by Trader_001 | Aug 27, 2019 | Forex, Uncategorized
Opposition MPs say they have agreed to try to block a no-deal Brexit by passing legislation in Parliament.
A meeting between those opposed to no deal was called by Jeremy Corbyn.
A joint statement afterwards did not detail how or when legislative attempts would be made, but Green MP Caroline Lucas said it was the best way to stop a PM "careering towards" no deal.
The statement also made clear using a vote of no confidence to bring down the government remained an option.
The UK is set to leave the EU by 31 October and Boris Johnson has promised to stick to that date even if he cannot agree a deal with Brussels.
Ms Lucas said "the legislative way forward" was "the most secure way to try to extend Article 50, to get rid of that 31 October deadline".
by Trader_001 | Aug 21, 2016 | Bullish, Forex
Check out Part 1 Here, Part 2 Here, and Part 3 Here.
Too Many Indicators
If you have read any of my previous articles here on LinkedIn then you may have noticed that I poke at technical analysis a bit because I personally have found success day trading the fundamentals and sentiment and I only use technicals as a timing tool, not a decision making tool.
I get a lot of struggling traders come to me looking for some help to get them trading profitably. When I ask these traders to describe their current trading strategy I get one of 2 responses:
- They have no strategy and smash in and out of the market on nothing more than gut feel.
- They go off on an incomprehensible rant: to have a trade setup they wait for a harmonic wave pattern to form on the 4h chart and close outside the 2.3 standard deviation Bollinger bands. But in order to get a confirmation they need the parabolic SAR to be below price, the 47 exponential moving average to cross above the 183 simple moving average on the 17 minute chart, the Ichimoku cloud floating below price, but if the 6 stochastic and MACD are not oversold and turning up then the trade is off........
This is about the time I flip the desk over and walk out. You might as well cook a nice spaghetti bolognese and instead of enjoying your delicious dinner throw it at your computer screen. Try it out, you might notice the resemblance to your charts if this is how you trade.
Imagine your frustration with wasting your nice meal like that. Now imagine trying to trade for a living like that. Ridiculous.
If you’re trading with more than 2 indicators then you need to clean house. Having many indicators stifles trading and finds reasons not to trade. A setup and a trigger in line with the fundamentals is all you need.
Quality Trading Time
3 hours a day of quality focused trading time should be enough to get you well on your way to gaining plenty of trading experience. When you’re trading being 100% focused is essential, half way doesn’t work. Just because you sit and stare at the charts for 8 hours a day doesn't mean that you are gain proper quality experience discovering why prices move the way they do.
Time spent in front of the computer has no correlation to profitability as a trader. Spend less time but when your trading be 100% focused on trading and fully tune into the market.
Even more important is the time that you spend after the trading session is over. This is things like going over your trades objectively while not in the battle, finding the mistakes you made by not following your plan and making your purpose to not repeat those same mistakes tomorrow. I can't tell you how many traders I come across that have no tracking plan for their results they are getting. They literally have no idea is they are actually following their plan or not.
Simulated Results
This is another trap I see a lot of traders fall into. Look out for “black box” systems. These are trading systems that don’t divulge how the trade signals are generated. The vast majority of them are absolutely nothing more than simple systems that will not deliver what the seller is promising. Many use dangerous Martingale system in order to achieve the high returns. They show you a track record of extraordinary results that may or may not be fabricated.
If you think about if you build a trading system with half a dozen filters using the benefit of hindsight you too could come up with a great system. Of course going forward is an entirely different story. They fit the system to the past data which of course typically does not work in forward markets. High-speed number crunching capabilities allows for building great hindsight trading systems that don’t perform going forward. Beware of the too good to be true scenario.
This is not to say that all automated systems do not work because there are definitely some that do. I just say think twice about it if someone is selling an algo that produces 1,000% returns monthly for $50. I promise you that if I had that I would not sell it to you for even $10,000,000.
This concludes my 4 part series on smart ways to avoid losing money. I hope that you may have found something of use in here.
by Trader_001 | Aug 14, 2016 | Bullish, Forex
Check out Part 1 Here and Part 2 Here.
Lack of Courage to Take a Loss
There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts and intelligence to accept your loss and wait for the right opportunity to try again. It also takes practice. That's right, practice taking your losses. With time it gets easier.
I know that financial loss is one of the scariest things for humans to accept but at some point if you are going to succeed as a trader you need to make the decision that you will define your maximum loss per trade. If price gets to your max loss point then you need to start learning what it feels like to take that loss and preserve your precious trading capital. Over time the pain will lessen and it will become automatic.
I know the above seems hard for some to digest but think about this for a moment. Back in the day when I was prop trading it was pretty common for me to trade 2-5 millions shares per day, in and out, foaming at the mouth high frequency manual trading all day long. I literally took hundreds of losses per day! The major thing that made it work for me was refusing to take a larger loss than my plan allowed. Learn to take your losses intelligently!
Rationalizing
This is an absolute Killer of traders and complimentary to the above point.
Put your trade on and let it run. If it hits your reasonable pre-determined stop then your trade is over. If you have to walk away from the computer and compose yourself then do it but don't for a second remove your stop and start rationalizing that the market will come back for any reason whatsoever.
If we use the analogy of thinking of your trading self as a fighter. Your stop loss just got knocked out. Moving your stop to make it larger is like getting up after being crushed with a knockout blow and trying to fight some more. It’s pointless and things will only get worse. Come back the next day and try again. A small loss will not ruin you but a catastrophic loss will both emotionally and financially.
Mixing Apples with Oranges
Have you ever done this? You see the EURUSD start aggressively trading higher so you go an buy another USD pair such as GBPUSD because it hasn't moved yet thinking that the US dollar is going to be weak across the board. This is a mistake. The reason the GBPUSD hasn’t moved yet is likely because of something external such as early morning economic news that was bearish.
Also, think about the implications of EUR going up. This means that it will actually be putting upside pressure on ERUGBP which could have a weakening effect on GBP on other pairs because the EURGBP is a major currency pair (in my opinion at least).
Don’t mix apples and oranges, if EURUSD looks like it’s being bid up aggressively then look for an intelligent spot buy EURUSD. Make sure to confirm with the news feed that there is a good sentiment or fundamental reason for the move as this is what will sustain the aggressive buying and give you conviction to hold for better profits.
Part 4 to follow shortly!
by Trader_001 | Aug 7, 2016 | Uncategorized
If you missed part 1 you can read it Here.
No Trading Plan
“Make money” does not constitute an intelligent trading plan. A trading plan is a map that clearly outlines how you are going to be successful. It spells out what your edge is and should be understandable to someone who has no knowledge of trading. If you don’t have an edge, you don’t have a plan, and likely you’ll wind up a part of the statistic pool (part of the 95% or more of new traders that lose money and quit).
Your plan should also include things like how you will track your results and how you will go about adjusting your results. And don't forget proper risk management of course.
Trading too Short-Term
If you’re profit target on a particular trade is less than 15-20 pips then you might want to consider finding another trade with higher profit potential. The spread or commissions you pay to enter the trade eats away at these tiny profits.
Also, consider your stop loss distance. It doesn’t make much sense to take a 15 pip profit while using a stop loss of 150 pips. It would make even less sense if you weren’t using a stop loss at all. You would need to have a 10:1 win ratio just to pay for the losses which is nonsense. The best traders I know win somewhere between 40-60% of the time not 90+%.
Lack of Conviction
This is a massive one!
Conviction only comes from successfully trading over a sustained period of time. If you lose money early in your trading career it’s very difficult to gain true conviction because you will likely not stick with your trading system for very long. This can lead to a cycle of switching trading methodologies before you ever have a chance to gain any real momentum.
Learn the business of trading before you trade so that you give yourself a professional head start. You would not try to open up a restaurant without some very good and detailed plan would you? Trading is no different than any other type of business and should be treated with the same level of professionalism. Study hard, get a qualified mentor, make a trading plan and PRACTICE PRACTICE PRACTICE.
If you want to know more on how I view conviction you can view my article on How to Build Conviction in your Trading.
Part 3 to follow shortly!
by Trader_001 | Aug 4, 2016 | Uncategorized
This article is a follow up to my previous article Recency Bias and Why it can Kill Traders. In this article I will offer some helpful solutions that I have seen work for many traders.
The first step in fixing a recency bias is simply having an understanding that it is a real phenomena that can definitely cause problems not just for trading but also in many other areas of life.
Conviction
Conviction is confidence and the best way to build confidence is to succeed at something consistently over a sustained period of time. In trading the only way to succeed over time is making sure that you never deviate from your trade plan. This is something that you must do more than just a few times, you literally need to place dozens if not hundreds of trades in order to truly understand how your trading edge will perform.
If you allow recency bias to cloud your good judgement then you run the risk of altering your edge in an adverse way. It is incredibly difficult to succeed at pulling profits out of the market over the long run if you are constantly changing the way you enter and exit trades.
I have written 2 other articles that go a bit deeper into conviction and your trading edge which might be helpful if you think that recency bias is affecting your trading.
How to build Conviction in your Trading
Having an Edge in your Trading
Understand the Bigger Picture
One trade does not make you a good or bad trader. Rather, it's how you perform over months and years that makes you a good or bad trader. You need to understand that your trading results will be a random distribution of winning and losing trades.
It's definitely not any fun for any trader to lose 8 trades in a row but if you are an overall profitable trader and you zoom out and look at your last 200 trades you will see the bigger picture. Those 8 losing trades may look insignificant in the grand scheme of your entire trading career. Losing trades are and always will be a part of the game but you have to remember that sometimes losing streaks happen and that doesn't mean that you are a losing trader.
I have heard people refer to recency bias as looking at individual trees rather than the forest. If you think of your entire trading career as the forest and the individual trades as the trees then you can see that a few losing trades are just a couple trees in the vast forest of your trading career. You should not let a couple bad trees burn down the entire forest.
Keep a Trading Journal or Diary
This is a great idea for helping you keep track of trades that you inevitably forget about over time. It will help you to view your overall career rather than just focusing on a few annoying losses that happened recently.
Keeping a trading diary or journal will allow you to look back and see the mistakes you might have made and then bring them into your conscious mind. This is helpful because often enough the mistakes you make in trading (or the rest of life) are subconscious (like switching systems of tinkering with your edge).
This also is a track record of how you felt while you were in your trades and can offer many useful insights into how you might go about improving your trading performance or simply understanding that losing streak happen from time to time.
Tune into what is Happening in the Market Now
It’s not enough to just scan the news now and then. If you want to be successful in the long run you must be constantly focused on what is moving price and how the fundamentals and sentiment are playing out each and every day. The speed of information is incredible these days and you need to make sure that you are not making a trade based on yesterday’s news when today there was something that negated that prior news.
If you are a technical trader you should still be aware of what news is coming out and how it could potentially impact your trades. Keeping up to date on the flow of information can give you more conviction in your open trades and help keep you in when you are supposed to be in and out when you should be on the sidelines.
Be Self-Aware
Being self-aware is more than just knowing that you are breaking your trading rules and suffering a bout of recency bias. It's about being completely honest with yourself and removing your ego. Take you ego out of trading and enjoy a slice of humble pie.
If after a series of losing trades you have a tendency to grab at profits far too early from what your plan states then you need to be completely honest with yourself about why you are doing that. Could it be that you have carried over those emotions from the recent losses into new trades that have nothing to do with those losing trades?
Each new trade needs to be completely removed from previous trades whether they were winners or losers.
I don't mean to say that any of this is easy because it's not and trading profitably is not easy either. I have been trading for about 10 years now so how I react to a series of losing trades will be completely different to how someone who is just starting out will react.
My best suggestion for new or struggling traders over and above anything else I have written on recency bias is this:
- Find an edge that is proven and learn everything you possibly can about it.
- Once you know how to trade your edge practice, practice, practice and track everything you do including how you felt before, during, and after each trade.
- Focus on becoming self-aware with the goal of being the world's most disciplined trader.
- Once you have learned your edge and have some practice focus your efforts massively on good trading psychology.
A huge part of what I teach my students is trading psychology because once you have mastered your edge the most important thing to your trading success will be your state while you are trading. You can contact me about that or check out the many amazing books on the subject of trading psychology for more help.
Find an edge, master it, practice the heck out of it, track it, keep calm and carry on.
Thanks for reading and I hope you found some value here.
