How To (NOT) Fail As A Trader? (Part 2)

2022년 11월 3일

Hello traders,

All the below are based on my preferences, I don't give any financial recommendations and I have nothing to sell you with this article.
I'm sharing content because I see a lot of traders being/becoming broke and I don't want you to be one of them.

Today, I want to share the second part of the frameworks I’ve used across the past 10 years.

I’ve learned them from the legend himself Charlie Munger, cofounder of Berkshire Hathaway, what NOT TO DO to stay far away from being unsuccessful and poor.

You'll find the first part shared yesterday below

https://www.tradingview.com/chart/BTCUSDT/ZFF1ffjI-How-To-NOT-Fail-As-A-Trader-Part-1/

I) Overspend your income

Once I got to a certain level of net worth, I still didn’t spend a lot.


Actually, I never overspent my trading income, I just keep stockpiling as much as possible
I don’t buy fancy things, I don’t get a table when I go to the nightclub
.
I barely spend 3% of what I earn every month - makes me feel so free because it’s more money that I’d ever need.


And …. That’s how wealth is accumulated. 

I don’t even live frugally… I go to the restaurant every day….. I buy stuff that I need and I like…. 


But … if you want to fail, definitively overspend your income.

II) Learn only from your own mistakes

To fail, don’t learn from the mistakes of others, don’t learn from the success of other people.
There are tons of free ressources to learn the basics of psychology, trading, self-mastery

.

There are also a few very reliable and trustworthy traders selling courses and sharing how they became successful.


Sharing their trading method, their insights, etc...



Knowing how to identify them, and listening to them is key.



To stay poor, don’t learn from other successful traders.

III) Quit Early

If you want to fail and be miserable, you definitively want to quit soon, quit early.



Because, no matter of who you are, you’re going to fail many times.



Remember that my win-rate is between 50/60% :)
Half of my trades are necessary failures for me to deserve the winners.



If you quit trading too early, that’s a guarantee you’d be miserable for a long-time.

Don’t put yourself in a situation where you blown up your trading capital and can’t trade anymore...forcing you to quit…

Stay in the game, with tiny baby trades and take many of them for a VERY EXTENDED period of time…



That’s the ONLY WAY to learn overtime

IV) Negative Visualisation

Take something very negative, and imagine it happening a thousand times in a row.


How would you feel at the 1000th time it happens?


Exactly…you’d feel nothing

If you feel that way after the 1000th time… then you might as well feel that way after the 1st time…


This mindset framework has been so POWERFUL for me.



That’s exactly why you MUST trade a lot and have a lot of losers in your “skeleton closet”

Being insensitive to losses is a skill that can be acquired only after hundreds/thousands of failed trades

.
And trust me, I have hundreds of those losers every month…



They’re not affecting me anymore… they’re a necessary “evil”

V) Expect only the best outcome

If you want to fail at trading, definitively follow traders only posting the winning outcomes/trades.

Definitively never think of setting a stop-loss, or an hard-exit

.

Definitively don’t think about your RISK

VI) Expect the worst

Bouncing back from the previous point, sharing how I approach trading.

If you’re a beginner in your trading journey, expect every day that you’re going to lose some of your money.
And that is going to be your base reality

If I happen to make gains, be profitable then…. That’s just a bonus…. That’s serendipitous … it’s just a happy coincidence.



But I expect that at every trading session I’m going to lose.



This mindset framework has been extremely beneficial for me.


If I come trading with that mindset, then I’m not surprised nor affected when I’m losing some capital and I feel that way because it’s in alignments with the expectations I have in my mind.

Thank you for reading

I'll keep bringing a few articles like this every week because it helps me clarifying my thoughts AND giving back to the community makes me feel good about myself somehow :)

Dave