16 Mar Make money by losing money

Say what now?!

When I first start­ed get­ting into trad­ing I was look­ing at how I could make mon­ey the fastest. A year lat­er I under­stand I was look­ing at it wrong. Of course we all want to make mon­ey. That’s why we’re trad­ing. The thing for me was that I was doing some­thing right from the begin­ning because I was mak­ing mon­ey here and there. This was def­i­nite­ly more luck than skill. It was just that I would make a bit of mon­ey and then have one huge los­ing trad­ing that would wipe out my win­nings and then some. So what changed?!

Hard-head­ed

I am very hard-head­ed. If I don’t learn and find out for myself, I don’t real­ly adopt a les­son. That doesn’t mean I won’t budge from my point of view in a dis­cus­sion. Dis­cus­sions are dif­fer­ent than learn­ing a new skill. When learn­ing a new skill I go deep into find­ing out what works, and what does not work. I’ll read a lot on the sub­ject and then will go out and try things. But, and yeah I am toot­ing my own horn here, what I do best is observ­ing. I come up with ways to mea­sure what I am observ­ing and draw con­clu­sions from them. This is so much more valid than any­thing any­one says. I don’t care who that is. If you are going to ‘mas­ter’ any­thing. It should be your voice that you lis­ten to. 

OK OK calm down. You’re awe­some. We get it. You were saying?..

What I am real­ly say­ing is that I made a lot of mis­takes. I like to think that every mis­take got me clos­er to my goal. Guess that Edi­son guy was on to some­thing with his light bulb huh. Here are my mis­takes and SPOILER ALERT noth­ing new that any of the pro­fes­sion­al traders aren’t talk­ing about. For me there are two main culprits:

1. Impa­tient with win­ners, patient with losers. 
2. Tak­ing ‘intu­itive’ trades.

Be patient with win­ners and impa­tient with losers

But what do we do? As soon as we start see­ing a green P/L we get impa­tient and want to close it. More than not we go right ahead and take prof­it too soon. Then when a trade goes against us we try to jus­ti­fy the posi­tion and that it will go back in our favor. So much patience we got with losers. So we take with tea spoons and give back in buck­ets (more like a dig­ger). I’ll get to how you can over­come this lat­er on. Since it is all relat­ed to each oth­er of course.

You’re so smart

If it’s one thing I like to tell peo­ple is that I am so smart. Like real­ly smart. Basi­cal­ly, smarter than you… You oh and you… YOU YOU YOU. YOU get the idea. I don’t think I do it on pur­pose it is just a char­ac­ter flaw I have built up over the years and before I start cry­ing my guts out on my bad child­hood… As you might have noticed anoth­er flaw of mine is that I tend to stray from the point that I’m try­ing to make 🙂 let’s get back on point. This arro­gance will kill you in the mar­ket­place. You are not smarter than the mar­ket. The mar­ket giveth and (more than not) the mar­ket taketh. It is your job to under­stand how the mar­ket works and try to hop on at the right moment so that you can take a prof­it. You won’t do it right every time but you’ll get the hang of it. This also means you have to under­stand when you’ve made a mis­take. If you are trad­ing a cer­tain set­up, then trade THAT set­up. Once it breaks the cri­te­ria of how the pat­tern should be behav­ing GET THE F*** OUT. On to the next one. So this then brings us to your cri­te­ria. Only you can decide what this should be. I could teach you my pat­terns. But they’re mine and I don’t like shar­ing! BOOHOO!! Just kid­ding. I’ll be hap­py to share them with you but you’ll have to mes­sage me direct­ly and I’ll be hap­py to teach you my pat­terns. Although hav­ing said that. I do believe that you should and you will come up with your own pat­terns if you just stick to observ­ing the mar­ket long enough. It will hap­pen. You just want a short­cut and there’s noth­ing wrong with that. It’s just that there’s a lot of peo­ple charg­ing a lot for these short­cuts. Some work, 99% are BS. And I am too cheap to pay for any­thing (not true) but I don’t know which one is actu­al­ly worth spend­ing my hard-earned mon­ey on. Plus like I said before. If you want to mas­ter some­thing you have to make it your own. How do you make it your own? You dive in deep and let go. Be one with the sub­ject 🙂 Prob­a­bly drank too much cof­fee I’m a bit all over the place. 

Stick to the plan

So stick to the plan. Set up your cri­te­ria for your set­up and stick to it. Once it breaks the pat­tern, get out. Set a prof­it tar­get, set a loss tar­get. I don’t set a cer­tain pip amount for my loss­es. I look at the pat­tern. Did it break the pat­tern? I’m out. I do set a prof­it tar­get. Which in most cas­es is 3 pips only. More than not I have seen it go to 4 pips and then only to return. So this real­ly depends on what pat­tern I am trad­ing. If it’s a high prob­a­bil­i­ty set­up I’ll take more prof­it. Anoth­er thing I like to play around with is the posi­tion size. Not every set­up is cre­at­ed equal. And your tar­gets should be adjust­ed accord­ing­ly. Trade the plan and don’t take trades because you had a feel­ing. More than not these don’t work. You will build up a ‘feel­ing’ for the mar­kets but that doesn’t hap­pen in a year. Give it time. 

No emo­tions

So many traders say that you shouldn’t be emo­tion­al when trad­ing. This way you can stay clear-head­ed and trade your plan. That’s all fair and good but they rarely tell you how to go about it. Gath­er around peo­ple!! I’ll share this huge secre­tive secret ONLY with you and all at a huge­ly dis­count­ed price for FREE. Why?! I hear you ask­ing?? Well… because you’re my friend! Right?! 🙂 Alright alright. Note to self. Don’t drink so much cof­fee. OK let’s get on with it. 

1. Come up with a trad­ing strategy/plan/setup.
2. Test it out by trad­ing the small­est con­tract size your bro­ker allows you to trade.
3. Grow con­fi­dent in your setup.
4. Los­ing mon­ey in your set­up? Revis­it point one and work on your setup. 
5. Mak­ing mon­ey? trade a lit­tle bigger.
6. Keep doing this until you make the amount of mon­ey you want in a day/week/month/year.

When you trade small con­tracts, chances are that your loss­es will be rel­a­tive­ly small. That small that you don’t real­ly have a feel­ing about it. This is what you want. You’ll start see­ing that some­times your posi­tions go against u before going in your favor. You’ll learn all these things that are valu­able to learn­ing how your set­up works and how to tweak it fur­ther. This is price­less (although you are pay­ing mon­ey for it though but what­ev­er, shut up!). Set a goal for your­self before you increase your posi­tion size on your set­up. For exam­ple. Go from 100 Euros to 150 Euros and then increase posi­tion sizes. Then go to 200, then 500, and 1000 and so forth. You get the pic­ture. Come on. This way you’ll learn how to lose mon­ey in a struc­tured way but feel OK about it. Because you have con­fi­dence in your set­up. Dis­tance your­self from the mon­ey in the process and grow into a stone cold heart­less killer! Uhh trader 🙂

Thank you for reading

Let me know what you think about this and how you han­dle this. What were your mis­takes and how did you over­come them? Troll me. Call me stu­pid. Do what­ev­er you like. Just con­tact me. Please?! Any­one there? Some one? Any one? Do cats read? I’ll take a cat.