How to Know If You’re a Good Trader

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Welcome to another Talking Wealth podcast you're on with Phil and Pedro and today we

are asking the question, how do you know if you're a good trader?

Now this is actually a question that I'm sure a lot of people go through.

I know that we've, you know, I've asked a question myself and, you know, you always

ask yourself that question.

I think it's an important question to always be asking yourself, you know, am I actually

good at this, you know, am I actually, you know, following the steps?

Because trading is one of those few professions where the answer isn't always obvious, you

know, you might have a great month and you think you're doing everything right, but

you know, at the end of the day, it could just be luck.

So I know you're jumping to get onto this discussion and feel so without further ado, how's

it going mate?

Good mate.

Good.

This is interesting.

I was going to say I should leave the room, but I'll take it easy on him.

I say that because I've been doing this almost on 20 years and I don't think I've

ever asked myself this question, which is really, really interesting, really, really interesting.

Yeah.

Yeah.

I've always been, I've always been someone that's like coming from, from a certain mindset

and, and I guess style and background, I've always been, be more hard on yourself than

not, you know, which has kind of helped get through the hard times because there haven't

just been easy times and that you're right, trading is not, it's not a fixed point one

day you wake up.

Like people said to me, oh, when did you know that you wanted to go out and trade full time?

It's like, well, it wasn't a day where you wake up and you go, I'm ready, like you're

never ready.

It's like when you get married, day you're getting married, you're still nervous.

I'm doing the right thing, but I'm married, sure, I've been kids that I've picked another

one.

Let me help.

Let me help.

But, you know, you get the point, right, it's, yeah, it's a constant thing with your

mind.

Sometimes you feel like the king of the world when you get certain things, right, and other

times you think, what the hell is this?

What am I even doing?

What am I doing this for?

I'm crap or, but it's great to explore, I guess, sure.

Yeah.

Yeah, definitely because, you know, you want to really figure out, you know, is it something

that you're doing or is it just the market conditions, you know, and how exactly do you

gauge it?

Is there a way that you can, you know, score yourself and stick around to the end of

the podcast because we've got a little bonus for everyone.

It's a bit of a questionnaire that will help you to answer this question.

So we'll cover that at the end, but, you know, is it, you know, how do you actually

know?

Is it the money that you make?

You know, if you're making money, does that mean you're a good trader?

Is it your strategy?

If you're following the strategy, are you a good trader?

Or is it something deeper?

Is it something to do with your psychology?

What, you know, how do you know that you're actually at that level and that you're a

trader?

I actually don't think it's the money at all.

I think money can fool you into thinking you're a good trade.

If you get some profit, you might have traded, got lucky, basically.

And I've seen so many times stories of even people that come to us.

It's like they traded a specific strategy at the perfect time.

And you look at that and you go, there's so many flaws in this, like when the market

changes, character or just slightly, there are so many holes in this strategy, like people

that don't trade without stop losses in bull markets.

Okay.

What happens when that changes?

You know, so strategy, I think, is part of it, for sure, that makes you a good trader.

But I think it's, what makes you a good trader to me is if you can sit down and go to bed

every night and not question what you're doing.

You can sit in front of the computer and do it day in, day out, have the discipline

to follow what you're doing, be comfortable with whatever the market throws at you.

Have a reason for how to act with that or have a process on how to act with that.

And as I said, go to bed every night, not thinking about it.

And there's two parts in that.

It's finding a strategy that works with you, with your psychology, with the way you do

things.

That is so, so important.

And almost running on autopilot, not having to think.

I know for me that took a long time, you know, it's not to say that things won't change

again.

And there won't be another learning experience, not at all.

But to find peace with yourself and the markets, I think that's the measuring stick, to

be at peace.

And that might be what I'm saying is sounds really simple.

But I mean, I'm sure you've had experiences of this, like, you know, for me, even times

where I was changing strategies and looking to trade different styles, you know, I was

successful one way and then I'd go to a new style and I'd be like, this isn't working

out as I thought it would.

It's going to require a lot more work.

I know you've spoken about it as well, you know, sometimes moving from medium to long-term

trading to short-term trading, it's like, yeah, you think you have moments where it's

like really good and then you, and then reality hits and you think, oh, what's happened

here?

Is it me?

Is it my strategy?

Why is it what was working on this area, not working now?

What's going on?

Has it changed?

Is it not going to ever work anymore?

And all these doubts creep in.

And it's how you deal with that at the start, really, how you turn that into not that there's

something wrong with you or something wrong with the strategy is just that it's time

now.

The market is telling you that, okay, there are holes in what you're doing, use that as

an experience to fix what you're doing and make it even better.

You know, each losing trade allows you the opportunity to make things even better because

it's just finding more holes and holes in your actual strategy and it's weird.

You think the answer is to do more in terms of, it must be an indicator that I don't have.

It must be something that they know that I don't know.

So you go on these, it must be that I need to add another five rules on my strategy.

It must be that I need to back test more or whatever and you go through all of this experience

and then it all goes back full circle and it's like, you realize, hang on a second.

What am I doing here?

What's the core common denominator in what I'm trying to do?

And you often find that when you go back and you simplify things, because the process

of exploration of finding your way in markets for humans generally is complex.

Ignating complexity and complexity and complexity and after a while, you realize if I just kept

it simple from the beginning, it would have been best.

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I call it looking for the next shiny thing and that's what we're always doing.

When you think that you've learned something, you want to move on to the next thing but

really you need to perfect that one thing.

It's like what Bruce Lee says that I'd rather master one type of kick a thousand times

than master then perform a thousand different kicks one time.

You need to know that strategy, like the back of your hand and once you think you know

it, we'll go back through it again and try to really understand it because for me, it's

a lot about consistency.

That's how you know that at least you're in the right path and you could tie it back

to maybe bodybuilding or going to the gym.

If you're one of these people that buys all the equipment, buys all these active gear

and everything, it's like going to gym membership, yeah, I've met people like that as well.

One of my good friends, hopefully it doesn't listen to these but when we'd go and play,

we used to play golf and the problem was not that he was shit at golf, it was that his driver

wasn't working so he'd gone by and you drive, it's like a stick in golf.

You're a big one and that would be the fix each time until it wasn't until it wasn't until

it realized it's actually me that I need to improve and that is so applicable isn't it

to trading?

Oh yeah.

You know, going back to that analogy where you think that you're getting all the latest

gear and everything but you haven't even got experience lifting one weight.

You know, you have to start with the basics and it's the same with trading.

You have to start to buy all these fancy indicators and thinking that you have to spend

on all of these different aspects and you have to master this next thing.

It just go back to the basics and be consistent at it.

Learn how to lift one weight, you know, curl it a thousand times until you can feel every

ounce of your muscles pulling basically, you know, that type of detail.

Well, part of what you're saying honestly is and we were talking about, you know, how

do you know, you know, all that if you're on that path, it's the word strategy as well

is something that's important, right?

Because when you go back to the basics, what do you, for me, what the basics means is just

actually listening to the market, like how good it you were at just sitting there and

going, okay, I'm listening to what the market is telling me right now.

You would be so surprised, you know, when you go and set out on this journey, how much

you struggle with it because a lot of the time when you build a strategy, you're focused

on wanting your, your outcome to happen.

So you've already come into things with this pre pre determined set of rules, pre determined

set of outcomes of what you want and what gets thrown out the window is that the basic

job, the basic, just the basic, look at a bar chart, look at price, what's the market

telling you today?

Yes, I know you bought it and you wanted to go to X amount, but it's the market telling

you that and following the market day in, day out, week in, week out when you're in a trade,

when you're looking to get into a trade, I think you become good when you get to that

point, when you forget about trying to predict and trying to tell the market, no, you know,

my stock is under, stock is undervalued because of XYZ fundamentals and I'm an analyst

with, you know, gone to 50 million universities, well, you know, and how much were we seeing

that with, with, with lithium, everyone was a genius, all these big analysts are lithium

next big thing and consistently down, down, down, down, down, down, down, because they're

not listening to the market and this is, this is where, you know, the best things can

happen is when the market is driving, you're following your passenger and you're reacting

as fast as possible to the news, you know, and being on with what it's doing because

believe it or not, when you're, when you're listening to the market, you realize that

and if you're not trying to trade one minute time frames, you realize that the market moves

pretty slow and you can get on board.

And so I think that's very important because we talk about strategy, yes, strategy is

one thing, but before strategy comes and after strategy, it goes back to, you know, how

well do you understand what's going on?

How well do you understand the movement?

Yeah, yeah, yeah, and of course, and the breadth of the movement as well.

I think another key point to this is a lot of traders, they want to make money quickly.

I mean, people that say that they're traders and, and unfortunately, there's something

that I see with many people that come to us, you know, us and what type of stocks are

you trading?

And they tell me, you know, zip, you know, nanosonic, webit nanos, you know, all of these

kind of little specky type stocks.

And the first thing that I say is, well, well, well, no, focus on the top 10, top 21st,

learn how to trade those and then you earn the right to trade those ones.

Don't try to, this is exactly why you're failing.

This is exactly why you're coming to us, because these ones, they're a different beast

and they're not meant for beginners.

So always, you know, focus on on, on that and, and focus on protecting capital first,

because that's the key thing.

Instead of trying to make your millions in one trade, focus on protecting capital and

you'll see how much of a disciplined trader you become, because the, the profits will

come in themselves.

If you imagine you're, you know, taking it back to boxing, look at Mayweather, right?

He was, he was known for his defense strategy, you know, he's always putting the shoulder

in.

And people are like, yeah, they feel, yeah, that's it.

And they're always asking, you know, why, why you always, this guy, all he does is defend,

all he does is defend.

And then he might punch once or twice.

Yeah, but he's winning, he's winning all of his, his matches surely might, might be frustrating

to watch.

I know they are for me because I like to see a little bit more action, but the dude has

a strategy and it's, it's defense first and attack later.

And it's exactly the same with the markets, your first line of, of, of, of, of thinking

should be that defense, because you can defend against all of these negative moves.

Then once you see that winning one, bam, you're in for the hits.

And that will be the one that will make you most of your profits.

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And I mean, something you've put here as well, you know, the, the traits of, of, of what

this is.

I mean, you're right, cat.

Unless you, you've got to be around long enough to be able to learn as well, right?

Yeah.

And you, if you don't alay yourself the time by being at least disciplined on the capital

protection side of things, if you don't alay yourself enough time in the market to get

the experience, well, there's no way for you to, to, to move forward.

And the experience comes in all forms and it's, it's not just if you think I'm saying,

you know, just keep your, your, your risk, discipline and, and the experience will be a

good one.

No, you're going to have to experience the good and the bad.

And this a plan is one, not negotiable because they'll come the experience of my edge

doesn't work anymore.

Now I need to change it.

My this happens or I didn't see the market do this ever before.

Now it's doing that.

These are all those experiences that you get over time, which is why I think time in the

market is underrated from the point of view of you spending time, spend time in front

of the screen.

I want to be a professional trader, but I want freedom.

Yeah.

And how much work have you put in?

How do you expect to understand something if you're putting in minimal effort compared

to the guy that's putting in 10, 15 hours a day?

It's like anything.

This is a skill set being able to understand price and like, you know, and, and, and,

and see where things are going.

Find the real, there are certain things in, in, in price, let's just say, or just looking

at a bar chart, you've got four elements.

You've got an open high low and a close, you know, each are equally important in giving

you really valuable information.

And so if you were to, for example, look at it the first time, I don't know about your

experience, but, and it's probably like this, but the first time you look at a bar chart,

you probably thought, okay, it's cool.

And then you go and get educated.

And you're like, okay, now I, now I see things that I didn't see before.

But if I was to ask you 10 years later down the track looking at a bar chart, you start

to see things that even after being educated, you didn't even see there before.

You'd be surprised how much your eyes don't see, and how much they do after with experience.

And that's with everything.

Because I know sometimes people tell us, they go, oh, you guys on the show, you have a blank

chart, and you talk about it, and you say, all this, this, this, and this, it'll take

me hours to work out, to get to the same point.

Like how do you do it?

Well, it's 20 years, 20 years of staring at, and, and, and, and a language opens up.

And I'm not trying to sound like, you know, or, you know, airy, fairy, or, or like philosophical

about this.

But it's true.

It's true.

It, it looks different after time.

You see things differently.

The way price interacts has more, a different meaning, and that's only because you've given

yourself the time.

But what does everyone want to do?

They look at the dude, the 20 year old with the two blondes in the, in the Ferrari.

And, you know, make $1,000 a day off a $200 account, join my WhatsApp group, and they

believe that it can happen quick.

I'm sorry, nothing good happens quick.

I don't care.

I don't care whether you're, you're educated or, or whatnot, you need to allow time to gain

experience.

You have, you have to, and you have to not beat yourself up, and you have to not blow

up in that process.

Yeah.

For sure.

I mean, insane that, I mean, our courses take, I mean, the diploma, the usually students

are finishing in around 18 months.

But you know, I've had students come back, you know, even a year after that, and they're

like, like, my results are incredible, you know, they're, they're, they're profitable.

They way ahead, and then where they were before, was I, I do agree that's obviously the

more time, if they stick to it, they're going to be even 10 times better, five, 10 years

down the track.

But it's just amazing on that first couple of years after, or during that, that diploma,

how much you can improve.

It's like that exponential spike at first.

Like when you start doing that, you know, you don't start.

It's like when you start, yeah, when you start to see the muscles develop, you start to

see, oh, you know, where that come from was, you know, that, that's a nice little, you

know, muscle.

I've got there on my back.

I didn't even know I had it.

And it goes quick.

And it goes quick, right?

The, the first time you start, you see growth really fast.

Yeah.

And then growth starts to, exactly like that.

And then growth starts to diminish, but that's where the real, that's where you really

culture the muscle.

And that's the same thing here.

I mean, you're starting off a low benchmark if you try to trade the markets with nothing.

And then you go and do the diploma, government accredited, I mean, serious, serious education.

Absolutely things are going to change and you're going to be, you know, well better than,

than where you were.

But what I'm saying is, even from that point to 20 years later, oh, yeah, two different

people.

Yeah.

And two different levels of understanding of things, and, and I think you have to accept,

the journey and accept that the journey has, like any journey in life, has,

amazing moments, has challenges.

And it's how you use those to, to, to stay in the game.

That's the thing.

Staying, yeah, that's a key isn't it, being able to stay in the game to get that experience

in the first place.

Yeah.

Because you won't reach that 20 years if you, if you blow your account in the first specie

trade that, that you make, when you're trying to make all your millions within the, and,

and you know what, even if you do win that first trade, that doesn't mean that you're

a good trader, because going back to that, you know, how do you know you're a good trader?

Give it all back.

You can give it all back.

You know, the amount of times that people have come saying they've made all this money

during COVID because they bought it at the low, you know, it was a smart move.

Good on them.

But then we had that downturn in 2021, 2022, and they, they lost it all, you know, lost

a big chunk of it.

Yeah, I would say the majority, like over 95%, that's how you, approaching it, you throw

it all on, and it hits the first time, 95% of people will, I'll say 99% of the time,

you'll give it all back and some for sure.

So yeah, I don't know if that helps in answering what your question, but.

Are you curious to learn how you can gain more confidence with your trading?

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Well, look, I think we've provided some, some good points there.

So now it's time for the questionnaire.

So this is a questionnaire that we prepared.

So then you guys can actually ask yourself these questions.

So get your pen and a paper ready or, you know, if you don't, you can come back to this,

this section later.

And you can answer these questions and we'll give you a scoring system that will let you

know, you know, how you're doing, whether you're a good trader or not.

And hey, you're welcome to come, you know, talk to us if you didn't score very well.

You can have a bit of a chat.

So the first question is, do you have a written trading plan, right?

So answer just simply yes or no, do you use a trading plan when you trade?

Question two, before entering a trade, do you know exactly where you will exit if you're

wrong?

Key.

All right.

Question three, do you risk a consistent percentage of your capital on each trade?

All right.

Another key.

Question four, can you accept losing trades without emotional reactions?

Oh, big one.

That's a big one.

Question five, do you review your past trades regularly to learn from them?

Question six, have you followed the same trading method for at least six to 12 months?

Back to what we'll say.

Yeah.

Question seven, do you avoid moving your stop loss further away once the trade is open?

Number eight, do you sometimes feel the urge to trade simply because the market is open?

So again, all of these are yes or no answers.

Yeah.

Question nine, do you judge your performance more on how well you followed your rules rather

than how much money you made?

And now lastly, question 10, if you lost your last five trades in a row, would you still

follow your trading plan exactly the same way?

All right.

So all some key questions.

Now this is a scoring system here.

So if you answered yes to eight or more, you're probably developing the mindset and discipline

of a professional trader.

If you're around five to seven, you're on the right path, but there's still some habits

to improve.

And if you're below that, it might be a sign that you're still trading more emotionally

than systematically.

But of course, the good news is that all these things can be learned and improved over time.

Yeah.

Yeah, that's, that's pretty cool putting it in a structure there.

I've not seen that before, but it's, it's great.

And it's, it's fantastic that you, you know, someone can honestly reflect was really one

of the hardest things to do in trading because a lot of the time you're on your own, like

trading is a lonely sport or lonely game or lonely endeavor.

And so, you know, if you're someone who can't or doesn't want to look in the mirror and

do some serious reflection on things, it's never going to get addressed.

And sometimes playing games like this, you know, having questionnaires, you can start

to go, okay, hang on a second, you know, because more than anything I found over all these

years is, ratings taught me more about myself, my good, my bad, my, you know, it like ripped

me completely open to truly understand myself.

So, from that point of view, it's like, well, you will find out about who you are.

Truly.

Yeah.

I don't think there's many things that will help you find out about who you are.

And then, then, then doing the endeavor of trading.

And that's a beautiful thing.

It is.

It's you versus you.

Yeah.

And so, you know, doing these kinds of exercises can really help explore that and you take

it, you take it for like a little bit of a, you know, assessment because really, you're

not going to do that for yourself or very rarely will you because you're more focused on

getting a strategy and more focused on trading.

But it's like, hang on a second, let me sit back and really see, where am I?

Let me assess myself.

Where am I really?

What's holding me back?

What's helping me?

If you're not asking the questions, you'll never know and you'll just keep bearing it

deep down and consistently think the strategy is the problem or having got the right in

new indicator or having got the right techniques.

That is some part of it, you know, knowing how to having skills, but this is very, very

important.

I saw this funny meme the other day and I couldn't stop loving, I showed my wife.

It said it was a picture of like a, one of those trading apps, like a meta trader or whatever

on the phone.

And it said, it said, ladies, if you see this app on his phone, you'll never be able to

break his heart.

This man is, this man is bulletproof.

He's been shattered by the market.

You can't break his heart, which I thought was very funny, but hey, man, it makes you,

it shows you a lot about life and it, you know, yeah, I would have put, if you see this

app on your boyfriend's phone, you're going to have to pay for dinner because there's

people with that trade just on their phones, using all those little gamified things, you

know, good luck to them.

Yeah, yeah, but I mean, yeah, it's, it's the best thing in the world.

You know, it's the, I think this is one of the only fields where you can start with not

much.

You have, everybody has a chance to get involved and you can walk out a king.

You know, we've seen stories of billionaires that run the world now.

Do it from trading.

You've had, um, Soros, one big trade.

You've had so many guys become billionaires and, and come starting from poor, um, situation.

So this is the great equalizer, which is why it attracts so many people, uh, and, um,

it allows you to change your life really.

And, and for that, it's, it's, it's the best thing in the world, you know, and, and it's

just a matter of whether you're willing to walk the walk, um, and, and do what it takes.

Uh, yep.

And, and constantly assess yourself.

Yeah.

No, this, this is not only for, for new traders, but if you think, and that's, that's the

key, another key thing.

If you have reached a point where you think that you know it all, you're not, you're not

consistently, you're not a trader in my sense.

I think a trader is always questioning things and always looking for that improving,

uh, improvement, you know, they stick to a strategy, but you don't think that you know

it all.

You know what, the know it all part, yeah, you're right, that is a good marker too.

You should ask yourself that because if you've truly, um, if you truly found your way,

through that process, the marker would have humbled you more times in enough to, to

know, um, that, um, humble will be beaten into you and you'll walk around life, humble,

and, uh, you know, it'll be a lot better, um, operating that way because you, you, you,

you're not willing to jump to risk or jump at things, you always assess and you go, hang

on a second, um, let me, let me think about this.

Let me look at this properly because so many times through the process, um, they've been

humbling experiences.

So yeah, I totally agree, mate, if you're, if you're thinking that like that, what you

just said, then for me, you're not, you're not, you're not there, yeah, yeah, I totally

agree.

Alright, well, I hope that you guys have found this, um, helpful, uh, you know, all the

best on your journey as a trader, um, you know, can be a, a difficult one, but very rewarding

like, like Phil said, you know, it's, it's one of the best experiences really to be able

to generate, uh, profits out of your head, basically, you know, you know, not, not actually

physically having, uh, you know, to break your back or, you know, get dirty or things

like that.

So if you guys are looking to become that trader, we can help us while so if, you know,

feel free to, to get in touch, uh, but anyway, uh, cheers, feel great chat as always.

Yeah.

It was a good therapy session.

Yeah.

Exactly.

Well, I'm going to go fill out this question here now.

I'll see you.

I scored it.

Yeah.

Um, alright guys, if you, if you enjoyed it, please give us a five star review.

We are looking forward to bringing you the next one, uh, so for now, uh, bye and catch

you on the next one.

Thanks for listening to our Talking Wealth podcast.

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