Did you ever wished for a time machine to turn back time and get around all the mistakes you made
at the beginning of your trading career? Sadly there are no time machinces, but all of you traders
that are new , can learn from more experienced traders. If you are ready to listen there are alot of
mentors like me that can help you on your way to the top.
By reading this article you won’t avoid all the mistakes that can be made on the market, but you
might avoid the bigger ones that a lot of new traders made because they are misimformed. By
avoiding those mistakes you can save alot of money, time and mental anguish.
Let me tell you about the things i wish i knew about trading back when i first started.
Take one trading strategy, learn it and keep it
Many beginners come into the market and just starting trading without even knowing what their
entry or exit criteria are, they are just pushing buttons and hopping to get lucky, just like in a casino.
First of all you need to have an actual trading strategy and master it, not just learn it. You need to
become a master of one trading strategy and stick with it, otherwise you’ll never stand a chance in
the markets.
Maintain capital in the beginning
Traders ran out of their risk capital quickly in the beginning, because they don’t even think twice
about the need for capital preservation. The irony is you can learn a lot in your early days of trading ,
but if you spend all your money you will have little to no money left by the time you will learn how
to run in the market.
You must survive long enought to get to the point where you can thrive. You don’t want to spent all
your money,time and energy before you reach expert status. Trading is not just for very smart or
wealthy people like many think. But you need to keep going and overcome difficulty, particularly in
the beginning. You need to learn how to manage and keep your capital and risk. Don’t get trigger
happy to quickly or you will soon join the traders on losing ranks. You don’t want to be an expert
trader without money.
Don’t focus on one advantage sort
Don’t just trade Forex, don’t just trade stocks, don’t just trade commodities, etc. You must look
through different advantage sorts, because that way you have the best chances to make profit. I look
at the major FX pairs, major indices and major p as well as researching potentially lucrative
investments in companies. I keep my options open and don’t limit myself when it comes to the types
of markets I trade or the investments I make.
However, that does not mean I am looking at every market under the sun. I actually don’t look at
most markets, rather, I have several in each asset class that are my favorites and for the most part I
stick to those. You can learn more about this in my article on the most profitable markets I trade.
Keep your focus on trading performance not on the money
Most traders become obssesed with their trading account balance. They think about it so much they
think it can only go up and when it goes down they start to over-react. That is probably the base
reason for most trading failures. Traders get to concerned with their money instead of performance
of their account. Yes that are two very different things.
Your trading account performance is easily reflected in the equity curve of your account, which is
something most trading platforms will provide you with via a report. Once you start being more
concerned with a consistently rising equity curve, instead of the dollar value of your account, your
trading will increas immediately
That equity curve is not just a reflection of your trading account, it is also a reflection of you, your
strengths, your weaknesses. Show me a consistently rising equity curve (even with some dips in
between rises) and you will also be showing me a consistently disciplined, organized and properly
focused person, not just a trader.
Your trading account performance is what you stay responsible for, not your account dollar value.
You need to view that equity curve as an addition to you. If it starts falling and you start losing all the
progress you made, something is seriously wrong with your trading mindset and you need to fix that
quickly. Keep the natural rise of the equity curve intact, gently rising over time, in an uptrend. That
doesn’t mean there won’t be losses in between wins, but it should look like a pretty solid
uptrend; higher highs and higher lows.
One of the keys to switching focus from account dollar value to equity curve, is realizing that making
a lot of money fast, is just something that is not going to happen. Unless you are starting with a large
account (most of you aren’t) there is no way to safely and consistently make a lot of money quickly
in the market. Just remove this notion from your head quickly and you will be much further along
than most. If you’re not trying to make “fast money”, your equity curve is probably going to be rising
slowly but steadily over time, that is what you want.
“Don’t be a dick for a tick”
This is some of the most important advice you’ll ever get about trading: Don’t be a “dick” for a tick.
Not to be crude, but this is important.
Stop sticking to one trade and trying to squeeze every last point out of it, because we have a word
for that kind of behavior. It’s called greed. Maybe you don’t feel like that but when you are sitting
infront of your computer and not taking profit from nicely put up trade, you are greedy. The market
is offering you a winner and you still want more. The market doesn’t care about what you want, and
is happy to turn around any time and fall against you just as fast as it rose.
The point: if the market is near your required profit target but it looks like it’s stuck at that point, just
take your profit off the table or at least trsil up your stop loss to lock in most of it. Don’t wait for
winner trade to turn into a loser or breakeven, take the money and run!
You really don’t need a guide line
Comparing to 18years ago when i started with my trading career, being trader today has its
advantages, but also a few disadvantages. It can be overwhelming and confusing because internet is
full of trading gurus and advices, and not all of them can be any help to you. So how do you know
what or who to believe?
If I tell you honestly, all you need is price action and an understanding of how to read the footprint
on the chart. I researched everything in my beginning, so you can believe me when i say there is no
magic indicator recipe. Moving averages are helpful in showing support / resistance and value areas,
but beyond those I really don’t use indicators. ATR (average true range) for stop loss placement and I
may look at volume in shares or commodity trades. That’s it.
If you really want to spend hours messing around with technical analysis indicators on your charts,
you can, but I can think of many better ways to spend your time on the market that are far more
productive.
Be OK with being out of the market
Let me tell you something that may be new to you. Being on the market constantly is not in your
best interest, but it is in the best interest for brokers. Being out of the market is considered a
position by pro traders, but not many traders know that and it even isn’t talkedbabout it alot. In your
best interest is to make money, and you can do that with low frequency trading, which means the
broker gets a lot less money from you.
When i was younger, i entered a trade and than watched it all week. As soon as the trade was closed
i felt like i need to enter another one. Like many of you I had problem not being on the market non
stop. But if you want to begin making money constantly you need to force yourself away from the
computer and the market. I will give you an example. You take one good trade early on in the month
and you make 5% on your account from it. Now you have 2 options:
1. You enter one trade after another and keep repeating it till the end of the month (you will
probably lose money not make a profit)
2. Wait patiently for a good trade like you did for the last one. And even if you don’t trade for a
while at least you are still up 5%
The market can be also viewed as a dangerous place. You can potentially profit from it, but you want
to avoid risking your money, unless there is a really good and obvious reason to do so.
Don’t put all your focus on trading
You should not make trading your only way of income. If you do it so, you start feeling attached and
you need for it ti work out instead of being an addition to your income, that you can also be ok
without.
Make yourself retirement funds, slower long-term investments, cash savings, your job income, and
trading, amongst other things. Don’t view trading as your ONLY option for life, liberty and happiness,
or I promise you it will not work out.
I’ve ecen heard of new traders that they quit their day jobs the moment they oppened their live
trading accounts. That is just crazy. You need that income from your day job, especially if you want
to tradebon financial markets. You need that income tovpay your bills but also to keep a sound, calm
mind, which you need if you want to have a chance at winning over the long-term in the markets.
Look at and trade what’s moving
One of the biggest reasons traders fail is trading low-volatility markets. Trades need volatility to have
a chance of moving enough to make you money, you won’t make money without it. Instead, you will
enter random trades when the market is just churning sideways and you will sit there watching your
money churn and eventually take a loss or a tiny win that will just make you angry and cause you to
want to jump back in the market again, losing more money. Look for strong trends and obvious price
action signals that have confluence in the context of a market that is moving. Try to avoid sideways
choppy markets.
Higher time frame charts are better
If I had someone to tell me to ignore all time charts under 1 hour chart at the very beginning, it
would save me alot of time and money. If you want to have a chance at lasting trading success you
really need to avoid all the low-time chart frames.
If you are reading my articles for awhile now, you probably saw articles on why I trade higher time
frame charts. The most important reason why i use higher time frames is because the daily chart is
going to ”smooth out” B.S. of the short time frames and show you the most useful view of any
market.
Conclusion
Like we figured it out already, time machines don’ yet exist. But you can learn from my mistakes and
find away to go around them, in the proces also save alot of money. So in some way you can go
”back in time” . I’ve been in your shoes, thought,the same thoughts and experienced the same
trading frustrations you are experiencing and i have made it throught to the ”other side”. I have a
virtual blueprint of what you should and should not do in regards to trading the market.
This 10 points of wisdom that we discussed above are critical for your trading career, and if you
follow them, they can save you alot of money and time. We are all human and tend to behave the
same way when trading so alot of mistakes that traders do are vera predictable. Every struggle,
every stupid mistake i made and every crazy traring approach i have tried just made me a better
trader, trader i am today. Many of these mistakes are discussed above and also lessons i’ve learned
from them. They form a big part of the chapters and teachings in my professional trading course. If
you want to succeed at trading, it’s important that you put time and effort into learning and
developing the winning mindset that is required to make money in the markets.
