So this post is mostly to change the perspective of what we look at when we trade, especially the way we think of trading profits.
I’m going to put this spreadsheet out first, and then explain why I think its important to look at trading profits the way that its laid out in the spreadsheet.
Now obviously there are going to be people who are going to say “THAT IS UNREALISTIC” and “YOUR GOING TO HAVE LOSES”.
Obviously your going to have losses when trading. Your most likely not going to be going all in on all your trades, and obviously your not going to hit your profit percentage every single time.
I know, I understand. Now that that is out of the way, let me break down why I truly believe this chart is important.
When I look at this chart, the number one thing that comes to my head is..
How little trades it took to get to those high profit numbers. I believe this is important because so many of us traders over trade, even when we think we’re not.
The reality, it truly doesn’t take that much trades to get to the desired target you want.
I believe it is more about patience however. In that spreadsheet it shows that it took only 30 trades to get to get to to pretty ridiculous numbers, with varying percentage gains of course.
This is the power of..
Sticking to your setups, that also give you great risk reward. The reason why the numbers increase so quickly is not because there are a lot of trades being taken, its because when a trade is taken, the return is bigger than a usual day to day return.
So, you can try to take 10 trades a day and make $5,000 in a month, going back and fourth from winning trade to losing trade, which is fine.
Or, you can try and snipe those easy trades, those easy set-ups that don’t arrive as often as the everyday plays, but can provide huge returns.
I personally prefer sniping trades. For me, its less stressful and more rewarding. I don’t like being the trader who has to try and $.15 – $.20 cents on a position everyday. The sniper method is more calm and relaxed. Simply waiting for the opportunity
Would you rather chase around mice everyday to kill and eat?
Or would you rather sit up at the hill top with a sniper and patiently wait for a big herd of deer to cross your path. You don’t need to kill many, just one. Because that one will do much more for you than a months worth of mice you caught.
The other important aspect is having profit targets on every trade that make the “hunt” worth it.
Find plays that will pay out big if they go in your favor, and simply cut them when they don’t. Just because you have a bigger profit target in terms of where your exit is on the chart doesn’t mean you have to risk more capital.
You have the option to hunt “big fish” so you don’t have to stress about hunting everyday, Or trade everyday, as long as it fits your personality.
Obviously this is just my advice. If your personality is to scalp 50 times a day, I am not knocking that at all. As long as it works for you. I just think that a lot of beginner traders don’t truly understand that in trading, less can be more.
Much more than we think…