"Meticulous Planning Will enable everything a man does to appear spontaneous."

Mark Caine

It's Your Money. Shouldn't It Be Your Plan?

How to Analyze a Stock and Day Trade It The Right Way

We called out AMZN Long Premarket on 7/28/17.  It had earnings that took it lower but we saw reasons it should be a fade.

Join Us on Stocktwits Here to get daily stock calls like this.

After we called it, we waited for an entry and took it long just like we talked about for a 3R winner.  Join the CTP Group Today to learn this exact pullback strategy we used and learn how to make it your own.

Once you’re a member of our Group, drop me a comment.  Let me know how you traded AMZN today or stocks like this recently and why.  Are you staying consistent?  What can we help you do better?

Ben from CTP

Why You Must Focus on Rs and Not the Dollar Amount

If you’ve ever YouTube’d Day Trading one of the first things you see are videos of things like watch me make $5,000 in one hour or learn how I make $200 a day trading or any other nonsense that is only there to sell you.

The truth is, without knowing how much they were risking to make that, you don’t have all the facts and cannot POSSIBLY consider their strategy legitimate for anything more than selling purposes.

When looking at any trade result, any strategy, or any plan, the secret to success is all in the R.

R or Risk Factor is how much you’re willing to risk per trade.  Typically, the logic goes that you should not risk more than 2% or less per trade.  Many times you’ll hear this in swing trading but not as often in day trading as even that amount can be substantial.

Regardless of what the amount is, the key is understanding why it matters.

If a “guru” risks $1,000 and makes $1,000 and posts a video of it online, it’s impressive to an extent but it’s no different than someone risking $10 to make $10.  They just had a larger account to begin with.

However, if the same guru posts a video that shows $1,039 day come see how at my site” then you’ve been hooked into believing you can start making $1,000 days yourself if you just follow along.

The truth is your dollar amount return is completely dependent on your account size.  If you are only supposed to risk 2% per trade then to risk $1,000 you must be trading a $50,000 account.

This isn’t that large a number in the grand scheme of things, but when you’re struggling to come up with the $500 to pay this “guru” to show you how to make $1,000 a day, be very aware of how much it costs to copy him in all aspects; not just the profit part.

Another important reason of R value is for data comparison and trade management.  At the end of the day if you pull in $300 it is a nice day.  If you have a monetary daily goal as your main focus point (not recommended) and you reach it; then you exit all and call it.) 

But if you want to double that monetary goal, what do you have to do?  Hold twice as long?  Risk twice as much?  By tracking Rs instead of $ amounts, you can quickly see which management style produces the best Rs over the long haul and then simply make the Rs match the goals instead of trying to make the money match the goals.

If you want to make $5,000 a month, you can risk $1,000 a trade and hit it with 5 trades or you can risk $500 a trade and make it with 10R.  They do the same thing but they handle themselves entirely different.

One final point; ever wonder why casinos make you trade in your cash for chips?  Because you can handle yourself better with chips.  If you are carrying around 20s and 100s and playing with them, the money is too real, you’ll play differently.  Trading should be the same, by focusing on Rs and not the $s, you can trade the right way and hit targets whether you’re trading $25 an R this month or $200 an R next month.

Let the Rs show success; stop chasing the $$$.

If you need more help with this, we offer plenty of free training through our blog and email group or we offer a premium service with custom built management and tracking if need be.

What Makes A Trader Professional?

How many different professional traders are really out there?  If you do a google search for professional trading; you’ll get all sorts of results.

From people to strategies to everything in between.  Professional Trading has become extremely blurred and it’s time to clean this mess up.

Level 1: Professional.  The first stop on this list is the true professional.  How can you tell if the person you’re looking at is truly professional?  They must be licensed.  Whether it’s series 7, series 13, CMT, or otherwise, a true professional trader is licensed and governed by outside forces.  If they offer their name, google it and look for a license.  If they offer a company they mainly stand behind, it’s fairly easy to say they are not professionally licensed.

Pros: These are the people that handle large trading for firms.  Training from someone like this gets you true inside access.

Cons: Some of the licenses here can cost thousands into the mid $20,000 range.  They are not doing this for bragging rights, it’s the cost to handle large accounts.  A 1% fee on a billion dollar account is easily enough to cover the startup fees.

However, if you see an ex trader who used to work for a large bank suddenly decide it’s time to share that info with the world for $50 or even $1,500–you’re at the wrong place.  

This is just my personal opinion, but if a trader at that level comes down to a retail level asking a few hundred dollars for a course, I would not believe that they were ever truly at the level they claim.  You would never buy a mercedes to help someone else drive a kia.  Again, just my personal opinion, but I see this alot and I truly don’t understand why.

Level 2. Retail Professional.  Full Disclaimer: This is our Level.  

This is the level for those that taught themselves how to do it and look to teach others as well.  The main reason (at least our reason) that we are not professionally certified is we do not need outside money.  

Spending the fees to become licensed and doing nothing with it simply does not make sense.  If there ever comes a point that we look to grow beyond our capabilities and require outside capital, CTA would be our license of choice.  However, at the present time, the money is not needed, and therefore neither is the license.

Pros: They’ve learned what it’s like through experience, and through a normal sized account.  The main advantage over large accounts we have is that our stops will not disrupt the system, our exits will not take away our profits in the process; our smaller size is one of our biggest edges.  This goes for the Professional Retailer as a whole group, not just CTP.

Cons: Anybody can write a good salespage and it really comes down to gut feel with the training.  We tried 3 different courses ourselves during our learning curve.  It can be extremely frustrating learning everything only to realize they are no better off than you and you must start all over.

(This is why we don’t publish our P&L or account % increases.  If we did, it would either make you think this is too easy, too hard, or be a sales trick.  All of the above are the reasons Account Returns are usually posted, but it truly does not help do anything for the end user, only sell the system.  We fell for that trick ourselves early on and as a result simply decided it will not happen on our site).

Level 3. Everyone Else.  If you aren’t a professional and you aren’t a professional retail trader, than you’re just part of the everyone else category.  I’m talking about the gurus here, not the traders and investors trying to succeed here.

These are the types that offer services that make a million dollars, 200k, 100k a year with doing nothing more than following along.

News Flash.  Insurance companies collect millions in premiums with the goal of collecting more than they pay out.  Don’t you think companies whose sole job is making more than they lose would look into these $300-$10,000 systems if all it took was a computer program?

It’s a lie.  The worst ones are those that work for the main person by entering in first and then letting the hundreds to thousands of followers, the other ones are just as bad but take less time to figure that out as no one’s winning.

Either way, stop looking at trading like a get rich quick scheme and start looking at it like a real business.

Whoever you decide to follow; make sure they match up with your style, your goals, and will work with you to help you get there.

There are lots of incredible trainers and traders out there.  CTP of course, but there really are others.  Some do it for the money, some do it for boredom, and others do it for company.  It really is a lonely career if you don’t do something about it.

Just make sure before you invest any of your money into any form of education; you understand who they are.  


The 5 Mental Phrases You MUST say every day to succeed in trading.

Have you ever seen a salesman just before they give a big pitch?  The bad ones look nervous, sweaty, out of place.  The great ones look confident, excited, prepared.  Sometimes you might even catch them looking in a mirror almost muttering to themselves.  Yet when the day is done; the sale is theirs.

How is this?

Mindset.  Having the skills to do the job with the confidence to do it well.  This is an incredible combination, and that muttering you sometimes see is really them telling themselves their own phrases to succeed. 

While anyone can learn how to trade; not everyone will succeed.  The setup may be the same, the temporary loss may be the same.  Yet one trader may look at the loss and jump, while the other sticks to their plan and wins.  If you gave the same winning tip to 5 traders you’d have 5 separate outcomes because they would get in their own way.

How do you solve this problem?  Like any other problem; Mindset.  Things will go wrong, but the traders with the best mindset will outlast any other trader over a long enough horizon.  Even if the weak minded trader has a better plan, more capital, and more time, the trader with a stronger mindset will come out on top 100% of the time over a long enough timeline.

Why?  Because with the right mindset; everything else catches up.  With the wrong mindset; everything else get’s passed.  

Here are 5 phrases you must start saying to yourself every single day if you want to become a professional trader.  Say them when you have trades on, say them when you have nothing on, say them when you are backtesting, say them before you go to sleep.  Develop a strong mindset, and everything else will be easier to come by.

#1.  Don’t Waste a Day.  

Success in trading takes time.  Everyone gets so jacked up and ready to knock it out after a long webinar weekend and after a few set backs they’re ready to throw in the towel by thursday.  Stop focusing on beating this game in a week.  Focus on accomplishing something every single day that gets you closer to your goals.  Some days may have significant progress; some days may be baby steps.  As long as you live by this mantra 7 days a week, you will get there.  

No access to a monitor?  Read.  No access to a book?  Think about a winning setup you recently saw and how to build off that.  No time to think that out?  Say your 5 phrases and build up your mindset.  

Do something Everyday.  No Exceptions.

#2. Would the trader I want to be in a year do what I’m about to do today?

Building on #1, this takes it to a whole other level.  You can get too exact with this and stop doing everything but trading, however, that’s not advised.

What is advised is focusing on what you really want.  Are you studying to be an equity swing trader?  Then focus on that.  Stop considering day trading strategies because that’s not who you want to be in a year.  Are you wanting to have a $10,000 account to trade with in a year?  Then stop eating out 4x a week and start saving it.  This phrase can be taken as literal or as little as you want it.  Under no circumstances should you sacrifice family time or family expenses here, that is not the goal.  Simply make sure you’re not putting yourself ahead of your year away self very often through this.

#3.  Hard Work Beats Talent when Talent Doesn’t Work Hard.

Ever seen a winning team coast by because they think they got it made, only to get passed over near the end of the game?  There’s a reason most teams don’t stay champions year after year.  Most success results in mediocrity; you’ve got to keep at it.  There’s always someone hungrier than you, and if you coast, they’ll pass you by.

#4.  Reward Effort More than Results.

Stop looking at your bottom line first.  You can take an awful trade and make money and a great trade and lose money.  The key is looking at your tracked trades and seeing how many trades were part of your plan. 

If you follow the CTP way you won’t go live until you prove your plan out.  If you are live with a proven plan and all 20/20 trades for the month were part of the plan then reward yourself at the end of the month whether you won or lost.  The plan has proven itself out over the long haul.  A bad month should only be a bad month if your efforts were bad, not your end P&L.  That will handle itself over the long haul.

#5.  Can’t Stop.  Won’t Stop.

There will be days when you want to give up.  Days where your plan fails 100% of the time.  Days where you just can’t see yourself doing this for another week let alone another year or longer.  

When this happens, remember why you started here in the first place.  Remember what got you to this point.  Once you remember that, just tell yourself “Can’t Stop.  Won’t Stop.”  Say it over and over and over again until you believe you will not stop until you succeed.  Then do something about it.

Analyze what went wrong, track your data, look at old data to compare, go get some exercise and clear your mind, get yourself back in it.

Once you’re back; say these 5 things again.  You’ll start to see things differently.  Start to believe you really cannot stop until you succeed.  Because you’re starting to have a mindset of a winning trader.


Why Your Plan Needs a Stop

There are alot of traders who don’t use stops in their plan.  They do this for reasons like “The Algos are out to get me” or I lose too much with a stop” which is really just an excuse for the traders limitations.

When you give excuses for your limitations; you get to keep them.

This can be seen at the highest level all the way to the brand new trader.  Those that don’t plan for stops will be taken out of the game.  Look at Jesse Livermore.  Arguably the most famous trader in history, the book “Reminiscence of a Stock Operator” is a classic and one of the first books traders read when they get into this game.

Yet what the book doesn’t mention is after he made close to a billion dollars in one day by today’s standards, he could not be satisfied with small profits going forward.  He kept risking more and more without any stop, and within 5 years of having a billion dollar day he lost everything for the 3rd time in his life and could not handle it.  He took his own life in a bathroom.

For a more modern take, consider some of today’s hedge funds.  Assets so large they have no stops in place to wind down positions.  Look at the final exit price of VRX for a certain well known manager compared to his entry price and you’ll see just how important the stop truly is.

Who doesn’t use a stop successfully?  Warren Buffett.

Who does use a stop?  O’Neil and traders/investors like them.  It simply comes down to this.  

If you are buying something you plan on giving to your kids for the dividends, then wait for a market extreme mispricing and buy all you can without a stop.  When buffett goes in, he rarely catches the bottom.  Look at how long his bank plays took to get extremely profitable in 08-09 era.  If you’re doing this type of strategy, divide your amount into 3-12 lots and buy it monthly or quarterly and never look back.

If you aren’t investing to give to your kids or retirement, strongly consider stops.  Whether they are % based like an arbitrary 7% or ATR based off the pivot high/low, it doesn’t matter.  You need to have a stop.  

Stop making excuses and start tracking the data.  You’ll see there’s a few times you’re being stop hunted but are you basing the stop off the proper level?  Because a true breakout does not pull back 7%.  A true pullback continuation holds near that pivot low.  

First, analyze your losses and see how close your stop was to the actual level.  We have ways of tracking all of that data in the premium services section if you need help.

If you already know your numbers, then you know the truth.  90% of the stop hunts are coming from the fact you’re trying to get as large as possible with as tight a possible stop as you can get when the proper stop would still have you in the trade.

Longevity; Not Prosperity.  Focusing on the first will give you the second.  Focusing on the second will take the first away.

$10 A Backtest

No one likes to backtest.  No one likes to forward test.  Everybody just wants to trade live.  

Yet the low barrier for entry, lack of rules from outside sources, and lack of quality system team up to destroy most traders within 12 months or less.  

Ever stop to wonder why?

Nobody wants to put in the work.  

Let’s look at this a little differently.  

The average salary in America is close to $50,000 for a 4 year degree.  This may be slightly off but the math is simple so I’m going with it.  

Most traders that get on YouTube are looking to supplement or replace their income.  Let’s just assume you’re looking to make $10,000 a year on the side as a starting goal.

You found a weekend seminar that for $2,000 will teach you how to trade and make $10,000 a year.  You pay the fee and learn a ton of information and systems and strategies and you are good to go.  

You fund another $1,000 into a trading account and promptly lose it all in 3 weeks. 

Looking to make $10,000 on the side you are $3,000 worse for the wear.  Why is this?

Because you spent 4 years to make $50,000 salary and thought you could make 20% of that after a long weekend and a few all nighters.

Reality Check.  Treat this like a job.  Trading should not be any different education wise than everything else.  The goals can be different, but the timeline should at least be realized here.

New Plan.  Every Back Test or Forward Test (DEMO) trade you do, consider it a $10 deposit into your trading account.  Your account starts at zero, when it reaches $5,000, you’ve put in the time and work to unlock that money and go live if the system has been proven out.

Most traders can easily do 5 backtests a day whether its early morning or late nights.  On the weekends you can take it off or push for as many as you can handle.

If you can do 5 backtests a day, 5 days a week, that’s 25 backtests a week.


20 Weeks is the minimum time you should expect to building your plan and proving it out before going live.  

This is not a requirement, just my humble opinion.  You just have to realize that professional traders treat this like a business, and you showing up to compete with them after a weekend seminar is not going to end well for you.

You need experience and confidence to succeed here.  You can build that up over 20 weeks or longer, you cannot over a weekend study session.


How Much Capital Should You Start Trading With?

One of the most disingenuous questions most trading “gurus” answer is how much trading capital should someone start with?

Their answers are always lowball because if you can convince someone that you have a magic pill AND tell them it only takes a trivial amount to unlock financial freedom, you’ll get an army of fresh meat just begging to start trading for themselves.  

The reality is most traders go broke or blow up their account within the first 12 months.

 This is due primarily to 3 things:

  1. Lack of Capital
  2. Faulty System
  3. Faulty Discipline

We will touch on the remaining two in another post, but today we are going to talk about capital and what it takes.

Let’s start out talking minimums.  The minimum amount it takes to become a trader in certain markets.

  • Binary Options-Nadex-$100
  • Forex-Currency Markets-$500
  • Futures-Futures Markets-$1,000
  • Options-Equity Markets-$500
  • Equities-Swings-$500 (3 round trips max per week)
  • Equities-Day Trades-$500 (3 round trips max per week)

Note: Some options/equity markets may require up to $5,000 to join, but as competition from the brokers has risen, the entry cost has fallen.

Now if you don’t know what round trip means it’s just market talk for if you buy something and sell something in the same day.

See what all these markets have in common?  

They all have an extremely low barrier to entry.

When something has a low barrier to entry, lots of people will take the shot.  Everyone loves the idea of being a professional at something.  Professional golfer, poker player, trader–they all have a very low barrier to entry to “try” while they all have a very LARGE barrier to entry to succeed.

By keeping the barrier low, traders can feel in control and if they lose, they can easily shake it off as a learning experience or entertainment.  This allows them to easily come back and lose again and again and again.

So while the minimum required is one way to look at this, the right amount required is something entirely different.

Each trader will have a different number in mind.  Some traders will have much larger starting balances while others will have to work and build their account up before ever going live.  

There are however a few ways to build a baseline.

Rule #1.  Whichever market you go with, your starting balance must be at least 10x the minimum required amount.

Rule #2.  Do not risk more than 2% per trade.

Rule #3.  Do not start with more than a $10,000 account and do not add to an account until it has proven worthy.

These three rules can truly help you find success.  Without any of the CTP Services, simply grasping these 3 rules correctly can start you on your way.

Rule #1–Minimum $1,000 to a $10,000 investment.  This keeps you from trying to make a fortune on a $100 investment in binarys or a $2000 investment in futures or a $1000 investment in options.  How many losing trades can an account that small take before going broke?

What if you don’t have that much money to fund an account?  

Even Better!  This will force you to build your account slow while working on backtesting and system building.  When you’re ready to trade, you’ve done the work and see the blood sweat and tears results first hand.  You know what it took to get that account funded and you won’t be tempted to blow it like so many others, this ones going to be different.


Rule #2. The 2% Max Risk.  On a $1,000 account, this is $20, on a $5,000 account, this is $100.  Keeping your max risk in check keeps you from starting out right but blowing up after 1 loser.  

Note: Our Trading 202 Section handles all aspects of risk/reward management.  It is an excellent place to turn if you have a system but are struggling on the funding side.

Rule #3–Start Small.

If you start out with a $50,000 account and lose 30%, you’ve lost $15,000.  Psychologically–you may be done trading right then and there.

If you start small and prove it, you can get up to the $50,000 you have ready to trade with in under 6 months, but you’re system and management have been proven, you’ll know what to expect as a drawdown and you’ll know how to handle it the right way.

Earn the right to grow the account or you may be earning the right to lose the account.


By following these 3 rules, you will know how much it takes to really get started and WHY that matters–the CTP Way.

Stop Comparing Your Chapter 2

It’s really easy in this business to start watching youtube videos of successful traders banging out profits and think you just aren’t going to end up like that.

The truth in life is people are rewarded in public for what they practice in private.  Now this isn’t even counting the entire section of YouTube videos that are simply straight up fraudulent.  There’s plenty of “gurus” who record every day and only show the monster days or who trade both directions with 2 accounts so that they can record the big win they made on the account that worked.  To those types of videos, you just have to accept that life is full of tricksters in every walk and trading is no different.

What I’m talking about is the legitimate successful traders out there.  Whether they are teaching others, showing proof to get you in, or maybe you’re just reading about them online.  These types of traders that have success when you don’t can make you feel like giving up.  

It makes sense to look to these traders for help, but sometimes, especially after a really rough day, you might think it’s just not meant to be for someone like you and you want to quit.  You simply think you can’t reach that mountain top.

If you ever find yourself thinking like that, remember this.  

You need to stop comparing your chapter 2 to someone else’s chapter 20.

You don’t know the struggles they took to get there.  You don’t know the sacrifices they made.  You don’t know how many times they were having the thoughts you are now, and yet they found a way past it.

Trading isn’t for everyone.  It very well may be that you should be calling it, but calling it because you’ve put in the work and decided there’s something better or different out there for you instead.  That is a legitimate reason to move on.  Looking at your results today, this week, this month, this year and saying it’s not even close to them so it must not meant to be is simply not allowed.

Look to others for guidance, for help, for teaching, but never look to others as a reason for why you should throw in the towel.  You might not be where you want to be, but who is?  

Keep trying, and get that chapter 2 to a 3 and then a 4 and eventually a 20.  When it’s a 20 you can compare, but not until then.

The truth about break even trading

Talk is Cheap.  It’s easy to say I had a break even day and no one seems to know the wiser.  The reality is trading is a negative sum game.  1+1 does not equal 2, it equals 1.8.  This is because every trade has added costs of doing business, things like commissions, slippage, plan breaking, etc.  These little hits can add up to some serious pain if you let it.

Or you can plan for them, build them into your trading business and accept them from the start.  The difference is calling a break even day what it really is, a slight losing day and being completely OK with that.

Hope you like this video.  Feel free to subscribe to our YouTube channel to get tuned in to a lot more videos coming your way!

How to get out of a Trading Slump.

Trading Slumps are one of the worst parts about this job.  In my old life I installed HVAC equipment, furnaces, air conditioners, ductwork and the rest. 

A bad day meant I got hurt, was too slow, or made a mistake I had to fix the next day.  A good day meant just the opposite and maybe more.

If I put in a furnace on monday, even if something changed and I had to move it, the furnace stayed put.  In trading, a good day on monday can be replaced by a bad day on tuesday.  However, unlike my HVAC career, in trading, the money (furnace) can go and literally disappear.  This makes the slumps in this profession vs others so much harder to cope with.  

Unlike most careers where mistakes can be easily corrected or replaced, mistakes here can compound quickly and painfully, taking away days and even weeks of progress in mere hours.  Unlike most careers where something is left behind to at least speed up the repairs, trading gains can be completely wiped out and a trader can truly be left with less than they started with.

It is for this reason that a trading slump is so hard to handle in trading.  At this point in a trader’s career, there are some serious and tough choices to be made.

The trader that has established their plan, with the right backtesting and parameters set up before going live, can handle this slump with ease.  This is what we talk about day in and day out.

The trader that has not established a plan, that had quick success and decided they were smarter than the rest, until they realized they weren’t.  Those traders are the ones who are googling MACD right now, looking for that one missing piece that makes the plan fool proof.  

That one missing piece that keeps them going until the next failure that the magic indicator can’t fix.  

That sends them on a path of system jumping, guru following, slump sliding that never ends until they realize THEY have to change or they run out of money to try.

The key to getting out of a slump; is planning for the slump.  If you know a slump should come in the range of 5% of your account, than you should not be worried until you reach 5% and then look to your parameters for when it’s time to re-adjust vs ride on.

The key to staying in a slump, is thinking you can out maneuver it.  Every system has a weak point, when breakouts are strong, reversions are hammered.  When pullback are strong, breakouts are broken.  Every system takes the hits, but every system pays the bills when done properly.

The key is not jumping from breakouts to pullbacks just as the breakouts finished their slump and you didn’t know it.  

If you’re in the slump, and you don’t know what to do, get to cash.  Stop live trading and reassess.  The market will always be there.  Longevity is more important than the next trade.  We are here to help if you choose, but trading through a slump without a plan in place is closer to gambling than professional trading.

If you’re in the slump and you’re plan says you have another 4% drawdown before you should do anything, stick to the plan.  

When you plan for the slumps, you can get through the slumps.