The background and inspiration for today’s article came about after I read a great book called The One Thing. In short, it’s about how the greatest people and companies that have achieved massive success always tend to be masters of one core process or thing; they perfect that thing and then keep repeating the process. They simply stick with the one thing they are good at and scale from there.
“The One Thing” is about reducing clutter and stress and achieving better results in less time. It teaches you how to build momentum toward your goal, whatever that may be. By mastering what matters to YOU, this book will help you increase your productivity and dial-down your stress. It’s a great book that is well worth a read or listen on audio book (perhaps on your next holiday) and it will help you significantly as a trader and person.
As traders, we should learn from this book and use the concepts it teaches by focusing on one thing at a time and mastering it. This means mastering and perfecting our trading strategy and everything that surrounds the execution and management of that strategy, effectively, the process of the trade and our trading plan.
I also encourage you to find the trading strategy that fits you the best or that you like the best (for me it would be pin bar trading), and stick to that exclusively, until you’ve MASTERED IT and feel like you OWN IT.
Master Your ‘One Thing’ …
Here’s what I would do if I were in your shoes…
- I would master my trading strategy by becoming a master of the process. Everything from the trade signal to the entry, stop loss, target, money management and my mental state. This is the one thing you are mastering, collectively it is the process. You are mastering the process of trading the entry signal of your choice, essentially.
- Your aim is to focus on this ‘one thing’ without distractions and without the obsession of changing, adding variables and searching for that ‘next best thing’. That is the key. You need to believe in what you are doing, stick with it, rinse and repeat. Eventually it becomes a positively reinforced trading habit and the by-product or side-effect of it is trading success.
- Many traders get this mixed up. They think they will first make money trading and then becoming a habitual trader who does the right things. It doesn’t work that way. You must, essentially, have faith in the process and follow it ‘blindly’ BEFORE you start making money. That’s really one of the keys. Trust the strategy, trust the signal you’re committed to mastering and trust the process.
- Example: Franchises like McDonald’s are so successful because they develop and implement focused processes and then the execute them flawlessly over and over. They commit to a proven model and stay focused on it; they NARROW their focus rather than broadening it. Most traders do the opposite! There’s a reason McDonald’s doesn’t offer boxes of friend chicken like KFC and why KFC doesn’t try selling a Big Mac; they stick to what they are good at, to what they OWN and have MASTERED.
- Another example: Remember what happened when arguably the best basketball player ever, Michael Jordan tried to paly professional baseball? Yea, me either. Fact is, he wasn’t that great at it. He was / is the best basketball player ever because he focused so narrowly on that one sport, he literally dominated it and no one to this day has equaled his achievements or abilities. Fact is, you really cannot be super good at many different things, like the saying goes, “Jack of all trades, master of none”. Well, if you want to be a “jack of all trades” that’s great, but you won’t make much money, I promise you that.
- The people who make money in trading or any other profession all have one thing in common: They are specialists. They specialize in one narrow field or focus, and they own it as much as they possibly can. That specialization results in higher pay / more money because MOST people have not focused on that one thing as much, so they do not know how to do it as well, they aren’t as good at it. Same thing in trading; most traders lose money because most people don’t’ have the discipline, patience, focus and passion to commit ONE THING, one process and become a Yoda-level bad-ass Master of It.
So, ask yourself right now, before reading on – are you committed to do what it takes to become a master trader or are you going to keep wasting your time, energy and money by screwing around with trading indicators all over your charts and a hundred different trading blog subscriptions all telling you something different?
Burn this into your mind, print it out, love it…
Here is the setup I would pick to master first: the pin bar price action pattern. Note: the targets are 1 or 2R or 3 or 4R depending on which entry you took; if you enter on a limit entry near the pin 50% level, the risk reward ratio potential is higher.
Here is what ideal pin bars look like (print this image out and add it to your trading plan or post it on your office wall if you want to, it will help.):
1. Now you know what you’re looking for when you hit the real charts. You’re looking for only super obvious pin bar signals, bullish or bearish, with long protruding tails. The tails should be sticking out from the nearby price action. Practicing taking only the most obvious ones, this way you give yourself the best chance at a winning trade because the more obvious the pin bar, the better chance it has of working out.
2. You may choose to read some trading mantras or go through some mental trading affirmations each day before you start scanning the charts. I know this may sound slightly funny, but trust me, it works. It’s all about getting yourself into the proper trading mindset before you start looking for trades. Trading psychology is paramount to trading success, believe me on that.
3. I suggest you have a written-out trading plan with screen shots of your setup. You can even print out the diagrams above and the real charts below, so you have examples of what you’re looking for. But, remember, each setup is unique, and they will always be slightly different. But, the basic idea is there: a pin bar has a long, protruding tail and it should typically have confluence either with a key level, the dominant trend, or both. Don’t over-complicate it!
4. Remember, we are looking mainly for 4 hour or daily chart pin bars here. 1-hour charts are OK, but I really don’t recommend them until you’ve mastered the higher time frames like 4 hours and daily. You will notice below these trades took some time to play out and hit the targets of 2R or 3 or 4R drawn in using the risk reward tool, BUT, the profits would have been massive. We are not looking to day trade, because that is not sustainable. We are looking to become skilled, savvy chart technicians who swing trade or position trade the markets to hop on big market moves and trade in a relaxed set and forget and end of day approach.
Examples of real-life pin bars setups to model your trading plan after:
Below, we see two bullish pin bar buy signals that were about as ‘perfect’ as you will see. They had confluence with the previous underlying uptrend and also formed at a key level of support.
Notice the potential risk reward of 4R on the second pin bar if you entered using my “trade entry trick” which is a tweaked entry where you enter near the halfway point of the pin bar after a retrace down the pin’s tail. You will also notice it took some time, about a month for that 4R to get hit, but if you’re making 4 times your money on one trade, can’t you wait a month? I can. Discipline and patience are HOW you make money in this game, NOT trading high frequency.
Here is an example of a counter-trend pin bar sell signal. This one was also darn near ‘perfect’. It formed at a key resistance level and had a large protruding tail, which is what we need to see if taking a trade against the trend. There was even a nice second-chance entry a week and a half later for anyone who missed the first pin bar. Note: whilst I typically don’t recommend beginners try counter-trend trading, it can be done on the daily chart if a signal forms at a key level – if done right it can lead to huge moves and even entire trend changes…
Here is the potential risk reward had you entered a ‘standard’ entry at the pin bar low and a stop loss above the pin bar high; note that 4r or more was possible entering this way. Had you entered on a 50% retrace tweaked entry as discussed previously, you could have gotten 8R or more!
Important insights for you to remember:
- Building focus – too many signals, strategies, markets, news. – focusing on one signal creates focus you need to become a Master of It. To get good at anything you must focus on that and only that. Whether it’s writing an article like this one, reading a book, learning to paint, play a sport or ANYTHING – you will never get good at it by having scattered and broken focus. Similarly, focusing on one thing helps you get good at it faster, obvious, right? But most traders overlook this fact in their quest for fast-money. Laser like focus on ONE setup will help you to make money faster than if you try learning 20 different trade signals and strategies all at once, it sounds obvious, but it seems to be human nature to try and do and learn too much at once, resulting in exhaustion and giving up. Rather than really committing to one thing and OWNING IT.
- Bruce Lee was the master of his domain. Be the master of yours. Was Bruce Lee good at everything? No, but he was THE BEST at the martial arts he practiced because he was intensely focused on it. If you want to make money trading, you need to narrow your focus and become obsessed with the topic of that focus.
- Don’t doubt yourself or let anxiety ruin you – people often think themselves right out of success and they often make things much harder than they are. Often, the hardest part of success, be it in trading or business in general or even in getting fit, is just GETTING STARTED. Don’t sit there staring at the walls, thinking how hard XY or Z MIGHT BE, just start doing it and you might find you enjoy it more than you thought (and that it’s not as hard as you thought!)
- How do you become a master? Breaking things down into smaller piece s/ goals, don’t overwhelm yourself by trying to achieve the lofty goal first. You will get distracted and lose focus if you do that.
- An exercise in discipline. Focusing on one setup creates discipline. You need to execute with confidence when your setup forms and systemize this to some extent. This is done by creating a trading plan with screen shots of a ‘perfect’ example of your chosen setup and the way you will trade it: stop loss placement, exit strategy, risk reward, position size, money management, psychology – those are the main topics to cover in any trading plan.
- Specialists make the most money. Become a ‘pin bar specialist’ or a ‘fakey specialist’ or whatever setup you like the most, pick one, master it, rinse, repeat.
Here are some articles that will assist you in learning more and helping you understand today’s lesson more:
If you want to turn your trading around or just start on the right path, you really need to narrow your focus. Most of the time, traders just get inundated with the loads of trading information swirling around the internet. I am telling you, from 16+ years of trading experience, most of it is just rubbish and will hurt you if you let it.
You can really pick one of two paths: Get serious right now and start mastering one price action entry signal at a time, until you are literally a Bruce Lee – level owner of that signal, or keep doing whatever you’re currently doing. But if what you’ve been doing isn’t working, I strongly suggest you try what I have outlined in today’s lesson because this is basically how I trade and it is what I know works for me and has worked for many of my students.
I suggest you pick the price action pattern you like the most, that you have the best grasp on and study it and commit to mastering it until you are dreaming about it in your sleep. If you need more help you can study my trading course for more in-depth examples and explanations. But, whatever you do, if you’re serious about trading, I strongly suggest you start following what I have laid out here today to put some structure and consistency in your trading routine.
What did you think of this lesson? Please share it with us in the comments below!