Dear Trader,
In the first part of this article I spoke about negativity and how it could influence us as traders, businessmen and humans in general. The huge impact “energy vampires” have on us and how to identify them. I also discussed the “never stop learning” concept and how we can dramatically increase our success, if we try to be surrounded by successful people.
Now let’s move forward to the next tips i strongly believe can change your trading and life for good. Again I must put a note here that those tips should and could influence you not just as a trader (work wise, whatever area you are in) but in general.
FOREX SECRET TIP #4 – ALWAYS REMEMBER THE “BIG PICTURE”
Why? – This is what every single one of you reading this article should ask him/herself. Good things happen slow. Yes of course you can win the lottery or may have a good night at the casino but how often does that happen? Consistent work gives consistent yields. When you reach the top too fast, you are probably going to fall down also very quick. In forex we call it the V pattern. Price shoots up, then falls like a knife.
We as traders and successful businessmen (yes we are, your forex account is your business) should learn to go after the consistent profits. When you open your statement after 6 months of discipline trading you should see a smooth upward curve. This is what i teach all my students. Spikes up for 20% increase in 1 profitable trade, followed by spike down of 30% losing trade is not what I (and I hope you) want.
Make yourself a short note somewhere, and answer the following questions on this note:
Where do I want to be in 1 year from now?
What should I know about forex in 1 year from now?
What strategy/method will I master in that time?
Why do I want to be successful?
Stick it on your monitor and follow the long term plan.
Ok moving forward.
FOREX SECRET TIP #5 – ANALYSIS AND STATISTICS
It wouldn’t matter how good your plan is if you don’t keep track of your progress. Why? Because this is the only way to know if you are moving forward or not. How else would you measure it?
How to keep track of your progress?
Very simple. Create milestones. If you are learning a new strategy your milestones could be the chapters inside the manual. If you are already a trader that has a trading plan and strategy in place, that would be your weekly/bi-weekly/monthly statement. What you need to do after each milestone is to go back and review how you have done.
Let’s assume you are a trader already. Then go back and check out the losing trades. The easiest way for me is to load the period i want (be that may 1 week or 1 month) inside the Terminal then -> Account History tab. Now i see all trades from the period that i have selected. Here comes the cool part. You can actually load the trade with its entry point, exit point and stop levels to your chart. To do so just drag and drop the trade in question inside the chart. I have created a small video explanation below:
This is extremely useful as you don’t have to manually input stop loss, entry, targets on the chart using lines or whatever. Drag and Drop and start analyzing.
Now go over the main questions:
Why did I open this trade? Was this trade based entirely on my strategy rules?
Was my entry correct? Maybe you got in too early and didn’t wait for clear entry signal (as per your trading plan and strategy) or maybe you entered a bit later, when the price has already moved away and your risk reward ratio was bad?
Did I follow my exit/target plans as I was supposed to? In other words, did you close the trade before the target was hit (if so why? maybe there were news ahead or some other technical explanation which makes this decision correct, if not, this is a mistake, you should’ve waited for the target to be reached as now your R:R is not what you expected it to be and in the long term these “early retirements” of your trades will make a big difference on the statement)
You may add additional questions here, these are really the fundamental ones.
Important here is to keep track of your progress, analyze your work and make sure NOT to repeat the mistakes you did in the past. We all make mistakes when trading ON DAILY BASIS, we are humans after all, there is no way around it. Just make sure to minimize them as much as possible and not repeat them. This is how you will grow as a trader.
FOREX SECRET TIP #6 – FORCING TRADES
It happened to you, didn’t it? Yes i know it happens to me too. When I look at the given chart once, twice then once again, up to down then sideways and I try to justify the entry that i’m trying to stop myself taking, in a few seconds.
I know the level i want is so close, and i know the price may run away from me BUT the entry is not valid. It is not as per my plan and yet i want to be in, just because it looks so tempting and i really don’t want to miss it. I don’t want to be the one who missed this 500 potential pips trade. A trade I could catch from the top or the bottom.
Yes, it happens to me almost every week.
What do I do about it?
I fight with this feeling every single time.
How do I manage to use my trader’s logic over my feelings and emotions in such situations you may wonder?
It is simpler than you may think. I just tell myself that there are 2 options here.
Option 1 – price indeed starts moving without my valid entry being triggered, so i will re-join this move on the first correction. I know Mr Market will give me an entry again. He is my friend, and when I respect him, he respects me back. Worst case scenario, market takes off and i miss the trade…So what? Is it the end of the world? Was that the last trade in the forex market? Next one will come, and next one will reach my level and I will catch it from the beginning. No worries.
Options 2 – price makes some ugly move, stop loss hunting, then reverses and goes to my level. Now i get even better price, with an extra confirmation ( false break or something like that) as a bonus for my patience. I smile at the monitor and I know I won half of this battle. I was patient, and i was rewarded for it.
Things are simpler than they look and we must try to simplify them even further. Most traders i know, that lose money, even though they are loaded with knowledge, either don’t have the patience (lack of discipline) or they complicate the process of trading too much.
Think about any of the hundreds of strategies you have ever read. Think about them. Each strategy in its core consist of 5-6 steps at most.
1. Wait for this to happen
2. Now wait for that to happen
3. Ok you have an entry – buy or sell now
4. Place your SL here
5. Place your targets – here and here
We, the traders, ALWAYS find a way and excuse, to bend these few lines of directions. No matter how simple it is, we fail to follow it, well at least most among us. Think about it.
FOREX SECRET TIP #7 – DIG DEEPER
Unfortunately the road of the successful trading career, is paved with scammers, myths, fake promises and anonymous gurus. To make sure you are getting the best for yourself and your money you MUST dig deeper.
Always ask questions
There is no such thing as stupid question, period. Well the question becomes stupid if you asked it 100 times before that, and it was answered 100 times… Joke aside, don’t be afraid to ask questions. This is the only way to learn more, get more ideas, and get it right. It doesn’t always happen from the first read or the first time you have watched a video tutorial.
Remember when you were applying for a driving license? How many hours of practice driving you had to take? Even afterwards when you got your license, you are not a real driver. You become a real driver only after you have been behind the wheel for 5000 km or 10000 km. You must go through all possible situations that are going to build you up as driver – snow, ice, fog, night driving, traffic jams etc…
Same is in forex. Just because you know how a given strategy works, doesn’t make you a trader. There are so many variables that could influence you trade. This is the experience. You can’t buy it, you can’t win it as a gift and a friend of yours can’t give you half of his.
This is why you must ask questions on the way. The more you ask, the better.
Until you have gained that experience there will be failures. You will fail even after your 10,000 hours of trading when you start to become experienced. Believe me. I still fail. I’m not afraid to share it with you. I know my statistics and i know failure is part of it. This is the business i signed up for, so now i’m playing by the rules and being wrong sometimes is part of this game’s rules.
Find yourself a good mentor and good trading community. This is priceless. The job of a retail trader could be very lonely. We are blessed to live in a time when we have technology at our disposal. So use it!
There are so many teachers and mentors out there, how do I know which ones are good?
One of the key things to look for is whether your coach would show you HIS bad setups and trades. We all love to share our good trading examples, the ones that worked and that’s fine. It is in our nature. But we all make mistakes when analyzing the market and that’s fine too as long as we make money in the long run. However trying to hide that should be an alert. Nobody is correct 100% of the times. Nobody. Not even huge banks robots, that cost million of dollars to develop. There are simply too many variables in the equation, for 1 person or robot to predict it all.
For example the Flash Crash of 2010. There are many theories about it and what actually happened. We can only guess even after the reports but 1 thing is for sure: smart money’s robots, created by the quants, couldn’t know what happens. This is a variable. It is possible that exactly these quant robots or one of them made a mistake which triggered other robots to short sell as well. Obviously to a certain extend they were programmer to act pretty much the same, as they all started to short.
At this point we have have an avalanche.
Again maybe i’m wrong maybe i’m not. But i’m looking at the facts. Would that happen if there were humans there, taking these decisions at that very moment? Maybe some would go short, maybe not. But i know for sure they wouldn’t short it for so long. Why I think so? Watch the video below:
Another thing to Look for is transparency. You want the person who is building you up as a trader to be open and honest with you. When there is money involved people tend to hide things. And today with internet, hiding something is even easier.
In summary – do your research and homework. The deeper you dig, the more you will protect yourself. If you find something fishy, go and ask. Why and how? From the answers that you will get you can make your own conclusion.
Thank you for your time and patience to go until the end of this article! I really hope that these tips will be helpful to you.
Yours,
Vladimir
