Bridging the Gap Between Trading and Making Money
There is a gap that exists between trading and making money. For many who know how to trade and yet are unable to trade profitably, consistently banking profits, it can be a tremendous source of frustration. Success is not easy. I am not talking about being up 5% or more each month on a 2k account. This would be excellent returns from an investment perspective and nothing to laugh at. The context of this article is making enough money consistently so as to earn a living as a trader and pay the bills.
Like many of us here, I too have spent many years scouring websites, buying or developing a repertoire of trading strategies and systems, invested countless hours back-testing and forward testing all to trade the markets more effectively. I have read the books, atteneded the seminars and expos. I have looked into autmoted systems, exotic ideas, long term, medium term and short term approaches. This has all helped me tremendously and I have no regrets. For the past several years I have been able to trade full time for a living and I am convinced that I need a good system. I do not believe anyone should trade the markets without one. But even with a good system or even several of them, there can still remains a gap between trading and making money.
I believe that there is no one answer to fill this gap. I do, however, believe it is found beyond a great system or strategy or anythng mentioned above which I like to call outer laws. Don't worry, we won't find the answer searching for our inner child. But if ,after having a grasp of the markets and developing a few good strategies, the success you desire still alludes you, then then answer may be not another system or idea but an inner law. It lies within the trader himself, your relationship with the market and your willingness to be brutally honesty.
There is a lot that can be said which can easily lead to a discussion on the psychology of the trader. It's hard to beat Mark Douglas' "Trading in the Zone" or the "Disciplined Trader" if you want to cover this topic. All this is important as well.
But I am a practical guy and want to share with you a practical idea that has helped me more than anything else to date. It is one thing that I can honestly vouch for that has helped me bridge that gap from being a decent trader to trading for a living.
Here it is: Become accountable
There are 2 types of accountability. The first is accountability for banked results. Results are the proof. Nothing more nothing less. Nothing will help you with this more than trading someone else’s account. I am NOT suggesting you go and start managing accounts or start a hedge fund if you are not ready or have a proven track record. But there are ways of doing this that do not require much risk in capitol or reputation. For example, you can open a $50.00 USD account with OANDA and trade for your mom or your cousin Larry. It may even be your money that was used to open the account. But don’t underestimate the value of someone else looking at the account that has a vested interest or expectation. It will help you to remain disciplined.
The second type of accountability does not have so much to do with how much you earned, as with how you made it. It is being accountable to stick to a trading a system or trading plan, follow money management rules, etc. This requires someone who understands trading. A fellow trader, a partner, a trading coach, anyone who can understand the details and hold you accountable to your trading plan will do.
Hope is safer than reality. The truth is few people will ever become accountable. Few will ever be honest enough to do so. It is easier to hope we will someday have the results than to become accountable to someone. But this is just one of the reasons why so many trade yet so few trade for a living.
