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This article aims to share the crucial lessons I learned on my trading journey, which transformed my life. If you’re starting trading, you might rely on retail trading concepts like support and resistance levels, trend lines, and chart patterns.
However, these methods often mislead traders. Retail trading strategies can act as traps, baiting you into the market only for your positions to be reversed by smarter money. The key turning point in my journey was abandoning these retail concepts.
Instead, I focused on understanding market structures, institutional supply and demand, and liquidity concepts. These three fundamental elements are crucial for profitable trading, and they are the core principles I teach my students in the 1% Club.
The Importance of Market Understanding
Understanding how the market truly operates is vital. It’s not about chart patterns but comprehending order flow, supply and demand, and identifying where smart money enters and exits the market.
Retail traders, like us, can’t move markets; we are small players. But by learning to trade like the market movers, you can gain an edge.
Focus on Risk-to-Reward Ratio
A crucial lesson I wish I knew earlier is focusing on the risk-to-reward ratio rather than just the money. Social media often highlights traders flaunting their profits, which can be misleading.
Many over-leverage their accounts, risking significant losses. Instead, by concentrating on the R multiple (risk-to-reward ratio), you detach from the monetary outcome and focus on the process.
When you prioritize the process, you refine your trading strategies, improve your market analysis, and enhance your entries and exits. This shift in mindset leads to better trading outcomes.
It’s essential to treat every trade as an intelligent risk-to-reward decision, ensuring that the potential rewards justify the risks.
Detachment from Money
Detaching from the money and focusing on the process was a game-changer for me. This mindset shift allows you to trade with precision and clarity, ultimately leading to consistent profitability.
Whether you’re up $10,000 or down $10,000, maintaining a steady, unemotional approach is crucial.
Perseverance Through Trials
Your journey won’t be easy. I lost over $10,000 in my first year and blew multiple accounts. But perseverance, continuous learning, and refining my strategies were key.
Whether you’re a beginner or an advanced trader looking to elevate your skills, understanding that everyone makes mistakes is crucial. It’s about learning from those mistakes and persisting until you find success.
Conclusion
Your trading journey from rags to riches won’t be straightforward. It involves overcoming numerous challenges, shifting your focus from retail concepts to market fundamentals, and prioritizing risk management. By applying these insights, you can guide yourself towards profitability faster than I achieved it.
If you apply these principles, you can accelerate your path to success in trading. Remember, it’s not just about making money but understanding the market, focusing on the process, and maintaining discipline and patience.