Learn to Love the Daily Grind

There are many traits I think a trader should have if he or she wants to be successful. One of them is the ability to put in the hours. If you can sit down, cut out all disturbing noise, and just focus on what you are supposed to do, then you have one of the most important traits. If you are one of those who not only can do it but love to do it, then I see no reason why you should not become a master trader.

When you read about successful traders, you will quickly notice that they share many traits, and hard work is one of them. Sitting down and going over chart after chart is actually fun work. Sometimes I hope that the weather over the weekend will be horrible so that I have an excuse to sit at home and study my charts.

Trading and technical analysis can be very addictive. It’s like golf; once you are hooked, you are in it for life. But to get there, it is important to understand that trading is for those who love hard work. Trading is not for the lazy. Trading is not a get-rich-quick scheme; it’s a slow grind that, over time and with many setbacks along the way, can make you financially independent. Unfortunately, many people don’t understand this.

I don’t know why, but for some reason, some people seem to think that trading is a game that you take lightly. There is no end to videos and articles about how to make money in a very short time with little work. “How I make $500 per day with just 15 minutes of work,” “Trade for an hour a day, make $1000,” or “I made a trading bot that makes $100,000 per month.”

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I don’t know how many of the writers and video makers who produce this kind of content actually believe it. I just hope that you don’t believe it. In my eyes, these people are all fakes and are only interested in clicks and/or want to sell you a course or a bot. Please don’t fall for this.

Don’t ever buy a bot and let it loose in the market with your money. You don’t need to buy a course from a YouTuber; all the information you need to make it in trading is already out there. FOR FREE. Spend your money on books. There are a few classics that I list at the end of this article.

You can be a trader in a few minutes if you want. All you have to do is open an account with a broker, fund it, and start trading. You need no license, formal training, or diploma. If you want to be a successful trader, however, you must do the work. And a lot of it.

Jesse Livermore talks about this in “How to Trade in Stocks” and “Reminiscences of a Stock Operator.” People used to ask him how to pick a winner in the stock market or “Just tell me what stock to buy.” He compared it to someone asking a doctor who has spent years training and perfecting his profession how to perform surgery.

I get this also. “Just tell me how to spot a winner,” and that is usually all they want to know. They want to know how to identify a stock that will go up, or as we say in the trade, how to find an entry signal. When I begin to explain that there is much more to it than just finding entry signals and that risk management is really what they should focus on, they interrupt me. “No, no, I just need to know what to buy, and I’ll be fine.”

They couldn’t be more wrong. They will not be fine because they are not going to do the work required to be successful. I know that because if they are not even willing to listen to what I have to say for two minutes, they are not going to sit alone in a dark room looking at charts for hours upon hours, year after year.

They don’t want to hear about when to sell after a stock has gone up. They don’t want to know how to cut losses. Mention risk management, and they will interrupt you, bringing up the what-to-buy question again. Position sizing? Forget it!

I will write about specific entries, stops, exits, position sizing, journaling, and all other practical things in later articles, but until you understand that, as a newbie, you have a ton of work ahead of you, those things will not help you.

If you want to make it as a trader, then don’t be like these guys. They want all the benefits (i.e., money) but don’t want to do the work required. They want someone else to tell them what to buy. Don’t be like them. Be like Livermore, Minervini, Kullamägi, and other great traders out there (even me). Do the work!

I think that loving to work long and hard is a skill that can be learned (not necessarily taught). If you want it bad enough, you will find a way. Start by reading about successful traders, studying charts, and learning to spot the high-probability setups. I know that you will be hooked because it is a very addictive game. Just like golf.

List of books that you should read

·        Reminiscences of a Stock Operator – Edwin Lefevre

o   Very entertaining about the trader “Larry Livingston” who is really Jesse Livermore, about his life and trades in the late 1800’s and early 1900’s.

·        How to Trade in Stocks – Jesse Livermore

o   Livermore’s own book contains everything you need to be a great trader. If you only read one trading book in your life this is the one.

·        Trading in the Zone – Mark Douglas

o   Great book about trading psychology and discipline. Want to know about those traits I mentioned in the beginning, then this is the book.

·        How I made 2m in the Stock Market – Nicolas Darvas

o   Just what it says on the label. Darvas explains how he learned to trade by trial and error, lots of errors, before finally becoming a successful (part time trader). Great motivation.

·        How to Make Money in Stocks – William O’Neil

o   About of the CANSLIM approach to trade combining fundamentals and technical analysis. If you don’t think patterns repeat in the market this book will change your mind.

·        Trade Like a Market Wizard – Mark Minervini

o   Lots of details of entries, exits and stops as well as a pattern recognition and money management.

·        Trade Your Way to Financial Freedom – Van K. Tharp

o   Book about the extremely important, but often neglected, subject of money management and positions sizing.

·        Secrets for Profiting in Bull and Bear Markets – Stan Weinstein

o   This is an all-encompassing book of who to trade. What to buy, when to buy, when to sell, where to place stops and more.

·        Market Wizards – Jack D. Schwager

o   There is a whole series of these book with interviews with great traders. Want to get into the head of the best traders the world have ever seen, then this book is for you.