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No, you DON’T need to make X dollars a day
I have this friend who I absolutely adore. I’m very thankful that our paths crossed, I truly couldn’t imagine my life without him now.
Although he doesn’t think it, he’s a very gifted trader. He is far smarter and more patient than me. He also understands the market on a more intimate level.
However despite this, it breaks my heart that every time he goes live, it doesn’t work out. We both know that he CAN trade, he has the backtested results to prove it. The issue is purely psychological for him.
Whilst meditating one day, a thought came to me. For the many years that I’ve known him, he’s always said something similar to this:
“I just need to make X dollars a day, then I can quit my job”
To make matters worse, his boss appears to have a lot going on, and he’s taking out his anger on my friend. We’ve had many conversations about the day when he can finally tell his boss to go “love himself”!
I can identify with the pressures of needing to make X a day (to replace our current income). When I first traded, I also did this, and it completely fked me up.
On paper, it sounds like a great idea but in practice, this doesn’t work for everyone.
During my meditation, it made me realise how this single thought, “needing to make X dollars a day”, could be screwing him up.
I would love if it the market was predictable enough to make a fixed sum every day. In reality, I’ve struggled to make this work long-term.
It’s quite easy to stop trading when we’re up. The issue for me has always been about stopping myself from forcing X dollars out of the market, on days when the conditions are not favourable.
It’s why I trade so fluidly now. Most of the time, I will trade to an approximate small amount (as that’s the most conducive way to trade with a prop account).
However, if I have an account that’s not being subjected to a trailing drawdown, consistency rule, or max withdrawal limit, I will absolutely go for more if the market is really running.
Instead of my friend trying to trade to replace his current income, I suggested the following:
Forget trying to make X dollars a day
View whatever they made day trading as a top-up to their existing income
Save whatever he can afford to save until 6 months of bill money is put aside
Trading with 6 months of bills covered, makes it easier to think about leaving his job (and it not screwing with their trading)
When he starts trading full-time, he will be working 6 months ahead
Until he is trading full time, right now he has to work anyway. So it makes sense to treat the income from his trading as supplementary.
This may sound boring or ‘duh’ to some. But when you dig down into the psychology of it, this shift in mindset is HUGE!
Yes, I’m aware that for some prop firms, there is a consistency rule (which is in part there to stop YOLO trading). However, I’ve never seen this rule as a problem.
Whenever I have had a big day and made ‘too much’, all that’s happened is I’ve been expected to trade a few more days. I’ve never had an account taken off me for having a bigger day.
Being made to trade a few more days, is substantially better than forcing X amount of the market (and blowing up because the market is stuck in a FK zone all day).
Cheatsheet
N.B. The following whilst still helpful, is slightly out of date. I am working on updating this. Please my highlighted tweets which show the newer chart layout that I’m using.
Here you go guys, my cheatsheet. There’s no space to cover the chart setup, please see details below:
40 Range Chart (my execution chart)
- 5 EMAs (8, 20, 50, 100 and 200)
- kissorderflow.com (Trapped Trader bars turned on: Max 6, Min 20)
15 min (my Big Picture chart)
- Day 1-5 VWAPS plus Weekly and Monthly VWAP
- Session high and low levels are enough for me, but you can go crazy
Delta Drop Setup
I’ll share what I’m using. I wouldn’t get too hung up on seeing the exact data. Small differences in delta largely do not matter. The same patterns will still be there.
nobstools.com/delta - For Swing Delta
kissorderflow.com - Simplified order flow bars that show me:
Absorption
Trapped Traders
Buy or Sell surges
ninjatrader.com - Platform
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Can’t imagine*
Seems it’s a normal step in our weird lives of traders, he’ll be fine. This was similar situation in my previous job and I just quit to give me a real chance. When you have to pay the bills, it somehow makes it easier to not fuck up for me. Cheers 🍻
Like most, it took me a while to learn how to lose. Then I got great at it as far as from one trade to the next goes.Too good for a while because I didn’t know how to stop and accept a losing day - or rather recognize that I wasn’t in the correct mindset that day to make great decisions.
One would think that being able to lose from trade to trade translates to a mindset that it’s okay to having a losing day here and there because having a winning month with some losing days shouldn’t be a problem as a day trader if you have dollar stop limit for the day. But it’s a mind fuck that’s hard for some of us to get past because we are trained that we go to work day in and day out and receive pay for each day. We don’t go to work and write the company a check every so often at the end of the day because we did a terrible job.
Tell your friend he’ll get through this but the next step will probably be just as difficult. He’ll be making much more than his real job but he’ll hesitate that 6 months income isn’t going to be enough for the next mind fuck of a transition. I’d have to have at least 2 years income. But that’s me. Wishing your friend the best and to stay resilient!