Here at Learn To Trade The Market we are introducing what we call the “Coffee Shop Traders Movement” today. This idea came to me recently as I was – surprise surprise – trading from my laptop while in a local coffee shop. I began thinking about how my trading has morphed over the years from messy, complicated and having a big trading desk with multiple monitors, to its current form which is mobile and minimalistic. Trading in this manner actually helps me to keep emotion and over-trading at bay, because rather than walking into an over-the-top trading room with 10 flat-screen monitors where I might feel compelled to enter a trade, I have everything I need to trade successfully on my pencil-thin Ultrabook laptop.
I have found over the years that if there’s what I call a “damn obvious” price action signal on any given day, I will be able to spot it and trade it just fine with only my laptop, whether I’m at home, at a friend’s house or at a coffee shop. I began to think about how trading in this manner meshes perfectly with the simple scaled-back approach that price action analysis brings…it really completes the package of minimalistic trading. This is in contrast to the façade of the stereotypical “trader” analyzing and trading the markets on a big stack of flat panel monitors while pouring over countless economic news reports and technical indicators all day.
The Coffee Shop Traders Movement is really a metaphor for the way that I trade the markets, and the way that many other traders now trade. Not only is it a metaphor, it can actually describe the way you really trade; from a coffee shop, if you want. That’s the beauty of it; simplicity in all aspects of trading leads to more freedom, flexibility, time and ultimately, money. Not only does it work to de-clutter your charts and your mind, but it’s also conducive to developing the trading habits that lead to success and will help you avoid emotional trading mistakes. Let me explain:
Why you should become a “coffee shop trader”
Recently, I’ve adopted a “minimalist” approach in my personal life that I had already been using in my trading for years. The way that you become a trader who can trade from a coffee shop, a sofa, or anywhere else, is by simplifying your trading, from the strategy you use all the way down to the hardware and software you trade with. I actually got the idea to “simplify” my personal life from the way that simplicity and minimalism had improved my trading. Just as reducing the clutter and variables on my charts worked to increase my time, money, and overall success level in trading, it had virtually the same effect on my personal life.
With global economic news constantly flooding our minds through the internet, TV and other mediums, a trader faces a near mountain of potential market-moving variables each day. By taking a minimalist approach to our trading, we can cut-through all these variables by simplifying our trading to the point where our market analysis and trade execution can be carried out in as little as two quick ten minute sessions per day, anywhere with an internet connection. As most of you know by now, the trading strategy I use is price action, and specifically I like to trade price action strategies on the 4 hour and daily chart. Once you get this technique down, you really don’t need a lot of time to check the markets each day for your setups.
Trading is perhaps one of the only professions in the world where doing “less” is better for you. Many people have trouble when they start trading because they are used to working long hours, studying long hours, and generally doing as much as possible at their job or school each day. Thus, it’s natural to assume this philosophy should apply to trading as well.
The problem with this is that your actions have exactly zero effect on the markets…all you can do is analyze them and trade a high probability strategy. After you have learned how to trade your strategy and you feel 100% confident with it, all that’s left to do is open up your charts two or three times a day, look for your trade setups and then either enter a trade, possibly adjust stops or targets from a previous trade, or walk away. This notion that you have to read forex news reports and sit at your computer trying to make sense out of 5 different indicators, Elliot Wave and what the guy on CNBC is telling you…is just ludicrous, unnecessary and counter-productive! So stop it!!
How to become a “coffee shop trader”
Becoming a “coffee shop trader” is really the end result of simplifying your trading strategy, minimizing the time you spend analyzing the markets each day and generally just taking a calm and scaled-back approach to trading. Most traders start off in a somewhat haphazard manner, excited to get started but not yet certain of exactly what they are doing. Over time, we either figure out that less is more, or we give up all together. What I mean by that is that most traders over-complicate the trading process and experience a period of trial and error that is usually defined by losing money. They then either reach a point where they give up on trading all together, assuming it’s too difficult for them or that it “can’t be done”, or they come to the realization that all they need to do is chill out a little bit, solidify and simplify their trading strategy and just stop trading so damn much.
Perhaps the best way to get started as a minimalist “coffee shop trader” is to focus on the higher time frames, and more specifically the daily chart time frames. Focusing on the higher time frames works to smooth out the price action of the market for you, and it also provides you with a more pertinent or useful view of the market picture. Traders who focus on lower time frame charts often end up spending hours upon hours in front of their computers, analyzing the charts and watching their trades progress, tick by tick. It’s really easy to over-trade on low time frame charts, the more you look at them the more likely you are to think you see a trading signal that’s nothing more than random market “noise”. My mindset as a trader is that quality of trades is something I am far more concerned with than quantity of trades. This leads me to trade far less than most traders but it also allows me to have far less losers, smaller account draw downs and a lot more peace of mind, and most of all, more time.
I have found that the simplest approach, and the most effective one, is to simply wait patiently for my price action setups to form on the daily chart or the 4 hour chart (occasionally the 1 hour). I then execute my trade if my edge is present or walk away if it’s not. Most of the time I just let the market do the “work” and give my edge it’s proper time and space to play out, rather than messing around with the trade because I “think” the market will stop me out. It’s a funny thing that many traders have a solid trading edge but then through voluntary interference they fail to give their trades proper time to play out and this likely lowers the probability of their trading edge over time.
Trading higher time frames and low-frequency trading is much more conducive to most people’s on-the-go modern lifestyle. The idea with my “coffee shop traders” approach is that by taking a more relaxed and slowed-down approach to trading, a trader will work to forge the correct trading mindset and trading habits. This is in contrast to the frantic pace of day-trading and trading with messy charts or overly-complicated trading systems that many traders seem to prefer (to their own detriment). The majority of retail traders are people with full-time day jobs, and when they try to be “scalpers” or “day-traders” they simply put themselves in a very difficult situation right out of the gate since they don’t have the time they need to dedicate to trading short time frames. My opinion is that all traders should first master higher time frame trading and only after having found success on the 4 hour chart and above should they consider day-trading or scalping. Most traders seem to go in “reverse” by first getting attracted to day-trading and then later moving to the higher time frame charts after they find out that trying to make money on a 5 minute chart is something only a very experience professional trader should try.
Whereas trading is sometimes thought of as a complicated profession that mainly the Ivy-league elite excel at, I teach my students to scale-back their involvement in the markets to the point where they can trade comfortably from a coffee shop or their own home with nothing more than a wireless internet connection and a laptop or iPad. Taking this simplified approach to trading actually helps most traders improve their performance since trading is a highly psychological profession that tempts many traders to become over-involved with the markets, giving rise to emotional trading mistakes.
The statistics suggest that somewhere around 90% of all traders fail in the long-run, thus, mainstream trading strategies and ideas, as well as the people teaching them are most likely leading traders down the wrong path. I believe that the way I trade and the methods I teach my students truly buck the trend of the cliché day-trader sitting at his or her charts all day basically gambling their money away in a very high-stress manner. The lure of Forex and futures trading sucks people in very quickly and inexperienced novice traders can very easily develop addictions to the wrong trading styles and habits. Sadly, these addictions can be very hard to break and often aren’t broken until the trader loses a painful amount of money.
Being a “coffee shop trader” is not something that just happens overnight. It really is the end result of having your trading strategy mastered to the point where you are 100% confident in your ability to trade it. This means, you can open up your charts, scroll through them quickly and easily determine whether or not there’s something worth trading. You aren’t sitting there for hours stewing over economic news, Elliott Waves, MACDs, Stochastics, or any other messy and unnecessary analysis tools. The coffee shop trader simply needs his Ultrabook/Laptop PC, an internet connection and his own finely-tuned trading skills.
If the “coffee shop trader” approach interests you, but you just need a solid strategy to get started, then I suggest you look at my price action trading course. Once you have learned everything I teach in it and truly mastered it, you’ll be able to flip open your laptop and almost instantly know if there’s a trade setup worth risking your money on or not. This is how I personally trade and I wouldn’t recommend any other approach to anyone, it sure as hell beats sitting around staring at the markets all day (and night) wasting your time and becoming confused and frustrated. If you follow my members’ daily trade setups commentary, it will act as an effective guide to the daily charts of some of the major Forex pairs each day and it’s an excellent daily companion to the relaxed style of “coffee shop trading” that we’ve discussed here today.
Good trading, Nial Fuller