Trading Rule 2 You Don't Need To Predict To Make Money

[Brendan Egan]

My second trading rule reads "You don't need to know what is going to happen next to make money. Being wrong is fine and expected". As a newer trader, whenever I would have a losing position, I would freak out. This is probably because I went 2 months as a new trader not having one single losing position and actually making an over 20% return. This is probably what messed me up the most as a new trader and part of why my learning curve was so steep.

So naturally once I had a losing position, and even my first string of losing positions, I freaked out. I thought I was doing something completely wrong and that by having losing positions I was a losing trader. I didn't realize that even professionals have losing positions, and dozens of them. Losing trades are completely normal and are expected, which is something we talk a whole lot more about in section 4 of the price action course.

In addition to this, I used to think I needed to have a crystal ball and predict the market movements in order to make money. I am a day and swing trader and not a buy and hold investor. My methods are designed for four groups of traders: scalpers, day traders, swing traders, and active investors. My methods are not designed for buy and hold old-school investing where you buy something in 1990 and don't even touch it again until 2020. Because of this, I never need to make any predictions on the market direction, but rather simply need to follow my methods and do whatever my 10 trade setups are telling me to do.

I bring this up because I used to think I needed to know exactly what is going to happen next to make money. I still don't know nor do I care what the market will do in 2 weeks, but rather I do care about what my method is telling me to do and what trades I should and shouldn't be placing. There is a big difference between anticipating a position and planning a trade versus predicting market movements, and once I learned this and added this one simple rule to my trading rules my results improved dramatically.

[Tomross58]

Hi Brenden,
This was very helpful as I struggle with this. After a losing trade or a couple in a row I havent learned to just accept those (providing they were done for the right reasons) and look to the next trade which could be profitable and maybe a few winners in a row. I am trying and hope to learn from your post,,,thanks

Tom

[Brendan Egan]

Hi Brenden,
This was very helpful as I struggle with this. After a losing trade or a couple in a row I havent learned to just accept those (providing they were done for the right reasons) and look to the next trade which could be profitable and maybe a few winners in a row. I am trying and hope to learn from your post,,,thanks

Tom

It certainly can be difficult, however eventually it will all click into place. Remember to look at the big picture and not each individual trade along the way.