Advice for Newbies and Traders Who Aren't Profitable Yet
(If and ONLY if you are a consistently profitable trader, feel free to leave positive constructive comments and additional information and ideas that helped you along YOUR journey. Non-helpful comments will be removed.)
Here’s a pm I received yesterday. I thought it might be helpful to one or two newbies and/or failed wannabe traders to share it and my response. It's not the end all be all perfect response - I don't know what the perfect response is. It's just my response based on what I went through. Hopefully it will help a couple people:
“Hi, read your post you shared day or two ago about your large losses years ago and drawing home equity. How did you manage to push through mentally?
I had large losses back in 20xx. This set me back by over 10 years... Worked 2 jobs and lead extremely frugal life to have better life later but didn’t quite go as planned. Beating myself over it for the past 2 and a half years. Every day. I understand there is no benefit in doing that but cannot help it.
Trying to learn and make money trading but I was never able to find anything that would make money consistently. Happy to put in the work but typically get advice of the type “watch charts and see what happens around this or that level”. Well sometimes it works, sometimes it doesn’t.”
My Response
Trader,
“How did you manage to push through mentally? Beating myself over it for the past 2 and a half years.”
You’re still searching and asking questions so at least you’re still in the game trying. Also, you’re pretty stupid just like the rest of us were at the beginning. No worries, you are in the process of changing this and should be proud of yourself that you’re still trying. You’re about 1/3 of the way through the journey to becoming a profitable and consistent trader. If you follow what I say below it will help get you on the right path. BUT You will need to CHOOSE to do the last 2/3 on your own – no one can or will be able to help you with it. Becoming a successful trader just doesn’t work any other way.
You push through by just keeping on going, but one day you will realize you have to move on from what happened. Why? Because it’s getting in the way of your trading growth (and your life in general). Emotions destroy trading logic, a clear mind, and a mind able to learn. So, you’re going to have to move on from your losses (and any other life failures) before any future work is going to be rewarded. If you’ve decided to not get past this then go find a third job and walk away from trading. Otherwise, flip the switch in your head.
I was able to flip the switch after hearing this quote:
“Don’t be upset with the game, be happy you got to play the game.”
It made me realize I no longer need to be upset I lost and that I truly am happy I get to trade, I enjoy trading.
Some people snap a rubber band on their arm. I started saying that quote out loud after any loss or mistake that gets my attention. It’s rare now that I care about losses because, as you read further down, you’ll find my stupidity and trading risk is controlled by a risk and trade management ea; making losses no longer matter. If a rubber band or the quote doesn’t help you then look into CBT, Cognitive Brain Therapy. You can learn online how to do it or pay someone to help you. One of my kids did it for a rare brain issue she had. It helps retrain/rewire your brain to react to things with the proper amount of reaction and emotional control; helps shorten the amount of time you dwell on negative things. People with high emotional reactions, fear, people who dwell on a thought, people with ptsd (military, people in car wrecks, people who have had high outputs of adrenaline, etc), use CBT to overcome and retrain how their brain reacts to negative things.
“never able to find anything that would make money consistently”
You will never be able to “find” anything that will make money consistently.
Looking at FF and all those different trading systems and all the different indicators and seeing how other people do things is great, but in the end a majority of consistently profitable traders design their own trading system. No one “sees” or understands how you see the charts or the flow of the markets or fundamentals (news, economy) so how do you expect to use someone else’s brain and trading process? It’s NOT YOURS. Theirs are not made to work for you. Your brain can’t see it or understand it.
Now, can you pick up things and learn things by watching other people? Sure, that’s how we learn to talk, eat, be polite/rude, etc. You’ve already done this. Hmm, still not successful? Why? In the end, we don’t end up 100% like that person/parent that we copied. You become your own person.
All of the successful traders I know figured this out and developed their own trading strategy. We take the things we’ve learned from others and figure out which ones we understand and “see” the best. We put them on the chart and just trade those things. ALL of us stopped going from system to system and guru to guru and just did our own thing.
I could literally teach you my billion dollar (sarcasm) system where I identify and ride the coat tails of the big money (no, it’s not on my FF thread), but you wouldn’t understand it. It’s not just you…NO ONE WILL GET IT. I know no one will get it because I’ve “mentored” people. Had a really great kid right out of college here with me in my office from 2:30am eastern time to 11am for five days a week for four months and he still didn’t get it. He got the part he could see and got stuck on it and wasn’t able to go further. I told him exactly where he was and what he needed to do to continue, but his brain couldn’t take the next step. I gave him another month of my time, but he still couldn’t make the jump. So, I had taken him as far as I could and said good bye. That’s ok. I get it now. Another successful trader here on FF, told me he experienced the same thing with the people he mentored…they just don’t see what he sees so they don’t get it. He also no longer tries to “teach” people…it’s a waste of time and you miss trades and are late closing the trades you do take.
My next steps when I was in your shoes (if you’ll actually listen to and do them):
1- get over responding negatively to failure. It makes you worse than a little baby. Without failure we would learn only a small percentage of what we need to learn. A little kid doesn’t try to walk, fall down and just decide, “I’m done, never trying that again. Let’s see, that didn’t work for the week I tried it, let’s go over here and try to learn how to say an entire sentence today.” Nope, they get right back up and keep trying to get over the last fall!
2- You’ve been around trading a long time so take what you already know and understand and put it on a chart and trade ONLY those things. IF nothing has clicked for you yet, then I can tell you that another trait of many successful traders is that their system is based on price action/market structure and, while many trade naked, others use only a couple indicators like supply/demand and a sentiment indicator along with a source of information like reading the tape or other data source from a futures market like cme. Use what you study and find that you understand/see.
3- Once you know what your mind can see and understand, then put it all on one chart and ONLY trade that set up until you know how it works and what does and does not work. Remove what isn’t working and trade what’s left. Figure out if you’re missing something and go find it.
4- Then trade only the new set up for as long as it takes for you to develop 5 trading set ups that happen over and over and that are profitable a majority of the time. Write down the steps to what you need to see for each set up before you can open the trade. Get rid of the 2 or 3 least profitable set ups and keep doing the 2 or 3 most profitable set ups. Try to have alerts programmed for these set ups so you’re not watching the charts being tempted to trade any other way, any other set up.
5- Trade until you double the DEMO account using prop firm risk management requirements and ONLY prop firm risk management requirements. YOU ARE NEVER ALLOWED TO TRADE YOUR OWN MONEY AGAIN because losing your own money makes you and me a big baby. Why go through that again?
6- Figure out the bad human traits you have. What mistakes do you make over and over? Write the rules for an ea that will eliminate those human stupid moments.
Example: I was really bad at risk management on my entries and was horrible at trade management after opening trades, but am really good at opening trades at the right place/time. I let a lot of winning trades turn into losers. The trade risk and management ea I had made requires me to enter a stop loss prior to being able to place a trade. If I do open a trade without a stop loss, the ea immediately closes it and I lose the spread and commission…punishment. After placing the trade, the ea is hard coded (I can’t change this in the inputs) to close half of my trade automatically when my profit reaches the same number of pips (+1 for costs) as my stop loss. Later, after certain requirements are met, the ea pulls my trades to break even plus 1 pip. When I mess up and am proven wrong, it closes my trade and reverses (under some very specific conditions). No, you cannot ask for my ea. Do NOT ask. It will NOT work for you. If you thought about asking me for my ea, have you learned nothing from what I’ve written? YOU have to build things for YOU, not use someone else’s stuff.
You will need to figure out where you make YOUR same mistakes over and over and write up a way to fix this and have it coded.
7- Hints on prop firms: If they have a 4% max draw down, then your max draw down needs to be half or less of 4%. If they have a max number of lots allowed to be open at any time then you will only use half or less of that size. Why? Because you need a buffer for mistakes and being stupid. Also, let’s say a prop firm has 4% allowed per day draw down, but a 5% max draw down from your high water mark. If you lose 3.99% one day and lose 1.01% the next day then you’re done! Account closed and you have to start all over. Why risk it? 1% risk making 1% return on a one million dollar account is $10,000. Why would you risk 3.99% and waste the next two months trying to re-qualify? You’ll have lost $460,000 of potential profits at 1% a day (not compounded) and your prop fee. Sooner or later we have to stop being stupid or we won’t ever be successful. Start doing things that set you up for success.
8- Double a demo account that is on the same broker as the prop firm uses and is the same size as the prop firm account you plan to have. Make sure you are 100% doing what the prop firm will require and make sure you have traded any pairs, indices, etc that you might trade live. After this, get the account. You may have some high emotions the first few weeks of trading real money so cut your risk by half until you’ve calmed down.
Conclusion:
Now, stop being miserable, stop thinking you’re the only person in the world going through this, go make some changes, follow the steps I’ve provided, and go live your life being grateful and thankful you got to play the game. If you’re not willing to do this then please just quit now and go be miserable doing something else because you will never find a way to be happy. Sorry, it’s the truth. Choose to change, change, be happy you got to play the game = much better chance of being successful.
You cannot drive forward while looking in the rearview mirror.
(Disclaimer, these thoughts and steps are based on what I have experienced during my trading journey, your steps may vary. I don’t care if someone reading this agrees or disagrees with what I’ve said. It’s what I’ve experienced.)
(If and ONLY if you are a consistently profitable trader, feel free to leave positive constructive comments and additional information and ideas that helped you along YOUR journey. Non-helpful comments will be removed.)
Here’s a pm I received yesterday. I thought it might be helpful to one or two newbies and/or failed wannabe traders to share it and my response. It's not the end all be all perfect response - I don't know what the perfect response is. It's just my response based on what I went through. Hopefully it will help a couple people:
“Hi, read your post you shared day or two ago about your large losses years ago and drawing home equity. How did you manage to push through mentally?
I had large losses back in 20xx. This set me back by over 10 years... Worked 2 jobs and lead extremely frugal life to have better life later but didn’t quite go as planned. Beating myself over it for the past 2 and a half years. Every day. I understand there is no benefit in doing that but cannot help it.
Trying to learn and make money trading but I was never able to find anything that would make money consistently. Happy to put in the work but typically get advice of the type “watch charts and see what happens around this or that level”. Well sometimes it works, sometimes it doesn’t.”
My Response
Trader,
“How did you manage to push through mentally? Beating myself over it for the past 2 and a half years.”
You’re still searching and asking questions so at least you’re still in the game trying. Also, you’re pretty stupid just like the rest of us were at the beginning. No worries, you are in the process of changing this and should be proud of yourself that you’re still trying. You’re about 1/3 of the way through the journey to becoming a profitable and consistent trader. If you follow what I say below it will help get you on the right path. BUT You will need to CHOOSE to do the last 2/3 on your own – no one can or will be able to help you with it. Becoming a successful trader just doesn’t work any other way.
You push through by just keeping on going, but one day you will realize you have to move on from what happened. Why? Because it’s getting in the way of your trading growth (and your life in general). Emotions destroy trading logic, a clear mind, and a mind able to learn. So, you’re going to have to move on from your losses (and any other life failures) before any future work is going to be rewarded. If you’ve decided to not get past this then go find a third job and walk away from trading. Otherwise, flip the switch in your head.
I was able to flip the switch after hearing this quote:
“Don’t be upset with the game, be happy you got to play the game.”
It made me realize I no longer need to be upset I lost and that I truly am happy I get to trade, I enjoy trading.
Some people snap a rubber band on their arm. I started saying that quote out loud after any loss or mistake that gets my attention. It’s rare now that I care about losses because, as you read further down, you’ll find my stupidity and trading risk is controlled by a risk and trade management ea; making losses no longer matter. If a rubber band or the quote doesn’t help you then look into CBT, Cognitive Brain Therapy. You can learn online how to do it or pay someone to help you. One of my kids did it for a rare brain issue she had. It helps retrain/rewire your brain to react to things with the proper amount of reaction and emotional control; helps shorten the amount of time you dwell on negative things. People with high emotional reactions, fear, people who dwell on a thought, people with ptsd (military, people in car wrecks, people who have had high outputs of adrenaline, etc), use CBT to overcome and retrain how their brain reacts to negative things.
“never able to find anything that would make money consistently”
You will never be able to “find” anything that will make money consistently.
Looking at FF and all those different trading systems and all the different indicators and seeing how other people do things is great, but in the end a majority of consistently profitable traders design their own trading system. No one “sees” or understands how you see the charts or the flow of the markets or fundamentals (news, economy) so how do you expect to use someone else’s brain and trading process? It’s NOT YOURS. Theirs are not made to work for you. Your brain can’t see it or understand it.
Now, can you pick up things and learn things by watching other people? Sure, that’s how we learn to talk, eat, be polite/rude, etc. You’ve already done this. Hmm, still not successful? Why? In the end, we don’t end up 100% like that person/parent that we copied. You become your own person.
All of the successful traders I know figured this out and developed their own trading strategy. We take the things we’ve learned from others and figure out which ones we understand and “see” the best. We put them on the chart and just trade those things. ALL of us stopped going from system to system and guru to guru and just did our own thing.
I could literally teach you my billion dollar (sarcasm) system where I identify and ride the coat tails of the big money (no, it’s not on my FF thread), but you wouldn’t understand it. It’s not just you…NO ONE WILL GET IT. I know no one will get it because I’ve “mentored” people. Had a really great kid right out of college here with me in my office from 2:30am eastern time to 11am for five days a week for four months and he still didn’t get it. He got the part he could see and got stuck on it and wasn’t able to go further. I told him exactly where he was and what he needed to do to continue, but his brain couldn’t take the next step. I gave him another month of my time, but he still couldn’t make the jump. So, I had taken him as far as I could and said good bye. That’s ok. I get it now. Another successful trader here on FF, told me he experienced the same thing with the people he mentored…they just don’t see what he sees so they don’t get it. He also no longer tries to “teach” people…it’s a waste of time and you miss trades and are late closing the trades you do take.
My next steps when I was in your shoes (if you’ll actually listen to and do them):
1- get over responding negatively to failure. It makes you worse than a little baby. Without failure we would learn only a small percentage of what we need to learn. A little kid doesn’t try to walk, fall down and just decide, “I’m done, never trying that again. Let’s see, that didn’t work for the week I tried it, let’s go over here and try to learn how to say an entire sentence today.” Nope, they get right back up and keep trying to get over the last fall!
2- You’ve been around trading a long time so take what you already know and understand and put it on a chart and trade ONLY those things. IF nothing has clicked for you yet, then I can tell you that another trait of many successful traders is that their system is based on price action/market structure and, while many trade naked, others use only a couple indicators like supply/demand and a sentiment indicator along with a source of information like reading the tape or other data source from a futures market like cme. Use what you study and find that you understand/see.
3- Once you know what your mind can see and understand, then put it all on one chart and ONLY trade that set up until you know how it works and what does and does not work. Remove what isn’t working and trade what’s left. Figure out if you’re missing something and go find it.
4- Then trade only the new set up for as long as it takes for you to develop 5 trading set ups that happen over and over and that are profitable a majority of the time. Write down the steps to what you need to see for each set up before you can open the trade. Get rid of the 2 or 3 least profitable set ups and keep doing the 2 or 3 most profitable set ups. Try to have alerts programmed for these set ups so you’re not watching the charts being tempted to trade any other way, any other set up.
5- Trade until you double the DEMO account using prop firm risk management requirements and ONLY prop firm risk management requirements. YOU ARE NEVER ALLOWED TO TRADE YOUR OWN MONEY AGAIN because losing your own money makes you and me a big baby. Why go through that again?
6- Figure out the bad human traits you have. What mistakes do you make over and over? Write the rules for an ea that will eliminate those human stupid moments.
Example: I was really bad at risk management on my entries and was horrible at trade management after opening trades, but am really good at opening trades at the right place/time. I let a lot of winning trades turn into losers. The trade risk and management ea I had made requires me to enter a stop loss prior to being able to place a trade. If I do open a trade without a stop loss, the ea immediately closes it and I lose the spread and commission…punishment. After placing the trade, the ea is hard coded (I can’t change this in the inputs) to close half of my trade automatically when my profit reaches the same number of pips (+1 for costs) as my stop loss. Later, after certain requirements are met, the ea pulls my trades to break even plus 1 pip. When I mess up and am proven wrong, it closes my trade and reverses (under some very specific conditions). No, you cannot ask for my ea. Do NOT ask. It will NOT work for you. If you thought about asking me for my ea, have you learned nothing from what I’ve written? YOU have to build things for YOU, not use someone else’s stuff.
You will need to figure out where you make YOUR same mistakes over and over and write up a way to fix this and have it coded.
7- Hints on prop firms: If they have a 4% max draw down, then your max draw down needs to be half or less of 4%. If they have a max number of lots allowed to be open at any time then you will only use half or less of that size. Why? Because you need a buffer for mistakes and being stupid. Also, let’s say a prop firm has 4% allowed per day draw down, but a 5% max draw down from your high water mark. If you lose 3.99% one day and lose 1.01% the next day then you’re done! Account closed and you have to start all over. Why risk it? 1% risk making 1% return on a one million dollar account is $10,000. Why would you risk 3.99% and waste the next two months trying to re-qualify? You’ll have lost $460,000 of potential profits at 1% a day (not compounded) and your prop fee. Sooner or later we have to stop being stupid or we won’t ever be successful. Start doing things that set you up for success.
8- Double a demo account that is on the same broker as the prop firm uses and is the same size as the prop firm account you plan to have. Make sure you are 100% doing what the prop firm will require and make sure you have traded any pairs, indices, etc that you might trade live. After this, get the account. You may have some high emotions the first few weeks of trading real money so cut your risk by half until you’ve calmed down.
Conclusion:
Now, stop being miserable, stop thinking you’re the only person in the world going through this, go make some changes, follow the steps I’ve provided, and go live your life being grateful and thankful you got to play the game. If you’re not willing to do this then please just quit now and go be miserable doing something else because you will never find a way to be happy. Sorry, it’s the truth. Choose to change, change, be happy you got to play the game = much better chance of being successful.
You cannot drive forward while looking in the rearview mirror.
(Disclaimer, these thoughts and steps are based on what I have experienced during my trading journey, your steps may vary. I don’t care if someone reading this agrees or disagrees with what I’ve said. It’s what I’ve experienced.)
