HAVE YOU EVER LOST MONEY IN A DAY-TRADE?
You’ve probably heard of a saying before that 80-90% of day-traders lose money. On average, they lose somewhere between 20-30% a year and most day-traders quit after two years.
When you’re losing money as a day-trader, one of the first things that you should not do is to jump right back into the market.
When you are day-trading and you lose some money, what’s important is that you need to make sure that you are in a calm mental state and that the market is going the way that you think it should be going. To be very honest, day-trading is a very difficult task.
So before you even start to become a day-trader, you should check a few things.
1. DO YOU HAVE A PROVEN STRATEGY?
The first thing is, do you have a valid and proven investing strategy?
Before you spend your first dollar on day-trading, you should test your strategy against historical data to make sure that it works.
If you didn’t test your strategy and you start using it right away, you should accept the fact that you will lose money.
2. WHAT IS YOUR COMPETITIVE EDGE?
What is your competitive advantage compared to other investors?
When you are day-trading, you are competing with other day-traders that have five, ten, or even twenty years of experience.
You are competing with supercomputers that the hedge funds bought, which can day-trade faster than you, or even minute-trade or even second-trade.
As a day-trader, you need to know exactly where you thrive.
What is your advantage?
You also need to execute your setup in a flawless manner, because if you trade randomly or you trade based on emotions, chances are that you are going to get burnt out pretty soon.
In fact, in the very beginning of my investing career, I started out as a day-trader and I would get emotional and would trade after my losses and would keep trading and trading until I blew my entire account.
That is why it is so dangerous to trade emotionally, and why it is so important to keep your emotions in check.
If you do not have a trading plan in place, you are likely not going to be following any rules at all, which leads us to the third point.
3. HAVE A PLAN
Thirdly, you should have a trading plan in place.
List out every single step you are going to take before you make a trade so that it will give you the highest probability to succeed.
If you do not have a trading plan or have any idea what you are doing, then go back to step 1 which is to test your strategy or idea before you even spend a single dollar.
You can find plenty of ideas on Google and YouTube, where people are sharing their strategies.
Personally, I have tested more than 300 strategies that I found on the internet and most of them didn’t work. That is why it is so important for you to first test it out with historical data and then figuring out exactly what the win percentage is.
What is the risk to reward that works or does not work?
What is the position sizing?
At which hour and which conditions of the market should you use that strategy?
Ask yourself these questions and test it over a long period of time. You should try to place at least a hundred trades using past data before you even decide on whether the strategy works or not.
Then, you can use real money.
Back in the day when I was testing different strategies, I actually learned how to program and code different strategies into the software so that I could test it across 10 years worth of data.
I tested different strategies with different parameters within the same strategy, and different risk to reward ratios to see whether the strategy works or not under different conditions and how to optimize the strategy.
If you are able to that exercise for yourself, you will learn some very interesting lessons. It’s going to prove to you that a lot of things that you initially thought were right is actually incorrect.
A lot of things that people say online about investing, whether something works or doesn’t work is actually incorrect.
MOVING AVERAGE CROSSOVER
One common strategy you will find on the internet is Moving Average Crossover.
This is the concept in which you buy when one of the lines crosses over with the other line. Then, when the line moves back down and crosses over you sell.
However, if you test this strategy out you will realize that it is a loss-making strategy. When I was testing it out across different sectors, currencies, and companies, I found that it is a losing strategy.
I didn’t understand why until I started reviewing how the robots are buying and selling in the markets, and that’s when I found that the crossover point would normally be too late.
By that time, the market has already gone up the stock or the currency is at a premium price.
If you are using a crossover to enter into the market, it will usually turn out to be too late for you to have an advantage to make money, which is quite interesting.
Unless you test out the strategies yourself, you wouldn’t learn such important lessons. So if you are day trading and losing money, it would be valuable to take a step back and ask yourself, do you have a valid investing strategy?
You should also take the time to test things like the risk to reward ratio.
You should know what your win rate will be, and what your portfolio allocation is.
If you don’t know, you should test for any indicators you decide to use, as well as different parameters for any trendline or subjective indicators you may use.
Do you need to make it more formal, more objective?
The goal is so that you can be more consistent with every attempt.
These are my tips for day-trading, although I myself have decided to be a long-term investor as I am a full-time professional working many hours in my job.
I hope you can take these valuable lessons I’ve learned to find success in your day-trading journey.
So you a trade and you lost money. And you probably heard of a saying before that's 80 to 90% of day traders lose money. And on average, they lose somewhere between 20% to 30% a year and most day traders
Quit after two years.
No, come on, come on, man. Well, it's got some support right here, so, you know, maybe it'll hang on to this 16 area, bounce back up tomorrow
When you're losing money as a day trader, one of the first thing that you should not do is to jump right back into the market. When you are a day trading and you lost some money, what's important is that you need to make sure that you're in a calm mental state and to make sure that the market is going the way you think it should. Before you jump back in. And to be honest, a trading is a very difficult task. So before you even start, you need to check a couple of things. So the first thing is, do you have a valid and proven investing strategy? So before you even spent a single dollar on day trading, you should test your strategy against historical data to make sure that it works. If you didn't test your strategy and you start using it right away, you should accept the fact that you will lose money. Second, when you are day trading, you need to know what is your edge? What is your advantage? What is your competitive advantage compared to other investors? Because when you're day trading, you're competing with other day traders that have five, 10, or even 20 years of experience, you're competing with super computers that the hedge funds bought. So then they can day trade faster than you, or even minute trade or even second trade. Or they even traded tick by tick.
We have executed 21 million shares already. Wow. And we are not even three minutes. And
So as a day trader, you need to know exactly where you thrive. What is your advantage? And you only want to do those, what they call setups in almost a perfect manner, because if you start doing a lot of random stuff, if you trade based on emotion, chances are you're going to get burnt pretty soon. And for the very beginning of my investing career, I started out as a day trader and I would get emotional and I would trade after my losses and I would keep trading and keep trading and keep trading until I blow my entire account. So that's why it is so dangerous to trade emotionally. And that's why it is so important to keep your emotions in check. If you don't have a trading plan in place, you're not going to follow any rules at all. So the third idea is really to have a trading plan in place.
You should list out every single step you're going to take before you make a trade. So that, that will give you the highest probability of to succeed. Now, if you don't have a trading plan, if you have no idea what you're doing, then go back to step one is to test your strategy or idea before you even spend a single dollar. And you're going to find plenty of ideas on Google and YouTube, where people are sharing their strategies. And trust me, I have tested a lot of those strategies, more to 300 of them, and most of them don't work. So that's why it's important for you to just first test it out with historical data and then figuring out what is exactly the wind percentage. What is the risk to reward that works or does not work? What is the position sizing at which hour should you use that strategy and which condition of the markets, and then you should test it over a long period of time.
You should try to place at least a hundred trades using past data before you even decide on whether the strategy are works or not. So then you can use real money. So back in the day, when I was testing different strategies, I actually learned how to program and code different strategies into the software. So then I can test it across 10 years worth of data. I tested different strategies, different parameters within the same strategy, different risk to reward ratio, to see if whether the strategy works or not under different condition and how to optimize the strategy. If you are able to do that exercise for yourself, you're going to learn some very interesting lessons. It's going to prove to yourself that a lot of things you thought was right is actually incorrect. And a lot of things that people say online about investing, whether something works or not is actually not correct, for example.
So one of the common strategies that you find on the internet is moving average crossover. So it's like one of the lines crosses over with the other line and then you will buy an end. If the line crosses over, back down and you sell quite simple, right? Sounds like it works. You know, the average price of crossover to the average price of that new, you know, anyone can do it. But when you test that strategy out, you'll actually realize it is a loss-making strategy. And when I was testing it out across different sectors or different currencies, different companies, it is a losing strategy. And I didn't understand why once I start reviewing how the robots is buying and selling in the markets, I started to realize that's the crossover point is already too late. By that time, the market has already gone up the stock or the currency is at a premium price.
So if you are using a crossover to enter into the market, it turns out to be too late for you to have an advantage to make money. So that is quite interesting. And unless you do that, testing yourself, you wouldn't learn such important lessons. So if you are losing money, when you're day trading and take a step back and ask yourself, do you have a valid investing strategy? And you should test things like the risk to reward ratio. You should know what is your win rate? You should know that what is your portfolio allocation? If you don't know, you should test it for any indicators that you use, you should try different parameters for any trendline or any subjective indicator you use. Do you need to make it more formal, more objective? So then you can be consistent every single time. So hopefully a trading will work out for you for myself.
I'm a full-time professional. I work a lot of hours, so I decided to be a long-term investor instead. Good luck. So when it comes to investing, my vision for myself is really to achieve 30% a year. Initially, when I started, this seems like a stretch goal to me because the SMP 500 only goes up by around 8% a year. So how is it possible that someone can achieve 30% a year? So that's why I have made a four hour free training for you, which outline exactly how I achieve 30% a year. And this training is made for you. If you are a full-time professional without a financial background, or you are retired without a financial background as well. And you want to learn how to manage your own portfolio instead of investing in ETF funds or mutual funds, and you want to learn how I got 30% a year for the last five years, my return is actually 54% per year.
And you can get this free [email protected] slash free case study. So some of the success stories from investing accelerator includes extra making 63% from Altrix in two months, Chris made 60% from Altrix in two months as well. And finally, Jenny making 65% from our trucks in two months. So these are some of the success stories. And as of right now, we're celebrating the 119 to 120 first taste study within investing accelerator. So this month I'm looking to help an additional 20 professionals without a financial background to master investing and target 30% a year. The stretch goal is 30 people. Now I was looking at the statistics for YouTube and 96.4% of you guys are not subscribed yet, and it is free and you can always change your mind in the future. And in the next slide, I'll talk about the giveaway this time. So the giveaway does time, Sam Walton made in America. And if we reach a hundred likes for this video and it is free, just leave a comment below to say you want the book or something interesting about this CDO as well. And I'll award one of the winners, a Sam Walton made in America books. So I'll see you in the next video.