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Every single millionaire trader I’ve ever met does this one thing..
If you read this blog post and take action on the information I’m giving you here, you’re going to become a much better trader. Becoming a better trader is going to lead to you making a lot more money.
So let’s do this.
Do you keep a trading journal? What I mean is are you carefully tracking every trade you make, win lose or draw.
I’ll explain to you how I keep mine, and why’s its important for you.
Whenever I enter a trade I immediately make an image of the chart. It doesn’t matter what I’m trading, stocks, financial futures, or commodity futures.
Then upon exiting the trade, take another one. Finally some period after I’ve gotten out I take another one. If I’m day trading I might take it 20 minutes to an hour and a half after I get out, if I’m taking a longer term position it might be a few days, up to a week. It’s important to have these charts though.
Once you have the charts it’s time to write a little bit on them. Explain why you entered the trade. If the reasons are technical, write out the pattern you saw. If it was fundamental write those down as well. I’ve been trading since 1998 and tend to take a couple of trades per day on average – so I’ve literally got stacks and stacks of boxes with my trading journaling in my basement.
The information you can gather from this journal is solid gold.
Well, what you want to do is study tendencies and patterns. Is there a certain type of trade that you nearly always make money on? or maybe a time of day? On the flip side there could be setups that you almost always lose on, or times of day.
Just with this little bit of information you can probably add 50% or more to your yearly profits.
For simplicity sake here I’m going to talk about trading the eMini’s – but anything else is the same as well.
What I personally found is that there are a few situations where I get an amazingly good risk to reward ratio and make a lot of money. For me it’s taking a gap trade in the first 3 to 10 minutes of the day and then closing it with in the first hour. That’s by far my best pattern.
The next situation I make good money in is when we have a trend day. A trend day is simply one of those days where the market has a huge head of steam and it basically just goes in one direction all day. There are ways to predict a trend day with over 80% accuracy. (If you’re interested in me teaching you how to do that, shoot us an email) Anyway, on a trend day I will average about 4 or 5 trades and in one day I’ll often make as much as everything else I do would in a week.
Literally every other type of day trading situation ends up costing me money.
When I first discovered this of course I tried to get better at trading these other patterns. This is because there is undoubtedly a huge rush involved with being in the market, hunting for setups etc.
Eventually I wised up though. I became friends with a guy who had the first $1billion plus hedge fund in London that traded only metals (Copper, Gold, Silver, Platinum etc)
He had a suggestion for me that was very simple. “Brandon, stop taking all those other trades. Focus all of your attention on the situations you are good at. See if you can refine that and tweak it a little bit – and forget the other crap.”
This is very simple advice. It’s not exactly the advice I wanted to hear, but it’s advice I needed. When I finally decided to take his advice my returns went up exponentially. I went from an average return of about 4.5% to 6% per month to just over 11% per month.
Best of all, I did that while actually removing a huge amount of stress from my life.
Do you keep a trading journal?
What are your favorite and most profitable setups?
Which are the worst?