5 Tips For Getting a Funded Account
There is no guarantee that any strategy will have the same performance in the future. Some may perform worse and some may perform better. We use backtests to compare historical strategy performance. Backtests are based on historical data, not live data. There are no guarantees that this performance will continue in the future. Trading futures is extremely risky. If you trade futures live, be prepared to lose your entire account. We recommend using our strategies in simulated trading until you/we find the holy grail of trade strategy.
“If you want to be the best, you have to do things that other people are unwilling to do.
—Michael Phelps, winner of 17 Olympic medals”
I’m going to take a slight detour from what I normally do: discuss automated trading strategies. Instead, I’m going to give you a list of 10 things you can start doing to improve your manual trading game. I’m also going to give you five tips for passing any trader evaluation, which includes a few manual strategies.
Those of you that have been with me for a while know that I often analogize trading with surfing. There are many similarities. Both require acute self-awareness and a kind of blind faith that can be hard to muster under stress.
It may seem like a kid learning how to surf is vastly different from learning how to trade, but as someone who’s done both, I can tell you that the same kind of commitment is involved; the same kind of blind faith is required to keep getting back up on that board. You may not have the ability to work with a surfing guru like Raimana Van Bastolaer, but you don’t really need a guru as long as you commit to a program of study every day. The same is true of trading.
Please watch the following video. It’s less than a minute long.
I chose the video above because you can see a transformation occur in real-time. This kid goes from blind faith to knowing in a matter of a seconds and the look on his face when it happens is absolutely priceless. That’s what needs to happen for many of you struggling with trading. Doubt does not serve you well on the hunt.
There are many people that will tell you that you can’t make money as a retail trader. They have one reason after another — the market’s rigged, you need a lot of capital, there’s no liquidity, etc. I want to assure you that it is possible to make money as a retail trader. Do NOT believe the hype. The market is full of sharks, but that’s anything. If you think the market is rigged, adjust your game - channel your inner Remora. To learn more about this read:
90% of trading is mental. It’s about being able to observe your actions at a distance. It’s about managing emotion and being self-critical. It’s about understanding how to motivate yourself. It’s about knowing yourself well enough to course correct in the middle of a storm. And, most importantly, it’s about never giving up.
Here’s a great quote from the legendary Mark Minervini:
“Those who succeed big at anything all have the same attitude: You keep going until it happens or you die trying. Quitting is not an option.”
Mark Minervini, Think & Trade Like a Champion: The Secrets, Rules & Blunt Truths of a Stock Market Wizard
Minervini is the modern day version of Jesse Livermore. Starting with only a few thousand dollars and an 8th grade education, Minervini became a self-made millionaire by his early 30's. He’s won the the United States Investing Championship twice and he used the same strategy to do it. What’s the strategy? He looks for winners and rides them. It’s not a hard strategy. He’ll tell you that it’s the only strategy he uses so he’s become very good at it.
“Specialists get paid well, while those who know a little about many things make good conversation at parties.”
Mark Minervini
Every decent trader has found a set of tools that works for them. I like looking at volume on multiple time frames. I also like using support/resistance and trend lines for historical price targets (see the latest Mudder Report for an example). I use various risk management strategies and indicators depending on the kind of trading day. Most importantly, and I got this from Peter Davies, whatever the target, I only allow myself to lose two trades in a row. That’s a hard one, but it’s a risk management system in and of itself. It also forces you to think critically about each trade. You have to be willing to adjust.
“During a difficult trading environment your gains will be smaller and less frequent than during a healthy market. When this occurs, remember three words (with a nod to Nike): “Adjust” Do It! Always think risk in relation to reward. You must adjust your risk as a function of potential reward.”
― Mark Minervini
So the first step is to find your strategy. If you’re an ATS subscriber, there are many strategies here that can be used manually. Find one that works for you and study the hell out of it. I’ll give you a few of my favorite manual strategies in a moment.
The second most important thing, going back to psychology, is to get your mind right. In a way, it’s the most important thing, because you can’t trade if you think you can’t.
When it comes to behavior and mental control, the bottom line is that if you think you can’t do something, then you are right, you won’t be able to. The real key is that humans can only perform up to the level of their self-image or identity. So, the general rule of thumb is, regardless of your skill or ability, you’re not going to outperform your self-image.
I cannot stress the importance of this last quote enough in trading. If you want to be a trader, you have to see yourself as one.
Get Your Mind Right
I recently sent an email to a company about an indicator to test out. I decided the indicator wasn’t what I was looking for. A few days later I received the following response:
Celan,
The odds of anyone making money long term by day trading are less than 1%. 99.75 of all day traders eventually lose money. It’s entertainment… not a profitable venture.
Get outta here with that BS!!!! I mean yuck. I suppose this sort of pitch works for someone that hasn’t made money or for someone that’s just starting out and looking for a way to hack the market. But, if you’re a trader, you know this statement is bogus. It’s not false, but it does not pertain to me. Who cares about the 99.75? I’m certainly not one of them.
There are many people in the world that think that just because they can’t do something, others can’t either. When you achieve something they can’t do, they tell you you’re going to fail in the long run. And, there are a lot of people that have tried and failed at this, but that has nothing to do with you.
When I first started, I lost $17K in less than 3 days. Then I lost more and more. Right around the time that I started really taking myself seriously, something clicked.
What do I mean by “taking myself seriously”? I developed a plan of action and embraced the profession of retail trader.
When I first started, I was embarrassed to tell people that I was a trader because I hadn’t made any money. In addition, many people in the financial industry still see technical analysis as a form of witchcraft. They laugh at retail traders, especially institutional traders. I’ve been on the trading floor and I’ve heard all the jokes. In the end, it can be very difficult to confidently get back up again. Every time you dust yourself off, you wonder if everyone that’s laughing at you is right. At some point you must come to the conclusion that none of these concerns really matter, they have nothing to do with you becoming a good trader.
I will also say that there is no other profession that allows the kind of leverage and scale that trading does. I don’t want to dissuade anyone from pursuing a college degree of any kind, but once you get that degree, how long will take for you to double your income? How about triple it? In trading, once you find a strategy that works on one contract, you can scale up to as many as you can handle. This is also the reason we are not “well liked” by the IRS. Some financial professionals might even say that we are the ones being hunted, but that’s no reason to give it up. Here’s a video on developing a strategy against that as well.
Finally, and this is my last pitch for trading as a profession, both retail and institutional trading offers a lifestyle that generally takes many more hours to create in other professions. I get up early, sit down at the desk at 7:30am (EST), and I’m thinking about what I’m going to do with the afternoon by 11:30am (EST). If I have a bad morning, the day may go until 3:30, 4pm at the latest, but there are no late nights. And, the more you trade, the more you know when to trade, how much to trade and when not to trade.
Now you need a plan.
“Mastery requires sacrifices; therefore, something must come first. Make a list, prioritize, and pursue accordingly: Focus, achieve, and then move to the next big goal.”
― Mark Minervini
Here’s my plan of action for you:
10 Tips To Improve Your Manual Trading Strategy
Watch one video a day about trading. Ninjatrader posts some great videos on Youtube. I try to watch at least one a day. You can never learn enough about trading.
Read one trading book a month. If you haven’t done so already, start with Reminiscences of a Stock Operator. This is the first book my mentor gave me—Thank you Jeff. Every trader should own a copy of this book.
Subscribe to your favorite traders on Substack (of course, right?;)
Watch the markets every day. You can’t be a trader if you don’t take at least an hour a day to follow the market. You can condense this time with market replay, but there’s no way to get around it.
Love to trade. This is a piggyback off of #4, you have to love this stuff. A friend of mine recently tried to expose me to commercial real estate. It was so boring—eventually we realized that commercial real estate was not for me. On the contrary, I can’t wait to trade every day. It’s a dream come true. If you don’t feel the same way, find something else that does.