Although you might think that hedge fund managers are very different from you, the only real difference is the amount of money you have to trade with. This is the only real difference as the other differences are minor.
The professionals start out trading just like you, but they also learn how to trade like them, how to make sure their strategy is the best and how to fine-tune their strategy. They also learn to control their emotions and behaviors in the market. This is probably the biggest difference between amateurs and professionals.
If you have enough time and experience, almost anyone can make a profit. However, it is not enough.
If you are a professional at a certain trade, you can be at the top of your game without the emotional attachment that can be a distraction to your performance. This is the difference between a professional and an amateur.
The only way anyone can successfully trade these large sizes is to have complete control of their mind and actions in the market.
It is Just Zeros
The ability to think about the money in your trading account in a new way is the most important thing you can do to succeed.
If you are looking to start trading on the stock market and want to know more about the different types of trading accounts, keep reading. You can learn more about them here.
To manage a billion dollar position, you have to treat it like a million dollar position. All of the information you are receiving is simply digits on a screen. It’s all just zeros and ones.
There are a number of things that can affect the amount of money in your trading account. You can’t allow yourself to be affected by the amount you have at risk.
- You should only trade with money that you can afford to lose.
- Know your net worth, the amount of money that you have available to invest.
- You can risk a small amount of your liquid money by trading each trade.
The final steps to trading like a hedge fund manager lies in how you think about the money you’re trading.
How can they do that?
If you think of your trading account as a “just a number”, you are able to remove the emotion from your trading decisions. Hedge fund manager simply thinking about their money differently than you are, and as a result, they are able to function in the market essentially as if they’re trading a demo account.
If you have traded a demo account successfully and then when you transitioned over to a real account you blew it out in a month? Why did this happen? It is because you were letting the money control you on the real account rather than you controlling how you thought about it like you did on demo account. Don’t let it affect you.
You have to take control of your finances, don’t let the money control you and you control the money in your account.
If you believe in yourself, you’ll find a way
If you want to become a successful trader you have to change your mindset. The first step in achieving anything in life is convincing yourself you can do it and really believing it.
Trading is a game of confidence, if you don’t believe in yourself you can’t be successful.
Is a hedge-fund manager or trader sitting in front of his screens everyday, day trading?
Day-trading is the hardest way to make money and it is most stressful.
Hedge-fund traders take a macro view of the market and then check for opportunities by looking at the price action on the charts.
The advantage that you have as a smaller retail trader, is price action is the true footprint of money on the charts, it literally shows you what the hedge funds are doing. The price action is a true representation of the way money is moving on the charts. It is only possible if you combine the price action with self-control, consistency and discipline.
How would a hedge-fund trade a large account? Slow, consistently and masterfully. You must trade slowly, consistently and masterfully. The difference between a small trading account and a large trading account is just the size of the account. It’s the amount of money you can make with your account. You literally have to trade your small trading account AS IF it’s a big account!
You aren’t looking for quantity; you’re looking for quality of trades. One or two good trades a month is all you really need. You may have to wait patiently like a crocodile for days or even weeks either for an ideal trade to form. This slow, methodical approach is what works. The ideal method to achieve this is to use price action t and intense self-discipline is how you will make your money as a smaller retail trader. This can be done by studying the charts and looking for patterns.
Until you can trade a small account successfully over a significant period of time, you will not be able to trade a larger account successfully. Thus account size, simply doesn’t matter.
Here’s what’s important:
- Your ability to trade with discipline.
- Your ability to trade on a consistent basis
- You have learned how to trade using price action.
- Daily chart, end of day trading.
- Low-Frequency Trading.
- Money management.
Put it all together
You know that dream you have in your head? You might have a dream of making money online without having to deal with traffic. Don’t give up. Don’t even think about it.
Forex trading is a game that is almost entirely mental.
The hardest part of trading is what happens after you have made a trade. It is the emotions you feel when making the trade that is the hardest part.
If you don’t have the power to control your feelings and your behavior, you are in a state of weakness. Once you take that power back, you are on the right track.