Principle #2 – Application

/Principle #2 – Application
Principle #2 – Application2018-07-17T21:59:21+00:00

The Dividing Line Between Those Who Succeed & Those Who Pretend…

Most trader’s pin their hopes of making consistent money in the market on finding a magic formula or a secret indicator for picking stocks. This corresponds nicely with the fact that most traders don’t make any money.

Despite all of the technological advancement in trading platforms, alerts, order triggers, back testing software, advanced charting, etc… Despite a glut of “market gurus” shouting their stock picks across the airwaves, networks, and cable news programs…

“The Gap Between Those Who Make Money in the Market and Those Who Lose is as Wide as it Has Ever Been.”

Why? The answer isn’t more information. The answer is Applied Knowledge – and the leverage that comes from it.

Think back with me to an old boss that you hated. Why was he your boss? Because he was better than you at your job? Because he knew more than you did about doing it? Maybe. But it’s more likely that you worked for him  – instead of him working for you – because he had some kind of leverage that you didn’t.

It could have been how long he’d been there, or how hard he worked 7 years ago before he became an overbearing jerk. It could have been that he knew whose hiney to kiss and he applied that knowledge to get promoted.

Whatever it was, he had some type of leverage, so he got to apply that leverage by telling you what to do. And for that time where he lorded over you as your boss, he was in charge.

Now think about financial markets. Every trade takes place between two people – one who is about to make money and one whose about to lose money.

There may be a zillion layers of complexity added on top of that, but in its simplest form somebody’s going to win and somebody’s going to lose.  Somebody’s going to be a hero and somebody’s gotta go explain some missing money to their spouse.

Someone has leverage working for them. Someone has leverage snuffing their financial future in to the ground.

Leverage is the force of life and in trading, leverage comes not from what you know, but from what you do. Not the knowledge you gain, but the knowledge you apply.

I stumbled around in financial markets for years trying to figure out the “secret” of being on the winning side of that leverage. Pure and simple, I wanted someone to tell me how to pick stocks and never be wrong.

I read books, I went to seminars, I took courses – and through it all I did learn 3 very important lessons:

    1. You can find a detailed explanation of every “Super Secret Stock Trading Set Up” – including full charts and graphs – gathering dust on the shelf at Barnes & Noble for $14.95.


    1. Turning your trading decisions over to some guru’s stock picking service is the quickest way to slit your financial throat.


  1. Most importantly, I learned that real professionals – the guys who feed their family, pay their rent, and go on vacation with money they made in the market – are not Stock Pickers.

Write that one down…

Real Money Makers Aren’t Stock Pickers. They’re Traders.

…and they know how to apply leverage like they know back of their hand.

You must understand that this type of applied knowledge rarely comes from so called “authorities.” Self-proclaimed gurus, market technicians, economic prognosticators – they’re all out there devoting their lives to studying problems and theorizing about how to solve them.

But, in truth, they don’t want to solve the problem. Why? Because they love the problem! They’ve devoted their lives to studying it. If the problem ever really got solved, they’re going to have to take their ball and go home.

Regardless, the truth is that…

Making Money Trading is a Performance Based Career,
Not an Academic Activity.

The outcome depends on what you do, not what you know – like bowling or golf, not jeopardy or trivial pursuit. Plain and simple, your ability to trade for a living is based on your ability to show up and perform when the lights are on, the theater is full, and you’re money is on the line.

Trading gurus can introduce you to trading systems, but they can’t make you a professional trader. It’s not the business they’re in.

Continue to Principle #3 – Accountability