A Plan for Profit: How to Reward Yourself for Growth as a Trader
by Michael “Robinhood” Storm.
Occasionally we are contacted here at Winners Edge by folks that are having a hard time making consistent gains as traders. Some are really troubled with their performance and concerned because of losses slowly eating up their precious capital. Often Casey and I have heard similar stories of losses, followed by questions like this: “If I place X amount of money in the market, can I make it as a trader?” We try hard to counsel these folks, but we often see the same mistakes being made again and again.
One example (names have been changed to protect the guilty), we will call trader Bill. Bill contacted me after loosing over 80% of his account in a rather short time period. My counsel was lengthy and solid. I thought we had a pretty good plan worked out. Then a week later Bill contacted me again and had more dramatic losses. After going over the plan, I realized that he NOT obeyed what was set out. He did NOT adhere to his end of the bargain. He cheated himself out of potential growth. Once again we went over and over it. He finally agreed to DO what he said he would DO. Will he? I have no idea. I sure hope so. What did I recommend? Lets go over a plan for success for you. If you will DO THIS THING… You will eventually rise to greatness. If you cheat yourself in some way and blow out your account, you will sink to the lows of a million others that have come and gone before you.
Number one, you must realize that Forex (or ANY other form of trading) is a zero sum game. What does that mean? Well, there is only so much “pie” to go around and you are pitted against ruthless sharks that have no concern for you whatsoever. They are NOT willing to let you take money out of there accounts. ONE wins. ONE cries. It is that simple. When you make a successful trade money is transferred OUT of a traders account and INTO yours and vice versa, it is a WAR plain and simple.
Now, if you are going to thrive you must SURVIVE. And that may mean that you should get yourself some serious education. If I KNEW that I was going to go to war in 2 months. I would join a school that could teach me how to be one bad dude and FAST! And I don’t want nonsense but REAL tactics. So, education is Numero Uno. Is it not amazing that we will resist spending $40 for a book or a few hundred for some videos, but will think nothing of letting our accounts get smashed for thousands of dollars. Its just not right. So, here is the plan:
Right off the bat. STOP trading in full size lots. Drop down to something more comfortable. For some it may be as low as one micro lot ($1,000) or perhaps an initial position of 3 “lots” of 5,000 each. With the intention of pulling it off in thirds. Why loose with big money? Why not loose small? SHOW ME…. PROVE to me and yourself that you can make money with this small amount first. Then track your performance. When you are CONSISTENTLY profitable daily for an entire week you get to progress to the highly coveted “level 2”. Level 2 is 3 “lots” of 10K each, or an initial 30K size. Now, make money with THAT. PROVE it first. You are NOT allowed to go to level 3 until you are CONSISTENTLY profitable every day for a week. If you are having trouble you do not go up. It is that simple. WAIT, until it is as easy as level one. Once you are ready, even if it takes MONTHS of labor, then and only then do you get to rise to the next level. Level 3, Oh yes! now we are really cruising. Level 3 is 3 lots of 15K each= 45,000. Hey that is almost half a standard lot. You can do this. That is your initial position. scale out in thirds as you did for the other levels. Just be consistent. DON”T CHEAT YOURSELF! You’ll regret it, trust me you surely will. What do you care if it takes you 4 weeks to get here or if it takes you 6 months??? So what? This is your LIFE you are talking about here. This is your Trading career for the rest of your days, that promotes you to greatness. You will never thrive unless you SURVIVE.
You get the idea. Level 4= 60k in size, level 5= 75K, level 6= 90K and so on and so on. In small incremental size increases, so as not to shock you. What is that voice in the back of your mind saying? Oh, I know exactly what it is, you are thinking this is silly. I am not going to trade with 3 micro lots of just 3,000 ! I cant make any money like that! ( I KNOW that is what you are thinking!) Oh really? So, you can afford to blow through a few grand more this month in being stopped to death by the alligator that is slowly eating you alive? Please. IF…. IF you are struggling and having such a hard time, then I beg you to consider what I say. THIS WORKS ! You will immediately take the pressure off and drop down to something SO small it is ALMOST ridiculous. But it really isn’t. You see, this is more important than you realize. This is the golden KEY. Forget about the money, think in terms of PIPS.
Think like this: I need to find a trade that I can get 10 to 30 pips out of. I will scalp the first portion for around 10 pips. Maybe 8 or maybe 12, not really important but I am shooting for 10 to be booked on the first portion. I am shooting for around 15 to 20 on the second, and the third…. well, I will let that one RUN, or stop me out for break even. Now, go and do this as often as you can each day! Can you find 10 trades a day where you can get 10 pips or more? Great! Can you find 20? WOW! even better! DO this, day in and day out and you are on the road to greatness as a trader.
Don’t fall for the hype out there…. that you can just trade on 10 minutes or twenty minutes a day, just stroll in and WHAM!!!! pull out 60-80 pips out of the market and you are DONE! That is garbage, pure and simple. The market is NOT going to hand you that without requiring you to have MASSIVE stops and I will have NO part of that. If you don’t have time to trade for 4 hours in the morning and 2-3 hours in the Tokyo open, or maybe the first few hours of the European/London session, then you really don’t have time to be a trader. Perhaps you should seek someone to manage your account for you.
I challenge you folks that are struggling and eating losses, CHANGE your plan. DO this thing that I have said. Do NOT think it is silly or unworthy. If you really are so great as you think then this little “exercise” should be NO problem for you! This should be a piece of cake for you. You should have NO problem at all going from level one to level 6 in just 6 short weeks. RIGHT? Well? This is what I have to say about it. You just might do it! Perhaps you really will. But the point is this, to get you to STOP losing money or at least slow it down enough so that it doesn’t hurt you the way it has been, until you can turn it around, and prove yourself to yourself. OK?
The solution is not throwing more money at it. If your not making it with a 5K account, it will NOT work to place $25,000 into an account and lose it 5 times faster. Trust me. The solution is to get REALLY small and REWARD yourself BIG time by going up REALLY small, each level. The video games that exist in the world… Do they not start you off at level one? Isn’t that how it works? If you can survive to each level doesn’t it get harder? You really need to think about it this way.
The longer you can sit in front of those charts and observe price action of the market participants and get in tune with the flow of money the better things are going to be for you. Don’t rob yourself. If you do this thing, there will come the day, when you are throwing 5 or 10 lots on a perfect setup and taking it for a 20-30 pip move. And these will be some of the happiest days of your life. The life of a market Master! Till Next time. Happy trading!
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