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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

How to Trade Like A Hedge Fund Manager

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By in Forex Trading Articles by Nial Fuller Last updated on | 74 Comments

You might be shocked to hear this, but there aren’t many differences between you and a professional hedge fund manager. The only real differences are the balance of your trading account and your ability to control yourself.  

The world’s top money managers all started on a path similar to yours; they had to learn how to trade just like you, they had to master their craft, fine-tune their strategy and learn to master their emotions and control their behavior in the market. Mastering one’s emotions and controlling behavior is probably the biggest thing that separates the pros from the amateurs. 

With enough screen time and experience, if you stick around long enough, just about anyone can begin to call a market quite confidently. But as many of you will all know by now, that alone isn’t enough.    

As I mentioned, what really separates the ‘men from the boys’, is the ability of the pros to treat each trade as just another execution of their edge, without little to no emotional connection to it. Trading multi-million or billion-dollar hedge funds is certainly no easy feat and definitely not for the weak-minded.  

The only way anyone could successfully trade these huge sizes and successfully trade for high net-worth clients, is by having complete and utter control of their minds and actions in the market.  

Remember, it’s just zeros.

The ability to change how you think about the money in your trading account is what you really need to succeed at this game.  

What professional hedge fund traders know and do, is think about the accounts they trade as score boards, keeping score in a giant world-wide game. The score is the trading account balance and to them, it’s nothing more than digits on a screen, the more zeros they rack up after the first couple digits the better they are doing. 

Imagine managing a billion dollar position the same as you would manage a $1,000 position? The only way to accomplish this is by remembering it’s all just zeros; it’s just digits on a screen. If you start allowing yourself to truly “feel” the power of the money, you have already lost.  

The ONLY true weapon you have as a small retail trader, is not allowing yourself to be affected by the money you have at risk in your account. This can be accomplished a number of different ways: 

  • Don’t trade with money you really can’t afford to lose. 
  • Know your overall net-worth, liquid money left over after debt. 
  • Risk a very small amount of your liquid money per trade.  
  • I like to do the “sleep test”; if you are able to sleep with your position on, then you’re good.

If you are doing all of the above, then the final step to trading your account like a hedge fund manager lies in how you think about the money you’re trading. 

I can tell you from personal experience, that the only thing more potentially nerve-racking than trading your own real money, is trading someone else’s money. Thus, a hedge fund manager needs to have ‘ice in their veins’ (discipline, self-control), otherwise they are not going to get above average returns for their clients. 

How do they do this? 

By thinking of the money in your trading account as “just numbers”, a trader with a really big “baller” sized account, can remove the emotion from their trading decisions. They are simply thinking about their money differently than you are, and as a result, they are able to function in the market essentially as if they’re trading a demo account.  

Have you ever traded a demo account successfully and then when you transitioned over to a real account you blew it out in a month? Why did this happen? Well, it’s simple; you were letting the money control you on the real account rather than you controlling how you thought about it (like you did on demo). Don’t let it affect you. You do this by following the 4 bullet points above and then remembering it’s just numbers, nothing more, just zeros on a computer screen.  

You have to take the power back from the money, don’t let the money control you, you control you and as a result, you control the money in your account.  

This might sound like some type of gigantic cliché motivational speaker type stuff to you, especially if you’ve just come off a bad streak of trading losses. But, I am telling you, from personal experience, that it’s a FACT that how you think about the money in your trading account directly influences whether or not you succeed or fail at trading.  

Whether you think you can or you can’t, you’re right. 

I don’t want to get all Tony Robbins on you (I do like him though) but your mindset really has everything to do with your trading performance. Whether you think you can become a successful trader or you think you can’t, you’re probably right. The first step in achieving anything in life is convincing yourself you can do it and really believing it.

In trading, you really have to “fake it till you make it” because that is the only way you will stay consistent and disciplined in your approach.  

Let me explain… 

Do you think a hedge-fund manager or simply a trader with a million-dollar account is sitting in front of his screens everyday, day trading? Would you do that if you had a large trading account?  

No, you wouldn’t, and here’s why… 

First, anyone who’s been around the trading world long enough knows that day-trading is the hardest way to make money and the most stressful. Put simply, there just aren’t a lot of high probability trading signals each week in the market to make a day-trading something that is more skill than gambling.  

Hedge-fund traders do a lot of research, they have access to information that regular retail traders do not. They take a macro view of events and then check for opportunities via the price action on the charts. They are not just diving in and out of the market all day because some line crossed over another line (sounds stupid because it is).  

The advantage that you have as a smaller retail trader, is price action is the great equalizer, the true footprint of money on the charts, it literally shows you what the hedge funds are doing. Then, you can combine that price action analysis with sickening self-control, consistency and discipline in your trading. This is literally the ‘recipe’ for retail trading success and the only way it’s possible, trust me, I know.  

Where does the “fake it till you make it” come in you ask? Simple… 

You literally have to trade your small trading account AS IF it’s a big account! How would a hedge-fund trade a big account? Slowly. Consistently. Masterfully. This is what I teach, this is how I trade.  

You aren’t looking for quantity, you’re looking for quality of trades. One or two good trades a month is all you really need. You may have to wait patiently like a crocodile for days or even weeks either for an ideal trade to form or maybe for one you entered to play out. Either way, this slow, methodical approach, is what works. Using price action and intense self-discipline is how you will make your money as a smaller retail trader. 

You aren’t going to ramp-up a tiny account into something you can live off of overnight. So, you have to fake it, until you make it. Trade that $1,000 account only risking $10 – $50 per trade for a year or two. Then, if you’ve proved to yourself you can do it, maybe you’ve doubled it. $1,000 profit may not sound like a lot over a year or two, but that’s a 100% return. Now, add a few zeros onto that $1,000 account and tell me if THAT amount matters?  

You see, if I can get brutally honest with you for a minute… 

Where most traders fail is in not understanding this simple point… 

Until you can trade a small account successfully over a significant period of time, you will not be able to trad a larger account successfully. Thus account size, simply doesn’t matter.  

Here’s what matters: 

Bring it all together 

You know that dream you have in your head? The one where you are trading from a beach and making thousands of dollars per week without having to be stuck in traffic or talked down to by some a-hole boss? Don’t give it up. Don’t even think about it. I’m here to tell you, as living, breathing proof, that it IS possible. I have done it, and so can you.  

What you have to understand and truly believe, is that trading is a game that is almost entirely mental. This is why I don’t just teach you how to analyze price charts in my trading course and I am not just teaching a trade entry system. Whilst that stuff IS important, what you do with the trading method you use and learning how and when to implement it, is more important.  

What professional hedge-fund managers either instinctively know or have learned through much trial and error, is that the trade entry is not the hardest part of trading. The hardest part is what happens after that; how you process the feelings that come along with trading, your thoughts, your hopes and fears.  

I have spent the better part of my adult life being intimately connected with global financial markets, trading and investing is quite frankly my life-force. The lessons I share with you on this blog and in my trading course and members area, are literally what keeps me going. My entire existence and happiness is pinned to the idea of sharing my experiences with aspiring traders so that they can feel what I feel every day. The feeling of not having to be to work “on time” or having to answer to some boss who doesn’t really care about you, the feeling of being able to make money from a beach or from a coffee shop, that is what keeps me going. I want you to have that feeling and am telling you that it is possible if you simply change how you think about the money in your trading account and remember that you have the power to control how you feel and how you behave. Once you take that power back, you are on the right track.

What did you think of this lesson? Please leave your comments & feedback below!     

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. Fanani September 17, 2019 at 12:12 pm

    Thank a lot Nial.

    Reply
  2. Dmitriy September 16, 2019 at 1:57 pm

    Thanks a lot, Nial!
    That was a truly beautiful lesson!

    Reply
  3. Sunday September 14, 2019 at 9:53 pm

    what to know more about risk management
    if I want to risk 1$ on a pair what will be my lot size and pip value to set as a Stop loss

    Reply
  4. Zinnur June 2, 2019 at 4:34 am

    Important lesson. Thanks

    Reply
  5. Благодарность October 30, 2018 at 3:47 am

    Magnificent article

    Reply
  6. Rahmat February 26, 2018 at 7:36 pm

    Almost every articles content and language from Nial are really giving positive effects including this one.
    So thank you Nial.

    Reply
  7. Olawa February 18, 2018 at 1:01 am

    Nial is my preferred Forex mentor anyday

    Reply
  8. DERRICK February 16, 2018 at 12:54 am

    all i can say is thank you so much

    Reply
  9. Tha Mathabzo Zulu February 15, 2018 at 8:15 pm

    Thank Nial

    Reply
  10. Duncan February 15, 2018 at 6:29 pm

    Thanks Nial;

    This was a great post which actually helped me rephrase my thoughts after my losses.

    I am still not very profitable at this stage but every time I lose, I look back to see what I could have done better and learn to minimize my losses maybe exit at a small profit rather than a loss!!

    However; after having read this, I also now appreciate the fact that losses are a part of it as well and I feel less discouraged before taking the next trade than before. Things sometimes are easier said than done – true – but after reading these guidelines, I learn a lot and appreciate it heaps. I am learning a lot and the best part of it is that I am enjoying it.

    Thanks for spending the time to post such valuable guidance!

    Duncan

    Reply
  11. Peter Miller February 15, 2018 at 2:46 pm

    Another good lesson. As they say ” life is what you make it “and that goes for trading also, think before you act and know that never one day (or life is ) is the same as the last one, so treat as Nial says each trade as a new beginning. Thanks .

    Reply
  12. rudra February 15, 2018 at 6:24 am

    good one sir

    Reply
  13. Khesiwe February 15, 2018 at 2:14 am

    Excellent article pactice makes perfect I’m going to practice every advice in this article thanks Nial

    Reply
  14. Winston Roy Longbottom February 15, 2018 at 12:01 am

    Thanks Nial, I for one admit that I was influenced by previous success and could not see the next trade through that; I was brought back to reality with some quick losses, however I puuled my thoughts together and looked at my next trade with confidence and considered every possible angle before taking it and I am now back on track. This article has since reassured me of that fact and I must disregard any previous trade before attempting the next. Your articles help keep sanity in the trading game and also leads to further success. Many Thanks. Winston

    Reply
  15. farzad February 14, 2018 at 8:50 pm

    Every word in this article is like gold…

    Thanks AGAIN Nial.

    Reply
  16. Olamide February 14, 2018 at 2:03 am

    Thanks Nial. That’s reminds me of a trade some years ago before I quit trading. I bought EUR/USD on $0.05 lots with $20 risk and i made a profit of $183 on that trade so that winning recency bias got into my head and I felt overconfident, then i went ahead to trade $0.10 lots on my next two trades and I lost both. That’s how I gave back the profit I made from that EUR/USD to the market. Fear start to catch me then I reduce my lots to $0.01 which definitely reduced my profit that I would have make on some trade. Though I just came back to the market since two or three years ago that I quit but am still using demo account to test my trading strategies before trying to come back live. Thanks once more.

    Reply
  17. Wandera Moses February 13, 2018 at 8:50 pm

    Nial thx for this one also. i have improved alot in trading just by reading your articles. thx alot

    Reply
  18. ampurirag February 13, 2018 at 6:09 pm

    Excellent and timely. Thanks Nial.

    Reply
  19. Seiso February 13, 2018 at 1:44 pm

    Typical of Nial’s mail’s. I am not in anyway surprised to find this post hitting the nail on the head as it does and so timely as well. I always find Nial’s post as informing, factual and educating like this one. Thanks to Nial, from now I am no longer going to be enslaved to my last trade’s results.

    Reply
  20. Colin February 13, 2018 at 10:31 am

    Thanks for the trading insight. Particularly about training our brains to behave properly.

    Reply
  21. Hettie van der Vyver February 13, 2018 at 5:12 am

    this makes sense!!

    Reply
  22. Thoko February 13, 2018 at 5:09 am

    Well I am a true novice,I have not started trading yet. If I understand well briefly you say if one is a trader one must bury the past.That is my motto
    So I feel l Iam going to do well.

    Reply
  23. Wasantha February 13, 2018 at 4:45 am

    This article explains what happened when I first started trading forex. After reading many of Nial,s writings on the subject of trading I feel that I am expanded in my knowledge and confident about my trading decisions.I really appreciate Nial,s works,

    Reply
  24. kris February 13, 2018 at 2:59 am

    i noticed today after one loosing trade that it can’t reflect, the other running trades .
    After that i checked my emails and i saw your email as first .I have read it and then it was like you would heard what i sayd before It was simmilar to :

    If you just lost, it has no bearing on the fact that your next trade might be a winner.
    If you just won, it has no bearing on the fact that your next trade might be a loser.

    thank you for your work .
    traders mindset ..

    have a nice day.

    Reply

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