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My 5 Biggest AHA Moments In Trading

My 5 Biggest AHA Moments In Trading

hey hey what’s up my friend so in today’s episode right i want to share with you five of my biggest aha moments in trading so i’m sure you have probably experienced this you know at one point or another watching some video reading a blog post and you’ve got a light bulb moment you read it this is like you know man i didn’t see this before now i get it right so so yeah i’m gonna share with you my own five of this aha moments in trading number one is this is that you don’t have to win often in trading this means your trading strategy doesn’t need to have a high winning rate to be a profitable trader so this experience came back in uh i can’t remember exactly i’m guessing sometime in 2011 2012 okay so what happened is that i am long the dollar yen i remember it’s on the one hour time frame it’s a false break set up on the one hour time frame so this well this is way back right almost nine years ten years right so i long on the falls break set up on a dollar yen and the market pretty much went in my favor pretty quickly i think when i went to bait that nine right i was up about one to one point five hour all right uh in profits so meaning if i risk let’s say a hundred dollars i’m up about hundred dollars right there’s a profit of one hour and the next day when i wake up right i quickly check my phone i realized that my profit right exploded right instead of a one hour profit i’m now up 10 r so meaning it’s now a thousand dollars profit right if i if if i raise 100 on the trade now i’m up a thousand dollars ten time my initial reason i thought man what’s going on right and i realized actually what happened is that the boj the bank of japan interviewed the market so they they bought dollars and sold yen it was a massive huge up spike and i happened to be caught in the right direction and that one trade right propel right my account strongly into the green and that hit me and that’s when i realized man you don’t have to be making money on every single trade you don’t have to be making money on 70 of your trade 60 of your trade because you can make money on let’s say 40 of your trades but if your winners are large much larger than your losers you can still be a profitable trader in the long run so that was my one of my first few aha moments is that you know you don’t have to win often but you want to make sure that when you win right you want your winners to be larger than your losers okay so this is where uh we this is where it’s kind of similar to trend following adopting a trend following approach so so yeah basically if you are going with this approach a trend following approach you don’t have to win often but when you win right your winners are usually larger than your losers okay so that’s one of my aha moment second thing is it is that you want to trade multiple uncorrelated trading strategy slash systems right to improve your trading results so what i mean by this is that let’s say you trade a solely trend following system right where you trade trend following in the fx and futures market in crisis period right you will do pretty well right because that trading system takes advantage of you know panic in the market greed in the market fear in the market so usually during crisis period like 0809 financial crisis uh maybe even the the 2000 dot-com bubble right during financials panning in the markets right trend following systems tend to do well but in normal market times or this system kind of you know go into a double drop they don’t really perform exceptionally well so if all of your money is in trend following system then you know what you can expect is you know periods of you know good money making opportunities during crisis period and in normal times the system just go you know like a little bit quiet so what if you actually take some of your money right let’s say 50 of your original amount of money and put it let’s say in the stock markets trading a uh momentum stock trading system so now things are a bit different because now let’s say if the stock market it’s bullish it’s strong this stock trading system will perform well and if the stock market goes into a recession it’s in a crisis your trend following system will do well so when you combine these two uncorrelated trading systems your overall portfolio equity curve is actually pretty smooth it’s gonna be much smoother right compared to just simply trading a trend following system make sense yeah so this is a really i think i would say in for advanced traders right if possible right adopt multiple uncorrelated trading systems trading systems that trade different markets well that’s a powerful one okay the third thing you need money to make money in trading so this is something that uh took me a few years to figure that out right initially my plan was that i’m just gonna take a 20 000 trading account uh trade full time uh make about 20 a year and i can sustain but after which it kind of dawned on me that you know making 20 a month uh that’s possible but i have a huge risk of blowing up my trading account so after which i kind of realized realistically that’s not really a path that i want to go down into so i figured what’s the next next best option so i started studying you know successful traders fund managers and i kind of realized that when they set up a hedge fund when they trade right they do it with a decent size of money you can’t do it full time or you can expect to make a lot of money if your trading account is like 500 a thousand dollars just mathematically speaking right you know even if you make like 50 a year a thousand dollars account is only 500 a year so mathematically speaking right you know that taking a thousand dollars into six figures or seven figures unless it’s by fluke or by luck right otherwise right you will likely blow up that trading account so if you want to you know make money in trading you need money if you look at warren buffett right he bought a insurance company right and using the company the premium right to actually invest in the market so correct me if i’m wrong i think that’s the path that he took in his early days of uh investing then if you know h fund managers raising capital from the financial markets to set up the hedge funds right why because they need money to make money in trading or investing all right the fourth thing different markets have different behaviors okay so often you heard of the saying right you know rainer the market trends thirty percent of the time and seventy percent of the time is in the range and i just kind of took that statement at face value right i didn’t really look too much into it oh yeah that’s true thirty percent of the time it’s trending seventy percent it’s in range look at the charts that make sense but when i do some research and development right behind it i want to credit to andreas uh unger andrei unger for this uh this technique what he did was that he studied the behavior of different fx markets and he realized that different markets have different characteristics for example the pound dollar the poundian these are trending markets so how do we define this as trending market so let’s take pounion for example so what he does is that he did a simple back test and whenever the poundian break above the previous day high if he realized that this market tends to continue higher or when the pound yet breaks below the previous day low this market tends to continue lower and he found out that hey you know pound yet is a trending market it tends to have a follow through whereas on the other hand let’s say the aussie canadian that’s a mean reverting market this market whenever it breaks above the previous state high it tends to reverse down lower and whenever it breaks below the previous day low it tends to rebound higher so you can see that different markets they have different behavior different characteristics and if you have access to this information right you can actually realize that you can use this statistical data to your advantage right because if you know if you’re buying a breakout on the market that has a trending behavior guess what the odds of that breakout working out is much higher compared to buying a breakout on the market with a mean reverting behavior yeah so that’s one of my aha moments as well right realizing that different markets have different behaviors and finally the last thing is that i realize that some of the best traders out there they have multiple source of income so initially my thought is that you know if you’re a trader you can only you know make money from trading right otherwise you know you’re fraud right you know you’re not trader yada yada and i realized when i studied some of the exceptionally good traders out there those with the longest track record i realized that trading isn’t their only source of income right they for example let’s look at market wizards you have mark minerville he’s one of the popular stock market visitors out there right i’m pretty sure he’s a consistently profitable trader at the same time he has a subscription fees to his i think private feed or something like that then he has a weekend training course right you can see that he has multiple source of income even my income from his books i’m not surprised or how about adds a quota or another market wizard he has some kind of a trading tribe there’s a monthly subscription as well i believe you know he makes some money from there as well and yeah really if you just look around you some of the best traders out there they don’t just make money from trading right trading is uh just one source of their income so as much as possible right i mean if you love trading great right but why not use trading trading right to help you develop multiple sources of income maybe you have money from trading you can you know go into property investing or whatsoever i don’t know but just some ideas for you all right so with that said right a quick recap number one uh you don’t have to win often in trading number two right you want to trade multiple uncorrelated trading system right so your equity curve is much smoother over time number three you need money to make money in trading number four different markets have different behaviors and number five the some of the best traders i know they have multiple sources of income okay so that’s it i wish you good luck good trading i’ll talk to you soon


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