Motivation in Trading
Think about this: Is making money your true and only motivation why you want to do trading? Or maybe is it rather the case that making money could positively impact you and your family’s lives? Before going live, one should understand the primary motivation of why she/he wants to take this risky yet potentially enriching journey. I
met a guy who destroyed his life and the lives of his family because of amateur nonsystematic trading. He had no critical thinking and risked too much. What happened? He was supposed to build a family house from savings.
But unfortunately, he met a “trading guru” who taught him a “miracle” trading strategy because he lost all the savings during a few months. Then he lost his wife and children’s trust because he told them he would make a fortune. He didn’t. He lost his family.
What did he do wrong? Firstly, he was greedy and had unrealistic expectations. Secondly, he didn’t have the real edge, and he traded a non-verified random strategy. And I hope you won’t make the same mistake, and this Ebook could help you avoid that.
There is only one way how to trade – trade with the edge.
There is a saying: “The money is the only value you can afford to lose.” But I would add “extra money”. Because if you lose your extra money, it won’t threaten the quality of your life. And this is one of the critical things to understand if you want to succeed. Otherwise, you will not follow the strategy and be consistent in hard times of inevitable drawdowns.
You will be very vulnerable. Remember, trading is very hard with real money. Of course, it hurts when losing money, but you can deal with it if the main values in your life won’t be in danger.
Recently, one woman contacted me for advice: She wants to do trading because she is in debt, not in good shape. She tried to take out a loan, make money in trading, pay the debt, and start a new life. She asked me if that is a good idea. My advice is to don’t ever begin with trading unless your financial and life situation is solved. There is no shortcut. Not in life and neither in trading.
Risk, but only with your own capital
For the good quality of your life and, consequently, trading, it is necessary to distinguish between joy and happiness. And I do believe that understanding the real meaning of this distinction is a must. Happiness comes when you make your streak of winning trades. But then it goes away. It will not make you happy for the rest of your life.
You might ask a question: “How do I have happiness on a day to day basis? “Well, you don’t. It is simply impossible. And honestly, I don’t think trading itself will make you happier. I believe that real fulfillment comes from your consistent hard work and learning. And systematic trading is a fantastic area where you can learn knowledge from different areas.
Moreover, it can teach you how to live in probabilities. You can learn better what has potential and what is better to leave. And this can improve your life. Personally, trading also helped me to develop other businesses and improve my relationships with beloved people. It helped me to control my greed better and become more generous. It has set up my mind the correct way.
The truth is that not all the things you will do in trading you will necessarily enjoy, but the question is, do you have a sense that you make progress as a human being? And this is the point: The trading will not make you happier if your only motivation is materialist and fugacious.
Because when you focus on the journey, learning from mistakes, gaining new know-how and insights, the joy with fulfillment will come hand in hand with trading profits.
You have to love trading as a scientific field, as an object to explore. You have to have a clear vision of what you want to reach, thanks to trading.
When I started studying trading, I had a clear inner motivation not to be employed and feel the freedom to do what I want and when I want. I didn’t think about making hundreds of thousands or millions of dollars. I was very sober and stayed on the ground, and that helped me the most, in the beginning, to keep on with trading.
And fortunately, I reached my dream of financial freedom faster than I have ever expected. But it would never come without dedication and education.
Without the motivation to continually improve, trading is not possible. You can’t buy long-lasting happiness in trading
A lot of cheap online marketing created an unrealistic expectation that trading is a fantastic adventure and an easy way to make huge money (it is possible with the systematic approach and the discipline). It is an adventure but with a lot of constraints and uncertainty.
So why write this Ebook? We want to share our best practice with you.
If there were a guaranteed recipe on how to make money in all circumstances, this business would be done by any ambitious person with a desire for financial success sooner or later. It’s no different in trading. Nevertheless, it is no secret that about 90% of traders lose their capital in the markets in the long run.
But what is the long term? Is it one year or ten years? And when someone loses capital, does that mean he/she has lost 20% or 100%? Do you understand where I’m going? Have you thought about what is the measure of the success of your trading?
Hasn’t a “trading” guru with a miraculous strategy set it up for you, promising you tens and hundreds of percent of appreciation a year if you stick to it? I think it is time to land back on the ground and set your expectations right.
Don't believe in shortcuts, fairytale returns and cheap marketing tricks you can see online
Have you already been frustrated that the desired appreciation and the related dream luxury lifestyle did not come? Or are you still at the beginning of your trading, living in the beautiful illusion of fairytale appreciation?
Don’t take me wrong, I don’t want to take your dreams away from you. Dreaming is important. But to set up realistic objectives, it is more critical. Without goals, I would not have achieved success in trading. But you must have realistic goals, both in terms of what you are willing to risk and what average annual appreciation you would like to achieve in the next X years.
You need to learn to protect your capital in the first place – that is, to take systematic steps to minimize the probability of failure and maximize the probability of continued and consistent success.
An essential part of success is to have well-defined objectives. It means your capital risk and your target as your Average Return per year. A realistic expectation plays a crucial role. Amateurs usually target more than 100% return p.a. Then, the reality in their live account is typically a disaster.
Amateurs have this illusional belief from some so-called guru that making hundreds of percent p.a. is not such a big deal. Well, based on my live trading experience, it is realistic to target a two-digit % return p.a.
Still, you have to accept potentially very high drawdowns in a similar range. The more you risk, the bigger the profit potential. This golden rule will never change. But you have to have the edge – the strategy that makes sense. Otherwise, you will only lose.
Set realistic and achievable goals
Ok, now maybe you think like: This guy says it’s impossible because he doesn’t know how to make it. If any individual had consistently made hundreds of percent every year, he/she would be the most successful and the wealthiest trader in the world.
He/she would make the hedge fund and had assets under management in billions of dollars. Have you heard of James Simmons, co-founder of Renaissance Technologies?
His Medallion fund, with systematic trading strategies, is famed for the best record in investing history. Years of success and outsized returns have placed him in a class of his own with his eclipsing fellow legendary investors like Ray Dalio and Warren Buffett. By some estimates, the flagship Medallion Fund has returned 66% annually, or 39% after fees, since 1998. If you don’t know him, google him.
If you want to invest in this fund, I will have to disappoint you. It’s a closed fund available just for employees.
What is admirable is the fact that his fund is trading with billions of dollars. It is a different story to make tens of percent a year with small retail trading accounts. Unnecessarily to add that with small retail trading accounts, it is much easier.
Think critically about trading and compare yourself with the best traders
The successful ones are the ones who can learn from their mistakes. And the most successful are those who can learn from other people’s mistakes.
Mistakes are priceless because they make our experience. And the experience is what moves us forward. I want to share my and clients’ most common mistakes we have made over the years. I am sure it can save you a lot – capital, relationships, and your nerves.
Learn from your mistakes, but don’t repeat them
So who am I to advise you in this way? I don’t want to brag about myself. I’m just an ordinary trader. My story is not anything exceptional. I didn’t turn $5 k into $5 mil. as those gurus are claiming all over the internet.
I was an ordinary boy drowning in countless useless books, watching numerous so-called teachers with no real added value to what they were teaching. It was just pure theory with no real edge.
I’ve spent enormous hours looking at the indicators and trying to see trading signals. Till one day, when I’ve lost almost all of my trading capital because I thought that I finally figured it out and I’ll make a trade of my life! Well, guess what? I didn’t. I wasn’t even close to that. Luckily for me, I didn’t give up, because I simply couldn’t and even more, I didn’t want to.
So, I had my 9 to 5 job. I had my emotional roller-coaster inside me, and I’ve spent all my free time studying, trying to find some edge, trying to find something that will help me make my dream come true – the dream of financial independence.
After sleepless nights trying to find something that would finally work, put me ahead, and give me my sleep back, I got it. I got the goldmine—the gold mine in the form of facts and systems. I got rid of every emotion holding me back, and I started to use a purely systematic approach: no emotions, no fear, no greed.
And don’t get me wrong, I still was greedy, but I started to focus my greed on the right place. And that was it. After the first year of using this systematic approach, I increased my trading portfolio by 72%.
After returning to Prague, where I currently live, I was so excited about this systematic approach that I wanted to share with the world. I started my new career as a teacher and mentor because that’s what I enjoy the most.
Before being a full-time trader, I always wanted to be a professor and share my know-how with people. But as life sometimes happens, not everything went as I planned, so I, luckily for me, didn’t become a professor. Or a full time, academic professor, I mean.
But I still have this desire inside me that I’m trying to fill today, passing my knowledge further. One day, one of my students, a start-up investor, actually liked the methodology that I was teaching so much that he offered me an opportunity to co-found a hedge fund with him. And here’s where the fun began.
In 2015, I fully started to develop the hedge fund with a team of mathematicians, statisticians, programmers, and data scientists. I executed thousands of trades. I traded millions of dollars and tested thousands of different strategies.
And from that five years of experience, now I have more than enough know-how to share it with you. Of course, I am not J. Simmons, but I believe that I have a lot of know-how to share.
If you don’t want to read all I want to share with you article by article, grab our Ultimate Guide To Successful Algorithmic Trading here and read it anytime you want! 12 chapters, 112 pages: all in one place and completely FREE of charge!