Winning the 1st Quarter

Hi fellow traders, I want to wish all that are celebrating a very Merry Christmas and to everyone a safe and happy holiday season.  I feel one of the most beautiful things about the world we live in are the diverse cultures we have and how much we can learn from one another.   With the emerging technologies and our ability to reach some previously untouched facets of our society, we are becoming closer than ever.  This is an exciting time to be alive!

Last year we focused on starting where you were with what you had.  I started over 6 times with $1500 in my Suretrader account this year.  We only have 4 days left in this quarter but to put this in perspective, I have made $45339.30 to date in this year trading small.  I started a community in the time span of a weekend and have spent all year trying to turn it into something special.  All of this while trying to focus on my trading and teaching in chat.  I proved what you can do because you in the community saw it unfold live.

The focus again this year is starting where you are with what you have.  Getting started perusing a goal or dream is one of the hardest things we face as adults.  Too often we wait for the perfect time or the perfect opportunity and it never comes.  It doesn’t take near as much to get started as you think.  I changed the dynamic of my community going into this year to provide all those who are sitting on the fence waiting to get the money, or the time to get started an opportunity to do so.  Just by joining the AJT community you get a first-class education free.

So, you can start now, work at your own pace, and develop the skills you need to be a successful trader.  Don’t worry about trying to save 3k to 4k to join a community and start learning, or saving for extra monitors or a trading computer.  For as little as $50 a month, if you elect an annual subscription, you can learn and trade live beside me every day.  You get access to the live day, swing, and trading psychology classes as well as the recordings. My goal is to educate you and help you develop the skills needed to build a successful trading career.

Back in October I started the 4th quarter challenge.  We needed to finish the fourth quarter strong to set us up for the next year.  I pointed out the obvious:
 The first 3 quarters are history
 The only thing that mattered then was the 4th quarter
 If you were unhappy with your first 3 quarters performance, then:
 You had to change your mindset and habits
 You had to identify and change everything that created your poor performance
The worse thing we could have done was continue to do the same thing and expect different results.

Let’s look at some numbers.  I had 21 traders to sign up.  I had a goal of 25 so this was good.  However, I had 9 to not stay past the 1st month.  I started with $1500 in the toughest market that I have seen recently, and I struggled to make any progress through the first 3 weeks of October. I only ended up making $399. The struggle was real and in the back of my mind even though I was frustrated I was happy that you were able to see the real deal.  Unfortunately, some did not see it that way. In my experience in education I have a good feeling that these are the prospective traders that may not have what it takes to see these tough times through and become successful.  You have to have mental fortitude and take the bad times with the good.  Now I am sitting at $10,304.30

This 4th quarter challenge was about facing adversity head on and building a foundation that we can take into the next year.  If you stuck with me, you saw this transition first hand and the mental fortitude needed to get through the hard times and into prosperity.  You saw exactly what it took live and unscripted, which at times was very embarrassing.  I didn’t quit.  I didn’t give up. But if you quit during this process, you missed the most important and valuable lessons of the 4th quarter.
To finish summing it up I had 12 stay active and out of that 12, I have 7 that have subscribed for the 1st quarter and one took advance of the early bird yearly subscription deal.  4 I guess are still on the fence!

You guys know by now that I am a college sports junkie so in line with that I want to share this example with you.  I watched South Florida and Texas Tech in the Birmingham Bowl.  As you can see, Texas Tech won the 1st quarter but they didn’t finish it strong. They lost the 2nd, won the 3rd, but didn’t finish it strong.  Meanwhile South Florida stayed consistent and continued to build momentum and finished the 4th quarter strong. That’s what won them the game. The body of work they put in during the 1st quarter, not folding up under adversity, and finishing the 4th quarter strong!

This year, we are not only looking toward the first quarter and wining it, we’re looking at finishing it strong.  Here is an example of a team, who didn’t have the skill, talent, or the capital backing them that their opponent had, but they won the 1st half and finished strong, and in turn won the game.  The game for Wofford was one in the foundation they laid in the first half.  The blows they landed in the 1st half set the stage and they followed through.  Sure, they took hits as well, but they remained focused and stuck to their game plan, UNC did not. Wofford College is a very small independent liberal arts school here in South Carolina.   Enrollment was 1,683 this past semester.  UNC is a public institution with an enrollment of 18,523 this semester and is a college basketball powerhouse.

This is what we need to do as traders going into this first quarter.  Don’t worry about the professional traders who may be more talented, experienced, or capitalized.  We stick to our game plan and see it through.  There is a lane for us.  Sure, we will take hits in the form of losing trades, but if we stay in our lane and stick to our game plan, we will be victorious.  So lets make 2018 our best year yet!

Ed

When I Make a Wrong Turn

At different points in our day trading career, we will take a wrong turn.  One time it may be on accident, another may be on purpose.  But, one thing is for sure, we will end up going down the wrong path several times in our career.  It doesn’t matter whether we have been trading 2 weeks, 2 months 2 years, or 20 years.  The only difference is that the longer we trade, the fewer and farther between these incidents will occur.  The one thing that stays constant, no matter our experience level, we will need to have a process for getting through it and back on the right path.

If you have followed me for some time, you know that I am all about simplicity.  The fewer steps in the process, the less moving parts I have, the more precise and consistent I can be working my way through a crisis.  In this blog, I will share the simple process I use to help me find my way back to the straight and narrow path to success in this industry.  There are several key principles that I employ to help me achieve this.

The first principle is to realize that you are having a problem and have taken a wrong turn somewhere.  It is important that you develop this skill of understanding who you are as a trader and when something is just not quite right.  Understanding who you are and being able to self-assess is a very important component in your development as a trader.

The next principle is to take responsibility for your actions.  We cannot play the “blame game” at this stage, regardless of what caused us to veer off course.  Blaming others is admitting you don't control your own trading, and if that is the case, why are you trading? If you control your trading, then you can fix it. If others control your trading, you can't fix anything.

The fact is, the ultimate decision was made by us.   It would be so easy to take the pressure and responsibility off us and place it on something else.  But the reality is that if we do this, we have suspended any chance we have of growth.  We will not learn anything by blaming something else and we are setting ourselves up to repeat the same action.

It doesn’t matter if there were surprise events, or technological equipment failures, or trading platform issues.  There is always an excuse for a string of losses or bad trades.  Some are actually good excuses, but as traders, we ultimately must accept all the risks. Until we are willing to do that, history will likely repeat and the same thing will happen again and again.  The bottom line is that we are responsible for whatever happens with our trading and we must accept that.

The third principle is to reflect on how you ended up where you are.  Reflection, or thinking about our experiences, is the key to learning. Reflection allows us to analyze our experiences, make changes based on our mistakes, keep doing what is successful, and build upon or modify past knowledge based on new knowledge.  I have a simple six step process that I use.  Below is an illustration of it and how I use it.

The fourth and final principle is, Make the adjustments.  Address issues as to what is causing the problem and make any necessary trading plan changes. Get back to the basics.  Return to your core trading strategies.  Get back to really knowing your strategy. Knowing what market conditions it works best in, and what the profit and risk expectations are. Get back to what attracted you to trading in the first place: building or learning a strategy that made money consistently. Trading is hard, so get back to loving and embracing the challenge.

By going back to the basics, you will be taking things slow.  You will trade with smaller size and slowly increase.  You may even want to trade a few days in the simulator while you just observe the market.  Even if you hit the ground running and string a few winning days together in a row, increase your position size incrementally, so it takes about a month to get back to your full position size.

I know it's annoying to start back with a small position size, but it's for the best. Bouncing back from a losing streak or a bad trading streak is about getting back to basics and implementing your core strategy well. Bouncing back is not actually about making money. Money comes from implementing a strategy well and re-establishing the skill that you developed. Trading small position sizes gets you refocused on what's important, so you can start building your confidence again. Then the money will come, naturally, without being forced.

Start Where You Are, With What You Have

A few years ago, when I was first beginning my journey into day trading, I saw this movie titled, “The Pursuit of Happiness”.  I am sure most of us have seen or heard of that movie so I won’t spend much time talking about it but just for reference I will give a brief synopsis.  This was the story of Chris Gardner, a man whose wife lost faith in him and his vision and left. A man who refused to have his son grow up fatherless the way he did.  A man who became homeless, and eventually took a job as an intern at a prestigious brokerage firm that unfortunately paid no money, and more importantly, no guarantee for a job at the end. But he didn’t look at what he was starting with, he was looking at what he could end up with.  He knew he would be homeless through this transitional phase in his life.  He knew that he would have to struggle to provide for his son during this time, but he believed in something bigger than what he had in his reality at the time.  He believed in himself and his potential to be great.  He was determined to make the best of this opportunity he was given.  He gave 120%.  Even though he didn't have any money, no home for his son, he was one of the first people in the office in the morning and one of the last one to leave. The company goal was to make 100 calls a day but his personal goal was to make 200.  He refused to be outworked.

This movie was the beginning of my inspiration to make a better life for myself and my family.  The beginning of my inspiration to pursue my happiness, because I knew if I achieved that, my family would receive countless benefits of my suffering and hard work.  But, there was a piece of the puzzle missing.  I tried to get things in place but it seemed like for every step I made forward, I made two or three steps back.  Every time I would come up with the same excuses: “If I just had a little more capital”; “If I just had more time to work on trading, “If I just could afford the right tools”.  “If I just had the right opportunity”. You know the list!

Fast forward a couple of years and my wife attended a conference in which Chris Gardner was the keynote speaker.  My wife knew how inspired I was by the movie and promptly bought both of his books.  One obviously was The Pursuit of Happiness, but the other was, Start Where You Are: Life Lessons in Getting from Where You Are to Where You Want to Be.  I’d have to say that was the book that nullified any excuse I ever had as I was trying to build a career in trading.  The speech he gave that day was really meant for me, but my wife received it in proxy and I am so thankful that she did.

So, now to the core of my message.  You all know by now I made a conscious decision to start with $1500 at the beginning of January with the goal of demonstrating how you can grow your account safely and consistently if you employ the right process.  My process is what brought me from $1500 that I had to start with to over 235k. You can check out my first interview here:  https://www.youtube.com/watch?v=M5mQ3Q7p_ew&t=798s  .  The updated story to $196k you can find here:  http://bit.ly/2a1JA6A  It all started from reading this book, Start Where You Are: Life Lessons in Getting from Where You Are to Where You Want to Be, by Chris Gardner.  As I mentioned before I had every excuse as to why I could not be successful.  But, after reading this book, thankfully I realized that none of those excuses held water.  They were just BS stories I was telling myself as to why I couldn’t be successful.

 

So, just as in 2017, In 2018 my message is start where you are, with what you have.  If you sit around and wait for the perfect moment in time, I can promise you that it will never come.  If everyone did that, we would not be where we are today as a human race.  I remember hearing a very prominent motivation speaker say that the richest places on earth are the graveyards, because in there lies most of the earths untapped potential.  Buried there are inventions that we will never have a chance to experience because someone was waiting for the perfect opportunity to take a chance.  Buried there are some of the world’s greatest minds who never shared it with the world because instead of creating an opportunity to share it, they were waiting on an opportunity to share it.  If these people had started where they were, with what they had, there is no telling where we would be as a people right now.

Start where you are with what you have.  Don’t focus on what you don’t have to start out 2018, focus on what you do have.  Don’t focus on your lack of resources, but on your resourcefulness.  The truth is our resources are limited but our resourcefulness is limitless! When I learned, and accepted this fact, I became a better person, a better trader, a better father, a better husband.  Everything that was once an obstacle in my trading became a potential gain.  I started looking at what I could do with what I did have, and maximize my potential with it.  This is what I challenge you to do in 2018:

       >  Believe in yourself!

       >  Change your limiting mindset. 
 >    >  Start where you are with what you have! 

       >  Stop thinking about what you don’t have, but what you can do with what you do have. 

Let’s make 2018 phenomenal!

Can Learning Chess Improve Your Trading Skills?

The simple answer, yes it can!  One very important trait they both have in common is that once you make a move, you cannot predict the outcome of that move.  In chess, you can make your move, and have your next move planned, or even the next several moves planned, but you do not know how your opponent will react.  In trading, we make our move, we have our subsequent moves planned, but we do not know how the market will react. 

Day traders are always looking for ways to hone and sharpen their mental skills.  On the surface chess, may seem like a game that would not have any relevance to day trading, but it is actually a strategic game that can hone your decision-making skills and strengthen your mental game.  This can lead to more consistent profits from your trading.  In this blog, I will explore several reasons why I believe that the game of chess can be a big asset to day traders.

First and foremost, chess helps you improve your decision-making processes.  A solid chess player is analytical, and understands that with each of his moves, he will need to simultaneously reassess his position on the board, so he can take advantage of the opportunities that presents itself.  Each move will present the player with new data that he uses to determine his next move. Successful day traders are no different from this. Day trading, like chess, requires that you are steps ahead of your opponent, which in this case is the market.  They analyze each decision that they make in the market.  When a day trader is planning his trade, he is thinking about what his next move will be based on how he is predicting the way the market will react.  In both instances, you are planning an initial move, then planning subsequent moves based on a strategy and the predicted reaction from your opponent. While it is impossible to be right all the time, making decisions with the future in mind helps day traders plan to make decisions on trades when the market is behaving as predicted.

Secondly, and this could be considered a spinoff of the first, is that chess helps day traders adapt to the uncertainty in the market.  In chess, you learn to accept the fact that despite having a 50 percent chance of being right, that other 50 percent can creep up and hurt a perfect play setup.  Now in day trading, we are searching for strategies that will give us better odds, which are closer to 70-30.  But, chess helps teach us we cannot control our opponents moves, but we can develop the skill to react accordingly.  This is a very important skill for day traders.  We need to handle and react to that 30 percent uncertainty that is inherent on our trading.  A day trader, like a chess player, needs to be able to handle these losses without losing focus on the game.

Chess skills emphasize strategic intelligence. Good chess players will constantly search for their own weaknesses in their decision making and chess moves; therefore, it makes them a good chess player. As a good and consistent day trader, you need to constantly look for where your strategy or trading ideas may be weak and find ways to strengthen.

Lastly, chess teaches you the importance of the end game.  Playing chess can also help you develop the focus you need as a day trader. It takes tremendous focus to win chess games because it is not just each move you make but the entire process of analyzing the board for potential moves. Day trading is very similar. It’s not just about trading the stocks, but learning to value each step in the process of making the trade.  With each trade a series of decisions must be made. To make sure you make these decisions efficiently and effectively, you must focus on the end of the trade, your strategical final objective of the trade. Traders who are skilled in strategy games like chess develop these strong focusing skills needed to be successful day traders. They learn to stay in the game and look at it through to the end, not just individual chess pieces. They focus on how their opponent is playing as well as themselves. In trading, your opponent is the market, and staying focused on the market allows you to better navigate and make decisions within it.

So, as you can see, a trader who plays chess correctly, can bring these skills to their trading.  Not only can chess can improve a day trader's decision making and critical thinking skills, it can also help with managing the emotions inherent to trading.