Guillermo Monguia / プロファイル

[The hidden cost of copy trading that nobody tells you]

Copy trading is a business.

So, if you’re not being charged any upfront fee, then you’re paying more for the spread and overnight fees.

I’ll explain…

For most Forex brokers, the spread on EUR/USD is 1 pip. But on a copy trading platform, you might pay 2 to 3 pips more.

But don’t take my words for it because you can compare the spreads of a normal Forex broker with a copy trading platform and you’ll see the difference.

So, what’s the implication?

Two things.

#1: If you’re a trader being copied, then bear in mind your trading strategy won’t work as well because you’re paying more in spread (compared to a typical Forex broker).

#2: If you’re copying another trader, then it’s best to follow traders who trade infrequently so the spread doesn’t eat up a huge chunk of your profits.

Now, the spread isn’t your only cost because you still have to consider overnight fees (if you’re holding positions for longer than a day).

This fee is calculated by taking Libor + X%.

(Libor stands for inter-bank offered rate. It’s an interest rate that banks charge to other banks for borrowing the money.)

So, what is X?

Well, this is the mark up that’s determined by the copy trading platform and you’ll need to check with them for the exact amount.

The good news is, you don’t have to worry about calculating all these because the platform will likely do it for you—so do check it out before placing a trade.

Now, there are probably other fees to consider but the spread and overnight fees make up the chunk of it.

If you manage your risk, your profits will take care of itself.

If you don't, your parents will take care of you.

[Pullback stock trading tips]

When it comes to stock trading, it’s possible to have hundreds of stocks forming a pullback trading setup at the same time.

So the question is:

How do you know which stocks to buy and which to avoid?

Well, the secret is to focus on stocks which have increased the most in price over the last 12 months.

Why?

Because these are stocks likely to outperform the market (and it’s been proven in theory as well according to the paper Returns to Buying Winners and Selling Losers by Jegadeesh and Titman).

So, how do you apply this to your trading?

1. Rank stocks according to their rate of change (ROC) over the last 50-weeks—from the highest to the lowest

2. Look for a pullback trading setup on stocks with the highest ROC value. If there isn’t, then move to the next stock (with a lower ROC value)

3. The top 5 stocks with a valid pullback trading setup are the ones to focus on

No one can consistently predict the markets, call tops and bottoms.

So just follow price. Ride winners. Cut losers.

You'll be much further ahead than trying to outsmart the market.

[Always be a student of the markets]

Here’s my learning curve as a trader:

I started with indicators, then price action trading.

And for a few years, I thought that’s all I needed because after all, the price is king and that’s all I needed to be a profitable trader.

But that hurts my growth because I tuned out everything else (and limited myself only to price action trading).

When I realized my folly, I quickly went back to being a student of the markets.

So I asked myself:

“What are other winning traders doing to profit from the markets?”

That’s when I got exposed to trend following, systems trading, mean reversion trading, etc.

By expanding my knowledge and incorporating different strategies, I was able to find more trading opportunities (most traders are blinded to).

So here's the deal...

You may (or may not) be a profitable trader but, it doesn’t mean your learning curve is over because you’re always a student of the market.

I encourage you to keep learning and exploring new strategies. Don't limit yourself to just one approach, because there's always more to discover.

Ultimately, the key is to remain open-minded and willing to try new things. It can be scary to step outside your comfort zone, but it's often the only way to achieve true growth and success.

[Follow your trading plan regardless of each trade’s outcome]

When I was a 7-year-old, my teacher would give me a “star sticker” whenever I put in the effort to do my homework, regardless of whether the answer is right or wrong.

In other words, she rewards effort, not the outcome.

If you think about it, this approach is highly suitable for trading.

You should reward yourself whenever you follow your trading plan regardless of whether the trade is a winning or a loser.

So here’s how the star system works…

Every time you follow your plan, you get 1 star

Every time you didn’t follow your plan, you get -2 stars

The goal of the star system is to accumulate 100 stars

As you can see, the focus isn’t to make profits.

Rather, it’s to accumulate as many stars as possible by being consistent with your actions.

Remember, a consistent set of actions lead to a consistent set of results.

Good trading isn't about how much you make.

You can make money on poor decisions and lose money on good decisions.

Instead, focus on the process.

Trade with an edge. Execute your trades consistently. And have proper risk management.

“Insanity is doing the same thing and expecting different results.”

Don't take losses personally because the market has nothing against you.

It doesn’t know who you are, what you do, or why you traded.

Instead, it’s an opportunity to learn what works and what don't, so you can become a better trader—and that’s how winning is done!

[Be prepared for a steep learning curve before profitability]

I’m sure you can agree:

Professionals like lawyers, doctors, pilots, etc. spend 5 years (or more) to master their craft.

That’s why in the early years of their career, they typically don’t “see the money” as they are in the learning stage.

But when they get good at it, BOOM, the money starts rolling in—but, it doesn’t happen overnight.

And it’s the same for a professional trader!

You’ll take years to build your foundation, make mistakes, find your edge, and if you survive long enough, you can’t help but get good at it.

So, don’t come into trading thinking you can quit your day job after taking an online course—it doesn’t work that way.

There’s a steep learning curve ahead and you must be prepared for it.

You’ve been warned.

7 ways you can exit a trade:

1. Trailing stops
2. Support & resistance
3. Fibonacci extension
4. Swing high & low
5. Setup is invalidated
6. Previous candle high/low
7. Time stop

Bonus: Margin call

[How to grow a small trading account (that nobody tells you)]

It’s easy to grow a small trading account.

Want to take $500 and double it within 2 days?

Want to make 50% a week?

It’s easy because all you need to do is risk a huge % of your account on each trade, and if the trade goes your way, BOOM—target achieved.

But here’s the thing…

Just because it’s easy doesn’t mean it’s feasible.

Sure, you can double your account in a few days. But, it’s also a matter of time before you give everything back to the markets, and more.

The solution?

Instead of looking for shortcuts, let time and money be on your side.

This means you’ll regularly add funds to your account and compound your returns.

A casino doesn't make money by predicting.

They manage their risk and let their edge play out—and it's the same for trading.

[Be realistic and know that you won’t make money every day]

Here’s the thing:

A trading strategy seeks to exploit certain market conditions in order to profit from it.

(For example, Trend Following makes money when many markets are trending together.)

But as you know, the markets are always changing. One moment it could be trending, the next, it could be ranging.

In other words, you’ll make money when market conditions are favourable to you.

When it isn’t, your trading strategy will lose money—which explains why you won’t make money every day (as market conditions change).

Trading one strategy with discipline beats 10 strategies without discipline.

Stay focused my friend.

Advice to new traders:

You’re not going to get rich quick

Don't hop from system to system

Have a planned exit for every trade

Limit your loss to a fraction of your capital

Your entry is only a small part of the equation

The early years are for learning, profits come later

Trading will not make you rich.

At least not next week, month, or year.

But if you persevere, protect your downside, and compound your returns—you will make it.

[The ONE thing you must have in trading that nobody tells you]

This is one of the biggest trading myths which have fooled most traders…

“If you have a winning trading strategy, you can use it to make millions of dollars from the markets.”

That’s B.S.

I’ll explain…

Yes, you can have a winning strategy but, it doesn’t mean you can make millions of dollars.

Why?

Because the size of your account matters!

Let me give you an example…

Let’s say you have a trading strategy that makes 20% a year.

On a $1,000 account, that’s $200/year.

On a $10,000 account, that’s $2,000/year.

On a $1m account, that’s $200,000/year.

As you can see, your trading strategy is one part of the equation, the other equally important aspect is the size of your account.

And this is the same reason why hedge funds raise millions, if not billions of dollars—they need money to make money in trading.

No market trends all the time.
No range sustains all the time.
No strategy works all the time.
That's why you MANAGE RISK all the time!

Always use StopLoss