019: Stuart McPhee – How to Form the Basis of a Solid Trading Plan—and Follow it With Absolute Discipline

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chat for more information. Tasty Trade Inc. is a registered broker dealer and member of Finra, NFA and SIPC. The biggest secret of the best traders in the world is that they're just like everyone else. However, they've worked hard to learn the markets and discover what works and what doesn't. Aaron Fife.

Hey what's up team? Welcome back. It's awesome to have you tuned in and listening to episode 19 of the Chat with Traders podcast. Now not sure how this happened, but this interview somehow slipped through the cracks. I actually had the conversation with this week's guest around November last year, being twenty fourteen, and it's been tucked away in a folder ever since.

So let me introduce you to this week's guest. His name is Stuart McPhee and he comes from Melbourne, Australia. He's an equities and forex trader who has been involved with the markets for around about twenty years. And he is also the author of Trading in a Nutshell. Our discussion was heavily based around trading plans. Stewart shares a very simple discipline hack that will help you to follow your trading plan for the long term, not just the next week or so.

Even though it's taken a while for this to surface, I'm pleased to finally share the interview with you. Alright, this is Chat With Traders. I'm your host Aaron Firefield, and here is this week's guest, Stuart McPhee. Hey Stuart, thanks for making time to come on the show today. It's really great to have you here. Yeah, thanks for having me.

Great. So you just got back from uh Singapore. What was going on over there? Yeah, I go over there uh quite regularly. I've been doing it for a number of years now. Uh last week I just did a number of events uh in the evening talking to aspiring traders, people from all sorts of experience levels, from absolute beginners who have no idea what's ahead of them.

and all the challenges they have in front. Um, to some that have been tr you know, trying for a few years and have won some money and lost some and just sort of battling along trying to uh make their way through the journey. So that's all I was doing last week and I do that uh on quite a regular basis. Awesome. Were you speaking on stage there or um just sort of bit of networking?

Yeah, no, it was on uh not quite on stage, uh in a room no doubt uh no less, but um uh I do the occasional sort of big Uh, Expo Invest Fair is one in particular in Singapore which is quite uh popular and that involves, yes, a very large stage. And last time I was there in August there was like five hundred people in the audience and standing room only, but uh last week was just small groups of, you know, thirty or forty people. Okay, good one. No, that's really cool.

So um Stuart, if you could give us a rundown on how it all started for you. Um, how did you get into trading and what was the appeal? The appeal is obviously money and uh I say to people all the time it's nothing to be ashamed of. Um, it's generally the primary motivation that most people have to get into it. And I just get that out in the open and say, you know, you when I talk to groups of people, you're surrounded by people who had a similar motivation and it's nothing to be ashamed of.

So that was my motivation, uh unlike uh sorry, just like everybody else. Um Excuse me, that was my motivation. I'm just trying to think of your other part of the question. What sort of sparked my interest? Yeah, how did you get started uh trading? Where what was your introduction? Yeah, well it was having some money this is before I bought it, any assets or any property, and it was just having some money saved up.

And thinking, What am I gonna do with this money? So I went and saw a financial planner at a bank and this is uh a few years ago now, who just said, Why don't you buy some shares? You're young enough and you can afford the risk and ups and downs and the like and I thought Shares. I I've heard of them before. Like I've heard of buying shares in companies. So

I did just sat and I remember buying shares in the actual bank that I was physically sitting in. It just made a lot of sense. You know, there's two thousand stocks. on the ASX thereabouts, so where do you start? You know, do you start with the A's and work your way through to the Z? So I just bought, you know, shares in that particular bank, but then I realised with the ups and downs and uh that I could probably do more and be a little bit more active. So I was just sending on the lookout for

ways to learn how to do it better and perhaps a little bit more active in trading. So sure enough, newspaper and I'm just flicking through newspapers and I see advertisements all over the place saying, you know sit by your breakfast table and, you know, sit in your shorts and t shirt and make, you know, X thousands of dollars before morning tea, blah, blah, blah, all that sort of rubbish.

Um but that sparked my interest and sure enough I went along to a few of these introductory free in bracket sales seminars. Um and that just really sparked my interest.

Okay, good one. So um how did you get started from there? What was the next step? Did you begin paper trading or you just sort of Dived right into it, started um putting some money on a few trades and sort of see how you go. Yeah, the first real um probably big step was actually uh one of the sales sum seminars lured me in and got my checkbook out and I paid a lot of money to attend um quite a series of it wasn't a one off event, it wasn't a weekend.

course. Um it was a very structured, uh, ongoing um quite a number of like the curriculum, the s uh syllabus was actually quite extensive. So I thought I was getting reasonable value for money and probably in reflection I probably did get pretty good value for money. So I undertook this course and it took me probably six months of going to evening classes and um, you know, um on the weekend Saturday morning for three hours and I did all these classes and I was learning about

It's what I refer to now as quite simple things as like charts and candlesticks and drawing support and resistance levels and learning about risk and position sizing and sure enough I just started to appreciate how much there was to learn.

Okay, sure. So once you did get started, what were some of the things that you found yourself struggling with? Um what was sort of most the most difficult part for you? Losing money. Yep, pure and simple. Buying something and it just didn't go where you wanted it to go. And then not knowing what to do. And you know, it's intuitive to just bury your head in the sand and hope and wait and pray that it comes back up to where you bought it so you can break even. Um, losing money.

Pure and simple. And I think probably that's the case with ninety five percent of the people. I mean, clearly being proven wrong on a regular basis is very humbling and it's not something that a lot of people are comfortable with or used to. because of their character or perhaps what they do for a living um in their real life. But uh all those things with uh managing risk and losing money and getting it wrong often and not knowing what to do, um

They're probably more I could give you specific examples, but they're probably the more general uh issues that I really struggle with. Yeah, right. So losing money was was certainly the big one. Um, what was the best way you found to overcome losing money um or at least sort of um be able to deal with it a little bit better? How did you um approach that?

Yeah, it probably wasn't anything conscious. I did. It wasn't anything deliberate. I did what happened was and I say this a lot to people now, what happened was the more it happened, the more I became desensitized to it.

So I think if you have, you know, fifty losing trades, you are able to handle that a little bit better than someone who's just had their first monumental loss. And when you've had a hundred losing trades And intertwined in all of this is the journey of you learning a lot more about what it takes to be a trader and you're attending the occasional workshop or seminar or reading another book or reading another article.

And the more you do that, the more you'll appreciate that you're not the only one who's losing all this money and you're not the only one who loses money one out of every two trades or two out of every three that it it happens to absolutely everybody. So the more you learn that and the more you go through it. I really do believe you become desensitized. So it was nothing, as I said, deliberate that I did or this is the path that I'm gonna take to address this problem.

not knowing really what to do, you just keep ploughing on and keep persevering and just, you know, save up a bit more money and start trading again and The more that happens, the more chance sometimes you have of pushing through and getting through to the other side. So that's probably what happened in my case.

Yeah, so time and just sort of sticking with it was uh sort of one of the the big ways that you got time and I think yeah absolutely and and I think um one of the things so many people don't appreciate is how much time it's actually gonna take.

to get some measure of success and consistency and the performance that people actually initially dream of. Um, people don't appreciate that. There's no obvious barrier to entry to set up a trading account. There's nothing you need to do. There's no licensing. There's no So

No barrier. So you go in there with very false expectations and you don't appreciate the time. Of course, yeah. Okay, Stuart, so now that you've you've had a lot more experience, how would you define your trading style? Well I've got two very distinct. Um, very separate trading style uh styles. One is I address once a week, the other one is every day.

So I can talk about both of those. Um one's um purely trading equities in my retirement fund, my self managed super fund, which I've had for many, many years now. So that really only takes uh once a week. Uh very conservative, very medium term outlook. Stops are very wide. Uh it's not something I need to manage every single day. And for the last five years or so I've been trading currencies a lot more actively. So that's the thing that does take my time every day, but even then it doesn't take I

You know. I don't spend ten hours looking at a screen. looking at numbers flashing, but uh my process that I go through I do every day. Um takes a little bit more of my time. Um but even that's reasonably conservative in currency terms. Um, you know, I'm probably taking Maybe four or five trades per month, that's it.

Um, some will take that every hour. So, you know, but that that's nothing right or wrong about that. That's just everyone has to work out an approach that works for them. So two very distinct uh approaches, two very distinct financial products. Um yeah. Absolutely. Okay. So what would you say are some of the key benefits from um

the the account that you trade with the currencies, um, taking four to five sort of trades a month. What would you say are some of the key benefits of um that trading style you have versus maybe a day trader or um someone who's buying and holding. Obviously that's sort of a little bit different from trading. But what are some of the benefits uh from that method? Yeah, I think um a key benefit is being a lot more selective.

So rather than um sometime taking the best of a bad bunch and just looking for opportunities and actually really sometimes lowering your standards and just trying to find something, I am on the other end of the scale. I'm far more selective. So I think Whilst I trade fewer, I think generally speaking my signals and the set ups I take are far higher quality.

because I'm just being a lot more selective. Um that I think is one definite benefit. Um certainly time. I I'm just I just have a life right now where I just don't want to be again looking at a screen for I mean an hour for me looking at a screen is too long. And I don't want to be doing that. That's just and again, that's just personal choice. That's not right or wrong. That's just um I do a lot of other things and excuse me, balance that up with other things I do in my life. Um

But I think being far more selective with your opportunities rather than, as I said, sometimes taking the best of a bad punch. Um which I don't think is a good thing. Yeah, okay. So you're sort of saying you're very selective in the trades that you um execute.

What are you actually looking for to get into a trader? Do you have um some favorite signals, um, some patterns that you like to trade? Yeah, within currencies, um I'm a huge follower of s just simple key levels. So support and resistance levels. Um I don't want to time stamp this particular interview too much. I could talk about current levels with the Euro or the Australian dollar or whatever but

Um, in years to come that'll be miles off the mark or something and it'll very much date the video. But key levels for me are paramount. Uh I think currencies respond to key levels all the time and they're a big component um of the way I look for opportunities. Um and the other thing is just pure trend. Um I know people trade counter trend and I know um currencies probably lend themselves more than stocks do to trading counter trend. Um but I'm a big trend follower. Um

You know, you uh currencies can move so far. Admittedly, for a lot of this year, um, they haven't moved a lot. But just the last two or three months they have moved unbelievable amounts. And we're talking about all the majors um and it's all been dominated by the US dollar, but there's been significant moves. So simple trend following strategies can just absolutely clean up. Okay.

So when you talk about uh key levels, that's much the same as sort of support and resistance levels. So you're just looking for it to sort of break tops or uh break bottoms. Yeah, f it can be that way. Um or it can be if you want to trade the counter trend is the actual testing of those levels and the level standing firm, um, you know, and holding up. And then of course when there's two levels involved, then all of a sudden you have a range established.

And then people, not myself generally, but others can then take advantage of those ranges. Um because you know the limits and you know uh sort of, you know, expected outcomes and how far it might move to the upside'cause that's where the level of resistance is and and so forth. Hm. Yeah, great. So it sounds like um your trading's predominantly technical uh based.

What are your views on fundamentals and news and do they have any impact on your your trading approach? They have a massive impact on the markets, but they don't have any impact on me. So um there's no doubt currencies are a very news driven market. Every time a governor or a head of a central bank says something, markets normally respond and they're saying things often.

Um and they're certainly never be more in the limelight than they are right now. Excuse me. Um so the currencies markets are very news driven. For me, I love simplicity and I love price and I love price action and I love technical analysis and I love the clarity of charts and I love that price captures everything that everybody is thinking.

Um, even if I don't agree with it or not. And I think sometimes fundamentals can be too opinion driven and can be do too story related, you know, too much sort of a like telling a story. And that's just not something that resonates with me and I just love the clarity of charts.

Okay, cool. Sorry sorry, I should just sorry, add on to that. I'm the last person to say as a technical analyst, I'm the last person to say that fundamentals don't work or are horrible or whatever. Um no doubt, as I said, currencies are very fundamentally based and very news driven. It's just each person just has to work out what suits them, what works for them, what resonates with them. And for me, and I say this a bit tongue in cheek, I think with fundamentals there's too much to learn.

you just gotta know so much about economy and G D P and all these figures and jobs and yields and interest rates and It's just not something that's never interested me interested me, uh, to be perfectly open.

Yeah, no, I think you think you put that really well, Stuart. So the point you made there about finding what works for you sort of brings me to the next point um I'd I'd like to discuss with you and that's um trading plans. Um I know you're very big on this, um and in fact I saw your interview with um Mark Cook, the market wizard. And um it was good to see he's also extremely passionate about um trading plans and having a solid wife. Yeah, so Stuart I'd like to ask you

What does a trading plan mean to you and um what should entry level traders do to create one? I think it'd be very daunting. for beginners to put a trading plan together. You wouldn't believe it. I did a brand new session last week in Singapore, never run it before, and I just was ad libbing a bit to start with.

And I s and I had a room probably of thirty five people and I said, Hands up, who here has a trading plan they can present to me right now? Out of those thirty five people, you could probably uh have a fairly educated guest. One person put their hand up. And everyone sort of sniggers and feels a bit uncomfortable and has a bit of a laugh about it. I said, Okay, from that then, who here in this room

believes that they can make money consistently, not today or tomorrow or just the next week, but consistently over an extended period of time without a trading plan. Who believes they can do that? Not one hand goes up. So I said, Well there's clearly a disc there's clearly a disconnect here. There's clearly a problem where you all accept that you need one, yet not sorry, with the exception of one person, um no one has one.

So clearly that's an issue. Um I cannot overstate the importance of a plan. Plan is simply a compilation of your rules. Your rules are there to protect you, protect you from making silly decisions. And if you don't have a plan and don't have something to base your decisions on, you'll make silly decisions on a routine basis. That's just human nature. I mean all the things we do intuitively in the markets, um, generally have you losing money.

So the plan actually provides you some structure and hopefully assists with some discipline to actually have you moving away from intuition and at doing more what's required of you. Um so what does it mean to me? It's uh look I don't to be very open with you, I don't necessarily have it written down anymore, but um I do believe in that. I tell people that. And I do believe that. I probably got to a point now where um I'd have it maybe somewhere as a as a Word document.

But I've done it you know, you do it so many times. You see the same set ups all the time, you you set your stops the same way all the time, your position size the same way all the time. Um, you know, talk about becoming instinctive and routine and do it in your sleep. Because that's what happens when you've done it thousands of times.

Um but yeah, I can't overstate the importance of it. Yeah, but to get to that level you obviously did have a trading plan that you ne now you just know it so well that it's just second nature. Sorry, yes, and I didn't really answer one of your questions. That was how do we start off? Where do we go? First thing is don't be daunted.

buy it. Uh don't think it's a a f a book. You know, it's not two hundred pages. Uh Mark Cook, you mentioned before, his was very, very long and in his and I saw a a copy of one of his, in his, he addressed questions that I never even thought were possible in the market. So I mean that's just probably um a a product of how much experience he has and he is far more active uh in the market than I am.

Um but where do we begin out? We just break it down into basic levels and you need to answer three questions at the very basic level. How do you get in? How much do you risk? How do you get out? So you're under what conditions do you enter a trade? How much do you risk? How many units do you trade? Where do you put your stop, position size, etcetera? And then how do you get out? At a s at a loss or at a profit?

So yes, each of those questions takes a bit of time, but just break it down to those three basic questions and that forms the basis of a plan. Yeah, no, that's that's really solid information there, Stuart. So um

After creating a trading plan, um I guess the next most important thing would be um to follow it. And um I've heard you say before, um following a trading plan is pretty simple. unless it's your own. Um, could you elaborate on this a little bit and maybe share some tips on how to actually follow your trading plan once you've created it? Hmm. Um

I talk to people a lot about discipline and I've had a number of people come up to me and say, I know I'm ill, undisciplined, whatever the word correct wording is. I know I'm undisciplined, yet I know I have to be disciplined and I don't know what to do about it. And I the advice I give to people is to take small steps. So most people know and I just relate it back to perhaps losing weight.

There's no secrets to losing weight. People know about, you know, burning energy or burning calories and activity versus what you put in your mouth. So, you know, there's no secrets to that. So the problem is though, people say, right, as of one Jan or as of one July, I'm gonna lose weight, I'm gonna stop eating all that and then I'm going to exercise thirty minutes every day, I'm gonna go for a walk. That becomes too daunting. People can't follow that. It's all too much.

Because what we are very habitual creatures. and we get into habits and we are very routine and, you know, when the sun comes up shortly after that we get up and when it goes down shortly after that we go to bed, we're very much habitual creatures. So to change a major behaviour takes a lot more than me saying, Oh, uh one July I'm gonna, you know, walk every day for thirty minutes.

So what I say to people is take small steps. If I was to say to a group of people, right, tomorrow all of you need to find thirty minutes and go for a walk, everybody would be able to do that. Easy. But if I said right, you need to do it for the rest of your life, well, after a period of time, after five days, X percent will drop out, after ten, more will drop out and so forth and so forth.

So the idea being is just say for the next three days I'm gonna walk every day for thirty minutes and you'll get a high completion rate. Because the fourth day, I don't care what you do, sleep in all day, eat as much food as you want, but you don't have to do that change of activity. There's a sort of a light at the end of the tunnel. So it's very easy to achieve. Let's relate that to trading.

To say, oh, I'm going to cut my losing trades every trade from now on is just not practical. It doesn't work. Because say to someone, just for the next three days or the next three trades, do that and then the fourth trade, I don't care what you do and everybody will be able to do that. And after that they can say, Wow, I actually was able to change my behaviour. Perhaps next time I'll do it I'll do it for four days or for the four trades.

And then we just slowly but surely change behaviour over time as opposed to saying as of tomorrow completely change. So discipline to stick to the plan. um is incredibly, you know, can cannot be overstated. So to me it's all about changing behaviour, changing habits, um and just basically saying to yourself what you believe

is important and what it takes to be a good trader and work out how, you know, professional you're gonna really be at this. Yeah, so you're saying that small steps are really the key to being able to follow your trading plan. To change behaviour, yes. And uh

you know, to become more and more disciplined. Yeah, and I I guess um sort of as you do that you you sort of prove to yourself that it does work and it does make you money if you stick to your rules instead of it's sort of being a bit hypothetical to begin with. it then sort of sinks in and um yeah, you soon realise it's the way to do it.

Exactly. The third trade that you sort of cut your loss, uh a week later you might look back at it and go, Wow, had I not cut that, look at the position I would have been in right now, it would have been miles down. Well this thing may actually work. Yeah. So it sort of starts to convince yourself that one you're capable of doing it and two it's the right thing to do. Yeah, no, I th I think it's very important um the the topic of trading plans.

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Bring it back to your trade in a little bit. Um Are there any trades from your career that you'd like to share with us, either um for all the right or wrong reasons? Um The definitely the right the wrong reasons are the right ones to to uh share with you. Yeah. Um I can think of when and um all of a sudden now this is a long time ago, but back in two thousand when the Nasdaq crashed.

and markets really stumbled. Um, I was very heavily involved, very active for the twelve months leading up to that and uh did okay out of it. But then when all that crashed, um, gave basically all of it back and some. But the lesson I learned was that I had been so conditioned that markets just went up. And they went up incredibly strongly and with real venom, real strength. So as markets started to fall, I had been so conditioned to markets going up. As they fell, I was just all in buying.

thinking that this is just a a blip, you know, this is just one or two days Not appreciating the fact that things had turned and markets were about to move very, very strongly lower. And as things just dropped so sharply, I did what was intuitive and that was, wow, look what a bargain it is, look how cheap this is. And I just jumped right in.

um to make all that money back. And um I just continued to do that and I was so conditioned to markets going up. So when they didn't, I was just flabbergasted. I mean I was just had no idea. Uh I was just I'm just trying to think of the right word to describe how I felt. I certainly felt helpless and I felt like I was just an absolute amateur and that I was being just completely run over.

But the thing was that I was so inexperienced and I was so conditioned to that just markets go up all the time. And uh I remember I remember I just vividly remember being at a friend's place in Perth, um, and I live in Melbourne, but being over in Perth and using their phone line and I h hooked up on the phone cable, I thought I was really smart, dialed into the local ISP phone number and I logged into my account and w was actively trading on their kitchen bench.

Um, because I was that active. Um and I just look at that now and just realise how stupid that was. But but but the thing is with so many you you d if you don't know any better, you think you're doing what's right and you think you're doing what makes a lot of sense. Um and most of what people do they think is the right thing to do. They wouldn't they don't deliberately sabotage themselves, they think they're doing the right thing. And when you don't know any better

Yeah. No, really good points there. So um I believe you've been trading for nearly twenty years now. Um All of a sudden. Was there ever a point when you thought to yourself that I've got this, I know how to trade profitably now? Um I mean I guess the question would be

Was there ever a transition from learning how to trade to now being able to trade? Did it ever s just sort of click like that? It's a great question. And it wasn't a single moment in time. Um I think it was a twelve month period though. Where slowly but surely I started to feel that way. Um and it was when I after I lost all this money and therefore I had no more money to trade with and in fact I was then committed to paying back

money that I had lost, um, where I had no choice but to not be involved. But what had happened, fortunately for me,'cause I could have easily have turned away never touch the market ever again. Um, fortunately for me in that twelve months prior, I'd actually made some decent money. So I saw it was possible.

And I still to this day have people come up to me just quietly. They will not ask this in front of everybody. They'll come up to me individually and say, Is this real? Like, is it actually possible?'Cause I'm not yet convinced. And I can understand that. I can understand why people would think that. Well I had been convinced'cause I actually had made some fair cash. Um the problem was I gave it all back. But I saw it was possible.

I just realized I had to do it a lot better and be a lot more conscious of um the other end of the trade and that's when to get out and managing risk. So when I had no choice but to hit the books and attend more workshops and seminars and I'm not a big reader and I probably should be ashamed to admit that, but I'm not. Um I have not read a lot of books in my life, but I've actually read a lot of trading books.

because it was a topic that really interested me. Um so Market Wizards was probably a defining book for me and I which I had to doll off every time I've mentioned that book as having a significant impact on me. Um so the market wizards books and a few others I could uh list off. But I'm reading all these and going, Well, I can relate to that and that makes a lot of sense and I can understand where he's coming from here and all of a sudden then I did a lot of testing.

Because prior to that I wasn't trading with any consistency. There was no real strategy. It was just, Hey, that's going up, I'll buy it. And sure enough it did well. There was no process, there was no strategy looking for opportunities. So all of a sudden now I started to think more about consistency and having a clear cut set of rules. And then I had to validate that. So I had to go through this process of testing. And because I had the time I did most of my testing uh manually.

And the good thing about that was I had confidence in the results because I'd seen them bar by bar. I'd followed all these trades. But I actually learned a lot about technical analysis by following all these trades manually, by studying price action and I noticed when price did that it did this and then it did this and

All of a sudden I'm learning a lot more about TA. So throughout that twelve month period I'm starting to think I'm gonna be in a far better position to go at this again than I was, say, two or three years ago. Okay. And when you say testing manually, um are you talking about backtesting there? Correct, yes. You are. Okay.

Good one. Um so just sort of proving to yourself that certain um patterns, you know, cause this sort of reaction and that that type of thing. Yeah, yeah, and I and I and and I'm quite open about this and I share this uh elsewhere where I think I thought

Trading's difficult, you need a complicated solution. So I thought I'll start off with a few basic rules and I'm just gonna add lots and lots of things to it uh to make it really complicated and complex and everything. And all of a sudden these simple rules were actually getting results. And I thought, do I need to go any further? Do I need to add complexity uh to this? Maybe I don't. So that was another learning point that simple rules actually do work.

And whenever I sign my book now, and I sold some books last week, um whenever I sign my book now, front cover, I write keep it simple. Because we have a very natural tendency to complicate things. Again, in trading I think simple works very well. Absolutely, yeah. So um I mean this might that might be relevant to this question here, but um where do you often see entry level traders slipping up and what would you say to them? Um filing to understand and manage research.

Um entries won't kill you as a trader. Uh, I'm not saying random entries work well, but certainly your entries won't kill you. It's what you do at the other end of the trade. Um, it's failing to manage risk, it's failing to understand the risk. You know, there's so many products out there now. Many are leveraged. Uh people are attracted to leveraged products, but they don't understand the risk.

Um and they just blow themselves up really, really quickly. Um they don't understand that leverage is double edged. Um they just completely fail to probably realize how difficult trading is and I've never ever said trading is easy. Um ever. And I still don't think it's easy. Um it's actually a lot more difficult than people realise. So that's probably a big slip up is entering it thinking

you know, give me a weekend course and I'll be okay. I'll be giving up my job and trading full time, not appreciating You know, you read about competency ten thousand hours of sort of work to develop a level of competency with a particular skill and maybe trading is one of those in the ten thousand hour bracket. But risk is one word probably to sum up. Where the in the where the beginners slip up, it is absolutely risk.

Okay, okay, very good. So um I mean again, maybe sort of similar question, but what is that um what is it that you believe stops majority of traders um from making a huge success? Not taking the time. to do all the things that need to be do that need to be done. Uh not taking the time to study and understand and manage risk.

Not taking the time to become more and more disciplined as a person, as a trader. Um, not taking the time to um develop a plan and validate rules and test or and prove and disprove different strategies. So not taking the time to become very methodical in their process and structured and organised as a trader. So not treating it as professionally as they should. And I'm gonna say the word again time. Not not

probably investing the time thinking that uh I use the analogy I play a lot of golf and uh I talk about not wanting to look at a screen for ten hours a day. That's one of the reasons. Uh and I'm very lucky I get the opportunity to play a lot of golf. But I'm not a professional golfer.

I don't make money any money. I don't make one cent from playing golf. In fact it costs me money. I just bought clubs earlier this year. They cost a lot of money. My membership fees cost a lot of money. So I don't make any golf. Um any money playing golf. I'm not a professional. But to me I love it. And to me it's a hobby. And for me, too many traders treat trading as a hobby.

In that they enjoy it, they spend a lot of time doing it, they're happy to do it, but at the end of the day it costs them money. Um they don't take that next step of um becoming professional. Um, so to many, trading is a hobby, not a profession. Uh golf for me is a hobby. Uh but I think trading demands a little bit more of my time and respect. Yeah, so failing to treat it like a business um is probably another way to put that. Um so

Another big um factor in being successful at trading would be the emotional side of things. Um how do you manage emotions and um what gives you the confidence to push on after a few losing trades? Yep, it's uh again desensitized. So excuse me, um I mentioned this, I can't remember the the specific point, but I talked about over over a period of time you become more and more desensitized. And I think to myself, a surgeon who might cut the chest open of a human being

The first ten times they did it thought and if you and I walked in there we'd go, Oh, it's I don't want to look at that, it's uncomfortable. But this guy who's done it a thousand and ten times has become incredibly desensitized to that. So when it becomes to emotions in trading and having confidence in what you're doing and having a string of losing trades and the like Time.

trades, the number of trades, the number of times you've gone through this all these emotions and what have you, just you become desensitized. So I have no issues taking a losing trade. I haven't for years. But when I started, I I had massive issues with taking a losing trade, as does everybody. Uh but over time he became absolutely desensitized. Hm. No, it's it's good to hear that. Um

So this has been really good, Stuart. Um it's been great having you on here and um thanks again for for you taking the time to come on. So um yeah, it'd been my pleasure. But before you go, we'll um we'll take it to the closing bill. So the closing bill is just a a round of questions that we asked to all the guests, just short Rapid fire questions. Pretty much, that's it. So um first one would be What's the best piece of advice you've ever received? Um hard to be simple as simple to be hard.

Um if you talk about trading, as human beings, it's very difficult sorry, as human beings it's very easy and simple for us to complicate things. It's actually very difficult for us to simplify things. So um realizing that Um, it's actually a very conscious, deliberate decision for us to try to simplify what we're doing with our trading. Otherw because if we don't, we all overly complicate things'cause that's what humans do.

I like it. Really good. So what is the number one trading resource you couldn't live without today? Uh probably easy internet. Internet, that's a good one. Yeah, I mean every everything is online, it's on my tablets I don't I never do things on my phone. I mean I've got a big screen on my phone, but I don't like it being that small. So laptop, tablet, but all that's of course connected somehow. So internet is probably it.

Great. What's one book that you believe is a must read for um any trader just starting out? Yeah, Aaron, that's easy. My book, of course. Um Trading in a Nutshell, fourth edition. But if I can't uh provide a shameless plug for my own book? Um, I think I've said it already once today and that's Market Wizards by Jack Schwager.

I think it's just it certainly had the most significant influence on me. Um I think also with that book, if you've read it before and then you trade for one or two or three years, go and read it again because you'll actually learn more. Because from your experience you'll be able to relate to other things you didn't pick up the first time.

Yeah. So that would be it. No, that's an inc that's an incredible book, the the Market Wizards. And um we'll we'll put a a link to your book in the the show notes for sure. Thank you. Um No, and everything you do now, what would you have done differently come day one? Maybe not started. Um so you probably haven't got that answer before. Um It's a new one. Well you know, well it was uh a few times early on were horrible.

I mean after I lost uh a fair amount of money and then three months later lost more trying to win that back. Um, that was an incredibly horrible time for me. So though that's probably not my final answer. Um, that's just penciled in. But um realizing that most of the decisions I needed to make were counterintuitive. So I needed to have steps or processes in place to ensure I didn't make decisions intuitively. I. e. have a plan. Okay.

Really good. No. Thanks again, Stuart. It's um it's been awesome. So Tell us where can listeners connect with you or um find out more about um you and um more about your book and uh that type of thing and then we'll um we'll leave it at that. Sure, thank you. Um probably I'll just give you two URLs. Um my book You can find at tradinginanutshell dot com. That's all one word, trading in a nutshell, um, or my website yet to be developed, stewartmcfeah.com.

Okay, awesome. All right, we'll put um we'll put those links in the show notes and um we'll keep in touch. Thanks again, Stuart. Oh you're very welcome. Thanks. Welcome to the end of this episode of Chat with Traders, but don't worry, more great episodes are on the way. And we'd love to be able to do that. Leave us a rating and review.