Ultimate Trading Hack? Take Care of Yourself!

Ultimate Trading Hack? Take Care of Yourself! 78

For years, I’ve been struggling with an undiagnosed chronic illness that has robbed me of my energy, ability to sleep well, and peripheral vision. I was knocked off my original career path and decided to learn how to day trade in order to obtain income and a way to afford quality, results-based healthcare. (If you want to learn the longer story, read this two-post series)

Before I became ill and fatigued, I was a highly active person – weight-lifting, biking, jogging, yoga to name a few of my favorite activities. I loved to cook and make healthy and creative meals. I was devastated to lose my progress and joy in these endeavors, but even now, I make a point of lifting, slow jogging, and stretching when I can.

Nonetheless, trading with a chronic illness is incredibly difficult. I routinely miss my early morning trading sessions, the most opportune times to trade for my strategy, in order to catch up on sleep. Unfortunately, this sleep doesn’t ever leave me feeling refreshed, so the cycle continues.

So too, having a foggy brain leaves me slow to act on some trades or taking less trades than what the signals call for. I also have occasions when I completely forget the rules of my strategy and need to take time to review the rules (This is another reason why I keep my strategies as simple and mechanical as possible).

Because of all these issues, I have taken a highly organized and simplified approach to trading. Creating systems that are simple and easy to repeat through routine have made trading for profit possible in such conditions.

So coming from the perspective of someone who has both experienced extensive fitness and then extensive illness, I can say with candor that one of your greatest tools for success in trading is to take care of your body and mind.

Why does your physical and mental health have such an impact on your trading?

Think about what fatigue feels like:

  • Your body is sluggish
  • Your energy is low
  • Your brain is foggy
  • You are slower to respond to urgencies
  • You will more likely pick creature comforts over somewhat painful, yet effective action
  • It’s a vicious downward cycle – the more you feed into the fatigue with comfort (like fast food) or create short-term energy boosts (from sugar, coffee, or sodas) the longer it lasts
  • Sometimes lower self-esteem and outright depression/anxiety

In this state, do you think you can make good trading choices – the decisions that will override some of the more emotional impulses that come with trading?

In my experience, it only adds to the challenge of trading for profitability.

When you feel exhausted and have low energy, it can be difficult to want to follow your trading rules, wake up or stay up for your trading session, or be able to effectively evaluate a trade (should you apply discretionary tactics).

When you have natural energy, the opposite happens:

  • You have a clear mind
  • You can better manage your emotions
  • You feel more positive and in control
  • You’re quicker to respond to urgencies
  • You can better handle any setbacks

An energized trader can better handle the inevitable losses, routinely show up for the trading session, manage impulses and emotions, as well as have the drive and energy to do the extra work that comes with learning about trading (whether that means working through trading books, courses, videos, or spending a handful of hours back-testing)

Now, there’s also something to be said for rest and recovery, I believe taking breaks and enjoying creature comforts can actually boost your health over the long run, but the key is in the dosage – when partaking in any of these activities for the majority of your week, then problems ensue.

Having energy is a physiological phenomenon – that is, there’s a physical, bodily component as well as a psychological one.

Let’s go over how you can improve each one.

How to Improve Your Physical Energy

There are two factors that will affect your physical energy more than anything else:

  • How you move your body
  • What you put into your body

By addressing these two areas many other activities that increase energy become easier to do (such as getting enough restful sleep, as well as working on mental energy practices).

Move Your Body

It’s ironic – creating stress and depleting your energy stores through exercise actually improves your energy over the long run.

Many of us don’t move enough.

From the Industrial Revolution onward, people are spending more hours standing or sitting in one place. We do far less physical work or walking than the humans of the past.

Nowadays, we have to make an effort to include movement in a daily or weekly routine.

Some of the best ways to get a healthy dose of exercise:

  • Lift-weights/Resistance Training
  • Jog
  • Walk
  • Run
  • Do yoga
  • Play sports (softball, racketball, tennis, basketball, etc.)
  • Go on solo excursions (hiking, surfing, skiing, etc.)
  • Pick up a martial art

Try to get in around 150 minutes per week of movement that increases your heart rate, suggests Dr. Michael Greger. Adding in resistance training, regardless of your body or health goals, is also important for maintaining muscle mass.

What I Do:

  • Lift 2-3x/week (Usually 3-4 exercises for up to 3 sets per exercise; Basic comprehensive movements like bench press, split squats, deadlift, shoulder press, pull-ups, etc.)
  • Slow-jogging 3-5x/week
  • My partner and I have an interesting (and therapeutic!) routine of going on long walks when we want to talk about something that’s difficult in our relationship or personal/individual problems
  • I also like to wear a FitBit and use that to help track whether I’m walking enough each day or not

 

Put Good Things In and Leave Bad Things Out

The second crucial component to improving your physical energy is to be very mindful of what you consume.

Think about the importance of clean food in this way: So few things in this world have such an intimate relationship with us as the food we eat. It’s literally going INSIDE you. It’s important to keep high standards for nourishment.

A lot of folks have a hard time deciding what’s healthy to eat because the information on what’s healthy is outright confusing:

  • One day the media says eggs are bad. A few months or years later, the media says eggs are good again
  • You see people who cure diseases or experience dramatic weight loss by eating a specific diet (vegan, paleo, keto, carnivore, etc.)
  • Thousands of diet books are published each year
  • Research papers on nutrition give myopic or contradicting results
  • Food packaging misleads with legality-safe terms like ‘natural’, ‘no artificial xyz’, ‘no hormones’ to convey healthy as a marketing trait, but the food item itself contains hidden unsafe, unhealthy ingredients

Given all this, you may not know where to start. Or you’ve started but don’t see any results.

Finding a healthy approach to eating that works for you will be a research project that extends further than what I can write here, but in my own research for using nutrition and diet to help heal a broken body, I’ve found that most successful dieting plans focus on these three things:

  1. Eat more plants (preferably vegetables)
  2. Eat whole food items (that is, there is one ingredient and it’s the food itself – think “apples” instead of “apple pie”
  3. Avoid sugar

Starting with these three easy and basic rules, you can discover a personal diet that leaves your body feeling healthy, able to digest and assimilate the nutrients that fuel your mind and energy.

What I do:

  • I eat a vegan, plant-based diet
  • The majority of what I eat is whole-food sourced: lots of bananas, spinach, kale, cacao chips, flax seed, apples
  • Some of what I eat is processed: brown-rice pasta, sugar-free pasta sauce, plant-based protein powder
  • I get the majority of my calories and meals through making smoothies. It’s so easy, just toss everything in and press the button. Does the chewing for you!
  • Every now and then I get take out from places like Chipotle, Waba Grill
  • I like to drink coffee and green tea, although I probably should quit caffeine at some point given my sleep issues
  • I rarely drink and don’t do any recreational drugs

I want to also note that there are a few other things that “go in” that can dramatically affect your energy, such as alcohol, caffeine, supplements, drugs, and even air quality and toiletry products

Keep in mind, if you want to protect and increase your energy:

  • Caffeine is best consumed in moderation or not at all
  • Your caffeine source should also be a simple ingredient (think black coffee, green tea, not soda or energy drinks)
  • Modern agricultural practices have depleted the soil and decreased the nutritional value of even whole food sources, thus taking supplements for possible vitamin and mineral deficiencies can help
  • If you work or spend most of your time in one room, getting a quality air filter can help clear some of the air. Overall, be mindful of whether you’re breathing in toxins regularly or not
  • Consume alcohol in moderation and never while trading; it’s also advisable to discontinue using recreational drugs, especially marijuana, due to its tendency for causing chronic brain fog. We need to keep you sharp!

How to Improve Your Mental Energy

This second area concerns the thoughts you keep and the mental health care practices you include in your routines. I’ll keep it brief since I wrote about mental health routines here, but it would be incomplete to recommend energy-boosting without also mentioning your mindset.

When it comes to improving your self-confidence and energy through your psychology, more than anything else, staying positive will serve you well. Instead of believing that you can only be happy when good things happen, I encourage you to start believing that good things happen when you’re happy.

Under this philosophy, you take responsibility for choosing your mindset and setting the tone for your daily life.

It took me a long time to realize this, but I firmly believe now that as long as you’re doing at least a little bit of something to help your physical well-being and you’re not experiencing any mental health disorders, a positive attitude is a choice.

Again, I’m telling you this as someone who has lost everything and has had to carve a path out of a deep pit to survive- choosing to stay positive and always trying your best to find the lessons and opportunities in bad experiences will improve your chances of achieving what you desire by 10x.

To help yourself stay positive:

  • Think of yourself as a learner and every experience an opportunity to find out more about life, trading, etc.
  • Think of life as a game or puzzle and your challenges will help you level up and improve
  • Take time to be grateful for the good things you have (if you don’t know where to start, having access to internet is amazing! Think about the thousands of years people went without it – you could have been born back then, but instead, you’re lucky to be here now!)
  • Let yourself play – have hobbies and down-time to enjoy activities that make you laugh, smile, and even get silly.
  • Pick up a meditation or journaling practice – you will come to better understand your thoughts and better notice their diversity when you take time to reflect
  • Create expectations and a schedule for yourself that’s as realistic as possible – taking time to plan 3 big things you need to do each day goes a long way to helping you feel in control of your time and life

What I like to do:

  • When problems come my way, I immediately start researching who else has experienced and overcome this problem in order to find out ways to solve it – in this way, I spend less time dwelling and more time doing
  • I organize my time and make sure I have plenty of gaps in my schedule for rest or the unexpected. I’ve used a planner for over 12 years to track what I need to do each month, week, and day – I couldn’t imagine life without it
  • I meditate regularly and am working on getting back into a daily practice
  • I leave evenings open to play games, hang out with partner/friends, watch movies, read
  • When I think my problems feel like too much, I think about all the other people who have come and gone, having lived through tragedies and traumas that truly exceed what I’m personally going through – I also see suffering as ubiquitous, something that is a shared human experience and this helps me feels less lonely in my unique situation.

Bonus Tip: Identity what to prioritize. If your diet would make a nutritionist gasp, don’t worry about exercise just yet, instead start there since you’ll feel the greatest relief by improving this one thing.

All in all, if you were to pick even just one action to take from these two major categories, you’ll be sure to see some improvement in your energy levels and happiness. While most of the above may seem trivial to trading, it’s just the opposite.

You bring your whole self to your trading desk.

Not just your trading skills, but also your psychology, your body, and your energy.

What you do when you’re not trading matters too. When you understand and implement this hack that most traders ignore, you significantly increase your chance of making it in the markets.

 

How to Create a Trading Plan: The Definitive Guide

How to Create a Trading Plan: The Definitive Guide 27

Here’s a fun fact:

Do you know what people do when they’re blindfolded and told to walk 20ft in front of them?

This is an experiment done across many different landscapes and timezones, yet the results are always the same.

If you were to blindfold a group of people in an open space and then tell them to walk across to the other side of the field, they’ll start walking in circles.

It turns out, that humans need some kind of horizontal plane of reference, be it the horizon or buildings, to help guide a path forward.

Otherwise, the brain can’t fixate on a direct path.

You need to be able to see where you’re going.

So when you’re seeking to build skills as a trader to achieve consistent profit, having a destination in sight helps you get there.

Maybe you’re familiar with the symptoms of not trading with a plan:

  • you circle back to the same failed strategies or psychology time and again,
  • you do extra work finding new strategies or ways to become a better trader,
  • you change your mind about what you want or how you want to trade,
  • and overall, just second-guess yourself as a trader.

As the saying goes, if you fail to plan, you plan to fail.

Walking in circles isn’t just a metaphor, there are so many ways in which our brains use logic from the physical world to influence our inner world and the ways we think. So in order to guide your path to profitability, you’re going to need to develop a trading plan.

Whether you write a plan for each of your strategies you perform or a plan for each phase of a prop trading challenge, the beginning of every trading pursuit or goal you aim for needs to have a trading plan.

Yes, I’m implying a written document, not just an idea in your head.

While a goal may name the destination, your trading plan is supposed to show you some of the milestones along the way by listing what you should and shouldn’t do during each session, as well as what you plan on doing if you face unexpected challenges or lucrative opportunities.

In the world of trading where there’s so much movement and so many different assets changing direction all at once, you need to narrow in and define for yourself what you’re going to focus on.

You can’t trade everything you see in the market and make up a plan on the spot.

You need to create rules for yourself.

In this way, you are responsible for defining what you do and don’t trade and how you go about doing so. In this tutorial we’re going to go over what you need to include in your ideal trading plan. I’m going to show you a trading plan I’m making for the Funded trading Plus challenge, and we’ll go over different things you can include to adapt it for different trading goals.

The Components of Your Trading Plan:

  1. Goal
  2. Your Motivation/Why
  3. Strategy
  4. Risk Management
  5. Contingencies
  6. Log (Optional)
  7. Other Components

What to Include in Your Trading Plan:

1. Title

This may or may not seem obvious, but be sure to give your plan a title that makes sense for the role this plan will play in your greater trading career.

You will likely have a few different trading plans over time, so it helps to name them in a way that keeps things organized.

For example, if you are making a plan for a prop firm challenge, like the FTMO challenge, you can title it “FTMO $100K Challenge 2022”. Or if you name your plans for different strategy systems, you can title it according to the name of your strategy.

How to create a trading plan2. Goal

Next, your trading plan should immediately tell you what the purpose of the plan is, that is, what your goal is for trading this system.

Be descriptive, here.

Some examples:

  • Return on average 2-5% per month for 2022
  • Have 3 consistently profitable months in a row
  • Follow 100% of my trading strategy checklist rules for 21 days straight
  • Grow my account by 20% this year
  • Build my account to $50k within 5 months
  • Pass the FTMO challenge within 30 days by returning 10% of $100k

Notice how some of these goals have clear time-based or performance-based outcomes? Such targets are easier to track – you’ll know whether or not you’ve profited +2% in your account this month by looking at your brokerage statement. You want to be able to clearly say whether you’ve achieved your goal or not.

The reason for putting down clear numbers in your goals is not to constrict you, but to help you decide how you’ll design your trading strategy and risk management plan, especially the latter.

You can adjust these numbers as you go, but by having a target you can track how well other components of your trading plan help you meet your goals or not.

3. Your Motivation/Why

ALERT!

This is possibly the secret key to ensuring that you will actually follow through with your trading plan.

Anyone can write a plan and make it look like a good idea.

This isn’t only true for trading, but other big behavior-changing goals, as well. Think about fitness.

Here’s a simple fitness and nutrition plan:

  • Lift 3x/week
  • Jog 3x/week
  • Yoga on rest day
  • Go on an evening walk every day
  • Stick to a whole food plant-based diet, no sugar or processed foods

Seems simple, yes?

But performing this every week is the hard part.

The plan is effective. You will definitely morph your body into a healthier version of yourself by following these simple rules, but you will only achieve that outcome if you put the plan into practice regularly without fail.

Fitness coaches will often say that you need a really good “why” to help you sustain motivation while you’re still changing your habits and gaining momentum. Sometimes wanting to look good isn’t enough when you’re 5 seconds away from eating a chicken waffle slathered in high-fructose corn syrup after a long and tiring day of work as you pass an old favorite restaurant.

Better health and fitness reasons that will make you second guess short-term pleasure in order to achieve long-term freedom:

  • I want to be able to be there for my kids when they’re in college and stop feeling so winded every time I play with them
  • I want to see my abs for the first time in my life so that I can prove to myself that I have control over my body and my energy levels
  • I want to end this illness and see if I can use a safer and more effective approach in place of expensive drugs so I can live a vibrant life again

The pain of the greater loss needs to outweigh the pain or inconvenience in the moment.

Your trading plan is similar and your mindset as you execute the plan is likely going to have a greater effect on your results than the system rules.

I am diving deep on this topic for this guide because I want to emphasize how important it is to have a CLEARLY DEFINED MOTIVATION for pursuing profit from trading.

Your reason for choosing this highly risky, long path to becoming financially free as a trader needs to be so moving that it can make you second-guess acting out a trading mistake as you’re thinking about doing it.

Wanting to earn something like $5k per month won’t cut it.

Money, itself, usually isn’t the reason people want it.

Instead, it’s the options that money gives to life that make it so useful.

What can trading success help you feel or experience in your life?

Is it to be the first person in your family who isn’t indentured to debt? To afford a life-changing opportunity, like a professional degree? Is it to quit your job that makes you feel like you’re wasting away your life?

Make your motivation crystal clear. Make it emotional because it will be the emotion-evoking moments in your trading that will make or break your success – you need to be able to speak to your emotions in the language of emotion.

“Yes, I know I really don’t want to take a loss on this trade today, but I can’t let myself chance a bigger loss – I need to trade skillfully, otherwise I’m never going to get out of debt. Following my trading rules is key and right now they’re telling me to take this loss.”

I want you to begin thinking like that for every single move you make in your trading.

Your reason to trudge the path will help you prevail and learn from your mistakes. Give this one time and thought.

4. Overview of Your System: Your Trading Strategy

Usually, most traders focus all of their attention on this section.

That’s fair, you need a strategy that’s profitable for your trading goals, whether that means greater profit in the short-term or long-term.

However, I recommend keeping this as simple as possible. Your risk management and psychology will have the greatest effect on your ability to profit, overall, and other parts of this plan help you mitigate when those areas face problems.

For your strategy, be sure to include the main rules and principles that your strategy utilizes.

Your rules should define, clearly, what you do or do not trade.

For many traders, this could mean listing a specific set of candlestick patterns you trade, the main mechanics of an indicator setup for entry, etc.

Your trading principle should tell you what high probability situation you seek to use with your strategy.

Some common ones include:

  • Trend trading major/minor pairs
  • Trading a NY reversal
  • Trading London breakouts
  • Scalping News
  • Trading smart money liquidity setups

Again, like your trading goal, you should be able to simply and clearly understand the basis of why your strategy should work and how its rules were chosen to take advantage of the situation.

I think this is important to include, because you may find over time that your strategy rules don’t actually fit its principles. When you discover this, you can decide how you can change your rules or change your principle in order to ensure you’re only trading high probability setups.

Be sure to also include important technicalities regarding your strategy, such as:

  • The sessions you trade and the time you trade
  • What pairs or instrument classes you trade
  • The mechanics of your entry and exit plans
  • Your expected R:R and even expected win rate

 

5. System Cont.: Your Risk Management Plan

While most traders spend a ton of time fine-tuning and working through a trading strategy, seasoned pros know that the most important aspect of your trading plan is actually your risk management plan, which includes the ways in which you handle emotionally-charged trading situations.

So if you’re feeling like you’re running around in circles way too often, it’s probably because you’re spending too much time focusing on your strategy.

Stop that.

Instead, put your time and energy into learning about risk management, discipline building, and developing the ability to understand your own emotions and make systems to address them as they come up.

For your risk management plan, you’re going to want to include these key trade-related measurements and tactics:

  • How much of your account you’ll risk per trade
  • The maximum number of trades you’ll take each day
  • The maximum amount you can lose per day
  • The maximum drawdown you’ll let yourself experience with your account/prop challenge

To make your risk management strategy effective, these outcomes you’ve listed from above need to come with consequences. You need a plan for how you’ll address each situation and set yourself up to learn as much as you can from losses. You’ll also want to include in your risk management plan:

  • What happens when you exceed your risk per trade
  • What happens when you hit your max. # of trades per day
  • What happens when you hit your max. loss per day
  • What happens when you hit your drawdown

You’ll also want to add:

  • What happens when you break your trading rules

Your strategy and gameplan for what you do when you’re in a loss or breaking rules needs to cover two things:

  1. You need to create space between yourself and the trading desk
  2. You need to replace bad behavior with good behavior

Some ways to do this include:

  • No longer trading for the session, day, week, month, etc. – that is, take a break from trading because either the market doesn’t currently work with your strategy or you can no longer trade your strategy without breaking rules
  • Take time to review what happened – going over your trading journals, your account equity over a period of time, etc.
  • Learn from experienced traders how to manage drawdowns or improve trading behaviors/psychology – do some research
  • Make a plan to implement any tactics or behaviors for better trading performance that you learn from your research
  • Put the plan into action – schedule your tactics/habits, get someone to help hold you accountable, etc.

Make sure you write out a plan that works for you.

Think of this as a flow chart:

  • If X, then Y
  • If I break my rules during my trading session, then I stop trading for the entire day. If I break my rules more than two sessions in a row, then I stop trading for the entire week.

By having a “Worst Case Scenario” plan, you don’t have to rely on yourself to make a decision about your trading in the moment. You won’t likely be in the best mindset during a drawdown or some serious rule-breaking, so it’s better to make these plans while you’re feeling confident and in control.

6.  Contingency Plan

A trading contingency plan focuses on what you’ll need to do when things not necessarily related to trading go wrong, yet will still have an effect on your ability to trade with a sound mind.

In the contingency plan I created, I include a list of reasons for not trading, or at least reducing the frequency you trade or risk you take. These are contingent upon 3 key areas:

  1. Psychology – this would include any emotional states that affect your ability to make sound technical analysis or risk decisions. I would include here depression, grief, anger, stress, etc. Your worst trading mistakes arise from similar states of mind (anger can lead to revenge trading, depression can cause taking greater risks or avoiding setups because it doesn’t feel like trading matters anymore – it’s better to stay out during these transient times)
  2. Life – I included this category to cover any life events that can take away from your availability to trade – this can be weddings, funerals, change of jobs, moving to a new city, etc. It’s up to you to decide how emotional/physically you’ll be available and you can decide whether you want to reduce your risk, reduce your frequency of trading, or just stay out of the markets altogether until you’re situated again
  3. Personal – This last section is more of a grabbag for anything that doesn’t fit the others and may be individual to your personal life – for example, I’m currently pursuing a PhD in Business and will either stop trading or show up only for red news event days when I’m in finals for my courses.

Technical Troubleshooting

You also need to include contingency plans for what you’ll do when your tech breaks, the internet goes out, or any other trading resource is unavailable to use.

I promise you, if you’re in this for the long haul, you’re going to run into your internet going out or your computer/laptop/mouse/platform glitching or breaking on you while you trade.

The best plan is to always have a backup or figure out a place you can go to in order to set yourself up to trade for the rest of the session.

7. Optional: Log

Lastly, I included a log, but I don’t recommend using this unless you’re trading for a prop trading challenge or some other relatively short-term goal. An excel spreadsheet or software trading journal is a better tool for tracking your trades over the long run.

When you’re evaluating your trades during a challenge, it’s helpful to have your rules and strategy all in one place. By keeping a log of your trading outcomes on the same sheet as your plan, you’ll have an easier time deciding on how your plan is performing and whether you need to make any important changes.

8. Other Optional Components

The above categories and parameters will cover the majority of what you’ll need to plan when you’re setting yourself up for success while trading. However, there are a few other components you could  include if they are relevant to your situation. Feel free to also add others that you believe will help you.

The goal in creating this plan is to put everything you need to know to do while you trade, written down in one place.

Some additional things to include:

  • How you’ll break down your risk plan across multiple accounts
  • Equity chart as you track weekly or monthly balances over time
  • List of brokerages and which strategies you trade on each one
  • Worst/Good/Best targets for your performance goals
  • A “Retry” plan for when you should consider aiming for a retry for a prop trading challenge instead of completing the goal

I hope this article helps you organize your thinking and planning as you put together a working system for your success in the markets.

Your plan will likely shift, change, and evolve over time.

Instead of seeking to create the perfect plan, get yourself comfortable and familiar with the art of planning and gathering feedback from reviewing your plans regularly. This habit will accelerate your path to profit.

As always, I wish you nothing but the best of strength and luck with your trading!

Should You Trade Forex Like a Robot?

Should You Trade Forex Like a Robot? 7533

Perhaps during this century more than ever before, society is willing to bravely discuss emotions and mental health.

I believe this is a milestone for humankind and a boon to evolving as a global society that seeks to achieve peace and continue to make technological and social progress.

I also believe that taking care of your mental health is crucial to your success as a day trader. Whether this means learning stress reduction techniques or meeting with a physician to discuss options for medication, you can make your trading sessions (and not to mention, all other areas of your life) far more comfortable and easier to manage when you prioritize your mental health care instead of avoiding it.

However, when it comes time to read the charts or set your trading order, emotions have a way of doing more harm than good.

Unless you’re seeking to become the next Paul Tudor Jones, trying to trade based on a “gut-feeling” for what the market is going to do next will more likely drain your account than develop your trading skills.

For us retail traders, who have limited access to the kinds of information that power the biggest funds in the market, we will likely depend on the technical analysis of price-action or indicator strategies in order to organize our approach and make some profit.the seven habits of successful day traders andrew bloom

If you follow the habits of successful day traders, you likely have a strategy and plan that tells you what you do during different market scenarios or at different stages of profit or loss in your account. You also have a checklist and routine that governs your trading session.

With these pre-planned rules and guidelines, combined with a strategy that is backtested or forward tested for profitability, you should have everything you need to be able to conduct a responsible trading session.

During that time in front of the charts, your emotions are not invited to join you. It is in your best interest to trade like a robot.

Why should you trade like a robot?

Consider these attributes of successful traders:

  • Winners think statistically – they know that no single loss or single win makes any difference in the long term. It is the series of wins and losses over weeks and months (or years, for swing traders) that determine the strength of a strategy
  • Winners know that a profitable strategy can still come with strings of losses (even up to 10 in a row)
  • Winners are patient and take only the high probability setups (consider trend-trading if you don’t know where to start)
  • Winners are willing to do nothing if the appropriate setups and rules aren’t aligned
  • Winners don’t try to predict the future
  • Winners reflect their understanding of risk and the inevitability of losses by limiting their risk on each trade to 2% or less (the larger the account, the smaller the number)
  • Winners develop confidence from backtesting (gaining statistical knowledge about the strategy) and by following rules
  • Winners focus on consistency

Emotion is not necessary to make any of the decisions involved in a well-thought-out trading plan. A trader builds skills to help manage randomness, your mind’s least favorite bedfellow.

forex trade like a robot

In this way, the point of learning about and developing your psychology while trading involves being able to override your human natural instinct to want to protect your money during your attempt to make more money.

However, it’s no easy task to subdue your emotions while you have money on the line. It will take many encounters with your emotions and having the courage to override them time and again in order to get to a status of discipline. Don’t worry, the pain of your failures will help this, too.

Here are some additional things you can do in order to minimize your emotions’ influence on your trading:

  • Make sure you are risking an amount that you are comfortable losing at least 5x in a row (if you want to be more realistic, make it the amount you’re comfortable losing 10x in a row)
  • Have hobbies and interests that give you a sense of self-worth which have nothing to do with trading
  • Have over streams of income so that your basic needs are not dependent on your profits
  • Before you trade each session, visualize yourself losing all of your setups and feeling okay with that because you’re proud of following your rules
  • Visualize yourself winning and only being proud about following your rules – not the fact that you made money
  • Consider losses as the normal operating costs of doing business in the trading industry (Every business has costs – for example, DFX has subscription fees for various software licenses) and as long as your “sales”, your winning trades, outweigh your losses, you’re in profit
  • Focus on %, # of pips, or R multiples, not dollars when tracking your progress

 

Psychology is the greatest factor in your trading success, followed by risk management, and lastly, your trading system. Continue to take time to learn about and be positively influenced by successful traders who talk about this key skill.

3 Ways To Get More Profit From Your Trades

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I’ve been doing a bit of research lately on the different ways professional retail traders select profit targets.

One of the most frequently touted adages for staying profitable in trading is: “Let profits run!”

There will come a point in your trading when you will no longer want to just be profitable, but also get the most out of your trades. Looking for more trades or trying to be available for more sessions aren’t always feasible. One can lead to over-trading and the other is both mentally draining and time-consuming. Instead, another way to build up one’s returns is to seek to increase your risk-to-reward ratio.

However, like many easy-to-repeat phrases of advice in the trading world (among others like “buy the rumor, sell the fact” or “buy low, sell high”), it’s hard to apply this wisdom without considering the context of your strategy.

If you’re a scalper or you trade during the Asia session, “Let profits run!” can sometimes be poor advice. Or expectations for “Let profits run” could mean capturing 100 pips over a week versus 10 pips for a Tokyo scalp.

In order to make the most of your take-profit targets, you’ll need to think deeply about your trading style, your trading goals, and then find a take-profit approach that works best for you.

While there are many other ways to seek more pips out of the market, here are three unique methods that you can apply to your trading.

3 Ways to Get More Profit From Your Trades

1) Backtest Your Strategy To Determine Appropriate R:R

Who is this best for: Algorithmic traders, mechanical strategies, scalping strategies

While past performance does not guarantee future outcomes, often history repeats itself. Since market moves are motivated by human emotions, players in the markets tend to behave similarly over time.

Especially if your strategy has clear-cut rules, you can readily backtest its performance and measure how far price tends to move before going against your trade. I like to do this with the mechanical strategies I use to trade. To compile data for this analysis, I’ll track the most pips moved towards and against my trade in a spreadsheet, as seen below.

 

how to backtest forex

Push implies the farthest distance the trade would go in my favor and the pull represents the movement that would go against the trade before turning towards profit again. “1.5 x 1.5” ended up being “1.5 ATR as a stop-loss and 1.4 multiplied by the stop loss for take profit.

Such data can be revealing. You can apply different risk-to-reward variables to see which results in the highest return over a period of time. Perhaps, even contrary to the advice to “Let profits run,” you may find that it pays to have a tighter take-profit target, with a R:R like 1:1 to 1:1.5. I find this to be particularly true for algorithmic trades or trades that occur on shorter time frames (5m, 1m, etc.), when trades are taken with any given setup, without higher time-frame analysis.

The more data, the better. Test it against different R:R possibilities, such as 1:2, 1:2.2, 1:4, or even 1:1.4. However, as with any backtesting activity, the results need to be taken with a grain of salt. Slippages, slow entry orders, and other small tweaks or mistakes can affect these outcomes. Therefore, I like to aim for a little less of a target than what my results tell me.

2) Using Multiple Targets: Using Both a Fixed and a Dynamic Profit Target

Who is this best for: Trend traders, price action traders

Many traders will split their take-profit targets over multiple different exits. This is probably one of the most widely used methods to let profits run while taking some profit along the way. While you want to get as much as you can out of a trade, the farther price moves, the increase in likelihood it will eventually turn around. Even with the best of analysis, picking tops and bottoms of trends can be excruciatingly difficult. Instead, it’s better to use an exit strategy that is malleable to a variety of outcomes.

An example of using both a fixed and dynamic profit target can look like this:

Instead of one target, use two take-profit targets.

The first can be a hard risk-to-reward ratio, such as 1:2, where you are profiting twice as much as you risk. At this price point you can decide to exit half of your position.

The second take-profit target can be an indicator or price action pattern that signals a reversal. One example of this is to let price continue until it pulls back and crosses a 21-ema. Another example is to exit when you see a bearish/bullish pinbar going against you on a higher time frame, like the 4h if you took your trade on a 1H. You can research different ways to spot signs that a trend is about to end if you’re using this to get as much as you can out of a trend strategy.

multiple take profit targets forex

3) Apply a Trailing Stop

Who is this best for: Trend Traders, day traders, swing traders

There are traders out there who only use trailing stops for a take-profit target, they won’t put a defined target on the chart, but instead let the market’s momentum decide where the appropriate profit lies. This approach can help with minimizing losses and drawdowns but sometimes at the cost of a higher return. The benefit in using this approach is that it’s agile and sets a target that more closely matches what the market is willing to give.

There are a few ways you can use trailing stops.

One way is to set it as an automatic stop-loss that follows the movement in ticks. If price goes down after a pre-defined level (such as with every 10 pips moved), the stop loss follows as well. This works better with wider stops, as often used in swing trading, and less volatile markets, as too close of a stop can take out a trade early.

Another way is to move your stop below the low/high of every 3 bars – this works best with trend trading.

Again, you can research trailing stops more deeply, as there are many methods out there.

Conclusion

No one exit strategy will work for all trading plans, time frames, or trading sessions. Backtesting, demo trading, and small positions can all be used to test the efficacy of a profit target as it relates to your strategy. Be sure to put the time and work in to experiment with your trading, as you’ll learn and build your skills by performing these exercises!

Wishing you the best of strength and luck in the markets!

 

7 Things Every Trader Should Do

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Before I dive into the details of this post, I just want to say a very big heartfelt shout out to all Ukrainians around the world – I am so sorry and in so much pain as I see all the suffering, war, and destruction that’s happening in Ukraine right now. This is an unethical move on Putin’s part and I genuinely hope that this war ends soon and that Ukraine can recover and repair the damage.

These are difficult times right now – all around the world, inflation is pretty bad.

Here, in California, gas is just about six dollars a gallon.

Like any market, global economies go through ebbs and flows as they play out boom and bust cycles. Hopefully, we are still in an uptrend overall and in time the world will repair and grow again.

Amidst this volatility, you may be learning how to trade right now – and wanting so badly to get into profitability, or at least make sense of the market.

Or perhaps you’re three years in and you’re in a fumble and you don’t really know what to do as markets are changing. Just when you think you may be gravitating towards clarity, suddenly volatility is all over the place and you’re just kind of stuck in information anxiety.

To help abate some of that anxiety, and clear away the confusion, I want to help you regroup and be able to center in on 7 things you can focus on doing in order to become a profitable trader.

Now, I didn’t just pull these out of thin air. I actually derived these 7 ideas from Alexander Elder’s “The New Trading For a Living”. This is one of the first books I ever read on trading and I continuously go over and over again as I try to remind myself what do I need to be focusing on as I continue to grow as a trader.

<<This is also one of a number of books I personally recommend and have listed in a free guide that I’ve compiled just for you>>

You’re going to find that there aren’t only just trading books on that list but some other personal development and money management books as well. At the end of this article, I’ll touch on why I’ve included those other books.

So let’s dive in and go over 7 things every trader should be doing as they not only learn about markets but also grow into different levels of expertise.

In my notes, I call this list the “Seven Words of Fatherly Advice” from the trading father himself.

7 Things Every Trader Should Be Doing

1) Decide That You’re in This For the Long-Haul

Elder’s first suggestion is to decide that you’re in this for the long haul – for you, trading isn’t some dabbling activity. It’s not like when you go out and you just want to try quizzo for the first time and you know you can have fun with a one-off…no! You’re in this like you’re going to become the next star on Jeopardy.

You want to get into trading with a level of commitment where you know and anticipate that you will still be trading 20 years from now.

The kinds of things you’ll commit to doing in order to gain knowledge and endure the ups and downs that come with the experience will look different when you assume you’ll be in this for a long time versus just browsing with no true commitment.

2) Learn as Much as You Can

The second suggestion is to learn as much as you can, especially in the early stages. It’s really important to get a nice range of information from different sources – you don’t want to just follow one trader. Instead, you’ll probably look up a number of traders on youtube or you’ll probably read a couple of different books.

At the get-go, you want to be expansive and get a little taste of everything you can find in order to collect and later reflect on what to do with this information.

You’ll learn about day trading and scalping and swing trading…and then maybe after watching different videos or trying out different trading styles on your own, you’ll eventually decide on becoming a scalper or a swing trader. But at first, it’s a good idea to learn as much as you can.

The caveat that Elder gives (and that I think is the utmost of importance, too) is that it’s important to keep a healthy level of skepticism.

You can’t necessarily believe in everything you read or see, especially on youtube or other forms of social media.

It’s going to be up to you to filter this information through your own analysis and decide what might be useful what might be unfounded.

Following a bruce lee quote: Take what is useful, discard the rest, and basically come up with something of your own understanding.

3) Don’t Rush the Process

Elder’s third word of advice is to not rush this process. Don’t be greedy – don’t assume you’ll make money during the first couple of months.

You want to take this process slowly, especially if you’re in your first year, don’t start making any plans about quitting your day job.

Assume a slow learning process. Some people will compare day trading to getting a master’s degree – it can take a couple of years. You could try to get all your credits sooner but you tend to frustrate and overwhelm yourself in the process and maybe not do as well in certain courses as if you were to take the process slowly and maybe spend three years on a master’s degree instead of trying to do an accelerated one year.

So using that as an analogy for going into your first year of trading, don’t assume you’ll even make anything at the end of the year.

There’s common project management advice that says however much time you think it will take for you to complete a project, add in at least 30 percent more of a time buffer.

-Because things come up, mistakes happen, and you might not have all the information you need at the get-go.

You’re not a bad trader if you don’t make money your first year and you’re not even a bad trader if you don’t make money your second year.

It can take a lot of time to learn the skills you’re going to need to espouse in order to do well in the markets.7 things every trader should do

4) Be Able to Use Several Analytical Methods to Confirm Trades

Fourth, we’re getting more into the nuts and bolts, here. You’re going to want to have a way of analyzing the market. This is the aspect that most people pay attention to, as this involves having a strategy and being able to conduct technical or fundamental analysis.

Elder goes on to add that you need to be able to use several analytical methods to confirm trades. He also recommends that you should test everything on historical data and be able to move with markets and know how to approach a bear market versus a bull market. Overall, anticipate that you’re going to need a variety of approaches for different market conditions and it may take some time to learn this, as well.

5) Develop a Money Management Plan

Fifth- and this is huge- Elder recommends that you develop a money management plan. He explains that there should be three main goals with profiting in the markets and they’re ordered in level of importance:

A. Have a long-term plan

B. Aim for steady growth

C. Have high returns

That’s the order you should approach this. For your first couple of years of trading, you are probably just going to focus on making sure you can stay consistently profitable over the year even if you’re not returning a lot.

As you grow as a trader, then you can start looking to hit regular targets for steady growth. This could be profiting every month or every quarter, depending on your style of trading.

Your third goal is to eventually hit a high-profit level.  You’ll see this more in experienced traders, maybe going to the fifth sixth year and beyond, where you have a foundation, you’re solid in your discipline, and now you’re looking to increase the amount of profit you make each month. Of course, Elder goes into this more deeply in his book and I do recommend that you check it out to learn more about money management.

6) Remember That the Trader is Always the Weakest Link in a Trading System

I almost want to write it down as a note and put it on my computer to remind myself. He says that it’s important to remember that the trader is always the weakest link in a trading system – not the strategy, not the risk management plan, but the trader. Obviously, the trader is the person who decides the risk management strategy and which strategy to use or whether to enter in impulsive trades or not, because the trader is in command.

Given this information, it is crucial to understand your own weaknesses as you trade and this is something that I don’t think anyone’s going to be able to tell you.

You’re going to have to observe it within yourself.

Elder adds that you need to have a way to examine yourself and be able to cut and end those impulsive trades.

That’s gonna have a lot to do with psychology – you can learn a little bit about this by talking to other traders or learning from the mistakes of other traders, but the most important tool you’ll ever have to understand your psychology and gain control over yourself as a trader is to conduct a trading journal.

Keep track of what you’re thinking and doing as you perform in each trading session and review those entries regularly.

7) Winners Think Differently From Losers

It may be hard to conceptualize now, but how you think in this moment in your current trading sessions will look vastly different from how your mindset will work and the way your thought process will unravel as you’re trading in the future.

Elder specifically writes that you are going to need to change and develop your personality.

This is huge!

This is implying that what it takes to grow as a trader is going to involve work that expands beyond what you think about when you think about trading.

You’re going to have to develop your personal self – you’re going to have to grow into emotional maturity in order to reach that high-level success you’re aiming for.

This is why in the resource guide I list a number of personal development books that have made a huge impact on my life and my own trading, which may make a big impact on yours, as well.

7 things every trader should doOther actions, like going to therapy or maybe getting on medication if you’re struggling with a mental health illness, are also crucial tools you can use to develop yourself as a trader.

Remember that who you are now and who you will be when you are a profitable professional trader are two different human beings and there will need to be growth and some steps taken to get to that place.

It’s not going to happen overnight, so it is very much in your interest to get into the field of personal development if you want to grow as a trader. I often recommend books for this research because there’s no better way to start thinking like someone else than to hear their thoughts and their words inside your own head.

—

So these are just seven of the most foundational steps you can take to continue on your journey as a trader. There are others out there, but I think this is a very concise list if you’re ever feeling lost and you just want to regroup. I think you could use these seven reminders almost as a checklist to ensure you’re doing the things you need to do in order to profit as a trader.

I hope everyone stays strong and be prepared to deal with a continuation of this volatility in the coming weeks.  I wish you nothing but the best of strength and luck in the markets – take care!

Funded Trading Plus – Pros and Cons

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This seems to be the year to be a prop trading firm.

Nearly every other week, a new firm comes out with trading rules that seem to surpass the industry standard set by FTMO and the 5%ers. Prop firms can be a blessing for responsible and profitable traders who seek to quit their jobs to make a living from their skills yet lack the capital to make such a lifestyle shift.

As firms compete with one another to provide better returns or more lenient rules to us traders, they still need to craft ways to sift irresponsible and costly traders from responsible ones who are capable of making a profit for both themselves and the firm. Therefore, each firm’s funding model will come with trade-offs – perhaps in lieu of a higher profit split return to the trader, there may be requirements to trade a minimum number of days each month or pass a challenge with a strict drawdown requirement.

It’s likely that whatever firm you trade with, there will be aspects of the arrangement that feel suboptimal. You’ll have to decide which trade-offs are worth the benefits in order to return a profit from a funded account.

Keep this in mind as you seek the best prop firm structured for your trading style and strategy – it’s likely that certain models will fit certain strategies and risk management approaches better than others. You may need to research a number of firms before selecting your first challenge.

For the purpose of this article, I want to share with you a (relatively new) prop firm that has recently caught my attention.

Note: I am an affiliate of Funded Trading Plus. I personally chose this arrangement because I believe this firm has tremendous potential for offering a realistic prop trading challenge that people can more comfortably pass than other reputable firms like FTMO or MyForexFunds. 

<<I’m excited to be able to offer you a 10% discount on your Funded Trading Plus challenge – Just be sure to use DFX10 as a coupon code at checkout!>>

I’ve taken time to chat with both of the owners of the firm and hope to arrange an interview in the future – they are both retail traders who understand the kinds of difficulties retail traders face. One of them mentioned to me something along the lines of, “We’ve built the prop firm that I would personally want to trade with.” 

As I’ve mentioned in another YouTube video where I compared FTP to FTMO and the 5%ers, this firm is like the best of both a challenge-model and a long-term model. You’ll understand why in just a moment, as I list 5 pro’s and 3 con’s that this firm exhibits. It’s up to you to decide whether the benefits of this firm outweigh its trade-offs. I hope this simple list can help you organize your thoughts on the matter.

Let’s begin!

5 Pro’s of the Funded Trading Plus

  1. No time limit or time requirement – FTMO has set the standard for requiring traders to hit a 10% profit target within 30 days. If you’ve been trading for some time, you’ll probably realize that earning 10% in only a month is quite an accomplishment. JP Morgan would come knocking down your door to hire you if you were capable of returning 120% per year. 

A professional trader working for a firm usually aims for something closer to 20% per year. That comes out to 1.6% per month, on average. So if you’re looking to make sure you hit 10% in a single month you’ll likely need to risk more than you’re used to or use other risk management strategies to ensure a pass. (I passed both of my FTMO accounts by using a range of risk % per trade, from 0.5% up to 2.5% – this was not easy to stomach some days)

So, when I first saw that FTP was removing all time-related requirements, I didn’t believe it at first. It was such a relief to see a firm remove time from the already difficult challenge of aiming for a profit target while avoiding a drawdown. Without a time requirement, you can aim to pass the challenge as fast or as slowly as you like. This is an added benefit for swing traders or part-time traders with a day job who may need a few months to hit the target. 

funded trading plus experienced

2. Option for a 1-Phase Challenge – Funded Trading Plus offers a couple of different account options, one of which, the Experienced Trader, only requires one phase to pass and achieve a funded status. This can be beneficial, as starting over with a second account can be surprisingly difficult for traders when you can’t use the capital you’ve already earned to mitigate future losses. However, I believe that this firm still has its own way to include a verification stage – I’ll explain why I believe this when I list the cons.

3. You can use EA’s, Algo’s, Trading Bots, and Trade Copiers – this is a boon for traders who aren’t available to trade high probability setups but depend on technology to assist in making these trades happen. Many firms will deny the use of these tools, but FTP invites you to trade with them, so long as you are still the architect of your trading decisions (and not some bloke who you paid to do your challenge for you).

4. They Accept Crypto – It seems more traders are utilizing crypto as a regular-use currency or investment. You can pay the challenge fee (which is refunded when you receive your first split) using Bitcoin, Litecoin, Ethereum, Dogecoin, Tether and USDC.

5. Trading View to come – Most firms only offer MT4/MT5, which have been the industry gold standard for decades (personally, I think they’re outdated) but when it comes to UX, Trading View is likely the best platform currently available. Most notably, their order forms are practical and easy to use to set up stop losses and take profit targets. FTP is working with Trading View to be able to offer this as a platform soon, but the date for launch is TBD.

BONUS: This firm is relatively inexpensive, especially when considering how quickly you can scale your account. Since #5 is still in the works, I’ll give you another solid benefit that is already true to the firm. FTP offers affordable options for a variety of funded accounts and will double the account size for every 10% profit made on the account. FTMO is currently charging about $600 USD for a $100k account. FTP is charging $499 (or $449 if you use the code DFX10!). 

These are just a handful of the reasons why I think FTP is a remarkable prop firm and possibly one of the best firms you can trade with, given what you deem reasonable for trade-offs. I recommend checking out their site and reaching out to their customer support to learn about more than what I’ve listed here.

The Cons of Trading with Funded Trading Plus

Now that we’ve covered some of FTP’s perks, let’s talk about a couple of cons that have stuck out to me as potentially difficult roadblocks to staying funded with or profiting form this firm. I’ve noticed that a lot of firms are pretty responsive to customer/user feedback, so there’s always a possibility that some of these rules will change in the future or be mitigated with the addition of greater perks.

  1. 1:10 leverage only – If you’re a scalper, like me, leverage can be your friend when you are taking 5 pip stop losses. It helps abate some of the commission fees and boost profits with these trades. I don’t take trades every day, and often only have one or two signals, so sometimes I lean on leverage to hit certain profit targets. 

HOWEVER – as I was going over their prop firm model, I remembered something important about this firm – there are no time limits. Thus, instead of rushing to hit a 10% target in one month, it’s better to take smaller trades and hit the target when your strategy lets you, not because of some abstract cutoff time. In this way, we don’t need leverage – we can risk less % per trade and practice the responsible trading styles of institutions (using usually less than 1% risked per trade). 

We need to remember that we need to evaluate each firm within its own context. As much as we want to compare apples to apples, the parameters of each firm can change whether it’s useful or not to have more or less leverage, time, drawn down, etc. So having a 1:100 leverage isn’t as crucial for a challenge without a time limit, when compared to something like FTMO, where you’ll need every boost you can get to finish within 30 days. This concept applies to the next cons, as well.

2. Complicated Drawdown Rules – Instead of using a set and easy to remember, fixed drawdown (such as FTMO uses, requiring funded traders to stay above a 10% drawdown from the initial balance), FTP first requires a relative drawdown (this means that the drawdown increases as profit on the account increases) for the first 5% of profit. After that amount, the drawdown is fixed and will stay set as your initial balance. This also means that you cannot withdraw all of your profit from the account. This leads into the next issue..

3. Withdrawal is Affected by Drawdown Rules – Here’s the example that FTP shares on their website:

Remember how I said I believe FTP has a way to include a verification stage (see Pro #2)? This is it. It’s my understanding that this is meant to motivate you to keep the first 5% of profit you make in the account. This feels like a verification stage to me since you’re forced to keep profit in the account and won’t be able to withdraw it without penalty. From the firm’s point of view, having the trader leave profit in the account helps offset any future loss on their part – you’ll only be risking money that was won. It’s pretty smart as a business model and if you can accept this trade-off, recognizing that you would have to trade an extra 5% on most 2-phase challenges anyways, then you’re not really being deprived of anything. 

Nonetheless, this greatly put me off the first time I read the rule (with brows furrowed and head hurting). It only made more sense to me after sitting on the information for a while and having an insight while making a review video. Most people won’t take the time to do the math, though – there’s a saying in business that “If you confuse – you lose”. I think most traders will look at these rules and psychologically put up a wall. It could even be a deciding factor to avoid trading with the FTP in lieu of another firm (even though they’re signing up for the same setup in another 2-phase challenge). So I think it’s probably in FTP’s best interest to eventually change this rule or find a way to make it easier to understand and accept.

As with the theme of this article, your choice of firm will always come with a series of trade-offs. To access a benefit that better suits your trading style – such as needing more time to hit a profit target – you may need to learn how to maneuver an initially confusing withdrawal ruleset. I hope that the pro’s and con’s listed here can help you discover whether Funded Trading Plus is your best prop firm choice. I know for myself that I hope to trade an account with them soon. (Just waiting on Trading View!)

 

Again, if you can see how the added benefits of this firm help it stand apart from what’s currently available, and that its cons are actually realistic and fair for the industry, then be sure to use the coupon code DFX10 for 10% off of your challenge!

I wish you nothing but the best of strength and luck.

And always do your due diligence!

See you in the markets 😉

Mental Health and Discipline

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Day Trading and Mental Health

When learning how to day trade, it can be tempting to spend most of one’s energy focusing on learning strategies, technical analysis, and account management formulations. While these are all important aspects of trading, the glue that brings all the pieces of the puzzle together into a cohesive whole is discipline.

As I’ll often reiterate, even with the most profitable of strategies, if you can’t commit to following its rules then you will still lose money. You can minimize losses with the best of discipline and the worst of strategies, but you can cause great financial ruin with the best of strategies and terrible discipline. So which do you think you should prioritize in your trading?

One way to think of discipline is that it represents the actions you take in the face of psychological awareness. Disciplined traders still feel anguish, fear, and desire for more profit – but these feelings don’t cast the final vote on what to do next. Instead, experience and logic remind the trader of potential outcomes and the best approach to take in order to manage risk. Discipline is the art of reflecting on one’s own emotions and deciding to take the right action anyways.

But sometimes emotions can feel more powerful than usual. It’s often a foolish idea to assume that you can just ignore an emotion in the heat of the moment and follow your rules. Many traders over assume their grip on their own emotions. Or at least fail to anticipate the ebb and flow of emotional states. This can lead to account-draining actions, such as revenge trading, or risking more than anticipated on a single trade. This doesn’t just happen to new traders, but even seasoned ones too. The wisest of traders know to always reflect on one’s emotional state and discipline, and take action to take care of each.

<<Don’t know what to do with your current trading outcomes? Try this…>>

Focus on Your Mental Health

We’re currently living through a pretty tough time in history. To say that the global population is stressed out is an understatement. Between public health crisis and war, inflation and political tension, it’s hard to go outside or search the internet without being reminded of how emotionally overstretched everyone feels.mental health day trading

I think now, more than ever, is a good time to start paying close attention to your own mental health. You deserve to feel solid in your own sense of self – no one else is ever going to be closer to you or look out for you better than your own self. You are capable of being the best parent to yourself than you ever had, the best nurturer and guide. When you take care of yourself, life gets just a bit easier. Maybe not enough to solve all of your problems, but enough to help develop resilience and invite some peace in your headspace.

One of the greatest ways to take care of yourself and your mental health is to start exploring what’s going on during your “air time” –

What kind of tone do you use when you are thinking?

What topics do you focus on?

Do you call yourself names – if so, what are they?

What emotional states do you experience the most often (anxiety, stress, joy, calm, fear, boredom, anger, etc.)?

What activities drastically change your mood? (Drinking coffee, being around certain people, consuming alcohol or drugs, being in certain environments, etc.)

Ways to Actively Work on Your Mental Health

When you take account of your inner thoughts and recognize the importance of mental health, you can begin to determine the kind of actions you can take to improve your headspace so you’re experiencing less negativity and more calm. While I’m not a psychologist or licensed professional, here are a few mental health suggestions that have been passed on to me by those who are:

  • Regularly working with a licensed professional, like a therapist, counselor, or coach to personalize your approach and receive expert advice
  • Journaling your daily emotions and reflecting on these entries each week
  • Working with a doctor to determine whether medication is appropriate for you (There is nothing wrong with you if you need this kind of support – medication can be a life-saver and there are far safer options today than ever before)
  • Taking care of your physical body (your neurotransmitters need supplies from your diet, too!) – this means eating a nutritious, non-inflammatory diet and regularly exercising
  • Ensuring that you’re taking regular breaks from work and trading by making time to do the things you enjoy
  • Introducing more calming routines in your life – going on nature walks, doing yoga, having spa days, getting a massage, taking baths, etc.
  • Meditating
  • Using a mental health workbook written by a professional to learn more about yourself (this can be a cheap alternative if therapy is unaffordable)yoga day trading

Again, you are setting yourself up for losses if you continue to ignore the role of mental health in developing trading discipline. Taking the time and focus each day to care for your mental health will pay dividends in all areas of your life, not just trading.

 

Mechanical or Discretionary Strategies – Which is Better?

Mechanical or Discretionary Strategies – Which is Better? 4830

Lately, I’ve been spending some time learning about the Wyckoff method and “Smart Money” concepts, both of which are discretionary approaches – I firmly believe that it’s always important to grow as a trader and do what you can to become more comfortable and aware of how the markets work, and while these two approaches are by no means easy to understand in-depth, they are incredibly efficient for producing phenomenal returns.

I think of myself as an intermediate trader – not quite a professional, but definitely not a noob. I started out with learning a grabbag of trading approaches – breakout candle structures, triangles, Fibonacci retracements, and ultimately landed on mechanical strategies using indicators as the way to defy the gravity of trading mistakes and finally get into profitability.

Discretionary tradingMechanical strategies can be fairly easy to learn, as long as the conditions for signal, entry, exit, and trade management are clearly described in rules. They’re also easy to program if you want to get into algorithmic trading and have a bot submit trades on your behalf. But every mechanical strategy has periods of drawdowns as they don’t necessarily adapt to new changes to typical market behavior.

Now that I’ve passed a couple of challenges with the mechanical strategy I teach in the Disciplined FX Scalping Course, I’m thinking about ways I can improve from here and not only increase my typical return but also stay vigilant of inevitable changes in market types.

Does this mean discretionary strategies are “better” than mechanical ones? I believe the answer to this question depends on your trading style, your level of experience with trading, and what kind of returns you hope to get out of the market in exchange for the amount of study, preparation, and effort that you put in.

If you’re relatively new to trading, I believe mechanical strategies are the best way to be able to focus on building emotional discipline with trading first. It’s difficult enough to determine appropriate entries and exits in market structure, but it’s nearly impossible to achieve any kind of consistency and profit if you have no reign over fear, greed, and impatience from upending your trading plan. While you might not see 1:20 risk-to-reward ratios with a day trading mechanical strategy, you can still get into profit and keep it. If this is an experience you’ve never been able to maintain for months at a time before, then that alone is achievement enough.

For me, getting back into discretionary trading methods feels like the logical next step. Now that I know myself better as a trader who is capable of following rules and not making common early mistakes such as holding onto losses, revenge trading, or putting more than 2% of my account at risk for a trade, I’m better prepared to handle the learning curve that comes with developing an intuitive and experienced eye for reading market behavior.

<<WANT TO SEE AN EXAMPLE OF A DISCRETIONARY STRATEGY? CHECK OUT THIS FREE CONCEPT I CREATED>>

I think the important takeaway from this question isn’t a final decision over whether one strategy approach is better than the other, but to instead regard the behaviors of each as unique. They each have their benefits and drawbacks, with their own skills that need to be mastered, regardless of your time in the markets.

Mechanical trading might be for you if: You’re new to trading; you are struggling with trading discipline; you want to turn your strategies into robots; you don’t have a lot of time to study market structure or trade; you’re having a hard time grasping discretionary concepts, or you are okay with less return in exchange for less effort committed to learning how to trade; you want to be able to trade while you are also working

Discretionary trading might be for you if: You’re looking to improve your trading skills while gaining a better understanding of how markets work; you want to improve your typical return of profit; you are confident in your trading discipline; you have more time to evaluate different time frames and setups; you have time and are available to watch the charts and wait for prime entries; you want to stay on top of changes in market behavior and profit from doing so

Mechanical Trading Skills to learn: How to implement trading tools like indicators, fibbonaci tools, or candlestick patterns; Discipline in following rules

Discretionary Trading Skills to learn: How to read market structure; How to profit on different market setups; dynamic entry and exit positions; How to use technical analysis tools to aid in understanding market structure and behavior; Discipline in following a trading plan

Trader Trade-Offs

Trader Trade-Offs 65

Let me set the scene:

You’re sitting at your trading desk, about an hour into the session. You are using a strategy, like the ones taught in the Disciplined FX Scalping Course, which requires a specific market order entry. 

The good news is that you don’t have to guess where to enter. The bad news is that you need to be ready to enter at any given moment during the session.

Just as price is nearing a potential entry-level, you feel a gurgling sensation in your gut.

Uh-oh.

You know what’s coming.

It’s time to go to the bathroom.

But it’s also almost time to take your trade…

Now, the obvious question that’s coming next is… are you going to miss your trade or risk pooping in your chair in order to show up for your strategy?

That’s one way to approach this.

But I think there’s another way to frame this question, which speaks to the crux of this dilemma –

Would you be okay with pooping your pants in order to take a trade?

What I’m trying to get at is this – What trade-offs are you willing to make in order to not just trade, but ultimately make money from trading?

On an immediate level, you may already be swapping a good night’s sleep in order to be present for certain market sessions. You may be forfeiting Taco Tuesdays with friends so you can prep your next trading session.

But then there are trade-offs that come with greater risks.

Market Wizard, Linda Bradford, told Jack Swagger about being on call with her broker while in labor at the hospital. 

You may be reading this right now with the notion in your mind that, yes, you are completely okay with soiling your pants in order to possibly land a winning trade.

And that’s okay, I’m not here to judge what’s within or beyond your comfort zone of trade-offs.trading style

Instead, I want to direct you to consider the ways in which you are willing to make adjustments in your life in order to succeed at trading. I also want you to consider what you want to ask of trading to adjust to you.

This means that you don’t just keep bending yourself to try to capture as many trading edges as possible, but instead lay out what your ideal trading session is first. And then go find ways to best trade for profit during that time.

For example, I’m getting fed up with waking up at 5:00 am PST in order to trade the New York session. I have medical issues that destroy my ability to sleep well. I don’t have the option to sleep-in, should my body need it, if I want to be sure to follow my strategy correctly. So ntrading sessionow, I’m looking at ways to scalp either the end of the New York session or the Asian session.

Is scalping difficult? Yes, it comes with a long learning curve (mostly due to the emotional nature of scalping, not necessarily the ability to craft a winning strategy). Does the Asian session have less volume than the others? Absolutely. 

But if I continue to force-fit myself to meet the best practices of most traders, I run the risk of disempowering my discipline if I’m not “awake” or if I’m feeling emotional from not sleeping well.

If you want an outcome badly enough, you will find a way to make it work.

My ultimate point in writing this piece is to draw attention to the various trade-offs that come with developing your trading skills, choosing a trading style, and selecting a time to trade. They’re not obvious. There may be empirically “more profitable” or “less profitable” styles and strategies with trading, but they must be understood in the context of your own life, your current trading skill level, your psychology, and your appetite for risk.

No one else but you should make the final decision regarding what you want to do with your trading system. People (hopefully experienced traders and not some social media trend) can make suggestions from their own experiences, but what will ultimately guide you towards profitability and profitability for years to come is going to be unique to you. 

This is why the mechanical strategies I teach in my course all suggest different ways you can backtest and adjust the strategy to your own suiting – whether that means trading during a different market session, a different currency pair, or even a different time frame. I believe that the strategies that you will be trading with as a routinely profitable trader will possibly echo the mechanics of other’s strategies, but ultimately have a personal touch of your own, even if just to adjust an indicator setting. 

So if you’re A-okay with pooping your chair while you scalp the market, then that’s something important to know about yourself as you trade. If you need the guidance of reputable courses and mentors to help you along, or you’re committed to only consuming free content, both have ways in which they are perfectly reasonable and wise. Don’t let anyone else tell you otherwise. As you learn and grow as a trader, remember that you are in the driver’s seat of your own journey. Find the equilibrium of trade-offs that makes the most sense for you.

Interview with The Forex TradeHER

Interview with The Forex TradeHER 7759

This past week, I had the opportunity to interview an up-and-coming Forex mentor, who is populating Instagram with both informative, and might I say, sassy, content!

Michelle of the @forextradeher is one of many women traders who are helping us turn this male-dominant market into a diverse and opportunistic experience for anyone who wishes to develop the lucrative skill of day trading.

From sharing her experience of becoming profitable in six months of intense study to discussing technical analysis and risk management approaches, Michelle imparts some of her refined trading insights and wisdom in our one-on-one session.

Be sure to watch the video below to enjoy this experience for yourself!

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