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Dave Landry – Trading Full Circle 2022
Dave Landry – Trading Full Circle 2022
If you’re like me, you probably weren’t exactly sure how to get started trading. It’s tough. There’s so much noise out there. And, like me, you found yourself spending a lot of time and your hard earned cash chasing empty promises. For me, my true enlightenment finally came when I realized that simple techniques could actually work in real markets.
Even if you’ve been trading for a while, at some point, you’ll hit some tough times. We all do. It’s what happens during those tough times that defines us. There are pitfalls that we can easily fall into in order to “get back” what the market “took” from us. This could be using excessive risk, trading in less-than-ideal conditions, attempting to use complex methods to outsmart the market, and a host of other bad behaviors. If we’re not careful, we could easily spiral downward during these inevitable bad times.
Can Anyone Become A Successful Trader?
I believe with 100% conviction that anyone can learn to trade. There is one small caveat: *You have to want to be successful. You may be thinking, wait, doesn’t everyone want to be successful? I’m not so sure. The biggest problem that I see with many traders is that they abandon their plan in attempt to outsmart the markets. They refuse to give up on pre-conceived notions and aren’t willing to ignore much of what has been taught as “conventional wisdom. ” They tend to interject logic into what the market should be doing vs. accepting what the market is doing. The good news is that these problems are easily fixed through understanding how markets really work and accepting what is.
Do You Have To Be Really Smart To Trade Successfully?
Highly intelligent people can often make for bad traders – This is because they fail to accept the fact that markets are often irrational and always emotional.
NOT Rocket Science
I once received an email from someone who was literally a rocket scientist. He said: “Rocket science is not rocket science. Trading is rocket science!” I explained to him that his difficulties stemmed from the fact that he was trying to interject logic and reasoning into the equation. These things might help to get a rocket off the ground but don’t always apply to trading.
It’s not just rocket scientists that struggle. The same often holds true for doctors, lawyers, automatic transmission mechanics, and any others who are highly skilled or educated. It’s not your fault. In fact, once we get deep into trading psychology, you’ll discover that you may have had years and years of “bad training” for the markets. This can be easily undone. So, if you’re smart, don’t worry. You’re not doomed! You’re just going to have to accept the fact that logic doesn’t often apply. Once you understand how markets actually work, then you just have to be willing to follow along.
Trading is far from easy but it’s not nearly as hard as many try to make it. The mechanics are actually quite simple. In fact, it never ceases to amaze me how the simplest of concepts can work quite well in real markets. This inspired me to trademark “Trading Simplified.”
“Take The Easy Route”
There are two ways to become a successful trader-an easy way and a hard way. The hard, and very expensive, way is to abandon the basics and try out numerous methodologies that seem to be “too good to be true.” And, then later find out that they truly are too good to be true. This journey can take years and provided that you don’t go broke and/or give up in frustration, you reach true enlightenment when you return back to the basics.
Some Hard Realities
You’re Not Going To Get Rich Overnight
Good trends don’t come along every day – It will take some time to catch good market trends. The good news is that if you learn how to recognize and get aboard them, you’ll be ready for when they do. You’ll limit your losses in less-than-ideal conditions and do extremely well in great conditions.
So You’re Not Selling The Golden Goose?
If someone had a goose that laid golden eggs why would they sell it? Good question! If you’re like me, you’ve probably ended up on a few marketing lists. And, like me, you probably get emails daily with inflated promises. Here are just two of my favorites:
“Make 10-million in 10 minutes a day”
“Make 2-4% every day.”
Obviously, “make 10 million in 10 minutes a day” is complete and utter BS but, how about 2%-4% every day? Well, with simple compounding, a $10,000 account would be worth between 1.4 million and 181 million in less than one year. That’s returns in the 14,000% to 1,800,000% range. Again, these claims are slightly exaggerated-sarcasm implied. And, if they were true, why would you tell anyone?
“There is something that everyone who succeeds in markets follows, knowingly or unknowingly”
“The ONLY way to make money on a trade is to capture a trend”
I’m going to let you in on a little secret that marketers don’t want you to know. The secret to trading is that there is no secret. No one knows exactly what a market will do: not you, not me, and certainly not the guy who screams on TV. Knowing this is actually quite liberating! We can cut through the BS by understanding that the only way to make money in a market is to capture a trend. Period. This goes for any methodology. Once you accept this fact then you can spend your time seeking out trends and then looking to get aboard them.
Unfortunately, there is a big dilemma when it comes to trading trends…..
The Trader’s Dilemma
“You cannot predict trends but you can follow them forever”
Predicting the markets is akin to predicting the weather. Only short-term forecasts are viable. If it’s cloudy and thundering there’s a good chance that it will rain soon but you don’t know if it will be raining this time next week or next month.
Short-term trading has higher accuracy and the risks are generally lower. Unfortunately, gains are often limited. Big trends take time to develop. And, the really bad news is that something bad can still happen. Trading where the gains are limited and the losses are potentially unlimited is a recipe for disaster-with ANY methodology.
The real money is in longer-term trading. Unfortunately, so is the risk. The longer that you’re in a market the better the chances are that you will get soaked. We all read about these famous long-term traders, but a quick Google search shows that many of them subsequently blow up.
This creates a dilemma. Short-term trading has its problems as does longer-term trading. In order to be successful trading, you must control losses while still allowing for the potential for longer-term gains. So what’s a trader to do? Both! It doesn’t have to be a mutually exclusive decision. You truly can have your cake and eat it too by trading for both short-term AND longer-term gains. Through proper money and position management you can take short-term profits just in case the trend is a short one but stay with the remainder of the position should it turn into the mother-of-all trends.
I Have Some Good News But First,
The Bad News
“We have found the enemy and he is us”
The bad news is that we’re simply not made to trade. This is on both a psychological and a physiological basis. The things that are keeping you alive and making you successful in your career are detrimental to your trading account. Once you accept these facts you’ll instantly be able to identify the bad-for-trading behaviors and take simple steps to correct them.
When, not if, you find yourself struggling with your trading, it could have absolutely nothing to do with you. During these times you must identify anything in your life that has nothing whatsoever to do with trading that could be coming between you and your success. Correcting these things in your life will vastly improve your trading.
Keep Setups Simple For Success
It never ceases to amaze me that virtually all of my best trades come from the most simplest of setups. A stock will be in an obvious and persistent trend and then have a sharp move lower. Looking to enter after traders are “knocked out” can lead to explosive moves.
Why Trading Is Unfair And What You Can Do About That
Money management isn’t sexy but you have to have it. All trades, even well-thought ones, eventually end badly.
Trading is unfair. You have to make back more than you lose. For instance, if you lose 10%, you’ll have to make back 11.1% just to get back to breakeven. And, unfortunately, it grows geometrically from there. This is why systems that only make small gains eventually will fail. The good news is that through proper money management you can keep losses in check while still allowing for potentially unlimited gains.