The fastest way to become a profitable trader!
The following is a share on Singapore’s tradwithrayner.com page – Rayner Teo, …
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You are reading this article because you are too tired of constantly losing money.
…Witness the consecutive losses that occur?
Or, maybe you’re not at a loss, but you’re stuck at the capital level for a long time. You just want to know how to become a profitable trader.
Whatever your case, don’t worry, because in this article, I will share with you the fastest way to become a profitable trader, even if you have tried everything and failed!
But first …
This is a true story, I know a trader named Sam (not the real name).
He wants to learn trading because of the opportunities this field offers.
Sam is quite successful in life, graduating with a good degree and having a job with a high salary, constantly achieving success.
Trading is an area he wants to pursue.
How did Sam learn trade?
He started as the majority of other traders, got to know for himself, took risks with his money and learned through the “test and error” process.
For many years, Sam has been trying to learn how to trade in the market.
In the process, he “burned” many trading accounts, lost tens of thousands of dollars, and in the end, the losses became too large to endure.
In the end, the time and effort he spent did not yield to the expected profit (ROI).
Sam had to give up trading.
If you ask me about Sam’s mistake, it’s very simple …
Sam tried to discover everything from the beginning.
By doing so, you will waste a lot of time, effort and money to “decode” the laws of the market.
My first suggestion for unprofitable and struggling treaders is …
Do not reinvent the wheel to do!
There are systems that have been shown to work effectively in the market. Use them as a platform to develop your trading strategy.
Here are some trading books with backtest results …
- “Following the Trend” by Andreas Clenow
- “Trading Systems” by Urban & Emilio
- “Automated Stock Trading” by Laurens Bensdorp
- “Short-Term Trading Strategies That Work” by Larry & Cesar
- Keith Fitschen’s “Building Reliable Trading Systems“
These books will change the way you trade forever.
I am not asking you to copy trading system In these books, learn the systems that have proven to be effective.
Then use them as a platform and then tailor your own trading strategy to your needs.
It could be trading at another time frame, or other market, etc.
But let’s take that as a platform so you don’t have to start from number 0.
Do you understand?
If you are a trader according to price action or telecom traders, don’t worry, I have a solution for you …
Set price action
Below is a trading strategy you can use to develop the strategy price action mine.
I often trade in trends and identify markets that are in an uptrend. I mean like this …
Then I waited for the price to fall to a value area, like a region support such as. This is what I mean…
Then I searched for a sign to enter the purchase order, probably candle model reversing up like candles Hammer. This is an example…
You enter the command at the next candle, placing the hole below the nearest bottom.
The goal is usually before the nearest high swing peak, like this …
This strategy is quite simple and straightforward, consistent with the market that tends to (trending).
For example: Fair Isaac Corporation (FICO)
This stock is in an uptrend. I mean like this …
If you look at previous value regions, see price action around that area.
And here too…
Notice how the market returns to the region support
Dropping the bottom and bouncing back up …
This area too…
The pullback market is about the region support, bottom out and then increase sharply.
Currently, you see the market is likely to be declining in region support. I mean like this …
If the price drops and drains the bottom and then closes again, I would consider buying at the next candle.
This is an example …
You can adjust it to suit your time frame and market.
Manage Your Risk
I know you’re probably thinking you know I’ve heard this a thousand times.
This is important so pay close attention because what I’m about to share with you is something that you have likely never heard before.
Imagine this…
John and Sally are two traders.
They both have $1,000 trading accounts and they have a 50% winning rate on their trading system, and they have an average of a 1…2 risk-reward ratio.
Let’s assume… Over the next few trades, this is the results of their trades…
LOSE-LOSE-WIN-WIN-LOSE-LOSE-WIN-WIN-WIN
This is the outcome for the next few trades.
Let’s say John risked 50% of his account on each trade which is about $500 and Sally, risked $20 of her account per trade.
John… $500
Sally… $20
Let’s have a look at John first, having $500
-500, -500, -1000
LOSE-LOSE-WIN-WIN-LOSE-LOSE-WIN-WIN-WIN
John has essentially blown out his trading account.
What about Sally?
–20, -20, +40
LOSE-LOSE-WIN-WIN-LOSE-LOSE-WIN-WIN-WIN
How much did Sally make?
It’s 40 because as you’ve seen over here, we have an average of 1…2 risk-to-reward ratio.
Her winners are twice the size of her loss.
In total, how much money did Sally make or lose?
Sally made a total of $120 which is about a 12% gain of her account.
Can you see how important this is?
If both John and Sally are trading the same system but one of them blew up his trading account and the other one made the 12% return on the account.
What’s the point I’m trying to make?
The point is this…
You can have a proven trading strategy that works out without proper risk management, you will still lose.
Are you with me so far?
Consistent action = Consistent results
I know this sounds a little bit vague so let me give you an example so you understand how this works…
Imagine your trades. The outcome of the next few trades is something like this…
LOSE-LOSE-LOSE-WIN-WIN-WIN-WIN
Let’s say you’re trading with a proven trading system and you’re following your rules.
As you can see here. Your first three trades are losers.
When the fourth trade comes, you decide to skip it because of the recent losses that you had you think.
Guess what?
It turns out to be a winner over here.
Then your fifth trade comes along.
You decide to skip the trade because of the recent losses that you have encountered, the pain is still very wrong so let me skip the trade again.
Again, turns out to be a winner over here.
Then comes the next trading opportunity, and now you’re stuck. Thinking should I skip the trade?
Because the recent losses are still too much to bear, you decide to let your emotions take over and skip the trade.
Then guess what?
Another winning trade that you missed.
Then guess what? Another winning trade that you missed.
At this point, you can’t take it anymore.
You decided to follow your trading strategy because if not, you might miss out on further again.
We decided to take the next trade that came along and finally, you caught this winner over here.
However, if you look back your winner is not enough to cover your losses the three losses that you had earlier.
If you look at this from a big-picture standpoint, if you had followed your rules you would have come up profitable because you had four winners over compared to your earlier losses that you had earlier.
Four winners against three losers, you would have made money over this series of trades.
But because you didn’t follow your rules, because of emotions your actions were not consistent, and that’s why you didn’t get consistent results.
You can see that if you want to be a consistently profitable trader, you must have a consistent set of actions whenever the setup presents itself.
You have to take it so you don’t second guess yourself…
Because guess what? if you end up skipping trades, your results will not be consistent because your actions are not consistent.
Keep Moving Forward
Here’s the deal…
There will be a time when everything looks so bleak.
Things are not working out for you.
You can have proper risk management and be consistent with your actions and you can be the most disciplined trader out there.
But because maybe for the fact that your trading strategy doesn’t work, you still end up losing at this point.
Most Traders will give.
This reminds me of a quote from Sylvester Stallon (Rocky)…
“It ain’t how hard you can hit but how hard you can get hit and keep moving forward.”
That’s how winning is done. This is the same for trading.
You might have known some failures along the way in trading.
But guess what?
It just tells you that whatever you’ve been doing is how you should not trade the markets.
Go back to the drawing board. Get new trading ideas, and strategies to trade the market and you know, read the books I shared with you earlier.
Then start to apply proper risk management.
If you keep following this process that I’ve shared with you, there’s no reason why you will not succeed as a trader that’s winning.
Always Be a Student of The Market
Always be a student of the market.
Let me share with you a quick story…
This is me back in my prop trading days, hungry and free
Back then, I was trading the Nikkei Futures otherwise known as the Japanese stock market.
Many of us prop Traders, were trading the Japanese Market back then and one of the core strategies that they were using is what we call arbitraging.
Why arbitraging?
It’s because the Nikkei Futures is traded on four different exchanges.
By trading on multiple exchanges, they can find arbitrage opportunities.
Let’s say a trader, buys from exchange “A” a decay contract at $100 and then quickly sells it at exchange “B” for $101
I’m just simplifying things.
When you do this many times a year you can make six to seven figures arbitrage opportunities.
Back then, a lot of traders made a lot of money from this particular trading approach then slowly something happened.
They realize that the profits are getting smaller and smaller.
Why is that?
That’s because the algorithms the machines enter the market.
As you know machines are always faster than human traders.
Before you can even click buy the machine has already buy and sell.
The machine came into the market and eroded this age that they had for several years.
What happened next is that I believe about 90-95% of these traders, couldn’t adapt to this market conditions and they quit and left trading altogether.
Some even became cab drivers.
There is no shame in that but that’s pretty much what happened to them.
The lesson here is this…
“There’s no guarantee in trading”
Just because a trading strategy has worked in the past doesn’t mean it will work in the future forever.
This is why you must always remain a student of the market to be adaptable to change when the times have changed.
Conclusion
No matter what others tell you…
Being a profitable trader is never easy.
There is no shortcut.
But what matters is how fast you implement the concepts I’ve shared with you today.
And the best part?
Anyone can do it!
Nonetheless, here’s what you’ve learned in today’s video…
- Gather proven strategies from trading books and use it as a foundation to develop your own strategy
- Managing your risk is the number one key to surviving in this trading business
- Being consistent in your trading puts you closer to identifying your edge in the market
- When things aren’t going your way, be persistent and keep pin-pointing and improving on your weak points
- Time and time again, the market will always humble arrogant traders, so always be a student of the market
Now that I shared with you the fastest way to become a profitable trader…
