So there’s one big enemy every trader has.
It’s not the Wizard of Oz turning the gears of the market in secret. That guy doesn’t exist (I don’t think). And even if he does, many people manage to win playing his game, so who cares?
It’s not the billionaire investors out there like George Soros and Ray Dalio. The fact of the matter is, those guys do it better than any of us, and they’re the people we should try to emulate.
And it’s definitely not something smaller, like your system. Sure, maybe it’s not a good fit for you, I don’t know. I once got a sweater at Christmas. It was a nice sweater but the person bought it as an XS. I mean, I like to stay in shape, but come on! Some things just aren’t a good fit, be they systems or Christmas sweaters.
But if your system isn’t working, it’s probably because of something you’re doing wrong. you’re just not following it exactly, or you haven’t mastered the technicalities of it. Or maybe it is lousy (if it’s made by somebody else!) Even if you do need to replace your system, that’s not the “enemy.”
The Real Enemy
No, the number one enemy of traders is internal. The number one enemy of traders is greed.
Greed is a killer in this line of work. In fact, it’s greed that will wreck a system faster than anything else. When you push your stops, when you place extra trades or riskier-than-necessary trades. These are the kinds of mistakes traders make every single day that destroys their success.
But worse than that, there’s the greed for massive trades that change lives. Hey! Monster trades are fun. I just wrote about seven of my favorites. But monster trades are only worth pursuing if they’re safe. That’s why I focus on 1-to-2o risk-to-reward ratios.
Some traders aren’t that careful, though. Some traders are certain that they have to make $10,000 with every trade or they’re wasting their time. They’re wasting something, but it’s not time, it’s money.
A Different Way
Instead, what if you just focused on making a little money, keeping it, and stopping for the day?
This is a statistical truth: if you grew your accounts by one percent a month — ONE PERCENT — you’d be ahead of 90 percent of hedge fund managers and professional investors all over the world. It’s that simple.
If you win consistently, whether you win big or whether you win small, you’re still going to get where you want to go. If a baseball team won all 162 games in a season, no one would care if every win was by one run. They’d still have made history.
So reflect on yourself. Are you greedy? Are there areas where you fight with greed? We all do as traders, I’m not trying to call anyone out. I’m just saying, if you want to become a better trader, the best and first thing you should do is battle your greed. If you can beat the greed monster in your belly, you’re going to become a successful trader. It’s as simple as that.