The Only Real Way To Beat The Market
We’ve all heard “You can’t beat the market” and “The house always wins”, but we also all know that some traders and investors DO indeed beat the market, just as some black jack and poker players make a living in the casinos. How do they do it? Do they have some super-secret psychic ability to predict the next big move in the market or some big elaborate plan to cheat a state-of-the-art security system in a casino? Unless you’re talking about a Hollywood movie, the answer is obviously “no”.
So what’s the big ‘secret’? How are some traders ‘beating’ the market consistently while you sit there enduring yet another frustrating week in the market? What if I told you there’s really just two main ingredients that you need to beat the market consistently? Read on to find out what they are and how they can put you into that elite group of traders and investors who regularly profit in the market…
The first ingredient to beating the market: beat the bigger ‘enemy’…
If you want to consistently take money out of the market and become a profitable trader, you’re going to have ‘beat’ yourself first. That’s right, before you even get to the point of being a worthy competitor in the market, you have to master yourself. If you cannot control yourself and ‘defeat’ the temptations and impulses that flood through your mind and body every time you look at a chart, you will never even stand a chance at beating the market.
The idea here is quite simple in theory but MUCH more difficult in practice, as you probably already know. If you cannot learn to ignore the ‘demons’ in your head that are telling you to enter another trade and risk another lot when you know that doing so is not in your best interest, you will never become consistently profitable in the market.
What’s the solution?
A complete shift in your thinking.
You have to start believing that your only real ‘edge’ in the market is remaining in control of your actions and picking your trades wisely, because that really is your only real advantage against the millions of other people trying to trade.
Why do you think it is that something like 90% of all people who try trading their money in the market lose all or most of it in the end? It’s because it’s in our mental wiring as humans to be bad at trading, we are wired for “fight or flight”, as that’s the wiring that has served us best over our thousands of years of evolution which was mostly spent in dangerous situations hunting for food or fighting with other humans. Fast forward to the modern age and things are obviously A LOT different, the internet has only really been around in widespread use for about 10 to 15 years, widespread online trading from your computer and mobile trading have been around for even less time. Long story short, you are not born with the proper wiring to beat the market, you’ve got to develop it through discipline, patience, logic, planning and forward-thinking, you know, all the things don’t come naturally nor ‘feel easy’ to most people.
Thus, you NEED to accept and understand that the minute you begin trading a live account you are already battling the toughest trading foe you’ll ever face, yourself. I have written a lot of articles on patience, discipline and trading with consistency, but unless you are ready to TAKE ACTION on fighting the emotion-fueled trading demons inside your own head, you will never even get close to beating the market.
So, the solution is simple, accept that YOU are the biggest enemy you have to beat to make money in the market consistently and then devise a PLAN OF ACTION to make it happen. After that, beating the market will be a ‘piece of cake’.
The second key ingredient to beating the market…
If you are sitting there thinking that the 10% of successful traders are just “lucky” or had some unfair advantage, you are dead wrong.
You see, unlike many other professions, the market doesn’t care about you or your advantages, you might say that the market is the ‘Great Equalizer’. The only two things that really matter in trading are your trading skill / ability and whether or not you’ve ‘beat’ yourself like we discussed above.
Learning an effective trading method and truly mastering it is obviously a necessary component to beating the market. However, if you have not yet beaten the trading demons in your head, you will not succeed even if you’re already a very skilled trader. Thus, you cannot have just one of these two ingredients, you need both; you have to have complete control over your own mind and actions in the market and you have to be a skilled trader.
Perhaps the best example of how the combination of both skill and self-control can help you beat the market is Warren Buffett. Warren Buffett obviously knows how to beat the market, he is without a doubt the greatest investor of all-time and it’s not because he’s been lucky. As discussed in this article on Bloomberg, Buffett has a real skill for picking the right stocks and he has a plan and he sticks to it. They don’t call him the “Oracle of Omaha” for nothing.
What’s the solution?
The solution to a lack of trading skill and ability is to first obtain some effective training and education on a real-world trading method like price action.
Once you have learned the ins and outs of the strategy, you need to then start practicing it on a demo account and begin building a trading plan. Over time, you’ll need to tweak and change your plan, please don’t think of a trading plan as a “rigid rule set” to follow, because it shouldn’t be that. It should be a daily guide or even a check list that you go through to keep yourself on track. It will obviously include the main things you look for in a trade setup but it can also include things like daily trading affirmations or inspiring quotes, anything to keep your mind focused and on track.
You should think of the trading plan as the ‘glue’ of your overall trading routine. The trading plan is going to give you some structure (if you stick to it) and it will help you stay on track by keeping your mind focused on the trading strategy and guidelines that you have laid out. Traders who try to ‘wing it’ and think they will just magically become disciplined traders overnight, almost always fail. Everyone needs some tangible structure and routine to turn the desire for discipline into a habit that solidifies itself in your mind over time.
Beating the market begins with ‘beating’ yourself. You will never face a tougher opponent in the trading world than the one that lives inside of your own mind. However, the recipe for beating the market is pretty simple: Master a simple and effective trading strategy like the one I teach in my trading course and combine this trading skill with mastery of yourself. If you can do those two things, beating the market will be well within your reach, and best of all, within your control.
22 Comments Leave a Comment
The article is absolutely brilliant. Nial, you are a great teacher indeed! In so a few words you can express the essence of trading. Thank you ever so much.
thanks.for everything. i got it
Simply superb……..a” REAL JOLT”….many of us deserve.
Great article as usual, and so true.
One of the best comments I have ever heard about the mind , and unfortunately is true is:
It’s a shame when you are alone with your own thoughts, that you are behind enemy lines! (especially in trading!!)
Real skill. thanks Nial
“We have met the enemy and he is us”………so true!!!
Nial, great article! I was wresting with this issue for awhile and I am glade you wrote an article on this subject.
Thanks for a great article :-)
Thanks mate. I can’t argue with the fact the hardest part of trading is me. In my daily routine I commit to taking trading steps that not only helps me but overtime builds my belief I can beat the market.
Nial – Another great article, once again you nailed it precisely regarding the basic foundation of successful trading.
thanks nial.the article reminds me who my biggest enemy is in the market.me.
Thank you Nial!
Hmm Nice Article
really nice article,thank you Nail,you hit right on the target…..recently I deposited $30 and I was very confident and raised it to $90 within a week…..but finally I washed it all only in two trades,,,why only and only and only due to the “demons” inside my mind….in first trade i lost 50 and in second trade 35 dollars and I was watching and knowing that it was losing but I cannot accept S/L that’s my problem I think do or die….Thanks once again Nail for so nice articles for FREE…
I’m trading now since 17 years and spend some years on LTTM. I would say Im an experienced trader. After all the time I cannot say that I have 100 %-control over the markets. Still going in unreasoned trades, sometimes 1 hour after entry asking myself, “Why have you done that?”.Mostly taking systematical trades, but not 100 %. I can’t analyze the winning rate of unsystematical trades, instinctive I would say less than 25 %. The fight against yourself is not only a problem of beginners, its a never ending process, every day anew !!
great article and very inspirational, thanks Nial you are my mentor.
great,but then the bigger enemy requires lots of energy to defeat. thanks nial
Excellent lesson, thank you Nial.
great article. very inspiration to only price action trading. thanks
For me You the best nial fuller love everything you do in forex,you are a master love reading every email thank nial fuller
Thanks Nial. Quite inspiring.