The 6 B's of Becoming a Great Trader

What are the six B's? Number one, be prepared. Number two, be present. Number three, be patient. Number four, be disciplined. Number five, be free of attachments. And number six, big R winners. So let's go through each of these. Be prepared. We have to be prepared to trade, we have to be prepared mentally. We have to be prepared physically, we have to be prepared emotionally. We need to have a plan when we go into every trading day. Now, when we go into the day, we can be adaptable. We can go with the flow of what's going on. But we cannot just walk in and sit in the chair and think that we're going to make money. I want you to think about, I'm a big sports guy, I want you to think of one of your favorite sports teams, I want you to think of their coach and I want you to think about how would you feel if you knew the coach of your favorite team just sent the team out to play the game. They didn't practice, they didn't watch game film, they didn't have a game plan. They just rolled the ball out and went out and played. How would you feel? You'd be pissed! You'd be calling for him to get fired! This is ridiculous. How could the head coach of the Green Bay Packers or the head coach or the head manager of the New York Yankees or the head coach of the Denver Nuggets, how could they not be prepared? It's insane! Yet we're going to trade not being prepared ourselves? Being prepared is one of the key elements of our success. The better prepared we are, the better we're going to trade. So as I said, it's not just having a game plan. The game plan is really important, but it's also Am I mentally ready to trade today? Am I physically ready to trade today? Do I feel sick? Did I just have a fight with my wife, are my kids going crazy in the house? These are all things that are going to have us not trade well. So we have to be ready to go. 

Number two, be present. Guess what? If you're not around, if you're not available, you can't make money. Now, you don't have to, it depends on how you set the game up. But see, the market waits for no one. So you have to set the game up so that you can be present when you need to be present.

Okay, number three, be patient. I talked about there's two types of traders, there's traders who over trade and there's traders who are afraid to trade. If you're in the overtraining camp, and everybody falls in one of those two camps, by the way, if you're an overtraining camp, and that's the camp I've always been in, I'm more inclined to make the marginal trade than skip it. We need to be patient. We need to wait for really great setups, good setups are not going to get it done. Good setups are going to distract us, they're going to dilute our focus and they're actually going to keep us from being as profitable as we can be. So we need to be patient. Being patient also means that we are okay not sitting at the screen for extended period of time and not making a trade. It means that we are willing to wait for the right trade to come along. Now we may be able to step away from the screen, which is one of the things we'll get into an upcoming Trader Tip Tuesday. But maybe it'll step away from the screen. But no matter what we're going to have to be patient.

Number four be disciplined. Can we follow our plan? We spent all the time preparing, hey, we prepared with trade a great plan. Can we follow it? We have trading rules can we follow our rules? Can we be disciplined and execute consistently with precision? 

Number five, be free of attachments. This could be a whole workshop on its own. Be free of attachments. What is it attachment? An attachment is when you attach yourself to an outcome or you attach yourself to a person or to a team or to a group. When you attach yourself, you become, you're not able to see the situation for what it is, you become blind, because of your attachment to whatever it is you're attached to. In trading, we get attached to an idea, we're in an uptrend. I want to be long, and I have this belief that the stock market's gonna go up, gold is gonna go up and you really believe the story. What happens is we become attached to our positions, we become attached to our ideas, we become attached to being right and all these attachments actually really hurt our trading. When we become attached to position, we have a position that's working really well, we actually have scarcity starts to come in, where if I let go of this position, how am I going to make money? We become attached to it, we don't want to let it go. We become attached to an idea like gold is going up. Now gold starts to go down and all I'm doing is looking to buy looking to buy and looking to buy and I might be in a situation because I only think it can go up, I'm attached to being long, that a buying get stopped out, I buy and get stopped out, I buy and get stopped out. I find myself having lost a lot of money, because I was attached to being bullish. 

A flipside to this as if we're free of attachments, we can have an idea, we can get feedback from the market and see if our idea is being validated. If it's being validated, then we get in. If it's not, then we don't enter or if we are in and it's not being validated we get out. But what people often do is because they're attached, they don't see that the best trade may be to go the other way. This is one of the things I learned in my own trading. When I go out, I do all kinds of homework and be really well prepared and I'd say this trade is going to be a great trade. I know this gold trade is going to be a great trade. I get long gold and I believe in it. And then it's not working and so I start looking for every reason why gold is going to turn out to go in my favor. I start looking for every reason of confirmation that the trade is going to work. Now. As I said, if I buy to get stopped out I'm in buying again, I'm in looking for feedback that the market is going to turn around and it doesn't and then I would get really angry. I'd get really frustrated because I did this work and I knew it was going up and I didn't want to miss the bottom. I didn't want it to go up without me. I could not see the market rationally. If I had been able to step away and look at it rationally, what I would see is that it's actually going down and what's so interesting is the trades I had the highest conviction in, because I have the highest conviction, I often had the highest attachment. I couldn't see the market for what it was really doing and if I could just step back, if I could just release my attachments. What I learned is that my work was really good and when I did my work some of those ideas really kicked ass. But the ones that didn't actually were giving me incredible feedback and that is if I did all that work and I was that convinced the market was going up and it wasn't, guess what? It was probably going the other way big. This is one of the things I started to notice is that my best ideas, when they didn't work, they'd actually go the other way big and it made sense. If everything lined up and it was strong and it didn't follow through well then, everything was really weak. I learned when I had my highest conviction ideas to step back and when those ideas were failing it was probably time to go the other way. Be free of attachments will revolutionize your trading.

Now we go to number six, big R winners. We like to say big R winners or jackpot solve our problems. They do, big R winners solve your problems. If you can get big R winners, I just I'll just show you an example. Had a trade on Friday, I lost an R on my first trade, I lost a quarter R in the second trade, came back in on the third trade. And on that third trade at the end of the day, it finished about a four and a half R winner. I'm up just over three R in the day, but that trade still had significant upside. I could have closed it, took a four and a half R winner, or I could have let it go. Letting it go, letting it continue to work, knowing that I had managed a trade where I had no risk of the trade, I had peeled off just enough, I had no risk in a trade and let it go. By the end of the clothes today, it was an 11 R winner. Now, I had another one R loss today, one of the guys on my team had to R losses. Right. There's three R in losses today on my team, I had one and a quarter R in losses on Friday, that's four and a quarter R in losses. But guess what? This one trade, all in was over an eight R winner. So net net, think about it, net net, I have five losers and I have one winner. Sorry, five losers and one winner. My win rate's 17%, but I'm up four R, that is the power of big R winners. 

What I like to do in my debrief is I like to go through all of these at the end of the day and grade myself. Was I prepared? I grade myself on a scale of one to five, one I was totally unprepared, five, I was as prepared as I could be. So was I prepared? I grade myself, was I present? Was I available? Was I around? I grade myself on that. Was I patient on my setups? Give myself a grade for that. Was I disciplined? Give myself a grade for my discipline. Was a free the attachments on my ideas of my positions? Give myself a grade for that. And then big R winners. When I set my trades up and then when I managed them, did I go for big R winners? And give myself a grade there. Now, you can look at the six B's every day in your own trading, where every week depending on the timeframe you trade, and grade yourself and what you'll see is if you do this every week, it starts to raise an awareness about are you being great in the areas that have the biggest impact on your success. To help out with this, if you actually look in the comments, I have a free PDF for you that if you click on the link, you can gain access to this PDF that is a debriefing format that incorporates the six B's and shows an example of a typical trading day debrief. You can use this and you can find this will be a very helpful format for you to be able to raise awareness of your trading and hold yourself accountable. Do that debrief every day. Don't miss. If you trade, do the debrief. Make one of your rules for trading. You know when we evaluate ourselves that we follow our rules. Well, to say you followed your rules, you have to do the debrief, make that one of your rules. Go ahead and click on that link to get that PDF. Feel free to share comments below. And this is Trader Tip Tuesday, where every Tuesday I come to you with tips like today to help you raise your performance to an elite level. I'll see you next Tuesday.