Becoming a Minimalist Trader

icon-man-bluearrows-hands-250Minimalism has become a popular cultural trend over recent years, and it is easy to understand why. The emphasis with minimalism is always on “less is more.” With rampant consumerism and not enough resources to go around to everyone on the planet, it makes sense as a society to learn how to start cutting back.

As a philosophy, minimalism has made its rounds. For some people, it is a lifestyle choice, the decision to own less and choose a simpler daily routine. For others, it is an aesthetic design principle, found in art and architecture and even in music and literature. Minimalism also puts an emphasis on intention. In other words, you should own and use and create only what you really need, and forego the extra bells and whistles. Minimalism seeks to do away with complexity externally and internally.

Just as you can apply minimalism to art or music or other areas of life, you can apply it to your trading. In fact, functionally speaking, I think this may be one of the best areas of life to apply minimalism to. Why? I am not even a minimalist in other respects, yet I am a huge believer in minimalist trading.

Minimalism speaks directly to the mistakes of traders:

  • So many of us choose complexity over simplicity.
  • We add indicators to our charts or pursue paths we do not really need.
  • We act without clarity or intention.

The minimalist trader retrains himself or herself to let go of these bad habits and embrace a more elegant path to success.

Why do so many of us complicated our trading lives? I think in large part it is because we have a stereotype in our heads of what a professional trader is supposed to look like. This image is perpetuated by the media. We are convinced that real professional traders have fancy equipment, expensive hardware and software, and a hundred indicators on their charts. They are experts in every single facet of fundamental or technical analysis. They are capable of complex intellectual feats that we can hardly dream of equaling.

I am not too sure where this image came from, but it has very little connection to reality. Actually, the real professional binary options trader is going to tend to look like the exact opposite of this. She probably owns one computer with one or two monitors, and there is a good chance she is using free software. She has only several indicators and one or (at most) several trading methods.

7 Steps to Embracing Minimalism in Trading

Real professional traders do not seek to complicate their lives; they seek to simplify them. Consciously or otherwise, they embrace minimalism. Here are 7 steps to incorporating minimalism into your trading routine!

Focus on a single system.

A lot of traders jump into trading with the expectation that they should have as many strategies and techniques for profiting as possible. While this may seem like an excellent idea on first glance, it is not a sustainable approach. You cannot learn unlimited systems when you have limited time.

I recommend you stop torturing yourself trying to learn and test a dozen systems simultaneously. Just pick two or three you really like; or even better, think about focusing on a single trading method. Learn it until you become an absolute pro at it, and you will give yourself what you really need to succeed as a binary options trader. You will make far more money trading a single system really well than you will ever make trading a dozen systems poorly. You will also free up tons of time and energy and stop confusing yourself mixing up signals between systems.

Stop using a million indicators.

Just as multiple trading methods can give you conflicting signals on a chart, so can too many indicators. Using lots of indicators also clutters our visual space, which in turn can clutter up our mental space as well.

Get rid of all these indicators you really don’t need! Chances are that you have them there because you have that imaginary pro trader in your head, and you cannot help but picture him using a thousand indicators. In reality, he probably has just several. Whittle down your indicators until you find just several that give you strong, consistent signals. The rest is just clutter, and all it will ever do is distract and mislead you.

Quit trying to trade every asset your broker offers you.

How many assets does your binary options broker allow you to trade? 50? 100? 200? More than 200? These days there are so many different currencies, stocks, indices, and commodities you can trade. That is a really great thing, because it gives you all kinds of flexibility and opportunity.

That does not mean you need to be trying to trade them all, or even that you should. The minimalist trader will pick just several assets to focus on, at least as a beginner, and maybe even just one. Every assert has its own little nuances and quirks, and trying to keep those separate in your mind can be confusing and complicated. When you just have a few assets to focus on, it is much easier to really learn their personalities. This is how you really cash in on the flexibility of binary options trading. You have all those assets to choose from, so choose the assets that are best suited to your personality and trading method!

Stop paying for services, software, and equipment you do not need.

A big part of minimalism is the rejection of materialism. Oftentimes we trick ourselves into believing we need a lot of expensive things, but really, we just want to say that we own a lot of expensive items. It feels good to get on a trading forum and boast offhand about your expensive signal services and your five monitors and your super-expensive charting platform, because it means you have more than other people.

But do you really have more, or are you just fooling yourself into believing you do? You may actually have less, because you are pulling money out of your trading account which you could—and should—be using for trading. How is using your money inefficiently somehow “having more?” Ultimately the traders who are using their resources well will race way ahead of you, and they will be the ones with money to spend someday.

Maybe some of these things help you, and you should hold onto them, but ask yourself if you really need them all. In reality, you can probably get away with free charting software like MetaTrader (which is quite good) and a single monitor. You may not need signals at all, and if you do choose to use them, one or two great services is generally more than enough.

Clean up your trading environment.

Minimalism also emphasizes keeping a clean, austere environment. I am not suggesting that you pitch out all your décor or even that you necessarily clear all the clutter off of your desk, only that you create a trading environment which minimizes distractions. If it helps you to clear out physical clutter, definitely do it! If that does not help, consider other steps which might. Close the door when you are trading, turn off your cell-phone, keep chat programs offline, keep your internet browser closed. Come up with a layout on your screen which keeps you focused.

Do not take on more trades than you can handle at a time.

A lot of binary traders feel tempted to get into a bunch of trades all at once, because they reason that this will allow them to make a lot more money quickly. That would be true if you could maintain that strong focus across all of your trades and all of them were good ones, but how often is that really the case?

In reality, every time you add a trade that you are taking concurrently with others, you are dividing your attention. Eventually you will max out your attention, and then your performance will begin dropping the more trades you add. You will not make more money, you will actually make less. So this is a very clear case of “less is more.” Take fewer trades, and you may very well make more money!

Create simple checklists and routines.

I love checklists for trading. They turn complex mental procedures into simple, codified steps you can follow again and again to great results. That is the idea, anyway. In truth, a lot of traders misuse checklists. This is not an issue specific to trading either. How many of us have to-do lists which never get done, and not only that, but actually tend to pull us away from what we really need to do?

The key to creating powerful checklists and routines is to hold minimalism in your mind when you are codifying your routines. Always ask yourself, “Do I really need this routine?” How you express the steps and tasks matters too. Is there a simpler way you can phrase something? If so, go with it, because it will help your mind to stay crystal clear while you are trading.

When you become a minimalist trader, you minimize clutter and distractions, which helps you to maximize your productivity, concentration, and ultimately, your returns. So take this list and review your trading. Are there ways you could simplify your trading today? Take the leap of faith and embrace the philosophy that “less is more,” and you will see your trading account grow!