The 11 Brutal Truths of Trading
1. Do Not Underestimate the Power of "Simple, Stupid"
The amount of information you need to make successful, winning trades right now—and for the rest of your life—is probably a lot less than you can imagine.
You don't need dozens of indicators cluttering up your charts. You don't need to chase the latest shiny object in the market, nor do you need to know everything about the economy and monetary policy. All you need to become a long-term profitable trader is just one simple edge. That's it.
That one simple edge will become your domain, and you will become the ruler of that domain. Every day, you will hammer on that edge over and over again. Anything that does not pertain to that edge is just noise and nonsense. I've made millions of dollars over the last two decades doing one simple "layup trade" every single day. There's a whole lot going on in the market that I don't know about, but I don't have to, and you don't either.
Quick Tip: If you're new or inconsistent, stay away from indicators initially. Start with understanding price action, support/resistance, or something easy like the box theory. Get back to the basics. Remember: stupid simple will always win in the markets.
2. Focus on Trading Just One Asset
Much like becoming the ruler of your domain (your edge), you should also become the ruler of mastering a specific asset or a very select amount of assets (three to four max).
The reason for this is that the same traders tend to trade the same instruments, and those traders have specific habits and behaviors. Once you can add that nuance to your strategy, you move to a whole new level. This also narrows down your focus, preventing you from scanning hundreds of stocks and chasing shiny objects.
Start with one asset, then slowly add one or two more. Keep it boring, keep it simple, and master your chosen asset.
3. Screen Time is Your BFF (Best Friend Forever) ๐ฐ️
You need to get in front of that screen as much as you possibly can.
My mentor used to say the market is a lot like a movie. If you watch a movie the first time, you see the cool parts. But if you watch it a second time, you realize you missed an awful lot. Imagine watching that "movie" (the market) for 2,000 straight days. You would become the master of that movie—you'd know all the mistakes and could recite the whole thing in your sleep.
The good news is that most brokerage accounts have a playback device now. Use it. When you get a free moment, instead of watching Netflix, get in front of that screen. Watch that one asset repeatedly. You will be surprised how quickly your eyes and brain pick up patterns and nuances, allowing you to put the pieces together.
4. Position Size is Also Your BFF
If you're a new or struggling trader, you have absolutely no business putting real size down on the table. Why risk your hard-earned money when you don't have command over your strategy, your assets, or consistency?
Traders don't blow up because they made a bad trade; traders blow up because they over-leveraged on a bad trade and didn't cut the loss. If you can just control your position sizes, you'll be okay because you're in a learning phase.
What is the right size? Your position size needs to be as low as it needs to be to keep you from over-fixating or having any anxiety whatsoever about being in that trade. If you take a 100-share position and you're nervous or constantly eyeballing the P&L, it's too much. Back it down to 70, then 50, then 40, and so on. Go as low as you need to go until you are not worried about the size. This will help you stay in trades longer and focus on your process.
5. Do Not Focus on Making Money; Focus on Making Good Trades
We all come into trading to make money, but this cannot be your main focus. Your main focus must be on the trade you are currently in or the trade you're about to make. Anything outside of that is irrelevant.
Think of an NFL football team: they don't try to score on every single play. They try to make one good play, then another good play, and the culmination of those good plays is rewarded with a touchdown. Trading is the same. Make one good trade at a time, and the culmination of those trades should get you where you need to be financially.
Crucial Tip: Never look at your P&L (Profit and Loss) during the trading day. That number, at some point, will cause you to do something emotionally. It will cause you to detach from the trade at hand and make a serious mistake. Focus on your process, follow your rules and strategy, and just focus on one trade at a time.
6. Learn to Fall in Love with Losing ๐
Losing isn't your BFF; it needs to be your lover, because you're going to do a lot of it—more than you ever thought. But that's okay. Losing is part of the game.
There are two types of losses:
Acceptable Losses: This is the cost of doing business. You saw an A+ setup, followed your rules, and were stopped out due to an unfortunate, random market event. This is okay; do not stress over it.
Unacceptable Losses: These are totally avoidable and must be removed. This includes revenge trading, emotional trading, or blindly following gurus. There is no place for this.
Start looking at acceptable losses as a necessary expense to get your paycheck (your winning trades). The expense must be lower than your paycheck. Accept that losing is a part of the game, and you'll enjoy the rewards.
7. If You Don't Rank, You Won't Bank ๐ฆ
Every trader needs a ranking system to quickly establish the level of opportunity they are looking at. Two charts might have the exact same technical setup, but they are not the same opportunity.
Your goal is to be fully leveraged or to stomach as much risk as possible on your high-probability winning trades. If you don't have a ranking system, you won't know the difference.
I use a Tier 1, 2, and 3 method:
Tier 1: Must-take trades with an 85% or higher win rate. Put maximum risk on these.
Tier 2: High conviction trades (70-75% win rate). Good setup, but something might be slightly lacking. Take these, but do not over-leverage.
Tier 3: Low probability trades (slightly over 50/50). As you progress, you should avoid these entirely and wait for Tiers 1 and 2.
Start ranking and documenting those trades. If you don't rank, you'll never bank.
8. Journal Your Trades
You can't successfully rank and bank if you don't first journal your trades.
Traders are often a little delusional. We think we have a problem in one area (e.g., bad stock picking), but unless we document it, we're never 100% sure what the real problem is.
When I started, I thought I was a terrible stock picker. But once I journaled everything—what I was trading, the time of day, how I felt, the strategies used—I realized 60% of my losses were because I was panicking out of trades. I had an emotional problem, not a stock-picking problem. Journaling helped me identify the real issue and reinforced my new behavior.
Rule of Thumb: Journal as much stuff as you can. Use the great free tools online to upload your trades and get every analytical detail. Also, start each week by focusing on one area you personally want to improve (entries, exits, patience, size, etc.) and make that a prime part of your journal.
9. Have a Set of Rules in Place
Rules are different from journaling; they are in place to protect us from ourselves and prevent us from going down a path of self-destruction.
Loss Limit: Have a rule that if you lose, say, three trades in a row, you back off or even take the day off. Whatever you're seeing, you're not seeing it correctly, and you need to step back.
Max Loss (GTFO Number): Have a "Get The F Out" (GTFO) number. When that number (your maximum acceptable daily loss) is hit, you are gone. You must walk away immediately, regardless of the technicals.
The single greatest enemy in trading is us; it's the person in the mirror. We must protect ourselves from ourselves. Trust me, it's easier to step back, calm down, and come back with a cleaner approach tomorrow.
10. Find Yourself a Mentor ๐ค
Whether that's finding an individual or joining a reputable community, a mentor will get you to your goal faster than you ever could imagine. Only a trader can truly understand another trader—how it feels to wait for a perfect setup, push the button, and get smoked out.
You are there for the individual's experience, not to piggyback on alerts. You need these people to hold you together when it gets bad. My mentor taught me how to make trading my life. He held me together when I was ready to quit and helped me on days I was literally in tears.
Find someone you align with who can help you take the next step.
11. The Last Step Will Be the Hardest Step You Take
At some point, you will have obtained all the knowledge and received all the help possible. But the final step between being average and being elite has to be taken by you.
It will be the hardest step you ever take. There are no shortcuts and no easy answers. You will find yourself at the proverbial fork in the road:
Whatever that final step is, it's different for each of us. For me, it was dealing with my insecurities. No one can help you with that final leap; you have to take it
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