Akil Stokes is a professional forex trader, former money manager and trading coach. He's also one of the co-founders of Tier One Trading, which was listed as one of the leading innovators in trading education in Forbes.
You can see Tier One Trading’s YouTube channel here.
We speak to Akil for the latest in our Expert Q&A series.
Exprt Q&A: Tier One Trading
Could you tell us how you began trading?
I got started in the financial markets after graduating college. I started as a stock investor and as I fell in love with the game I moved towards becoming an active trader, which then led me to the forex market. My biggest difficulties at first were having the wrong expectations about what was possible through trading. I thought it would be easier, I thought I could make a lot more money and I thought the process would be quicker. My biggest hurdle was focusing on finding a magic strategy that would print me money vs. taking the time to actually learn how to trade.
What made you decide to start your YouTube channel?
I started a YouTube channel as a place to document my journey and share my experiences. Before I became successful I had written a blog and a lot of people praised its honesty. Trading is something that changed my life and despite having an education business I wanted to have a platform to continue to give back and help those who weren't able to work with me personally.
In your opinion, what are the essential elements of a good trading plan?
A good trading plan must contain a psychology and philosophy section where you lay out your beliefs about both yourself and the market. You should also have a rules of engagement section which includes a step-by-step, rules-based trading plan, and a money management section which includes a trader’s risk profile, rules on when to increase or decrease position size and a schedule on when and how to pay yourself when profitable.
Psychology plays an important role in trading. What are the most common things, in your experience, that block a trader’s progress?
The biggest hurdle that traders face from the psychological side of things are focusing on the outcome - meaning that they judge a trade based on the result of the trade. Trading is unique in the sense that you can do everything right and still be wrong, and do everything wrong and still be right. So the value (or the pain/pleasure) needs to come from following the PROCESS of consistently taking good trades - and not the outcome of any given trade.
How soon should a trader move from a demo to a live account?
It'll vary depending on the timeframe you’re trading on, but they need to give themselves enough time to be comfortable placing live trades and confident enough to have a belief in their system or strategy. For a day trader working on the lower timeframes I'd say at least one month, for a swing trader I'd say a minimum of three months. Even then, once you go live should only do so with a small portion of the account size that you plan on trading.
Strategy flipping is pretty common in trading. What’s the one thing traders should ascertain before they decide to change to a new strategy?
Before bailing on a strategy you need to make sure that you give it an honest chance. Nothing works all the time and all strategies go through periods of drawdown, so when that happens you need to make sure it's a natural drawdown and not one caused by your own errors. You need to compare that drawdown to the historic ones taken by the system either in live trading or during backtesting.
Should a new trader use a % amount to configure their risk or a fixed dollar amount per trade?
Either is fine as long as there are rules behind it. I don't personally use the same fixed % risk per trade, but I do follow guidelines for what my maximum risk % can be per any given trade. What matters most is that they have a consistent approach to risk management.
In your opinion, what’s the main reason such a huge percentage of traders lose money?
Most traders lose money because they self-sabotage. The majority of traders don't have a problem finding winning trades and a report (probably a decade ago now) confirmed that. The problem is that they make psychological mistakes mainly due to fear, greed and false expectations.
There are new online prop firms cropping up all the time. When do you believe someone should make the move to trade a larger capital base?
Similar to going from demo to live, they shouldn't make the jump until they feel completely confident in what they are doing and have a solid track record of their performance. I would personally wait until after my first full year of being a consistently profitable trader to make the jump.
When you’re not trading, what do you do to keep yourself balanced?
Finding balance is everything to me. I'm a former athlete, so I'm always working out (which is also my form of meditation). I also have two young kids, who are the reason I do what I do so I make sure to spend a lot of time with them and try to be the best father that I can be. I don't nearly spend as much time on the charts as many people assume I would as a full-time trader.
You often hear traders saying you need to put the time in to become a consistently profitable trader - but what does this mean to you exactly and where should a trader be putting in the most time?
I think books are great (especially those on trading psychology) but I don't think you can learn to trade from them alone. Courses are great too, but again, just being taught won't take a trader to success. You have to put yourself in a position where learning to trade becomes a lifestyle. You're reading the right books, you're learning to trade through a course, but you're also spending a massive amount of time practically applying what you've learned to the chart, spending time with a positive community of traders who are going to help you through the process and hold you accountable. Without that it's going to be very difficult to become successful.