Kevin McCormick - Futures Trading Champion Trained by Larry Williams

1. Retail Traders Have an Edge

Kevin emphasized that retail traders possess a significant advantage over large institutional players like hedge funds and venture capitalists. He pointed out that these big players often underperform the market despite managing immense amounts of money, due to their inability to be nimble and react quickly to changing market conditions. Retail traders, on the other hand, can adjust their positions more freely and capitalize on opportunities that larger entities might miss. This nimbleness allows retail traders to navigate the market in ways that large institutional players may not be able to.

2. Understanding Market Trends is Critical

Kevin's approach to achieving a remarkable 253.8% return in a single year was rooted in identifying long-term market trends, particularly regarding inflation. He noted that understanding macroeconomic narratives, such as inflationary pressures, provided a foundation for his trading strategies. For aspiring traders, recognizing and utilizing these larger trends can be pivotal in shaping their trades and potential returns. This fundamental analysis helps traders make informed decisions and capitalize on market shifts effectively.

3. The Propaganda Machine in Media

Kevin shed light on the influence of mainstream financial media, describing it as a "propaganda machine" that often misguides traders. He advised traders to be wary of media narratives that could lead to poor trading decisions. For example, he noted how certain commodities, like lumber, become hot topics only when large traders are trying to offload their positions. By recognizing these trends in media coverage, traders can avoid being led astray and instead make decisions based on their own analysis.

4. Set Realistic Expectations for Trading

Kevin emphasized the importance of setting realistic expectations when entering the trading world. He explained that most hedge funds and money managers underperform the market, and retail traders should model their goals accordingly. Instead of trying to "get rich quick," he suggested focusing on outperforming the market over time and establishing consistent habits for building wealth. For instance, investing a small, consistent amount in index funds like the QQQ over decades can yield substantial returns.

5. The Necessity of a Trading Journal

One of the key insights Kevin shared was the critical role of maintaining a trading journal. He stated that tracking trades helps reinforce positive behaviors and identify mistakes, ultimately leading to improved trading results. Reviewing past trades allows traders to understand their strategies' effectiveness and make necessary adjustments. For Kevin, journaling was a significant piece of his learning process, allowing him to reflect on what worked and what didn't.

6. Avoid Day Trading While Learning

Kevin advised beginners to refrain from day trading while they are still learning the ropes. He highlighted the psychological stress and risks that come with day trading, especially for inexperienced traders. Instead, he encouraged novice traders to adopt a more static risk approach, focusing on learning the emotional aspects of trading and mastering the nuances of their trading platforms. This foundational knowledge is essential before moving on to more complex strategies involving dynamic risk management.

7. Embrace the Learning Curve

Kevin shared his personal experience of facing setbacks during his first year of full-time trading. He highlighted the importance of embracing the learning curve and understanding that losing streaks are a natural part of the trading journey. Instead of panicking, he advised traders to maintain perspective and not to lower their standards. Reflecting on mistakes and understanding why strategies may not have worked is essential for continual improvement.