his post kind of piggy backs off of my last one titled 12th round knockout. But again I want to stress the importance of being able to stay mentally tough in the market. A good friend of mine is showing interest in becoming a trader so he's been asking me a few of questions about the new material that he is learning. And yesterday I remember telling him that there are a million ways to trade the market but they all mean nothing if you don't have the right trading psychology and strategy. This was my issue when I first began trading. I knew tons of techniques but didn't know how to consistently trade them correctly, nor did I have the mental ability to see them through. I took winners off early and let loser run to far, making for a disastrous combo. During my first conversation with my trading coach Jason (http://www.triplethreattrading.com/
) he was able to pinpoint my exact flaws.
In this trade here (see chart below) I entered a buy order at the 78.6 retracement predicting that this would lead to a patter completion. I also saw a heck of a lot of support at the bottom and knew that the profit target well outweighed the risk. The trade hit my order and immediately shot up almost hitting my first target. As I saw this I let out a big sigh of relief, I mean who doesn't enjoy a painless trade. However the end of that candle and the next proceeded to drop right back down putting me back to break even and then into the red. You can see the rest by the chart about how it sunk, continued to play around for a few days, and then shot straight up earning me a good profit. I owe staying in this trade to two things.
First, my ability to place a correct stop order. I was taught that the market will try to stop you out so when placing a stop, you need to use a logical technique instead of just saying "ehh I'm just going to put it at 20pips because I don't feel like losing that much", or because that number equals 3% risk in your account. One you understand how the market works you'll be able to understand where it wants to go, and what structure is going to try and protect it. My stops on this trade were below the obvious structure, including that long wick, and guess what the market never broke it. It came close, but it held.
The second key of this trade deals with what I talked about earlier, being mentally tough. Honestly I'd rather watch a trade go straight into the red rather than shoot up and down. But that's the name of the game. A few weeks ago I had a similar situation and I moved my stops up only to be taken out for a small loss. But then the market proceeded to rally without me. This time I was determined not to make the same mistake twice. I stuck to my guns as I should and it paid off. And is still paying off.
I apologize for any errors, I'm rushing this one out this morning. Hope you enjoyed it.
I decided to title this post "A 12th Round Knockout" because that's the vision that came to my head when I thought about one of those really difficult grind it out days. You know one of those days where everything just seems to be harder than it should be for no good reason . Getting out of bed in the morning is a little tougher, follow that by having car trouble or missing your transportation to work. Then add on to it you having a major brain fart while you're trying to get an important piece of work done. You get the point, just one of those days where it feels like you're being tested, yet you prevail anyway. Those are the type of days where you really earn your paycheck.
I did not expect today to be one of those days for me. I mean I actually got a really good nights worth of sleep, I woke on time(not 5 minutes before my alarm) and I really had no personal stresses to worry about. Actually I was pretty excited thins morning because I had a few friends that reached out to me wanting to learn more about what I do on a regular basis. I started my morning normally by reading the psychology portion of my trading plan (which gets me in a good mental place) then reviewing my charts. At about 8am I entered a trade that went directly into the red on me. I didn't get upset because a losers a loser, but it annoyed me that this particular trade kept bouncing right above the point where I would be exited out for a loss, then going back up to even money. I honestly felt like the market was teasing me like playing the high five game as a kid where you say "down low...too slow." I was literally sitting in front of my computer saying "just take me out already, so I can cancel this order and use it someplace else." This same teasing action went on for 4 hours until it finally shot upwards and I was able to collect my profits. During those 4 hours I was so tempted to simply give in and either accept my loss and just exit at whatever, or to exit when I was back to even money/ a little bit into profit. But something in me told me to stick my guns and tough it out. And that something in me was right.
We recently started an I Am Business facebook group titled Self-Made Entrepreneurs and a few of the members have been kind enough to share their stories with us. Some stories simply explain who they are and what they do, and some others have expressed the need for advice or help. Starting/running your own business is very similar to the experience I had today. It's one of those things where at some point things are going to become so difficult that you want to quit. But you know what that is your test. That's the point that separates the strong from the weak. Everybody on this planet is blessed with some type of natural talent. But it's only those who work extremely hard at perfecting that talent that succeed. The true test of a person's character is how they act when their faced with adversity. Will you throw in the towel in round 8 when you're getting your butt whooped? Or will you fight through the pain and finish your opponent with a 12th round knockout? If it's something that you truly love and more importantly truly want to succeed at I suggest fighting through the pain. Worst case scenario is you fight it out and you lose. But if you chose not to fight it at all then you have already lost. Personally I'll take a 50% chance at winning over an 100% chance of failure any day of the week.
Lastly my personal opinion on going through hard time sis this. I believe that all legends in history (fictional or non-fictional) faced a point in their lives where they were down, out and almost left to die (figuratively speaking in some cases). However it's how they rebounded and overcame that situation that made them legends and what made their stories the ones we read about today. Become Legendary I DARE YOU.
I didn't really plan to write this piece but it was something that popped into my head while looking at my charts. Every night around 9:00 go through my list of charts and either review trades that I made during the day, or update my notes for the next morning. I watch a lot of pairs, so I'm constantly writing notes about what I see and what I predict will happen. Because I watch so many pairs I often miss out on trades during the day, but that's a story for another time. While checking my charts this evening I noticed that a few pairs completed at price points that I predicted and turned around to what would have been profitable trades, or at least trades that were in the profit zone. Immediately I thought to myself "darn it I missed this winner, or man that would have been another 50pips." (Glimpses of the old me still exist apparently). But when I looked at the trades a little closer I realized that I didn't have an order placed for a reason. And yes this particular trade happened to win, but on the other hand the same reasons that kept me from taking the trade, allow me to not get involved in similar trades that lose. I don't know about you but I'll take not being involved over losing any day of the week.
During my training I was thought that the most important rule of trading is "don't go broke." Don't get me wrong, I am a very aggressive trader, but at the same time I like to control my risk, because I've done the gun ho trade everything I see approach before, and it never ends well. Just because a trade wins doesn't mean that it's a good trade. And just because a trade loses doesn't mean that it's a bad one. What matters to me is if I executed the trade by following my rules.
ne of the most import lessons learned in becoming a trader is never trade without a stop loss set. For those who are not familiar, well you should not be trading, but a stop loss is the last line of defense set up to protect you if the market goes the opposite way of your trade. Although the concept of a stop loss is quite simple, where to place it can be an entirely different stories. It is best that you have a specific set of rules that tell you how to measure your stop loss, but it isn't always that simple.
Yesterday I caught a trade that wasn't on my radar. I was skimming through charts before I went to bed (like the market nerd I am) and i noticed a set up that was very appealing. It was an AB=CD pattern on the CADJPY that seemed to be fighting back and fourth at a structure area. I usually don't like taking a trade that I haven't fully analyzed as i've ran into trouble in the past for doing so, but I figured with the risk reward ratio being in my favor so much it was worth jumping in. The price action continued to fight the upper resistance for a few candles before finally rolling over and breaking through the lower support level. At this point I figured that the market has made it's decision on where it wanted to go and I decided to move my stops down directly above the highs. After all my main objective isn't to gain a lot of money really fast. Its to protect myself as much as possible and limit my losses. Needless to say when I woke up I was stopped out of the trade for a small loss. Then the market decided to roll over and hit what would have been my profit targets.
I'm at the point where I brush losses right off now because they're not worth stressing over. However, when I reviewed my trade I noticed that if I would have kept my stop loss in its original position, it wouldn't have been hit. Now, I don't regret what I did because it's in my rule book, but it reminded me of when I was a rookie trader and I often was so scared of taking a loss that I would set my stops so close to price action that the market would always take me out on its way to becoming profitable. This is where you have to ask yourself. Stop losses are for your own protection, but if you're scared to a point that you continue to set them too close because of that fear then you're really just preventing yourself from being successful.
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It has been a little over nine months since I've been a professional trader. Needless to say I've had many bumps in the road, many trials and tribulations, but over all of that I think one of the hardest issues that many traders deal with including myself is the issue of isolation. If you're trading from a home office like myself, it is often only you and your computer. In the afternoon I work as a volunteer track and field coach so I get my social time there, but for many traders it can be hard for them to find a chance to have social interactions. This often leads to a person searching the net for a chat forum which can be a devastating place a new trader.
When I first began poking around the market (before I made the decision that this was what I wanted to do professionally) I was constantly in a Forex forum trying to get ideas and piggy back off of what everybody else was saying. I would latch on to the most confident person in the room and assume that they were the best trader. Keep in mind I had no clue who this person was or what they were talking about, but I figured they knew more than me so I better pay attention. Needless to say there were so many contradictory signals and ideas that I made no progress at all trading. Even worse I didn't learn anything for myself and I began to feel dependant on the room. Rooms are bad but they're also hard to avoid because home based traders often get lonely. Speaking honestly, I wish I had somebody close to me that shared my trading style that I could bounce ideas off of and go over charts with. Not that I feel I need a second pair of eyes to make a decision but simply a person to chat with and talk about the market with. I fully admit that I have become a trading nerd. I'm also a sports junkie and I can compare it to being a football fan overseas. Meaning that you're one of few that actually understand the game and one of even fewer that want to discuss it.
The other day I watched a British documentary on trading and it felt so good to see people doing the same thing as me, going through the same struggles as I went through, speaking the same language that I speak. Then it was over and I was back to my normal life of being isolated. It's hard, a part of me wants to join a forum just to be around others doing the same as me, but deep down I know nothing positive will come from that.
The other day I wrote a short piece for my tumblr site ( http://iambusiness.tumblr.com/
) titled "Keep Shooting." In brief the post talked about a horrible start to the month as far as trading went. But despite going through a rough streak of losing trades, I had to keep pulling the trigger on every set up that met my qualifications. This Monday didn't start out any better then the rest of June and combine that with some really negative news in my personal life i was all but set for a meltdown. Call me crazy but at this point I remember myself looking at the charts on my computer and saying "you are my way out." Meaning that success in trading was my way out of the rat race. (If you're not familiar with that concept I suggest you read "Rich dad, Poor dad.") I've worked very hard doing job after job after job that I hated over the last six plus years that I refuse to go back to that life. So I refocused myself, re-read my psychology section of my trading plan, and got back to business shooting without a care. And by that I mean taking the trades I'm suppose to take without thinking about the past. With that being said Tuesday was a goo trading day for me and last night/ this morning was even better. I haven't calculated the exact numerical figures but i know I'm back on the right track and out of the hole that I put myself in earlier.
The cool thing about trading for me is that not only do I see it as a way to achieve financial freedom and fulfill my entrepreneurial desires but it's also something that I just flat out I love to do. During my work hours trading is my business and I treat it as such. i have a strict plan that I follow and I try as hard as I can not to deviate from my daily routine by getting sidetracked. However,t when I'm off I still enjoy playing around with different charts and indicators as sort of a hobby. Yes I am a trading nerd, I except it and am proud of it.
Today while playing around with some of the different tools I stumbled upon something that seemed to work very efficiently. Now I won't know if this is something that I can actually use during my business hours until I go through my entire testing process, but it's a start. It seems that the best things, or ideas often come to me when I am not trying to look for them. This was the case when I used to write poetry, play sports, edit music and has now carried over to my trading.
This week was a horrible trading week for me. All I can remember is red after red after red every day. And as I tallied up my weekly totals, I realized that I basically lost everything I made last month in a single week which set of a red flag for me. I thought to myself, obviously I messed up somewhere, therefore I woke up early this morning and decided to analyze my trading journal to see if I can find any mistakes that I may have made. As I looked through my notes, I realized that I didn't really make many mistakes at all. There was one loss that I had where I didn't set a stop for because I had too many orders placed. That's one place where I took a bigger loss then I wanted too, but other than that I couldn't find anything. If anything I think I was just involved in too many trades at the same time and the majority of them just happened to go south on me. However, I can't really regret that because I don't have a rule about my involvement in the market and being the aggressive trader I am, I have to tell myself that the shoe could have easily been on the other foot and I could have made a killing. And do I really want to pass up that kind of opportunity because I fear losing?
Something that I decided to do, and I think I mentioned this in my self evaluation post, is that I want to take a picture of each trade set up that I enter . That way I can go back and learn from what I did at the end of the week or month. This will help me not only recognize mistakes if I make any, but also allow me to get familiar with different set ups that may be more profitable than others. Who knows if it will benefit me or not. I figure it can't hurt, and it won't be a waste of time to do so.
Enjoy your Saturday!
Seeing how I just wrote a piece a few days about self evaluating, I figured it would be fitting if I shared mine for this past month of May with you guys. For obvious reasons I won't go into full details and specifics but hopefully you will be able to pick up something from this example.
Since I always like to start off on a positive foot, the first question I ask myself is: What did I do well this month?
Something that I felt I did a really good job of this past month was making confident decisions and not second guessing myself. In the past I have been really hesitant to make some moves and for that reason I have missed out on a few really profitable opportunities. Personally I think it hurts more to miss out on something knowing you would've been right, rather than get in something and have it lose. So making confident decisions and sticking to them is something that I was really proud of last month. Another thing was the fact that I was becoming more organized and robotic in the way I approach my business. I'll touch on this later but its includes everything from creating a morning routine that I follow everyday to re-wording my trading plan in a way that is easier for me to understand.
After thinking about what I did well at, I ask myself: How can I continue to improve upon what I did well?
Becoming more organized has done wonders for me. However, there are still sections in my plan that I would like to re-write. One of my goals for June will be to finish re-writing my trading plan and improving it by making it more reader friendly.
Next I go on to thinking about what I didn't do too hot at. Where do I think I can improve at?
After analyzing my end of the month journal I noticed that I still had a few impulse trades. Moves that I made because they looked good at the time, but didn't have a specific set of rules for. This is a big no no for me because if it becomes a habit it will no doubt take me right back to where I started 20 months ago.
How can I improve upon my faults for next month?
I can improve upon my faults by either forcing myself not to take impulse trades. Or my indentifying what types of impulse trades I took, create rules of engagement for them, and proceed to back-test them before trading them live.
Overall view of May
Overall May was a good month for me which puts me on a two and a half month hot streak. Just as I stated earlier I feel a lot more confident at what I'm doing and not having a client has freed up my mind a lot. No longer am I worried about impressing them, I'm simply trading for myself and the way I want to. There are a few things that I still need to fix but I just think "Kaizen" and that if I continue to improve day my day even if it's my small margins then I'm on the right path.