One Big Win Is All You Need
Winning in the business of speculation, just like any game, requires success in two operations: offense and defense. There are times when you’ve got to attack and times when you’ve got to protect your turf. Sometimes offense is full of bold and exciting plays, but sometimes it’s a grueling battle of taking one yard at a time. Defense is always and at every time a true slog through the mud.
Right now, for my style of trading, defense is the mode I’m in, and it is a crucial strategy to winning the game. The first part of this year was an all out offensive attack with big, aggressive plays that put up points in my account. Beginning in March, I was still on the offensive attack, but it became a one yard at a time fight to try to gain even a first down. Since August, I’ve been on the defensive. I’m trying to just keep what I’ve got without taking any serious losses.
Defensive trading is different than playing defense in sports. For me, I’ve got to keep placing trades, which seems like an offensive posture, but I’m really just probing the market to see what’s working. At this late stage in the cycle the market is full of risk. I’ve described in detail all the metrics that back up my analysis. This market is not conducive to playing offense. We will get back to a market that is far more conducive to aggressive plays for wealth building, but this is not that market. In times like these, all I can do is prepare for when we do return to that type of market where I can play offensive aggressively and manage big positions on the long side. The things I’m looking for that let me know when we have returned to that type of market are very specific.
When a market is full of stocks and sectors that show the setup I describe in the video, I know the odds are in my favor, and the market is in a low risk phase that can produce some big wins if I get into the right stocks. Reviewing my chart library is how I spend time during the trading day when I’m in defensive mode. I’ll always have some probing trades open in small size to get a feel for whether or not trades are working, but these trades are more of an upkeep activity to stay mental involved in the market.
The setup I like shows a price and volume structure that indicates institutional money is buying a stock. When many of the stocks in the same sector show that setup, I know there’s a good chance I can win by buying breakouts. The key to growing an account is aggressive trading with concentrated positions, but holding big positions requires a low risk market. There is no way to speculate with any consistent results in a market that is full of risk like this one.
For that reason, I’m spending my time now researching new trade ideas, reviewing past trades, and studying my chart library for nuances among different winning charts. One reason that reviewing past trades is so important is that action bolsters my confidence in difficult times. I’ve taken screen shots of my account when it was about to push through a big figure. Reviewing those pictures now reminds me of all the work it took to get here, and that it was the application of my skill that pushed my account into a higher range where it sits to this day. Every trader should be keeping track of their growth and development with screen shots as their account hits milestones. Reviewing your past success when times are tough is a great way to boost self confidence as a trader.
Not seeing any real progress in my account for months now is tough. Without reminding myself that I do possess the skill to put up big numbers, I could easily fall into a negative mindset in a market like this. That’s the most dangerous place for a trader’s mind to wander. The next big opportunity to win could be developing right now, but without keeping a positive attitude, there will be no way to spot it. Staying positive is key. Making small, low risk, probing trades is essential until this market provides the conditions necessary for an aggressive play.
I’ve been in about 75% cash since March, and without any big position on, it feels like I’m wasting my time. I know I’ve got to show up everyday at my monitors, put in the work, and stay vigilant, but it is tough when I don’t see my account pushing past all time highs. The only thing that helps alleviate the mental tension is to simply participate. I hunt for any opportunity I can find to just stay involved and participate in something that is working. I’ve got a small short in the DIA, a small long in the housing theme with WY, and a small long in pharmaceutical stocks like the XPH from last week that are all holding up well enough to stay in the trades. These trades are too small to make a difference in my account, but they are just big enough to keep my faculties alert.
Keeping an alert mind while playing defense is critical in order to be prepared for the next low risk phase in the market. I was talking with a novice trader this week who was clearly wearing his mind out by following all manner of minutia that doesn’t matter in the big picture. What the Fed does or doesn’t do, whether or not this tech company makes earnings – none of that has ever helped me put up points on the board. Those things are just not critical to winning the game I’m playing. What matters is identifying low risk opportunities and positioning aggressively when they appear. Those opportunities are defined by the price and volume structures that develop and nothing else.
Finding even one of those opportunities can change your life in a big way. My career is proof that literally anyone can change their life for the better by following a well defined process of speculation. I’m a guy of average intelligence. I’m no smarter than any one else. I merely had the determination to succeed in the markets no matter the cost. And the costs were heavy. Reviewing my account screen shots and past winning trades from my chart library remind me of the costs I incurred for every win.
There was one day I knew my account was about to surface above a key figure that I’d wanted to attain for years. I took multiple screen shots throughout the day as it was getting close. I refreshed my screen every 15 seconds when the time was coming and captured each refresh. I wanted to get the exact moment my account added a new digit. Now I can look back, scroll through those screen shots in rapid succession, and remember with alacrity all the financial struggles I put my family through because I needed to keep all our money tied up in a big position in order to win us a better life.
Now that moment I eagerly wanted to capture is reduced to just another number on a screen I can look back on as I wait forlornly for another opportunity to push my account up. Back then I placed so much weight on that number. I thought everything would change instantly, and I’d feel like I made it. But the truth is as soon as you get to the next number, life has a tendency to expand it’s requirements to meet your ability to pay for them. Families grow and change. Parents and children get older and require more things and more time. Homes require maintenance and automobiles break down. Insurance gets increasingly expensive, and time becomes scarce.
Managing all of the complexities of life can rob you of the enjoyment of getting your account to a big number, but maybe that’s the way it’s supposed to be. The life of a speculator is necessarily one of constant adaptation and searching. Whatever has happened in the past needs to be left there, losses and wins alike. Our business is concerned with the future. Predicting several different scenarios as to how the future might unfold by analyzing the present is how we win. One big win is enough to get you to the next phase of personal growth. Life’s requirements will grow with you, but the markets will forever offer opportunities to grow into a new, higher level of personal modus operandi.
Whatever number your account is at now, add one digit to that number. I promise you, with determination and patience, you will get it there. If you’ve already got a big account, double that number and aim for that. Write down your number every day in your trading journal with pen and paper. Eventually, your mind will figure out how to reconcile your present with the future you tell it is coming. There is no possibility other than success if your mind continuously sees the future number you tell it your account will attain. This exercise trains the mind to remain alert for opportunities to get your account to that number. Not every opportunity will result in a big win, but one of them will, and one big win is enough to get you to the next opportunity.
Lastly, a word of caution: please do your own research before placing a dime of your hard earned money into this market. Everything I write can only be considered as data for your own analysis. Nothing you have read here is investment advice, which is personal to your own circumstances that you should discuss with a trusted advisor. I am a speculator, and I take risks with my own capital that I would NEVER suggest others to take.
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By: Patrick G. Full-time independent trader in Atlanta, GA.
Patrick G is a full-time trader. Worked for a decade in a money management firm as a trader for high net-worth individuals.
He invested his and his family’s net worth into gold and mining stocks before the Covid money printing. Gold and commodity runs of the past 3 years allowed Patrick to trade full-time due to his gains.
Past performance does not guarantee future results. Trading involves significant risk of loss, and individual results vary. Positions mentioned are the author’s own, disclosed for transparency — not individual investment advice.
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