Without a doubt, the learning process to successful trading is not a short one. It is one that takes time, akin to virtually all other skill based endeavors. Be it sports, playing a musical instruments, or martial arts.
Although we want to become black belt traders, or virtuoso readers of price action in a jiffy, in 99% of the cases, your time line from here to success will likely not be as quick as you’d prefer.
Because of the extended time on our journey from A to B, it is common as bikes in Amsterdam for us to lose perspective, and go off the rails.
Putting Things In Perspective
Take a look at the graph below. What you are seeing is a snapshot of an equity curve from one of the strategies in my price action course.
Upon first glance, it looks incredibly unimpressive…that it loses money. And you would be correct in this assumption…for this period of time.
Now take a look at the second image below, which is the entire equity curve over several years.
What you are now seeing is something totally different.
When you look at its entirety, you are seeing is a price action strategy that made 108% return! This is across only one ONE PAIR, and only ONE TIME FRAME.
Some highlights of the performance are below:
+108.9% profit
Profit Factor of 2.3
Expected Payoff of 112.28
Maximal Drawdown of 14.27%
% Profitable Trades 68.04%
Greatest Win 36% Larger Than Greatest Loss
Max Consecutive Profit Almost 200% Greater than Max Consecutive Loss
Without a doubt, this is a strategy that makes money, consistently, preserves capital, with a balanced risk to reward ratio.
Below is the table from the performance test, showing you the same performance.
Most Un-Successful Traders Make This Mistake
For those who are not trading profitably, most likely when you are in a draw down, you don’t give the strategy enough time to work itself out. You see the equity curve falling, and think something has to be changed.
In reality, there could be nothing wrong with the strategy. Maybe this particular strategy won’t perform well in that market, yet this price action strategy makes money over time.
Now imagine if you changed strategies at the end of the first graph. You would have missed out on over 85% of the entire profit that strategy made. You would have lost several years of consistently profitable trading. That alone would have put you in top 5% of all traders. Food 4 thought.
Building A Healthy Perspective
Generally developing traders are more hyper-sensitive to every single trade, each win and loss. But look at this from a different perspective:
Imagine being a new archer having this same approach – that you gauge your confidence based on each shot.
That map would be all over the place, and drive a person batty as to how they are doing, because naturally one will be an inconsistent shooter in the beginning.
Instead, look to a great basketball player, and tell me if their confidence wanes from missing one free throw. They don’t make this mistake. They keep the right perspective and mindset by focusing on the process, not result. They keep the right perspective.
Constantly Changing
Changing strategies every month or so will take you in circles (like the dog that chases its tail).
Quarterbacks don’t change throwing motions every month, nor do musicians change instruments every time things go bad. Why would you think the path to successful trading would be any different?
So avoid changing your trading plan and strategy every month. Stick to the one you got for at least 90 days, once you’ve refined it. Commit to learning/trading it inside and out.
By doing this, you are (at the very least) building a skill set towards successful trading. Even if the strategy does not work out, you are developing one of the most important qualities in trading – discipline.
And with discipline comes confidence, which is something most un-successful traders lack. Remember, the draw down of the first chart was the prelude to a 108% return, (doubling your account in a few years).
Ask yourself if you have done this (changed strategies after a small losing period). Ask yourself if you’ve focused on result more than process. Then see how you can change this to keep the right perspective when trading.
Very helpful article and very good examples. I would love to see some short interviews with some of your students , how they are overcoming difficulties and hard time in trading, how they built confidence etc etc. I am your student so I may read some amazing stories inside a course, but I bet it would be helpful and inspiring for non members as well.
Hi Chris
I have never seen a teacher who just wants his students to succeed.
Most of the other courses tend to be very expensive and tells you that you can make money the moment you sign for their course.
You on the other hand have plated the seeds in us and you are there 24 hrs watering it and want it to grow.
You inspire us .
Take care chris you need to be around for our graduation.
Regards
sahaj
Excellent article, understanding the process is far more important than result, I agree on that. I had that once in the circle but in the end stop and realise that the fact the system previously used were profitable.
Its a great article and shows that slow and steady wins the race, but still finding the trade style that fits you can be challenging. I was wondering about something, when you say “making 108% return would double your account in a few years” Would making 100% a year not double your account on your initial capital? Or am i missing something?
This is an subject I am dearly strugling with, and a month like April doesn’t help any! Thanks Chris, you’ve put my heart right back under my belt!
Chris- excellent timing for me as April was especially challenging for me. Focus on the process…
Hola Max,
Yes, April was a challenging month for many. See the forest from the trees, and focus on the process.
Kind Regards,
Chris Capre
Excellent article Chris! Timing of it couldn’t have been better for me. Thanks!
Hello Cherie,
Good to hear you found the timing of the article appropriate. We can all relate to this article at one point or another.
Kind Regards,
Chris Capre
Great article, I can absolutely relate to it.
Hola Jeff,
Yeah, we all have moments like this, not just in trading, but in all skill based endeavors and learning processes.
Kind Regards,
Chris Capre
Nice article Chris…
Hola Raja,
Glad you liked the article.
Kind Regards,
Chris Capre
Thanks for this great article Chris ! Jumping from one method to another confuses our minds. I’ve experienced this so much when searching for the right strategy that fits me.
Hola Kris,
Yes, newer traders tend to jump from one method to another, and then get confused. The irony is they wonder why they are confused after 😮
In reality, the search for the ‘right’ strategy should be more about the style of the method, then the direct profitability.
Kind Regards,
Chris Capre
Excellent article Chris. I reckon the timing of publication is also perfect as we are experiencing markets that some, including myself, may find frustrating to make the most out of our systems. Patience and right perspective!
Hola Ivan,
Well it seems hedge funds were also experiencing some challenges in the market as 75% of them lost money.
But yes, patience and the right perspective is key.
Kind Regards,
Chris Capre
A well illustrated explanation highlighting one of the most challenging issues for new traders – not seeing the woods for the trees.
As illustrated here, find an edge, work your edge (with discipline) and look long term. Individual trades are inconsequential in the big picture. Do the folks at Caesars Palace worry about each hand of blackjack played on their tables?
Thanks Chris! Another great one from you! This article is what I need now!
Hola Senor Scientist,
Glad to hear you enjoyed this one and found it applicable to your experience now.
Kind Regards,
Chris Capre