The Most Important Thing In Trading

Mar. 17, 2025

What’s the most important thing in coaching?

It’s not techniques or knowledge of the game.

It’s the losing.

Specifically, what happens when your student loses?

Does your student get too sad and want to quit to avoid the pain?

Do you dread seeing your student or his parents the next week?

If so, it’s over.

That coaching arrangement will never last and the student will never get better.

But what if the student is all ears after a loss? What if she can’t wait to get back to work on what she needs to work on?

And what if you can’t wait to do the fixing?

If that’s the case, you probably have a champion on your hands.

And you’re probably loving every second of the journey.

(In coaching, the losing times are always the most fun–if the student has the right mindset.)

Trading is no different.

The most important thing in trading is not the instrument you trade or the indicator you use. It’s not buying crypto on Fib retracements or using Bollinger Bands™ developed by quantum computers.

The most important thing in trading is what happens when you lose.

And it comes down to one simple question that answers everything:

Would you add more money during a bad drawdown?

We all know most traders fail. And why do they fail?

They quit.

They lose, and then they quit.

But what is the common characteristic of all the huge winners?

They add when they lose.

They get more committed.

Does Warren Buffett add to losing trades or buy when the stock is losing? Of course.

Does Mark Minervini start adding massive trade sizes as soon as he starts winning after a losing period? Definitely. He can’t wait to put money to work after a bad market environment.

Those two examples are polar opposites in methodology, but they both have worked amazingly well.

Because, again, they get more committed when things get bad.

And the same goes for everyday people who’ve made it to where they want to go.

They won because they kept adding to what they’re doing no matter what–either through Dollar Cost Averaging or buying the dips or betting bigger when things are finally going their way

All the big winners love to add when they lose.

So, what are you willing to add to?

• Would you add to TSLA after its horrifying fall off a cliff?
• Would you add to NVDA now that China has alternative A.I.?
• Would you add to your Fx system when Central Banks are pulling shenanigans and the reversals are coming in waves?
• Would you add to your long-only Futures system during one of the fastest 10% corrections in stock market history?

If the answer is no, then the question is why? Why give up on those?

Here’s a reason: Because none of those options will pay you back.

TSLA can fall a long, long way and not recover for a very long time. NVDA can do something similar.

If that happens, your money is gone.

Further, if your trading system breaks–and we’re told they always do–then how do we get our money back?

We don’t.

There’s no money coming in if those investments go down.

But, of course, high-yield is different.

Yes, the stock charts can fall during fast drawdowns–but the money keeps coming in. Could the dividends drop? Sure. But the payments are still coming in, regardless.

And, if the drops on single stock high-yielders are too tough to take, you can always try something simple and index-based.

Here’s a comparison between the ultimate buy-when-it-loses instrument, SPY, and high-yield XDTE:

For over a year now, XDTE has beaten SPY on a total return basis.

And XDTE pays a 26% dividend.

When you’ve reached a good level with SPY, you have to sell shares and run the risk of losing everything via bad sequencing.

When you’ve reached a good level with high-yield XDTE, you get payments every week and don’t have to sell shares.

But it all comes down to losing.

And which failure makes you excited.

When you figure that out, your success practically becomes inevitable.

Talk to you soon.

 

Join the free Newsletter list here .

 

Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich is HERE.
My latest YouTube video is HERE.

 

Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.