Show Full Transcript
Have you ever wondered whether it’s actually possible to get rich with your trading? And this is one of the most common questions I get: Is it real? Can I actually build wealth doing this?
And my wife and I were walking along this forest trail, just near [Craig] Lake today, actually just now, and we were looking at the pine cones on the floor of the forest. And we looked up at the pine trees, which are humongous. I mean, they’re not big compared to the redwoods, which we’re going to see in a couple of days time. I’m looking forward to doing some videos from the Redwood National Forest. But I looked at these tiny little pine cones and then these humongous, great trees that they’ve grown into. And it’s sort of hard to believe that one can turn into the other. Looking at this great environment a number of good stock trading tips occurred to me that I wanted to share with you.
And it’s just like when you’re starting out trading and you’ve got a relatively modest account, and you look at that account and you make some gains, but it’s kind of hard to believe that that account could balloon into a six or seven figure account, particularly when you’re first starting out.
But I want to let you know that it’s actually possible and it’s really just as simple as math and discipline. Math and discipline is all you need to turn… not the acorn. What is it? It’s the pine cone; that’s what I’m looking for. Sorry, my wife’s over there, she’s just helping me out with my words. Yeah, math and discipline is all you need to turn the pine cone into the pine tree. And time, actually, the third thing. Math, discipline and time.
So what’s the math? Well, the math is the system which you follow, the rules that tell you when to buy and when to sell, that have a positive expectation. You must have a set of rules that gives you a positive expectation of making money over many, many trades, through many different market types. If you don’t have that, you’re lost and you may as well not be trading.
Actually, I would go so far as to say, if you don’t have a back-tested trading system, then you need to stop whatever you’re doing and go and develop or find one of those. And if that sounds like you, then click the link below and find out more about the Expert’s Guide to Backtesting, because it’s really going to help you out. But it’s not really what this is about.
So the first thing is math. You need a system which has a positive expectation. The second thing you need is discipline because most traders, for whatever reason… we’re human, I don’t know, refuse to follow the rules consistently. And actually, once you’ve got a profitable trading system, making money is pretty mindless to be honest. All you have to do is follow the same process each day. You update your data, you run your scans to find what stocks you’ve got to buy. You buy them. You run your scans to find out what sort of stocks you’ve got to sell, you sell them, and then you close the computer. And that’s it.
The problem most traders have is second-guessing those signals and trying to add their own unique flavor or their judgment to the signals. Have you ever done that? I mean, [inaudible] you’ve been trading for a while, you’ve looked at a stock or a signal that you’ve been given from your system and gone, “Oh, I’m not really sure about that one.” But that is the road to danger. The road to success, to go from the pine cone to the pine tree in your account, is to have the discipline to actually follow your rules.
And the third thing you need is time. Now, I can’t tell you how many times I’ve spoken to a new trader who has had the expectation that with a $5,000 account they’re going to retire next week. It is absolutely not possible. And if that’s you, if that’s your expectation, then I want you to unsubscribe and hang up from this video now and just basically quit trading. Because if you have the expectation that with a small account you’re going to be rich next week, next month, or even this year, then you’re gravely mistaken. You need time.
And if you remember back to high school math and the principles of compounding. Einstein talks about compounding as being… Well I think he said the eighth wonder of the world or something like that. And it truly is. But in order for it to work for you, in order for your trading account to go from being a pine cone to being a pine tree and being a humongous six or seven-figure account, you need to allow it the time to compound.
Now that means not taking money out of your account. And I know that’s not sexy because everyone wants to say, “I’m a trader and I’ve got all this money to splash around and whatever.” But this is not what it’s about. The trading is about building wealth for the long term. And if you’re in it for the longterm, if you’ve got the discipline and if you’ve got the math through your system, and you give it the time to grow, then it’s very hard to not succeed. In fact, it’s extremely hard to not succeed if you’ll just have the discipline to follow your rules over a long period of time, because compounding works magic.
Now there’s another way you can accelerate your growth and that is rather than taking money out of your account, put money into your account as your confidence grows. Save more money from your day job, save your bonuses, spend less money and put it into your trading account, because that is what accelerates your growth more than anything else, particularly in the early days. To get your account from where it’s a seedling, where it’s an acorn, a couple of thousand dollars, to six figures and beyond, you need to be following your system and adding money to the account as your confidence grows. That is how you build wealth and become free.
And once you do that, trading… Even before, but once you do that, trading is the best discipline in the world because it sets you free to spend your time in amazing places. And you can make your money and continue to build your wealth with very little time effort and stress each day.
So if that sounds like something you want, then click the link below and find out about the Trader Success System, because the Trader Success System will accelerate your progress towards that goal of building wealth and freedom through the stock market.
My name is Adrian Reid. This is Enlightened Stock Trading. I’m going to go back to enjoying nature and I’ll see you in the next video. Bye for now.