Losers Make Millions

Today, Alex has a very different conversation with Cody and Nate from Investment Underground. Both are millionaire day traders, and they share their secrets of success during a casual conversation in a scenic, lakefront setting. The first topic that comes to mind is “taking losses”. How do millionaire traders feel about it? And what sets them apart from average traders?

Taking Losses

Cody and Nate both agree that taking losses is part of the game. Accept it! Millionaire traders are good losers, and they surround themselves with friends and other traders who are good losers. If you can accept taking losses, trading and life just seems a little bit easier, according to Cody. And, as Nate explains, what sets successful traders apart is their ability to take losses without becoming too emotionally involved. It’s simply part of the game.

When Nate started trading, he experienced a lot of ups and downs. He was a very good trader, but there was always just one trade that brought him back down to mediocre trading. It was not until he was able to control his emotions and accept losses that he was able to improve his profit margins and excel as a trader.

Discipline

Discipline seems to go hand in hand with taking losses. As Cody puts it, “if you are disciplined, you can take losses.” He even takes it a step further and credits people who have prevailed after enduring challenges in life and in trading. In a way, it makes you stronger. But discipline stretches much further than taking losses. It encompasses all areas of life: having a morning routine, eating right, and exercising, for example, will help you to become a more disciplined trader. More discipline will then result in more consistency and help traders to be more productive.

Preparation

Being prepared is also of utmost importance. According to Nate, being prepared doesn’t necessarily mean that successful traders put on winning trades every morning. Rather, it helps you to be prepared when the right opportunities show up. You are ready to pull the trigger! Cody, for example, has a vast list of different sectors. When he sees one area take off, he’s prepared and ready to trade several stocks that fit his criteria long before they might hit everyone’s radar.

On the other hand, recognize when you are not prepared. For example, after spending time away from the markets give yourself some time to get back on track and prepare yourself before starting to trade immediately. Read the news, stay on top of developments that might affect the stocks you trade, and know what you are good at and when you trade your best. Be prepared rather than thinking “let me trade really quick, and then do what I really have to do.” Treat it as a job and be selective!

Risk

Cody is very risk averse but, on the other hand, is willing to bet bigger when he sees the right set-up. Nate also buys stocks with a set risk, willing to lose a certain amount of money. Yet they both agree that risk management is much more difficult than traders expect at the beginning, just because everyone is wired so differently. Cody thinks it will take an average of 5 years to tackle risk management. And you must experience big losses and how you deal with it emotionally to become good at-risk management, as Nate explains. Every great trader that he knows, has experienced it. There’s simply no way around it. This said, risk is easy to control unless you are stubborn. Make sure you stay in the game with maximum stop losses and respect your risk. Have a game plan and don’t become too emotionally involved.

Emotions

Control them! Don’t carry emotions into trading such as having a fight with your partner or family members, or being overjoyed because you are going on vacation. The more emotions you experience (good or bad, high or low), the worse of a trader you will be. Learn to control your emotions, otherwise they will control you and interfere with your trading. Moreover, the markets don’t care about your emotions, so don’t try to take out your frustrations by trading.

Frustration & Failure

For Nate, frustration equals missed opportunities. For Cody, selling too early comes to mind.

Yet, embrace failure. Combat it and don’t give up. Both, Nate and Cody, have experienced failure in life. Take responsibility for what went wrong and how you got into the situations. Learn and move on.

Hesitation

Whenever Cody hesitates, it’s almost always the best opportunities. Nate, on the other hand, suggests putting on a partial position when you hesitate to get a better feel for the trade rather than going full in.

Journey

A trading journey can take a lot of twists and turns and take you on a pathway (emotionally) that you never expected. There’s usually a monetary goal that traders want to achieve, but most of the successful traders stay in the game even once they achieved it. Your goals and life might change, you might enjoy the finer things in life, but stay focused on your purpose and not only on monetary goals. Have a clear goal in mind rather than just being focused on a set dollar amount. For new traders, enjoy the process while focusing on exponential growth. Once you hit your goals, give yourself credit and don’t lose sight of your life outside trading.

Pro Tips from Cody and Nate:

Know yourself!
Don’t risk too much money at the beginning so that you can stay in the game and survive initial losses.
The further you can disconnect from your profits and losses, the better trader you will be. Don’t count your money while you are still sitting at the table (fun reference to the Kenny Rogers song “The Gambler” – check it out. It’s one of our favorites!)
Have good risk management.
Everyone is different. Don’t compare yourself to other traders and their journey.

Thank you, Cody and Nate, for sharing your secrets of success, and for helping other traders to become more successful.

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Watch Alex’s full interview here: