It's true that someone making 2 points every day can become an incredibly profitable trader.  Nobody is doubting that on its initial face value.  If you can make 2 points per day with one contract you're doing fine but if you can make 2 points per day every day with 10 contracts you're making a very substantial income and there's no reason you can't ramp up the position size from there.  In the Emini S&P 500 a trader can regularly trade 20, 50 or even more contracts with ease.

The issue is that when our focus narrows to the outcome of a single day or even the outcome of a single trade it can actually make long-term profitability that much more difficult to achieve.  Let's take a look at why that can be the case.

Not Every Trading Day is the Same

Making just a couple points while day trading Emini S&P 500 futures isn't actually all that difficult.  Often you can pull that kind of profit out in a half hour or less.   The difficulty is in actually keeping it and, more importantly, regularly exceeding it to balance out those days with less than stellar results.

The reality of trading is that every day is different and some days are certainly better than others.  There's plenty of days where you can make a couple of points quickly but there are some that start slow with limited action where it takes a bit more time to find the trades that fit your trading plan or other days where the market enters into a whipsaw period that can cause a loss or two.

While veteran traders who are able to trade the full morning can realistically make profit nearly every day in spite of these conditions there are those who have a more limited trading window or market novices that will have break-even or losing days (though such losses should be kept small thanks to firm limits on overall risk).

Due to this it's important to realize two things.  First, that a trader should generally have a longer term outlook on their trading.  If you focus on "making just 2 points per day" it tends to put a lot of emotional weight into the outcome of every trade.  Suddenly every trade carries more importance and the emotional burden on a trader can significantly increase thanks to just a single trade possibly meaning daily success or failure.  This extra emotion added to the trading process rarely leads to more profitable outcomes.

As traders we must understand that our trading edge needs some time to play out even if our overall trading expectancy is very strong.  The outcome of a single trade or even a single day doesn't determine much.  What matters is following our plan, taking good trades that fit our rules, and letting our edge play out over a larger sample of trades.  This is why I have the day traders in the STA Training Program focus on weekly and monthly results while considering their edge over samples of at least 20 trades.

Second, outlier trading days that offer far more profit potential than the average are essentially the "keys to the castle" when it comes to extreme profitability.  You can still be profitable without them but taking advantage of the one or two days with high potential during the week often means the difference between decent weekly results and exceptional ones.

You can do all right by setting an artificial 2 point limit on your daily profit but some days offer far, far more.  Take Thursday for example, a day that had numerous high quality market swings and plenty of profit potential as you can see in my charts.  If you only came out of a day like that with a tiny 2 point profit you're severely limiting your overall profitability and potential!

Keep Playing When The Deck is Stacked in Your Favor

This is why I will always continue to trade for longer than my normal 2 hours or so on a given day if the market is moving exceedingly well and trading outcomes are highly predictable.  It's not about being greedy or trying to hit some specific dollar figure for the day - it's about taking one good trade after another and continuing to do so if the market is offering the opportunity.

There's plenty of days where I might just trade for an hour to pick up some points and call it a day if the market isn't moving particularly well.  There are times when other activities call me away after only a short period of trading.  However, when the market is moving well, the setups are excellent, and the trading outcomes are consistently in your favor then it's usually best to trade until those conditions change.

Sure, I could have had my 2 points after the first three trades on Thursday and called it a day in about 15 minutes but look at all the potential opportunities I would have missed on a day of exceptional price movement.  Considering it turned out to be the most profitable day of the year so far for myself and many STA traders it's a good thing we didn't pack things in!

If the market is doing its part to put the numbers firmly in your favor then don't let the opportunity pass without taking advantage - strike while the iron is hot!

The post Strike While The Iron is Hot appeared first on Samurai Trading Academy.

For many the pursuit of trading at an elite level is all about realizing "The Dream".  What that means is different for each person but it's usually about finding some kind of fulfillment that is lacking in their current work or profession.

For some it's the freedom of not having a boss or a set work schedule, for others it's having the flexibility to work from home and spend more time with the family, while a handful see trading as an opportunity to travel the world and take their work with them wherever they go.  Of course, many people also find themselves drawn to trading simply for the financial reward as the possibilities are near limitless with skill and consistency.

The potential for total financial and career freedom as a professional trader is just as compelling for aspiring traders now as it was for me well over a decade ago. While it's absolutely possible to achieve those goals it's also important to realize that the path to become a consistently profitable full time trader will not be an easy one and has its share of challenges to navigate.  It's essential that you're properly prepared for the task ahead.

There's No Free Lunch

Becoming a full time trader isn't about getting rich quick or taking shortcuts to find the easy way to success, even if that's initially something that draws many to the profession.  If "easy money" in just days or weeks is your goal or you don't want to put in the effort and time required to develop a new skill then learning to trade probably isn't the best fit for you  Nobody becomes proficient at playing a musical instrument or competing in a new sport overnight, and trading is no different.

Like most professions, trading rewards those who work hard and have a vision for what they want to achieve.  It offers near limitless potential to those traders that are able to identify their strengths and reinforce them, that can confront and learn from their mistakes, and that have the humility to understand that there is always room to grow and improve both professionally and personally.

Having known a lot of aspiring traders over the years I can say with certainty that the trading world is very, very effective at weeding out those who aren't serious about their own self-improvement and their ongoing skill development as traders.  Dabblers need not apply.

For those who are sufficiently motivated and determined to succeed, the path to becoming a trader is about having a clear development plan and being focused enough to keep pushing forward until you reach your trading goals.

Personal and Professional Development as a Trader

Becoming a professional trader is a challenging task, as most things worth doing are, but it's possible to navigate around many of the pitfalls of trader development through a combination of good planning, focus, and by thoroughly educating yourself on the markets before putting your account on the line.  There will be inevitable challenges along the way but building your skills as a trader is really no different than developing any other skill.

There can be minor setbacks, there will be plateaus at times, but there will also be periods of incredible growth and profitability as each new level of development as a trader is achieved.   If you can remain focused and stay on the path other professional traders have taken then it won't be long before you can look to transition into full time trading yourself.

So given that there's no easy path without commitment and focus, the question for those aspiring to be full time traders is "what will make the effort worthwhile?"  If you're like me then much of the passion for this business simply comes from always having fresh challenges and being able to continually learn and grow.  Trading the markets is partially a puzzle to be solved but also an incredible test of self-discipline and trust in your own plan.  Being able to come through those challenges successfully can give an incredible amount of satisfaction on its own.  The profits are almost a bonus!

For many aspiring traders the benefits are all about having professional freedom.  This might mean being able to work for only an hour or two in the mornings to spend time with the family in the afternoons.  Or being able to take Mondays off every week so you can focus on other projects or hobbies (my preferred approach).  It can even just be having the flexibility to escape for the summer and take some time off without having to plan your schedule around it.  You're the boss so it's up to you.

Others take their career flexibility to another level by taking their work with them as they travel around the world, as anywhere that you can find an internet connection for your laptop instantly becomes your mobile trading office.  While we are now transitioning into a much more connected and online working world, the freedom of trading is still something few other professions offer.

Becoming a Full Time Trader

Whatever your ultimate trading goals may be, it's the journey along the way that truly matters.  In order to make sure you survive where others have failed it's vital that you stack the odds in your favor by taking the best possible approach.  While the path to achieving your trading goals is not a straight line and will see ups and downs along the way, there are a number of key elements that can make the journey far smoother.

There are clear differences between the approach of those who are new to the markets and those who are consistently profitable professional traders so it's a good idea to emulate those who have come before and have successfully become the type of trader you want to be.

Setting Realistic Expectations

This is the most common trap out there for aspiring traders and devious marketers of trading programs know it.  They promise 1000% returns every week, $10,000 per day, and millions in your first year.  While there is nothing in the trading game that is truly impossible to achieve (sometimes through skill but occasionally through pure dumb luck as well), these attention grabbing claims are usually very unrealistic for the total market newcomer.

These poorly aligned expectations encourage traders to take on too much risk too early in their search for huge, instant profits.  The resulting combination of greed and anxiety often completely destroys a trader's efforts by leading them into poor trading decisions.  They simply don't have the experience, confidence in their trading edge or emotional tools to deal with taking on that kind of risk so soon.

The market veteran no longer thinks in terms of potential profits, but instead prefers to focus on risk and the proper execution of their plan.  They know if they control these aspects of their trading then the profits will naturally result, so it's best to focus their efforts there.  They don't over-leverage their positions or take trades outside their plan because they are know that keeping their risk manageable and building consistency is what will bring them better results over the long term.

Becoming a full time trader is similar to developing any other skill - it takes time, effort and determination to reach your goals.  If you are willing to apply yourself to a set path that focuses your trading development and you stick to it, you will reach your long-term goals.  There will be good weeks and difficult weeks, but over time your consistency will improve until you are the type of trader you originally set out to be.

Stick to the Trading Plan

It's vital that when you start trading that you have a clearly defined plan.  This means having a trading system you are confident in, but also the focus and determination to follow it and stick to your rules.

You need to know the setups you're looking for, how you're going to get yourself into those trades, and what you're going to do if price moves in your favor or against you.  While having some flexibility is useful for experienced traders when managing trades there is really no excuse for taking a trade with no real plan at all and risking unnecessary loss.

It's easy for novice traders to let their emotions get in the way of their trading which leads to losses that are too large and wins that are far too small.  By keeping your discipline and following a plan with well-defined rules you will be able to counter some of these emotions and build your confidence as a trader.  Confidence is a vital element to long-term trading success, and without structure to your trading it will be extremely difficult to develop.

Honestly Review Your Performance

This is a crucial element of trading development that is far too often neglected.  If you don't take the time to thoroughly review your trading results it's extremely unlikely that you make large leaps forward in future weeks and months.

One reason that many market newcomers don't fully review their results is because they are embarrassed to confront their losses.  They feel that somehow a single losing trade is a reflection on their ability as a trader, their intelligence or even their own self-worth.

A professional trader knows this couldn't be further from the truth.  Losses happen to all traders, but what separates those who make a profession out of trading and those who don't is that the consistent full time trader carefully analyzes all their results and adapts as needed.  They embrace their losses if they fit within their trading plan and were good trades than simply didn't work out.  If those losing trades were poor decisions or errors upon review, then they see them as opportunities for growth and improvement as a trader.

Master Your Trading Edge

Another all too common trait of novice traders is something called "system hopping".  Many new traders have an extremely narrow focus when looking at their results and the first time they have a small string of losses they suddenly jump ship to another trading system, looking for the new Holy Grail of trading that will never have a losing trade again.

Of course, this perfect trading system doesn't exist which means that this patterns repeats itself over and over.  Since the trader is jumping to something new at the first sign of trouble they are essentially always moving to a new trading approach when their results are hitting a new low point.  They go from one low to another and eventually this leads to a complete account implosion.

The experienced trader knows that a single trade or a single day is unimportant in the big picture.  They take a broader approach, understanding that they need to look at a larger sample of trades if they want something that is statistically significant.

They know that having a positive trading expectancy over those larger samples is the way forward.  That knowledge gives them confidence to stick to their plan and to trade their setups even when they have a difficult set of trades or a day or two that doesn't go their way.

Through a combination of  a solid trading plan, a well-tested system and a thorough trading education (through self-study, experience, books, courses, etc.) they have the confidence to stick to their methods and allow their trading edge to come through.

The Importance of Money Management

Many aspiring traders stumble on their path to becoming a professional and far too often it is due to poor money management.  Money management is a topic that deserves a few articles on its own, but suffice to say that it is a crucial part of any trader's plan and without well thought out rules to define your trading risk you will only set yourself up for trouble.

The professional, full time trader knows that managing their risk is the most important element to their success.  They understand that making money can be easy at times but recovering from a large draw-down of their account is very hard.

For this reason they keep their maximum risk on any trade within their personal comfort zone and focus on trading opportunities where their reward to risk ratio is high.  This allows them to  thrive over the long term in their day trading career.

While I personally think it's best to keep risk within 1-2% of a trader's account on any one trade, I've found that many longer-term professionals actually risk far lower than that as their account size increases.  In short, as they become more successful they focus much more on limiting their draw-downs than on maximizing their potential profits.

The STA Development Philosophy

A lot has changed in the world since I started Samurai Trading Academy years ago but some things remain the same.  There's still plenty of profit opportunities to be found but it's still difficult to navigate the trading world as there's plenty of misinformation online as well.

Especially in recent years the rise of the "YouTuber" seems to have only added to the issue, as there's dozens of channels out there telling you how to trade things like MACD/EMA crosses or some other indicator combination, but precious few that actually share any real trades or discuss the difficulties of entering and managing trades in real-time.  If you want to learn the basics of technical analysis there's some amazing resources but if you want real discussion on breaking down charts and managing trades there's not much to be found.

Indicators are a great tool and help give a trader a good signpost for where they are at the moment but without proper context they don't mean all that much.  And that seems to be what most trading resources are about - all about that new fancy toy but no context on how to use it.

When I first started in this business as a Forex trader almost fifteen years ago it wasn't really all that different as there were plenty of "never lose" trading approaches that turned out to be complete nonsense in actual trading conditions.  I spent dozens and dozens of hours digging into forums to try and find the nuggets of useful wisdom that I could apply to my trading.  It was an incredible amount of work and over time I became quite good at separating the wheat from the chaff, but it wasn't exactly an efficient path to trading consistency.

It's precisely because of those challenges that I went through that I've always tried to take a realistic view on trader development through this Emini S&P 500 futures blog.  It's not always easy, you need motivation and focus and it will take some screen time.

There's ways to accelerate trader development through coming across good resources, adaptable trading systems and quality advice.  But there's also no substitute for putting in some time and effort to really understand how markets move and how to trade them effectively.

Ultimately, if you want to become a full time trader then you need to be prepared to commit to the full learning and development process, "warts and all".  It won't always be easy but learning and overcoming your sticking points will be immensely satisfying,and if you persist then the sky is truly the limit in this profession.

The post The Path to Becoming a Full Time Trader appeared first on Samurai Trading Academy.

Yes, things are a bit different in May after a relatively slow and quiet April.  It seems the switch has been flipped thanks to plenty of incendiary headlines on trade and the political climate both in the US and abroad.

I often get asked what I change in my Emini S&P 500 (ES) trading when volatility spikes but the answer remains the same – I just stick with the system.  I make small adaptations to take bigger profits when available thanks to the larger swings but I still keep stops small.  This greater reward to risk helps to balance out the increased number of whipsaws we see from volatility and often sees our trading expectancy increase even with a lower win rate.

That’s the thing about my ES trading, I keep it simple and stick with what works.  I don’t make sweeping changes when it’s a difficult week or I take a few losing trades in a row.  I just follow the plan and let the edge play out.

If you’ve done this for as many years as I have though, you do occasionally find yourself looking for a bit of trading excitement.  Just like any profession there are times when you just need to grind things out with hard work and focus but it’s often the periods where you get to be creative and flexible that are the most satisfying.

For me, I find that satisfaction both from the teaching process and from ongoing trading research and development work that includes trading a variety of markets and instruments.  In the periods where I’ve “gone dark” and made few posts on the blog this is always the reason why – I’m exploring new trading ideas and filling that creative need.

One instrument in particular that I’ve traded a great deal in the past couple of years is the Emini NASDAQ 100 (NQ) futures contract.  Although closely related, there’s no doubt that the Emini S&P 500 (ES) and the Emini NASDAQ 100 (NQ) are different animals in their behavior.    They may get to a similar place at the end of the day but the journey there is rarely the same, especially considering the occasionally wild movements of the NQ.

With the ES I take a very structured approach to my day trading system.  It’s a market with huge volume and limit orders are a major driver of movement with many traps and swings meant to capture and fill those orders left in place.  I like to break down the structure and market context, place my orders well in advance for price to come back and fill, then carry on with the price momentum.

Things don’t always work the same way in NQ.  Market orders are what’s really driving things there and big jumps back and forth aren’t uncommon as bulls and bears battle it out.  It’s much more difficult to rely on prior levels or momentum in the NQ as you can’t as easily predict where imbalanced order flow is likely to enter the market.  In the NQ, it’s usually best to wait for a bit more confirmation.

This is why I take a more intuitive approach to trading the NQ with something I call Flow Trading.  This approach has taken a number of forms in the past couple of years because unlike my ES approach I’m willing to be far more creative and essentially treat my NQ trading as “controlled play”.  Trading the NQ in this way fulfills a desire for creative expression and though I don’t trade it with the same size as I would the ES I still find it handles 3-5 contracts easily with minimal slippage.  While I’ve experimented with more contracts than that I still need more time and data to see what the NQ can really handle before slippage becomes a major issue.

I look to read the flows of orders as bulls and bears battle it out, try to identify areas where one side may be able to take overwhelming control to allow for a bigger break (thus better reward to risk potential), then I look to trade using Market orders as price confirms.  Many times this means I’m just waiting with the finger on the button to enter when necessary but more recently I’ve been trading far more often with Buy and Sell Stop Market orders as price breaks in my direction.

There’s nothing particularly special about these charts.  I’ve changed them numerous times in recent months but it doesn’t really matter if I’m using 1 Minute charts, Volume charts or 10 Range Bar charts as I am here.  “It all works or none of it works” as I once heard another trader say.  If you can read the flows then the way you set up your chart doesn’t really matter all that much.

For today’s trading I’m using a chart setup similar to another STA trader who likes to regularly trade the NQ which includes a 200 Period Donchian Channel and a 100 Period Donchian Channel mean line.  I also have my BattleLine set up to act as a guide for trend and overall market strength.

That’s all that stuff is though, just a guide.  Indicators have their uses but they mostly provide context letting you know where you are relative to past action.  I don’t rely on them to predict the future movement, particularly in something like the NQ which can shift its mood at any time.

Instead it’s about reading price and momentum and looking for structures which provide opportunity for an order flow imbalance.  I try to find those areas and structures where if one side exerts control they are likely to do so for a good run.

Part of this is just about practice and getting a feel for how price is reacting (holding edges, churning with no control, over-exerting, etc.) but some traders find order flow tools, Volume Spread Analysis (VSA) or just watching the DOM can help with timing.

The NQ isn't for everyone. I definitely don't think it's a good market for learning how to trade or for picking up the basics of price action. Things just move too fast and are too volatile overall. However, for the more experienced trader that wants to trade in a more intuitive and instinctive manner it can be a great fit. It's a free-flowing and fun instrument to trade and gives endless potential for a trader's creative expression.

The post Creative Expression and Trading the NQ appeared first on Samurai Trading Academy.

As traders we need to be prepared for such events, ready and willing to embrace shifting conditions in order to make the most of them.  More importantly, preparation is necessary to limit any potential risks that come from those changes.  A trader who only thinks of the potential for profit when volatility goes through the roof probably won't be a trader for long.  The one who sees opportunity but makes sure to manage risk carefully is the one that will not only survive, but thrive.

Tweaking My Trading Method

My approach during periods of very high volatility as we've seen in recent weeks is straight-forward.  I expand my default profit targets while still keeping my stops and risk as low as possible.  This means that instead of looking for 1.75 to 2 points of profit on a trade while risking 1.25 points in normal volatility as I typically would,  in these market conditions I'm usually looking for 3 to 5 points of profit right from the start while still keeping my max risk at a very low 1.25 points.  Of course, I'm still going to remain adaptable and if those bigger profits aren't there then I will take a smaller one but there should still be plenty of solidly profitable runs if I'm willing to expand my targets and have a little patience.

You may wonder why I don't expand my stops as well to reduce the chances of taking a quick loss.  After all, if I'm more than doubling my profit targets much of the time then wouldn't it make sense to do the same to my stops?

It's not a bad question and I think there's some cases where it could be a good choice to take on bigger risk but in my experience I've actually found that it doesn't really help the overall edge that much.  We're not talking about small changes in volatility here but major shifts and when that happens the market can get quite erratic at times.  This means that when you take a loss you're often going to do so very quickly in these market conditions and if it comes back more than 1.25 points it's probably going to go to 2 points, 2.5 points, or even completely reverse during a whipsaw.

The Impact on Trading Expectancy

After going through these cycles numerous times I've found I have the best overall trading expectancy when I let my profits run if the price swings are large while keeping my losses as small as possible.  Your per trade expectancy factors in not only your winning percentage but also the average size of your wins or losses, so it may be the case where it makes sense to win a bit less often if it means a greater expectancy and profitability overall.

Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)

In my case, I know that by keeping my stops at 1.25 points in high volatility conditions that I will probably take a higher percentage of losses than normal.  That's just the reality of volatile markets with tight stops.  As I mentioned above, it's also worth noting that in these conditions it wouldn't be unusual for me to take more losses whether I had a 2.5 point or even larger stop so I'd rather keep those losses as small as I can.

On the winning side of things, I know these conditions can allow for far stronger swings and greater profit potential so it's best to adapt to that reality.  I might win a bit less often but those average wins are considerably larger.  This means the left side of the expectancy equation above typically gets increased by enough in high volatility to more than cover added losses which means greater expectancy and profitability overall.

Recent Results in Context

To better illustrate some of the concepts presented earlier it may be easiest to take a look at some of my trading this week.  As you can see in the table of weekly results above it was an exceptional week overall but it certainly wasn't because I didn't take losses.  In fact, Tuesday was a difficult day where I got whipsawed a bit and ended up with a loss overall.

Every week can and will be different, but in normal market conditions I typically achieve a higher win rate than I did this week.  Most months my win rate ends up somewhere in the 60-70% range but during this week I only managed to win 50% of the time.  Considering the volatility I'm actually very pleased with that!

As we talked about before the market can be much more erratic in these conditions and more prone to whipsawing so some quick losses are to be expected.  It's not easy to reduce risk in a market like this through active trade management so you need to be prepared to take a few more full losses than usual as well.

That said, the extra losses were more than balanced out by much larger than average wins.  Over the course of the week I took 20 trades and with 10 wins and 10 losses.  The 10 wins brought in 38 points (152 ticks) and the 10 losses cost 11.5 points (46 ticks).  That means my average win was 3.8 points and my average loss was just 1.15 points.  That makes for an exceptional 3.3 to 1 reward to risk ratio over the week so even if I had taken a few more losses I still would have had a very substantial trading edge overall.

Don't Get Greedy

It's important to remember that these are special times in the market.  It's easy to get in the mindset that this is the "new normal" where exceptional swings and profits can be made every day.  The reality however is no different than it was before February brought us this market mayhem... the market can change at any time!  It may remain like this for days, weeks, or even longer, but it will change eventually.

You don't want to be a trader that lets greed get the best of them.  Remember that adaptability is key so if conditions shift you need to be prepared to shift with them.  That means more regularly taking "normal" profits off the table and accepting that you'll have fewer home run days with big wins.  It's not always easy to do this but it's a big part of learning to trade if you want to be consistent and profitable long term.

Don't be the trader whose judgement is clouded because they see dollar signs flashing in front of their eyes and are unable to recognise when the market has changed.  Seeing solid trades go 2 or 3 points into profit only to have them come back to a loss because you were still holding out for the big 5+ point swings of a couple weeks ago isn't good for the psyche.

The market is always right.  Watch it, assess its movements and the psychology at play, and trade what you see.  Don't trade off emotion!  The market will tell you pretty quickly what kind of mindset it's in based on structure and momentum so the adaptable trader will always be ready and can simply ride the waves.

The post Adapting a Trading Strategy to High Volatility Markets appeared first on Samurai Trading Academy.

This hyper-volatility and market craziness isn't something that comes around often.  Sometimes we can go years without seeing these kind of events.  Slow and steady moves to the upside with low volatility is pretty much the type of market we've been in throughout the bull run.  However, these kind of corrections always happen eventually and they are rarely subtle.  The markets tend to go from periods of low volatility to periods of high volatility without a transition period between them.  It's not a question of IF it happens, it's just a question of WHEN.

Called It... Sort Of

In fact, I was just talking about this in a post only two weeks ago which talked about the possibility of increased market volatility in the new year.  To be fair, I also said in that post that I wasn't going to try and time the correction and it may happen in weeks or months, but it was certainly due at some point.  The main thing I was getting at was simply that a trader needs to always be prepared for shifting conditions because things can happen very quickly as we've seen.

For those that were unprepared things likely didn't go too well!  As they say, "bulls make money, bears make money, and pigs get slaughtered" so those that controlled their risk and prepared for the turn likely did just fine but the greedy ones probably took a major hit.  That likely includes those who watched the market switch into extremely volatile conditions and tried to push their luck by over-trading it.

A Little NQ Trading Before Mayhem Breaks Out

In terms of market activity the week started pretty normally.  The only thing that was really out of the ordinary from my perspective was that I was sitting down to do a bit of Nasdaq 100 (NQ) trading on Monday as I typically take Mondays off.  What can I say, I like my regular long weekends!

Things have been a bit different recently though as I've been pouring time and effort into trading research and development of an NQ strategy which needs to be tested extensively in a live environment as well.  That meant focusing a bit of extra time on the NQ with only the occasional glance at the ES charts.

I wasn't planning to trade for long as NQ is pretty much always active and volatile which means you can typically find plenty of good trades in a small window of time if you have a strategy to capture them.  The flipside of this is that the extra swings in NQ can lead to over-trading and it can be more difficult to manage your risk and keep stops small.  This is kind of outside the scope of this post though, so more on my NQ trading to come later...

In these charts you can see some of my trades from Monday morning.  These charts may look a bit different from what you've typically seen on the Samurai Trading Academy blog but it's still fairly straight-forward stuff.  I simply read the structure and flows on a 1000 Tick chart then trade high-value areas using VWAP curves on a 100 Tick chart once market sentiment shifts in my favor.  It's not too complicated and is remarkably efficient with a very strong positive trading expectancy but, of course, that doesn't mean it's actually easy to do in real-time.

After a handful of these trades and banking a substantial haul of ticks I took a break from the screens.  Upon coming back I saw that the bottom had completely fallen out of the market and price was flying to the downside in ES and the NQ.  Instead of chasing it I decided to just call it a day to let the market craziness play itself out.

A Wise Approach During Wild Market Events

I certainly didn't over-trade the day and if anything it was probably the opposite.  I scaled back and barely traded at all.  Why?  Because I knew that we were experiencing a highly unusual and statistically infrequent market event that couldn't be effectively captured by my trading system.

That's rule number one of being a trader - protect your account at all costs!  Volatility is a great thing for traders as a general rule but just like dosing a medication effectively, too much of a good thing can turn bad very quickly.

When market conditions go so far outside the norm that your carefully constructed trading approach can't adapt to the technical picture and price movement, does it really make sense to take on extra risk and place more trades?

My trading system is something that can be applied 99.9% of the time because it's built around regular market structure and price moves that occur over and over in the markets.  But when those typical 3 to 6 point swings turn into 20 to 30 point swings it's simply not going to be able to put method to the madness.  I'm better off standing aside to let the over-excited gamblers have their fun (or more likely, to let them learn their expensive lesson).

After all, those hyper-volatile conditions are so unusual that it makes it incredibly difficult to put a technical structure around them that can be traded with a highly repeatable edge.  How can you really test your trading plan thoroughly in a market environment that happens so infrequently and has such erratic movement?  It just makes sense to wait for when conditions fit my trading plan where I can have full confidence that my well-tested trading edge will play out.

Trading the News

I liken this kind of market to a major news release.  Generally, my trading method avoids trading right around the big, high impact news releases.  So if we have ISM Non-Manufacturing PMI at 10:00AM EST then I won't trade a few minutes before the release and I'll wait a few minutes after the release before looking for setups to allow time for the extra volatility and volume to work itself out.

Unless you're someone with a strategy specifically geared towards trading the news it's best to avoid those releases because they introduce extra risks and unusual events that aren't going to fit your structured trading plan.  Slippage can also become an issue in market conditions like this which is not something that Emini S&P 500 (ES) traders usually have to deal with.

It was no different with the recent market madness.  Things were so extreme that it was basically one big news event that lasted hours, even days, instead of minutes.  I have no problem sitting on my hands and waiting that out until the market calms a bit and starts to create a clearer technical picture.  When chaos rules the best approach is often to stand aside and observe.  That applies to news releases, whipsaw markets, or even major market volatility such as this.

Getting Back to Normal

With the major moves out of the way we're starting to find some normalcy again as we get into the middle of the week.  As I wrap up writing this post it's Wednesday afternoon and I traded this morning in both the NQ and ES as normal.  The market is still volatile and the swings are large but it's nowhere near the chaos we saw only a couple of days before.

It's important to keep in mind that this kind of correction isn't actually unhealthy in the markets and it's not that unlikely for there to be more to come.  We've spent a LONG time in a bull trend which leads to complacency, so when things eventually shift there's always going to be a bit of panic and extra emotion involved.  Stay calm, stay sane, and protect yourself first and foremost!

And remember, trading is about more than just entering and exiting the market all day long.  It's about planning, knowing your edge and having confidence in your ability to execute it, and making sure that conditions are right before pulling the trigger.  There's no reason to force anything just because the market is flying!

Wait for the setups that follow the structure of your plan.  They will come if you're patient, and so will the profit.

The post How I Trade During Market Mayhem appeared first on Samurai Trading Academy.

However, there's two lessons that come out of this kind of scenario.  First, there's no need to force a trade.  Some ranges are going to have excellent trades with a strong positive expectancy but many simply don't offer anything with good momentum or potential to latch onto.

If there's no trades available that fit your plan then the trader's best action is to simply sit on their hands and wait patiently for the next good setup to arrive.  It sounds easier in theory than it is in practice, which is why so many traders who search for consistent profitability end up failing through over-trading time after time.

A Slow Start Becomes a Fantastic Run

The second lesson is a big one and something that has made me hundreds of points in the Emini S&P 500 over the years.  It's a curious pattern that repeats often and seemingly out of nothing which I'll call the New York Lunch Phenomenon.  Those of you who I've worked will no doubt find this very familiar as I talk about it repeatedly during Live Training sessions when the market is struggling to move.

When a morning is exceptionally slow with very tight ranges like today there's very often opportunity right on the horizon.  In many ways these tight ranges act like a spring.  They get tighter and tighter, and the longer they go on the more explosive the move out of them often is.  It's really no different than consolidations on a 1 Minute chart or a Weekly chart... the same patterns repeat and it's just a matter of scale where things are different.

What's unique about the scenario we saw today is TIMING.  Go back in your charts over months or even years and look for those very slow and narrow mornings in the US session and you'll see over and over again that they often makes very high momentum breaks early in the New York afternoon (EST).

The New York Lunch Phenomenon

This is a curious thing because under normal conditions in the market this is usually when you can expect things to slow down and become a bit more rangebound after the morning swings.  This is because price has often reached some pre-determined targets many traders had in mind, so profits are taken and traders leave their desks for lunch, a few too many drinks, and they probably aren't coming back for the day.

Most of the time this means that most high quality trading opportunities are found in the morning so I tend to focus my efforts there for two or three hours before calling it a day.  However, when I see a morning like this unfolding, things change.  I very rarely look to trade the US afternoon but when these conditions arise I try to make an exception.

Many traders get bored with a slow session like this and lose focus or even walk away from their screens entirely expecting little to change.  I see opportunity.

Well, potential opportunity.  There's no such thing as a guarantee in the market and some days that start slow will end slow.  Many times the eventual break won't be nearly as strong as it was today.  But quite often you get a move like this and missing out because you got "bored" would be a tragedy.  There's loads of points to be made for those who were simply patient enough to wait for it!

I only have so much energy and focus for the day so usually after a couple of hours watching a slow morning like this I'll simply throw my chart on a second monitor and glance over at it periodically while doing other things.  I'm not too concerned about watching it second by second as it's not necessary.  Price will make an obvious move or it won't.  If price is looking to break or does so in a high momentum move then it's doubtful I'll miss it even if I'm doing things away from my trading station as long as I check up every ten minutes or so.

That's exactly what I did today.  I had a slow session, tried to take a single trade during the morning that I couldn't get a fill on, and then had my enough of directly watching the charts.  But knowing the New York Lunch Phenomenon occurs quite often I knew I better keep checking back.  I'll be the first to admit that I thought it was unlikely this scenario would play out today but I still knew I had to be prepared just in case it did.  I've simply seen this too many times to ignore it.

Cue a brief touch of Yesterday's High around Noon EST, a very high momentum move down a half hour later, and I knew that the opportunity I was waiting for may be coming in mere minutes.  From there I got locked in and was able to find a few very nice trades with exceptional reward to risk that turned a "nothing day" into an excellent one!

Most days aren't going to present this kind of opportunity as very slow and tight morning sessions are rare.  However, if conditions are right it often makes sense to pay a bit more attention to the US afternoon session than normal because these opportunities are quite common and tend to offer some of the best reward to risk trades in the Emini S&P 500.

Hope this helps your trading and make sure you don't miss out the next time the New York Lunch Phenomenon pops up!

The post The New York Lunch Phenomenon Delivers! appeared first on Samurai Trading Academy.

Of course, I tell them about how I like to get away from the computer screens by going out for a long walk in the sunshine followed by a mid-day workout or how I will spend a few hours on some of my favorite hobbies and they can appreciate those activities just fine, but when I tell them that I also spend a lot of time doing research, teaching others, and testing new trading ideas to further improve my craft I often get asked - "why?"

They wonder why it would be that if a person can trade and be consistently profitable that they would continue to spend time OUTSIDE their active trading hours to learn more.  What's the point if you are already making money?  Why not just stop there and settle into a simple routine?

High Performance Activities Have a Lot in Common

I've been asked this a lot of times in many different ways but it still stuns me a bit when it happens because I'm never sure why people think that trading is so different from other high performance pursuits.  Why is it so acceptable in other professions to want to push yourself to be better yet as a trader you're supposed to stop trying to improve once you're making a good profit on a regular basis?

For example, there are many ways that the mindset needed for high performance in athletics and trading overlap, yet nobody would think twice about an elite sportsman who still practices every day and ask why they put in extra effort outside the actual matches.  After all, you can pretty much look at any legendary athlete whether they are football/soccer stars like Messi or Ronaldo, or hockey players like Crosby and Gretzky, and people will tell you that the one thing that was different about them is that they NEVER stopped pushing to get better through training their bodies and minds.  Every day was an opportunity to improve.

They knew that to reach the top they needed to train harder than anyone regardless of their natural talent but they also realised that staying there meant continually working on their craft to reinforce their strengths and improve their weaknesses.

It should be no different for a trader.  They should always be looking to learn, to grow and improve their skills, and to build their overall level of knowledge and the "trading toolbox" at their disposal.

Setting Aside Time for Learning and Development

This is why for many years now I've set aside a bit of time each week to experiment with tweaks to my trading approach or to research and explore entirely new methodologies.  It's not about trying to reinvent the wheel and completely overhaul a trading approach that already works.  It's just a matter of growing skills over time, occasionally finding ways to improve your edge further, and also benefiting from the confidence that comes with increasing your overall trading knowledge.

Although I try to make these small testing and research sessions a part of my regular routine, there's usually times during the year that I delve more deeply.  This is actually the major reason why things have been a bit quiet on the blog front lately - I've been too busy experimenting and trying new stuff out!

In many ways I almost look at this kind of experimentation as "play" because I enjoy it and don't take the results too seriously.  I'm looking to approach the market and my trading in fresh and interesting ways that feed my curiosity.  It can be as simple as trying out a new rule for trade management or as complex as a total overhaul of charts, analysis, and methods.

Most of the time my trading experiments may not amount to much in terms of a grand new strategy or even an improved trading edge but there's still ALWAYS something to learn.  As Edison said while developing the commercial light bulb, "I have not failed. I've just found 10,000 ways that won't work."  Each practice session or idea tested tells you something that can be useful in your future trading if you keep an open mind and enjoy the learning process!

Embracing the Process

Since coming back from a lengthy summer vacation I've really immersed myself in this development work which has meant a lot more hours spent on research and testing than usual.  I'm still actively trading the Emini S&P 500 during the mornings on my regular Tuesday through Friday schedule and working with a handful of students but I've just had too many intriguing things to explore that were on the back-burner to put it off any longer.  Add on a few very compelling strategies and system tweaks that some veteran STA traders have been developing and testing and this research cycle has pretty much kept me busy into for months!

A few interesting things have even made it through the early testing phases and I've been trading them live with smaller position sizes.  That's all part of the process to integrate something new into your trading the right way - establish your rules, trade your plan in historical tests, trade in live markets with a Sim account, and if everything looks good then ease into trading real money with small size at first.  Once you've gone through all of that you always gain something whether it's knowledge and skill that improves your trading expectancy or learning what trading situations you should avoid in the future and coming to those conclusions is a highly rewarding process in many ways.

That there is more to trading than just short-term reward is what people sometimes just don't understand.  Just because you've "made it" in an endeavour doesn't mean you put things into cruise control without any further time or effort invested.  That just sounds like a good way to see your skills atrophy over time or to lose whatever edge you once had as market conditions shift.

And really, that's what makes this so much fun over the years.  There's always more to learn, always ways to improve, and every day offers new and interesting challenges.  Not many jobs out there are like that and in most it's far too easy to get stuck in a mental rut where everything becomes routine and there's little prospect of escape.  So when people ask why I put in the extra time and effort after my trading day is done, I guess the answer is - "because I love what I do, so why wouldn't I?"

The post The Importance of Research and Testing for Trader Development appeared first on Samurai Trading Academy.

Most of us can naturally understand that this kind of behaviour isn't beneficial and won't help our bottom line.  So why do so many traders regularly fall into these patterns of over-trading when it goes against their own best interest?

A big part of it comes down to trading being a unique endeavour compared to most careers.  In most jobs or businesses it's seen as a positive to be highly active, always searching for fresh opportunities to expand, and to put in as many efficient hours on the job as possible.  Your typical "go-getter" who creates opportunity for themselves and takes action is valued and in most cases can keep pushing successfully forward through sheer will and determination even if they have a few setbacks along the way.  As they say, "it's not how many times you get knocked down that count, it's how many times you get back up."  However, in trading these same qualities are likely to limit your potential unless you keep them in check.

As a trader there's probably no traits more highly valued than being patient and disciplined.  

If you can identify and develop an edge then remain patient and disciplined enough to execute it time after time without deviation then you can be successful long term in this business.  It's just a numbers game, after all, and if you've got a positive expectancy to your trading method then it will play out profitably again and again.

But it's human nature to be impatient, to be greedy.  Somehow sitting on our hands waiting for a trade feels like we're doing this whole trading thing wrong.  After all, if we're traders then we should be TRADING, right?  The reality of it though is that in many cases the most profitable position is not taking a trade at all.  When we try to impose our will on the market to force something to happen, when we trade impatiently and impulsively, these are the things that are likely to lead to strings of losses that cost us significant capital.

The act of waiting for a setup that fits our plan is where the real money is made in this business.

This impatience and greed can lead to some nasty things that most traders have experienced at some point early in their careers.  They put together those spreadsheets that compound results and see that they can make millions, even billions, in relatively short order by taking trade after trade.  The excitement of seeing those numbers and the near unlimited potential naturally leads them to search for trades on their charts and to trade impulsively rather than letting the market lead the way.  They try to predict every move, anticipate every breakout, and catch every run even if it means chasing price after it's extended and moving into likely profit-taking areas for the "smart money" that has been riding the move.  Yup, it's either death-by-a-thousand cuts as a trader chops themselves up with small losses or the ever-popular attempt to catch a falling knife when the move is already far extended.

They'll even load up their screen with dozens of indicators, check all the outside analysis they can for "hot tips", and come up with dozens of dubious and poorly defined setups in search of more trading opportunities.  After all, the more indicators and squiggly lines there are on your charts or the more times someone is whispering about big potential in your ear then the more times something will pop up that you can trade and the quicker you'll trade your way to millions.  Ok, I might be getting a bit sarcastic at this point but this really happens in the dark recesses of some traders' heads.

Some people will even start trading faster and faster charts each week in search of minuscule reward to risk opportunities simply because it will let them trade more often.  Of course, they conveniently forget that by trying to take 50 tiny scalps a day that their business costs just increased dramatically through their various trading fees and commissions.

So if all of that is what the failed trader typically does, how do we adjust our mindset and become more disciplined, patient, and ultimately more successful?  How do we trade less and ultimately become more profitable as a result?

The key to everything is to have a solid trading plan with a known edge that you can execute with confidence.

If you don't go in with a plan then you've already lost the game before you start.  The profitable traders have you beat the moment you enter the market because they know that you will be trading off emotion alone and will set up their various traps all day to take advantage.  False breakouts, choppy markets, whipsaws... this stuff eats undisciplined traders alive.

Let's consider an analogy for the kind of mentality that a trader should take to break out of these over-trading patterns.  If I had to guess I would think that most skilled hunters could have a fast-track to being successful traders as they likely have the right mindset for the job.  I'm not a hunter myself but it seems to me that success is largely based around patience, discipline, and having a plan.  You need to know what your target is (your defined trading setup, in our case), have the patience for wait for the best possible shot since you might only get one (trading according to your rules with a clearly timed entry plan), and you need the discipline to not get bored and start taking poor shots before your mark appears (over-trading).

After all, what kind of hunter would a person be if they're waiting for the big mark but get bored and start taking shots at the dozens of squirrels or birds that they see with far more regularity?  More than likely all you're going to do is scare away the big prize you've been waiting for and your opportunity is lost.

As a trader, entering the market "just to trade" is no different than that bored hunter wasting their time and effort.  We're either going to chop ourselves up so much that we aren't ready when the good setup rolls around or we will run out of bullets as our daily loss limit is hit and won't be able to take the shot when it's there.

Having this kind of patience and discipline is a skill and needs regular practice to be developed. 

One thing I commonly hear from new traders is that they are taking positions "just for the experience of entering and managing trades" but that's unlikely to be the real truth of it.  They are taking trades because they want the rush as they hit the button, the feeling of getting a big win (even if the losses overwhelm it), or simply because they are a bit bored waiting for their next quality setup to roll around.  Doing this kind of undisciplined practice isn't teaching you anything useful and in fact may do more harm than good.

A serious trader who wants to do this professionally needs to practice in the same way that they want to trade when using a live account and taking on real risk.  Practice the way you want to play.  If you imagine yourself as a disciplined and consistently profitable trader who follows his plan and takes trades within his rules over and over again then be that trader.  Practice these behaviours in your historical replay sessions, continue them in your simulated account trading, then move them into your real money account if the results are consistent and profitable.

It's interesting to note that by being more patient and not succumbing to over-trading or deviation from your trading plan it will make all your future trading that much easier.  As your patience is exercised and your discipline is rewarded you will start a natural positive feedback cycle where these abilities are boosted over and over with profitable results.  The more you do it the more natural and relaxed your trading becomes, even as your position sizes and profits increase.

What starts for a new trader as a struggle to maintain discipline becomes a natural process where it's no longer difficult to follow your plan because you're confident in your approach and your edge if you just wait for the right setups.  Patience and discipline continues to grow through the actions you repeat in the markets every day and from the consistent rewards you receive.  You get to a point where you appreciate and embrace the idea that being more patient means being more profitable.

So why not start the right way and build that disciplined and patient mentality right from the start?  Don't practice or sim trade and say to yourself that you're learning by constantly entering trades that are completely impulsive or without any known edge.  Don't fool yourself into thinking this is accelerating your skill development as a trader.

If you want to be a consistently profitable trader who can do this full time from anywhere in the world then realize that the successful traders who have achieved that kind of freedom are the ones who know their edge and stick to their plan.  Be that trader.

Not months from now after you "practice" by taking hundreds of undisciplined trades, not "after this one more try" when emotions have come to a boiling point and you force yet another entry, not after jumping from system to system every time you break your rules and have a losing day...

Be that trader NOW!

The post Don’t Trade More Often if You Want to Make More Profit appeared first on Samurai Trading Academy.

This has been on my mind lately because I've been working with a couple of traders that are trying to push their profitability to new heights and a part of that is selectively increasing their profit targets on some trades. However, they've yet to find a good balance of greed that gives them the best long-term result.

That's right, I did say balance, so I'm not saying greed is bad. Then again, it's not really that good either. You could say that the dose makes the poison.

What I mean by this is that in my experience and those I've worked with (both professionals and students) I've found that a bit of greed is generally a good thing for identifying and achieving high value targets and enhancing overall profitability but only as long as the strength of our greed doesn't become so overwhelming that it clouds our judgement.

As the old trading maxim goes, "pigs get slaughtered".

Going for the big profit because you've got an excellent price pattern break or a very high momentum swing does bring a bit of greed into the trading equation but that's not a problem if the evidence is there to support it. If that evidence fades or a new trading picture develops that weakens our trade then it's vital that we adapt accordingly. We need to take the profit!  The problem with all of this is that if our greed becomes too overwhelming then it can make it difficult to see these changes as they are happening, we fail to adapt, and a big drop in overall profit can be the result.

Building Emotional Discipline

When working with novice traders using our STA Day Trading System I always start them out with a fairly strict rule-based approach to setups, entries, stops, and profit targets.  The reason this is important is to minimize the impact of emotions on a new trader's performance while building their skills and pattern recognition.  Being very strict about targets isn't about profit maximization - it's about learning to execute and manage trades calmly with consistent results.

Having this structure builds emotional recognition and discipline too. For many new traders there is a tendency to panic if a trade doesn't head into profit immediately and to take a small win or loss but once you've managed dozens of trades and seen how often they reach good levels of profit then it becomes much easier to be disciplined in your future trading since you innately understand how sticking with the plan affects your bottom line.

However, once a trader gets plenty of screen time and their skills become more proficient there are some major advantages to being a bit more adaptable and sometimes aiming for larger profits on trades. This can be considered more of an intermediate stage of trader development where some week to week profit consistency has already been achieved but now a trader is looking at ways to maximize that profitability and bring their overall results to an elite level.

Don't Let a Good Profit Go to Waste

So this brings us back to those student traders I mentioned earlier. They are entering this stage and at first it can be a little bit overwhelming. Greed can get the best of us and we see every trade as a potential "home run" which will make us loads of profit and it becomes difficult to see any other possible outcome once we've taken a position. This can lead to good potential profits becoming losses after price fails to move to our initial target or sometimes to emotional decisions where a trader panics and exits for break-even before price inevitably moves in their direction.

It's important to realize here is that the market doesn't really care what our plan was or how strongly we felt about price hitting a specific target. Ultimately price is king and that's why it's so important to trade what you see, not what you think. So the best course of action is going to be to plan your trade, then trade your plan, and be ready to adapt your targets if the market doesn't confirm them through price movement.

The approach that has always led to the best long term profitability for me has been to "let the market decide". When I try to impose my will on the market and force it to conform to my expectations, it rarely seems to listen!

If I'm aiming for a big 5 point run instead of a normal 2 point profit then the market better pull me there without too much fuss. If price hesitates after a couple attempts to make a move, if the market seems unsure of its next move, then I'll gladly just take my profit and bank it. Sure, price might still move on and I miss out on a bit of the move but you can't understate the importance of having that profit safely tucked away instead of it just being a potential profit that isn't yet realized. There's no reason to be afraid of taking profits!

I think this particular day and the corresponding charts are a good example of the kind of profit-taking this article is all about.  There were plenty of times where I aimed for a bit more than my usual 2 point target as the market has had plenty of big swings lately. Sometimes price carried me to those bigger profits in a clean and direct way and sometimes price stalled so I adapted and took the good profit that was still available.

Some days this approach can mean huge profits as most targets are hit, some days it might mean you miss out on a bit of the moves (as I did in a couple cases here), but ultimately taking solid profits when available generally leads to not only increased profitability overall but also more confidence in your trading performance throughout the day as well.

Don't underestimate the confidence boost that taking profits can provide!

It's important to note that this doesn't mean I just take a tick or two of profit any time it's available. Nope, if I'm taking the risk then I deserve something decent as a reward so even if I don't get my 4 to 5 points (16 to 20 ticks) I'm still going to try and take a couple points if I can.  If a student I'm working with is jumping in and out of the market taking small losses and wins then they're not going to get anywhere so they have to make sure they're still getting paid a good profit for their time in the market and for taking on the initial risk.

Being adaptable isn't about panicking when price stalls and taking the little scraps of profit the market leaves behind. It's about giving the market a good chance to make its move and if the momentum just isn't there to carry you then bank your profits and wait for the next quality setup to arrive.

An adaptable trader isn't looking for emotional reasons to exit the market and allowing their fear or greed to dictate their trading process.  They just follow their plan, objectively assess the market as new price data comes in, and take their profits when the evidence no longer ato be in their favor.

Profit is banked, confidence remains high, there's no frustration in seeing a great profit disappear, and from there you just look for the next good trade to come your way.  Rinse and repeat.

The post Don’t Be Afraid to Take Profits appeared first on Samurai Trading Academy.

The interesting thing is that the novice's perspective of what the professional trader is doing isn't incorrect.  Trading well should be a simple exercise, though not necessarily easy.

You have your trading plan, execute it with consistency, manage your emotional and mental state, and achieve consistent profitability week after week as a result.  There's a certain routine to elite day trading performance and most who have done this for a while are happy to settle into those positive habits and don't look to over-complicate their approach too much or make sweeping changes to their methods.

The Pressure to Profit

For the complete market novice who is looking to day trade and is finding consistency difficult to come by the problem is usually one of pressure.  It's the weight of expectation they put on themselves, the "get rich quick" mentality people can have in the financial markets, and the struggle to detach themselves from the outcomes of single trades in order to see the "big picture" of trading performance over time.

All of this leads to a number of fresh faces entering the day trading arena who struggle as they place a very real burden on themselves to achieve elite results almost immediately.  Of course, anyone putting this kind of pressure on themselves is rarely going to achieve positive outcomes and in many cases this pressure only serves to draw out the learning and development process thanks to over-trading, breaking of rules, and other key trading errors.

So this begs the question - if you are looking to learn to day trade and to develop a skill that can be utilized for the rest of your life then why are you putting that pressure on yourself during the infancy of your trading development?  If you're trying to learn how to swim you wouldn't have someone drop you into the middle of the ocean and then hope for the best.  You would take things slowly, learning the basics step by step, until you had developed the skills and confidence to swim in a variety of conditions and situations in a calm and measured way.  Learning to day trade is no different.

I've worked with a number of people over the years and I consistently see the same thing - when people understand that trading is a long term skill to be developed and are willing to put their time and effort into learning in a minimal pressure environment then they achieve great results.  

While I know through my own experience and that of STA students that consistent profitability can be achieved in a matter of months it is still a process and only in extremely rare cases can a trader hit their goals from week one.  It takes screen time, practice, and the building of patience and discipline to get there.

How to Develop Your Trading Skills More Quickly

I've stressed in many posts here on Samurai Trading Academy that learning to day trade isn't a race and you shouldn't put immediate pressure on yourself to make massive profits but that doesn't mean that the learning process can't be streamlined.  There's no substitute for screen time and experience in this business but not every hour spent on skill development is equal and there are a few ways to accelerate the process.  In order to learn any skill as quickly as possible, including that of day trading, there's a handful of factors that should be present.

First, when initially learning the skill you need to put it into practice immediately.  

You can spend a lot of time reading books on candlesticks, price patterns, trading psychology, or any number of subjects relevant to becoming a day trader, but unless you take actionable steps to actually trade then you're not going to get anywhere.  Right from the start you should take your basic lessons and apply them in a demo account through the platform of your choosing and start to develop an understanding of the theory being put into actual use.

Second, you need to utilize your developing trading skills with regularity during the initial weeks/months in low to moderate pressure environments.  

This is the only way to develop pattern recognition, reinforce good trading habits, and continue to grow as a trader week after week.  What this all boils down to is simply making sure that you set aside time consistently for focused practice sessions.  NinjaTrader, the platform most STA traders use, is great for this.  Using the Market Replay functionality you can download historical data and replay it as if it was live while trading in Sim mode without real money.

These practice sessions remove a great deal of the emotional pressure that new traders often put on themselves to perform in a real-time market (even while Sim trading) and makes skill development that much faster.  Of course, there's still a lot of benefit to be found in trading in a moderate pressure live environment and eventually some things that can only be learned through trading with actual money but early on a trader will find having extra hours spent in calm, focused practice sessions to be hugely beneficial to their development.

Lastly, having the guidance of a coach, mentor, or more experienced peer who can give you clear feedback can help to greatly accelerate the learning process.  

Over the years I've learned countless lessons from veteran traders that have provided me with insight into my own trading and have challenged me to continue to develop and improve.  However, it's not as simple as just getting a bit of feedback and putting it into practice for immediate results.  In order to realize the most benefit from personal coaching and feedback a developing trader needs to be receptive, mentally adaptive, and willing to put some effort into tweaking their trading approach and their own behaviours to ensure positive (and profitable) decisions are made.

It's important to note that while it's hugely beneficial to have this kind of coaching support it's not a requirement.  I can say that with confidence because I personally began learning to day trade through self-study and achieved profitability through hard work, a LOT of testing and practice sessions, and finding like-minded traders to brainstorm with.  It wasn't ideal and I made a lot of mistakes along the way that made my overall development take longer (something I try to help people avoid these days) but it's certainly possible for those who are highly motivated and determined to be successful as traders.

Keeping Your Cool

The mark of an elite trader is their ability to keep cool under pressure and this comes from utilizing many of the guidelines listed above.  Maintaining a calm mental state and "trading in the zone" is something that comes from a combination of preparation (a solid trading plan and practice), support (from a coach and/or family), and a sense of long term purpose.

The full-time professional traders that we talked about at the start of the article have those traits and that's why they succeed in an almost effortless fashion.  It isn't magic or something that just miraculously happened the first time they sat down at their screens - they worked for it!  They put in the time and the effort and kept their eyes focused not just on the outcome of a single trade but on what they could achieve in weeks or months by simply following their tested plan and letting their trading edge play out.

Daily profits and the pressure that's involved in meeting short-term financial goals isn't something that concerns most long-term traders.

They simply set a goal of executing their plan to perfection each and every day and profit is the inevitable by-product of that disciplined approach.  

They've tested their edge, they follow a simple plan, have positive expectancy backing them up, and know that if they just remain discipline and execute well that they'll be consistently rewarded.

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