Trading — The End to My Competition

The Drive — Competition

Maybe as traders we resonate best with Daniel Plainview from the 2007 movie There Will Be Blood.

In the movie — set in the early twentieth century — Daniel, an aspiring oil man, struggles with his own humanity while striving to feed the unquenchable hunger to succeed; and will do whatever necessary to satisfy it. I won’t spoil the rest in-case you haven't seen it, but this drive is something I suspect many have in common.

We feel the burn, the need to separate ourselves from the pack, to abide by our own rules and make an ally of money. It’s more than a desire, it’s a thirst, a demand.

The Plan — Trading Futures

In 2006 I was new to investing, and I had finally gathered enough money working at a web design firm to make a move. The coming year would bring the largest financial collapse since the great depression, and I had just invested in Canadian mutual funds.

It only took losing 30% of my investment to realize that if there were profits to be made, I wouldn’t be making them with the bank’s local portfolio manager.

My trading setup — 2x27in 2560x1440 monitors

Today, I actively day trade a personal futures account, my returns haven’t been outstanding, but I can hold my head above water.

Having journeyed through Forex, stocks, and finally to futures; I can say for certain that for me, the futures market offers exactly what an aspiring retail trader needs to get started. Very little slippage, lots of volume, plenty of volatility, discount brokerages and when compared to stocks — the market couldn’t be simpler.

But hold on! “How can the average retail trader compete with institutional traders?”

It’s easy, you don’t have to.

With instruments like the E-mini S&P 500(ES), Crude Oil(CL), or the Nasdaq(NQ), volume and swings are so great that there’s plenty of ticks for everyone. You don’t need to take much out of the market to meet your goals.

Shut up and manage your risk.

via dukacopy

What if I told you that you only needed to be right 35% of the time to be profitable?

It’s true, the risk of ruin chart on the left shows that managing a good risk to reward ratio offers the flexibility needed to be successful in the market.

This is where trading your plan, trade management, and consistency matters. Managing risk is vastly more important than picking the top or bottom.

The goal is to trade three hours a day, practice proper risk management and build a steady compounding income. Not to get rich, but to create wealth and take control.

In later posts I’ll talk about my own strategy, tools and methods for taking ticks out of the markets every morning.

“I’m finished!”

Check out my last post Money — The Elephant in the Room, where we dove into the stigma of money and the ignorance that surrounds it.

Del the Trader is an active futures trader and part-time scribbler on the topics of finance, business, and investing. Follow me on Twitter.