"Over 500 pips since Monday now. Best streak yet...I feel a draw down coming on and I'm ready for it." This was a recent quote from Joe, a member of the Live Room. At first glance most traders are immediately drawn to the 500 pips part and the mind blowing excitement of being able to make that in just three days. However, myself along with a few other members in the room enjoyed the last part of the quote even more. "I feel a draw down coming on and I'm ready for it." This part of the quote really shows the maturity of this trader. Newbie traders often suffer from two common downfalls, overconfidence when they're on a winning streak and lack of confidence when on a losing streak. This basically means that when they're winning, they expect to keep winning which can lead to taking ill advised or impulse trades. And on the other hand, when they're on a losing streak they either A) stop trading because they're scared/depressed, or B) take impulsive trades due to the need to get revenge and make their money back. I've written about this topic before, but seeing how the markets have been umm...interesting as of late (to say the least) I figured that I'd touch on it again. As a trader one of the best things you can do is know your normal win rate. Obviously this number will change as you sharpen your skills over time and newer traders will have to rely on their back testing stats, but it is key that you are aware of what your average win/loss percentage should be. I say this because knowing this number will keep you humble during big win streaks and optimistic during long periods of drawdown.
Personally my overall win percentage usually ends up being between 40% and 55%. I know it's not the greatest win percentage in the world and it doesn't blow any minds, but it's become pretty consistent as well as profitable so it works for me. But that's beside the point. The point is that I have a pretty good idea of how many trades I should win/lose each month which gives me a certain peace of mind during a losing streak and a sense of reality during a winning streak. By peace of mind I mean the feeling that everything is going to be okay and I'll make a comeback over time, and by reality I mean knowing that with all of these winners, a streak of losing trades are sure to come, and I accept that.
This month (and the previous two) has proven to be a great example of how rocky the road of trading can be. I began the first two weeks of May going 5/15 in the live room which is a win rate of 25%. This week I turned it around and went 8/12 or 66%. If you add all of those numbers up you'll see that despite both the losing and winning streak, I ended up right back where I'm usually at (48%). Excited for the comeback? Devastated by the drawdown? Nope it's simply expected. I bring this example up because almost two years ago I went through a similar streak. However, back then I got rattled and decided to stop trading after the 5/15 and I ended up missing all of the winners that would have not only brought my win percentage up, but would have tripled the amount that I lost. It's very embarrassing to think about those times, but I feel it's important to keep those memories so that I will NEVER make them again. (That's what brings me pain, for you NAC folks).
"The longer you fall, the closer you are to the bottom." This simply means that nothing last forever and just as each passing second of falling brings means that your just closer to landing on your feet and being able to climb back up; each loss simply brings you closer to a win that will not only bring your win percentage up to speed, but your account as well.
So I've been trying something new this week traders and I'm really starting to like it. Just as the image above depicts, I've been exercising my brain. Aside from a trade I'm also a track and field coach. One of the things that I always emphasis to my athletes is to get a good warm up in before the workout. In fact, there have been times when our warm up routine last longer than our actual workout. Getting a good warm up before racing is critical because you want to have your body loosened up and ready to go, so that when you do go full speed there is no shock to your system and you don't end up hurting yourself. Unfortunately, most athletes would not warm up if there wasn't a coach yelling at them to do so every day. This was the case with me in trading.
Trading is my business and I make sure to treat it as such. I make sure that I wake up at the same time every day, and I have a morning routine that I follow on a consistent basis. However the problem that I noticed was that I didn't have a warm up. Previous to this week as soon as my alarm would go off at 5:58am I would roll out of bed, grab a cup of orange juice and start checking out some charts . At first this felt good. Why? Well because it felt as if I was being productive. However, when I sat back and really thought about it, I asked myself, in what other job does an employee roll out of bed and go straight to work? And although I felt productive, was I really being productive? Or was I simply going through the motions. So this week I decided to try something different.
This week instead of loading up the charts right away, I decided to turn on the TV, do some web browsing of the different trading groups I belong to, maybe write a post for this wonderful site called I Am Business ;-), then after I've been up for a good 30mins or so, get to charting. What I found in this small sample time is that my body is much more awake and responsive (not on auto pilot) and that my brain seems to function and analyze things a lot better. I probably should eat a good meal beforehand as well but, I don't really get hungry right away once I wake up. Plus I enjoy getting all of the sleep that I can.
My challenge to you is to try this method out if you don't do so already. I would say give it a good few weeks and see if you see or feel any difference in your trading. And if so, please give me some feedback. After all would a pilot, or a technician, or a teacher, start working as soon as they wake up? Well then why do we?
Life has became a lot more interesting since I started operating the Live Room for Triple Threat Trading. Don't get me wrong, my life was plenty interesting before that, but I have been making a lot of new connections as of late. I started this website back in late 2010 and have made many buddies based of the fact that they liked my writing and were on a similar type of journey as myself. Add those buddies to the ones that I have now gained by running the Live Room and I have an abundance of friends that are in the same field as myself and it feels great.
Yesterday I talked to a trader over the phone, who simply wanted to chat because, well let's be honest, talking trading is often a hard thing to do. In many cases either the people we talk to know next to nothing about trading, and/or don't trade the same way. That's what I like most about meeting traders in the live room. Most of us trade the exact same way which allows us to have some pretty good discussions without any arguments breaking out. What's interesting is that many of the people in the room remind me of how I was just a few years ago when I was on the other side of the projector. Everything from the questions that are asked, to the psychological issues that some are having are a mirror image of my experience in Jason's live room.
Speaking of mirror images, I had a very interesting meeting during my lunch break today. My good friend and writer for this site Devon Rembert (If you haven't checked out his Motivational Monday Posts you're missing out) said he knew a student that was interested in meeting me. Honestly, I wasn't sure why I mean, well I'm just me, but I agreed. When I met up with this student he said that he was thinking about becoming an entrepreneur and simply wanted to ask me a few questions about what I do and what led me down that path. We ended up having a pretty good conversation and when everything was all wrapped up I realized that just a few years ago it was me in that seat meeting my mentor for the first time having the exact same conversation.
It's funny how thing come around full circle, only they don't. Just because I have became a so called mentor to a few people doesn't mean that all of a sudden I can't be mentored. I still have mentors that I talk to on a consistent basis and the only thing that has changed has been the conversation. Instead of asking questions and trying to figure out how to get started, I now ask questions about what's the next step. Recently my trading mentor Jason Stapleton started a Mastermind Program for his company and one of the reason's is so he has a bunch of minds to thinking of ideas that can eventually make his company better. The point his we never stop learning I guess. Although we grow a lot in life and in what we do, we must never settle and always gear ourselves towards that next step.
Hey traders, this past week has probably been the longest week I've had since I made the brilliant decision to wake up at 3am to run the Live Ratio Room during the London Session, while supervising 50 college kids on a spring break trip back in March. For those who don't know I'm also a College Track coach and this weekend was the Penn Relays which is the biggest track event on the East Coast of America. Between transporting athletes there and back over two days, returning home to help out at our own High School meet that we host and having to go coach my other athletes that competed on Saturday, I clocked in about 46 hours of work in the past 3 days. With that being said I returned home late Saturday to a very pleasant surprise.
For you 6 Figure Syndicate members out there and for those who watch the free Forex Market Preview video each week, you're well aware that a new advanced pattern has been discovered by the Triple Threat Trading (T2t) Team. Well this surprise that I'm talking about was finally finding out what this secret pattern was. Obviously I can't spill the beans on it (you're going to have to wait until the Ratio Master's Series next month to learn about it), but I wanted to bring it up because during the new pattern training, I heard a very interesting but 100% true quote. The last chapter of the training was on setting alternate targets and like with any pattern the presenter said that there were many different levels that could be used and for us to find out what fits us best when we do our back testing. He followed that up by saying that he often gets the question "Well how much back testing is enough? 100 trades? 365 days?" He then said "If you're not seeing this pattern in your sleep, then you probably haven't tested it enough... If your wife isn't angry at you at least once a night because your dozing off thinking about trading instead of listening to her, then you probably not testing enough." I personally found this to be very funny because...well its true (to me at least). I don't know how many times I've went to sleep dreaming about patterns. Yeah I know it sounds extremely nerdy, but when you're in back testing mode running through chart after chart after chart, it seems to become the only thing on your mind. I've also felt guilty plenty of times for back testing while my fiancée was over. No I didn't want to be doing back testing while she was here, but on the other hand I couldn't stop. I wanted to get finished as quick as possible especially if I was back testing a profitable system/strategy. It was during those times when I realized that there is a certain line you must straddle between just enough time in the markets and too much time in the markets. This line is best described in a book titled The Winning Edge: How to use your personal psychological power to succeed in trading and investing by Jake Bernstein & Adrienne Laris Toghraie. I won't get into all of the different chapters and scenarios discussed in this book but let's just say it gives many examples of traders that ruined their marriage, life and other relationships by being too "addicted" to the market.
Although I don't think I've ever had the market rule my life (probably because I read the book and knew what the warning signs were) I have been on the verge of it doing so. When I first decided to get serious about trading I signed up for a course called the T2t Pro Trader Course. In this course I learned a lot about trading the markets, and like any new trader I was very eager to test my new knowledge out. This lead to me being a charting and back testing machine. Since it was during the summer and I wasn't really working at the time, I would literally sit in front of my computer about nine hours a day looking through charts and/or tracking data. Friends would ask if I wanted to hang out and I would say "no I'm busy." My girlfriend at the time would come over at night and I would basically ignore her. Obviously I didn't mean to do so purposely, but I was in the zone and wanted to stay there until I reached a good stopping point. After a while I started to realize how much time I was spending in the market and I forced myself to trim it down. Not only was it having an effect on my personal relationships, but I also felt as if I was losing my sharpness to identify patterns and setups. Two years later I now run my trading like a business, because...well, trading is my business. I have set up strict, consistent trading hours and tend to think about it like this. If I was working a full time job would I stay there after my designated assuming I didn't have to, and on top not get paid overtime? I know that's a bad example because many of you are saying to yourself right now "well the more I analyze the markets, the more trades I will find which means more money in my pocket." First of all that statement isn't necessarily true, but that's a discussion for another day. The point is trading should be a part of your life and not your entire life (at least that's how I feel). Even if trading is your full time job that doesn't mean that you have to do it every second of the day. You still need time for hobbies, leisure activities, family and whatever else is needed to maintain a balanced life. I am a full-time trader and do you want to know how long I spend each day looking at charts. A mere five hours. One hour in the morning for my swing trading market analysis, three hours during the morning for my active day trading, and one more hour at night for my PM swing trading analysis. Would I be better if I spent another three hours a day trading? Maybe, maybe not, who really knows. The point is I've found a balance that works for me.
I know that we are all different and many of you may not agree with my stance on this topic but remember, this is something that works for me, with my schedule and with my personality. I have no problem with those who spend 15 hours a day in the markets, and I have no problem with those who spend 15 minutes a day looking at charts. After-all as long as you're consistently profitable, you're doing the right things. I simply wanted to provide an alternate example for those who feel like they NEED to be in the market every waking second in order to be successful.
One of the WORST and most repeatable offence that a trader makes is moving targets. And by his I mean taking profits off too early instead of sticking to the original plan. I've done this plenty of times in the past and I'm sure that each and every trader reading this has done so as well. We finally get over this hump once we fully develop confidence in our own trading and get to the point where we honestly can care less about any one single trade. This is great, but the downfall is when we become so robotic and stubborn that we let our pride get in the way of our analysis. I personally have a few rules for when and how early I can take profits off simply so I'm not there watching the market tick by tick, but in the Live Room today we had a case where we had to adjust targets on a trade based on our analysis. The charts above show a trade that we took on the NZDUSD. As the market rolled over after the pattern completion, price action came within a single pip of my target. Watching the market move on the 15min chart I noticed that it kept banging on that level multiple times which lead me to take a closer look. When I looked at the 5min chart I noticed we were at what else but a previous structure level and that the market had RSI divergence telling us harmonic & ratio based traders that the market may be looking to turn around. Therefore we moved out targets up by 2 pips and eventually got filled. Needless to say the market eventually rolled over regardless, but it was a better safe than sorry type of play.
Anybody that has been through the Pro Trader Course know about the powers on Neurological Associative Conditioning. Just as how we're triggered to know that touching a hot stove top equals pain, most successful traders have been programmed to relate moving your targets to equaling bad. Today was a perfect example of how the markets aren't simple black and white. There are always room for adjustments in this profession, the key is doing it the correct way and not simply using it as an excuse.
A CLEARER VIEW
Here is a quick bonus post for you day traders out there. When we think lower time frames we often think 5 or 10 minute charts. I love these charts and have had great success trading them. However, as you probably know the often get a little clustered. Especially on days where the market seems to be in consolidation. So what do you do when you get a chart that is hard to read and analyze? Go to a different style of chart, mainly Tick or Range. Because these charts are not timed based, they often present a much clearer picture. The charts below are of the EURUSD taken at the exact same time. Although the basic formation of the two charts are similar it is obvious that the Range bar chart on the right is a lot clearer and easier to read than the 5 minute chart on the left. As a ratio trader, I often find it much easier to use extensions and retracements on the range bar chart as well. The only drawback I have is the fact that you never know when each bar will close since it's based on a range of movement rather than a time. This simple means that you have to be even more alert that usual, but it's more than worth it if you're able to.
I get really tired of people asking me “how is that trading thing going?” For the longest time I had no idea how to answer that. I have gone through so many ups and downs, times of self doubt, learning, practicing, relearning, big wins and total blow outs, it was hard to explain that I love it but really had nothing to show for it.
Yesterday I was asked that question yet again, but this time, from out of my mouth came a surprising and unexpected answer, I said to my friend, “Well, I’ve made it through the first 2 years, so I’m doing better than most small businesses, and now that I have all my assets in place things are really starting to take off.” Pretty good answer I thought, of course that was followed by “so your winning some money huh dude?” I just simply sighed and replied, “No man, I don’t gamble, I earn my money…dude”
Now I hadn’t thought about that answer before I said it, but I sure spent the rest of the day contemplating the words I had chosen. ‘Assets’; this had nothing to do with my account balance, while a considerable sum of money to me, it’s still considered a meager amount in many eyes. No that word meant something entirely different, to me it meant my Knowledge and Discipline.
When I started trading I was the total cliché of a newbie trader. Couldn’t spot a valid setup to save my life, draw a ton of lines with a ton indicators and still not make sense of it all, and a nervous wreck when I did get into a trade. It’s an old story you’ve either heard or lived before. But today, like many of you, I see patterns everywhere, and as such we are often tasked with analyzing patterns within patters to identify the more valid setup. We have to pick and choose the best of the best, and then demonstrate the will and obedience to trade those setups responsibly.
Akil has written about his room members profiting back to back on sequential patterns within larger formations. An absolute awesome ability, but one that has taken time, experience, practice, repetition, determination, conditioning and so many other aspects of training and study by these traders to achieve. To be able identify and execute these opportunities both wisely and effectively, now that’s some knowledge, that is discipline. For all of us it has taken a lot of hard work, a lot, to get to this point, and I personally think much, much more personal growth to be able to maintain it. It has been an amazing journey thus far, but guess what folks, we ain’t done yet, not by a long shot.
We never actually will be done, learning and growing that is. The more knowledge and discipline we acquire, the more of it we seek it out. It’s the whole ’the more you know the more you know you don't know’ paradox, but thankfully one I’m very happy to be stuck in. Andre once wrote about hitting the ‘preverbal market gym’, a term I love, and with it I try to exercise my trading everyday through reading, interacting with other traders, or hitting the heavy bag on my demo account. Sometimes it’s as simple as just re-reading your rules or maybe keeping an open mind to someone else’s ideas.
Knowledge and discipline are very much assets, like any other they can be utilized to acquire something else. We may use money to fund our accounts, but money alone is incomplete, we require the knowledge and discipline to fuel future growth. They all work together and are co-dependent in a big, beautiful circle, where the need of the one is essential to the need of the whole. Try charting those assets on an equity curve and you’ll be shocked at how well it mirrors your account balance. That’s the kind of equity curve I measure my success by.
So in summary, guess what I’m saying here is this; The more I learn, the more I earn, and I am sure not done learning yet. Pretty simple. Thanks for reading, and be well my friends.
Those who either know me, or are members of the Live Ratio Room know that I have a pretty calm personality. I wasn't always like this, but I've gotten to the fact where I really don't care about any individual trade. Don't get me wrong, like everybody else I love to see winners and would rather not see losers. But in the long run I understand that no single trade is going to make or break my career. With that being said yesterday there were a few trades that actually bothered me. When the room opened yesterday we identified a few potential different trading opportunities. If I remember we had EURJPY, GBPJPY, CHFJPY, EURUSD and GBPUSD all on the longer term trading radar. As the session went on I added both NZDUSD and AUDUSD to that list as well. Now many of the JPY pairs were advanced pattern setups which meant an aggressive entry for me. However, EURUSD, GBPUSD, AUDUSD and NZDUSD were all structure and ratio based. I don't want to bore you with a long story but out of those four trades, due to my rules I was only allowed to get involved in one. What stunk, was that out of those four trades, the one that entered was the only one that didn't roll over. So I had to sit through a loss on this pair while watching the other three roll over into profit without me. Again, I'm a pretty calm dude so I din't break a computer screen or anything like that, but I did mutter a few "unprofessional" words and honestly felt a little sad for a brief moment. I'm not sure if these reactions came from watching the NZDUSD explode up while the AUDUSD fell off a cliff (When does that ever happen?), or if it was the point that I was really happy about my analysis on GBPUSD spending a lot of charting time finding the perfect reversal spot, only to play the sideline. Either way, I just wanted to share with you guys that us Professional traders get emotional too. We just don't allow it to affect our trading.
Hey traders! It seems as if it has been forever since I've written a post for my own site. However, thanks to the contributors for the new "Trading War Stories" section and the "Good Vibes" posts that Devon has been writing for Motivational Mondays, I hope that you've been entertained in my absence. Recently it's seemed like I've had a million ideas for new articles yet haven't had the time to complete them in a way that is worth sharing. My most recent idea was an article titled "Trading & Golf" which I still plan on writing, it will just have to be tuned down from how I originally planned for it to be. With that being said, I've been somewhat inspired by the Live Trading Room over the past few days and thought it would make for a good write up.
The past two days have been pretty even in the room. My win percentage is a little down but overall the room is at about break even for the month. With that being said, between yesterday and today I've had two structure based trades that went on to win without me being involved. Let me take that back, I was involved, but was stopped out before the market decided to roll over into what would have been profit. Am I mad or have any regrets about these two trades? No. I fully understood the situation when I entered them and in order to keep the target I wanted, along with a proper risk profile, the stops could only be a certain amount away from my entry. But just because I don't regret the decisions doesn't mean that I can't learn from them
One thing that often hurts a trader the most is having to much pride. I've seen instances where a trader continues to ignore a perfectly good system or strategy simply because they didn't develop it themselves. Yes they want to make money, but they also want to feed their ego by saying that "I" developed a way to conquer the market. Basically wanting to feel that they're smarter than everybody else. I've also seen examples of traders that get in denial about losing trades because of their pride. When a trade loses, instead of taking it for what it is, they come up with some type of excuse for why it lost. "Well it would've won if I didn't place it during the opening bell." Sure, this excuse could actually be true, but then again every losing trade we take "could have won" right?
I haven't been around the trading game long enough to make a distinct statement, but from the 100+ traders that I have met and am in constant communication with, it seems like the best traders are also the most humble ones. When I say humble, I don't mean the ones that never brag or get excited about calling a winning trade. After all, lets be honest, if you predict a big time trade, then see the market proceed to do exactly what you projected who doesn't get excited. Rather I mean the ones that don't make excuses when their wrong, and more importantly understand that our job isn't to reinvent the wheel. It's more like using the wheel in the most efficient way possible.
Well, I've seemed to have gotten off topic as I tend to do, but the original point of this post was to say that professional trading is all about making adjustments. We all make good calls, we all make bad calls. What's important is that we take each trade, bad or good, as a learning experience and try to improve on it for the future. There is no such thing as a perfect trader. But that doesn't stop me from wanting to be as close to perfect as possible.
Between Jason, Roy & Nuno it seems like all of my trading friends have been having some type of issue with trading. Between computers blowing up and charting systems failing, I think it's very important that we all have a safety net for our trading, just as any other business would have. This morning my good friend Rick wrote a short write up on our FaceBook Group Page about an issue that he recently had with his trading. A few others responded as well and it made for some really good conversation. Below is a summary of the discussion.
Hey there fellow traders, I wanted to share a lesson I learned a while back that came in very useful today. Do not take your computer for granted!!! This morning my computer took a dump… Crashed out of no where and I could not get it to reboot. Now, like many of you, I am a multiple computer kind of guy, I have my main system, another just for entertainment stuff, and a laptop. The laptop is what I call my ‘work’ computer. I can trade from it and check it through out the day, however I left it at, you guessed it, at work. This has happened before, no access to the charts and open positions, and thus a lesson was learnt. These days, besides those systems, I also have a mobile app platform on my phone, my brokers phone number on speed dial, the numbers also written down on my trading plan, as well as what I like to call plan ‘B’. Plan ‘B’ is just an older, almost obsolete, laptop I got from a family member. Plan ’B’ is slow, bulky, and only keeps a charge for about 45 minutes. But that is all ok; it has wifi and a built in dial up modem if needed. Plan ‘B’ has only one piece of software on it, my trading platform, and it’s sole purpose in life is to accommodate me in just such an occasion. Old plan ‘B’ just sits dormant most of the time, but it sure came through like a champ this morning as I was able to monitor my trades with a solid piece of mind, as I worked through the problems on my main system finally getting it back on line.
So please, heed this warning, one day your system WILL crash, don’t learn this lesson the hard way, make sure before it happens that you have yourself your own plan ‘B’.
Have a great day everyone :)
...Roy 'Jr' Painter, I love your entry on the laptop "Plan B" set up. I thought I should share my very basic set up, as I have been caught up with the same issues before, without a back up. Now, I have three backups - Well four.
1 - Main laptop for trading wireless
2 - Second laptop for charting wireless
3 - Ground cable desktop
4 - iPhone with trading app
... Okay 5: I have two wireless HotSpots that ensure constant access to wireless charting/trading anywhere there is signal capture between my home in Durango Colorado and my place of work in rural Kansas.
I was once separated from my laptop for more than I felt comfortable, even though I have swing trades in the works. I travel a lot, and I'm always on the move, so I also made sure to have a special membership with the line of hotel, travel to the same hotels, use the same room, and call ahead about their connectivity.
In the picture, I have the two laptops, a regular desktop computer in sleep mode for fast backup, my iPhone, and paper trading on the wall for emerging set-ups I really do not want to leave out of sight.
I hope it gives a bit of an insight as to how paranoid you have to be when trading "for real" - It demands contingency plans ready for the most twisted scenarios.
Thank you Roy for prompting this topic with such a great example. Much appreciated.