Over the last few days we've been talking a lot about a profitable trading methodology.
And for good reason.
Having a profitable trading methodology is a proven method to be one of the fastest (if not THE fastest) way to gaining wealth, resulting in a net gains...profits over losses.
But there's a big problem.
90% of traders fail.
They lose money.
Someone opens an account, deposits $5,000...or $10,000...or $100,000...and then nothing happens.
They see tons of tickers fly by, but they are paralyzed by information overload. Sound familiar?
The good news?
There's a reason for all of this failure, and it has nothing to do with being an avid reader or having the perfect trading office setup, or any of that.
It's all about "analysis."
"Analysis" = Disqualifying suboptimal trades and focusing on the right ones.
Listen, if the spend time on the wrong trading idea, it's game over.
Profits are not going to "Friend you on Facebook," or text message you when they're ready to show up. I don't care how good your office set up is, how fast your machine is, or how amazing your 8-monitor set up is. You have no chance. Save your money.
And the sad part is so many fall into this trap. There are websites set up that publish "tricked out" trading desks. What a joke. Most of the old timers had one machine with a CRT monitor that they ran and the end of the day.
Check out what some other readers have said:
"I like that podcast with Peter Borish. He really breaks it down to what traders need to focus on. He didn't mention anything other than putting the analysis in..."
"It makes perfect sense. I can spend 100 hours diligently studying someone else's rules and sub-optimal set-ups. And after the 100 hours, they'll still be sub-optimal set-ups."
"...spent 7 weeks trying to force a trade on top of TSLA when there was nothing there. It's humiliating, but at least I won't be wasting time doing that again."
It looks like I wasn't alone when I talked about wasting money on hardware.
But like I said, we're all just 1 small tweak away from eventually turning $1 into $2 in trading profits...if we get our analysis right.
That's all is takes. The big "aha" moment.
You just need to make sure you avoid the 3 fatal mistakes we talked about yesterday. (Here's a quick recap)
Mistake #1: Focus all your time on intraday charts and especially the right side of the chart
Mistake #2: Focus all your time on finding "the best" technical indicator
Mistake #3: Focus all your time searching Twitter or TV for the next big trade
Instead of making these 3 mistakes, spend your time on the only thing that matters...your analysis!
Why You Need Solid Analysis For Your Trades...
Remember the case study I mentioned to you last week?
That account started with $50,000 and I grew it to almost $300,000 in 7 months.
This is the trade where I posted 35% of my equity in Sugar margin in a very calculated manner after extensive analysis...
...and generated over $71,000 in profit (that's over 350% Rate of Return).
Or this trade in COMEX Gold a few months later for almost $45,000!
You want to know why I was able to generate those types of gains and grow this account over 5-fold during that time?
Detailed Market Analysis.
Not by accumulating these "piker" $200 day trades. Big winners that go right to your bottom line (and also pay for your losers, because you will have them).
You only take risk when the risk is worth taking - and most of the time IT'S NOT WORTH TAKING.
If you're willing do to the work like I know you are, you ought to get paid for it, right?
Here's How You Analyze the Right ideas...
I call it "Top to Bottom, Left to Right Drill-Down."
If you start thinking, "Is this type of trade worth the risk I'm willing to take?"...
You'll most likely come up with only a handful of ideas, right?
If you're an equity trader...
If you're a commodity trader...
If you're an ETF trader...
Even, if you're an options trader...
...you get the idea.
But if you went out relied on other trader's analysis...your analysis and trading will fail.
You need to drill-down. Deep.
Drilling down means asking yourself one simple question...
"Which reward to risk ratio am I the most comfortable with?"
Let's take the equity traders first.
The first group I think about targeting for trading profits are tech stocks. So, I ask myself...
"Which are the characteristics of Tech Stocks?"
Well, most likely the ones with high daily volume. (I don't want to be the only one in the trade.)
So, now I've drilled down to: Tech, High Volume.
Drill down again...
"Which high volume stocks do I want the most of?"
Answer: the ones with directional volatility
So, now I've drilled down to: Tech stocks with high volume and directional volatility...
Drill down again...
"Which of those do I want the most of?"
Answer: Tech stocks that have high Institutional Sponsorship.
So, now I've drilled down to: "high volume tech stocks with directional volatility in strong hands."
Get the idea?
The problem we all make is we don't take the time to sit down and really go through this
exercise...and it leaves us with great intentions that get wasted on the wrong trades.
Of course, there is a lot more to analyzing trades than just this one strategy...
Once you’ve used this Drill-Down technique, there are still questions like:
1. How do I actually evaluate the risks associated with these trades?
2. When do I know to put on the trade?
3. How do I customize this process so that it fits my personality and psychology?
If you want answers to these questions and are ready to be taken by the hand and shown the
exact process, I can help.
My colleague Scott Kaminksi and I are just put the finishing touches on a brand-new course that will walk you through a proven step-by-step system for analyzing securities so that you can eventually get $100 back for every $200 you put to risk.
It’s called the Trader Mastery Program.
It will be available to purchase tomorrow at 7:00 a.m. EST.
I’ll be sending you all the details in the morning...and there are a few surprises too.
Keep an eye out for that email...
See you tomorrow.
P.S. A quick action item for you: I want you to go through this drill-down exercise right now on a piece of paper.
Think about your favorite stock or commodity...
Then start drilling down.
Once you get your ideas on paper, hit reply and let me know how it goes. :)
I'm interested to see what you come up with.