Tips That Shaped Me Into a Consistent 6-Figure Investor
What comes into your mind when you think about what a successful trader looks like? What kind of lifestyle do they live?
Do they all own big houses and many cars? Do they all have multiple Rolex watches? Do they have branded items from the top to the bottom of their body? Do they party on a yacht every day? Do they own private jets and are able to go to Japan for lunch, and be back home in Singapore for dinner?
There is actually no real answer to what a successful trader is like. A successful trader can be anyone. He or she could be your next-door neighbour that looks like your average blue shirt collar worker. Mark Zuckerberg wears the same outfit every day. He doesn’t wear branded clothing, nor shower himself with luxurious lifestyle. The same goes for Elon Musk and Jeff Bezos.
The image that came into your mind has to do with the person’s habits and expectations towards life. If you think that successful traders party all day and spend a lot of money to enjoy, that’s your expectations towards life. If you’re suddenly given $10,000,000 right now, the likelihood of you doing all those is high. You will spend on branded items, buy multiple Rolex watches and start partying all day. You will not be able to sustain this kind of lifestyle as the upkeep is high.
Knowing Your End Goal
Many of you want to be profitable. Who don't? But how much is enough? What do you really want? Do you want to live with a monthly expenditure of $20,000? Do you want to live an average lifestyle with a monthly expenditure of $2,000?
Before you even understand your goals, you need to know how to manage your money. I have a financial roadmap which guides you through the basics. You can find the roadmap here.
I'm sure you've heard of lottery winners spending all their winnings within a few months. They are back working in a 9-5 job after spending all the winnings on luxury goods, cars, mansions and travelling. Don't be like them. To be successful, you need to first understand capital preservation. Think about how to grow your money next. If you don't have a plan, you plan to fail.
Knowing your end game numbers help too. If you expect to spend $2,000 a month, getting funded with $100,000 and earning 2% a month will get you to your end goal. If you want to be more comfortable, get funded with $200,000 and earn 1% a month. Once you're funded, it gets easier for you to accumulate more accounts if you're doing things correctly. It took me 3 months to get my first $10,000 account. It took me 2 months to accumulate another $200,000 worth of accounts.
The Power of Trading Psychology
Trading psychology is the foundation upon which successful trading is built. It is the mindset and mental attitude that allows you to make rational decisions in the face of uncertainty and volatility. The ability to manage emotions, such as fear and greed, is paramount in maintaining discipline and sticking to a well-defined risk management plan.
One of the first steps in developing a strong trading psychology is understanding yourself. Each trader has unique personality traits, risk tolerance levels, and trading styles. By recognizing these individual characteristics, you can tailor their risk management strategies to align with your strengths and weaknesses.
Risk management is a fundamental aspect of successful trading. It is the key that unlocks the door to consistent profitability and long-term success in trading. Yet, many of you overlook the importance of risk management and instead focus on finding the perfect strategy or chasing after the next "holy grail" of trading.
The Discipline to Follow the Plan
Discipline is the backbone of effective risk management. It is the ability to follow a well-defined trading plan consistently, even in the face of temptations or external influences. A solid trading plan includes specific rules for trade entry, exit, and position sizing, as well as guidelines for risk management.
Without discipline, you are prone to making impulsive decisions based on emotions or external factors, leading to poor risk management and potentially catastrophic losses. A disciplined trader understands the importance of sticking to the plan, no matter how enticing a seemingly profitable opportunity may appear.
If you think in monetary terms, you are more likely to be affected psychologically compared to think in terms of percentage. If you're trading a $200,000 account, does it sound scary trading with a $2,000 risk or a 1% risk? Our human mind finds it hard to comprehend each trade with a risk of $2,000. Especially if $2,000 amounts to half your month worth of salary.
Start small. All profits, however small they are, contributes to your journey to financial freedom. Below is the profit split I've received since June 2023. They are small. I have yet to receive my actual payout from MFF, but the payouts from TFT are from $50,000 account. These numbers will only go higher as I merge more accounts.
https://www.tradingview.com/x/FOCRowTx/
Implementing Risk Management Strategies
Effective risk management involves a combination of several key strategies. These strategies are designed to protect capital, minimize losses, and maximize profits. Let's explore some of the most important risk management techniques that you should consider.
Position Sizing
Position sizing refers to determining the appropriate amount of capital to allocate to each trade. It is a crucial aspect of risk management as it helps you limit their exposure to any single trade or market. By calculating the ideal position size based on risk tolerance and account size, you will ensure that no single trade has the potential to significantly impact your overall portfolio.
Stop Loss Orders
Stop loss orders are a vital tool in risk management. Placing a stop loss order allows you to define their maximum acceptable loss for each trade. By setting a predetermined level at which to exit a losing trade, you can limit their potential losses and protect their capital. Stop loss orders should be placed at a level that reflects the trader's risk tolerance and the volatility of the market being traded.
Take Profit Targets
In addition to stop loss orders, take profit targets are equally important in risk management. Take profit targets are predetermined levels at which you plan to exit winning trades and secure profits. By setting realistic profit targets based on your trading plan, you can ensure that you capture a portion of their gains and avoid the pitfalls of greed and overtrading.
Diversification
Diversification is a risk management strategy that involves spreading investments across different markets, asset classes, or trading strategies. By diversifying your portfolios, you can reduce their exposure to any single trade, market, or strategy, thereby minimizing the potential impact of adverse price movements. Diversification allows you to benefit from the potential upside of multiple positions while mitigating the risk associated with any individual trade.
I'm currently running 3 different strategies on 3 different accounts. As these strategies are uncorrelated, I spread my risk across different accounts. The likelihood of my overall portfolio going into drawdown is lowered.
Risk-Reward Ratio
The risk-reward ratio is a critical concept in risk management. It refers to the potential profit compared to the potential loss of a trade. A favorable risk-reward ratio ensures that the potential reward outweighs the potential risk, providing you with a statistical edge over time. By identifying trades with a high probability of success and favorable risk-reward ratios, you can increase their chances of long-term profitability.
Traits of Successful Traders
Successful traders possess specific traits that contribute to their ability to effectively manage risk and achieve consistent profitability. Let's explore some of these traits and how they influence risk management.
Patience
Patience is a virtue in trading. Successful traders understand the importance of waiting for high-probability setups and avoiding impulsive trades. They are willing to sit on their hands and patiently wait for the right opportunities to present themselves. By exercising patience, traders can avoid overtrading and reduce the likelihood of taking unnecessary risks.
Discipline
Discipline is the cornerstone of risk management. Successful traders have the discipline to stick to their trading plans, follow their risk management strategies, and avoid emotional decision-making. They understand that deviating from their plans can lead to costly mistakes and erode their edge in the market.
Adaptability
The ability to adapt to changing market conditions is crucial in risk management. Successful traders are flexible and willing to adjust their strategies when market dynamics shift. They understand that no strategy works in all market conditions and are willing to make the necessary adjustments to maintain their edge.
Continuous Learning
Successful traders never stop learning. They are committed to improving their skills, expanding their knowledge, and staying ahead of market trends. They understand that the financial markets are constantly evolving, and staying informed is crucial to effective risk management.
Manage Expectations
Manage your expectations when you’re scaling up, especially when you’re crossing the 6-figure mark. A 1% gain on a $100,000 account is now $1,000. It’s hard to comprehend the amount of money you’re managing. It gets easier to get 5-figure payouts from here onwards. You just need a 5% gain on a $200,000 account, or a 2% gain on a $500,000 account to hit your 5-figure payouts. If you and your family have been in the rat race for all your lives, you will find it hard to believe that you can earn 10x your annual income just through trading.
But always remember, it’s one thing to profit from the market, but another thing to stay consistently profitable. I’ve known traders who had their first payout, only to lose their funded account next. Staying disciplined and following your rules is easy. Maintaining that for 10 years is hard.
Trading is not a get-rich-quick scheme. It requires time, dedication, and continuous learning. By prioritizing risk management and developing the necessary skills and mindset, traders can increase their chances of success in the challenging world of trading.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
Do they all own big houses and many cars? Do they all have multiple Rolex watches? Do they have branded items from the top to the bottom of their body? Do they party on a yacht every day? Do they own private jets and are able to go to Japan for lunch, and be back home in Singapore for dinner?
There is actually no real answer to what a successful trader is like. A successful trader can be anyone. He or she could be your next-door neighbour that looks like your average blue shirt collar worker. Mark Zuckerberg wears the same outfit every day. He doesn’t wear branded clothing, nor shower himself with luxurious lifestyle. The same goes for Elon Musk and Jeff Bezos.
The image that came into your mind has to do with the person’s habits and expectations towards life. If you think that successful traders party all day and spend a lot of money to enjoy, that’s your expectations towards life. If you’re suddenly given $10,000,000 right now, the likelihood of you doing all those is high. You will spend on branded items, buy multiple Rolex watches and start partying all day. You will not be able to sustain this kind of lifestyle as the upkeep is high.
Knowing Your End Goal
Many of you want to be profitable. Who don't? But how much is enough? What do you really want? Do you want to live with a monthly expenditure of $20,000? Do you want to live an average lifestyle with a monthly expenditure of $2,000?
Before you even understand your goals, you need to know how to manage your money. I have a financial roadmap which guides you through the basics. You can find the roadmap here.
I'm sure you've heard of lottery winners spending all their winnings within a few months. They are back working in a 9-5 job after spending all the winnings on luxury goods, cars, mansions and travelling. Don't be like them. To be successful, you need to first understand capital preservation. Think about how to grow your money next. If you don't have a plan, you plan to fail.
Knowing your end game numbers help too. If you expect to spend $2,000 a month, getting funded with $100,000 and earning 2% a month will get you to your end goal. If you want to be more comfortable, get funded with $200,000 and earn 1% a month. Once you're funded, it gets easier for you to accumulate more accounts if you're doing things correctly. It took me 3 months to get my first $10,000 account. It took me 2 months to accumulate another $200,000 worth of accounts.
The Power of Trading Psychology
Trading psychology is the foundation upon which successful trading is built. It is the mindset and mental attitude that allows you to make rational decisions in the face of uncertainty and volatility. The ability to manage emotions, such as fear and greed, is paramount in maintaining discipline and sticking to a well-defined risk management plan.
One of the first steps in developing a strong trading psychology is understanding yourself. Each trader has unique personality traits, risk tolerance levels, and trading styles. By recognizing these individual characteristics, you can tailor their risk management strategies to align with your strengths and weaknesses.
Risk management is a fundamental aspect of successful trading. It is the key that unlocks the door to consistent profitability and long-term success in trading. Yet, many of you overlook the importance of risk management and instead focus on finding the perfect strategy or chasing after the next "holy grail" of trading.
The Discipline to Follow the Plan
Discipline is the backbone of effective risk management. It is the ability to follow a well-defined trading plan consistently, even in the face of temptations or external influences. A solid trading plan includes specific rules for trade entry, exit, and position sizing, as well as guidelines for risk management.
Without discipline, you are prone to making impulsive decisions based on emotions or external factors, leading to poor risk management and potentially catastrophic losses. A disciplined trader understands the importance of sticking to the plan, no matter how enticing a seemingly profitable opportunity may appear.
If you think in monetary terms, you are more likely to be affected psychologically compared to think in terms of percentage. If you're trading a $200,000 account, does it sound scary trading with a $2,000 risk or a 1% risk? Our human mind finds it hard to comprehend each trade with a risk of $2,000. Especially if $2,000 amounts to half your month worth of salary.
Start small. All profits, however small they are, contributes to your journey to financial freedom. Below is the profit split I've received since June 2023. They are small. I have yet to receive my actual payout from MFF, but the payouts from TFT are from $50,000 account. These numbers will only go higher as I merge more accounts.
https://www.tradingview.com/x/FOCRowTx/
Implementing Risk Management Strategies
Effective risk management involves a combination of several key strategies. These strategies are designed to protect capital, minimize losses, and maximize profits. Let's explore some of the most important risk management techniques that you should consider.
Position Sizing
Position sizing refers to determining the appropriate amount of capital to allocate to each trade. It is a crucial aspect of risk management as it helps you limit their exposure to any single trade or market. By calculating the ideal position size based on risk tolerance and account size, you will ensure that no single trade has the potential to significantly impact your overall portfolio.
Stop Loss Orders
Stop loss orders are a vital tool in risk management. Placing a stop loss order allows you to define their maximum acceptable loss for each trade. By setting a predetermined level at which to exit a losing trade, you can limit their potential losses and protect their capital. Stop loss orders should be placed at a level that reflects the trader's risk tolerance and the volatility of the market being traded.
Take Profit Targets
In addition to stop loss orders, take profit targets are equally important in risk management. Take profit targets are predetermined levels at which you plan to exit winning trades and secure profits. By setting realistic profit targets based on your trading plan, you can ensure that you capture a portion of their gains and avoid the pitfalls of greed and overtrading.
Diversification
Diversification is a risk management strategy that involves spreading investments across different markets, asset classes, or trading strategies. By diversifying your portfolios, you can reduce their exposure to any single trade, market, or strategy, thereby minimizing the potential impact of adverse price movements. Diversification allows you to benefit from the potential upside of multiple positions while mitigating the risk associated with any individual trade.
I'm currently running 3 different strategies on 3 different accounts. As these strategies are uncorrelated, I spread my risk across different accounts. The likelihood of my overall portfolio going into drawdown is lowered.
Risk-Reward Ratio
The risk-reward ratio is a critical concept in risk management. It refers to the potential profit compared to the potential loss of a trade. A favorable risk-reward ratio ensures that the potential reward outweighs the potential risk, providing you with a statistical edge over time. By identifying trades with a high probability of success and favorable risk-reward ratios, you can increase their chances of long-term profitability.
Traits of Successful Traders
Successful traders possess specific traits that contribute to their ability to effectively manage risk and achieve consistent profitability. Let's explore some of these traits and how they influence risk management.
Patience
Patience is a virtue in trading. Successful traders understand the importance of waiting for high-probability setups and avoiding impulsive trades. They are willing to sit on their hands and patiently wait for the right opportunities to present themselves. By exercising patience, traders can avoid overtrading and reduce the likelihood of taking unnecessary risks.
Discipline
Discipline is the cornerstone of risk management. Successful traders have the discipline to stick to their trading plans, follow their risk management strategies, and avoid emotional decision-making. They understand that deviating from their plans can lead to costly mistakes and erode their edge in the market.
Adaptability
The ability to adapt to changing market conditions is crucial in risk management. Successful traders are flexible and willing to adjust their strategies when market dynamics shift. They understand that no strategy works in all market conditions and are willing to make the necessary adjustments to maintain their edge.
Continuous Learning
Successful traders never stop learning. They are committed to improving their skills, expanding their knowledge, and staying ahead of market trends. They understand that the financial markets are constantly evolving, and staying informed is crucial to effective risk management.
Manage Expectations
Manage your expectations when you’re scaling up, especially when you’re crossing the 6-figure mark. A 1% gain on a $100,000 account is now $1,000. It’s hard to comprehend the amount of money you’re managing. It gets easier to get 5-figure payouts from here onwards. You just need a 5% gain on a $200,000 account, or a 2% gain on a $500,000 account to hit your 5-figure payouts. If you and your family have been in the rat race for all your lives, you will find it hard to believe that you can earn 10x your annual income just through trading.
But always remember, it’s one thing to profit from the market, but another thing to stay consistently profitable. I’ve known traders who had their first payout, only to lose their funded account next. Staying disciplined and following your rules is easy. Maintaining that for 10 years is hard.
Trading is not a get-rich-quick scheme. It requires time, dedication, and continuous learning. By prioritizing risk management and developing the necessary skills and mindset, traders can increase their chances of success in the challenging world of trading.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
Prop Firm Funded Trader
Find out more about me here: linktr.ee/kt_fx
Find out more about me here: linktr.ee/kt_fx
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