So, You Want to Quit Trading? (Try These 6 Steps First!)
Have you ever felt like you want to quit trading? Maybe you’ve been trading for months or even years, and you’re still not achieving the results you would like. The fact is any trader that is now successful thought about giving up many many times! Speaking for myself, I wanted to quit many times. This is especially true when all of your well-meaning family and friends keep telling you to “quit, and get a real job.” If you’re learning to trade I’m sure you can relate.
About 11-12 years ago, when I was still in the process of learning to trade, there was 1 blow up that really stands out still to this day. I had around $2,000 in my trading account at the time, and I was trying a new trading system. During that week I took the $2,000 account and turned it into over $15,000! As you can imagine I was elated…or I guess I should say I was elated until the market opened the following Sunday.
When the market opened the following Sunday I started acting like a big shot, after all, I just took a $2,000 account and turned it into $15,000 in a week! It’s funny how the market has this innate ability to humble the prideful. All of that bravado, chutzpah, and confidence was soon wiped away in less than 4 hours! Not only did I lose the $13,000 in profit from the previous week, but I lost another $500 of the initial $2,000 balance!
I could go on and on with stories like this, but the fact is we have all been there! Having come out the other side, I’m going to break down the exact steps I used to pick myself up and start trading again. If you’re on the verge of quitting trading, then I would highly recommend following the steps I have detailed for you below.
1.) Stop Trading For a Week or Longer
Have you ever been in a heated argument with your significant other? In the heat of the moment, isn’t it very difficult to say the right thing as your emotions tend to cloud your judgment?. In the process of learning to trade for a living, the same principle holds true. Trying to effectively analyze your results and actions while still dealing with the emotions of live trading isn’t possible. At the very least it’s not possible to do it well.
This is why I recommend taking at least a week away from trading altogether if you’re at the point where you feel like quitting. This separation will allow you to evaluate your mistakes much more efficiently. Additionally, the week-long break will also give you the time to complete some of the steps below as well as the time to reflect on their importance.
2.) Write Down the Top 10 Reasons You’re Learning to Trade
This is purely an exercise in motivation. The more difficult the task, the more critical it is to become and stay motivated. Staying motivated for months while continuing to lose money is never easy. By writing down the reasons you started trading in the first place, you’ll be in a much more motivated state. After you have your list I want you to read it every morning when you get up and every night before you go to bed. This is NOT an easy process, and you need to stay motivated if you want to reach your goal of becoming a consistently successful forex trader.
This list can include whatever you choose. Maybe it is lifelong dreams that you cannot fulfill without the funds? Remember this is your list so it can include whatever the hell you want it to include. I remember making my list years ago and two that stand out to me we’re ‘Freedom’ as well as learning to fly an airplane.
I should do more recording’s but here is a quick video I took from my Cessna. The number one thing I had on my list was ‘Freedom.’ Vacations, money, flying your own plane, and anything else along those lines is nice, but it doesn’t replace Freedom for me.
I remember how many times my family and friends told me how risky trading is, and how I could lose everything. The entire time they were saying that to me I was thinking that the biggest risk is working for someone else for the best 30-40 years of my life while hoping to have enough to survive when I’m old. You want to talk about risk, what is the risk of wasting your life?? How do you put a value on the best years of your life, the fact is you can’t because life/time is priceless. Keeping this in mind was enough to always keep me motivated. The bottom line is that these goals/reasons I started trading kept me motivated which allowed me to power through the low spot of learning to trade.
3.) Own Your Results
Having run Day Trading Forex Live for the better part of a decade I’ve had the opportunity to talk to 20,000+ traders, with 5,000 alone being members of DTFL. What I see over and over is people blaming others for their results. “The broker scammed me.” “The Magic Trading Machine didn’t turn my $100 into a million in a week as it promised!” I could go on and on, but the point is the same; If you cannot address your own faults as a trader, then you cannot fix them. It should be empowering to say your losses are your fault and your fault alone. After all, if the reason you’re losing money is because of everyone else, then how do you plan to fix everyone else so you can make money?????
I will be 31 years old in April, but when I started trading, I was just 17. In the beginning, I bought into many scams as most people do. But even at that young age, I generally knew that it was a scam, and I bought it anyway because I wanted it to be true. When you’re desperate, you suspend disbelief and talk yourself into anything! The point I’m getting at is that there are always signs of a scam before you make the purchase. Therefore, if you buy a $79 EA because the website told you it wins 90% of its trades you cannot blame the scammer, you need to take responsibility. A simple rule to live by is if it sounds too good to be true, then it is! In trading and especially forex, this is not just true some of the time; it is true ALL of the time!
I’m not saying no blame should be placed on the person selling the scam. The point I’m making is that you cannot control their actions, so what is the point in blaming them?
When you start accepting that where you’re at in your trading is a direct result of your actions alone, then and only then can you start making progress. Additionally, if you cannot accept responsibility for your defeats then how can you accept responsibility for your eventual success?
4.) Eliminate Your 3 Biggest Mistakes
Having taught traders for the last decade, I find that people tend to approach the process of learning to trade from the wrong angle. What do I mean by that? To illustrate, I want you to think about what you did the last time you blew up a trading account or got discouraged about your trading results.
More than likely you felt like the answer to your troubles would be found in the forex trading strategy itself. I hear comments like, “if I could only find a good strategy then I know I would succeed,” but is that really the case?
Over the last decade of educating traders, I have found most hyperfocus on the strategy they’re using to the determent of everything else. While the trading strategy you choose is important, successful trading it is much more about eliminating your mistakes. What do I mean?
The reason I put the ‘Own Your Results’ section before this is because it requires you to admit that your losses are your fault, just like your winning trades are because of you. So with that being said, instead of looking at all the other things that caused your failure, you need to look inside. You need to analyze things like the number of trades you’re taking, your risk per trade, discipline, patience, ability to follow a trading plan, and many others, not just the strategy you use.
When you look back over your past results, I think you’ll find that the big losing days and blow-ups didn’t come from trading your chosen strategy with 100% accuracy. Maybe the 1st loss that you took was a valid trade, but then you slipped into revenge trading, then doubling down, then massively over-leveraging and over-trading to ‘make back’ what you lost. While the strategy might have produced a valid loss to start, that is not what blew up your account. Sound familiar??
To reiterate, people don’t blow up their trading account because they followed a strategy perfectly and lost. The reason people blow up their trading account is because of things like over-trading, revenge trading, over-leveraging, boredom trades, and random trades.
Even with the most profitable strategy, if you do not get those other aspects in check, you will lose money. The trading strategy you use is literally irrelevant if those aspects are not solved first. Look back over your last few months of trading and pick out your 3 biggest problems. Get rid of those, and you’ll be way closer to trading success, regardless of the trading strategy you choose to use.
5.) Accept That This Is A Business, NOT a Get Rich Quick Scheme
So many problems could be eliminated with just this 1 step, as this tends to trickle down to every other aspect of trading.
When someone over-trades, why do they do that? When someone risks 5-10% of their account on just 1 trade, why do they do that? When someone removes their pre-determined stop loss, why do they do that? I could go on with the list, but the answer is the same. The only reason (or at least the main reason) people do these things is because they have unrealistic growth expectations. Because of this, they begin to over-leverage, over-trade, remove stops, etc. What is the fix?
The fix this; I have a very simple exercise. Sit down with a pen, paper, and calculator. At the top, you should write a starting balance that is reasonable for you. Maybe it’s $1,000, and maybe it’s $100,000, the amount does not matter. I then want you to compound that balance by 10% per month and do so for the next 5 years. As an example, it would look like this.
Starting Balance: $10,000
1.) $10,000 + 10% = $11,000
2.) $11,000 + 10% = $12,100
3.) $12,100 + 10% = $13,310
4.) $13,310 + 10% = $14,641
5.) $14,641 + 10% = $16,105
6.) $16,105 + 10% = $17,715
Continue this process until you have 5 years worth of results. At this rate of compounding, you’ll find that the account would grow to over 100K in the first 2 years and just over 1 Million by the end of the 4th year. I’m not telling you to expect these results, and I’m not telling you it is easy to achieve them. All I’m trying to illustrate is the true power of compounding as this is a central key to growing your trading account, not unrealistic huge monthly returns.
As you can see, the key to becoming a wealthy trader is not huge monthly gains, but rather it comes from consistently compounding steady gains. If you disagree with what I’ve written out, then you probably need a few more months or years of the market-beating you down before you realize that getting rich quick in the forex market does not exist. When you’re ready to come out of fantasy land, we will be here to help, but until that time there are some $79 EA’s with your name on it (sarcasm included) 🙂
If, however, you have been chasing the get rich quick fantasy and you’re ready to start treating this like a business, then you’re on the right track. What then, can you start doing today to improve your results?
- Reduce your leverage: By understanding that you can achieve your goals with steady, consistent gains, you’ll be less likely to over-leverage. Stick to 2% risk per trade max, and you’re all but certain to see a marked improvement in your mental state while trading. As your risk is small, no one trade is going to hurt you. Knowing this you’re much more likely to stick to your trading plan.
- Reduce the number of trades: Seeing how quickly a 10% gain can compound your account, you’ll be less likely to over-trade. Unrealistic goals in trading can cause you to make poor decisions in order to achieve them. By adjusting your goals, you can adjust your actions.
- Eliminate the ‘Revenge Trade’: I have found that traders are much less like to place random, boredom, and even revenge trades when they keep the long-term perspective in mind. By writing out an account growth schedule and then keeping it on your trading desk as I mention above, you’ll give yourself one more reminder of the rewards of following a rule set and staying disciplined.
6.) Getting Back in the Game – Your Trade Plan
You should only be moving onto step 6 after you have completed steps 1-5. Once you have those completed, then it is time to get back in the markets and start learning again.
If you’ve ever tried to get a loan to start a business, you know that the person or institution providing the funds will request a business plan. I want you to ask yourself a question, and only by being honest will you get any benefit.
- Do you have a written trade plan that you could send me right now?
If you do not have a written trade plan, then you need to do that first! If you walked into a meeting of investors to pitch them your new business without a plan of how you’re going to grow that business, they would either laugh you out of the room or be pissed that you wasted their time. If you don’t have a plan in writing, then you shouldn’t be too surprised by sporadic and/or poor results.
Without a business plan, no bank would ever loan you money. Likewise, without a detailed trading plan, you will not be a profitable trader.
To get a written trade plan finished you first need to settle on a trading strategy that is right for you. Maybe that is the DTFL trading course, and maybe it is another service. Once you have found the strategy and educator you want to learn from the next step is committing to it for at least 3-6 months.
After you have a written trade plan and you start practicing again, you should begin trading on a demo account. Even better than a demo account is using a live account, but only trading with 1 micro lot per trade. This allows you to begin handling the emotions of trading live, while not putting a large sum of money at risk. Only after you have 2-3 months of profitable trading, should you begin to increase your position size.
A simple rule to live by is that if you cannot make money with a demo account or trading 1 micro, then you will not be able to make money with a larger position size. Increasing your position size does not magically make you a better trader, it only ensures you will go broke! This is one of the few aspects of trading that is an absolute rule without exception!
I want you to keep in mind that anything of real value will always be difficult to attain. As an example, gold has a specific gravity of 19.32 which means it’s incredibly dense. Because of this, gold naturally buries itself under all the worthless ground and only stops after hitting bedrock. Why do I bring this up? I bring it up because even in nature, the fact remains that everything of true value will be extremely difficult to attain. Imagine if gold wasn’t very dense and instead it settled on top of the ground? Do you think it would have the same value, of course not!
You need to keep that in mind when it comes to learning to trade forex as well, as the benefits of becoming a profitable trader are massive! Likewise, if the pay off is massive, then the work required to reach that goal will be as well.
Very few people are really dedicated enough to put in the work. They might say they want it, but their work ethic says otherwise. If, however, you are one of the few that is willing to do whatever it takes to become a successful trader then I firmly believe you can achieve that goal. Start by going through the steps I have listed above and make the decision today that you’re going to do whatever it takes to achieve your goal!
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