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.

Do Traders Really Need a Mentor?

As children, everything we do in life comes with a coach, a teacher, or a parent directing us and helping us along the way. Words of encouragement are plentiful, and there always seems to be someone looking out for our well-being. As adults, this relationship is much more difficult to establish. Wouldn’t it be nice to have someone assisting you in life and helping you find success in everything you do?

As a technology education teacher, I realized early on the importance of being more than a teacher to my students.  According to Webster’s, a teacher is: “a person or thing that teaches something; a person whose job is to teach students about certain subjects”.  Webster’s defines a mentor as: “someone who teaches, gives help, and advice to a less experienced person; a trusted counselor or guide. I believe my decision to be a mentor to them was crucial in helping my students connect the dots between the theory that I taught and their abilities, potential, and goals. By being a mentor to them I was able to provide the advice, confidence, and the network that allowed them to achieve the level of success they envisioned for themselves at the beginning of my class.  So which one would you want helping you through your journey into trading; a teacher or a mentor?

Why is it so difficult to make consistent profits when you are working to be a day trader? I have all this education, but somehow I just can't connect the dots and make money. Why is that? This is a question I get asked a lot and the answer is really very simple.  A common mistake they make is thinking they can figure out the rules and develop the strategies themselves, but end up losing not just time but most or all of their savings trying to reinvent the wheel. I know because I have been there. Numerous places on the Internet will attempt to give you an education on how to trade stocks but the real secret is not only finding the right education but finding the right mentor as well.  Building a solid foundation on which to base your trading is of the utmost importance to survival in this industry. That is what I focus on when I am mentoring traders. As a mentor I educate traders in the proper way to trade stocks in today's market by helping them build a solid foundation which can ultimately lead to consistent profits. To put it simply I help new traders connect the dots.  

If you examine any successful trader, they typically have one thing in common: a mentor. Nearly every successful person in history had someone who they could confide in and learn from when times were tough. To be successful in life it is very important to have a mentor, a coach, or someone with more experience than you. You need someone who has been where you are and is in a position in life that you desire to be in the future. Most people underestimate the value of a mentor and this is the biggest reasons for failure in any endeavor, especially stock trading. A mentor offers valuable insight to things that only experience can teach as well as a host of other things.  A mentor is a brain to pick, an ear to listen, and a push in the right direction.  A mentor can help to shorten your learning curve and open your mind to new ideas and possibilities.  

Learning from a good mentor or trading coach is one of the best investments you can make for your long term success.  You invest in yourself with workout trainers or lessons from golf pros.  Why not invest in your financial future with someone who can help you use the knowledge you have and help you connect it to the skills to make money in the stock market for years to come?  Most people never get to live off of their trading because they never learn how to apply the knowledge and skills with the rules of the game and play it well.   Why set yourself up for failure?  Trading mentoring programs help transfer knowledge from the experienced traders to those who are just beginning. You get to see the way they interpret market movement and how they play the game. You’ll also understand the strategic trade-offs that they consider before making a trading decision.

Mentoring can be done in two different ways: one-on-one or small group sessions. One-on-one private sessions will obviously cost more, but, with a good mentor, can be tailored to your specific skills, problems, and goals.  On the other hand, a small group session allows for collaboration and discussion that can stimulate the mind and lead to other types of trading techniques that might have otherwise gone untouched.  The most important thing to think about when choosing a trading mentor is whether he or she can teach you something you’re comfortable with, not just what they want to teach.  Bad mentors are usually one-trick ponies who only know a couple of things and try to make money off of unsuspecting amateur traders.  

Now, do you even have to ask yourself if you need a mentor?  I hope not.  This blog should help you realize the importance of mentoring in the success of your trading career.   To sum it up, a mentor can give you the benefit of his or her perspective and experience which is vital in developing your trading identity.  A mentor can help you look at situations in new ways. He or she can ask hard questions and help you solve problems.  A mentor can help you define your trading and ensure that you don’t lose focus and continue down that road even when you become distracted by day-to-day pressures.  A mentor who knows you well can be a strong champion of your positive attributes and an ally during any bumpy spots in your career.  A mentor whose trading you admire can be a strong inspiration. With the help of a good mentor, you can trade more effectively with a clearer view of the goals you are trying to reach.  Having a mentor is not just a great idea, it is a proven concept.

The Anatomy of Making a Trade

As a fellow trader who teaches and mentors new traders, one of the most common questions I get is related to the actual process of planning and making a trade. They understand the setup they want to trade and they know what it looks like on a still chart after the fact, but they have a hard time planning and initiating a trade beforehand so they never enter or enter a trade at the wrong times.  I believe the answer lies in developing a process to your trading.

As a professional educator and engineer, I firmly believe in the process approach to trading.  I can safely say that this is a big secret to my success.  My trading process looks like this:
 Morning Routine
 Develop Watch list
 Build a trade plan
 Initiate the trade according to plan
 Execute the trade according to plan
 Reflection
This process is slightly modified when I switch to my reversal scans after the morning session. Intraday I eliminate my morning routine and my watch list becomes the reversal scan.

The first question I get when I start presenting this is, “Does HOW you do things actually matter”? Think about something significant you do.  Then think of how it can best be done. Now, consider how you do it currently. This is a great thought process for traders to have. When you take a trade, you need to ensure that you are focused on the right things prior to entering it as well as during the trade. Creating a system for this thought process will take away most of the emotional hang-ups traders experience when looking to enter into a trade as well as managing it while they are in it.

The first thing we must do is develop a perspective of what matters.  This will come from education and practice.  Once a trader has the perspective of what matters, they can proceed to identify the specific processes on which to focus. In each of the steps in my process, there are key leverage points that often make the difference between me having a successful trade or an unsuccessful trade.  The key to success in most full time traders and, often not sufficiently focused upon by beginning traders, is the planning process that enables a trader to focus the important elements of a trade which maximizes their chances of success.

So why do I feel that developing a process important in trading? It is important because it describes how a trade will be put together, provides the focus for executing and managing them, and after the trade, provide a tool for reflecting on to determine if there is something that you missed or could improve on for the next time.

I start my trading process by following the same routine when I get up in the morning.  Trading cannot be looked at as a hobby.  You have to approach trading seriously and as such I wake up, go work out, take a shower, get dressed, and eat breakfast prior to firing up my trading station.  I am awake, alert, and motivated when I start building my watch list.  This morning routine has helped my mental preparation coming into the market tremendously.  So whatever you do, starting the morning out the same way will pay invaluable dividends.   However, rolling out of bed and throwing water on your face 30 minutes prior to open just doesn’t give you enough time to get prepared for the market open.  Sitting at your computer in your pj’s or underwear does not put you in the right mindset to attack the market.  I know because I have experienced all of these scenarios.

My watch list comes from a specific scan that I use every morning.  I will not look anywhere else because I am confident that the stocks on that scanner will have the best opportunity to setup for me to trade.  I will vet each stock the same way using a checklist I have to determine if it is actually tradeable for me.  My watch list is built by 9am and I will not add anything to it after that time.  This allows me to watch the tickers on my watch list for the 30 minutes into the open.  This actually leads into the next step in my process.

During the 30 minutes prior to open I am watching the tickers on my watch list and developing trade plans for them based on the price action I am seeing.  This helped me with that deer in the headlight look I used to get when the opening bell rung and all of the lights started flashing on my charts. When the bell rings I’ll have my plans in place written on note cards because it is too easy to forget what you saw on each ticker coming into the open.  What is my plan if it sets up to the long side? What’s my plan if it sets up to the short side?  What setup do I want to see? What are my profit targets? Where will my stop be? Is the profit window large enough for the trade to make sense? Just asking yourself questions like these when you are planning your trades will give you a big advantage because you can then go in with a battle plan and stick to it.  If it is written down in my face I can easily refer to it and that eliminates the anxiety that I used to feel when that bell rang.  All I’m doing at the open is looking for my signal and trigger to enter the trade.

Once the stock sets up, signals, and triggers an entry, I will enter without question, well that is the plan anyway.  Sometimes I may second guess myself, but not often.  I have my profit targets written out on my trade plan and well as the technical level that I am basing my stops on, so after entry I am just concentrating on hitting my marks and booking profit.  There are some that say that knowing when to exit is the hardest part of the trade.  It can be extremely tough to not exit the trade too early if you do not have a pre-set plan. So if you have a plan ahead of time and you stick to it, you will have a better chance of letting your winning trades work and cutting your losses off quickly instead of the other way around.  This will also help with managing your emotions while in the trade.  Last week I talked to our Warrior Pro students about filtering out the noise.  This strategy goes a long way to help do that so that you can focus on the trade.

Once the trade is done I will reflect on how well my plan worked and how well I stuck to what I had written.  Most of the reflection on my trades will come in the evening when I review and recap my trades from the day.   I believe one of the key things forgotten is reflection. “What did I do right?”, “What did I do wrong?”, “Should I have sold earlier?”, etc. are all extremely important for the development of your trading. Just because you made good profits doesn’t mean you are a perfect trader. How you play both sides of the table are extremely important.  Write down or do a video recap of the trade and everything that comes to mind lesson wise. Then, file it away with other past lessons and use them as a reference for the future. Some lessons hit harder than others, but be confident that with time you will only get better. It only takes one time of getting your hand slammed in a door to figure out to be more careful, but may take two or three times to learn to turn on the lights before walking around your house at night.

Why are processes in trading important? They are important because they describe how things are done to prepare for a trade and then provides the focus for executing them.  It helps filter out the emotional social noise giving you a better chance for a more successful winning trade.  It provides you with a tool to go back and reflect on your trades and make you a better trader.   If you focus on the right processes, in the right way, you can design your way to trading success.

The Power of Being Broke

I am constantly asked about why I wire out my account every month.  My first response is always, I'm not comfortable with my money being off shore, but the reality is Suretrader has a bank here in the US that they service their US clients with, so that reason is a little weak.  My fear of not having enough money to pay my taxes is another reason but if I lose it all, I wouldn't have to pay taxes on it anyway so that argument is also weak.  I also say that I want to protect my gains, which is true.  I like the feeling of having my gains safe from the chance of me giving it back.  Am I a coward?  Do I not have the true mindset of a day trader?  These are the questions that I get asked, and I also ask myself at times.  The truth is, for some reason I didn't realize until this weekend, I am more comfortable and successful trading with a smaller account.  My trading strategy was and is based around growing a small account.  What is it about trading with that mindset that makes me comfortable and more focused everyday in the market?  I never really had an answer until now.  One book I read over this weekend unlocked the mystery of why my strategy works.

You see for a few weeks I tried trading with a larger account well over the PDT rule.  I felt this was my time to take off and not look back.  It was an epic failure.  I only lost about $1500 over a period of 6 weeks because I did have my risk management strategies in tact.  It was like I forgot who I was overnight.  I couldn't see my setups like I used to.  I found myself trying to follow larger traders.  I felt I had to trade like them since I was where they were.  My whole mindset toward trading was different.  I spent too many days watching the market in a daze, not knowing what to do.  I was completely lost, just like I was when I first started trading.  Toward the end of this trial I began getting some professional help from a retired hedge fund manager.  I felt that I needed to get some guidance from someone who was used to trading with larger sums of money.  I got good advice, but that wasn't my problem.  I had lost my identity as a trader.

After this experience ended, I refunded my Suretrader account and almost immediately regained my identity.  I felt that maybe this was as far as I would be able to go.  I mean I almost made 100k for the year trading with my smaller account.  I truly believe I would have hit my goal if I had not tried to trade larger.  But at this point I had accepted the fact that I did not have what it took to trade larger, or that I just wasn't ready yet.  I decided to increase my base account size I started every month off with from 5k to 7.5k at the beginning of 2016 to see how I did with it.  It has worked out great.  At the beginning of the month my share sizes are smaller and I gradually build up my size as the month progresses, providing I am making a profit and my buying power is increasing.   Why does this work so well with me?  I mean for this month of February, I started with 8k and I am up 13,688.89 for the month. Just by employing the same strategies and increasing position sizing as my buying power grows.  I just couldn't understand why I can do it with Suretrader, but when I made the switch I folded up like an envelope.

I mentioned earlier that I read a book over the weekend that unlocked everything for me about how I am able to trade better with a small account versus a larger account.  The book is titled, "The Power of Broke", by Daymond John, the creator of the clothing brand FUBU, and more famously known as one of the sharks from the hit TV show "Shark Tank".  It talks about when you are broke, how having not a whole lot to lose and everything to gain drives you to dig deeper and work harder to get it.  That "sometimes having your back against the wall, leveraging your last dollar, and having no place to go but up; because if you have to succeed to survive, you will."

This is exactly the mentality that had driven me for the past 2 years.  I never knew it had a name.  It is what kept me up until 2 am studying charts of my trades, other traders trades and trying to identify setups.  It is what woke me up at 6 am every morning to get ready for the market before I had to go to work.  It is the Power of Broke that still drives me everyday to work harder and smarter than the next guy.  That 90% failure rate of new traders may just be a little low.  It may be a little higher.  I can tell you about 2 traders, one being myself, out of 25 who started this journey into trading together, that are still in the game.  We worked harder and longer than everyone else.  We were driven to succeed.  You see we were older, had small kids, wanted to spend more time with our families, wanted make sure we could provide the educational opportunities our children would need to make it in this world, and were essentially broke.  We had tried for years to make it the traditional way.  Working a 9 to 5, trying to save $ and provide a comfortable life for our families.  To put it simply, we had our backs against the wall.  We had no other option other than to do what it took to succeed.  This was the mindset that we have.  The Power of Broke.

I know everyone has seen the "Rocky" movies but I want to specifically refer to "Rocky 3".  When Rocky got his block knocked off by Klubber Lang at the beginning of the movie, he had lost something.  The money and fame caused him to lose his hunger.  His will and desire to win at all costs.  You see, he wasn't broke any more.  He wasn't hungry.  He wasn't hurting for anything.  He didn't have that fire deep down inside that burned because he had to win to survive.  All of it was gone the minute he experienced the success of being a champion.  Apollo Creed described it best. "You lost your edge...... You didn't look hungry. No, when we fought, you had the eye of the tiger man.  The edge.  And now you got to get it back.  And the way to get it back is to go back to the beginning".  He had to find that hunger again to get that edge back.

That is exactly what happened to my mind when I switched to a larger account.  When I looked at over 200k buying power after being used to looking at 30k to 60k, I felt I had made it.  I felt like I didn't need to be who I was, that I could be that guy that I always saw as a successful trader.  Suddenly I didn't feel like my back was against the wall.  I'm here to tell you it makes a difference.  I needed that hunger to drive me.  I needed that hunger to keep me moving forward.  That's why the minute I switched back and I was back to square one, where I started, everything fell back in to place.  I needed that lesson. I needed to understand how I worked and what I needed to be aware of as I progressed in this industry.  I am very thankful that I had this lesson when I did.  Now, when the opportunity presents itself again, I will be ready.

I feel that I have finally unlocked the secret of my success as a trader.  The Power of Broke only works for you if you tap into it and put it to work.  You don't have to be broke financially to use this power.  The Power of Broke is a mindset.  There is tremendous power in it.  The more you need to succeed, the more likely it is that you will succeed.  The more you've invested, not a financial investment but an emotional and personal investment, the more you will get back in return.  This is the fuel that will power your passion.  The fuel that keeps you driving forward when everything around you says quit.  Tap into it.  It is there for anyone that wants it.

So what have I learned.  I need to keep the Power of Broke mindset throughout my career.  It is what drives me.  It is what drives my trading strategy.  It doesn't matter how much I make or how much I keep in my trading account, I will always keep that hunger, that desire to grow, that desire to get better.  I will have a goal every day.  I will do my homework everyday.  I will bring my passion to the market every day.  I will remember I am "The Average Joe Trader".  And I will always remember the ways of the shark.  Even when a shark is sleeping, he is still swimming, still moving forward, still ready to attack when an opportunity presents itself.  You see if a shark stops swimming, he will die.  In order to succeed in this industry, you have to live the ways of the shark.  You can find out more about the SHARK mindset here:  "The Power of Broke", by Daymond John  and download the shark points.  I know this book is written more for entrepreneurs  looking to start a business but if you think about it, as traders that's exactly what we are trying to do.