Following a trading system is on the one hand the easiest thing a trader can do and on the other hand it becomes an almost impossible task for most traders. In truth, few traders can follow a trading system. I have met hundreds, maybe a thousand traders, some who were positively brilliant, and I will tell you that very few could follow a system.
I’m not sure why this is so. Before I became a trader, I was a psychologist and naturally I have an interest in the psychology of trading. However, I have yet to develop a clear explanation why intelligent people cannot follow a trading system.
I post my trades and positions several times a day on my website. Anyone can see that I have good days and I have bad days. But overall my returns are excellent and actually far exceed the returns of most professional traders.
I have also shown that this methodology has been working for over twenty years and that I have traded it with accounts ranging from $6,000 to $6,000,000. Using this methodology anyone, in my opinion, with 10 to 20 thousand dollars has the potential to earn millions of thousands even millions of dollars if they simply follow a good system for several years.
This is what I recommend you do to become a millionaire:
1) Open a trading account with a discount broker with ten to twenty thousand dollars.
2) Sitting in front of computers for almost eight hours a day every day the markets are open. Plan to do this for five to eight years.
3) Get a good short-term system that you’ve tested with loads of data. Do exactly what the computer tells you to do. Buy when the computer says buy and sell when the computer says sell.
4) Keep careful trading records and strive to improve your order execution skills.
5) Pay your taxes on time.
In theory, the worst case scenario is that it will take you eight years to become a millionaire. This is not a bad salary for five to eight years of work.
So why can’t people do this? Why can’t people follow a simple system for several years to earn a million dollars?
Well, like I said, I’m a psychologist AND a trader. I have also contacted hundreds of merchants. Unfortunately, however, the portrait of the AVERAGE trader I have come across is not very flattering.
Based on my contacts and experience, here’s why you probably won’t be able to follow the five steps above to get a million dollars:
1) Boredom – Becoming a professional trader can be disappointing. Most people think that trading is very exciting. It is not. The truth is that markets tend to move sideways about 85% of the time and that is not very exciting.
Also, I make about 60% of my profit on 5% of my trades. What that means is that I take a lot of mediocre trades while I wait for the big one. Trading is like fishing and sometimes requires a lot of patience.
I think a good trader has a personality a bit like an accountant’s personality. But not many people who are drawn to trading have personalities like an accountant. They tend to be thrill seekers, and thrill seekers quickly become disillusioned with my trading style.
2) Desire for Change: Earning a million dollars using MY systems and methods requires you to do the exact same thing day after day for several years. Most people can’t do that. People naturally want to stimulate themselves, perhaps as a reaction to boredom, through change. Often this can come in the form of changing trading systems.
I have met a lot of people in this business and some of them have treated me with a certain amount of contempt simply because I continue to operate the same way I did 20 years ago. Even though I’ve made a lot of money doing this, they feel like I’m suffering from some kind of intellectual disability because I haven’t developed something new.
But my experience is that system switchers lose money faster than anyone else.
3) Negative life events: When I suggest to people that they can make money by staying home and doing something that is no more difficult than doing operations their computer tells them to do, their eyes light up and they think maybe they have found the key. to happiness. But trading can cause emotional problems that can lead to depression, anxiety, divorce, and despair.
When I actually quit my day job and started trading full time, I initially felt very isolated and missed seeing my friends at work. At first I felt deeply alone and isolated.
Having a busy and somewhat worried dad at home all the time can also cause stress in families. And even making a lot of money in the markets can stress families. If you go from poor to rich, your relationships will surely change, and the changes won’t always be for the better.
Good trading demands stability and consistency, but walking around with $100,000 in your checking account can undermine that.
4) Negative Psychiatric Programming: Running a website and selling business software and counseling helps reduce my sense of isolation that comes from working at home all the time. Although some of my best friends and business contacts started out as my clients, this business has also brought me into contact with some of the strangest people on the planet.
Two of the most interesting stories:
Hobo John was literally homeless and frequently called me from phone booths. Fifteen years ago he raised a few thousand dollars, probably selling drugs, and paid me $1150 for my business package and used the balance to open a business account. What he got from my trading materials was that if you invested in the stock market you would get rich.
The guy bought a stock index contract and held it until all his money was gone. I was almost glad when that happened because he had been calling me every day from a phone booth to inform me about his progressive account crash.
Millionaire Mike had all the family money anyone could want and had never worked honestly in his life. He barely knew how to turn on a computer and he couldn’t follow my system if his life depended on it.
He was losing large amounts of money on a daily basis and this did not seem to bother him at all. He talked to me as if I were his best friend and, like Hobo John, he called me every day to cheerfully inform me of his loss.
His marriage was in trouble and he was curiously telling me about buying gold and burying it on public land to hide it from his wife. The phone calls fortunately ended with her divorce.
I am absolutely convinced that some confused people get mixed up in trading because they want to punish themselves and they want to lose money.
In any case, there are many reasons why people cannot sit at a computer, at home, for several years to earn a million dollars. Following a trading system can be easy or next to impossible depending on how you want to look at it. But if you really think you might have the right stuff and can avoid some of the pitfalls I’ve outlined here, I’d suggest giving it a try.