One of the biggest stumbling
blocks to me moving ahead in a successful way as
a trader was not knowing the type of trader I
wanted to be.
As a result this meant my approach to trading
would have no consistency as I constantly
fluctuated between different schools of thought
about the approach to trading.
One of the things that I have learned about
trading is that there are multiple avenues to
success. I have also learned that one person
cannot accommodate and be equipped to use all of
these multiple avenues to success. Therefore
many of the top traders are specialists within
particular areas and particular styles of
trading. A final point here is that peoples
opinions are a result of their experience.
So why do I mention this?
Because I constantly hear people who trade
options state that you cant really make money
trading equities. I hear people who trade
equities state you cant really make money
trading options because the majority of options
end up expiring. I hear people say you cant make
money trading forex because its too volatile and
unpredictable. I hear people say you cant trade
commodities and futures because they are simply
too risky. I hear people say you shouldn't trade
penny stocks because they are a waste of time
and full of too much scams. I hear people say
you cant trade sports because its too random.
There seems to be this trend that those who have
found their particular niche seem to then have a
bias against other niches.
But the point is this, in every one of these
niches there are people making significant money
consistently which leads me to the conclusion
that many people seem to have a bias which is
based on bad experiences they have had in
particular niches. But just because you have a
bad experience it doesn't mean everyone else
will have the same experience.
Some people are good at day trading, others are
good at swing trading. Some people are good at
dealing with short time frames, others with
longer time frames. Some people are successful
using Elliot Wave, Fibonacci retracements and
other forms of chart trading. Other successful
traders don't use charts at all and simply base
decisions on price action, statistics and numbers. Some trade
technical, others trade fundamental. Some people
trade news, others trade momentum, others trade
the trend or counter trend.
The choice is endless and can
sometimes leave you feeling rather exasperated
and not knowing where to turn.
This means that when entering trading you have
to decide what works for you and what will
resonate with your DNA.
Let me give you an example. I am perfectly aware
that whilst I work best with a system that has a
"standard win rate/standard return" that
there are others who work with "low percentage
win rate/significant return" strategies who
still are highly successful.
However when I toyed with low percentage win
rate/ high return strategies I found that my DNA
did not resonate with long periods of losing
streaks. If you are using a strategy which only
has a win rate of 30-40% you need to understand
you could face losing streaks that enter double
digits. I know myself I cannot deal with that so
I had to make the decision of going with a
higher percentage win rate (around 50%) where
the losing streaks are more manageable.
But these are the decisions you have to make and
the strategy you choose has to resonate with
your personality and tolerance for risk and
So the story here is in order to be at peace
with yourself in trading and to stop the rut of
moving from one system to another and one school
of thought to another, know who you are and
choose what works for you the best because when
you make that choice the level of congruency
between who you are in terms of your emotions
and psyche and your trading style will provide a
better foundation for success to spring from.