I did want to do something a little different with this post though if we're going to take a small break from student updates, so this post doesn't just cover one day of trading or one week but more than a month with the good days, the great ones, and even the poor ones included.

One thing that really bothers me when it comes to trading forums and websites is that they almost always try to avoid the realities of trading and only focus on the highs at the expense of the lows.

It's easy for someone to post their one good day or a single exceptional trade, but if they lose in each of the other four days or end up down 10 points for the week then what good is it?

This is why I always focus on a full week with the student updates.  No picking and choosing charts just to find the good days, but instead an honest reflection of what it's like to trade at a novice to intermediate level where there will be mistakes, there will be losing days, and are unlikely to achieve an 80% win rate week after week.

But what's even better than showing a full week of trades from one of our developing STA traders?  A full month of course!   Well, the original idea was to do a 4 week post at least, but life and a lot of sight-seeing on my travels got in the way of that so instead  of 4 weeks the loyal STA blog readers get an extra week for free.

The Progress of TH - A Newly Developed Samurai Day Trader

I'm extremely pleased with the progress of the select handful of traders I work with and I love seeing the growth in their confidence and profits as they make and learn from mistakes, learn to read the market and anticipate future moves, and begin to develop their trading intuition for the odd "gut instinct" trade.

One of these new traders is TH, a young Canadian trader who has seen good growth in his profitability over the course of his first weeks working with me in the STA group.  You might remember TH from a recent post as well where he along with others in the group saw exceptional results.

Although TH's results have been very good and improving during the STA Training Program, there's nothing particularly special about his prior experience in trading.  He came into the group with no experience day trading or participating in the Emini S&P 500 (ES) market.  At most he had some very limited experience of just a few months in the NYSE trading basic breakouts and pullbacks.

I point this out because it's important to realize that you don't need a lot of experience or established trading skill to become successful in a short period of time as a day trader.

All you need is motivation, determination, and the willingness to work hard to achieve your goals.

So let's just jump right into TH's numbers over the first five weeks and then we will look at a few lessons we can glean from them.  I've also included a handful of charts for a variety of days (including some of TH's notes) so you can get a bit of perspective on how things were traded and the thought process involved.

The Numbers

A Few Lessons From the Data

Win Rate Isn't Everything

I know this is a topic I've already discussed extensively in the past but this is just one more example to add to the pile.  Yes, win rate is important and it's helpful to sustain a ratio of at least winning more often than you lose (if only for the psychological benefits) but ultimately it's only one part of the profitability equation.

What matters is our trading expectancy and that factors in both the win rate and our reward to risk ratio.  Without considering both of these factors we simply can't get a full picture of the overall performance of our methodology.

In the case of TH we see a trader who has started with an acceptable win rate of 50% but he was still able to make a good profit due to his winning trades being much larger than his losses.  His two 50% win rate weeks were still his lowest in terms of overall profitability but there's plenty of methods out there that would be in the negative with that hit rate because the wins are small and the losses are large.

By focusing on reward to risk more than the win rate in the early stages of trader development at STA, it not only allows those who are less experienced to see consistent profitability but it also removes a lot of the pressure and emotional toll that come with trying to maintain an exceptionally high win rate day after day.  For us, a losing trade or a losing day is no big deal because the edge is strong and drawdowns are small, which leads to quick recoveries after difficult conditions or even completely natural novice mistakes.

You Don't Need to Trade More to Make More

As you can see in the chart above, some interesting things started to happen around Week 4.  There is a subtle progression I try to guide traders through and it was at this point that TH started to focus a little bit more on his profit targets and expanding some while contracting others.

It's important that a trader doesn't try to do this right away and simply focuses on execution and managing risk but once some consistency has been achieved and confidence is high we can take additional steps to expand profitability.

What we see here are the effects of this transition starting with a big jump in profitability at Week 4 and then another exceptional result in Week 5.  The interesting thing to note however, is that in Week 5 there were actually 7 less trades taken but more points of profit were made.

This is something quite powerful and once the awareness is developed for a trader to pick his spots with contextual target setting or simply to know when to wait out difficult market conditions, it opens up a new trading experience.  The pressure to always be in a trade decreases, the trader can more easily assess the overall market situation and opportunity at any given time, and finding the elusive "trading zone" which allows elite performance is much easier to achieve.

The Potential for Further Growth is Very High

Probably the most exciting thing about seeing these kinds of results from STA traders is that many are new to day trading and still have considerably more potential they've yet to tap in their trading.  TH is a great trader to profile for this post because although his results aren't actually the highest in the group, he is someone who is very new to trading overall and still very early in his development.

With this result in 5 weeks, what can be achieved in 5 months or even 5 years?

The fact is that you don't actually need bigger numbers than this to make a substantial income as a professional full time trader or even as a part-time trader.  At STA we aim for a consistent 10-15 points per week which this trader achieves and that already puts someone into a pretty elite category.

What changes as time goes on for most traders is that they focus a lot less on achieving huge numbers and start trading more for pure enjoyment and challenge with the profits becoming secondary.  At this point a lot of things often open up for the trader allowing them to fulfil their various monetary and lifestyle goals.

With a bit of additional experience and some newly developed trading instinct, it's not too difficult to maintain similar results to these but in less hours per day.  There's only a few hours of trading in most of these charts but an experienced trader who is able to take advantage of a few more advanced opportunities at the right time can often wrap up with nice daily and weekly results with as little as a couple of hours per day.

The difficulty then becomes finding other passions which you can use to fill up all the rest of the hours of your day.  As long as you've got some passions and hobbies outside trading you will find ample time to exercise them, family can always take scheduling priority, or whatever else you want.  Though the truth of it is that I would blame you if you just wanted to keep trading just for the fun of it!

The post Becoming an STA Samurai: A Student’s First Five Weeks appeared first on Samurai Trading Academy.

I know it's been a while since the last post but it's been a very busy period for myself and STA.  Between focusing a lot of effort on the Samurai Trading Academy students, doing my own trading along with a few interesting research projects on the side, and my continued travels around the globe, well... the schedule has been pretty packed.  I am a bit more settled in one place for now though so I hope to have some more posts on the STA blog in the coming weeks.

Just to give a quick update on myself, I've now moved to Belgium after spending a couple of months enjoying the sun in Arizona to start the year.  The last time I was in Belgium was over a decade ago and I absolutely loved it.

Great cities and towns, wonderful people, and absolutely amazing food and beer.

The beer in particular was an eye-opener.  Back in those days I was your typical North American lager drinker without much of a clue that there were worlds of beer I had yet to explore.  Coming to Belgium set me on a path into the fascinating world of brewing and I've always longed to come back and experience the unique offerings here once more.  It's become my mission to search out the best "hidden gem" beer bars and to try every obscure monk-brewed ale I can find and over the last month I think I've done an excellent job of it.

For the time being I've really settled down here in Belgium with a nice apartment to use as a base for further exploration of the towns and countries nearby or to occasionally stay "home" and soak in the local culture.

Having this location flexibility and freedom is exactly why I decided many years ago to become a day trader and it's a huge part of what drives my passion for this business.  

I wanted the freedom to be able to choose when and from where I would work and just in the past year I've managed to trade from Thailand, Japan, Malaysia, Canada, USA, Belgium, Netherlands and Germany.  I also gave a token attempt in Cambodia, Indonesia, and even Laos, but let's just say that there are still a few places in this world that aren't quite up to par with the day trader's required internet standards.

The months ahead are currently undecided so anything is possible and I'm weighing a variety of options.  I might head to Southern France (as I attempt to improve on my admittedly poor French skills), maybe Spain, or possibly even the long haul to a more exotic locale.  If anything being a full time trader can actually be a bit overwhelming simply because it opens up such a huge world of possibilities.  When you can work from anywhere it makes it increasingly difficult to stay in one spot for long!

Now on to some student updates...

TH

This is exactly the sort of result I love to see.  A solid win rate, good reward to risk, and an excellent overall weekly result.  TH is actually one of the newest traders I've been working with as he has under a month of experience but so far we've seen some very good weekly numbers coming in.

Obviously we still have a ways to go even if the results so far have been in the 10-15 point per week range that we aim for here at Samurai Trading Academy.  That's because in this business consistency is everything, so TH still needs some extra weeks under his belt in order to build his skills and confidence.  We're definitely on the right track though and the truth of it is that this is an excellent result for a newer trader and TH should be very proud of it.

GM

Here we have a trader who has integrated some of her methods with the STA day trading system quite successfully.  GM has managed to quite seamlessly use some of her more aggressive entry techniques around market opens and during strong moves to take advantage of some extra potential in the market.  This sort of result isn't what I would consider "typical" for a newer trader but is certainly achievable for those with more experience in the markets.

Interestingly, even though GM has been using some techniques from her past experience they actually line up very well with some of the Advanced methods in the STA Curriculum.  I'm continuing to work on those areas to expand them for more experienced traders who have a comprehensive market understanding and I think that for many it will allow similarly exceptional results like we see from GM here.

JM

JM is another trader who has seen excellent consistency over recent weeks.  I wanted to include his results as well because I think they are a perfect example of the power of trading expectancy.

As you can see, JM had a win rate of just 50% this week yet made an excellent profit.  Many newer traders spend far too much time and energy focusing on trying to achieve a 80% or even 90% win rate by taking very small wins compared to their overall risk simply because they are afraid to lose.  What this often leads to is an unsustainable situation where mistakes get made and even just a few losses in a row wipe out all the gains due to the wildly lopsided reward to risk ratio.

At STA we aim for something more balanced that is powerful in the hands of traders with a variety of experience levels.  By having an excellent reward to risk ratio (usually 2:1 or even higher for experienced traders) it removes a great deal of the emotion involved in winning or losing a single trade.  Anyone who has been trading for a while knows the importance of keeping a calm and focused mindset when they trade and understanding the strength of your trading edge is a huge part of having that mentality.

Potential Earnings

When I make these posts I always get a few emails asking me how the results in points translate into actual profits.  The chart below should provide a bit of context.  Keep in mind that this doesn't include some of the fees/commissions which vary depending on the size you are trading.

To get a more thorough understanding of how a day trader makes their income in the markets you can also read Part 3 of our Emini Day Trading Series called How Money is Made as an Emini Day Trader.

The post Student Results – Volatility, Profitability, and Belgian Beer appeared first on Samurai Trading Academy.

The last year has seen me working with a small selection of highly motivated people and it's been a major effort helping them towards their trading goals, but I've been extremely pleased with the progress I've seen from the students in the program.  I've seen multiple people transition into becoming professional full time traders (see the video with Niv at the end of the post for an example), others have been trading with consistent results and are working towards a full transition out of their current professions, and others are just getting started in their trading journey but are seeing exceptional results early on that open up fantastic possibilities for the future.

During this time, I've also been travelling extensively and making the most of the flexible lifestyle that being a profession trader provides.  As many of you know from my previous post called My Decision to Become a Day Trader, I took a trip to Thailand in August that became a multi-month exploration of a number of Asian countries.   I had the pleasure of exploring all around Thailand, Cambodia, Laos, Indonesia, amongst others, and even had the opportunity to fit in a month long trip throughout Japan which was an absolutely fantastic experience.

For this entire period I continued to trade and work with the STA students.  Well, with the exception of a brief trip to Laos because as you might have guessed the internet reliability there leaves something to be desired for the professional trader.  Perhaps one day they will "catch up", but I wouldn't count on it any time soon.  Still, it's a fascinating and beautiful country to visit, even if it doesn't really lend itself to long-term stays.  Outside of that brief venture and a short stay in Phuket, it was pretty smooth sailing overall for trading and teaching with the STA approach and I absolutely love the flexibility that having an online profession provides.

Ultimately that sort of flexibility is what being a day trader is all about to me.  I'm not saying that everyone needs to be a world traveller and jump from country to country for months at a time like I do but knowing you have the option is a huge benefit.

It's about having the choice. 

Do you work from home and have your afternoons free to spend with the family?  Do you trade from the other side of the world for a few months a year to avoid an ugly winter climate and enjoy a season of beach weather instead?  Are you like me and just want to have the flexibility to experience other cultures for months at a time without a boss, employees, or clients dragging you back home?

What I think is important to realize here is that having this flexibility isn't unattainable but in order to get there you need to have a dream.  Having big financial goals that draw you into trading is one thing, but those who manage sustained success in this business want more.  They want something that is beyond what money can buy, that gives them the freedom and flexibility to live life on their terms.

If you are only focused on the financial aspects of this business, how do you sustain yourself when things get tough?  How do you push through thick and thin?  No matter how good your methodology might be there WILL be those tough days or even weeks, so it's important that you have something that continues to drive you forward rather than just your immediate financial results.  Those who have a greater goal and a true passion for trading and the freedom it offers are the ones who persevere and ultimately find success.

Now that my brief lecture is over, let's look at some recent student results from some of the newer traders I'm working with at Samurai Trading Academy.

JJJ

Right off the bat, it's only fair for me to say that JJJ isn't your typical beginner trader.  JJJ is someone who has been following the markets for years but it's not until very recently that he's decided to enter the world of day trading futures.

It's still early in his development but so far all signs with JJJ's trading are quite positive.  He is settling more and more into his comfort zone, minimizing his "experimental" and riskier trades, and is growing his confidence exponentially.

But what is it that really seems to drive his results?  Above all - PASSION.  He is extremely passionate about the markets and is absolutely loving every minute of his journey to being a consistently profitable day trader and that's what it's all about.  Some prior trading experience is a useful asset and there's some personal traits that lend themselves well to success in this business, but when it comes down to it those who have a burning passion for this business are the ones who tend to achieve a high level of consistent profitability the fastest.

Since JJJ is still very new to day trading and has seen good initial success, the biggest thing he now needs to be wary of is over-confidence as he continues to develop his trading skills.  It's natural when things are going well to want to become more aggressive because you feel you can "do no wrong", but as soon as you start indulging this behaviour then it usually leads to a quick reality check in the form of a rapidly dropping equity curve that shows what you still have to learn.

Zach

These results and charts from Zach are a good balance to the ones from JJJ above.  Unlike JJJ, Zach has had limited trading time and was only able to manage three days of focused trading in the market last week.  Still, the consistency and end results stand out.

You don't NEED to trade 40 times a week like JJJ did to make good profits in the market.  Even with less than 10 carefully selected trades, a trader can bank decent profits that would be the envy of most and can be built into an excellent result over the course of month.  This is the power of trading expectancy and a strong reward to risk ratio.

The point is that it's important to understand that each trader is an individual.  Some have more of a scalper's mentality and some are more conservative.  Some can deal easily with the psychological pressures of trading many contracts at once, while others have to put a lot of effort into increasing size.

When it comes down to it though, this isn't a competition and all that matters is your own consistency and confidence in your trading ability and your trading edge.  As long as you have that and can churn out good profits on a weekly basis, the sky is the limit in this business.

Niv's STA Testimonial

I thought I would end this lengthy post with a brief acknowledgement to Niv and his recent move into full time trading.  I met Niv in an unlikely way when I was living in Bangkok but we quickly connected through our passion for trading and the markets.

Congratulations on your recent transition into being a full time trader, Niv!

The post Student Results – Off to a Running Start appeared first on Samurai Trading Academy.

If our expectancy is good due to a decent win rate combined with a high risk to reward ratio, we will be able to achieve excellent profitability.

As I was recording some of the Weekly Reviews for students in the STA Training Program this weekend it got me thinking that I should put together a new post using some prior weeks that really drives home the importance of keeping a longer term focus.

A good student to look at for this examination is AK.  Many of you will recognize him from some previous weekly recaps such at this one.  AK is a good example because he is someone who is fairly new to trading the markets, but he has been diligently applying himself each week and sending in his charts on a regular basis for review.

Considering that AK basically came into the STA Training Program as a raw trader, these results are an excellent example of the consistency that can be achieved in only a couple of months if a student is determined and willing to put in the effort to be successful.

Once weekly consistency is reached, the sky is the limit for further development of your trading skills and profitability.

One of the things I find most interesting about AK's results is his impressive returns despite not having a high win rate.  Some of our more experienced traders are able to achieve hit rates of 70% or more but as AK shows, it isn't necessary to have a large majority of winning trades in order to have excellent weekly results.

This is especially important for newer traders taking their first steps into day trading, because the pressure of needing to maintain a high win rate often crushes even the best laid plans under its weight.

As AK gains more experience in the markets, his win rate will continue to improve and his already substantial trading edge will grow.

I don't want to clutter up this post with dozens of charts, but here's a handful for some of the days above (click to enlarge):

Day Trader Income Breakdown

The most common question people email me about is always the same - how much money can you make as a day trader?  For the sake of this example, I've broken things down with the quick chart above.

You might have noticed that although AK's trading breakdown showed 57 points earned for the month, this chart only shows 50.  I've done this to account for commissions and fees in order to give a more realistic look at what would be made if a trader was taking ~80 trades per month.

If a trader was trading with a decent number of contracts his costs would likely be much lower (through better commissions from his broker), adding to his profit.

Please keep in mind that these results are not guaranteed.  Our aim is for our graduates to consistently make 10-15 points per week trading Emini S&P 500 futures, but individual results can vary depending on experience level and time spent each week actively trading.  The example above is a trader who generally trades for a few hours each day.  Please see our disclaimer for more information.

The post Student Results – A Complete 4 Week Trading Breakdown appeared first on Samurai Trading Academy.

To give you a little bit of an idea of what the flooding was like, here's a couple pictures (click to enlarge):

As you can see, Mother Nature was rather volatile here, and the markets were too.  Things started a bit slow early in the week but once Ben Bernanke and the FOMC got involved on Wednesday, volatility went through the roof.  There's a lot of uncertainty out there in terms of the various quantitative easing programs and the tapering off over time, and that nervousness was reflected in the market with some strong moves.

Luckily, as adaptable day traders we can thrive on this sort of emotional response in the markets and the volatility becomes our best friend.

For this post, I want to share a couple more complete week recaps along with charts from students in our STA Training Program.  What made this week in particular so interesting was that we saw a couple days where the market movement was incredible with swings in both directions, and this was a new experience for some of the students in the group.  These environments are usually not fully taken advantage of by newer traders as the market speed fuels uncertainty and hesitation, but they are a great learning experience and they open up the ability to truly capitalize when these market conditions come up again.

This was a week where traders could have absolutely killed it for 20, 30, or even more points, but not everyone wants to be tied to the screens all day.  After all, freedom is what day trading here at STA is all about.  Although the stated goal of the STA Training Program is to have our students consistently making 10-15 points per week by trading from 9:30 EST to 13:00 EST, many of our traders have been able to achieve that while only trading ~2 hours per day.

Since people email me all the time about potential day trader earnings and because the results below are in line with our STA targets, here's a table to give you an idea of what a trader can make by bringing in 10-15 points per week (before commissions/fees):

The Professor Continues to School the Market

Consistency is what day trading is all about, and The Professor continues to see solid results just like last week and the weeks before.  Also note that this trader usually focuses on the market for only a couple of hours each day, making those results even more impressive.  With more experience his win rate will continue to improve, sharpening his edge even more.  His results are already well beyond the vast majority of full time traders so any improvements to his results will move him into some very elite company.

As you can see above, The Professor also took Friday off to get started on a house party that lasted through the entire weekend.  Somehow my emailed invitation must have been lost in the tubes of the internet, but no doubt he will be happy to host all the STA traders the next time he throws a full weekend bash.  Right, Professor?

A Different Approach from AK

What I like so much about AK's charts and weekly results is just how different they are from The Professor's on a daily basis while ending up in the same place at the end.  AK has been on a bit of a different schedule lately with some other commitments outside of trading, but has still been consistent for a number of weeks in a row by fitting in trading when he can.

If you compare AK's daily results with The Professor's above, you will see that they rarely line up on a daily basis but that the weekly result is quite similar.  This shows the power of an adaptable trading system that has a good hit rate combined with an excellent risk to reward ratio.  This positive expectancy allows traders to be flexible in their approach by working around their own schedule, while still finding excellent long term results as day traders.

What I loved seeing from this trading week is that AK knew when to stop and walk away.  Although he was seeing a lot of success during the week (up +20 points), Friday just didn't get off to a good start.  Rather than getting upset and bringing emotion into his trading (which usually leads to much larger losses), he just accepted the small losses, called it a day, and went to enjoy the weekend.

If things just aren't working there's no reason to put good money after bad.  There will always be a better day coming soon, so walk away, mentally refresh, and come back positive and ready to go later on.

The post Student Results – Building Day Trading Consistency, Confidence, and Profitability appeared first on Samurai Trading Academy.

I like to share some of these weekly results with readers on this day trading blog because I think they contain important lessons that are crucial to success as a trader over the long term.  For example, do we really need to "make 2 points every day"?  This is a commonly repeated phrase among aspiring Emini S&P 500 (ES) futures traders, but it's actually a fairly dangerous way to view the markets.  We will get to that a little later.  Similarly, is there any use to cherry-picking single days to post just because we knocked it out of the park?  Not really, as the sample size of trades in a single day is simply too small.  What really matters is long term consistency built over entire trading weeks and months.

First, let's take a look at the results of one of our students, and then we will consider a some key take-away lessons that can help you improve your own trading results.

The Professor's Trading Results

Why are we calling him The Professor?  Because every trader needs a good nickname and he's started to earn it through his detailed analysis of the market.  The Professor likes to break things down and run simulations and this helps him develop confidence in his trading and his edge.  Considering his results in the STA Training Program, this approach is paying off extremely well and there's only better things to come.  With only a few months experience in ES, the possibilities are endless as his win rate continues to improve and he starts to expand his profit targets a bit more.

As you can see, this was an excellent week for this trader as he managed to pull 14 points out of the market.  This reaches our goal here at STA for established traders to make 10-15 points of profit per week and is more than enough for a nice living as a day trader.

What's interesting about this week was that The Professor managed to not only be profitable every day, but he achieved it in spite of a couple of days with a low win percentage.

That just shows the power of having a good trading expectancy and a solid edge.  

We all know that our risk to reward ratio is important and of course many are focused on their win rate, but what really matters is how they play out in combination.  In our case, the positive expectancy of our trading is strong enough that even on days where we struggle to find winners we can still end up with a profit.  This is an extremely powerful concept when put into practice and one that many professionals embrace.

It should also be noted that this trader decided to step aside on Friday due to his uncertainty about the market action and the recent addition of the 09-13 ES contract.  Every three months we see a switch to a new contract as the old one approaches expiration.  Sometimes this transition is smooth, but often it leads to difficult price action and fair bit of market uncertainty.  After an erratic Thursday that caused our trader to struggle to find a profit, he decided to step aside on Friday.

This was the first time this The Professor has actually experienced a contract change in futures, so he no doubt made the right decision to take the day off.

If you're not feeling confident about the market action and your trading, it will probably show up in the form of mediocre results.  

It's much better to take a step back and just observe until you are confident to trade again, rather than forcing yourself into the market simply because you feel like you need to trade.

The Difficulty of "Just 2 Points Per Day"

I don't know where it started in the world of Emini S&P 500 futures, but this idea of aiming for just 2 points per day has been around for a while.  It sounds good in theory - if you can make just a couple points per day then your potential as a day trader is unlimited.  Your equity curve will climb each and every day and you can simply increase your position sizing to the point of making millions with ease.  Sounds easy, doesn't it?  Too bad that for the novice trader this sort of thinking is often very limiting to their trading potential.

So why does focusing on these short term targets actually impair your trading performance, particularly for market newcomers?  Mostly, it comes down to emotions.  If you are aiming for very low daily profit targets, even a small loss suddenly seems far more substantial.  Relative to your 2 point target even a 0.75 or 1 point loss can seem like a big deal and can lead to a negative emotional response and poor future trade choices.

Similarly, setting very low daily targets also limits your potential upside.  Many traders tell themselves that all they need is "just 2 points per day", so once they get there they suddenly get fearful of losing it.  They avoid future opportunities and convince themselves not to take quality trades because they are afraid of giving their small profits back.  Instead of absolutely killing it for a 10+ point day when the market offers it, you end up with a small profit that you are likely to regret when more difficult days come along.

This kind of risk-averse thinking is extremely limiting, because we know that not every day in the market has the same potential.  Some days in the market are absolutely fantastic and will fit your trading strategy perfectly, but there will also be days that are just decent and other days where you might not find many quality opportunities and will take a small loss.  If we don't take advantage when the market is moving well, our potential weekly and monthly profits will take a significant hit.  Each week generally has one or two days that offer that extra bit of profit potential, so if we are truly looking to maximize our results then we need to keep pushing until the market suggests otherwise.

The interesting thing about the 2 Points Per Day phenomenon is that it is actually more difficult for many traders to accomplish than far loftier goals.  The limiting mindset of small targets and the resulting emotions it tends to bring up means that trying to bank just 2 points every day can be much harder than averaging twice as much, if not more.

The trader who understands that their success is determined over the long term is the one who has the right mindset for outstanding weekly, monthly, and yearly results, but they also maximize their potential during each individual trading day.  This trader feels no emotional pain from a small loss because he understands its minimal impact in the bigger picture.  He is confident in his expectancy and his trading edge, and this allows him to trade according to his plan and to take whatever the market is offering.

Don't be the trader whose focus is so narrow that every tick of the chart causes an emotional response.  If you want to trade for a living then you are making a long term commitment, so keep a similar focus with your results and you will find it much easier to achieve your goals.

The post Student Results – The Professor’s 14 Point Week appeared first on Samurai Trading Academy.

Even if you are doing well, you should always be looking for ways to improve your edge and up your trading game.

Trading is no different than any other competitive endeavour, in that about 20% of the results come from skill and 80% come from your mental approach.  It's for this reason that I was recommending a number of books on sports psychology to the STA traders recently, but digging into that is a subject for another post.

What I wanted to do today instead is to focus on three key trading lessons that I've seen from some of our STA members that might help those traders who follow this blog.  First, let's take a look at one of our trader's results for the week.

The Weekly Breakdown

To start, I wanted to take a look at AK's results for the week.  He has been doing quite well in the program and is quickly finding consistency in the market.  Over the past three weeks alone he has made over 30 points and I don't expect him to be slowing down any time soon.  Here's how AK's four days of trading looked this week:

While I don't like to focus much on it here at STA, people are constantly asking me how much money a successful day trader can make.  The chart below breaks down how a trader would do if they could consistently make 13.5 points per week in the markets.  While this is well within our STA target of 10-15 points per week, keep in mind that even for experienced traders some weeks may be lower and some higher.  We also recommend that new traders only trade a single contract until consistency is established.

Lesson #1: Win Ratio is Just One Part of the Bigger Picture

My favourite take-away of the first chart above is that it shows the power of a good risk to reward ratio and having a positive expectancy.  AK only won half of his trades this week, yet he made a massive 13.5 points!  Many people out there think that in order to be a successful trader you need to win 80 or 90% of the time.  There's even a group who endlessly searches for the elusive "Holy Grail" of trading systems that will allow them to win 99% of the time so they never need to take on real risk.  While it's certainly possible to get your win percentage into these areas with a lot of experience and a proper plan, it's far from necessary to be successful.

As long as you are able to keep your losses small and your wins large, you will have a positive expectancy and make points on a consistent basis as a trader who only wins half the time.  That's one of those big "secrets" of trading that people don't like to talk about.  We can be so afraid to admit to ourselves and others that we sometimes lose, that we fail to realize that embracing losses is a natural part of trading success.

Once we fully understand this, it allows us to trade without fear or ego, and truly maximize our results.

There's a secondary lesson here as as well.  A brief glance at AK's results for the week will tell you that he really only came up way ahead due to a single day.  It's a bit unusual for one day to stand out so much from the rest, but at the same time this is a crucial part of trading over the long term.  Not every day is going to be a massive winner simply because not every day has numerous quality opportunities and huge potential.  The professional trader understands this and realizes that trading can often be a bit more of a "grind".

What's important to the professional trader is that they can win most days, and that on the losing days they are able to keep the negative hit very small.  Doing this lets them consistently churn out solid weekly profits and then when those excellent days come around they can take full advantage.  I usually call days like Wednesday the 29th an outlier, and it's those days that are truly the keys to the castle that jump your equity curve to another level.  Of course, with experience the number of losing days decreases even further, to the point that an accomplished Emini S&P 500 trader will often go weeks or even months without a losing day.

Lesson #2: Don't Get Too High or Too Low

A couple of weeks ago I was talking to one of our STA traders who was beginning to do exceptionally well.  Weekly results were improving, and there was talk of the trader taking his trading business to the next professional level.  Spirits and confidence were high, and rightfully so!

At the same time, this can be a very dangerous moment for a developing trader.  The human mind and the ego within are very complex, and it often can't help but manifest right when we are at our most vulnerable.  If you've traded before you know where I'm going - the dreaded trading collapse and loss of profits.  It's an all-too-common phenomenon in the world of trading.  We're doing well, our confidence is building, and we now have no fear.  Suddenly, everything starts to go wrong as rules are broken and rookie mistakes are made.

This happens in most cases due to over-confidence.  Suddenly we feel like we simply can't lose, so we do foolish things like increase our position sizes or ignore our trading rules to enter positions.  There's always the occassional situations where something like this can be acceptable, but when it's repeated without solid reasoning it's a recipe for disaster.  For this reason I made sure to talk to this trader about the importance of maintaining an even emotional balance.

Though he was doing very well, it was no reason to get overly excited or supremely confident to the point that he broke the rules that got him there.

The trader accepted this by realizing he was in trading for long-term results rather than short-term gratification, and has seen his consistency continue with excellent results on a weekly basis.

At the same time, it's important for a struggling trader to never get too low.  Similar mistakes in terms of position sizing and aggressiveness are made during periods when a trader is frustrated with results, so it's crucial to maintain a long-term outlook and stick to the plan.  If you know you have a time-tested approach and you feel confident in its statistical edge, there is no reason to start pushing outside your trading plan and increasing size at a time when you are struggling a bit.  Eventually the edge will come good and you will continue to make strides, as long as you are determined to continue on when so many others would falter.

Lesson #3: You Don't Need to Be In Every Trade

The final lesson came from another of our STA traders, who reminded me of something very simple yet very powerful.  This trader had been struggling with inconsistency in his results  lately due to being a bit too aggressive in his trading.  In this case, the trader's desire to succeed and make profits each day often seemed to get the best of him as it would lead to trades he quickly realized he should not have taken as they didn't fit the rules.

This desire for trading success is a great trait, but occasionally it can hinder our progress if we don't keep it in check.

In this trader's case, the first step to finding a solution was taking a step back and doing some extra simulated trading.  He already knew that it was aggressiveness that was hurting him, but it was only once he put in the time and study that he actually realized the true impact of his recent trading actions.  As a result, this trader has now jumped to the other side of the spectrum as a very conservative day trader and his results are starting to improve.  He has realized that he doesn't have to get into every trading situation to make money as a day trader and this will free him up emotionally to better focus on the market as a whole.

In order to find trading success, it's vital that we find a personal style that is emotionally comfortable.  

Our day trading system as Samurai Trading Academy was designed with some individual flexibility in mind, and this trader has embraced that by taking a step back and re-building confidence.  By being patient and taking only the higher quality setups (trading with a sniper's mindset), this trader can build confidence and continue to grow.

The post Anatomy of a Trader’s 50% Week and Three Important Lessons appeared first on Samurai Trading Academy.

As I've talked about many times in the past, trading is a skill like any other and takes some time, effort, and persistence to develop to an elite level.  

Although we do use a very structured approach to trading here at STA that can lead to rapid consistency, we still need to maintain that long-term focus and aim to build on our results week after week.

STA Student #1 - Björn

First up, let's take a look at what Björn's results were like last week.  Björn is actually fairly new to the trading game overall but he has been improving at a rapid pace.  There's no secret here - he works hard and is determined to improve.  Lots of time testing and running simulated sessions has allowed Björn to quickly grasp many of the novice to advanced concepts we teach here at STA and his results continue to improve.

The journey is far from over however, and we will be continuing to work in the weeks ahead to build on these trading skills and improve both consistency and long-term profitability.

You can view Björn's trading charts for the week here. Comments are the trader's own (click to enlarge):

There's some very interesting things we can see from these results;

1. Wednesday was a great day for many of the STA traders.  A high win percentage combined with good reward/risk really made the week.  It isn't uncommon for most of a trader's profits to come in 1 or 2 "big" days, but it's still important that we aim to make at least a small profit every day if possible.
2. Friday is a great example of the importance of an excellent reward to risk ratio.  As our wins at STA are much larger than the average loss, we can have days where we only win 2 out of 6 trades yet still end up profitable.  This is very powerful when looking for day to day consistency which is what we look to achieve as day traders.
3. Over time a developing trader can expect to increase their weekly win percentage higher than in Björn's example, but in the early weeks we simply want to aim for a good trading expectancy.  The combination of winning more than we lose while having a high average win compared to our average loss will lead to excellent weekly profits.  In Björn's case, these 11.5 points would equal $575 in profits (less commissions) with 1 contract, or $5,750 with 10 contracts for the week.

STA Student #2 - EL

EL is one of the traders I really enjoy working with because he is honest about his performance and seeks out advice on a regular basis.  While we've hit a few sticking points along the way with EL's trading (a completely normal part of the process), he had seen substantial improvement in his trading discipline in recent weeks which is sure to pay off in the long term.

One thing to keep in mind about EL's results is that he only trades for 90 minutes most days and last week he didn't trade on Friday.  As a developing trader it is more difficult to find consistency if you're only trading within a short window of time but with a bit more experience EL should be able to pull out solid profits in just an hour or two the vast majority of trading days.

Here's a couple things to take notice of with EL's week:

1. Monday was actually a fairly difficult trading day but EL started to week off well.  There's nothing better than getting the week going on the right foot and it usually makes a trader feel a lot more comfortable with the days ahead.
2. Overall this was a good week in terms of win percentage.  This percentage will continue to rise in time but winning more often than losing gives a trader a lot of flexibility, particularly during the development phase.
3. Making 3.75 points in only 90 minutes per day is an excellent result.  This is nearly a point per day and is enough to do very well in the markets once trading with a bit of size.  The only thing that we really want to improve moving ahead is the reward to risk ratio, because there were a couple extra points left on the table.

STA Student #3 - Andraz

Andraz is one of our less experienced traders overall, but is very enthusiastic about learning to trade with our approach.  He often seeks out feedback and advice which shows his willingness to learn and improve.  Although new to futures, Andraz is showing excellent progress as well.  Now it's just a matter of time, focus, and determination to keep the development curve (and equity curve) moving upward.

Here are some charts for the week.  Keep in mind that some days have more than just one chart:

We see some similarities here with Björn's week but there's some differences as well:

1. The week started very slowly for Andraz, with just a few trades on Monday and Tuesday and not much in terms of profits.  That said, as long as you can be profitable most days and keep your equity climbing then you will do very well as a day trader.  Consistency is about more than focusing on making bundles of points every day - it's about making sure that you can still make a small profit even when the market isn't really moving at its best.
2. Wednesday was a good day that could have been great.  Unfortunately Andraz had a couple of trades that didn't fill for him on the pullbacks.  Sometimes this is unavoidable but in this situation and with a bit more experience, Andraz is likely to get filled on one or both of these trades due to his improved anticipation of the market action.  With 4 or more points on this day an excellent week would have been fantastic.
3. Probably the most interesting this about this week is the overall results.  Andraz actually lost more often than he won yet he still had a great week overall in terms of his total points of profit.  This shows the massive benefits of having a solid reward to risk ratio due to solid trading plan rules and good trade management decisions.  Over time, Andraz can expect his win percentage to increase substantially.  Just imagine the number of points that can be made if a trader is winning 60, 70, or even 80% of the time.

Learning to Trade The STA Way - A Natural Progression

At Samurai Trading Academy we understand that all traders develop at their own pace and in their own way.  It doesn't make sense to force everybody to trade in the exact same way simply because as human beings we all think and act differently.  To perform at our best, we need to be able to act within our psychological comfort zone.

Our approach at STA is to provide the trader the structure he needs to progress while having a trading plan that acts as a framework for further development.

The traders profiled here are starting to branch out a bit which is always a very exciting thing to see as a trading coach.  While I'm quite pleased with their current progression and results, the thing I look forward to most is to see what sort of traders they become in the months ahead.

It should be a fun journey and I'm very thankful to be working with such enthusiastic and determined traders here at Samurai Trading Academy!

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