I get asked a lot about why and how I got into stock trading. I guess the simple answer to the why is… Freedom. To be able to make an income without having to deal with a boss, staff, suppliers, or in other words all the normal associated issues that come from the traditional methods of making a living… that to me is freedom!
“life on your terms”
I’ve always had an interest in how the stock market works, and the idea of being able to learn a skill that meant I could create my own income from anywhere by trading stocks was extremely attractive, but I really had no idea at all of how to go about it. Endlessly researching the web and trying to piece together the various methods and strategies, not to mention the actual process of trading itself was a daunting and frustrating journey to say the least! As a Brit I initially tried trading the London Stock Exchange, but quickly learnt that the methods I was employing were in no way useful to the way UK stocks move. But could I even trade stocks from another country? I had no idea. Anyway, long story short, I soon realised that trading the NASDAQ/NYSE market was a really good fit for me, both in terms of strategy and time of day. With the New York 9:30am open of the market actually being 2:30pm my time meant that I could actually do my normal day’s work, and fit my trading into it. Already being self employed certainly helped, so making the decision to focus on my trading between the hours of 2-4pm ish every weekday was just like taking on a new client that needed regular attention, something you would certainly do if it meant that your efforts eventually turned into a decent revenue stream in return.
Having decided on the type of trading that most suited me I spent months and months researching various methods and strategies, types of stocks and plays that felt most natural to me… and also learnt what really didn’t work for me at all. I can honestly say, it was a mine field, a very difficult and frustrating path to travel down and on many occasions I felt like giving up completely! I couldn’t understand why others seemed to get it, and even though I felt so close to “getting it” I wasn’t quite there.
“gotta put in the graft”
Like all Entrepreneurs I’m used to being responsible for making it happen. If I don’t make the money I can’t pay the bills… and this is never more true when trading. You have nowhere to hide, it’s just you and the market and you either make or lose money, it’s that simple. As harsh as that is, it’s a leveller, and it’s also a reminder of why you have to respect this profession and adhere to the rules in order to stay safe. I would never ever recommend relying on making money from the markets when you start. Learn the skills, trade the setup and the money will come once you’ve gained the skills and discipline needed, don’t go into this thinking I have to make money from the start… you probably won’t!
I saw a comment on one of the social media platforms which made me smile. The quickest way to becoming a millionaire is to start with a billion, and then go day trading!!! Funny, and true… if you don’t know what you’re doing, or don’t have a full understanding of what/why/how to trade then you shouldn’t be risking your own money. Trading is a skill, one that can certainly be learnt, but as with learning most skills in life, you’re going to make mistakes so don’t make them with your money. Study, practice and fully understand well before entering a real trade with real money. I am a firm believer in development, develop your discipline, patience and emotional control before you ever hit the live market! This can be done with trading simulators and paper trading software. You need to be able to prove to yourself above all else that you can consistently follow a plan, stick to it religiously and not ever allow emotion to influence your trading decisions! Believe me, this CAN be done… trading isn’t rocket science, but it’s also not easy! Most people fail, not because they’re unable to follow instructions or a methodology, but because they cannot control their decisions when under pressure… or blinded by emotion.
I suppose my turning point with trading was when I finally turned down the noise, ie stopped paying any attention to what everyone else was doing and just started to focus on the setups that were working for me. I stopped waiting for others to tell me what stocks they were going to trade, or had just traded. I focused on my methodology, the one that I had proved to myself actually worked… and just focused on that! It sounds so easy and obvious, but until you truly understand a single setup, and how you react to it and then become a master at that one play, you can never expect to find any consistency in this game. Day trading is about recognising the relatively predictable patterns in the pricing action of stocks, and then nailing the entry and exit so you can grab some profits out of the market on a regular basis. You’re taking a small piece of the action and then moving on. If you know what a stock is likely to do based on a strict criteria, and because you’ve tested this theory on the same setups time and time again, over and over and over then you know, as long as you don’t compromise on this setup you’ll be able to grab some profits from the move. It’s a strict plan, one that calculates the risk vs the reward, and one that (based on months/years of studying) gives you a 60/70/80% win rate. If this is the only setup you allow yourself to trade on then you’re already disregarding all of the speculative, risky, gamble trades that may or may not work well before you even risk a single cent! This is called your edge, and this is how you put the odds in your favour.
There are so many things that can and sometimes do go wrong when it comes to the stock market, so why risk any money on any trade where you don’t have an edge to begin with. Buying a stock because you think it might go up is a gamble. Buying a stock because its giving you the exact pattern, volume, volatility and pricing action that you require for your tried and tested setup that works they way you expect it to the vast majority of the time… that’s trading! Sticking to this is consistency.
Learning a skill is difficult, and trading can be quite overwhelming when you’re faced with a whole load of things that you don’t yet fully understand. Breaking it all down into manageable chunks and focussing only on the important and relevant areas can really help you build a solid knowledge base that you can always come back to when you need that reminder of the basics. If things aren’t working out the way you think they should, go back to the basics. Remember, consistency comes from repeating a solid working setup over and over again, so stop flitting from one style to another, go back to the basics and repeat the working setup. Plan out the trade, know what you’re going to do before you enter. Be strict with your entry position, if your plan means you only get in if it pulls back to the $5.60’s then don’t jump in if it starts going without you for the break of $6.00 because that wasn’t the plan. Jumping in there would be because FOMO got the better of you… if it goes it goes, move on to the next setup. Remember, if it doesn’t meet the plan it isn’t your trade… let it go!
So anyway, as I do get asked a lot about trading I’m seriously considering uploading videos to my YouTube channel to better communicate the types of setups I use, and to offer some tips and insight into how to achieve consistency in trading. What do you think? Would you watch my videos? Would it help you?
In other news, the house is coming along very nicely, I haven’t finished my office décor yet but very happy with my desk… just need to add some finishing touches and it’ll be there 🙂
Its very nice being able to work mainly from home… especially when we get spring days like this… just before the latest storm hit!
Let me know your thoughts, and what sort of things you’d like to see on the channel and here on the blog. Reach out to me if you have any specific questions, happy to help if I can. I’ve also been putting up some #tradertips on my Instagram stories so be sure to check them out 🙂