Welcome to "Coffee with Markus"
Today, I'm going to share with you my "5 Best Trading Tips"
Here's what happened.
This morning I got a message on Facebook from a producer of a TV show -
asking me if I wanted to come to his show.
Because in a few weeks from now, I will be in Phoenix,
where we are conducting several bootcamps.
Yes, very excited about this!
So that's coming up January 28th through 23rd.
So we will be in Phoenix - he saw that and so he said -
"Would you mind coming to the studio and share your five best training tips?"
I said; sure no problem!
And so, I thought that right now, I will share them with you.
So let's jump to the computer and talk about my "5 Best Trading Tips"
Tip number one.
First of all is you got to - "Limit Your Risk".
You see when trading, there's risk involved.
You have to learn how to limit your risk.
Because the winning trades, they take care of themselves.
The losing trades, those are the ones that you need to worry about.
Now here is my rule that I want to give you.
My rule is: "Never risk more than 2% of your account on any given trade".
And let me actually make this here in blue so that he can clearly see it on the screen.
So let me explain.
Never risk more than 2% of your account on a given trade.
If you have a $10,000 account, this means that you would only risk $200.
Now think about it.
If you have a $10,000 account and you risk $200 on any given trade.
Let's say that you have 10 losing trades in a row.
Now first of all, with 10 losing trades in a row, you have accomplished something.
And you have proven to yourself that you need to go back to the simulator -
and double check your strategy. Because something is obviously not working.
Anyhow, even after 10 losing trades in a row, you're only down $2000.
Because you only risked 2% of your account on any given trade.
Therefore you still have $8000 to trade.
And that's what I mean by limiting your risk.
Too many traders - they just hope that a stock would just turn around.
"DON'T" make this mistake!
When you see that you have exceeded the max loss that you set for yourself -
get out of the trade.
Move on!
Let's talk about tip number two.
Tip number two is "Take Profits While They Are There".
See these days, I mean the markets can turn around on a dime.
You know this.
You have experience that a stock is going up suddenly crashes down.
You got to take profits!
Now my rule of thumb here for taking profits is the golden rule.
With is "1:2"
Let me write this down here for you.
So the golden rule is - "1:2"
And what does that mean?
It means that for every $1 you risk you're trying to make $2.
Or for every $100 that you risk, you're trying to make two $200.
Now think about it.
If you use the golden rule you'll make money even if half of your trades are losing trades.
Why?
Because you lose less money on your losing trades -
than you make on your winning trades.
On winning trades, you make twice as much money.
So think about it this way.
If you have five losing trades.... five losses -
you would lose $500.
And on the winning trades.
If you had five winning trades.
You would make a $1000.
Because you're risking twice as much, or you're making twice as much -
on your winning trades than you lose on your losing trades.
So as you can see with this simple rule, you'll make money -
even if half of your trades are losing trades.
Let's move on to tip number three.
Tip number three - "Trade What You See, Not What You Think"
Why is that so important?
Well, because we always have an opinion when it comes to the markets don't we?
We always think that this is the stock that is now making back -
all the money that I lost previously.
We always think that this is the stock that will go up.
While, I personally like to use indicators.
Because indicators are objective.
They give me a clear signal whether I should get into a trade.
And also when the trend is over. And these days trends are short lived.
So this is why I personally do not trade off the news.
Because why would you?!
The news as soon as it appears, it's already old.
When using indicators, you're trying to catch a trend, while it is still early -
and you ride it for a little bit - and I'd love to do this.
Because this way, I take my money out of a trade quickly and then I can reinvest it.
Is this making sense?
Alright good.
So Tip number three, trade what do you see not what you think.
Number four.
Number four is "Start Small And Then Grow Big"
And what does this mean?
It means that you don't need a large account to trade.
Think about it, if you can't make money on a $10,000 account -
Why do you think you would make money on a $100,000 account?!
You always start with a smallest - or a hundred shares here.
So keep in mind - start small, grow big.
Because it's always easier to trade a larger account.
If you cant make money trading 1 option,
You won't make money trading 10 options.
Keep it easy.
Keep it simple.
Start small, grow big.
Alright, rule number five.
Tip number five, not rule number five.
Tip number five "Practice On A Simulator"
And we talked about this in another show - about how to practice on a simulator.
You have to do it.
Here's why.
The simulator will show you if you're trading strategy is actually making money.
And it will show you if you can execute the trading strategy.
And I know.... trading is so exciting.
Let's say that you've got a strategy and now you're ready to trade.
You have your account funded and now you want to get started.
I hear you!
I've been there, done this.
Actually yeah, let me tell you a story.
Years ago, in the very beginning, I had a new strategy.
And I developed it on paper, and I back tested it, so I was looking at the computer -
but I never traded on a simulator.
I just thought, oh my god this will make money.
Well, the minute I started trading it, it started losing.
And you know ,I thought absolutely normal losses are part of the business -
so losses happen - right?
But the strategy kept losing losing losing. And I thought, how can this be?!
I mean on paper everything looks great.
Well, the strategy had a fatal flaw.
And I didn't realize it!
I only realized it when I lost too much of my real money.
Now, had I trade on a simulator, I would have seen that this trading strategy was flawed.
And I would have saved a lot of money.
So, always, always, always - test the trading strategy on a simulator.
So let's review, here are my "5 Best Trading Tips"
First of all - "Limit Your Risk"
Use that 2% rule.
Meaning that you never risk more than 2% of your account on any given trade.
Tip number two - "Take Profits While They Are There"
Whether you're risking $100 - as soon as you see $200 in profit -
Take the money off the table!
The next trade is just around the corner.
And these days it costs less than $1 to place the next trade.
Tip number three - "Trade What You See, Not What You Think"
I've learned this the hard way.
Whenever I had an opinion about a stock or a market, it didn't go well.
I lost money.
But when I trade what I see, I'm objectively trading and that's what you need to do.
When trading, leave the emotion out of trading.
Leave your opinion out of trading.
The market doesn't care about your opinion.
Hard to swallow the news right? But it is true.
Tip number four - "Start Small Grow Big"
Start with a small account, and then use money management to grow it into a larger account.
And tip number five - "Practice On A Simulator"
Prove to yourself that you can make money.
And if you need to - watch or listen to the other episode that I did on -
"How To Trade Without Risking A Single Penny"
Alright!
Those other tips that I have for you today.
If this was helpful, "Like" this video, "Share" it with your friends,
"Comment", and have a terrific day.
And I'll see you next time.