T2W Trading Community

You have worked with some of the top traders in the country. What do you think they have in common?
First and foremost it is self-awareness. They know who they are and what they are good at and what they are not good at. They consistently do more of what they are good at and less of what they are not good at. You see, trading is really different from sports. In basketball if you are good at dribbling with your right hand, then the other team usually finds that out pretty quickly and they exploit it by covering you on the right side. End result is you are no longer able to do what you are best at. In trading, however, the market has no idea what you are good or bad at and it does not change what it does to gain an advantage over you. The best traders I have ever met have a clear and defined process. They always follow that process. Sometimes the market pays them, sometimes it takes money away from them but they keep doing their process because they know over time, their process works and will earn them substantial money.

What tips would you give new traders about how to overcome the fear of placing a trade/losing on a trade?
Most traders make the mistake of thinking that they have to be “right” with a winning percentage over 80% in order to earn a living as a trader. Not true at all. People have to realize that even the best traders make money only about 53% of the time. So stop trying to be perfect. Just make smart trades and take smart losses.

Is there anything you can single out as the most important thing you would tell a trader to consider before placing a trade?
Calculate each trade’s expected value. What is the probability of it working and how much will you make vs. what is the probability of it not working and how much will you lose. If the reward outweighs the risk by at least 2:1, then you can put the trade on knowing you made an objective trading decision. This does not guarantee the trade will work (remember it is a 50-50 game) but if cut your losses and employ this objective strategy consistently then, over time, you will make money trading. 

Is there anything you can single out as the most important thing you would tell a trader to consider once they are in a trade?
Constantly ask yourself the following question, “If I had no position on, what would I do?” This simple exercise helps traders take the emotions and money out of their trading decisions and allows them to view their trades objectively. Traders have to remember that the market does not know how much they are up or down so the trader should not be focused on that either especially when making their trading decisions.
 

Which do you find most common in traders – over trading or under trading? (and why)
This is a tough one but I would say it is overtrading because it is so easy to get involved in the market these days. Access is low cost and geography and information is no longer a barrier. Anyone and everyone from anywhere in the world can open an account and trade. The problem is the simplicity of getting involved gives a false psychological impression that the game is “easy” as well. This is a painful lesson which traders learn early in the game and the frustrating part is coming to terms with the fact that something that looks so easy could actually be so hard to make money at. Learning how to trade is relatively easy and only takes a few months. The hard part is really learning how to think (objective) and act (disciplined) like a trader. Helping people achieve that is essentially what I do for a living.

How badly, do you think, money-focus affects otherwise good traders?
I would say it is easily the number 1 reason for failure in trading. It sounds simplistic but if traders could just see the numbers on the screen as points in a game as opposed to what I will refer to as “Tangifying” (the art of turning unrealized or realized P and L into tangible things like cars, mortgages, rent, etc.) then they would be able to turn their entire trading career around or take it to the next level. Almost every person in the world has a mental number in their head of what is “a lot of money.” The best traders I know think in terms of percentages. This helps them focus on making the right trades rather than how much was made or lost on the trade. Teaching this skill to successful traders is what allows me to help them take their game to the next level.

What is the best piece of advice you could give a novice trader in today’s markets?
H + W + P = E
Hoping + Wishing + Praying = Exit the Trade.
That simple equation is the difference between success and failure as a trader.