The True Holy Grail Strategy

The True Holy Grail Strategy 1

Since you first had the realization that it’s possible to make consistent money from trading markets, it’s likely that you subsequently formed an idea that “there must be a strategy out there that always, or at least almost always, makes a profit with every set up”. 

Forget your psychology, how much money you have to trade, or your level of experience: if you could follow a strategy with the right analysis and rules, you’d always make money, right?

This notion of depending on just one kind of strategy to repeatedly make money each week or month is often called a “holy grail strategy” – a mythical, catch-all approach that will practically print dollars right out of your computer. 

If you’ve been around trading education blogs or channels for some time, then it’s likely that you know what professional traders think of holy grail strategies: they don’t exist. 

The belief that depending on one profitable strategy for the entirety of one’s trading career is often what leads traders to hop around (or rather, shop around for) different strategies and approaches. This can lead to a vicious cycle of losing more money than what was earned as the trader jumps ship at the first sight of a losing streak.

I’m here to tell you that there IS a holy grail strategy.

But it’s not the kind that you’re anticipating.

First of all, instead of looking for a simple, “run-like-clock-work” strategy, I suggest that you learn an approach to trading that teaches how to analyze case-by-case scenarios and take trades depending on specific market conditions. Smart Money Concepts, the Wycoff Method, ICT, and the structured smart money approach I teach in the DFX Scalping Course are all examples of learning a trading approach rather than a strategy.

But once you understand your approach and build your trading system around it, even the most successful of systems will run into periods of drawdown and strings of losses. 

Therefore, the REAL holy grail strategy is involved with how you MANAGE YOUR MONEY and MANAGE YOURSELF. 

This idea isn’t my own, I first heard the suggestion from an Inner Circle Trader video about risk management and it really lit a lightbulb in my head. 

Risk Management

Yes, it is important to trade a strategy that actually has an edge and can make more money than it loses. 

But what’s also important is how you behave when the strategy inevitably faces a losing streak.

Risk management is an art form and depends entirely on one’s appetite for risk and overall trading goals. Michael Huddleston, the man behind ICT, gives the suggestions to adjust your risk with every loss by cutting it in half with every subsequent losing trade. 

So if you risk 2% on a trade, cut your risk in half to 1% for the next trade. If the following trade after that also loses, then its subsequent trade should have a risk of no more than 0.5% and keep it there until you make back at least half of the total amount of drawdown. 

I want you to understand the power of this model. If you took four losses in a row at the original 2% risked per trade, then you’d be down 8%. However, with Huddleston’s suggested risk model, you could lose 12 times in a row before hitting the same 8% drawdown as the first. Remember that we’re playing a probability game, not a prediction game. With a solid strategy, hitting 12 losses in a row should be a rare, albeit possible occurrence. You’re much more likely to hit 4 losses in a row (Which, under Huddleston’s model, means losing 4% when risking 1% per trade). Either way, by dynamically adjusting your risk amount according to your profits and losses, you protect your capital.

inner circle trader risk management

Another possible approach for managing risk is something that one of Huddleston’s famous YouTuber students, Paladin, suggests (and is a model I’ve used for myself in the past). Basically, you adjust your amount risked per trade according to whether you’re in profit or in a drawdown. Paladin tells his students to trade 0.5% per trade until you make 2% profit on your account. Then you can double your risk to 1% per trade as long as you hold over 2% in profit in your account.

The benefit in reducing risk during losing streaks is that sometimes a strategy conflicts with current market conditions for a period of time – be it days, weeks, or even months. By tightening your risk while you’re in a drawdown, you’re keeping your losses small in the event of a major losing streak. 

Sure, you may miss out on the upside – while your risk is low you may experience a winning streak and fail to make as much as if you had stuck to a consistent risk amount. But seeing how most people have a problem with losing money in the markets (rather than having a problem with making too much money) it’s better to accept less of a profit in order to mitigate inevitable losing streaks.

These are just a couple of examples of how you can manage your risk and money while trading. There are other aspects of money management, like deciding when to withdraw profit or when to increase funds, which merit further research outside of this article.

Self-Management

The other aspect of the true Holy Grail Strategy is having rules for how you manage yourself while you trade. Oftentimes, sticking to strategy rules and money management rules can give you enough confidence and trust in yourself to behave appropriately. Nonetheless, certain emotions can arise while trading and these can cause impulsive reactions.

One common emotional reaction is to revenge trade after facing multiple losses in a single day or week. This could entail taking setups that aren’t there, doubling the amount risked in order to “make back” what was lost. It helps to journal your trading sessions and to get to know how you behave during these scenarios so that you can develop a set of rules for yourself.

For example, part of a personal risk plan could include rules for only taking 2 trades a day, or similarly, allowing for only 2 losses a day before you stop trading. Psychologically speaking, you’re more likely to let emotions get to you with the more decisions you have to make over time, so even if your strategy could profit more from taking all setups, it may be prudent to trade less so as to avoid impulsive decisions. These are just a few examples of self-management rules.

Conclusion

The big takeaway: the only holy grail strategies you’ll find in trading have to do with the unique set of money- and self-management rules you create for yourself to protect your capital and trade at your best. When it comes to deploying a trading strategy, it’s better to focus on learning a trading approach that teaches dynamic analysis rather than a singular strategy. You want to trade “If-then” scenarios that adjust to market conditions. 

Finally, don’t forget that trading is a marathon, not a sprint – the set of rules you’ll need to manage your money and your psychology will likely shift over time as your experience, skills, and personality change. Be sure to spend as much time researching and thinking about risk management as you do analysis and strategy. 

Asking This One Question Will Save Your Trading

Asking This One Question Will Save Your Trading 0

Trading is a practice. 

Kind of like how playing baseball is a practice. A pro MLB player trains, develops skills, and puts far more hours into preparing for the game than playing the actual game itself. 

Trading is no different – how we prepare before the actual session can lead to success or failure at the time of performance and this will impact our profitability over the long run. 

Now, when a pro baseball player arrives before a game, do you think he just arrives to the stadium before game time, walks up to the plate, and takes a hit?

No!

Before a game, any athlete will warm up and mentally prepare for showtime. 

And as traders we should be doing the same. 

When it comes to trading, warming up and getting mentally prepared are things we should be doing before we place our first trade. 

Warming up can look like analyzing the chart, going over the week’s journal entries, back-testing a trade that happened in an earlier session, or reviewing past trades. 

But the majority of our time before a trade should be spent becoming mentally prepared. And in this article, there’s a specific question you should be asking yourself if you want to finally profit over the long run. 

This question that I want you to ask yourself each day is easy to answer- it requires a simple yes or no response, and yet it’s absolutely vital.

However, this question comes with a rule.

If you can’t honestly, from the most sincere analysis of your own mind, give the answer yes to this question…you shouldn’t trade that day. 

And in a minute I’ll explain why. 

The question you need to ask yourself any time you sit down to trade is:

“Can I accept taking a loss today?”

If you cannot sincerely and without anxiety accept that you can take a loss on a given day, then you are not in an appropriate psychological state to trade. 

One of the most difficult aspects of trading is that this activity involves facing constant loss.

And for most human beings, who have been taught all their lives to avoid failure, or to see loss as being “not good”, this can be a very difficult concept to accept.

The irony of trading is that:

  1. No trader will EVER win 100% of the trades they take over the course of their trading career – even professionals rack up some losses over weeks and months of trading
  2. It’s absolutely possible to win only 30% of your trades and still make a ton of money

Trading can be similar to sports in this way, too. The best of baseball hitters have a 0.300 batting average, which means that they only hit 3 out of 10 baseballs pitched. You don’t need to be a perfect batter to win the World Series, you just need enough of an edge.

Trading is the same – not all of your trades will win, you just need to get enough return on the ones that do so that they’ll outweigh the losses.

You’ll hear this fact stated over and over again – and yet..

..it’s still the most difficult pill to swallow of all trading psychology lessons.

The underlying concept here is that you don’t need to know exactly what the market is doing all the time. The best of financial analysis will misjudge outcomes at times, and that’s because the market is MASSIVE, capricious, and subject to many different orders, news events, and data influencing the decisions of market players. It’s not humanly possible to predict all market moves.

Instead, as responsible and disciplined traders, our goal is to use strategies and analysis that offer a high probability of winning frequently, returning large reward for the risk, or some combination of those two factors.

Once you’ve determined your strategy and you start consistently showing up to trade, your next responsibility is to take your setups when they come and to accept your losses when they hit their stop order. Hanging on to a losing trade by moving the stop loss further is a recipe for disaster.

So I suggest that when you sit down to trade, you always prep your mind for the market by asking yourself “Can I take a loss today?” As long as you can preemptively imagine yourself losing, and be okay with that outcome, then you are already in a much calmer and more prepared state than 90% of traders out there.

Write this question down somewhere you can see it when you trade and get in the practice of asking it every session.

Strategies, analysis, and learning technical tools will get you in the game but your psychological work will keep you playing for great rewards over the long run. Learning to accept losses is one of the best things you can do for your trading.

5 Discipline Hacks You May Be Scared to Try

5 Discipline Hacks You May Be Scared to Try 41

Hey there traders, Andrew Bloom of Disciplined FX here.

August 2022 Update

July and August have been fantastic months for trading with the daily chart strategy that I am using, as I was able to pass and profit (+$5k!) from a 200k MyForexFunds account. I am currently awaiting payout and will make a comprehensive post with all the details next week. So be sure to subscribe to get notified when that content is released.

Taking Care of Your Trading Psychology

For today, I want to talk a bit about some of the less common trading discipline and psychology tools that are 100% available to you but you may be afraid to give a try.

If you’ve been in the day trading world for a hot second, you’ve probably come to the conclusion that your strategy isn’t necessarily the reason you’ve lost money or failed challenges.

How you manage your risk is another important factor that can lead to ultimate success or failure in these endeavors, but there’s another aspect of trading that dominates nearly all of your trading outcomes.

And that factor is your trading psychology.

By psychology we mean the way you feel about your trading experience, the way those feelings turn into actions, and most importantly whether you are able to experience non-attachment from your feelings while still being able to follow your rules and make logical decisions.

I believe your trading psychology is the #1 reason you are either doing very well and staying profitable or staying stuck in a series of weekly and monthly losses.

Some examples of psychology getting in the way of your trading include:

  • Getting anxious about a trade and closing it too early before it hits your profit target or stop loss
  • Feeling uncomfortable about losses and therefore giving up a solid strategy in search of one that you believe will help you avoid losses
  • Feeling greedy and breaking your rules in order to chase every setup
  • Holding out for more profit past your take profit target.

When these feelings go unexamined and therefore unmanaged, your trading can feel like a rollercoaster and while you may behave according to your rules one day, on the days you’re out of control you can completely destroy your account.

The purpose of this lesson is to share with you a few solutions to help better understand what you’re feeling, be able to see your emotions in the moment and act on them with logic instead of impulsivity, and literally change the way your neurochemistry works so that you are more stable and grounded as you trade.

The five tactics that I’m going to share with you may seem completely unrelated to trading and may not even change your outcomes significantly at first, but there are long-term solutions that will help you grow exponentially over weeks and months rather than hours or days.

This is partly why they may seem scary – because they require a desire to want to change the way you think and feel over the long run.

Each will require further research and a daily or weekly commitment, so if all are new to you, just pick one or two to start with and focus on slowly building long-term habits.

There are no quick fixes here.

Furthermore, they may feel scary because a lot of people, especially men, may have been raised with stigmas against these acts of self-nurturing and care, but I promise you that they all work very well and have the power to change not only your trading but also your own happiness and ability to stay resilient in life.

So without further delay, let’s go over five seemingly scary tools you can use to improve your trading psychology!

5 Seemingly Scary Discipline Hacks to Save Your Trading

#1: Keep a Daily Meditation Practice.

The art of meditation is literally the practice of observing what you’re thinking without getting caught up in your feelings.

The aim of meditation is to be able to create some space between a typical flurry of thoughts and the part of your mind that is capable of observing and making logical choices. Meditation won’t stop you from feeling your feelings, you don’t want to be a complete robot – instead, it serves as a tool that helps you see yourself clearly and be able to stop a spiral of thoughts before they take over your mind.

This is useful for trading because there are so many moments that require snap judgment and an unaware mind can easily let fear or greed make a decision.

When I was in college I became deeply interested in Buddhism and have kept a meditation practice ever since – I believe this practice alone has made the learning curve of trading bearable. Meditation helps us create space in our minds because we’re able to notice when there is anxiety, fear, greed, and excitement.

In that pause, we can go against an impulsive thought and stick to the trading plan.

Since the early 20th century, after many leaders of eastern religions such as Buddhism, Hinduism, and Taoism started migrating and teaching in European and North American locations, eastern philosophy and various styles of meditation have become more commonplace and better understood, particularly for therapeutic and spiritual benefit. In the 1960’s an American would have had to find a local ashram or sangha in order to learn to meditate, but nowadays the number of resources available for learning is so widespread.

A quick youtube search can provide guided meditations and there are lots of apps, like Calm and Mindspace which can help you not only start your meditation practice but stay accountable over the long run.

If you’re interested in starting a practice, I recommend using one of these apps or finding an audio or video course so that you are taught what to do while you meditate and can be held accountable for a longer period of time.

#2 Work with a Therapist

Next, the second tactic is to work with a therapist.

Of everything I list here, this may be the one that most people will feel the strongest resistance. And I completely understand why – therapy can be expensive, especially if you seek to go regularly.

It can also take a while to find a therapist you like.

You may need to have a couple of introductory sessions with different practitioners in order to find someone who has a style you like and you find trustworthy.

Some folks are afraid of therapy because they don’t want to unearth painful memories or past experiences. Others may be afraid of having to change who they are.

Like meditation, a lot of stigma around therapy is finally falling by the wayside. Since the beginning of quarantine, many individuals are seeking out mental health help from a practitioner for the first time in their lives. This isn’t a shock – we live in a pretty stressful global situaiton right now!

I speak from experience. I’ve worked with different therapists throughout my life, usually for only a few months at a time due to cost and moving. However, I always feel better for processing my inner fears and concerns with someone who is trained to guide and help teach coping mechanisms.

Yes, it can feel difficult to start, but it is a service that is completely life-changing. A good contemporary therapist is able to teach you coping mechanisms and emotional skills to help you better navigate your life.

Talk therapy, which is what most people think of when considering therapy, is kind of old hat, and honestly, unearthing one’s past over and over again may not even be very beneficial if there’s no real action or change in thought that comes from it.

Rather, Finding the right therapist is key – there are other forms of therapeutic practice that may be more beneficial to changing trading behaviors – for example, I recommend checking out cognitive-behavioral therapy, which emphasizes focusing more on what you think than what you’re doing since all action begins with a thought.

Humanistic therapy is another solid approach, which focuses on helping the individual grow into a higher self with the client acting as an authority on their own experiences, rather than a therapist trying to tell them what they should or shouldn’t be doing.

But nowadays you’ll likely find most practitioners to be integrative therapists – that is, they use a blend of therapeutic styles to help serve the needs of the patient.

If you’re looking for an easy and convenient way to get started with therapy, I highly recommend checking out the app and service BetterHelp, which allows you to have weekly video or audio sessions with your therapist, who you can select based on your interests and needs, and is available for texting throughout the week.

This is the cheapest way to get the most intensive and frequent therapy. They also offer financial aid, depending on your income level. My partner and I just signed up with BetterHelp a few weeks ago and we love the service. I particularly like that my therapist will send homework, which are just worksheets that either help me write out some thoughts or teach me exercises to help cope with anxiety and depression.

The last thing ill say about this is to do your research and go slow if you need to, this is meant to be a long-term, ideally lifetime, commitment, and it should be treated with the same level of care as finding a spouse.

#3 Study Psychology and Consume Self-Improvement Content

Third, especially if you aren’t able to afford therapy or make the time for it, I highly encourage you to self-study psychology and make a habit of reading self-improvement or personal development books.

If you don’t like to read, then find audiobooks or podcasts that serve a similar purpose.

Like everything I’m going to mention in this list, the goal of this activity is to help you better understand your feelings.

However, when choosing your content, leave psychology textbooks to future therapists, there are far better options for individuals who want to learn personal coping skills.

There are also plenty of therapist-written workbooks that can help you focus on and develop skills around an area of your choosing, such as with anxiety, addiction, PTSD, and self-actualization.

Two resources I recommend for reading or listening as an audiobook are Feeling Good: The New Mood Therapy by Dr. David Burns and 13 Things Mentally Strong People Don’t Do by Amy Morin.

It’s worthwhile to make a habit of reading a bit of a self-help book each day, and it can even be a great way to spend time in front of the charts while you’re waiting for a setup.

I imagine you’re already a committed learner, seei

ng how you’ve independently sought ways to learn how to trade. Psychology and personal development are a subject you can learn on your own, too.

#4 Eat Healthy and Exercise

Fourth, take care of your nutrition and exercise daily.

We currently live in a world where humans like to cleanly organize different subjects as separate containers. When you go to a doctor, if you have a stomach ache, they’ll send you to a gastroenterologist. If you feel depressed, they’ll send you to a psychiatrist. The body is treated as a bunch of separate systems that seem to connect together like lego blocks of different colors.

trading hack

However, this is a limited and outdated way of perceiving health. You cannot separate bodily systems – just think about how when you find out about the death of a loved one or an accident, your stomach may drop, your palms can turn sweaty, or perhaps the muscles in your shoulder tense up.

When you take a moment to feel your own body, you know that it is one solid entity, its individual parts work together to protect you and attempt to survive. Thus, how you take care of your body also affects your mind.

If you eat unhealthy, processed foods and lots of sugar, you’ll notice that your brain feels foggier, your moods may swing as your blood sugar spikes and drop, and you lack energy – this is a disadvantage when you’re demanding your body to act in the moment during a trade!

But it’s more than just being overweight or eating too much sugar. On a biochemical level, your body needs nutrients to be able to perform essential tasks.

For example, your body creates enzymes to break down food, to break down pathogens in the blood, and to create neurotransmitters. Many of these enzymes rely on vitamins and minerals like vitamin C, E, magnesium, B6, and folate to complete the process.

On a neurobiochemical level, each neurotransmitter depends on vitamins and minerals as cofactors for their creation. Dopamine, the reward-seeking and attention-focusing neurotransmitter require the amino acid tyrosine, which you get from eating protein, as well as vitamins B6 and folate, which are found in meats, vegetables, and fruits, as well as the mineral zinc among others.

The best way to get these nutrients so that you can create these neurotransmitters that help you focus, stay calm, and remain alert, is through eating a healthy diet that is based on consuming whole food items, so anything that is a single ingredient, like an apple, a chicken breast, almonds, etc.

When you combine a healthy diet with exercise, the effects skyrocket – you feel more energized, you get more oxygen in your body, and not to mention you feel better about yourself when you like the way you look.

Some commonly enjoyed forms of exercise include weight lifting, jogging, biking, playing a sport like tennis or basketball, and yoga.

However, I’m not a doctor or professional in this area, and I highly recommend seeking out the help of nutritionists, functional doctors, and fitness trainers in order to learn more. I recommend looking up the work of Dr. Mark Hyman and Dr. Susan Blum. Mark’s book the Ultramind solution was the first resource that got me deep into functional medicine and nutrition a few years ago.

#5 Consider Medication or Nootropics

Lastly, our final mental health tactic is to consider medication and/or nootropics when necessary.

Many people believe that taking medication to help depression or anxiety makes you somehow a broken person or a failure. There has been a stigma against medication for a long time.

However, I believe this stigma is changing. More individuals are willing to work with a doctor to determine if such a resource is appropriate when facing chronic depression or overwhelm.

I will be candid with you and say that I’ve been using the antidepressant Zoloft for a few years now and it’s been a key medication for helping with some of my chronic health issues, particularly insomnia. A nice side-effect is that it also helps me stay calm while trading.

While this is by no means a solution, it is a support while I seek to heal my body so that it can sleep on its own.

There are always side effects when taking medication, such as some weight gain, slower digestion, and inhibited libido, but for me the mood stabilization and added sleep are worth the trade-off.

Most medications are bandaids and will not solve the underlying issue, but they can also be lifesavers when you have to select and prioritize how to work on your health and circumstances.

If you feel like you are struggling with depression or a mood disorder, especially when you’re already committed to multiple other mental healthcare habits like a healthy diet and meditation, then it may be worthwhile to seek the advice of a psychiatrist or general practitioner to continue to address the issue.

There is nothing wrong with you for wanting to have this support.

Taking medication can be a profound act of self-care!

Another area worth exploring, especially if medication doesn’t feel like a viable option, is to use nootropics or supplements to help balance your mood or even increase your concentration and focus.

As with our earlier discussion on nutrients, you may have nutritional deficiencies that are preventing your nervous system and body from operating optimally.

Working with a functional doctor or nutritionist who specializes in mental health nutrition is the best way to test for and accurately identify what supplements to take.

There are also cool at-home tests available, like this one from 5 Strands, which can tell you if you’re deficient in certain nutrients or have sensitivities to certain foods.

Many supplements are available for purchase on Amazon or in local stores, so once you know what you need, you can seek out trusted, safe, and ideally organic supplements to address any deficiencies or areas to optimize.

Again, I am not a medical doctor or licensed therapist, so as with any of these suggestions, I highly recommend doing further research and working with professionals who can provide individualized suggestions.

Conclusion

Today I’ve listed just five ways you can prioritize your mental health in order to improve your trading psychology and discipline.

Any of these habits and actions can give you an edge in your trading over the long run.

Whether starting a meditation practice, signing up for therapy, purchasing a good self-help book, looking up a whole food diet you can commit to, or signing up for a consultation with a nutritionist, I encourage you to take action today.

Hopefully, you’ve already thought of one that you’re going to start researching after this video, but do come back and watch again when you feel like you’re out of ideas for ways to improve.

I genuinely wish you the best of strength and luck on your trading journey. Let me know your thoughts on what you decide to do, and I’ll see you all in the markets. Take care!

My Trading Plan for a $200k FTP Retry

My Trading Plan for a $200k FTP Retry 490

I want to share with you my plan for my Funded Trading Plus Retry using a very short-term Swing Trading strategy, what it’s like using their new Trading View platform option, and how my challenge is going so far as I am 3 weeks into the challenge. 

After failing my first Funded Trading Plus challenge, I stepped back and took a good hard look at what I needed out of a trading style and routine.

I’ve been a scalper for the majority of my three-plus years trading both Forex and stocks, but I’ve finally come to the conclusion that higher time frames and longer holding periods for trades are far less stressful, much more convenient for my personal schedule, and often more consistently profitable over the long run.

Taking a Funded Trading Plus Retry

So a few weeks ago, after taking some time off to reflect and learn a new approach to swing trading, I decided to sign-up for my next FTP challenge.

A cool benefit about this retry is that it coincided with FTP’s release of their Trading View platform option so I signed up for a 200k account with a 10% discount- (BTW, if you also want a 10% discount off of your FTP challenge, be sure to use “DFX10” at their checkout).

Set up was very easy.

They emailed me the login info, which I could instantly use in my Trading View account. I’ll note that I have a Pro+ account with them so features like multiple partitions, saved layouts, alarms, and other benefits are already available to me. It’s possible to use Trading View’s free service with this challenge, at the very least to access their intuitive and easy-to-calculate order forms, but I personally believe it’s worth the extra cost to access more of trading view’s features and benefits.

Once logged in, the login info was saved, so I can connect without having to type in my password each time I log on. Because this password is saved to my Google Chrome, I can log on to any of my laptops or devices that access TV’s web platform.

A Daily Chart Strategy + Plan

So with this new challenge, I’ve decided to use a daily chart strategy that I’ve put together. This strategy depends on a couple of tools, like price action, Bollinger bands, fib retracement, support/resistance, among others to help me make a discretionary trading decision after the NY close of the daily candle. Let me tell you more by showing you my trading plan for this challenge:

funded trading plus strategy

Using Funded Trading Plus’ Trading View Option

Next, let’s talk about Trading View.

I am just in love with being able to directly trade off of the Trading View platform!

Nothing pisses me off about MT4/5 more than how difficult it is to use quick, pips-based order forms and install other tools and indicators.

With Trading View, everything is available in one place. The charts are clean, easy to adjust, or change the appearance of the chart, and overall it’s a pleasant experience.

My saved templates and previous markups on the charts are already there even once I signed on to the 8-cap account.

funded trading plus trading viewHowever, funded trading plus uses 8-cap as its broker, so you need to be sure to select 8-cap’s chart before setting an order on it.

Luckily, Trading View will notify you if you attempt to trade on another broker’s charts, so this is more of an annoyance than it is a problem to watch out for.

But, as with any difference in brokers, I’ve noticed that 8-caps charts often look different from Oanda’s, which I still use for my first look at the charts for the day and overall trading decisions.

As someone who is trading at the close of the NY session, I have to wait a bit after the 5 pm EST close before setting a trade, otherwise, my order will be rejected. Its markets open up again usually within 5 minutes later. The spread is sometimes good but can also be nasty, depending on the instrument, so with my strategy, I’m mostly looking to stick to major pairs or popular minor pairs in order to avoid costly spreads in the afternoon.

My First 3 Weeks

Lastly, I’m going to show you my current progress going into my fourth week of trading this challenge. I’m happy to report that it’s been a continuous upward drive the whole way through!

I’m currently up 4.22% with 10 trades overall and a 70% win rate (image was taken a day after).

funded trading plus challenge

The average win and the average loss are close to one another as I’ve chosen to close a few trades early due to a lack of evidence for continuation on certain trades.

I will say though that I am also a little trigger happy when it comes to closing trades early, and will swiftly close the trade early if there’s even a slight sign of a turnaround, so there’s a possibility that I’d have a higher balance and higher profit to loss ratio should I have held out to profit target on all of my trades. This is something I can go back to test and see if such is the case.

I will say, overall, that emotions play far less of a role in my trading now that I’m taking more relaxed and long-term trades.

The majority of my trades close within 24 hours but some will take two or three days to hit their target.

I’m spending less than 2.5 hours a week trading and it feels amazing to see such profit with very little effort and time.

I’m looking to formulate this strategy and package it up into an informative trading education course, so be on the lookout over the next couple of weeks for further updates!

Overall, I highly recommend considering Funded Trading Plus, particularly if you’re a swing trader, but really for any trading style because having no time limit on your challenge is a wealth of stress relief that could literally save you from making hasty and irresponsible trading decisions!

If you’re looking to take a FTP challenge or are already in one, please let us know how it goes, and I wholeheartedly wish you nothing but the best of strength and luck in your trading.

I’ll see you all in the markets, take care!

Making the Switch: From the 15m to Daily Time Frames

Making the Switch: From the 15m to Daily Time Frames 28

Last month, I failed my Funded Trading Plus challenge. This was due to making too many changes during the challenge (such as no longer being able to get up at 5am to trade the NY session and attempting to scalp trending strategies off of Asia instead) and also fumbling over my own discipline (pulling winning trades too early and taking trades that didn’t fully match my rules). 

It was time to take a step back and evaluate what was going on.

Since I first started learning how to trade stocks and onwards with learning to trade Forex, I’ve always sought out scalping strategies. I liked the focus that came with partitioning a set amount of time each day to watch the markets and know that my account was cleared and safe at the beginning and end of the session. It was tough to learn to scalp from the outset, as many professional traders will tell you, yet in time, I was able to make a profit. 

That is, until the last few months. 

I’m a big believer that your psychology and discipline are the most important edge in your trading success. And while most traders seek out a holy grail strategy and will spend endless hours researching ways to optimize their trading rules and analysis (to be fair, there’s merit in having a strategy that works), ultimately it will be your ability to make calm, responsible decisions that will determine your success or failure in the markets. 

So once you have a halfway decent strategy, the leg work that will improve your trading isn’t necessarily watching more YouTube videos on technical analysis. Instead, spending time strengthening your relationship with your emotions, taking care of your mind and body, and ensuring that your trading regiment is sustainable with your lifestyle will play a greater role in helping you rise in the ranks from beginner to intermediate-level trader.

Over the last few months, I fell out of sync with my trading regiment. 

Suffering from insomnia for many years, I was running into issues with waking up late in the middle of the night, or not being able to fall asleep until the next day. I started missing my 5:00am NY trading sessions or would wake up foggy and exhausted just to make mindless mistakes, like trading in the wrong direction or miscalculating position sizes. These may seem like silly mistakes, but their costs are severe when they add up over a consistent basis.

Even worse, when one doesn’t sleep well, it’s far more difficult to stay disciplined. Consider how often you’ve made naughty food choices when you didn’t sleep well the night before. The same thing can happen when facing your trading rules. 

I was forcing my lifestyle to my trading routine. 

To do so, I was muddling with my health and my ability to get enough hours of sleep at night.

This impacted other areas of my life as well, as I had to take naps in the afternoon and miss work sessions or class in order to get enough rest.

I forced my lifestyle to accommodate my trading under the assumption that I only knew how to scalp the markets and that New York was the only session that would fit my approach.

This is a big mistake.

You should never have to bend over backward to make trading work for you. 

Remember, this is more of a psychological game than a tactical one. 

Your trading style needs to fit your lifestyle, not the other way around.

Doing otherwise can lead to built-up stress, and other areas of your life going unnurtured, which come back full circle to compromise your ability to make calm, rational choices with your trading account.

Like a pro athlete taking every chance possible to ensure optimal recovery, your trading routine, and your lifestyle need to synergistically work together. If one becomes suboptimal, the other will soon follow. 

So this is all to say that after losing my Funded Trading Plus challenge, I realized it was time to make a change. My trading approach did not work with my life.

Thus, taking a hard look at my geographical location, my health symptoms, my inconsistency with following scalping rules under stress and lack of sleep, I decided that it was time to shift my trading style.

It was time for me to move to higher time frames and find a time of day to trade that wouldn’t impact my sleep.

What I’m Leaving Behind: Scalping

Even though it’s commonly encouraged for beginners to avoid scalping and start with longer-term time frames, I believe there were a few benefits to taking the contrary route. 

  • Lower time frames don’t require an understanding of fundamental analysis – learning how markets move and the kinds of data that impacts them is a heady task. Being able to focus on technical analysis helps prevent information overload when first starting out
  • Scalping requires you to create a trading routine – You need to show up every day to evaluate setups. This helps you create a trading routine that comes with quick feedback. If you are organized about scalping, you should be getting into the habit of writing up a trading journal nearly every day. This immediate data and practice is useful and will help you grow more quickly as you reflect on the role your emotions play in your trading.
  • You can get plenty of practice in a short amount of time. Each session is an opportunity to work on your discipline.
  • You can focus on the movement of the charts during the session. You’ll get more exposure in a shorter amount of time compared to waiting another day to evaluate the next candle. 

While the chances of failure during your first and probably second years of scalping are nearly 100% (Sorry, I just want to be honest with you!), the experience you gain is priceless. 

I believe you learn far more from your trading mistakes than you do your successes. Sure, you will need to invest in trading income as partitioned between different trading courses, mentors, or other learning resources, but another form of tuition is paid through your losses as you gain experience. 

This type of trading tuition is mandatory, there is no avoiding it.

Even if you demo trade (which is highly encouraged!), you will still need to learn how to manage your decisions and emotions when your own money is on the line. Demo trading helps minimize the costs, but it cannot teach you the lesson that comes with feeling the pain of irresponsible losses.

So instead of trying to avoid the storm, sometimes I think it’s appropriate to head right into it and prepare yourself to focus on learning from the experience. Just be sure to do enough prep to avoid killing your account over it.

In this way, I have no regrets about learning how to scalp the markets first. It eventually helped me pass time-sensitive prop firm challenges and make money. The strategies I developed from learning to scalp have made money for my students, as well (many of which are lucky enough to live somewhere that allows them to do so at a preferable time!)

I believe scalping can be a worthwhile, although tricky endeavor. Nonetheless, at this time such a style is no longer appropriate for my lifestyle and trading goals. 

What I’m Moving Towards: Day/Swing Trading the Daily Charts

During the last couple of weeks, I’ve started researching different ways to trade the Daily chart. I’ve bought a couple of courses that focus on using the higher time frames to minimize the time spent in front of the charts while focusing on high probability setups. 

I decided that a 4H or daily chart would be my best option because the NY markets close at 2:00pm PST, in my location. I use charts that follow the NY close on the daily chart, which lets me use the most recently closed candle in my analysis.

This is an optimal time for me to trade because no matter how late I get to bed or how late I sleep in, I’m almost always awake at 2:00pm. 

Another benefit of moving to a daily chart is that there is no rush to take a trade. I have enough time to evaluate the technicals, look at the fundamentals, and pinpoint whether I want to set a limit order or act on the recently closed candle. This dramatically lowers the stress that comes with risking money on a trade. 

I also suffer from pretty severe brain fog, with my thoughts stopping and starting like an Autopia car at Disneyland. When using the daily charts, I can type out my trading ideas and better organize my thoughts about my strategy before taking the trade.

But most importantly, this approach drastically reduces my time in front of the charts. I was in the routine of spending upwards of 3.5 to 4 hours a day with scalping. 

I think it’s pretty common for traders at the 3+ year level to seek to spend less time trading. Trading can be exhausting when done too often and it can feel boring when done right. Taking on longer-term charts usually means less time in front of the screens. This means you can have more time to focus on more important areas in your life and reduce the pressure to act quickly.

Now that I’m focusing on daily candles, I can analyze and set (and forget) multiple trades in under an hour. This is huge – so much time is freed up to better take care of myself and meet the demands of all my other responsibilities. 

My initial impression?

I wish I made the shift sooner! This feels so much more appropriate for my health and living situation than waking up before the sun and grinding out quick trades. 

For a long time I believed the only way to pass a challenge would be through scalping or watching the charts all day. I thought it would be a waste of my experience (and a hit to my profitability) to attempt to learn a whole new approach. 

So too, I was afraid of using discretionary analysis. I didn’t trust myself to learn how to use multiple analysis tools to decide on an optimal setup. I feared that many tools, like trendlines and candlestick patterns can lean subjective. There are so many options that I didn’t know what to choose. I thought I had to be available for every movement. I thought the daily charts only held opportunities for long-term swing trades – some that wouldn’t complete in time for, say, a prop firm challenge or monthly account withdrawal.

Long-time trading professional and educator, Dr. Van Thorpe, always says, “You don’t trade the markets. You trade YOUR BELIEFS about the markets.”

My own beliefs about what I was capable of and what was possible held me back from trying an approach that is utilized by professional traders and investment firms.

And my first week of putting money on the line with a daily chart strategy resulted in a 1.3% profit! Not bad after nearly five weeks of continuous losses!

daily chart strategy

If only I could have let go of my fears and trusted the process, accepted that my condition and my lifestyle may not be appropriate for scalping, I may have been able to better prepare myself BEFORE taking my Funded Trading Plus challenge.

However, there’s always another trade – as long as I continue to succeed in my demo trading and small account trading with the Daily charts, I can attempt this challenge again in the coming months. 

I share this all with you to remind you that you have options. If you are continuing to face drawdowns each month, perhaps it’s time to evaluate your situation and determine whether you’re trading with a style that fits snuggly in your life and accommodates your trading experience. Whether that means going up or down a couple of time frames, or moving away or towards discretionary strategies, sometimes making a big shift is the answer. 

No one is going to be able to tell you what works best for you. You’ll have to learn what approaches are profitable and select those that match your personality and availability. Luckily, there are multiple roads to Rome – many strategies and styles of trading will get you to your profit goals. Keep your mind open and always stay reflective!

I Failed My Funded Trading Plus Challenge – Lessons Learned

I Failed My Funded Trading Plus Challenge – Lessons Learned 1648

I Failed My FTP Challenge – Here’s What I Learned

As of last night’s Asia trading session, I failed my Funded Trading Plus challenge. 

How do I feel?

Actually, after almost two months of battling a drawdown, I feel pretty relieved. 

My challenge was a mess, to put it bluntly. During that time I developed worsening symptoms of my chronic illness and could no longer wake up to trade the NY session (I’m located in Southern California. The NY/London crossover officially starts at 4am here). 

So instead, I tried to trade an end-of-NY-session crossover strategy that I had used in the past but hadn’t fully backtested for post-Covid volatility. That was a dud and further drained my account. 

I also made a switch to trading during the Asia session. I tried using the trend-following strategies I teach in the Scalping course during this time and the results didn’t quite match the preferred London or NY sessions. 

Do you see the pattern in this? 

funded trading plus failed

I made far too many changes during a challenge. Shifting too quickly left me feeling a bit chaotic and I failed myself in my own discipline as I made a few trades that broke my rules amidst feelings of anxiety.

The ideal is to run your challenge with a strategy and system already in place with your discipline well intact. You should have evidence that this process is profitable before starting your challenge.

My experience with this Funded Trading Plus challenge ran against that simple formula.

So when I say I’m relieved, I imply that I feel like I received the outcome that my trading choices deserved. I’m at peace with this result. In the truest sense of the word, this was my karma for behaving like a trader going through retrograde. The way I traded over the last few months was not reflective of the practices of a responsible trader. 

Given my life circumstances, I did the best with what I had and it wasn’t enough to merit a win. 

So now that this first challenge is over, I can take time and space to reflect on the process and decide what to do next.

I intend on taking another Funded Trading Plus challenge, but not necessarily right away. FTP gives you 30 days to “reset” your account. At this time, it seems you get about 20% off of the initial fee for a retry. 

Even if I am not ready to trade right away, because there is no time limit to the challenge, I can sign-up again and wait to start the new challenge. I want to be sure I have evidence that I can be profitable with a new approach before attempting to take it live.

For this entire year, I’ve been thinking about taking my trading to another level. For most of my time as a Forex trader, I’ve depended on mechanical strategies and short time frames to execute scalping trades. 

While this approach helped me to develop a routine, make money, learn to follow my rules, and be procedural about trading, I’m no longer able to maintain the daily routine of a mechanical scalper. With 3+ years in the market, I feel like this next step is appropriate should I prevail as a successful trader over the long-run.

The Next Step: Learn to Trade Like a Professional

As I do more research on the kinds of trading practices kept by professional traders who have decades of experience behind them, I’ve found that about 90% of these individuals:

  • Utilize discretionary trading styles on higher time frames, such as the 1H to Daily charts. 
  • Utilize both fundamental analysis and technical analysis that accounts for the way big money hunts order flows and responds to news
  • Apply a variety of technical analysis tools to understand where to position themselves for high-probability returns: candlestick patterns, trend lines, supply and demand zones, Fibonacci retracements, etc.
  • Mostly use indicators to understand the overall market structure, not necessarily to trigger entries or exits
  • Use multi-timeframe analysis and top-down approach to understanding directional cycles
  • Apply conservative risk management standards (For example, most will risk less than 1% per trade)
  • Are buoyant and can apply analysis to any market setup

At this watershed moment, with a failed long-term prop firm challenge in my peripheral view and a vision for more consistent profitability in the future, I think it’s time to take the next step and dive deep into professional-level trading skills. 

The Beginner’s Mind

Becoming a “Beginner” again is far different 3 years into trading rather than starting out completely fresh as a new trader. There are many things that I intuitively understand from experience, such as dealing with losses, drawdowns, winning streaks, emotions while trading, etc. I’m also comfortable with trading platforms, submitting orders, reading charts, and have a general understanding of nearly every technical tool and trading approach out there.

When you’re first learning to trade, when every concept you come across is new, information overload is common. You don’t know how to prioritize information. It’s easy to decide not to learn something that feels uncomfortable.

The beauty of “starting over” when you already have experience is that you have more situational awareness and knowledge to help conceptualize difficult topics. You’re not exactly starting over, you’re merely adding more information to mental categories that are shallow in depth. 

For example, I may not know how to apply fundamental analysis to my trades just yet, but I am familiar with many economic events that drive markets, such as interest rate decisions, non-farm payroll, retail sales, etc. If I was just starting out and attempting to learn fundamental analysis, these would all be new words and concepts to learn. Instead, at this stage, I am familiar with the terms and their basic meaning – now I want to learn how they all fit together and go deeper on what their numbers entail for market sentiment. 

It’s kind of like when you’re learning a new language and you more easily remember vocabulary that sounds similar to words in your own native tongue. It’s far easier to associate already-known concepts than have to drill an entirely new concept into your head. 

So this is all to say that learning how to trade like a professional is a process. It’s not one that you can Bootcamp in six months. There’s far too much information to acquire and too many processes to practice. Dealing with your psychology is also something you can only master with experience and time. 

It’s not embarrassing for me to say that I’ve failed this challenge because I’m still relatively young in my career as a trader. I share this with you so that you can reflect on your own time in the markets and give yourself some slack if you’re not where you thought you would be by this time. Trading is not easy. If it was, more people would routinely profit. I also hope that some of you will be influenced to join me on this learning adventure, as long as you’re ready to scale your knowledge. 

My Trading To-Do List for the Next Few Months (and Even Years)

  1. Daily read books and take courses offered by professional-level traders who have a solid trading record. Some possibilities include:
    1. Anna Coulling (“Three-Dimensional Approach to Forex”)
    2. Kathy Lien (“Day Trading and Swing Trading the Currency Market”)
    3. Brent Donnelly (“The Art of Currency Trading”)
    4. Karen Foo (“Fundamentals of Currency Trading”)
    5. Research other traders who have a solid track record, are professional not only in their trading style but the way they hold themselves and conduct their Forex education business. Academic background in finance is preferred but not necessary.
  2. Find a trading approach that compliments my lifestyle
    1. Trade 1H – Daily charts for entries so I can limit my trading session to about an hour a day, in the afternoon when NY closes and I am certain to be awake
    2. Mixes fundamental analysis with technical analysis – I actually enjoy reading the news. Having a sense of why the markets are moving helps build confidence in a trade idea
  3. Find a trading mentor who I trust
    1. Ideally, this is someone who can regularly review my trading decisions and pinpoint flaws and strengths in my thinking process
    2. Is someone who has a lifestyle and approach that mirrors my own ideals (Calm, genuinely kind, values financial freedom over materialism, enjoys the art of teaching and mentoring – isn’t in it just for the money)
  4. Be more scrupulous in tracking not only my trades but also what I am doing to develop my education as a Forex trader.
    1. Sometimes it’s easy to “do more” without really learning from the experience. I want to make sure what I am learning is directly connected to trading improvement and actually has an impact on my trading over the long-run
    2. Sometimes it’s easy to not do enough or to avoid the difficult work. I want to be sure to go slow with topics that I don’t immediately understand and give myself enough time and patience to work on the tough stuff. I anticipate this being an issue with learning fundamental analysis
    3. My tracking tools can include: Trading journal (trade stats, overarching trading idea, emotions and thoughts that arise while trading, etc.); Weekly reflection of best/worst trades, what I researched and learned that week; Forex education journal (Jot down a few lines in a log each day as to what I studied, what insights I had, and how I spent my time learning)

This is merely the blueprint of what my game plan will entail as I begin again and learn new Forex strategies that may push beyond what I was comfortable doing in the past. I hope to document this process and share it with you all. I don’t doubt that some of what I come across will also benefit you in your own trading. 

Sometimes it’s the big failures that act as kindle for the fire that will light you up and motivate you to reach a new level. Whether it’s blowing up your account, failing a challenge, experiencing a major life change, or facing a long drawdown. Sometimes big problems help us open up to solutions that we might have rejected in the past, out of fear or laziness, or even the belief that we’re not capable of learning.

In the aftermath of a serious problem, one option is to stay caught up in emotions. Another is to use it as a springboard to learn deeply from the experience and make new choices. Don’t forget, you can always get value out of your failures by reflecting upon what happened, taking responsibility for your role in the outcome, and using that knowledge for your improvement. 

Ultimate Trading Hack? Take Care of Yourself!

Ultimate Trading Hack? Take Care of Yourself! 23

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 2

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? 86

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

3 Ways To Get More Profit From Your Trades 83

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!

 

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