I was so impressed with the final part of BBC2’s Trading documentary… did you see it?
In last night’s episode they focused on the home-based traders. And needless to say, they’d found a great cast of characters to follow!
There was one guy in particular: Charlie…
He stood head and shoulders above the others and spilled trading wisdom whenever he spoke.
But do you know, I think the biggest lesson he had for us was nothing to do with the trading itself. There was an almost unspoken secret to his success. I’m sure it’s the biggest take away from the entire program and I’ll tell you exactly what I think it is in a minute.
But let’s have a quick look to see if there are things we can learn from the others traders first.
(If you didn’t manage to catch the program you can watch it online here on BBC’s iplayer)
Can Jane stand the heat?
First we had Jane. She was the busy Mum of three from Devon…
Working weekends as a nurse and dreaming of spending more time with her family, she saw trading as the vehicle to get her there. She’d taken a demo account from £300k to £1.6 million.
So far, so good, but there were a couple of early alarm bells ringing from the way she was talking about her trades…
“…then I guess if it’s going to go up or down”. “If there’s no trade on I can’t make money”, and “I’ve only got four trades on at the minute”. It all suggested a bit of a haphazard, gambler’s approach.
And to be fair, she said herself how things automatically became more methodical when she started trading real money (she bred and sold Bengal kittens to raise her initial funds and kept one for herself which she called Lady Bollinger Pip!).
The problem was she’d whittled £6,000 down to around £3,500 by the end of the program.
LESSON: Real money can do funny things to your mindset. The market will find a way to apply heat to the soles of your feet and see if you flinch!
All traders go through a rite of passage like this at some point. Here we see Jane in the early stages of her development as a trader. If she keeps her cool and pushes through to the other side I’m sure she’ll do just fine.
Justyn gets his hustle on
Next up we had Justyn…
He and his pal had formed a great little partnership. Justyn did the hands-on trading and they had their hustle-on raising investment for their managed fund from Premier League footballers. We didn’t see too much of Justyn’s trading approach but I tell you what, you can’t knock him for sheer get-up-and-go.
LESSON: Not really a trading lesson, more of a philosophy for living – if you really want something just get into action and start making things happen. Justyn was running his fledgling empire from the attic bedroom at his mum’s house and footballers were already wiring-in £100,000 investments. Great stuff!
Renee’s mind-preparation tip
Renee was the ex-Antiques dealer who’d been battling away at trading for seven years and had found cutting losses to be the hardest thing to do.
“It comes with a lot of baggage” he said at one point and that’s his ego sticking a big unwelcome oar in. Egos do not want to be told they are getting something ‘wrong’. This all comes back to the old battle of controlling emotions before trading successfully.
One thing to take note of is Renee’s ritual of taking a walk before trading, “to get emotionally neutral”. He knows his weakness and is taking steps to overcome it. That’s a great tip right there.
LESSON: Go for a walk, do some stretches, a quick sprint up and down the stairs… anything to get you moving, release tension, and clear your mind. It’ll help you maintain the right focus when you sit down to trade.
John – Trading for fun and profits
John had been the Chief Financial Officer at Boots for 30 years and was now chairman of a money club. The member’s had pooled some funds together and off they went into the markets.
We see them at one of their regular meetings (in the pub) and I think it was a fun, social, activity for them just as much as a way to make money. They were all smart people who were very clear on this position.
LESSON: Make sure you know the real reasons you are trading and tailor your approach to suit. Is it a serious money-making enterprise or a fun money-hobby for you? Either way is fine but if it is a side-interest be careful not to let things run out of control and affect other areas of your life – don’t trade with money you simply couldn’t afford to lose.
Lessons from a market master
We hear Charlie chatting about trading while he’s sponging away at the wheel on his Porsche. He effortlessly drops bombs of trading wisdom which had me furiously nodding away as he spoke.
Here’s what he had for us:
1) The right environment is essential for success
It looks like Charlie might have a bit of an obsession for tidiness but he explains he can only focus properly on trading when he knows the house is perfectly tidy.
That might be the right way for Charlie but your most effective environment might be something different. It might involve a desk covered in notes, charts, and stacks of books.
There’s no right or wrong way but do give this some consideration: is your current trading environment causing unnecessary conflicts with your performance?
2) Invest in the right tools for the job
Charlie explains how he spends around £200 per month on data and charts when most traders solely on free ones from the broker. Is this you?
Are you sure you already have all the tools you need?
Would an entry level professional technical analysis platform give you a new edge? Send me an email if you’re thinking about paid-for charting and I’ll let you know my thoughts.
3) Wait for the markets to come to you
Great advice! Find your spots, place your trades and let the market do its thing. Don’t go chasing trades just for the sake of feeling busy.
4) In the main the herd is wrong
It can be difficult to go against the grain when you see other traders discussing their trades on forums or social media sites, or when you see the financial pundits pressing a particular opinion. But could this in fact be your indicator to take the reverse position?
5) Amateurs think how much they’re going to win: professionals think how much they can lose.
Not much we can add to that! Remember, your first job as a trader is to live to fight another day. Always look after the downside on your trades.
6) Most traders suffer from a lack of discipline
To be successful, traders need to cope with knockbacks and carry on with business as usual. Charlie had a rocky journey himself… he took £40k to over £200k and lost the lot before pulling himself back together and finding discipline in his trading. It’s something you should set aside time to practice and consciously work on.
An ongoing campaign to improve and maintain self discipline all part of the trader’s journey.
And here’s the biggest lesson of all. We see it demonstrated by Charlie, not on his trading account, but on his diet:
7) Follow the plan and you’ll reap the benefit
This was the real secret of Charlie’s success. We see him rigorously follow an extreme diet and exercise program.
He drops his body fat down to 3.7% and ends up with an impressive physique to match. But this was all a metaphor for his trading success.
Like he said himself… “I don’t understand why more people don’t do this, all you need to do is follow the plan and you’ll reap the benefit”
Be like Charlie in your trading… professional, focused, determined, and self reliant.
Find yourself a trading strategy with a positive edge and do not deviate from the plan at any cost. Do it like that and how could you ever fail?
Be Prepared: Market Moving Data Coming This Week (London Time):
Wednesday 24th September:
09:00 EUR German IFO Business Climate Index
15:00 USD New Home Sales
Thursday 25th September:
13:30 USD Core Durable Goods
Friday 26th September:
13:30 USD GDP
Monday 29th September:
15:00 USD Pending Homes Sales
Tuesday 30th September:
08:55 EUR German Unemployment Change
09:30 GBP GDP
10:00 EUR CPI
15:00 USD CB Consumer Confidence
Well, I hope you enjoyed my thoughts on BBC2’s Traders: Millions by the Minute. Also keep a close eye on Cable (GBPUSD), it looks like it’s still pushing to recover losses from before the Scottish ‘No’ vote.
