you to create a structure in your day and your brain will be ready to work
Checkout the video of Michael Bamber on youtube if you want an example of a routine
By following the same routine, you will be ready for the next step even before it happens since it will become programmed into your subconscious.
If you’re not careful it becomes extremely easy to start your morning by checking all your messages which will put you in a reactive state of mind, then opening tinder to see if you got any new matches which shall put your ego in the driver seat etc.
The second benefit of having a
routine is that it becomes extremely easy to schedule time for deep work – in
the above example, you know that once you get home from your walk you will be
fully focused on one task with no distractions for the next hour, so you are
already prepared to really give everything.
By time blocking I mean spending an hour on one specific task while having put your phone on the airplane mode, turned your notifications off your laptop and ban yourself from procrastinating. If you want more info about time blocking, I highly recommend you message Jake Andrew on Instagram, he’s the one that got me into it.
Zooming out & looking to the left
By zooming out I mean having a
large amount of candles in front of me instead of only looking at the last few
hours – to make it easier to understand here’s a comparison between how “zoomed
in” I used to be to how “zoomed out” I have now become
This has been a huge gamer changer since not only has it made all the impulses look a hell of a lot smaller and therefore reduced my temptation to take trades after seeing them impulse.
Instead you’ll notice that they barely moved on the larger timescale. Another benefit of zooming out is that it enabled me to have a better understanding of how a pair behaves– has it been trending upwards or downwards or just correcting in a large “box”.
Looking left – to the previous price action is also really important since you are able to quickly notice how the pair usually behaves.
For instance I took GBP/CHF in July at a risk entry, but once I realized that the price action wasn’t that clear anymore I did not feel any FOMO closing down the position for breakeven because after looking to the previous price action it was clear that it would give me a lot of opportunities to re-enter the trade.
On top of having a better understanding about how the price is currently moving as well as how it behaves it also enables you to use the bar pattern tool on tradingview in order to copy past price action movement and paste it to today in order to compare what happened then and what is happening now.
Even though there will never be the exact same set-up, it becomes a lot easier to imagine what could happen when you have a real live example.
Focusing on the higher timeframes
As I love trading and I absolutely
hate waiting, which if you know me personally you will have noticed I
thought that I would never say this but, jumping in and out of trades based on
their lower timeframes hasn’t been the best to me. Instead it costed me a lot
of money, especially when I was introduced to the 15min because I was seeing
potential trades everywhere.
It is a common saying in the trading community that multiple timeframe analysis is the key to success in the market and I cannot agree more – it is by combining several timeframes that you will really jump forward in your journey. If the higher timeframes and the lower timeframes both point in the same direction the likelihood of the move taking place is a lot higher.
For example, if you have been dating someone for the last five years, live together, have a great sex life and are happy together the likelihood of them saying yes if you propose is a hell of a lot higher than if you were to proposed to someone you picked up in a bar a few hours ago. That’s basically how I see the multiple time frame analysis 😊
More seriously, focusing on trading
with the higher timeframes will also enable you to trade less frequently which
will not only reduce your commission costs but also reduce the stress you are
faced with while also help you become a
lot more patient since you know the potential move is large and that you will
be presented with a large amount of opportunities.
Another benefit of trading with the
backing of the higher timeframes is that you are then able to trade with the
trend, which in turn means you will have momentum traders pushing the prices in
your favour while also enabling you to place large profit targets.
I’m thinking of doing a post by
itself on the benefits meditating has had on me and my trading but thought I
should talk about it in this one too!
There are many benefits of meditating, however since we are more interested in trading I will bring up a few points that are targeted to it
Having started meditating I am now a lot better at controlling my impulses which in turn has made revenge trading and trying to catch falling knives a lot less frequent, I am not going to say it is the only reason I have managed to reduce those occurrences but it for sure is a key part
It has helped me deal with my ego – which is not a necessarily something you want to delete – since it has enabled me to reflect on actions I have done and also adopt the right mindset, being willing to review what I did and why I did it while also really increasing the amount of time I can focus on the task at hand (and in turn increased my productivity)
Honestly struggling to chose a 3rd point here, but I’ll go with happiness, it has made me a lot happier and more comfortable with who I am and reduced the need to prove everyone I am good enough, which was one of the issues I was dealing with – I always wanted to be able to pick a reversal to prove I knew the market direction instead of waiting for it to show it’s hand.
I really believe that everyone
should try to pick up meditating and commit to it for at least three months
because for the first month you probably won’t really notice a huge difference
but it’s all about compounding those experiences. There are loads of cool apps
out there that can guide you if you are new to it, I usually tend to do my
meditation with just music from Brain.fm because it really helps me have a
quite mind instead of listening to someone’s voice.
Focusing on the execution of my trading plan
rather than results
I used to purely judge my trading
based off my returns, which at the time made loads of sense to me since it was
based on the returns that I can make money and live off my trading, Plus it’s
way cooler to share on social media and it makes you feel good when you’re
pumping out decent returns
But that’s really not helping you,
instead it is probably negatively affecting you since you will either want to
take more trades in order to reach a certain monthly percentage return that you
haven’t quite yet reached (and lead you to take lower quality set-ups which
leads to more losses which make you want to make the money back – which lead
you to take more trades etc…)
I’ve been there, done that and it’s
not great… Take my word for it :S
Instead by focusing on the execution of your trading plan you can really look and compare your returns to what the market made available to you over the month, sometimes that may be a small amount of positions other times a lot more. By focusing on the execution of your plan – as in number of high probability trades to valid trades (and having a low number ideally 0 not valid trades) you will take a step forward since you will make sure that your ratio of HP to Valid is high.
Another benefit of comparing your returns to what your trading plan showed is that you become a lot more aware that other people have a different trading style than you and therefore you definitely can’t or at least shouldn’t compare your returns to theirs. That in turn will reduce the impact your trading returns have on your ego and will make you a happy person.
Anyway, I hope you guys enjoyed
this post, let me know if you want more information about any of these or would
like to add something. I have made a lot of tweaks so these aren’t the only
ones but just a handful I have taken along my journey.
If you enjoyed this article feel
free to share it with anyone that will benefit from it!
After posting on Instagram asking for subjects people were interested in, it appears that quite a few of you would like to know more about me – kinda weird but okay, let’s dive into the more personal side!
I’m Max, been to 32 (or is it 33…) countries, I’m young, drink way too much coffee and like meditating and deep conversations. Anyway, this isn’t my tinder description thankfully.
Anyway, to skip to the more interesting parts I guess 🙂
I was extremely lucky to be born in my family, (well born at all knowing the odds being born stand at 1 in 400 trillion) because my parents are English, but were living in France and had their own business in the wine trade. So that helped me become bilingual without really trying and put me ahead.
Plus, I was especially lucky since they love travelling and brought me along in many of their travels abroad, which really helped me expand my openness to the world and understanding of different cultures.
That being said, since you’re here you probably don’t really care about those amazing travels and early age but would want to know more about my passion in Finance?
I actually got interested in the industry really early since a broker took me to school one day in a soft top jaguar e-type, since then I’ve been keen to learn more about stocks and the world of finance!
First stock I made my dad buy was of Blizzard, mainly (entirely) because I spent countless hours playing World of Warcraft as did millions of other people – turned out to be a really good call so kinda proud that being a geek helped me make money 😀
More seriously tho, I started learning more and more about FOREX thanks to Babypips which is a fantastic free resource that I would recommend everyone to go through, but don’t expect them to give you any holy grail or anything like that, but they will cover most of the bases! FinVids was also an amazing free resource that helped me out a fair amount!
So yes, it’s actually possible to learn and get started for free (on top of YouTube videos) in the FX world, but I quickly realized I’d be way better off if I was to join a course, so I ended up joining Infinite Prosperity which was really helpful, I’m not going to vouch for it today because it’s been a while I left and I have no clue if they made changes… BUT it provided me with loads of learning opportunities and help me see my first few months of positive returns which was more than nice!
After being part of Infinite Prosperity for several years and being subscribed to “Active Trader” and “Live Trader” I came to realize that I was relying too much on other people analysis so I decided to jump ship
After a few months trading by myself I decided to join Falcon Trading to keep improving my skill and learn more since remaining a student and having an open mind was really important to me!
I ended up losing a fair amount the first two months after joining so I do wish I hadn’t kept trading with the same account size before even building my trading plan and backtesting it… I was overconfident! But hey, more than two years later I’m still in the community so something must be right!
It’s all about finding a style that fits your personality and then going from there, if you are happy with your trading that’s great, stick with it and push it even further!
Now I also got a fair amount of questions about studying at a good university (McGill) while also learning how to trade so I’ll address those
Do I recommend going to university if you already know that you want to go full-time?
YES, If you can go to university for free or your parents are offering to pay for it you should absolutely go for it – many people are saying you should drop-out and never go, sure you can do that, if you really need to spend all your time on your already successful business and you already know you want to do that.
It’s now become cool to “drop-out” and say that university is bad – but that’s just falling to a trap of online courses that are more or less all copies of each other…
Are you going to learn loads of things? Maybe not, but you’ll meet amazing people, have the opportunity to live in a different country, learn a new language, get a higher paying job than a waiter, get black out drunk and network. Good days if you ask me 🙂
It will also teach you the importance to debate, present your findings and write, which is something that is lacking today. It’s quite funny to notice that most people that are against university aren’t able to debate on the subject, maybe because they never practised?
Will you have time to work on your trading on top of university? Absolutely! I had the time to pass all my classes (okay I had to re-take maths, fucking hated that class)
Sure you probably won’t get the best grades if you are simultaneously trading, running a failing business, and doing some work on the side, and going out and partying but will you have the time? Absolutely.
Once you will be working a full-time job you won’t have the time to work on your trading between 8 am to 6 pm if we assume an hour commute – that’s way more time than I spent studying every day
If I hadn’t gone to that university, I wouldn’t have landed the jobs I did, which paid me a lot, which in turn would’ve meant I wouldn’t have been able to save up enough money to go trading and travelling – so I am incredibly grateful for university.