Think Like A Trader Blog

Thursday, 30 November 2017

Stop Letting Fear Control Your Life

Reading Time - 4 Minutes


This blog post is somewhat reactionary, in that it has come about after some of the emails I received this week. I will not get into specifics on an individual basis, but the current running through these emails was the same –

People were peppering the emails with reasons to avoid doing something that they want to do. Small, strategically placed sentences that essentially said, ‘I want to do this, but because of ABC I don’t know if I can, or if I should.’

The actual excuse again is not important. Although, writing the word ‘excuse’, I come to the conclusion that it is perhaps the wrong word. An excuse tends to lean toward the imagery of someone who is lazy, and that is not the case. Instead, I would say that what was sprinkled through these emails was fear. I see it all the time, not only in trading, but in every aspect of life.

The truth is that fear is going to hold you back. It is going to stop you from trying, wrapping you in a fiend’s embrace, whispering ‘There, there, you’re safe here, don’t put yourself out there and risk failing and everyone seeing you aren’t worth a damn.’

And let me tell you something – I used to allow fear to control me. I was frightened to try new things for fear of failure. When I did try, that voice in my head made it ok to give half assed effort. I didn't want to push myself in case I then DID fail. That would mean that I wasn't capable, that I wasn't good enough.

My teenage years and my early twenties were dominated by that fear. I failed at lots of things and I passed up opportunities that I knew I wanted to pursue, but just didn’t have the courage to grasp. And those aren’t cute words to pad out this blog post. That is the truth.

Do you know what happened? Absolutely nothing.

And I mean that in terms of growth. I didn’t go anywhere. I was in the same place year after year, all of the ideas in my head locked in the cell of fear. There was a part of me that believed in myself, but it was almost completely drowned out. The excuses were there front and centre, always ready to chime in and make it ok to do nothing.

Living like that IS ok. A lot of people in the world do it. I would say the vast majority of people do it. They stick within the lane of their life, they try to keep their eyes focused on the road and they never look to deviate.

But I’m going to take a guess that you aren’t one of those people. If you’re reading my blog, then I can safely assume that you are the furthest thing from a ‘lane walker’ that there is. Even if right now you’re trapped in that lane, you’re here because you want to break out of it. Because for us, being stuck in that monotonous lane feels like we are being ripped apart.

You can get out of it. You can embrace the fear and take the risks you want to in life. Even if no one has ever told you before that you can. And what you will find is that although it is difficult and there are no sure-fire ways to succeed at whatever it is that you want in life, when you start hitting those excuses head on, they start to shatter on impact.

Make the choice to stand back and say ‘Ok, I have given it everything I possibly can and it just hasn’t worked out. But at least I tried’, rather than throwing in the towel through fear before you even start. Because the more things you try, the more effort you give, the more likely one is to 'stick'. Every successful person in any walk of life first started by taking the risk to try, and to give it everything they had. You might just surprise yourself.

When things started to change for me was when I decided to start pushing my writing. I was in my mid-twenties by then and had been writing for fun for a long time. I was the only person who ever read it. My reasoning was that if other people read it, they might think it was a lot of rubbish. I had literally hundreds of short stories on my laptop and I hadn’t shown them to anyone.

But I decided that it was the fear that was holding me back rather than my abilities. At that point, it was simply my fear that people would reject the stories as garbage. My reasoning was that at least if I tried, I would know for sure. Failure after giving all your effort is ok. Failure before you even try is not. Because failure before you try isn't verified. At best it is a biased opinion.

So, I set to work. I picked two short stories and I edited them. I started sending them out to literary magazines and sites. I braced myself for rejections and sure enough, rejections came my way. What was most surprising was that they didn’t really have an impact on me. It didn’t dampen my spirit or cause me to feel like a failure. I simply read the rejections and then tossed them in the bin.

A couple of weeks after I started sending them out, both were accepted for publication. One was taken by a literary magazine and the other by an online publication.

Suddenly that fear that had been holding me back seemed downright stupid. I had allowed that fear to control my actions, all the time thinking it was keeping me safe. I had already passed up on so many opportunities because of it, and here was the evidence in those stories being accepted that it wasn't keeping me safe, it was in fact holding me back.

After that I realised that even if I failed at something, it didn’t matter. I always had to first try it, and approach it with as much determination and focus as I could. You simply push through the fear and understand that the fear is the walls keeping you in your lane in life. For me, there was nothing worse than being restricted to that lane. Failure was easy to take it if meant I could break out of that lane.

Fear is there to stop you getting eaten by a predator when walking through a jungle. It is not there to stop you from trying to achieve your goals. So, stop with the bullshit excuses and get moving.

I hope you’re all having a great week!

James Orr

Thursday, 23 November 2017

Demo Trading Benefits and Drawbacks. Is it Useful?

Reading Time - 5 Minutes

The short answer to this blog would be – ‘Yes’. However, there are also a lot of pitfalls in regard to demo trading that people don’t consider, and they can end up doing a lot of long term damage.

First thing first – I didn’t use a demo account when I got started. I consider that to be a huge mistake, and one that I paid for with lots of losses. I wandered around the markets in the dark, bumping into random things, throwing more money at it and hoping something would work. It was stressful and in all honesty, it was stupid. I made the fatal mistake of looking at demo trading as a wasted opportunity. My idiotic mind-set was that I could be making real money rather than pissing around on a demo. Of course, the markets had a very different idea. I ended up losing lots or real money, rather than demo money.

In this blog, I am going to outline both the benefits and the limitations of demo trading.


The Benefits of Demo Trading

1) If we start at the very core of what a demo account should be used for – learning – then we are off to a good start. No matter how many videos you watch, courses you take, or books that you read, when you first try and start trading, you don’t have a clue what you are doing. You may know all the technical terms and when to go ‘long’ or when to ‘cover’ positions, but you have never actually done it before.

The trading platform you use will take some getting used to. You will need to learn how to place orders, how to set stops, how to calculate position sizes etc. This all takes time. A demo account is the perfect place to do that. You can press any of the buttons you want, you can move things around and experiment with different order types, all the while safe in the knowledge that you aren’t risking any real money. Do you really want to calculate your stop incorrectly on your first live trade and end up losing double what you meant to risk? Play it safe and spend a couple of weeks learning how everything works.

2) The next huge benefit of demo trading is in terms of perfecting a trading system and how you execute it. The market has more variables and will produce more situations than you can consider. The only way to pinpoint these is by executing a trading plan in real time. Back testing is great, but it will never give you the ‘full-picture’. I can honestly say that no trading system I have developed whilst back-testing ever remained the same after I started trading it. You watch the markets and you learn. You adjust.

It doesn’t matter if you developed a trading plan or if you bought one. Once you start trading, there will be issues you need to figure out.

‘X happened today when I was in a trade and I didn’t know what to do. So, I now need to go back and look at the course and figure it out/look at how I can adapt my trading plan.’

‘I was looking for X today and Y was my sign to skip the trade. However, a Z appeared instead and I didn’t know what to do. I took the trade anyway and suffered a loss. I need to figure out if what I did was correct or if I need to adjust my approach in those situations.’

Note what we are doing here. It is nothing fancy, it isn’t using the demo account to find the holy grail in trading, it is simply allowing ourselves to learn in a safe environment. When learning to box, you don’t get thrown in a ring with a professional boxer and told to hold your ground on your first lesson. Instead, you start working on the basics by yourself, shadow boxing and on pads. Mistakes are identified, weaknesses corrected. You build up slowly until you know exactly what you are supposed to be doing at any given moment.
The more of the technical side of things you can master on a demo account, the easier it is going to be when you switch to live trading. Like building the muscle memory of throwing a jab as a boxer over and over again whilst in training, you want to build a solid understanding of your trading plan, so it is almost automatic when it comes time to make decisions.

The Limitations of Demo Trading

Now you have read everything above, let me hit you with a hard truth. When you first step into live trading, the market is still going to kick your ass. There is no escaping that fact. Let’s look at the main drawbacks:

1) Although you have prepared yourself as much as possible by using the demo account, it in no way prepares you for the emotional side of trading. So many people read that trading psychology is the most important aspect of trading, over and over again and then go right ahead and discard it. Don't let that be you!

I don’t care how well you now know your system, or how much you have convinced yourself that ‘I am imagining my demo money is real money.’ None of that is going to matter. You are going to panic, you are going to make mistakes, you are going to revenge trade.

This is the area where most people really struggle. Almost no one believes it is going to be an issue for them, and when it does appear, they put their head down and run straight into a wall.

That is why it is so vitally important to first master your trading on a demo account. That leaves you with the job of mastering the psychological side of things when live trading, and the 'ABC' technical process is already ingrained in your mind. You are lifting some of the weight off of your shoulders.

Can you imagine not knowing exactly what you’re supposed to be doing in terms of your trading plan AND suffering through emotional trading? Well, you don’t need to imagine. It's exactly what I did, and believe me it isn’t a fun experience.

A demo account can’t prepare you for the psychology of trading, but it can help you build as much as possible before then. Think back to the boxer – they know what to do at every stage. They know their plan, they have sparred with people and understand how to react. But the first time they get into the ring for real, emotions are going to be tearing through them. And the first time they get punched in the face, it suddenly becomes incredibly difficult to remember the plan, let alone follow it. However, the better they know the plan, and the more they have practiced, the easier it is going to be.

2) Cockiness. I would say this is the biggest issue that comes from demo trading and it is a dangerous one. I see it over and over again. I warn people about it as soon as I detect it through speaking to them, and in probably 90% of cases I am ignored.

The very real truth is – Profits in a demo account do not translate to profits when live trading!

This relates fully to the first point. You have not built up an ability to manage the emotional side of trading. You are not risking real money. It is a completely different experience.

The problem is that on a Demo account, let’s say you have £10,000 or £100,000. You follow good risk management and you watch large amounts of virtual money roll in. It seems easy and you get flooded with dopamine so that everything in the world seems rosy and you’re safe in the knowledge that you’re going to be a millionaire in short order.

When you move to a live account, you should now be looking to risk minimum position sizes. It should be about experiencing and then tackling the emotional side of trading. You should be taking baby steps and building very slowly. But you have that demo experience. You KNOW how to do this and suddenly when you see a £10 profit for a perfect trade, your mind chirps up with things like ‘Only £10. What is the point in risking so small? You KNOW what you’re doing.’

Invariably people up their risk. I have even seen people plop thousands on a credit card in order to swell their trading power.

It ends in disaster. Always.

Think of moving to a live account the same was as learning to ride a bike and taking the stabilisers off. Yes, you now know what you’re doing, but cockiness will still invariably lead to a spill.

So, to answer the question – Is Demo trading useful?

I absolutely recommend that beginners use a demo account. It is invaluable. However, it must be approached with caution (just like everything else in trading). Don’t allow it to inflate your ego and cause long-term damage. Take baby steps and build solid foundations for your future.

I hope you’ve all had a great trading week!

James Orr

Thursday, 16 November 2017

Most of you Wont Make It

Reading Time - 6 Minutes 

Most of you won’t make it as a trader. That is the cold hard truth of it. Maybe not what you want to hear from a blog post, true. But by getting down to the root of it and blowing away all the shiny shit that so often wraps around the trading community disguised as bunting, it may just harden the resolve of some of you that can make it in this industry.

Trading has a huge failure rate amongst retail traders. It is unlike other careers in that you can’t hide in the background and get by doing the bare minimum as some low-level employee. As soon as you start falling into that trap, the market will instantly beat you over the head, remove the wallet from your pocket and take everything that you have.

A lot of people (I include myself in this category when I first got started), don’t even know that they fit the bill of the person looking to do the absolute minimum. They come at it with good intentions, but they look for the easy road, the simple ‘secret’ that will help them become a trader, the ‘fast-track’ method that means they can leave their job in a few months and be making serious income. The market welcomes them with open arms. The embrace quickly becomes a suffocating crush that saps the life out of you.

But it won’t necessarily do it in a way that makes it obvious to you. Oh no, trading has a way of toying with you, keeping you on the wrong path, and it is only as you watch your last pound drain from your account that you get the hint that something isn’t right. Because people looking for fast cash can have it with trading, and many of them do… but it is only ever possible in the short term. A small account can grow by a thousand percent and people can see huge amounts of money coming at them. But it is not sustainable. The bad habits that are there –

Bad money management
Emotional Trading

- and eventually they catch up with you and bye-bye goes the account. The problem with it working in this way is that now those traders have had a taste of the fast cash. They want it back. They don’t want to make a slow crawl up the mountain when they have already seen the helicopter that can get them up there. And so they rinse and repeat, over and over again, their nerves being torn to pieces as they grow to hate trading and sitting at the computer without even realising it. They don't seem to remeber that the helicopter in fact crashed into the mountain, destroying itself and everything on board.

Let me hit you right in the gut with some of the hard truths from possible fast-track ideas:

Buy a Course 

This in no way means you are going to be a successful trader. I don’t give a damn what people tell you, or that the course page says you will be financially free in a few months. It isn’t true. That is simply appealing to the part of you deep down that wants it to happen quickly.

I see people charging astronomical amounts for courses. I got an email recently from someone who said a company had offered him a course for $4,000. For that kind of money, I would want to be in a classroom for intensive training face-to-face for at least a fortnight! And even then they would have to drag me and my suitcase out of there at the end of it, because I would want to live in the office for a further month!

A course, if it is a good one (and there is a LOT of garbage out there), can act like a set of rails. Instead of wandering around aimlessly, jumping between multiple methods and half-researched plans you spent a night developing, a good course can position your wheels on the rails and keep you moving in the right direction. It can give support when you struggle and the teacher offer guidance when you find yourself hitting roadblocks.

But it WILL still take blood, sweat and tears. You won’t be able to make progress unless you fully commit and show a determination like you wouldn’t believe. And it will take you AT LEAST one year, and more than likely two years or more before that consistency comes.

Join a Live Room 

‘Hey, maybe I can just let someone else do it since it’s so hard!’  

Let me ask a very simple question here – Do you know one single person who has left their job because they found a live room that makes them consistent money? I don’t mean the people in the testimonials, I mean one person YOU know? What about this one – would you EVER leave a career to rely on someone you don’t know to make you money?

I can guarantee the answer to both is 'no'.

I would say a live room can be beneficial if you are also learning alongside it. However even then I would say I am stretching. Because you never learn to work through the emotional side of trading if you are just relying on someone else to do it.

I have been in live rooms where the results in no way match what the trader ‘made’ at the end of the month. I have seen losses explained away and mysteriously disappear. And the worst are pump-and-dump traders and rooms. Those guys lead their students to the slaughter and get fat off of all the meat.

Even if you find one that profits… you’re back to the main question – are you going to rely on this stranger to look after you for the rest of your life?

You absolutely must develop the ability to be self-sufficient.

But Look How Much He Made 

My teacher just made X amount of money, surely I can do the same if I just follow what he says?

Lewis Hamilton can get himself around a track pretty quickly. Do you think if he sends you a PDF explaining what he does to go that fast, you would be able to go out, jump in a car and do the same?

Of course you wouldn’t. You get to watch him on TV every week, doing exactly what he does. And you still can't go out and expect to get anywhere near to him!

It would take you lots of time and practice until you developed the experience to even attempt to get close to what he was doing. No matter how much information you have at your fingertips, the brain can only learn so fast. You absolutely need to be willing to put the work in.

This blog post may come across as negative, but truly that isn’t my intention. Instead I am looking to put out the cold hard facts of trading for those who are interested in pursuing it. I don’t think wrapping people in cotton wool is at all helpful in life, and with trading it is likely to lead them to untold hardship.

But there are those of you out there who want it enough. You’re hungry, driven and determined. You are willing to put in the work and will go to any length to achieve your goals.

It is to you I am speaking. The rest probably stopped reading as soon as I said it would take them two years to achieve it. Fight off the urge to follow the lazy part of your brain. Understand what you need to do and the commitment it is going to take.

Keep working, improving and correcting any mistakes or bad habits that appear.

Become one of the ten percent who turn the charts into something you can sit and watch each day with a coffee in your hand, wearing your warmest hoodie at your desk while everyone else is stuck in gridlock traffic on their commute.

I hope you’ve all had a great trading week!

James Orr

Thursday, 9 November 2017

Just Do It

Reading Time - 4 Minutes


Let me start off by stating that I do not represent or work for Nike (Nike employees, feel free to send me free stuff!) But I love the power in that simple phrase that they managed to coin and make their own – Just Do It.

There seems to be a dangerous predisposition toward excuses rather than action. I am first to hold my hand up and say that yes, my initial response, that little voice that chirps up in my head when the going gets tough, is to give up. It’s normal. We are, for the most part, lazy. We don’t want to take the hard road. We want things handed to us on a plate, or else we just can’t be bothered with it.

This seems to be wholly accepted in the main part. We now have ‘participation medals’ in schools and rewards for what is, when you get right down to it, nothing more than mediocrity. When people give up at things, we pat them on the back and say, ‘not to worry, it just wasn’t for you.’ It’s as though we enjoy people reverting back to that ‘mean’ of laziness. They step out for a while, a chick taking a step out of the comforts of the nest, but we don’t encourage, instead we wait to usher them back inside.

Our excuses are endless, repetitive chirrups in our heads, nothing more than a soothing hand to pat ourselves on the back and help us believe that ‘better luck next time,’ is a mantra to live our lives by.

And that one phrase gets down to the root of the issue and blows away all the bullsh** in three simple syllables – Just Do It.

There are an infinite number of excuses in the world. People look to self-help books to ‘fix’ the problem, they go to seminars and search desperately through a litany of information in search of that ‘fix’, because the searching is easier than admitting that they already know the problem and how to fix it.

The problem is that they are being lazy.
The solution is to – Just Do It.

We’re approaching January at an alarming rate, the time of year when people set themselves resolutions, when they did into the depths of their brain and pull out the things they really want to achieve but have been hiding from themselves in a mountain of excuses for most of the year.

The January resolutions tend to be the big ones, the goals that people really want. We plan how we are going to do it, we promise ourselves that this year is it, we’re going to smash through the obstacles and get to where we want to be.

And come January of the next year, we are one year closer to our goals, correct?


The most likely outcome is that we follow through with our resolution until around mid-February.

Let that sink in.

The goals we set ourselves in January, the ones we really want to achieve, we spend less than 60 days working toward before we throw in the towel.

Then it’s back to self-help books. It’s back to the sofa where we say it was just too cold to go for that run; our back was too stiff to go to the gym; you didn’t want to give up smoking this year anyway; you’ll start saving next year; learning a foreign language just wasn’t for you.

You give up. You revert back to the mean of laziness. You want that quick fix.

Well the quick fix is right in front of you –

Just Do It.

Whatever it is that you want, it’s on the other side of your excuses. You don’t turn your alarm clock off in the morning and ignore the hour of study you were going to do before work because you haven’t read the right self-help book yet. You do it because you have allowed the voice in your head that makes excuses to win. The only way to avoid it, to stop it from happening, to climb out of the nest of comfort you have built around yourself is to –

Just Do It.

Choose not to let excuses and mediocrity control the majority of your life. If you slip and turn that alarm off one morning, understand that it was your fault and your choice. It wasn’t too hard, it wasn’t something you just couldn’t do, it was that negative, lazy side of yourself winning out that morning. Accept it and then the next day get back on track instead of letting it snowball.

Whenever you find yourself making mistakes or wandering away from the road that leads to your goals, the ones you really want to work toward and achieve, realise that you always have the power to turn yourself around and point yourself in the right direction again.

Just Do It.

I hope you’re all having a great week!

James Orr

Thursday, 2 November 2017

Is Stubbornness Holding You Back?

Reading Time - 4 Minutes

This is a phenomenon I have noticed over the years, and it has helped me improve as a trader by seeking out similar behaviour in myself. It is worthwhile taking a look at your own approach and identifying if it is present.

Through Decisive Trading, I get a lot of emails from traders. Quite a few of them are struggling traders, and all they are messaging for is some advice and maybe a bit of encouragement.

I’m focusing on the emails here from people who are struggling and asking for advice. The emails all differ, but they have a common theme. They say things like:

‘I have lost a lot of money trading, my trading plan is ‘X’, can you offer some advice?’

‘I am trading on ‘X’ market and have been for two years. I have lost lots of money and I just can’t figure out what is going wrong. Can your course help me?’

‘I am using a system where I wait for a moving average cross. I learned it from an old trading guru I met in a bar who only ever shares his secret once every thirty years. It isn’t working. What should I do?’

All of these threads are different, but they are basically asking the same thing.

I am doing ‘X’. It isn’t working. Can you offer some advice?

When it comes to specific trading plans, I don’t offer exact ideas, because for me to understand the plan, I would need to study it, thoroughly back-test it, and then trade it. Unfortunately, I simply don’t have the time to do that for every email I receive. What I can and do often point out, is the obvious steps they should take in relation to what they have told me. So, for each of the above, it may be something like:

-       ‘Reduce your position size. Stop trying to make the money back and first learn how to protect your account and build your trading abilities.’
-       ‘If you take the course, my advice would be to switch markets. Treat it as a fresh approach so you don’t carry bad habits over with you. After you become consistent, then you can trade whatever market you like.’
-       Consider that the system doesn’t work or isn’t suited to your trading personality.’

And here is where this phenomenon come in, the one that I am simply calling stubbornness. I would say 90% to 95% of the replies to this type of email question and then response is the same. It is so common that it is what I expect when I see the name pop back up in my emails.

They say – ‘Thank you. But I think I’ll keep doing what I’m doing. I’m sure I can make it work.’

So they are emailing me because they are failing, and are in a place of desperation, they pretty much highlight the issue in the email, and I simply point it out to them. But when I do that, they pull back, as though I was some sort of pariah that was trying to harm them and their child.

It’s stubbornness. The equivalent of banging your head against a brick wall, asking someone how to stop making it hurt, and then when they tell you to step away from the damn wall, you instead say nah, I think I’ll keep doing this, I’ve been doing it for too long to quit now.

At first it used to boggle my mind and I would invariably reply, trying to point out that they themselves had already highlighted the issue in their initial email. But I found that by that time, the heels were already dug in (stubbornness) and anything I said would fall on deaf ears. Now, I just wish them well and hope that they figure it out, or at least don’t lose too much more money.

The refusal to change your opinion or come around to a new way of thinking has something to do with ‘self-affirmation’ and ‘cultural cognition.’ I don’t want to get too much into the meanings, because they can pretty much be summed up by the word I’ve already been using – STUBBORNESS.

Once I started to realise what was happening, I wondered if I was acting in a similar way? I must admit, it took me a while to link the common responses to myself, but once I realised that such a high portion of the replies were similar, it made sense that maybe, just maybe, I was also stubborn and didn’t even realise it!

It’s worthwhile looking at your trading and digging into what it is you do in order to find weaknesses and then ways to improve. You should be doing this all the time, and not only in relation to stubbornness. It is easy to grow bad habits, and unfortunately, if you don’t identify them quickly, the market will do it for you by taking your money. This is all part of trading and you should be aware of it.

So, I had a look at what I was doing. It took me a while to identify the specific areas where I was being stubborn, but sure enough, they were there:

-       My main one was that I went into certain trading days with a bias in terms of the trend. And throughout the day, even if the market was telling me that I was wrong, I clung to that bias and looked for trades that fit with it. What it resulted in was unnecessary losses and a lot of frustration on my part when these days showed up. It told me that I needed to work on my acceptance of being incorrect and my willingness to change my mind quickly.
-       The second thing, which was closely linked to the first, was that I had a hard time accepting strong trends. I always expected them to end, and was looking to sell into the bullish rallies or buy into the bearish ones. Again, this resulted in frustration and unnecessary losses.

The simple act of thinking about these things helped me greatly. I knew I was doing them on a subconscious level, but I was being stubborn, and because of that, I had never really addressed the issues. It’s almost like someone standing you in front of the answer written in six-foot letter on the way in front of you, but you instead chose to close your eyes. By specifically looking for that stubbornness, it was like opening my eyes and giving myself the permission to read what was right in front of me.

It helped me a lot and I am sure if you search out the stubbornness in your own approach, it will help you also. Don’t be afraid to be wrong as a trader, but be terrified of not addressing and correcting those mistakes.

I hope you’ve all had a great trading week!

James Orr