Sep 4, 2017
In episode 108 of the Desire To Trade Podcast, I interview Steve Patterson, one of the top proprietary traders based in Toronto, Canada. As someone trading the markets for 37 years, he came on the podcast to talk about how to make a living trading multiple markets.
More About Steve Patterson
Steve Patterson has experience working in the world's largest firms, prop firms, stock broker and floor trader. During his work life, he has seen 3 market crashes and multiple Bull and Bear market cycles.
Now he knows everything about how to master the markets and trade profitably through all environments, which makes him a very interesting guest.
"Get the right expectations about what this business is and what is possible from this business" - Steve Patterson
While some strategies found online seem ultra-simplistic, there will always be an aspect that makes trading not so simple.
For instance, a candlestick pattern by itself is not likely to produce a positive return by itself. You must add rules to limit the trading you'll do (i.e. concentrate on the best setups). That's what I believe is meant by keeping thing simple, but not too simple.
One thing I'm personally a big fan of is to use the Market Phase to determine whether my trade setup appears in the right context.
As you've probably heard before, Forex trading is a field in which you should spend more time working on becoming better than actually trading.
After all, you are competing against the top traders of this world, algorithmic systems, and technology. If that doesn't motivate you to work harder, I don't know what will do it...
I have seen how much you get rewarded for the work you put in outside trading hours. Those hours spent backtesting, researching, journaling, etc. eventually pay!
What's interesting about Steve Patterson's style of trading is that he decides in advance what market he is going to trade. By sticking to a market for a certain period, he ensures that he trades where there is sufficient volatility.
Although Steve doesn't watch the news, that much, he notices where things are likely to happen through fundamental analysis.
Steve mentions early in the episode that he is bearish on the S&P500 since the beginning of August 2017 all the way to the date of the recording (August 17th, 2017).
That was, in part, due to multiple companies missing earning estimates in the recent earning season. He noticed a theme.
He gets to answer: "Is the smart money buying or is the smart money taking profit?"
One of Steve's key lesson to his students is to never fight an existing trend. Instead, he mentions the interesting fact that it is easier to go with the trend instead of going against it - even if the trend is about to end.
When trading any market, most new traders rely on indicators. I have personally seen how poorly some indicator-only trading strategies perform over the long-run. You can rarely expect consistency unless you add in many filters to your trades.
I have personally seen how poorly some indicator-only trading strategies perform over the long-run. You can rarely expect consistency unless you add in many filters to your trades.
As Steve mentions it, most people don't know why certain indicators/patterns/ work well in certain conditions and not in others.
That is something you must take into consideration and be able to adapt when you notice a change.
Steve and I spend most of our time saying "No" to trade setups because they happen in the wrong environment - a chaotic market. What's more important is being able to detect when a specific setup is likely to work out.
What's more important is being able to detect when a specific setup is likely to work out.
Patience always pays. After asking Steve about his best advice for traders looking to trade only the Forex market, he replied: "learn to develop patience".
He added to that: "learn to identify the best setups."
Trading is probably the field in which it's the hardest to stay optimistic - speaking from experience here. :)
However, all the results I got in trading occurred when I was optimistic. You must find something to get you back on track when things don't go as planned. My personal resource is listening from inspiring traders on the Desire To Trade Podcast.
When Steve started to work in institutions, he followed an existing trader for several weeks to learn the details of the job.
I have personally seen a lot more success when I made the decision to invest in coaching.
What is one thing you are going to implement after listening to this podcast episode? Leave a comment below, or join me in the Facebook group!