The currency market is one of the toughest markets to trade for many reasons. One of those reasons is that it is an international market so it is literally open (in American) from Sunday at 5pm to Friday at 5pm. This means that anything can happen at any moment and because of this it is key that you try to stay at least one step ahead of the market at all times. My trading coach Jason Stapleton (www.triplethreattrading.com) taught me an acronym that helps to do this: I.P.D.E. which stands for Identify, Predict, Decide, and Execute. However, even if you do this it is important that you are not just disciplined in your analysis but also just as disciplined in your scheduling. And because I wasn't I have possibly missed out on a very good trading opportunity.
Over the past 6 months I have gotten into a great morning routine of how I attack the market. I wake up at the same time every day, read my trading plan, go through my analysis of the pairs I trade, get some breakfast, then proceed to start my trading day. I have also added a new section to my trading journal where I keep specific notes on what I'm looking at on each pair (along with having my charts marked of course). However, I noticed that after my trading day is over (12noon) I have no set pattern on when I check the charts for the rest of the day. I usually do so in the evening, but it's nothing set in stone. Yesterday was a busy day for me as far as coaching and running errands and even though I had my charts up when I came home, I never really went through my list of pairs to look for updates. I simply tracked the one trade that I was in at the moment. This morning when I checked my pairs I noticed a beautiful bat pattern complete and reverse that I had indentified about a week in advance. All of the lines were there on the chart and I even had it under the label "Watching" in my trading journal. So I asked myself "How did I miss this?" (There were some other words missing but I'd like to keep this post family approved lol). And the answer was because I didn't check my charts last night. Now I have to put in a specific rule on when to check my charts in the evening.
The point of this point is that discipline is more important that skill by itself. this isn't the type of market where you can simply stroll in when you want and make money. You have to make sure you stay on top of things and do so on a consistent basis. if I would have checked the pair last night I would have seen that it was on its way to completion and I would have set a limit order which would have been filled over night.
Today I got some much needed good news capturing a little over 100pips during my day-trading. I'm not defining the day as good simply because I made money, but rather because this positive outcome helped to get me out of the little funk I was in. Last week my day-trading system lost money each day, and to top that off I woke up this morning to see that I was stopped out of two swing trades that I placed late last week. I tend not to get upset over getting stopped out, but on both pairs it was one of those instances where I got stopped out by an impulsive wick, only to see the market retrace in my favor. I doubled checked where my stops were at this morning and they were well protected so it's just one of those bad luck deals.
It's funny how much your mood can affect your trading. Because of this "funk" I was in, this morning I even decided to not do my normal market analysis for the pure fact that I felt as if my mind would make up something and I'd end up revenge trading. Add that to the fact that it's the final week of the month and I'm currently in the red, I felt that this was the smartest path to take. While debating whether to trade or not I had to remind myself that trading is a marathon and not a sprint. Meaning that taking (and maybe getting lucky on) 1 or 2 trades now will have no effect on my long term future as a trader. And actually it would probably hurt me. If I win, then it will be in the back of my mind that I can make dumb decisions and still make money, and if I lose, then I lose money on a trade that wasn't necessary to take and I end up beating myself up even more. Trust me I've done this before (having both outcomes) and it didn't end good either way. Luckily for me my day-trading strategy is signal based at the moment so I have no opinion on whether I should be in a trade or not.
Traders often deal with a lot of numbers, ratios, news and a bunch of other stuff. But all of that means nothing if your mind isn't in the right place. If you're ever feeling down, depressed or just unfocused I suggest getting away from the market. Go for a run, listen to music, go workout, do something. But if you're not focused then the market will eat you alive.
Hey guys! Since I've been attending the FOREX Trader Seminar all week, I didn't plan on writing any posts, but something Jason mentioned today really got me thinking. Long story short, he mentioned that he recently spent a few thousand dollars on a new system and a training session on how to use that system. If you don't know Jason Stapleton, he is a professional trader/teacher that has done very well for himself in the market. Between Jason and his partners at Triple Threat Trading, they have various systems and techniques that they use to snatch profits from the market on a daily, weekly, monthly, and yearly basis. This is why it surprised me that he would spend money on someone else's system. The reason why he did this is because he is always hungry to learn more, a characteristic that I think we both share. After all, I've been spending three hours a day in Jason's FOREX Seminar hearing stuff that I already know since I went through his Pro-trader course a little over a year ago. Why?, Well first of all there is nothing wrong with a little review, and secondly, I'm always interested in anything that can possible help my trading/business. Therefore, if I only take one new thing learned out of each three hour session, then that session was well worth it.
If you're familiar with my posts then you know I'm a firm believer in Kaizen, which in short means continuous improvement. I'm currently swing and day trader that uses harmonics and structure analysis to maneuver my way around the market. Originally I was just a swing trader, but I recently added a day trading system to my arsenal. With that being said, I'm also looking to add a position trading system to my portfolio as well. Before I began trading currencies, I taught myself how to trade stocks and one of the key lessons that stuck with me was the importance of having a diverse portfolio. Although, it's difficult to do this in the FOREX market, I figured that having a short medium and long-term system can help produce the same kind of diversification. That's if all three systems are profitable of course. My though process for this was to try and develop balance. In the past I have had great months, only to see those profits be taken away from what I like to call a "Murder Month." By having a more diverse portfolio, my goal is to generate a smoother equity curve and eliminate some of those big draw downs. If it's a bad swing trading month, then maybe my day-trading can help generate some profit to offset that, or maybe one of my longer-term position trades cashes out and makes up for some losses (and vice versa of course). As I mentioned earlier I have the short and medium time frame systems down, now all that's left is the longer one.
The one thing I love about trading is the fact that I know I will probably never be 100% right all of the time. However that doesn't mean that I can't try. Not saying that I hate losing, rather I'm trying to make the point that there is always something out there to learn that can make you a little bit more efficient. If you're a harmonic trader then it could be different ways to use your fibs, if you're a systems trader then it could be playing around with different parameters. There is always something, and I won't rest until find it.
've been known to be a pretty even keeled individual. Due to certain events in my life I usually don't ever let my emotions get too high or too low. This works well for me in trading because (as you know) we go through a lot of up's and down's every day, week, and month. However I wasn't always like this. When I first started trading I would get emotionally involved in every trade I took. If the trade was going in my direction I would be rowdy, jumping up and down, playing music, you name it. And if the trade was losing I would be depressed and immediately start searching the internet for new techniques. Seems silly now, but that was my reality.
Fast forward two years and I have a completely new perspective on how things work. I now think of everything from a businessman's point of view, meaning that winners are expected and losses are simply looked at as being the cost of doing business. I have a friend who trades that has a problem taking losses. Emotionally it's hard for him to deal with a losing streak and when a winner becomes a loser. Because of this he is focused on finding a system that has a 95% win rate. When talking to him I tried to explain to him that if trading is truly his business then he needs to stop and ask himself this question. Is there any business out there that doesn't have operating costs? It just doesn't seem possible to have only income without with no expenses. Anyway, the point is that losses don't bother me anymore because of how I look at them. I now both accept and expect them to happen, it's just business. However there is one thing that gets me heated, and that's missing opportunities.
So far this month I have indentified five trading opportunities that I missed. Three out of those five came from my day trading which I don't mind as much because of how fast the action is at that lower timeframe, but the other two really make me upset. In this particular case the two trades I missed both would have been winners but I honestly would have been just as upset if they weren't. My main goal is to take part in every trading opportunity that meets my requirement because I know that in the long run I will be profitable. I often relate this trading mindset to my days of doing sales. My boss would always tell me that the most important thing was to actually go and talk to people. Whether they bought the product or not wasn't up to me, the point was to provide them with the opportunity. I compare it to trading in the way that, when we enter a trade we have no idea whether it's going to be a winner or a loser. We may have a hunch based on our analysis, but in all honesty we can't definitively say this trade is going to win. However if we don't even enter the trade then we take away any chance of winning at all. Just as if we refuse to talk to a potential customer (not knowing if they're a buyer or not) then there is no way we can make the sale. Obviously trading is a little different because you can lose money as well, so many people have the mindset that if they miss a trade then they simply avoid a chance of losing money. Which is true, but if you have faith in your abilities then you shouldn't be entering trades thinking you're going to lose in the first place. If that's the case then I suggest you go back to back-testing not only to gain confidence, but to also make sure that you have a system that proves to be profitable over time.
Thanks for taking the time to read this and comments are welcomed.
Also if you haven't done so yet, here is the link to sign up for the FREE 2 Week FOREX Trader Boot Camp 2.0. There are plenty of free training videos that come with registering and if you can't make the actual sessions i was told that the 2 weeks will be recorded for future viewing on your own time. http://www.triplethreattrading.com/2011_live/?ref=464
Akil L. Stokes (@IambusinessTR)
I usually don't post on my personal trading, but I wanted to try something new to see if it helps. At the end of each week I usually try to sit down and reflect on the week that was. I thought that writing it out may help me a little bit and maybe help anybody that reads this since I've received some comments saying that people are often dealing with the same issues.
This past week was a pretty good week of trading. Not a whole lot of action as far as finding new trades, but I did have the opportunity to work on my trade management
skills. The previous week I was involved in two trades (Short EURUSD & Short CADCHF). Both hit target 1 and because I don't have second targets in my trading plan, I simply trail stops. To some trailing stops may simply mean moving their stop/loss to break even, or a random number above price action. Me (like many others), I like to use structure and harmonics to trail my stops. So instead of randomly moving it down, I try to predict the next retracement and make sure I'm in a safe enough area to withstand that and take advantage of the next extension. I didn't always trade like this, as the temptation to take money, or rather the fear of losing money that we "think" is profit is often great. However after making and learning from a few trading mistakes in the past, I have a good clue, and even better the confidence, to trail it this way without getting nervous. So this week I got some practice doing this and it worked perfectly. Price action seemed to retrace exactly where I predicted, only to extend down and create new lows. I'm still involved in both trades and will continue to manage them until I'm stopped out.
I would say that I had a pretty good week execution wise with the exception of one trade. There was one trade opportunity that I missed (GBPUSD), because I hesitate when trying to decided whether to enter aggressively or not. By the time I ran through my trading plan and saw what was the correct answer I missed the entry. Price action just nipped my would be entry point and retraced so I'm not sure if I would have actually gotten filled, but I do count it as a missed opportunity. What did I learn from this. I learned that I have to put my orders on the actually chart in advance. I had the pair marked down on my whiteboard as something I was watching. I even had the entry zone market on my chart, I just didn't have the actual limits set. So next time I need to find out what type of entry I'm taking well in advance and set the orders.
Other than that not much is going on. I'm working on a post for Wednesday since it will be my One-Year Anniversary of being a full-time trader. I don't have anything written yet but it'll probably be some type of reflection on the struggles I faced.
Akil L. Stokes
Sign Up For the Forex Bootcamp 2.0 "This was the course that changed my trading career" http://www.triplethreattrading.com/2011_live/?ref=464
he other day I had a good conversation/discussion/lecture with one of my best friends who dibbles and dabbles in the FOREX market. I say dibble and dabble because although he has been trading for about seven months now he has yet to use a consistent strategy and still lacks the necessary psychological strength to trade successfully in the long run. This conversation sparked many topics to write about so hopefully I can get a few good post out of them, but today's post will focus on discipline and fear. Also known as the Early Profit Taking Disease.
My friend is a technical trader that uses various indicators (such as the MacD and Stochastic) to determine his entries. While walking me through his system I asked him how he did over the past couple of months. I know I personally struggled in July and the beginning of August and since I'm a countertrend trader and his system is trend following (I think), I was curious how he did in comparison. His response was "I made close to 200, but I should have made 750 pips." As he went on to explain why he failed to pick up the missing 550pips that were just sitting on the table waiting to be snatched up, I discovered two reasons for why he was missing out. Discipline & Fear. Lack of discipline
seemed to be his biggest struggle. One of his reasons for missing those 550 pips was the fact that he failed to get involved in the trade. I don't know every detail for each trade but I know he mentioned that he was asleep for some of the signals, or at work (he has a full-time job) and just didn't set up his limit orders previous to going in. Even though at this point in his trading career he is not trading full-time, that's no excuse for not treating his trading like a business. Obviously trading isn't his primary source of income but II believe that if you truly want to be a successful trader, and possibly make it your main source of income in the future then you need to at least start putting some business like principles into your trading plan and treat it like one. This means setting work (trading) hours and having a set daily routine to follow. I often ask people, if you wouldn't show up late to your real job, then why would you show up late to your trading if you're supposed to be treating it like your job. In my business I have a set schedule that I follow every day. For example, 6:30am- Read training plan and start pre-market analysis. 7:30am- Breakfast time. 8:00am- Start day-trading, etc. If you keep the same routine, and did your back-testing accordingly then you will be able to take advantage of every trading opportunity made available. And for those who have been trading know that it is very important to take every trading opportunity that fits your plan.
The second reason for leaving the 550pips on the table was fear
. Now to his credit he didn't miss every trading opportunity, but the ones that he was involved in would end with him taking profit early due to fear. I can see if he got out of trades early due to structure, or some other reason that may be in his rule book, but he was simply exiting because he was scared of losing profit. If this is the mindset you're going to have then, I hate to say it but you may be doomed as a trader. For those who understand risk/reward ratio's in trading, you know that if done properly, one winning trade can potentially make up for two losers and that it's important to see the trade all the way through. If you're consistently taking profits out early and letting losers ride, then how do you expect to make money. Also what was the point of all the back testing you did.
Having discipline and eliminating fear are the most important aspects of becoming a successful trader. My friend is great and developing systems, and very detailed in his back-testing. This is probably the third system he has shown me that had incredible results. However, this being his third system says something about him as a trader. He is stuck in the cycle where he does all of the behind the scenes work perfectly, but when it's time to step up and get it done on the big stage he fails. So I told him "it's not the system it's you!" Until he learns to become serious about his trading I'm afraid that he'll be stuck in the never ending downward spiral of bouncing from system to system.
Thanks for taking the time to read this post and look out for my next one called "The Holy Grail" (The Price of Doing Business).
P.S. If you haven't done so make sure you sign up for the Biggest FOREX Trading Event of the year for FREEhttp://www.triplethreattrading.com/2011_live/?ref=464 http://iambusiness.tumblr.com/
(Personal Trading Journal)