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Developing Traits & Thoughts for Successful Trend Following TrendFollowingMentor.com By Andrew Abraham Andrew@TrendfollowingMentor.com .
pain and failure! You have a choice in which you can trade for yourself or you can invest with money managers. I have been trend following since 1994 and have been investing with money managers who approach risk as I do since 1994. “Trading system” or worse…”Trading Robot”! Once you start learning and focusing on how to think as a successful trader. They just buy and sell on gut. I actually do both in order to compound money. They have no concept of how much to buy or sell. Believe it or not attitude and goals are much more important than your trading methodology. that you either do not have the time or fortitude to trade for yourself. . you will learn how to have the proper attitude when investing with money managers. I have compounded money over the years not because that I am a great trader but. which will match your personality and risk tolerances.Thoughts for Successful Trading The vast majority of traders do not have a plan. They do not know when to get out with a profit or exit with a loss! This all leads to frustration. you will learn with Trendfollowingmentor. you are light years ahead of the vast majority. If you decide.com how to develop your trading plan. More importantly we will work with you to develop your winning trader’s attitudes. because of my attitude and how I approach risk. If you want to trade for yourself. The vast majority of traders are unwilling to even hear about the psychology of trading!!! Just give me that “Secret indicator”. Important aspects of being a successful trader is implementing winning thought patterns & following goals.
I am very serious. They love the eye candy that some trading platforms offer. You really have to make a choice. On this chart I am constantly reminded that there are always periods of drawdowns and long periods in which I do not make money. You realize you must trade with stops. I have a wife. I have a very large chart on my wall. I am focused on compounding.Learning and focusing on being a successful consistent trader means: Realizing that any trade does not have to work That any trade has a 50/50 chance of working That anything can happen. All the flashing lights of the platforms are enticing. I speak to many traders. You realize you must try to keep the inevitable losses small. two daughters and a son. Mine is very simple. I need to support them and my goal is to compound money over very long periods of time. When focusing on compounding it puts many of the psychological issues are put in perspective and focus is sharpened. I am sure you realize at this point more than 90% of all traders fail. One of my proverbial questions is why are you trading? Another question is what are you goals? My next question is do you know your compounded annual rate over the last 10 years? If you do not know where you are. Do you want to be part of the 90% who fail and who seek to be entertained by the “Fun” of the markets? Yes. If you really want to succeed with your trading. Compounding of money is the sole goal. how do you know where you are going? Initially I was shocked to learn people look at trading as entertainment. However . You realize when a trade does work you must be patient and follow your exact trading plan. you need to have the correct reasons for trading. Because of these simple 3 points you realize you must trade with a complete trading plan with all potential outcomes pre planned.
When everything is already thought out with a plan there is no need for fear. Compounding is the Holy Grail. This new equity peak is followed by a drawdown. It is all the compounding and following a complete trading plan with every potential outcome thought out ahead of time.It puts everything into perspective When truly internalizing this chart you realize that trading is a marathon and a lifetime strategy that can create immense wealth. When you realize that trading is a lifetime strategy anyone trade means absolutely nothing. You have accepted the uncertainty of a trade.invariably I stumble into some very profitable trades because I have followed my trading plan and I encounter a new equity peak. So what is to fear? . You are taking small risk percentages of your account size bets on trades. I have accepted the risks and inevitable losses. Study this chart. This is why trading is a marathon. You know that most of the trades will not work. Any one month means nothing. Thinking in terms of compounding with a complete plan alleviates the fear & greed that plague traders. Actually anyone year means nothing.
He had a plan to compound money that created him enormous wealth. losing periods and even long periods of not making money. He did not have fear or greed. disciplined and focused. You are trading not for entertainment but rather to compound money. Even at the mildest return of 5% my children will be millionaires.Nothing! Compounding is the first aspect. This was a program of compound your way to wealth by proceeding through periods of drawdowns. You need a complete trading plan based on strong risk management and through this you will develop the proper trading psychology.448.000 which compounded to $18 million dollars over the years.000. This is one of the points to internalize that you must have stops in the market to protect yourself.163.000 which today it is worth approx. I have seen it personally with my mentor a dentist. It gives you a perspective. He had the right attitude. This was not a get rich quick investment. This investor knew how to think. Success in trading comes hand in hand. He was patient. Another example of this wealth creation was in Marhedge Institutional Investor in which they spoke about an investor who allocated to a commodity trading advisor $300. It was almost boring. I have been teaching my children since they have been 13 how to compound. At 10% they will have $30.000. . He did not quit at the first drawdown or ask how much you made last month. Anything can and will happen. He started in 1979 with $200. (Email me if you like me to send you the article) He accepted the certainty of total uncertainty! Think about this a second time. He always had countless trades that did not work (lost money) and long periods in which he did not make any money. He did the same thing over and over again. He understood there will be losses and long periods of elusive profits. Shocking isn’t it? This chart is really possible. He succeeded because he kept the losses small and followed his trading plan. $18. We are only dealing with uncertainty.
This is hard to digest in the beginning. I have accepted I will easily lose 1% on this trade.You Just Follow Your Trading Plan You see the signal and you put the trade on. If you have not accepted the financial risk or uncertainty you should not be trading whatsoever. I also I know I can stumble on to a big trade. and must take RESPONSIBILITY for your trading YOU are responsible for your trading results. You just follow your trading plan and have accepted & embraced the risks. You have seen this signal before. You will learn through consistency it all boils down to a probabilities game. you know just because you put the trade on. You are the casino and you have an edge. With Consistency you learn that… You must be ACCOUNTABLE for your trading decisions and actions. I know that I can have series of trades not work. You know that the trade does not have to work. There is nothing left to think about. no one else. Consistency produces uniform trading profits over time. It is no big deal. it does not have to work (Be profitable). Consistency is achieved with an exact Trading Plan. I am willing to risk a small percentage (1%) of my trading equity to see if this trade will work. it is familiar. Successful Trend Followers strive to be consistent. There is no fear or greed or anxiety. I have accepted the uncertainty and the financial risk. how much this trade will cost me to see if it will work. . so why force it? You know how much you are risking on a trade. you have an exact trading plan. Another interesting fact that makes trend following so hard is that you can follow the plan exactly and lose money. I say to myself.
you are destined to fail. you need to believe in yourself. After the trade evaluate it first yourself and then with me if you are enrolled in my one on one mentoring programs. believe in the robust methodology I am teaching you. . We will work together to “try” to prevent this in my home study course or one on one mentoring. Maintain a trade journal and evaluate yourself. not your brokers nor me! You must face the fact that you will face constant losses. and believe in the potential of Compounding Money over time.There is no one to blame. If you do so. This is the reality in trading. It will not be easy when you experience a string of losses one after another. however you will need to dust yourself off. I strongly suggest using it for every trade & then reviewing it. Be honest with yourself. You do not want to be one of them. You cannot abandon the strategy and seek out another trading idea. I do not want you to be one of them. you need to take that next trade. Evaluate yourself. Not the markets. You already know that most traders fail and are not successful.
It requires commitment. and effort on your part. It is a process. Do not think you will just buy this course and immediately start counting your millions. . Admit a mistake. Be Committed! Trading success will not happen overnight.Did you follow the exact plan? Did you overtrade this week? Did you let your emotions get the best of you? Did you let fear or greed overcome you? If you made mistakes –Learn from them. You need to internalize exactly the tenants I am teaching. learn from it. Just think how many years doctors study before they operate on a patient. time. and move on. I have yet to meet a perfect person! Take responsibility for your actions and your decisions. Think how many years lawyers study before they represent you in court.
On the first chart small %loses and small % profits and one big %profit. There are rare big profits. We must avoid (as best as we can the big loses) and let the probabilities work over time. Notice in the charts below. This is why the losses need to be kept small. On the second chart however there were many losses around 1% and one time -1.It is imperative for your long term success to always cut loses short and take low risk trades. These big rare profits more than make up for ALL the losses you will incur. small loses. The fact that you will be taking low risk bets and keeping loses manageable are the cornerstone of successful trend following. You will realize when you start trend following. There are big loses.9% due to a gap or limit move. There are only four possibilities when we trade. if you haven’t already. that many trades simply do not work. You need to have the patience to let them work. small profits and rare big winners. We can try to limit our loses but sometimes they are greater than we anticipate. . This is reality.
if you haven’t already. The fact that you will be .In order to succeed over time with trend following you will need to internalize that you will have numerous losses and your job is to keep them small by putting stops immediately in the market once you enter. It is imperative for your long term success to always cut loses short and take low risk trades. that many trades simply do not work. You will realize when you start trend following.
. When you risk 3% you have approximately 33 bites out of the apple. I have repeatedly stated any trade does not have to work as well as most trades will not work.taking low risk bets and keeping loses manageable are the cornerstone of successful trend following. Think of it as bites out of the apple. When you risk 1% of your account on a trade you can have many losses and stay in the marathon of trading. The more bites out of the apple the longer your trading longevity is. You have an exact plan to follow trades that are working as well as an exact plan to exit quickly trades that are not working. You need to learn not to risk too much on a trade and accept the fact you will have many many small losses. You have 100 bites when you risk 1%. Simply detach yourself. There is no second guessing or debating. When you are trend following successfully you trade only in the direction of the trend. There is no sugar coating it here. I want you to succeed. see what is happening and follow the exact plan. When you risk 2% on a trade you have 50 bites out of the apple. You follow the trend! Letting profits run without any fear or greed. You do not let your opinions get in the way.
4. You will learn from my manual & my mentoring 1. You will immediately take losses when trades do not work out without a second thought. You will need to follow it exactly in order to succeed 2.com bubble or the 2008 October stock market meltdown. You will have the proper mindset to overcome all the challenges. You will not be in areas that are illiquid such as the housing bubble or on the wrong side of major trends such as the dot. 6.You will have an exact plan in which at every point in time you know exactly what you should be doing. You will take low risk bets with the understanding that these trades do not have to work. drawdowns and durations of drawdowns. We will utilize this exact plan because … . 3. You will learn the proper mindset of patience and discipline. When you are letting your profits run you will be exposed to profitable opportunities due to trending markets. You will have an exact plan. You will allow profits to run when trades do work & not cut them short out of fear or boredom. 5.
There’s more To Trading than Just Having a Strategy There are countless trading strategies for you to choose from. We are dealing in uncertainty. The most important aspect of a trading strategy is that it matches your personality and risk thresholds. You cannot avoid or control these. We can never be certain of anything! The reality is that you will experience gaps in price that go against you as well days that are limit up or down. In trading magazines as well as web sites that list trading system results they all seem to highlight “the trading strategy of the month”.There is a drawdown out there that can make you stop trend following. . along with countless websites that offer trading strategies for free. We can try to limit our losses but gaps and limit moves are not something we can control. You can find hundreds of books with different trading strategies. We attempt to manage the inherent risks.
With all of these trading strategies available why isn’t everyone rich? The sad reality is that most traders fail. There are estimates that only 3-5% of all traders are successful over time. Many traders mistakenly believe that trading will result in a consistently rising account balance. experience and guidance can make you the trader you want to be. The problem is that strategies Do NOT make a good trader.If it were so simple to buy one of these systems you would have retirement in a box. But you already know that losses are a part of our business as traders. There’s more to trading that just having a strategy. like having an ATM in their office. Only time. you need to know what to expect when trading. You are your biggest enemy because of your emotions Fear & Greed! In order to develop the right mindset. knowledge. There will be some days and weeks when you’re .
That is why I commonly say Trend Following is a marathon. If they do not trend I will not make any money. it is meaningless. if there is fish I believe I stand a good chance to catch them. The reality is. they start looking for another. so again. It becomes a vicious cycle.trading exceeds your expectations. or start trading a different strategy. Too many traders and even investors in traders focus on shortterm results and lose their perspective. While the trading strategy they just abandoned is recovering from the drawdown. I like the analogy. It’s essential that you maintain a long-term perspective. . They do not have to do anything. I am asked all the time how did you do last month or last year. but more likely there will be periods when your trading results are far worse than you expected. If I had a great month or year does that mean I will have a great month or year following? Probably not! I am at the mercy of the markets trending. too many traders give up and start looking for. the new trading strategy may result in yet more losses. If there is no fish…probably going to eat pasta that day? After experiencing a loss or a bad week.
Truthfully it might not be. As I stated in the onset of this study guide. You have to believe that overtime you stand the potential to grind out profits. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. This manual contains references to hypothetical trading results. Basically you can fly the plane yourself or you can be a passenger. It might too boring or too slow. you will quit at the first steep draw down. you can trade for yourself or you can invest with money managers. In both cases your goal is to compound money and know at all times what your compounded annual rate of return is. I promise you…there is a draw down out there that can stop anyone from trading.You need to be convinced that the Trend Following is right for you. . If you do not really believe or internalize this.
IN FACT. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. SOME OF WHICH ARE DESCRIBED BELOW. THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS.HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS. FOR EXAMPLE. IN ADDITION. ALL TRADING DECISIONS ARE SOLELY YOUR RESPONSIBILITY. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. . HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK. AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
.** THE MATERIAL IS INTENDED FOR EDUCATIONAL PURPOSES ONLY.