Try This If You Think Trading Is Easy

Posted in: Basic Trading Strategies, Trading Article

Trading is easy.

  1. Pick a direction.
  2. Enter the trade
  3. Reap the rewards.

Really, you enter a trade and get out with a profit or a loss.  Right?  Seems simple enough.

Well, it is simple. 

Just not easy.

There are so many things that make up a consistently profitable trader that it would take literally hours upon hours to go through them all.

Many dive into trading thinking that if others are doing it, they should be able to.  It “looks” easy. The Twitter and Instagram accounts show people with wads of cash in their private plan.

It is an illusion. 

That illusion is devastating the financial position of too many people who got hooked on the promise

Mechanical Approach To Trading

When you look at a mechanical approach to trading, like the High Velocity Wave Trader, you are looking at a proven system and following the rules of the trading plan.

If you can follow rules and gain a rudimentary knowledge of the art of trading, you should do well.

With these types of systems, you don’t need the same type of knowledge as someone who trades something like order flow or gap fills.  They are great for new and experienced traders who take the time to back test, forward test and really “own” the system.

The problem is they make it look easy.

For the most part, it is.

The hardest part is being consistent with the trading rules of the system or strategy.

 

Staying Consistent or Monkey Brain

Many will see a few days of winners and the next day, start trading real money.  They have yet to have the rules ingrained so following them is a habit.

For example:

  • a trade sets up right at a resistance level…..
  • you put your entry x price points above it.
  • You decrease risk (adjust your stop) as soon as it is required.

You know the trade plan like you do your own birthday.

You have to follow those trading rules.

The issue comes when you seem to have missed a trade.  Perhaps the system profit targets got you out but the market continued to move in your direction.

This is where it gets hard for people.

  • Jump back into the trade
  • Risk more on the next trade
  • Ignore your profit targets on the next trade

The moment you deviate from the trading plan, you are no longer trading the system, the strategy, or the plan that was put in place.

 

Can You Stay Committed and Consistent?

Recently, I put together several trading tips post on topics that appeal to many traders.

I wrote about the Bill Williams Alligator that takes trend and a market preparing to make a directional move.  The rules are clear and well defined.

Moving averages are a popular trading indicator and I gave a few strategy ideas that traders can explore.

A specific article with trading strategies centered around the 50 period moving average was also published.

You want to be challenged?

Go through those articles and take the sample strategies laid out and use them on a demo account.  I gave enough information, including placing your stop loss, to enable you to have a trading plan.

You have to follow the trading rules exactly as you lay out for one month.  One miscue….you start over.

  • Do you have what it takes to do that?
  • If you can’t follow rules for a month using a demo account, how in the world will you survive when the money is real?
  • Simple challenge:  “one month, perfect execution and net positive”

If you can’t and the emotions are driving you to trade live and large before that, they will also drive you into failure.

Think of it as a test to see if you have some of what the successful have.

Take this seriously!

You would not shred any amount of money so why risk it before you have proven to yourself that you can succeed?

How many people will actually do what I have written?

My guess is a small percentage.

Those that do, and I speak from experience with myself and others, will find trading to be much more simple (not easy) and profitable.

Those that don’t?

Failure is a bitter pill to swallow


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CoachShane

Trader at Netpicks
Shane his trading journey in 2005, became a Netpicks customer in 2008 needing structure in his trading approach. His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. Shane started day trading Forex but has since transitioned to a swing/position focus in most markets including commodities and futures. This has allowed less time in front of the computer without an adverse affect on returns.

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