One of my colleagues sent me a very interesting email about how he starts his trading session with reading all these tips/advice first. Hope we can LEARN something here. I said "LEARN", not "COPY" am I clear enough? :)
MY DAILY GOALS
1) Try to get at least 100pips and more
2) Take risk 5% each trade
3) Never change Stop Loss that I already setup
4) Break even or lock at +1 when in 20pips profit
5) Always put Trailing Stop after in profit condition
MY VISION
1) Discipline with my rules
2) Positive thinking
3) Positive mindset and attitude
4) Act with my own best interest
5) Responsibility the result taken
6) Learn to accept the risk
7) Mental flexibility (flow with the market and cut my losses)
8) Make myself available to take advantage of opportunity
9) Action on my belief
10) Remove negative charge mental (fear, pain, anger, frustration)
11) Don't afraid and hesitation
MY GUIDELINE IN FOREX
1) I objectively identify my edges
2) I predefine the risk of every trade
3) I completely accept risk or I am willing to let go of the trade
4) I act on my edges without hesitation
5) I pay myself as the market makes money available to me
6) I continually monitor my susceptibility for making errors
7) I understand absolute necessity of these principles of consistent success and therefore I never violate them
MY PROBABILISTIC MINDSET
1) Anything can happen
2) There is random distribution between wins and losses for any given set of variables that define an edge
3) An edge is nothing more than an indication of a higher probability of one thing happening over another
4) Every moment in the market is unique
You may have heard the saying "'Forex trading is simple, but not easy." ??
Article below is written by a trader goes by nickname SoulTrader on website which I do not remember. You may notice which stage you are currently and perhaps you may speed up your process to final stage by reading this. Enjoy it.
This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you've heard so many things about it and heard of so many
millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy- after all, how hard can it be?? - Price either moves up or down - what's the big secret to that then - let’s get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again ..and again, and again.
You try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised. Well this is stage one - you are totally oblivious to your incompetence at trading.
Stage one can last for a week or two of trading but the market is usually swift and you move onto stage two.
Stage Two - Conscious Incompetence
Stage two is where you realize that there is more work involved in this and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit. During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. And begin your search for the Holy Grail.
During this time you will be a system whore - you will flick from method to method day-by-day and week-by-week never sticking with one long enough to actually see if it does work. Every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
You will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today.
You'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them because you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they can’t be making that amount because you've studied and you don't make that, you know as much as they do and they must be lying. But they're in there day after day and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better.
You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else - they don't work for you either.
This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Then comes stage 3.
Stage 3 - The Eureka Moment
Towards the end of stage two you begin to realize that it's not the system that is making the difference. You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right.
You start to read books on the psychology of trading and identify with the characters portrayed in those books. Finally comes the ‘eureka’ moment.
The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.
You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold. You start to take every trade that your 'edge' shows has a good probability of winning with. When the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade will have higher odds of success because you know your simple system works.
You have realized in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what. You learn about proper money management and leverage - risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren't ready then, but you are now.
The eureka moment came the moment that you truly accepted that you cannot predict the market.
Then comes stage 4.
Stage 4 - Conscious Competence
Ok, now you are making trades whenever your system tells you to. You take losses just as easily as you take wins. You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account. You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money.
You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
This lasts about 6 months, and then comes Stage 5.
Stage Five - Unconscious Competence
Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you. This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account. You’re a star in the trading chat room and people listen to what you say. You recognize yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.
You can now say with your head held high "I'm a currency trader."
I hope you've enjoyed this text and can recognize yourself in some stage or another – personally.
I'm at stage four now and am constantly making good amounts of pips - I've been trading in total for about 3 years and the first two were hell on earth.
p/s : Hope you learn something out of this! All the success traders know that in success trading, it takes 70% of Psychology, 20% of Money Management & 10% of Trading System. I will cover more in this Psychology matter next time. Now you can guess why 95% of trader failed. Happy trading!=)
