Inside The Trader’s Mind
Over the next couple of weeks we will give you some of our thinking about why we are all different in our trading success.
We have been asked what kind of results will we get with your trading system, what percentages of success will I get?
Let’s look at two traders. They have the same capital, open account with the same brokerage, were taught by using the same trading system, have the same entry and exit signals. Now give them some time to trade and check back. One trader is up by 25% and the other is down by 30%. It is interesting that with the same information two different traders get such different results.
We feel that each of us creates our own trading success by how we feel toward the market, the reason we trade, and how we feel about making money, along with many other reasons. The same reasons may be why it takes traders different length of time to learn the market, why some traders start to trade live sooner than others, and many more reasons why we are different when it comes to trading.
Prepare For Success
While on vacation over the 4th of July 2008 we visited Mt. Rushmore, South Dakota in the black hills. You know the place with the sculptures of the presidents of the USA. As we learned about what it took to make this monument I was amazed. It took years of work for many men.
They made small statues 1/16 the size of what they wanted to sculpt on the mountain. Then they took measurements of the small statues and then times it by 16 to get the measurements for the larger work. 90% of the sculpture was done with dynamite. Then they used other methods to get the finished work. The craftsmen became so good that they could come within a couple of inches of the finished surface by using the dynamite.
Mr. Borglum, the artist was 57 years old when he started the project. He lived for 17 years before he died and left his son to finish the project. He had worked on many projects and was taught by engineers how to do this type of blasting with dynamite to get the end result. They had to get rid of the surface granite to get to the granite that was hard enough to sculpt.
A Change Is As Good As A Rest
I have had a few days away from trading. The time has been spent with family and just traveling around the country. We are in Wisconsin right now actually and I thought I would check some email and glance at the charts for a little bit. I had a trade on and was taken out on my stop loss. Now that I have time to think I can see that I had the stop loss set a little close. If I had been 7 more pips away then I would not have been taken out and my original trade would have given me about 150-200 pips profit.
I get a lot of these trades so I am not concerned about one that got away. I will however learn from this and not play the market so close. As I review my mental state at the time I made the trade I can see that I needed a break from trading. When I give the market room to breathe I usually come out Ok.
The Easy Way To Monitor A Trade
When a trader makes a trade he should always monitor the trade no matter how long he is going to keep the trade on. To monitor a trade easily it is best done on time frames higher than those in which he normally trades. A trader can see a trade more clearly when he has a larger perspective. It is easier to spot the support and resistance levels the farther from the current time frame you are trading. The smaller the time frame is, the harder it is to judge where a good exit point is. That is if you want to get more than just a few pips on the trade. A trader who is concentrating only on a short time frame will miss things that are obvious to someone who is looking at the larger time frames.
Something that I like to do is find the trend on a larger time frame. Time the entry of the trade on a smaller time frame then move back up to a larger time frame to monitor the trade. This technique will help to get more pips out of a trade and still allow the market to move.
Time Conversions
We get asked all the time about converting times, trading times, and market hours.
Here are two sites to help with GMT conversions and FX market hours:
www.timeanddate.com (see the ‘World Clock’ function)
Hope you enjoy and find a use for these two sites.
Jed
The Excitement of a Flat Market
We have heard many complaints from traders about the market being flat, the market is dead etc. Is that the real problem or is it that traders do not know what to look for when the market is going sideways?
For new traders it is soon learned that sideways markets are great set ups for break out moves. The longer a price moves in a sideways direction the stronger the break out usually is when the move is made. I like to use the 30 minute chart to see the moves set up and break out. When the 30 minute chart starts to go flat that is the signal that a break out is soon to follow. Put an alert just a little above and below the tops and bottoms of the sideways movement then wait until the market moves outside the alerts that may be a good time to enter the market.
When the market is sideways get ready to trade.
Is It Okay To Take A Day Off From Trading?
Here are a few reasons when it is unwise to trade With Real Money
1. When the market is moving sideways and there is no real movement of any importance.
2. When you are ill.
3. When you are tired
4. When you are emotionally distracted with other issues.
5. When you are trying to trade with money you cannot afford to lose
6. When you have to make a certain amount of money each day or week
We all need a change once in a while. It seems that I make more money when I am fresh and rested. It is easier to get in the flow of the market and make good trades. A trader also needs to take care of their emotional, physical and mental health. For those that want to make real money they need to take trading seriously and take care of themselves.
These are some ideas that help us so we thought we would pass them on to you.
The Smart Way to Lose a Forex Trade
We have seen over the years traders will trade without a stop loss for fear of a small loss. When the market turns against them they let it run in the wrong direction rather than getting into the trade and trade with the move. Their total focus is set on wishing the market would turn and come back for them. Now the trade is several hundred pips against them and they can’t take it any longer so they close the trade and take a big loss and feel good that they did not lose more.
We all have to realize that a loss in trading is part of trading. We need to put the advantage in our favor so we will win more than we lose and not fall in love with a trade that is losing and let it run. When we take a trade we need to know where our stop loss is going to be then let the market tell us when to get out.
Once we have profit in a trade we need to concentrate on protecting the profit. So it is best to protect profit rather than hope a loss will get smaller. The first loss is always the smallest and will give you better vision for the next trade.
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