TGIFF #002: Trading is Survival of the Fittest. Will You Evolve or Become Extinct?

Do you want to be the best trader you can possibly be, and make consistent profits?

Do you want to feel the best you can? 

Do you want to enjoy being alive as much as possible?

Of course, you do. Who doesn’t, right?

Stupid questions? Maybe. 

But maybe I am getting you warmed up for my next question…

Are you fit?

It is the way you maximize your enjoyment of being alive.

What good is money or success without being fit and healthy anyway?

Similarly, being a ‘fit’  trader is how you become the best trader you can be.

How do you become a fit trader?

It’s like how you become physically fit: doing the hard work, being dedicated, being patient and most of all, being motivated.

Guess what? 

Getting in good physical shape is going to knock you outside of your comfort zone. 

But the long-term payoff is HUGE. 

Likewise, getting in good trading shape is also going to knock you outside of your comfort zone.

But the payoff here is also HUGE.

Do you want a good life as a trader and in general? 

Then you have to get fit and stay fit, and to do that you must adapt, you must evolve in trading as well as life.

It’s not enough to just know a lot of things if you don’t take massive action and change what you’re doing.

To survive you must evolve; to thrive you must optimize.

If you want to survive as a trader, you’ve got to do many things right, consistently right. 

The weak-minded and those with an inability to stay dedicated, disciplined, consistent and motivated simply do not make it. They lose. You don’t want to be them.

Just like someone who is in good physical shape is going to enjoy their life a lot more (even if they don’t have much money) than someone who is one meal away from a heart attack (even if they’re rich), a trader who is in good trading shape (even if they are trading a small account) is going to enjoy trading and the fruits that come with it much more than a trader who is in poor trading shape (even if they are trading a large account).

As Leon C. Megginson, a business professor at Louisiana State University, once quoted, “It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself”. 

However, just surviving is not enough. After all, we want to thrive as traders, right?

The first step is to learn to survive, to stop hemorrhaging money every year and start keeping your head above water, so to speak. 

To do this, you must change. You cannot keep doing what you’ve been doing if that hasn’t been working for you. Only those who learn to evolve and learn from their trading mistakes will be able to survive long enough to thrive as traders

So, how do you become the fittest trader you can be, so you don’t just survive but thrive? 

You’ve got to optimize.

How to be the ‘fittest’ trader you can be?

#1 Preserve Capital

I feel like there’s a need to stress this enough. If you want to survive, preserve your capital. 

In the wild, an Australian saltwater crocodile is one of nature’s most finely tuned and evolved predators. Another highly evolved, and finely-tuned predator is the African lion. 

Both amazing predators display behavior that we can definitely take inspiration from as traders. One such behavior is the way they conserve their energy for the easiest (weakest) prey. They may wait for days before finding an ideal prey, they certainly don’t go charging after everything they see, because they know that will result in starvation. 

Over time, they have learned that waiting (patience) is the quickest way to get a good meal. They preserve their capital (energy) so that when an ideal prey comes along, they can hunt it with ease.

As a trader, if you risk your money on every little intraday pattern you see, you’re going to quickly run out of capital. And when a good/easy trade comes along, you’re going to be crying on the sidelines, wishing you had been patient and conserved your capital better.

#2 Pick Trades Wisely

In a similar vein to the point above – Just like predators choose their prey wisely, you must choose your trades wisely. 

You cannot throw your capital after bad trades; you must remain patient and wait for the right opportunity to knock. 

If a lion keeps chasing every animal it spots, it’ll run out of its energy reserves without catching any meal and will eventually die. 

Similarly, if you continue to over-trade and not follow an anticipatory trading plan of waiting for high-probability trade situations to set up, you are going to quickly lose money and your trading account will also die.

Like Warren Buffet said; “Trading is a no-called-strike game – you don’t have to swing at every pitch!”

#3 Understand That Time Will Help You

Evolution takes many, many years to act on a species, as organisms change and adapt to their environments. 

Over time, you will learn from yourself and others and become a better trader. 

The earth is 4.54 billion years old, and the human brain didn’t form until about 7 million years ago, evolving into its current manifestation mostly over the last 2 million years. 

The point here is you can’t expect it to happen overnight. For things to become efficient and perfect, it takes time, no matter what it is. The sooner you accept that you aren’t going to get rich overnight in the market, the sooner you can start on the path to profitable trading.

Think about trading like a freight train; it takes time to get up to speed, but once it does, it’s hard to stop. However, if you try to go too fast too soon, you’ll ‘de-rail’ and lose any chance of really making it. 

Start small and slow, learn more until you really know what you’re doing, then over time you will know when to risk more.

#4 Develop and Use Your Trading Intuition

As you grow and evolve as a trader, you will develop a trader’s gut feel or intuition. 

This is one of the last pieces of the puzzle that will fall into place if you consistently do all the other things discussed in this lesson. 

The best traders, like the Market Wizards, can look at a chart and instantly have a high-probability gut feel about where it is going next. From there, they need only wait for an entry trigger, proper risk reward scenario and execute their trade. 

To someone new to trading, this might look easy, but they aren’t seeing the years of persistent dedication to the craft that led up to that point.

#5 Adapt and Evolve

Last but not least, accepting that to progress and profit, you must evolve and adapt is a crucial part of becoming a ‘fit’ trader. 

As the first step, you must study and learn to trade properly. With time, you will continue to learn from studying the price action on the charts.

You should then proceed towards the process of trial and error and learning from your past mistakes to evolve from a beginner to an intermediate trader. 

Next, understand that adapting and evolving also means that you have to adapt to the changing market conditions. If you keep trying to trade a trending market as it transitions into a range-bound or consolidating market, that’s gonna cost you your precious bucks. 

The ability to look at a price chart, interpret the price action story it’s telling and act accordingly, is how you know you’re on the right track. You must learn from screen time. If you do not use these mistakes to evolve, you’re not going to make it as a trader. 

So, don’t let mistakes get you down, look at each mistake as a chance to learn something and to improve.

Conclusion

If you don’t continuously learn, adapt and improve, you will not survive the trading game. 

Trading truly is survival of the fittest. Only the fittest chart technicians, price action analysts and those most passionate about their craft will survive. This means if you’re in this to try and make some ‘fast money’ you are not going to survive. 

Part of being a fit trader is truly loving trading, which will simultaneously influence you to trade in such a way that brings you more profits than losses.

My trading has evolved, and I feel it’s my duty to share what I’ve learned with you and help you evolve into the fittest trader you can be, so that you can move from losing to surviving and ultimately to thriving as a trader.

Hope you’re thriving more with each passing day with the help of the tactical trading tips shared in my newsletters. 

See you next Friday with more such actionable pointers. 

Till then, keep trading and have a wonderful weekend!

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