Secrets to Trading Success: Underrated Strategies for Going Full-Time // Ep. 64

In This Episode

• The trading optimization that Walter likes
• The non-trading optimization that Hugh likes
• Why trading only 1% could blow out your trading account
• Why you should question everything

Sometimes it Just Takes a Small Tweak to go Full-Time

It can be easy to get caught up in optimizing your trading strategy, in an attempt to become a full-time trader. But there may be a couple of optimizations that you may not have thought of, that can get you to full-time faster than you think.

Some of our tips are trading related, but other tips are not. Listen in as we share what has worked for us and other traders.

Read the Transcript:

Hugh:    Hi, Walter. What is the most underrated thing that will get you to become a full-time trader that people really don't talk about? I know everybody talks about this trading system; they talk about the psychology but, is there something more basic or maybe more advanced that you would say is super important also?

Walter:    For me, I would say it's probably the way that you approach risk. Because risk has been the thing that is probably, like getting risk wrong and the thing that probably has led to more traders quitting than anything else. It also has led to more traders getting frustrated more than anything else, I would say. Because it takes so long to get a certain you know, to build your account to a certain size where your goals are basically.

So for example, everyone always says risk two percent or risk one percent. Some strategies if you risk one percent you will go broke like that's too much. Some strategies if you can handle it, you can go more than that. Some traders might be comfortable doing something completely different.

Let's say you have a hundred dollar account. And so, in your hundred dollar account you risk ten dollars a trade or fifteen dollars a trade, you know something like that. So let's say in a hundred dollar account you risk fifteen dollars a trade. You might be able to build that up to a thousand dollars rather quickly. It also might blow up the account.

If it blows up the account you say, “Well, it was just a hundred dollars. I'll try again” sort of thing. And then when it gets to a thousand, maybe you decide that instead of risking two percent which would be twenty dollars, you decide, “Well, I am going to risk five percent”. So you are risking fifty dollars a trade.

Again, this is a little bit more than what most people are used to but it could build your account to ten thousand rather quickly. And then, when you get to ten thousand maybe that's when you are looking at two or three percent or something like that. Where it is closer to sort of the normal accepted level that everyone talks about.

So that's a way that you can kind of get some fast traction. I know a trader that did that. He always started with a really small account and as soon as he got to about a hundred grand he would cash out and start all over again. So even if he only started with five grand, he would just work it up to a hundred and then once he hit broke, a hundred, he knew that something in his head would mess him up. So he would have to cancel it out and do it again.

Sometimes you start with that little two thousand dollar or whatever, it blows up and you are like, “Well, that's all right. I made a hundred and twelve last time around you know, I will try another two thousand account” or whatever. So that is another thing. You can do things like that. You do not have to risk two percent of a one thousand dollar account you know like things like that.

There's a lot of things like in society that we just do not question you know we do not question it. It is a fact and that is one of the things in trading. It is the same thing. It is like everyone sort of just says two percent, two percent or one percent, one percent. But I don't know that for some traders that's too much. Depending on their system parameters and so for other traders that's never going to get them where they want to go.

Hugh:    That's true.

Hugh:    Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.

At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.

So, if you're interested in that, be sure to enter after this podcast is over. Alright, back to the episode.

Hugh:    From my perspective, one of the really underrated things is lowering your expenses every month. I think you know the faster you or the lower your expenses, the faster you can cover it with your trading. Maybe you buy a used car and pay with cash instead of having a loan or whatever. Same thing with your housing situation.

I think that is a really underrated thing that most people don't look at. Even if you do not want to become a trader later on or you just want to have a business or something like that I think that really is beneficial for that also. So something to consider.

Walter:    That is so true. That is why there are a lot of traders in places like Thailand and Indonesia and stuff because well one, you can live wherever you want. And two, it just naturally cuts that.

Actually, I think those are really good time zones to live in too like Bali and Thailand. Over in that part of the world it's really cool because London sessions start like in your afternoon you know.

In the evening you get New York. So it's kind of like the really heavy volume for Forex traders. Or, even if you're trading like the New York Stock Exchange still, that's kind of like the early evening when that fires up for you. It depends on the time of year but you could easily catch the opening of the New York stock Exchange if you lived in Thailand.

Absolutely and for people in your part of the world it would be you know, Mexico or Costa Rica or places like that, where there's a lot of expats living there and it's easy to reduce your expenses.

Hugh:    I think Thailand was from what I heard what five, six hundred bucks and you could get away with a month or something and still live pretty well.

Walter:    I think it depends on where you live.

Hugh:    Yes.

Walter:    My wife lived there. I think we went back maybe, would have been seven years ago. We went there. She was amazed at how much more expensive it was. We went to the tourist island Koh Samui which is really touristy. So I think at the time they were getting a lot of Russian and Chinese; they'd had kind of discovered the island.

So you know prices had gone way up when she was there. But look, if you are in Bangkok or something, you could definitely find a cheap or just slightly off the beaten path you know. I met some Australians over there that were kind of doing that, they're like, “Yeah, we don't live in Koh Samui anymore. It's too expensive” or whatever.

So what you're saying is definitely doable. There's beautiful places around. It is the same with Bali you know or Indonesia. There's areas of Indonesia where you can spend a lot of money if you want to or you can just go slightly off you know. I think Bali still has tons of places there that are cheap. If you go off Bali somewhere else it's definitely cheap.

Hugh:    I've seen some guys with those villas and I don't know what they're paying but it was kind of ridiculous like two thousand a month or something.

Walter:    Totally, we rented a place there and it was like you have a driver, a chef, a pool like it was my family with another family you know. It was like we were in heaven you know. The driver takes the girls to go shopping, the driver takes me to go surfing. It was just amazing. It was so cool.

I can see where you know it could be tempting. It depends on where you are at in your life. If you are in a situation where it is easy for you to pull up stakes and go. You are definitely right, that is an overlooked thing for a lot of traders. It is thinking that you have to make a certain amount of money to become a full-time trader.

Obviously, you want to have some money saved and set aside and all that but the other part of that is you also want to look at, can I reduce my expenses so that you know it's easier for me to get to that full-time level. I would always say to have six months at least though.

If I was working a job and trying to trade on the side and I wanted the trading to take over my job income, I would definitely want to have six months. Just in case I have expenses that come up or a nasty draw down for a couple months. You need that little cushion I think.

Hugh:    It never goes as well as you think, right?

Walter:    Yeah, it's never as good as a Forex Tester.

Hugh:    Exactly. All right, cool. Thanks, Walter.

Walter:    See you!

Hugh:    All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.

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