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Once upon a time I made a ‘million-pound’ spreadsheet.<\/p>\n
It was a beauty to behold. I even made a fancy graph too. It predicted how quickly my trading money was going to grow – all by making *just* one winning trade per day – and I virtually worshipped the thing.<\/p>\n
I could probably dig it up on an old hard drive somewhere. And you know what, for my very first 8 weeks of trading I actually kept ahead of the curve.<\/p>\n
I was making more money on a weekly basis than I needed to, all from a standing start!<\/p>\n
\u201cOh, this is going to be so easy\u201d I told myself.<\/p>\n
And of course, that\u2019s exactly when everything suddenly took a turn for the worse.<\/p>\n
I often think back to those days and try to relive what was going through my mind. I mean, my calculations were utter madness in the first place: I was anticipating annual returns of insane proportions…<\/p>\n
It didn\u2019t seem to sink into my thick skull that that my forecast returns of 50,000% in year 1 was anything out of the ordinary!<\/p>\n
But I can put all that down to youthful exuberance.<\/p>\n
No, it\u2019s the naive yet effective trading approach that intrigues me most.<\/p>\n
Looking back at my early trades now, I can see how I was operating from a completely clear and un-expectant state of mind.<\/p>\n
It was easy to do because I didn\u2019t know any different. I\u2019d put together a system of sorts and was simply pulling the trigger on the trades.<\/p>\n
I didn\u2019t have much money to risk so there were no real emotions involved. I could pretty much shrug off any losses.<\/p>\n
And I had no previous frame of reference to make me doubt the signals my rag-tag system was throwing out.<\/p>\n
I do think \u2018beginner\u2019s luck\u2019 is probably quite a common experience with brand new traders. You simply do as you\u2019re told because at this stage you don\u2019t know enough to do things any other way.<\/p>\n
And surprisingly, you get some half-decent results \u2013 exactly what the strategy would have you expect in the first place!<\/p>\n
It\u2019s how I remember things anyway. And it was only when I got a bit of experience behind me that my inner \u2018know-it-all\u2019 suddenly began to make its unwanted presence felt\u2026<\/p>\n
I suppose you store away memories of painful early experiences: your first big losing trade, the first time you completely miss a good opportunity, that time you put on a trade the wrong way around, buying instead of selling!<\/p>\n
And it\u2019s only natural your body\u2019s defense mechanism kicks in to try and stop you recreating bad feelings next time a similar situation rolls around.<\/p>\n
All well and good when you\u2019re a toddler learning it\u2019s best not to touch a hot central heating pipe again with your bare hand, not so good when those same instincts are fighting to stop you \u2018hurting yourself\u2019 by entering another trade because the previous one lost money and made you feel sad.<\/p>\n
To illustrate, let\u2019s jump back to week five of my fledgling trading campaign when things were still going swimmingly\u2026<\/p>\n
I\u2019d dropped lucky by starting to trade during a strong spell in the markets and had made good money for the first four weeks. And this set a dangerous precedent. It\u2019s what I came to expect EVERY week.<\/p>\n
So when profits for week five were looking a bit thin on the ground, come Wednesday night I hatched a devious scheme (you\u2019ll laugh when you hear this)\u2026<\/p>\n
I simply had to hit my target for the week \u2013 after all, I couldn’t let my million-pound spreadsheet fall into disarray \u2013 so I figured I\u2019d stick a trade on right before an economic number.<\/p>\n
It wasn\u2019t a huge report; it was the US Producer Price Index or something like that. But the plan was to use my \u2018skill and judgment\u2019 to figure out in advance which way the market was going to move and top my profits up for the week all in one focused raid on the market.<\/p>\n
And sure enough, that\u2019s exactly what happened! I made more than enough for the week off that one trade.<\/p>\n
It happened again the following week. In fact, it pretty much became my new standard strategy. I was now gambling my way through the weeks!<\/p>\n
And of course, you know what\u2019s coming\u2026 all the money (and more) that I\u2019d made in weeks one to eight went sailing out the window in week nine! My bad habit finally caught up with me and the honeymoon spell was over.<\/p>\n
It really knocked my confidence at the time. I overcompensated by starting to trade ultra cautiously. I was moving stop losses to breakeven far too early and snatching away at tiny profits. It meant I was leaving far too much money on the table so the losing period continued. And I\u2019m sure you know the story \u2013 \u2018scared money never wins\u2019.<\/p>\n
And that\u2019s the way it stayed until I stumbled upon one page in a trading book that changed my outlook forever\u2026<\/p>\n
This technique comes straight off the pages of Mark Douglas\u2019s Trading in the Zone <\/i><\/em>(it\u2019s on p189 of my edition, actually).<\/p>\n I\u2019m giving Mark Douglas absolute full credit here. I\u2019ll paraphrase the mind-changing concept he presents but if you haven\u2019t got Trading in the Zone<\/i><\/em>\u00a0on your trading bookshelf you really do owe it to yourself to get a copy. You won\u2019t be the same after reading it (in a good way), I assure you.<\/p>\n So here\u2019s the idea\u2026<\/p>\n You need to convince yourself that trading is a simple game of probability. On a trade-by-trade basis the profit\/loss outcome can be completely random but string together a larger sample size of trades and a profitable edge will start to show itself.<\/p>\n Think of a casino and how they run their gaming tables\u2026<\/p>\n They don\u2019t worry about whether the next spin of a roulette wheel means they\u2019ll have to pay-out the gamblers. And it\u2019s not a concern the next turn of a card means a particular high-roller helps himself to a wedge of their money.<\/p>\n They know the game is won over the long-term. They just need to keep spinning the wheel and flopping the cards long enough to see their mathematical profitable edge begin to materialise. And it always does without fail!<\/p>\n So put it into trading terms and imagine yourself to be a casino \u2018spinning the wheel\u2019 every time you place a trade using your proven system\u2026<\/p>\n Can you see how this subtle change in outlook can completely remove the urge for you to be \u2018right\u2019 on every trade?<\/p>\n It also shows there\u2019s no need to strive for set weekly or monthly profit targets like I was doing. You just need to settle into your groove, keep spinning the wheel, and let your profitable edge do the business for you in its own time.<\/p>\n Oh, if I\u2019d only read that book back in week 5! I\u2019d have saved myself a whole load of bother, about eighteen months of wasted time, and who knows\u2026 that spreadsheet I made in my early days just might have held water. Maybe I would have made a million in the blink of an eye after all.<\/p>\n I know it all sounds simple but have a think about how this mindset might help you overcome some of your own obstacles. Try it on for size – the best way is by following the 20-trade ‘Trade like a casino’ exercise laid out in the book.<\/p>\n