What is Inversion?
In trading, inversion refers to flipping the conventional way of thinking and problem-solving. It’s about working backward from your desired outcome to identify the steps needed to get there, while also understanding the pitfalls to avoid.
Rather than asking, “How can I make a lot of money trading?” inversion asks, “What would cause me to lose money, and how can I avoid those mistakes?” It’s about defining your risks and understanding the obstacles, so you can take smarter, more calculated actions toward achieving your goals.
Inversion in Trading Goals
For example, instead of focusing solely on profits, inversion teaches us to look at our trading from a risk-first perspective:
- What could go wrong?
- How can I minimize losses?
- What realistic financial targets should I set based on my capital?
By using inversion, traders can develop more grounded strategies and realistic goals, which lead to long-term success rather than short-term hopes.
Let’s talk about one of the biggest misconceptions in trading—people thinking it’s a fast track to making loads of money quickly. I get it, the idea of quitting your job and making a living off trading sounds appealing. But in reality, it’s not that simple. You can’t just replace your income overnight. You need a realistic plan, backed by numbers.
Replace Income with Realistic Math
First things first: forget about making millions right away. Focus on the math. You need to set realistic financial goals that are based on your trading capital and your risk tolerance.
Here’s how you should approach it:
- Calculate Your Monthly Expenses: Before you even start trading, figure out how much you need to cover your basic living costs. This includes rent, utilities, food, transportation—everything.
- Determine a Sustainable Trading Capital: Now that you know your monthly expenses, let’s find out what kind of capital you need to consistently make 4-5% returns per month to cover those costs. For instance, if your expenses are $2,000 per month, then you’d need a trading account large enough to generate that. Let’s do the math:
- If you want to make $2,000, and you aim for 4-5% monthly returns, you’d need around $40,000 to $50,000 in trading capital.
- Prop Firm Accounts as a Solution: Don’t have $50,000 in your personal account? No problem! You can get a prop firm account of that size. These firms allow you to trade with their capital. Your job is to manage the risk, trade diligently, and aim for a modest 4-5% monthly return.
Realistic Goals, Not Hope
Why is this planning important? Because hope is not a strategy. Simply wishing for massive profits won’t get you anywhere. A clear plan based on realistic numbers will. By focusing on steady, small gains and managing your risk properly, you can actually achieve financial freedom from trading.
Forget the “get-rich-quick” mentality. Instead, start thinking about how to make consistent, sustainable returns that can replace your income in the long run.
Let’s dive deeper into this in the comments! Do you have your monthly expenses and trading capital figured out? 👇
