I bought my first stock when I turned eighteen and had a full-time job to rely on for my main income. This meant I felt no pressure to trade and could wait for the right market environment and best setups to arise.
However, that changed when I sold my business in early 2005 and began trading full-time. I suddenly felt the pressure to trade, knowing now that it was my main – and only – source of income.
It was a weird transition to full-time trading. I had spent the previous twenty years running a business which required sixteen-hour days and six-day weeks. If I was not constantly driving my business, not only would it stagnate, but it would ultimately fail.
With this mindset deeply ingrained in my DNA, not trading every day felt counter-intuitive.
So, I abandoned the trading style that had worked so well and switched over to “hyper trading” mode. I felt that I had to constantly be trading, and thus, continually switched between methodologies in an effort to find more and more setups.
As you can guess, this added up to a lot of frustration, a lot of stress, and a lot of losing trades.
Then one day I came across a post by a blogger called Trader X, entitled “Chasing Success.”
I talk to numerous people through email every week who are struggling to be successful at trading. And, I find two common traits in most of them:
1.) They trade too much – most of the people struggling make multiple trades daily, some as many as 10+ round trips.
2.) They have a lack of focus.
I will start with #2. I have discussed this in the past – most people jump from indicator to indicator, timeframe to timeframe, method to method. They will use something for a few days, hit a bump, and move on to something different all together.
One day the holy grail is a XX period moving average, the next day it is MACD or an oscillator. One day it is a 30-minute chart, the next day it is a 5-minute chart. One day it is buying the break of the first inside bar, the next day it is a pullback from the high.
I call this “chasing success”. The bottom line is the person does not spend enough time on any one method to really understand and execute it properly. They bounce around, and before they know it a lot of time has passed and they are still struggling.
If you pick something and stick to it, you get good at it. Once you get good at it – once you perfect it, THEN you can add something else to your arsenal.
Up until then, I had never heard somebody talk so plainly and with such common sense about trading. It was as if a lightning bolt struck me and shocked me out of my sinning ways.
It took a while for this advice to completely sink in, and I had several stumbles along the way, but that post sowed the seeds of change in my approach to trading. I began to take a “trade less, make more” approach and narrowed the types of trading setups I took to just a handful.
Trader X doesn’t post much anymore and he doesn’t seem to want to engage in tweeting (can you blame him), but he was a minimalist trader before it became the trend, and his post made me a better trader.
Maybe this post will do the same for you.