Day Trader Turns £100k to £1.5m in 8 Months w/ Tom Hougaard (Part 3)

Summary

In this episode of the Trading Nut podcast, Tom shares his trading journey, starting with £100,000 and growing it to £1.5 million. He emphasizes the importance of not fighting the market and learning from losses. Tom advises against focusing on monetary gains, advocating for a gradual increase in trade size to manage fear effectively. He also discusses his approach to trading psychology, comparing it to Alex Honnold's free solo climbing, and stresses the significance of process over wealth. Tom's insights are complemented by his book 'Best Loser Wins,' which offers unique trading perspectives.

Takeaways

• 💹 Tom started the year with a $100,000 trading account and grew it to $1.5 million, emphasizing the importance of letting the market dictate your trades rather than trying to force them.
• 📈 He suggests that focusing on the process of trading, rather than the monetary outcome, is crucial for success and that learning from losses can provide valuable insights into trading mistakes.
• 🚫 Tom warns against the common trap of candlestick pattern training, advising traders to not rush into becoming millionaires and to let the market guide their journey.
• 🧠 The podcast stresses the psychological aspect of trading, highlighting the need to manage fear and build emotional memory through consistent practice and review of trades.
• 📚 Tom recommends the book 'Best Loser Wins' for its unique perspective on trading and its focus on breaking habits that may be holding traders back.
• 🤑 He discusses the concept of trading with a smaller account and a higher percentage of capital to avoid a false sense of security and to encourage more careful trading decisions.
• 🏔 Tom likens the mindset shift required for trading larger sizes to the preparation and mindset of Alex Honnold, a free solo climber, who prepares meticulously to manage the risks of his climbs.
• 🔗 He emphasizes the importance of incremental growth in trading size, suggesting that slow and steady increases help in managing the psychological pressures associated with larger trades.
• 🏦 Tom shares his approach to living expenses, using the profits from previous years' trading to cover costs and reinvesting the majority of his account balance back into trading.
• 🌐 He talks about the impact of running a Telegram channel on his trading, noting that it has increased his trading size and profits, and stresses the value of community and accountability in trading.

Q & A

What was the initial capital Tom started with this year?

Tom started this year with a capital of one hundred thousand.

What was the capital Tom had at the time of the interview?

At the time of the interview, Tom's capital had grown to 1.5 million.

What is Tom's approach to not fighting the market?

Tom believes the market is always there and one should not fight it, instead, one should let the market tell you what it wants to tell you.

Why does Tom emphasize the importance of learning from losses in trading?

Tom suggests that losses offer great insights into one's mistakes, which is essential for improving as a trader.

What does Tom warn against in terms of candlestick pattern training?

Tom warns that candlestick pattern training can be a trap and advises not to rush into becoming a millionaire.

How does Tom suggest traders should approach trading large sizes?

Tom recommends a slow and incremental process, similar to how Alex Honnold prepares for free solo climbing, to build up to trading large sizes without overwhelming oneself.

What is the significance of the movie 'Free Solo' in Tom's trading philosophy?

The movie 'Free Solo' featuring Alex Honnold is significant to Tom as it exemplifies the importance of meticulous preparation to handle high-stakes situations, akin to trading large sizes.

Why does Tom not use risk-to-reward ratios in his trading?

Tom doesn't use risk-to-reward ratios because he believes in letting the market dictate the potential rewards rather than predefining them.

What is Tom's view on having a large account balance for trading?

Tom believes that having a large account balance can create a false sense of security and confidence, which he finds counterproductive for trading effectively.

How does Tom manage his living expenses while trading?

Tom uses the profits from his trading to cover his living expenses, and he does not withdraw money for personal use, allowing his capital to remain invested.

What is Tom's advice for traders who wish to improve their trading skills?

Tom advises traders to focus on the process, learn from their mistakes, and not be swayed by monetary gains or losses, but to build a strong trading process and mindset.