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.

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.

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.

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.

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.

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!

Let me set the scene:

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

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

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

Uh-oh.

You know what’s coming.

It’s time to go to the bathroom.

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

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

That’s one way to approach this.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

After two years of day trading, I’ve finally achieved consistent profitability with scalping Forex markets and have gone on to pass prop trading challenges.

If you’ve dipped your toe into the day trading lifestyle, then you probably already know just how difficult it can be.

Most beginners need to just focus on learning the basics of technical analysis and trading psychology.

But once you can read charts and find a strategy that matches your personality, I don’t believe the way to get to profitability is to find even more information about technical analysis.

Instead, I think all of your issues with trading revolve around lacking trading discipline.

Once I had this epiphany, I changed my game plan and spent more time figuring out ways I could redirect my mindset and control my trading behaviors.

There were a few key things that I did that finally led me to become consistently profitable. 

Today I’m going to share with you three things that likely led to this big shift in my performance. Of the three, the last one I will share with you was probably the most beneficial of them all so be sure to stick around to the end to find out one of the easiest things you can do daily to get yourself profitable. 

So, ready to dive in?

3 Actions That Lead to Becoming Consistently Profitable

1) Take ONE Good Trade Per Day

One of the first big actions I took that got this profitability ball rolling was to stop trading multiple times a day and just focus on taking one good trade a day.

At that time, I was struggling with following my stop loss and take profit rules. I would frequently shift my stop-loss if the price got too close because I was afraid of losing on a trade that could turn around. With every trade I took during the day I increased the odds of breaking my trading rules.

So I reviewed the strategy that I was using, gave it a backtest to see if it would be profitable if I only took one signal instead of the three or four I would usually get, and sure enough, it was!

Thus, for about a month, I focused on taking one perfect trade a day.

During this time, I wasn’t worried about the money, I just wanted to finally know I could trust myself to follow my rules.

If scalping or day trading is feeling overwhelming, maybe dial it back a bit and see if you can take just one good trade a day or even per week before trying to ramp up the intensity again.

2) Create a Reward System for Following Your Trading Rules

The next important change that I made was to implement a reward system for performing the rules of my mechanical strategy. So when I followed my strategy rules, whether that meant winning or taking my stop losses, I would reward myself.

I go into how I did this with more depth in the Disciplined FX Scalping Course, but here I’ll summarize and say that I made sure that I reserved special treats for the end of my trading session which resulted in me following all of my trading rules. This helped to direct my focus away from the account balance and towards developing trading discipline.

There’s a saying in day trading that if you forget about the money and just focus on trading well, the money will eventually come on its own. 

Lastly, there was one more big shift I made that was probably the most powerful trick I’ve ever used to stop making trading mistakes and finally get into profit.

Now, I’m going to share this with you but before I do so, I want you to make a promise to yourself that you’ll give it a shot. I’m absolutely serious when I say that this will be the habit that helps you become profitable.

3) Track the Cost of Your Mistakes

The most important action I took to change my trading was to track how much my trades were costing me.

Some of you may be familiar with this kind of habit like when keeping track of your expenses when you want to get out of debt, sticking to a budget, or saving for a big purchase. When you record every one of your expenses, you start to notice where your money is going and can make a conscientious effort to cut back on the areas you splurge most, such as buying takeout too often or paying too much for a lofty car payment.

Because the real issue isn’t that you’re willfully losing money.

It’s not like you’re going outside and dropping money on the ground.

It’s certain actions and choices that you’re making which lead to loss over time.

This is true of trading as well. We need to be able to track and find out which behaviors are costing us the most money so we can prioritize what to improve first.

So to track how much my mistakes were costing me, every time I made a mistake, I would write on my trading log spreadsheet what mistake was made and how much it cost. If my mistake was pulling a winning trade too soon, I would write how much money I missed out on between where I exited and where my planned take profit was.

If I took a trade that wasn’t part of my signal criteria, then I would record what was lost. If I made money on any of these mistakes, however,  I would just record the mistake cost as $0. This helped me generate some data about my mistakes.

Each week I would look over my trades and calculate how much my mistakes cost me in total, as well as what feelings or impulsive behaviors were causing the most damage. 

After about a month of doing this, I started making money in the markets with the same strategy I was using while I was still consistently losing money.

Sometimes all it takes to turn your life around is a big epiphany combined with simple action. Again, if this is the first time you’re hearing about tracking the cost of your mistakes, I highly recommend giving this practice a shot. Your brokerage account will thank you.

That’s it for today folks, I wish you the best of strength and luck and I’ll see you out there in the markets!