The Low-Hanging Fruit Trading Strategy
According to dictionary.com, the term “low-hanging fruit” means “the fruit that grows low on a tree and is therefore easy to reach”.
In the world of trading and investing, “low-hanging fruit” refers to trades or investments that are “easy” or “obvious”, and these are the types of trading opportunities that you want to learn to identify and take advantage of if you want to truly put the odds of trading success in your favor.
As a trader, you should be focused on ‘low-hanging fruit’ trades if you want to get the most out of your trading capital and maximize your chances of long-term trading success. In today’s lesson, I am going to help you understand how and why you need to shift your focus to trades that are truly ‘low-hanging fruit’…
Why you NEED to WAIT for the low-hanging fruit trades
Imagine you are walking through an apple orchard and you haven’t eaten in 5 days. There are low-hanging apples and there are apples up higher on the tree that would require you climbing the tree or using a ladder to get to. Given that you have limited time and resources (you probably don’t have a ladder) and that you’re super hungry, you’re going to pick the low-hanging apples aren’t you? This is obvious, no one is going to put more effort into picking an apple off a tree than they have to.
I’m willing to bet that currently in your trading you are not trying to pick the ‘low-hanging fruit’, you are probably trying to pick the ‘fruit’ (trades) on the top, middle and bottom of the ‘tree’, you’re being greedy and it’s destroying your trading account as a result.
You’re being greedy because you want to make money fast and now, but what you don’t realize is that giving into your greed is actually causing you to lose money. Instead of waiting for those low-hanging fruit trades, you’re struggling trying to pick the trades that aren’t ‘ripe’ yet and that are at the very top of the ‘tree’. You might be thinking “Of course not waiting for the low-hanging trades doesn’t make any sense”, so why are you and so many other traders not able to wait for them?
It’s pretty simple really, you have not yet realized and / or accepted the fact that being patient and waiting for those ‘low-hanging fruit’ type of trades is actually HOW you make money faster over the long-run in the market. As a result, you’re still giving into the emotional impulses that are telling you to “trade, trade, trade” because it “feels” like that’s how you make money in the market (but it’s not!).
The low-hanging fruit trading mindset
If you know in advance that you’re ONLY concerned with the low-hanging fruit type of trades, then you already know you’re not going to need to spend a lot of time searching for trade setups. If there are no obvious trade setups (low-hanging fruit), then you simply go live your life outside of the trading world, don’t waste time sitting at your computer trying in vain to find trades that aren’t there!
My entire approach to trading can be summed in the phrase “quality over quantity”, that is to say that I am focused on finding high-quality (low-hanging fruit) trades, not with the quantity of trades I take. I find that most traders behave as if they have the opposite mentality; they are more worried about quantity of trades and how much money they “might” make as opposed to finding high-quality trade setups and simply learning to become good traders, which is ultimately how you make consistent money in the markets.
The ironic thing about traders who are glued to their screens, frantically trying to find trades and make money, is that the more they behave like this the harder it becomes to make a profit. You’ve got to learn to ‘let go’ of the belief that ‘more is better’, because in trading, less is better. Low-hanging fruit types of trades don’t come around every day and sometimes not even every week, so you’ve got to learn to enjoy your time IN BETWEEN these low-hanging fruit trades. The one thing you don’t want to do is continuously search for trades even when no obvious ones are present and trade away all your risk capital in the process, then when the low-hanging trades finally come you have much less capital to commit with.
The good thing about low-hanging fruit trades is that they tend to either pay very handsomely or they don’t, so you can typically implement a set and forget trade management technique on them quite successfully. Thus, the ‘low-hanging fruit’ trading approach is really the ultimate minimalist trading method because you don’t need to commit a lot of time looking for trading opportunities and once you find them you don’t need to commit a lot of time to managing them.
This is exactly the opposite of a losing trader’s approach and mentality, which is exactly why you need to make it your approach and mentality! Most traders fail, and most traders are micro-managing their trades and trading WAY too frequently, since we all know about 90% of traders fail in the end, it only makes sense to do the opposite of what the majority are doing. So, stop trying so hard to make money and instead let those low-hanging fruit type of trades come to you. If you have to go searching up the ‘tree’ and breakout the ladder to try and find a piece of fruit way at the top of the tree, it’s not worth the time and energy. Same thing in trading, if you find yourself ‘searching’ for a trade, that means there are no low-hanging fruit trades waiting to be ‘picked’, so pack up your laptop and come back tomorrow.
In the meantime, go enjoy your life and don’t worry about the market, when you come back the next day you will probably have saved yourself some money from avoiding a low-probability losing trade and you’ll see a nice big ‘low-hanging fruit’ type of trade there waiting for you.
HOW to focus on the ‘low-hanging fruit’ trades
OK, so how do you go about finding these low-hanging fruit type of trades you ask? Well, to put it succinctly; you simply need to know EXACTLY what you’re looking for in the market and ONLY trade when it’s (your edge) present. You should not be spending more than an hour a day looking for trades, entering or managing them. I personally spend about 20 minutes in the morning, evening and night checking the market, that’s approximately 1 hour total per day, nothing more is needed because I’ve mastered price action trading and so I know precisely what a ‘low-hanging fruit’ type of trade looks like and when it’s present in the market.
The greatest traders of our time know this secret and I am fortunate enough to have discovered it early in my own trading career. Even Warren Buffet uses the ‘low-hanging fruit’ philosophy in his investing as is evident in these quotes from him:
Over time, you will find only a few companies that meet these standards. So when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines. If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.
You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.
My trading philosophy and approach is to wait patiently for the obvious ‘low-hanging fruit’ trades in the market and then when they do come along I will go in and commit with a considerable portion of my capital. Obviously, you have to risk an amount that you’re comfortable with potentially losing on any given trade, but because I am so patient and I only trade ‘low-hanging fruit’ trades, I have more capital to commit to a trade when a good one comes along, this is real-world skilled / sniper trading. Conversely, most traders are just out there ‘running and gunning’ and frantically trying to force trades out of the market, this is also known as GAMBLING and we all know the house always wins in gambling (and you lose).
To summarize, you need to simply accept that there isn’t always a trade worth taking. Flip your mindset from feeling like being out of the market is causing you to miss out on ‘opportunities’ to thinking and BELIEVING that being out of the market IS an opportunity, and that a high-quality low-hanging fruit type of trade is just around the corner.
16 Comments Leave a Comment
You r Bill Gates of forex.
As always your teachings are right on. I went from trading daily because I thought that what I was supposed to do. Of course I was 80/20 OTM with that mind set. Now I might trade once a week. The pressure is off and I am actually enjoying this endeavor. No more angst watching my charts for hours at a time. Thank you, Nial.
Thank you Nial. I have to hear that over and over and over again. Thanks again
Personally i prefer mango’s LOL happy trading all…
As stated in the new market wizards the trader with a 188 IQ lost all the money he was given by a SUPER TRADER in 5 years, the guy that was unable to remember the alphabet made more $$$$$ then any of the other 35 traders. IQ intelligence has nothing to do with becoming a brilliant trader. IT’S JUST A GAME!!!!
The danger of having high IQ is not realizing the importance of training and using EQ properly, and many higher IQ people / highly successful people in other professions tend to have bigger egos, try to outsmart the market, be creative during trade executions and/or have lower tolerance for failures, which are direct signs of lower EQ. Hence, it’s also easier for high IQ people to lose money in trading, if they don’t regulate their emotions and properly use EQ.
EQ is more of the determining factor in successful trading, no debate there. I’ve had opportunities to meet some of the most intelligent (high IQ) and wisest (high EQ) people across the world. Very few of them possess or use both properly. Nial is one of those rare gems! Nial’s “Low Hanging Fruit” trading strategy and “Sniper / Crocodile” trading style are highly strategic (high IQ-oriented). Of course, being able to consistently execute the “Low Hanging Fruit” strategy and “Sniper” style is when EQ becomes most important.
Both IQ and EQ are acquired capabilities, but to truly harmonize IQ and EQ and increase the combined power is an even more challenging skill that’s acquired through discipline, persistence, and mental conditioning.
Nial,roughly how many of your trades do you enter as pending as opposed to market entries?
Jeremy. Prob about 50 / 50
I’m gradually applying these principles and I’m finding the truth in them. Being patient and just watching allows you to take advantage of the best setups when they pop up.
Brilliantly said, Nial! You are so wise. You’re a perfect example of having extremely high IQ and EQ.
I have the exact same experience as Taranjeet above. For Jan 2014 I only took 3 solid trades and made a whopping 28% return. For Feb 2014 I have taken 12 trades and am -10% for the month with a net 18% for 2014. In forex, less is more and focus is key….without doubt!
Trading is so easy, we are making it more complicated.
thanks for the article, Sir.
What an eye opener for me… For the past 3 months I have been trading only pin bars with trend on the daily chart and have taken 24 trades in total to this day… I was up 14 % and now back to 2 %..
After reading this article I went over all my trades and to my surprise there were only 8 apples out of the 24 that I had eaten…. WOW…. I thought I was developing patience but I guess I need much more to make money…
Thank you so much master… You are the best Mentor :)
Thank G-d one year ago I started to read Nial’s articles. He literally turned my thinking upside down. I was in deNial ( a play on words). I just couldn’t accept his ideas . but I noticed one thing about Nial , he got it right on target , trading successfully is 90% psychology and 10% methodolgy. I left stocks behind and trade Forex but As he states in this article . Trade LESS . Low hanging fruit , crocodile . walk away from the computer . We all know opinions on the internet are open like the wild wild west. but any one with a bit of a brain in his or her head that want to have their minds conditioned for trading Nial Fuller is the king. Thanks Nial ( in 6 month i triples my account- a trade once every few days)
Great article Nial. Very wise and I shall try to follow the message.
When we play pool, we look for shape, We do like the slam dunk ones…or the easy ones, those are the ones if played correctly give a chance to run the table. Those are in fact the low hanging fruit.