Something EVERY Trader Needs To Know

Estimated Reading Time: 5 minutes

Originally I am from Germany, but for the past 9 years I have been living in Austin, TX. One of the many things I really enjoy about living in Texas is the excellent BBQ. And, of course, I love to BBQ in my own backyard.

Make no mistake, there's a HUGE difference between "grilling" and "barbequing". And I learned quickly that you can't call yourself a true "Pitmaster", unless you have mastered the Holy Trinity of BBQ: Brisket, Pulled Pork and Ribs. I can nail the brisket every single time, and my Pulled Pork is outstanding, but my ribs still have some room for improvement.

So what does THIS have to do with trading?

Let me explain.

In order to make the perfect brisket, you have to master three areas:

  1. Mindset:
    You can't rush a brisket. It takes at least 12 hours to cook, and there are no shortcuts. If you are impatient, or look for a quick fix, you will fail.
  2. Method:
    Obviously, you need a great method to prepare the perfect brisket. It all starts with the right meat, a great spice rub, a professional BBQ pit, an awesome BBQ sauce, the perfect temperature, ... and much more. If you mess up just one of these things, you can ruin your brisket.
  3. Management:
    I know it might sound a little bit weird, but when you cook for 12 hours, you need to manage your pit. You need to fire it up at the right time and regularly feed more firewood so that the fire doesn't die. And lastly, you need to constantly monitor the temperature, and check the meat to make sure that it is not cooking too fast.

Back to trading ... if you want to make it as a trader, you have to master the same three areas:

Mindset, Method, Management

If you fail in any one of these areas, you will fail as a trader.

In the following section, I will give you a quick overview of what I am talking about, and in upcoming posts, I will cover these aspects of trading in more detail.

Trading Mindset

Trading is a business, and you need to treat it as such. It is not a game! It is not a "get-rich-quick" scheme! If you need money right now to pay your bills, then day trading is not for you!

As a day trader, you need to be disciplined, focused, confident and organized.

You must be able to create a trading plan and then execute the plan.

And you must also be able to control your emotions. As a trader, you will experience emotions like greed, fear, anger, frustration, stress, anxiety, just to name a few. As you can see, most of these emotions are negative emotions, and if you can't control them, they will take over and sabotage your trading.

So here is the trading mindset you must have. You need to realize that trading is a marathon and not a sprint. It doesn't matter whether you made or lost some money today, because you have to keep the big picture in mind. Even the best traders have losing days and losing weeks. Keep your eye on your objectives, and make sure that in the long run, you have more winning days than losing days, and more winning weeks than losing weeks.

Trading Method

You must have a method to reliably determine which way the market is moving: up, down or sideways?

Because knowing the direction the market is moving in, will help you apply the right trading strategy. Use a trend-following strategy in a trending market, and a trend-fading strategy in a sideways market. If you use a trend-following trading strategy in a sideways market, you will get whipsawed and frequently stopped out.

A doctor first diagnoses a patient before prescribing a treatment. As a trader, you first have to diagnose the market and identify the market condition before applying a trading strategy (treatment).

You also need to make sure you also understand the characteristics of your trading strategy. Is it a trend-following strategy, a trend-fading strategy or a scalping strategy? Knowing which market conditions your trading strategies are best suited to, and then patiently wait for these conditions, will greatly improve your trading performance.

Management

There are several areas of "management" that you need to master:

  1. Trade Management
    Limit your risk by using a stop loss. And take profits while they are there by using a profit target. Don't let a winning trade turn into a loser.
  2. Money Management
    It is proven that improper money management can wipe out your trading account despite having a profitable trading strategy. Make sure you understand money management and use it appropriately to grow your trade equity.
  3. Business Management
    Trading is a business, and you need to manage your trading as such. You must set goals and have a plan on how you will achieve these goals. And of course, you need to keep records, not only for tax purposes, but for your own business analysis. It is critical to know what time of the day you experience winning trades and when have losing trades? Are there particular days of the week where you are more or less successful? Are your long trades outperforming your short trades? Do you experience more losses in one market over another? When you KNOW your strengths and weaknesses, you can adjust your plan accordingly and increase your overall trading performance.

In this post I have just scratched the surface. In upcoming posts, I will explain these areas of trading in more detail.

Do you agree?

Leave a comment below!
I'd love to hear your feedback.

Facebook Comments:

Leave A Reply (45 comments so far)


  1. Stephen
    3 years ago

    You seem to prefer to kick yourself out of the market rather than letting the market kick you out by using profit target. Why not using trailing stop for maximum profit ?

    [Reply]

    markus Reply:

    Great question. The old adage "Let your profits run" was coined during a time when we still had great trends in the markets. These days computerized trading and scalpers are killing trends shortly after they started, and markets turn around on a dime. In one of my next posts I will prove that in these volatile markets profit targets are more powerful than trailing stops.

    Stay tuned :- )

    [Reply]


  2. robert d gurney
    3 years ago

    hey kids !! the 4 indicator set up that i read from rockwell ma, macd, stoc and force index??? how closely do they relate to the 4 technical fundementals of price volume support and resistance, trend???

    [Reply]

    severino Reply:

    Marcus,

    I just want to thank that I've found your website. Ever since I'm reading all your email always add a new knowledge about a good trader. I'm just new to this trading market and hoping for more advice and more knowledge to come from you. For this time I will continue reading your ebook and from there I will apply all the basic rules and technique. Once again thank u...

    [Reply]


  3. Michael
    3 years ago

    Markus:

    This first blog you write touches exactly where my mind and thoughts need to focus, because if I don't have this part down, everything going forward will be a supreme waste of time AND money! We need to play back these words to ourselves often, experienced traders and novices like me. Keep writing and I will keep reading!

    Thank You so Much!
    Michael

    [Reply]


  4. Voice Broadcasting
    3 years ago

    Markus,

    I never heard this stuff associated with doing a yee haw bbque, but it's a great one!

    Though this is basic, foundational trading stuff - it's well put.

    And I believe that this is 80+ % of the trading game so seasoned traders always need to keep themselves in check with these 'rules'.

    It's a great way to start off your blogging. Looking forward to more!

    Mark

    [Reply]


  5. Derek
    3 years ago

    I am lacking in all this, but as beginner I am hoping to learn. Thanks for the Blog and the insight.

    [Reply]


  6. Ngoc Tuan NGUYEN
    3 years ago

    Thank a lot Markus. Your article help me to think about the way to plan money management.
    Because I know, I have to learn, to try more in this discipline.

    Best regards from Munich (Germany)

    [Reply]


  7. Z
    3 years ago

    Trading 30 year bond. Cuts down on trading cost!

    [Reply]


  8. Doctor Stock
    3 years ago

    Great to see your first post... now I'm hungry. Looking forward to reading more!

    [Reply]


  9. Fred Lewis
    3 years ago

    I have been trading stocks, forex and now futures and I can say with no hesitation that everything Markus is saying is true. IMO stops are an absolute MUST DO. Going into a trade without stop loss order is creating unnecessary risk. Thank you for starting this blog!!

    [Reply]


  10. A. Regeelk
    3 years ago

    Do you teach option trading? and if so is there any mentoring

    [Reply]


  11. thierry
    3 years ago

    hello Markus ...you come from Germany , i come from France , you live in Texas , i live in Florida ....i have the same passion for the market ....but still a lot to learn ....and working full time does not help , some evening i am too tired ....one thing that can help beginner like me , is that i copy and save a lot of charts that i keep in my PICTURES , then 3 months later , i copy and save the same stock chart and try to see if i was right or wrong and why ....copy and paste has the avantage that i do not use paper ...thank you for your blog
    thierry

    [Reply]


  12. DC Hendrixson
    3 years ago

    Look at the military. They train, train and then train more. Pilots fly even though there's no war. The military spends about one million just to train a combat ready soldier. Their training never stops because they know a rusty soldier is a dangerous soldier. Every training exercise or combat mission is evaluated so it may be corrected and be accomplished better the next time. They are also given some to the best tools of the trade to fight with.

    If trader's have good tools, great training with an attitude of never stopping their learning then they should be successful. Unfortunately, it's been my observation that most traders give away thousands and thousands because they believe they can do this after reading a couple of books, going to a few training sessions and watching a few webinars. To stay on top of any profession you must continue to learn. Professional athletes still need coaching and continual training to correct mistakes. Why should trading be any different?

    [Reply]


  13. Nico
    3 years ago

    Great Information, thanks for the share, please keep posting.

    [Reply]


  14. Irwin Godin
    3 years ago

    Beautifully creative article. From pitmaster to pipmaster. Appreciate your contributions.

    [Reply]


  15. Abdul bari
    3 years ago

    Hello,

    I like your blog and your day trading strategy specially ping pong one. There is no system that can beat the market all the time but i found trending strategies atleast put you on the right side of the trend atleast once in a day.If combined with strong money management system its very much possible to end up winnnig at the end of the day despite you lose more trades than you win.

    Thanks,

    [Reply]


  16. Bhanwaar
    3 years ago

    Great example, however there are various ways to skin a cat. I wait and patient for the right signal or setup and take the trade. I keep my setup simple since too many spices sometimes ruin the taste.

    [Reply]


  17. JANET THORNE
    3 years ago

    THIS IS ONE OF THE MOST THOROUGH, BASIC TRADING COURSE WITH EXACT STEPS TO TAKE I HAVE RUN ACROSS. I GET A PIGILLION E MAILS AND COME ONS, SO MANY, THAT I HAVE BEEN ON OVERLOAD, AND YET NO CLEAR STEPS, AS PRESENTED IN YOUR OFFER.
    I AM TRAVELING WITH MY WORK AT THE PRESENT, BUT AS SOON AS I RETURN HOME, AND CAN DEVOTE MY FULL TIME TO THIS COURSE I AM PURCHASING IT. I HOPE IT IS STILL AVAILABLE. I WORK FOR THE SMALL BUSINESS ADMINISTRATION, (FEDERAL GOVERNMENT), AS A CONSTRUCTION ANALYST ON THE DISASTER TEAM. WE HAVE BEEN QUITE BUSY THE LAST 3 MONTHS. BUT, NO DISASTERS, NO WORK, SO THIS IS WHY I HAVE BEEN INTERESTED IN TRADING.

    [Reply]


  18. Speedy
    3 years ago

    You just nailed it on the head, for most beginners like me you look for the holy grail and get sucked in by the wolfs on the internet and by the time you opend your eyes it's to late 'kaboom' you lost all your savings and walkawy with nothing, to be come a successfull traider is to master your BBQ, have a plan. Thanks for the info. I trade GMT & EST time

    [Reply]


  19. Vinay
    3 years ago

    Simple but very important fundas for traders.

    [Reply]


  20. souvik
    3 years ago

    Must follow rules!!!

    Great reminder!

    [Reply]


  21. gerardo
    3 years ago

    Thanks so much for the posts. they are definitly very interesting to read.
    Thank you Markus! Keep it up.

    gerardo r.

    [Reply]


  22. Gary Brooks
    3 years ago

    I don't care how many times I hear this or read about this topic.... You are 100 percent correct! I have been trading the currency markets for years, and the only thing I would change, is to put an exclamation mark on the "mindset" part.... Everything else is important, but without mastering the "mindset" or "mental" game you can have the best system in the world and still fail... IMHO... Thanks for your blog!

    [Reply]


  23. Jan
    3 years ago

    Thanks ! I find it sometimes difficult to judge what is the exact amount of patience to excert. Guess that's where trading rules come in ... like trading itself - some you win and some you lose as long as you remain consequent.

    [Reply]


  24. Uttam Kurle
    3 years ago

    The Perfect Explanation.......Great Learning.........Thanks......

    [Reply]


  25. Mike Kerfer
    3 years ago

    As an option trader especially I totally agree with not letting a profitable trade turn into a loss. Happened too often too me - never again! All part of Trade Management, that I completely agree with.

    [Reply]


  26. adama
    3 years ago

    I agree and Marcus is right on. Thank you for the great insight. I know they say don't look back and there is another trade tomorrow, but fear tends to immobilize us and often times when we do, sometimes outsiders give bad advice. I now look to the professionals for advise. (And I switched brokers.) Still a newcomer to the extended trading, I have something to learn every day. Thanks Marcus.

    [Reply]


  27. Steve Mayer
    3 years ago

    Good Read. Good Info As Always.
    Thanks

    [Reply]


  28. princely
    3 years ago

    Am just too emotional in almost everything and it is fussing my trade may be trading is not for me that what your post remind.

    [Reply]


  29. Manuel
    3 years ago

    Yes, these're the main and principle features of the game. They're hard to get!..
    You may have born with it or you may have to learn it.
    "Things don't change, we change it!"

    [Reply]


  30. Joseph Said
    3 years ago

    Thank you very much Markus for introducing your blog. Your comments are very enlightening even though they are just the tip of the iceberg. Looking forward to have much deeper explanations on the three topics you mentioned.

    [Reply]


  31. Jose Herrera
    3 years ago

    Markus, thank you very much for your time and effort; its brilliant the way you compare those skills the one in the kitchen and trading, but i still feel that some of the negative emotions that we experience during the traading sessions, what's the solutions for those? I would like you to be more explicit if you can off course to let the people know how to overcome those emotions; and again thank you for your blog, very good and enjoy your BBQ.

    [Reply]


  32. Susanto Susanto
    3 years ago

    absolutely, I agree with you Markus! as like as Elder says about 3M. thanks for sharing, master. :)

    [Reply]


  33. Anand Sharma
    3 years ago

    I have been trying to day trade for the last one year or so with more time being spent in the last two or three months. In spite of the number of times I have read the various requirements of day trading, it is still a pleasure and a must to read it again. I am looking forward to your blogs giving more explanations on the 3M. I have to learn a lot more and constant inputs like these will firm up my emotional strength. Thanks

    [Reply]


  34. Dana Austin
    3 years ago

    always good when involved in a trading program such asRockwell to have the founder and head teacher careing enough about his studentsto continue to stay in touch and continue their education in regard to the rockwell method of trading. this and along with the daily videos with Mark and Rollie are a great aid in gaining knowledge and confidence in our trading. thanks much.

    Dana

    [Reply]


  35. Richard
    3 years ago

    Thank you, your article should be called "THE LAW'.

    [Reply]


  36. mike mueller
    3 years ago

    I have lost so much I don't know what to do! What's next give you some more money? Didn't work before why now?
    I have lost to much and never had a wining week/month/year. Trade plan or not.
    Sorry ,I am, now afraid to trade.

    [Reply]


  37. Madhava Warrier
    3 years ago

    Really usefull to both beginners as well experienced. thank you

    [Reply]


  38. Jacob Pretorius
    3 years ago

    I have been trading for three years now and came across Markus's trading strategy and I must say this is the best I have ever seen. Try it you will love it

    [Reply]


  39. gaspy
    2 years ago

    One important fact is to separate trading and casino. Many people, especially in USA, are attracted by subpennies stocks, at 0.0005$ one day and at 0.0010$ the other day ( +100%).The probablility to see +100% on such a stock is 1 time a month, so you can think to buy 4 or 6 stocks . Of course you can put 50$ on each, and 50$ again when the price is at the half and you put an exit at 2 times your new breakeven point, it will be reached,be sure, IFthe stock can be traded. The danger is not the 50 or 100$, the danger is not your entry or your target, the danger is not a bad money management, danger is either delisting - but you lose only 100$-, or, the worse the no-DTCC listed. In this case you cannot exit or only with huge commission and you cannot transfer your stocks.You risk to be with 600$ of papers you cannot sell or completely lose. You are lonked to your broker! So I think it's better to avoid subpennies andOTBB market, and to trade only NYSE NASDAQ or a good price AMEX stocks. In fact , it's better to trade company which have positive earnings than a company which is losing money for 10 years.
    Let ask you if you buy a piece of a company with a book value or a piece of paper without value.

    [Reply]


  40. Debra
    2 years ago

    Very pertinent and straightforward information. As a fairly new trader, I appreciate the simplicity of your teaching style..KUDOS!

    [Reply]


  41. Mriazkamran@gmail.com
    2 years ago

    Markus:

    Read your book Day trading strategy and also watched videos. Simple and straightforward.

    1. As you mentioned in video, you only use Volatility based charts for day trading, which is 20 tick bar chart. Searched hard trading platform has option to use Volatility based charts with ticks bars. Do you have an idea which system supports this option and approximate cost?

    2. If can not find tick bar charting software, and want to use time based bar charts then what time frame would you think close to tick based bar chart?

    3. Placing an order, one tick above high of bar (in uptrend) and one tick below low of bar (in downtrend), how many cents you consider equal to one tick? And if using time base charts then how many cents will equal to one tick bar (rouoghly).

    Thanks, Kam

    [Reply]


  42. Aj
    2 years ago

    Hi Markus.....i like to keep it simple too. I like the trade set up you showed on the gold. 20 tick bar, macd @ bollinger bands. Just wondered what chart package you used ? Have you set it up yourself for the triangles and the bar going black when there's no entry. I'm currently using IG's advanced charts and not sure if i can set it up the same ? Also which macd do you use....think i have about 5 to choose from!! Your help would be appreciated. Andy...in the UK.

    ps. Sorry if this question has already being asked.

    [Reply]


  43. Uboh sylvester Steve
    1 year ago

    what is the best indicator to be used. technical and fundamental analysis which one is better?

    [Reply]

 
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