In this episode of 2Traders Podcast, Darren and Walter look at “success.”
For instance, if you’re a successful and consistent trader, then why are you not mega-rich? Why don’t you have multimillion dollar real estate portfolio and a Ferrari? They dig into the idea of success and what it means to different traders. Your comfort zone, priorities, goals, and your relationship with money all dicate what “success” is for you.
You’ll find out what you should be focusing on with your trading in order to become “successful.”
Also, you’ll find out why large trading accounts are risky and how brokers can leave you broke.
Download (Duration: 19:17 /22.0 MB)
In this episode:
01:14 – why are you not mega rich?
03:06 – real driving force
05:55 – personal relationship with money
08:20 – learn about yourself
10:15 – “comfortable with my trading, why change?”
11:37 – what-if-situation
13:03 – key that unlocks what you want
15:32 – why do I need anything more?
16:05 – how safe is your money?
You have to be honest with yourself. [Click To Tweet].
Your relationship with money is a part of you success as a trader. [Click To Tweet].
Do you really want to be trading big positions? [Click To Tweet].
Walter: Just because you’re a trader, doesn’t mean it changes who you are and exactly sort of your trajectory. I think it just gives you a little bit more freedom, really…
Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.
Walter: Welcome to the Two Traders Podcast. It’s Walter here and I’ve got Darren on the line. How are you doing, Darren?
Darren: I’m really good. Thank you, Walter.
Walter: Interesting idea, Darren. I’m going to basically let you launch this episode with the question I think is something that is probably in a lot of trader’s minds. In particular, to those traders who were looking for some guardians or mentor or someone to sort of leverage off of their experience.
This is probably something that comes up quite a bit. So, what are we going to talk about today, Darren?
Darren: It’s a question that I get asked in around about way a lot of times. It is this notion that if you can trade fairly consistently, and successfully, why are you not mega rich like have massive yacht, houses, be around the planet , you know… Bentleys and Ferraris. If you can trade, why have you not got that?
I can only speak for my point of view. For me, it’s because it’s not just about the money, it’s about finding a scenario where I’m comfortable and that’s not just in my trading strategy, it’s in all of the other elements of my life that go around that as well.
I find that if I push myself out of that comfort zone too often, I find it difficult to stay consistent with my trading. So why, at least make you think is that it’s not just about the strategy that you trade, there’s a lot more to deal with it than just that.
You have to find a comfort zone — maybe it’s a belief thing, maybe you have a belief system where you fit in the world on what you should be. If you try and change that into something that’s unnatural for you, then sometimes the wheels can come off. That’s my gut feeling on it.
Walter: I’ve got so many thoughts on this and I think this is going to be one of my favorite episodes. This is such a great topic, Darren. I really appreciate you bringing in this up. I’m more interested in digging into what you have just said about how trading fits in your life.
This is something that I believe that most traders… one of the reasons why they get into trading is they think they’re going to make a lot of money. The other reason I think — and probably the real driving force behind it — is they want to free up their lives.
Instead of working a job where someone is telling you when you have to come in and when you have to go, how many weeks in a year you can have a holiday, and what you get paid, all these things, these constraints that are on top of your life.
Basically, your job and your boss, your manager or the company that dictate how often you’re going to see your wife or your husband and your kids, all these are sort of structured based on you making money for the company or the business or whatever it is.
It could be your own business but most traders, I think, are drawn to this idea of freedom because you can get away from those constraints and you have a little bit more — relatively speaking — a little bit more freedom in terms of creating your own life based on how you trade.
Is that really what you’re talking about?
Darren: Yeah, I think so and you have to be honest with yourself for about who you are with trading. When you start to become more consistent with trading and the truth comes out — if you like, really, about who you are — the people can recognize that and use it for their advantage and perhaps, go on to be more successful at trading. It’s knowing yourself, knowing what you really want.
Often when you’re in a scenario that you want to change, you have this kind of idea of this person that you want to be. On the journey to be in that, you hopefully find out the real you and you can find out the things that you really want to achieve and the things that you can achieve as well.
We all have this psychological makeup and stuff that we carry with us and you can’t necessarily get rid of all of that. You’re better to go with it and work with it rather than fight against it.
For instance, I’ve never pictured myself as being mega rich on a yacht and millions of GBP. It’s not like a reality that I can feel comfortable with. That probably holds me back if I try and achieve that, as well.
I’ve noticed that because when I reached a certain size trading then it severely affects the decisions I make. It’s almost like I can’t trade my normal strategy when I’ve got too big at position size. I tried to stick to how I normally trade on a small size but I can’t simply do it.
That might be like my personal relationship with money but I think that’s something, I don’t know.. Is it unique to me? I think we all go for that.
Walter: Absolutely. One trader who I have a lot of respect for, he taught me that exact idea that you’re talking about. I’ve known two traders who have this issue where they get their account to a certain level and then everything just breaks.
They can build it up, they take all of its account and build it up to a certain level and then it is just over. So the question becomes “Alright, is this going to be the way I am going to operate? So how do I structure? Do I just keep building up this account to certain level and the starting all over?”
You’re right. One of the things that is underappreciated in the trading world is the fact that your relationship with money is also a part of the formula that dictates your success as a trader.
I’m using success loosely here, as loosely determining your success. What I mean by that is the amount of money. There are a lot of other things that go into it and some that I love to talk about here today but for right now, I think you’ve really cornered — painted this corner — here looking at this idea of your relationship with money.
This is a critical thing. There was a book that was recommended to me by this trader. Again, I have a lot of respect for this trader and I learned a lot from him and he basically taught me that you really need to get this right.
If this is something that you really want to adjust and move then you’ve got to take a really close look at what your relationship with money is like and where do that come from.
That means looking at your background, looking at your childhood, looking at your family, looking at certain experiences in your life that dictate how you see wealth and rich people and money and all these sort of things.
I have a book I can recommend to all the listeners so you can see that on the shownotes down at the bottom of this page at 2traderspodcast.com but, for right now, I just want to acknowledge that I think you really hit on something that is forgotten about trading which is it forces you to learn about yourself.
Like you say, if you don’t work with this, if you don’t apply this, it’s almost like trading is giving you an opportunity that people with other jobs don’t get. This opportunity is to change and to be confronted with your weaknesses and to adapt if you want.
It’s always the case I believe quite strongly that if you trade long enough and if you do this for enough time, through enough cycles and enough trades and different markets, you will be confronted with those things that you don’t like about yourself.
You will be confronted with those things that you consider to be your Achilles Heel and those sort of things. I think that’s cool that we can do that. It doesn’t mean that we have to like become the tippy top of the Glasgow Pyramid and self actualize and all that.
It just means that we have some things that we’re going to be confronted with because we’ve chosen this path as traders. That is something that a lot of people probably don’t even acknowledge until they’ve been in it for a long time.
What you’ve highlighted here is really an important aspect of trading, Darren.
Darren: I think we kind of not truly undervalue experience as well, don’t we? We all know that being mega rich doesn’t necessarily make you happy. At the same time, we all know that having a little bit more money certainly makes life comfortable and enjoyable. You can have more holidays and a bit nice car and things like that then sure, they’re great.
There’s a gut instinct to think that more and more is always better. It’s not the case and you should really take that into account when you trade. Well, I do anyway. I’m in a comfortable place with my trading so, why change?
I mean, obviously, I’m trying to make a little bit more money all of the time but I’m not like racing to be mega rich and I’m not even considering it. If it does happen, then fair enough but I don’t think it will because it doesn’t tick my boxes.
If I did make a bit more money next year, I just trade less and go on more holidays. It’s not going to lead me to that point of being mega rich because I’m just going to spend another month on the beach and not just on the beach but travelling, and those experiences tick my box more.
I don’t think I’ll ever be rich in money but I want to be rich in experience. I think perhaps people with big families and lots of kids to put for university might see things slightly differently. It’s going to be personal for every trader.
Walter: Absolutely. One of the things you bring up reminds me of a story that I feel I just have to tell now. You’re talking about having vast colors of cars or whatever. A friend of mine, he’s done well and he was talking about how a lot of things are going on in his life and he is in sort of like what-if-situation.
What if this happens? What if my business falls apart? What if… you know what I mean? I’m not really into cars and one of the reasons why I live where I do is because I love walking everywhere. I’ve driven so much in my life and I’m at the point now where if I can have a really easy life where you don’t have to drive to a lot of places. I’m so happy and that’s why I’ve chosen to live where I do because everything is right there.
What was interesting about my friend is I said “You know, in Australia the cars are very expensive so if you’ve got these really expensive cars, they even turn this massive taxes on them.”
A car that would cost a hundred grand in the US might be a two hundred fifty thousand in Australia just because of the luxury car tax and all that. He’s saying “What if this happens…and that happens… I’ve got this and I’ve got that”
I said to him “Hey man, you also got like a two hundred and seventy thousand dollars locked up in your car, you can also unload that.” You know what I mean? It’s funny how what’s important to us we forget. I’ve got all these surf boards, so I’ve got this money locked up on these surf boards, my friend’s got all his money locked up in his car.
We forget that what’s important to us, whether it’s travelling or cars or surf boards or whatever it is, that’s going to be our focus and the same thing happens with our trading, isn’t it?
Our trading is just like the key that unlocks what you want. For a lot of people, it’s just “I want to get out of my job. I want to have a situation where if I want to go to Spain, I could go to Spain. I don’t have to ask my boss: Hey boss, can I go to Spain for seven days?” You know what I mean? “Are you going to fire me if I do that?”
Those are the things that people are into. What you bring up is interesting because I can list a whole bunch of… You know, just being the contrarian here, that we’ll have to take the contrarian view. One of the things I think of is do you really want to be trading big positions?
Let’s think about some of the reasons why you might not want to do that as a trader. Number one: if you’re trading really big positions, you’ve got to think about the safety of your money.
As we all know, we’ve all heard — and if you’re new to the forex game, you should know. If you haven’t heard that your brokers can go bust, they do and have and will go bust. If that happens, that often means that you will get pennies on the USD that you’re holding with your broker.
When you’re a retail forex trader, you have to acknowledge the fact that the money that you give your broker, you may never see again. That includes the money that you give your broker and you build up to a bigger account size, that also maybe gone.
These are the things that people don’t think about. When you get to a certain level you to think, “Okay, am I going to stay in retail forex, am I going to move closer to the interbank market and if I’ll do that, what happens?” Your deposit requirement goes up.
You’re going to think about which broker are you going to use, what kind of leverages are you going to get. Maybe you’ll get three to one? Maybe you’re getting two hundred to one leverages now with your broker. Rich, in the forex world, you’re going to the interbank market and you’re getting two to one or three to one leverage.
Everything changes when you get really big. People forget that it’s not just as simple as taking a little thousand GBP account and running it up to a hundred million GBP. That’s just not… You know, these things are a little bit more complex than that.
Darren: We all start off that way, don’t we? I think that’s the thought we have in our heads and it does change overtime. I say it’s a job now, I say it’s a career.
Darren: I say, “What do I want from my perfect job?” I want x amount of salary, I want x amount of time to do other things and as long as it fulfills that for me, then why do I need anything more?
Walter: Exactly. Here’s the thing that sounds like–and I could be wrong– but that sounds to me, what’s happening with you is you’re trading an account and you’re making money in your account. Your pulling money out and you’re using that money to do things.
Darren: My account doesn’t grow.
Walter: Exactly. This is another thing that people forget about. When you’re trading and if you leave the money in and you compound it, that’s great. Now you’re opening yourself up to the exposure of your broker, like how safe is your money with the broker you’ve chosen.
Do you have one broker? Do you have two? Do you have three? Where is your money located? The other thing is now what you’re basically doing is, you’re taking that — those fund tickets — that possible fund that you can have all that money and your delaying that if you’re not taking money out.
If your goals are to compound and grow an account really big, that’s great but you still run the risk that your broker can go bust between now and wherever your goal is, if you have one.
Two, is you don’t get to have that fund that you’ve worked so hard to build up in your account. Some traders I think are much better off not compounding and doing basically what Darren does which is “Look, this is a job I use to take money. When I make a lot of money, I take that money out and I go buy a motorcycle, I’ll go travelling, I’ll do whatever I want to do.”
These are the things that people will forget. People forget that just because you’re a trader, it doesn’t mean that you can take that thousand GBP account and run it of to a hundred million and be all private jets and dancing with models.
That’s not really the normal game, you know what I mean? A lot of traders I know, professional traders I know, are doing exactly what Darren does. This is something that I think is important to remember.
I like to take money out of the broker’s hands because when you do that, that means that that money is now yours. If you leave that money in the broker’s account, it doesn’t matter how long it’s been in there, it doesn’t matter how big you’ve grown it. That money isn’t really yours until it hits your account.
It’s something to keep in mind. This is a risk, it’s a very risky game to have. I believe it’s a very risky game to have all of your money in one broker’s account. It’s even riskier to have all of your trading capital with any retail forex broker.
There are better places to have this trading capital than giving it all to your retail forex broker. It might be better suited less somewhere else.
That’s it for part one. In part two, you will learn how our goals determine our outcomes when it comes to trading. You’ll also see how your trading fits into your life and how you can make that fit in more comfortably.
Darren gets into this idea of the questions you’re asking and how this really determines whether or not you’ve explored what trading really means to you and what you’re able to get out of your trading. It’s a fascinating discussion.
We also talked about the no loss trading system. This is something that you should definitely pay attention to and what you must be comfortable with to succeed at trading over the long haul.
Finally, we also looked at ice cream businesses and forex trading, their differences and similarities. All of these and more in part two.