There are a couple of reasons why stock trading is hard. First, most people zoom in way too much. They’re looking at five-minute or at one-day charts; and watch social media when Bitcoin jumps six or 7% in a day up. It’s like, “oh, it’s over, quick, buy before you miss out.” But no, Bitcoin fell from 69,000, and it’s kissing 20,000 right now. 5% is nothing and it’s not a change in trend. So, when you are looking at the markets and seeing little price moves and volatility, you want to zoom right out.

I look at a much longer timeframe and there’s a good saying “if in doubt, zoom out.” If you zoom out and get some perspective, you’ll see what’s happening beyond the noise. People focus on too short a timeframe.

Second, if you hold one thing like Bitcoin, Apple stock, or Facebook, that one thing means everything to your success right now. But if that starts going against you, that will hurt and it will be stressful. If you have a same set of rules that you’re following that allow you to trade a portfolio of cryptos, stocks, or forex but they’re getting in and out at different times because they all move a little bit differently. For example, I have a system that holds 20 other stocks or 20 different crypto tokens. If one of them goes against me, I wouldn’t care because in that 20, something else will be doing well. And so, the whole game becomes a game of numbers.

If you have a set of rules that makes money, I’ll tell you how to confirm that it makes money in a second. Let’s assume we have a set of rules that works, it doesn’t work every time because nothing works every time. But if you apply it many times in a diversified portfolio, there’ll be enough winners to offset the losers. If you allow the winners to be big and keep the losers small, you can make a lot of money.

If you’re wrong 70% of the time out of ten trades, and you lose $1 per trade. But when you’re right, you make $5 on each trade. Those seven losses will feel hard, but you only lose seven bucks. And then, on the other three trades, you make 15. Overall, you make good money and actually gained.

You’ve got to get past the idea that you need to be right all the time. And this is where most people struggle because we were taught at school to be always right and get the correct answer. But in investing while trading, that’s not correct; you need to be able to be wrong. I’ve been wrong way more than most people, which is why I can trade well. Because out of thousands of trades that I’ve made over the last 20 years I’ve been doing this. On average, I’d say 60% of them have been losers. You would think that I must be dumb. No, I have a high tolerance for losses, but I keep my losses small. And I allow my winners to be huge so that I make money overall when the math works out.

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Adrian Reid Founder and CEO
Adrian is a full-time private trader based in Australia and also the Founder and Trading Coach at Enlightened Stock Trading, which focuses on educating and supporting traders on their journey to profitable systems trading. Following his successful adoption of systematic trading which generated him hundreds of thousands of dollars a year using just 30 minutes a day to manage his system trading workflow, Adrian made the easy decision to leave his professional work in the corporate world in 2012. Adrian trades long/short across US, Australian and international stock markets and the cryptocurrency markets. His trading systems are now fully automated and have consistently outperformed international share markets with dramatically reduced risk over the past 20+ years. Adrian focuses on building portfolios of profitable, stable and robust long term trading systems to beat market returns with high risk adjusted returns. Adrian teaches traders from all over the world how to get profitable, confident and consistent by trading systematically and backtesting their own trading systems. He helps profitable traders grow and smooth returns by implementing a portfolio of trading systems to make money from different markets and market conditions.