Here is a little chart to see what it takes to recoup a loss at different levels.

% Draw down            % Gain required to
Recoup loses

10                                          11.11
20                                          25.00
30                                          42.85
40                                          66.66
50                                          100
60                                          150
70                                          233
80                                          400
90                                          900
100                               Out of Money

Once you reach your draw down level you should close all trades without thinking about it and find out
what you are doing wrong.  Here are some things to think about:

Am I following my trading system?
Am I following my trading plan?
What is my state of mind?
How is my physical condition?
What do I need to do to correct the problem?

By following these simple rules of preservation you will be around for another day of trading and not be
emotionally and financially destroyed.  We all can have a string of bad trades.  The best thing you can
do is step back and give it some time.  The most common problem of poor trading results is when a trader
gets away from the trading strategy that was successful for him.  By using good money management and
following the trading rules will give you the opportunity to be able to stay in the trading game until you
can figure out what you are doing wrong.  By having some rules to follow it is usually quick and easy to
see what is being done wrong.  You should be able to spot some rule breaking by looking at just one losing
trade.  You should not have to go for long periods of time and many trades to see that you are doing some
things different.

Do you still leave trades on hoping they will come back.  You know the “blowout trades”
that take all of the money you just made, and put you back to where you started or just
plain wipe out your whole account.

“Are You Set To Make The Wrong Decision On Your Next Trade?”

If you are not set to make the trade that your tested trading plan dictates you should make,
then your are set to make an emotional trade.

Do you keep making the wrong trades all the time?  If so most likely you are the problem.
It is not the trading system you are using, or the market, or the limited time you have to trade,
it is YOU.  You are the common denominator.

Solution:

Know your trading system
Follow the trade tracker
Keep a trading journal

Then

Make a trading plan
Follow the trading plan

These simple steps will help you develop the discipline to become a successful trader.
It is simple but it is not easy if you want to take short cuts and play the get rich quick game.
It takes time to develop the skill; patience, discipline, and persistence to become a successful trader.
But it is worth it when you get there.

This means you have 25% losses and 75% wins.  So if your wins are larger and the loses are smaller,
you will have a successful trading account.  This means you will lose 1 out of 4 trades.  If you
execute all the trades exactly the same then you can pin point the problem areas in your trading.

By doing the same thing each time you place a trade, you are developing a mechanical trading style.
You just see the trade and pull the trigger.

When you have a loss you need to still reduce the pain and emotions.  You need to make the money you
lose not so valuable.  Also set a limit of how much you will lose before you go back to demo trading.
All of your testing should be done in a demo account to get the skills you need to trade well.
It doesn’t hurt to go back to demo trading if you have a losing streak.  Do another 20 trades, get
your rhythm back then return to live trading again.

This is the way we like to take the higher probability trades.  When we get a signal on
the 15 min or 30 min time frame then we look at every thing up to the 4 hour and see if
the signal is going in the direction of the trend on each of the larger time frames.
If they all give confirmation then you have a better chance of getting a high probability trade.
If you do not have confirmation of the trend on all time frames the strength of that trade is weakened.

You need to learn to use all of the indicators in our courses so you can determine what to look for.
If you have patience, and follow your trading plan then you can become successful at trading.
Once you have a solid understanding of how to trade manually and can read all the signals then
you can use the alerts to bring the trades to you rather than having to spend time looking for
the trades.

The Alerts are based on the entry signals in our courses.  They save you time looking for trades.
You can watch many currency pairs at one time and only take the best trades.  You will always know
which pairs are moving on any given day because the alerts will give you heads up.

The advantage a trader has is to be able to spot trades that will give them a greater chance for success.
Since trading cannot be 100% then we have to be concerned about the 15 to 25% of the time when we are going
to be wrong.  To have a better gauge of how successful a trade might be one has to get knowledge,
experience, and practice.  To become a successful trader it is not so much about having big winning trades
but having more winning trades than losing ones. Trading is a numbers game so you can expect to win some
and lose some.  It has a great deal to do with how you manage your trades.  When a losing trade is managed
properly it can be a small loss rather than a large loss.  When a winning trade is managed properly it can
become a larger win if you don’t get greedy.

To become a good loser you need to learn the difference between experienced losses and losses that cause
suffering.  We first need to get the education and logic behind trading then we need to strengthen the
emotional side of trading.  Having a trading system the gives exact entry and exit points can do this.
Systems that move with the market to let you know when to get out.

When I relate this experience to trading it seem that by jumping in and day trading and not looking
at the larger time frames you are not seeing the big picture. By larger time frames I mean the daily,
weekly, and yes, the monthly charts. The larger time frames will pull the smaller time frames in the
direction of the larger trend. By looking at the big picture you can adjust your trading accordingly.

Swimming upstream is the reason you need to be aware of your long-term surroundings. It is really
hard or doesn’t work. You may see a trade develop on a small time frame and it goes against you
before you have a chance to get out without a loss. If you manage it correctly you will only suffer
minimal damages.

Have you ever been swimming in the ocean and all of a sudden you seem to be swimming nowhere?

I was playing in the ocean and was looking toward shore when I noticed the waste deep water was
now only knee deep and flowing out to sea I turn around just in time to see a 15 foot wave right
behind me. Before I could do anything I was picked up and dropped on my head where my feet once
were.

And that’s what it can be for YOU if you don’t honor your trading rules and not swim upstream.
Just because the small current is going out to sea doesn’t mean that, that is the way the larger
current is going.

The monthly chart, for the trader, is the most dominant current influence. It’s hard to turn a
battleship or an ocean liner…They turn slowly and after they do, they stay on that direction for
a good while, until some grand force has them turning again.

Take a look at any monthly chart. Big move up, then big move down, then up.. on and on.

The weekly chart has a lesser “macro” influence, of course, then the monthly, but a more immediate
influence for the day-trader. The daily chart has less of the macro influence, and more immediate
for the day-trader than the weekly, and so on for the 60-minute on down the timeframes.

If you’re a day-trader… sure, you’re going tick by tick in many cases… but when something happens
that “doesn’t make sense”… think about which way the current is flowing.

To make sure the current is my friend, I’ve learned to take the majority of my trades WITH the
current… and it’s made a very positive difference in my trading results. It will likely have
the same effect for you.

If I’ve noticed that the monthly, weekly, and daily chart currents are all pulling the same
direction, the wise thing to do in to not trade against all those forces.

The smart trader looks for the path of least resistance.

Hope this helps.

(excerpts in this series were taken from the book “The 4-Hour Work Week”  By Timothy Ferris)

“Many a false step was made by standing still.  — FORTUNE COOKIE”

Do not let fear keep you from moving forward.  Being stuck on the go square or any square for that matter.  9 times out of 10 fear is an essential part
of life’s tasks that we must face.  It is an ingredient for success.  In fact, it is the one thing that makes the difference between successful people and
failures.  Those who face their fears and push forward anyway and those who stay right where they are.

GOOD TRADING

I spoke with one of our coaching students today.  He has been through the product courses (Launch Pad and Nth Degree) a total of
three times each.  He has been entering trades based on the signals and he told me he is finding great benefits from having the courses
as a guide for him in his trading. He has the confidence and is seeing success in his trades  However, he did mention to me that he has
been using a “take profit” but not using a “stop loss”.  He was not comfortable with that yet.  My question is this.  How could you
feel comfortable with out it?  I never trade with out a stop loss to protect my capital.  This might mean that I will have a streak
of small losers before I get a bearing on the market, it’s direction, and mood.  But once I do I have great success that far out reaches the small losses that I took early on in the trend.

Please, please, please, learn to find confidence in using a stop loss.  This is the first step to having a sound money management program in place.

Back on January 17th, 2008, we posted a blog about the 6 things to leave out of the market.  They are:

Emotion: Wanting the market to go a certain way.

Revenge: Some people think they will get even with the market…

Anger: People will get angry with themselves and do foolish things…

Pocket book: When you are getting out of the market because you can not afford to be in it in the first place…

Greed: When a trade has ended expecting it to give you more. Then it turns and you lose all you just made.

Fear: Many times people have fear because they are trading with money they can not afford to lose.

Then, we discuss briefly the power of a good trading plan and sticking to it.  Then I saw that a comment was made by
Jewel, which reads, “You make some very good points here. I would say one thing that MUST be used
is patience. I think a lot of people get impatient when they are starting out: they want to make big money fast. Then they
make big trades and can lose a lot.”

This is extremely important and I agree whole heartedly with Jewel regarding this.  It is sad because I have seen many traders that are no longer trading because they did exactly what Jewel mentioned.  I think we need to take this to heart.  All of us can stand to evaluate how we are veiwing the market.  This world has a pandemic of impatience and this is a bad state of mind to be in;
especially as a trader.