The MISSING LINK Between Successful Traders and The Rest

February 24, 2011 at 5:24 pm (Uncategorized)

The “MISSING LINK” Between Successful Traders and “The Rest”

When it comes to teaching people to successfully trade the Stock Market, teaching them a strategy is probably only conducive to 5% of their success. I am going to now uncover something that I am betting the vast majority of Stock Market Trainers either don’t understand OR are not prepared to action.

When it comes to teaching a complete novice how to trade the stock market, there are basically 2 broad sections that need to be conquered before a trader becomes consistent.

Firstly, there are “The basic’s”. This is where the traders will be learning the strategy,  placing the trades, following the rules and developing a conversational knowledge of trading and start forming their traders psychology – basically getting to grips with the mechanics of Trading.

This takes different people different rates of time to learn and is based on a few different things :

1)      The amount of time that the client will put into their learning. If someone is going to put in 1 hour a day, they will cover the basics a LOT quicker than someone who is doing an hour a week.

2)      The different element’s they use to get an “all rounded” education in trading. An example of this is not just sitting and going through charts looking for technical set ups but also speaking to your trading buddy about trading, reading books about successful traders and listening to previous audio’s from the traders library. This gives you a much better “rounded, fuller” knowledge of trading.

3)      I do believe there is a small percentage of people who are genetically predisposed to trading. This is the same as people who are genetically good athletes, good academic’s, outgoing people etc. I do believe though that this only makes up a very small percentage of people’s success and, like anything else, is always bested by hard work.

Now, the thing is that all of the above learning is developed on what I refer to as “The cognitive knowledge”. People KNOW what to do – and it’s the FIRST step and obviously critical as it forms the foundation of human learning.

The challenge is, too many people believe that this is where they should be successful traders. I am here to tell you, this is NOT where traders become successful.

The next step is where a true trader is born.

You see, the above is all “stuff that you know”. You know the rules, you know you should stick to your money management rules, you know you should never go against the trend. The thing is, human beings very seldom follow their cognitive thoughts over their emotional needs and the vast majority of unsuccessful traders as unsuccessful as they trade on their emotions.

Think about it: We all know that coffee is bad for us, but do you drink it? We all know that drinking, smoking, eating junk food, not exercising everyday is not what is best for our bodies but I bet everyone reading this is honestly able to hold up their hand and say that they have done the above ( and no doubt much more!!)

Now let’s change the situation slightly – lets say you are a smoker – a “40 a day” person and you go to the doctor only to be diagnosed with lung cancer. They give you 1 year maximum if you don’t stop smoking. You go back to your family and tell them the tragic news. You see your children start crying, realising that they have only got, at most 1 year with their Mum or Dad.

I am betting that would create enough of a shift in you to stop you in your tracks from ever lighting up again. THAT is knowing something on an EMOTIONAL LEVEL. You will have NO PROBLEM with stopping smoking because you have been emotionally shifted by it. You have had an “A-ha moment”

Getting to understand trading on an emotional level, via an “aha moment” is the key to trading.

 Knowing your rules on a emotional level will result in you ACTING in accordance with you rules. When you start “acting” instead of just “knowing” you will find yourself going back over your trading diary and saying “Damn! Why did I take THAT trade?” a lot less.

Now, the question you are no doubt asking yourself is “How do I get to know this on an emotional level and not just a conscious level?”

The answer to that has become more and more evident to myself over the last year and a half where I have had the great fortune to work with so many great people and help them go from beginner, to intermediate to advanced traders.

Seeing someone go from “I have never traded before but I want to make a change” to then “I am following the rules but still not making money because I am making stupid mistakes” to “ I am now making consistent returns” is an a true gift and that look in their eyes when they serious KNOW they are SUCCESSFUL TRADERS – is a great moment to be seen.

So this is the process to get to that level :

1)      Select the people you want to trade with based on how much you like them and how genuine you feel they are

2)      You NEED to BELIEVE that you CAN be successful with trading. If you have the attitude of “We’ll see how it goes”, you best stay away from trading – rather go to Vegas – it will be more fun

3)      Learn your basics and DRILL them – again and again and again.

4)      You need to be practising and asking questions about your trades – get the support and feedback that you need. Learn from your mistakes – but be prepared to accept direction from your trainer.

The last part though is what is going to make you successful. Once you have got a competent knowledge of what you are doing, you need to keep at it. Keep refining your trades – reviewing them and seeing if there was anything better you could have done to make the trades more profitable.

If you keep doing this – somewhere along the line, there will be a moment where that last piece of the jig-saw falls into place. It’s almost like an “aha-moment” – literally, when the lights come on. That is when you get the EMOTIONAL understanding of trading.

 You will find that you stop “hunting for set-up’s”, you will just see them setting up as you go through the charts. You will stop feeling like you NEED to be trading or that you have to be in as many trades as possible. You will start refining your entry points to a much better level… all these things come together and result in a consistent trader.

The best way to achieve this “a-ha moment” is to keep asking your trainer to review the trades that you have taken. This is when the trainer can go through the trades and suggest some small tweaks or insights that you could make instead of just going through all the “black and white” rules that you already know. Somewhere along the line, you will have that break-through and 95% of the time, it’s something very small that has to be changed in order to get the desired result for you.

On this point, I would like to make something quite clear: People NEVER have a problem with the mechanics of trading. The placing of trades, rules of strategies, money management rules etc are all easily taught. HOWEVER, people DO have a problem with keeping the focus on learning to BECOME a trader.

The reason for this is because we are all very busy. We have other commitment’s outside of trading. Be it the 9-5 or the family or social events … we all have them but it’s that commitment to making the change that will then influence their outcomes.

This is then linked deeper into people’s motivating factors which, unless they are in a real state of pain, are generally not as powerful as the challenges they face and the reason’s WHY they have to become successful with their trading.

I am VERY VERY aware of this and my goal on every Monday night webinar is to ensure that my client’s come off that webinar feeling clearer, more confident, more motivated and genuinely more up-lifted after enjoying their Monday night hour from 7-8pm.

I am under no illusions that this has GOT to come from me initially. Similar to how much you enjoy an evening out at a restaurant can be dictated largely by the staff that work there, I have to get myself into a hugely positive state before I get on that call as it set off a positive chain of event’s through-out the rest of that hour…. ideally with the outcome of YOU, our clients having that “A-ha moment” .

To your Health, Wealth and Happiness.



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