The Secret to Surviving As a Trader

Is there really a secret? A secret to surviving and making it in trading? I’m not talking about a holy grail methodology. Of course first you’re going to need good old fashioned tireless effort and dedication to learn correct market principles and to form strategies that have a real edge in the markets. But once you do that, you’re still not guaranteed to survive.

What? Doesn’t everyone say that it’s all about having a trading edge and executing it with discipline? Yes, that’s part of it, but what most trading gurus and educators out there don’t tell you is about the tough realities of trading. They somehow fail to mention the opportunity cycle and what it can mean to your survival as a trader.

You see, unless you’re the most versatile of market wizards who can expertly trade multiple markets in multiple styles (which would mean that you had already learned to survive for years), you’re going to face regular periods of time when the markets are NOT in sync with your style. You may be a trend trader, and the markets go quiet for weeks and just move sideways while putting in one false breakout after another. Or you could be a trader that is skilled at fading highs and lows in slow predictable markets, and then things erupt into high momentum and your trusted setups stop working. Now what?


Forget the books and gurus who tell you how easy it can be. Reality is harsh. You have to be keenly aware of the cyclical nature of market volatility and price behavior, and you have to proactively plan for such times when things fall out of sync with your style. When things get way out of whack, these are the times that are most dangerous to you as a trader. These are the times when traders blow up.

The secret to surviving, then, is to be actively prepared for the worst case scenarios- and to be ready to weather them. In the instances when the markets are acting abnormally for extended periods of time and they’re out of sync with your style, step back and practice patience. Trading isn’t a 9 till 5 job. We don’t get paid based on the number of hours we trade. Instead, most of our profits often come from a handful of days when the markets were really in sync with our style.

If that’s the case, then what you need to do when the markets are out of sync with your style is to stay on the sidelines and not trade them. Or at least decrease your trading to only the most pressing of times when things line up and you identify your trusted setups in the middle of the chaos. You may need to be in protection mode for days, or even weeks. That’s fine. Remember, you don’t get paid for the number of hours you trade.

And become extra focused on correct position sizing in these times. Lighten up, and be defensive with the size you put on. Rule number one during these periods is to do no harm. And this is the secret to survival in the real markets. Because it’s not how the gurus tell you it’ll be. You won’t just learn a few simple setups that work forever. Periods of famine will come. And you need to be prepared. You need to expect them, and you need to have a proactive plan for dealing with them. If you don’t, you can have a successful strategy and good psychology and still unravel.

And so it ends up being that that’s one of the secrets to long-term survival as a trader. But what happens when market conditions change so much that your strategy and style become obsolete altogether? There’s two things you can do to ensure bigger picture survival, and I’ll detail those in the next post I write, aptly titled, The Other Secret to Surviving as a Trader.

A special thanks to blog reader Emini Wizard, whose comment on a previous post inspired this one.

  • Rob

    Thank You for being frank. Your foresight and wisdom are being much appreciated.

    • My pleasure Rob. There’s far too much BS out there about trading. I just want to set the record straight about what it takes in reality, Glad you’re finding it useful!

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