Remember
that demo account you had, where you doubled the balance in a matter of
weeks? After all, it’s the reason you took your paycheck money and put
it in FX to begin with. What seems to be the problem now that you have
your own money in there?
I post articles filled with theory and
potential solutions but I feel like this is a highly overlooked element
that gets ignored far too much in this business. If there’s a ‘theory’
based article I don’t want you to skip, this is the one.
Here are three huge clichés about trading FX that we’ve all heard before, and separate the winners from the losers:
1. The trend is your friend
2. Let your profits run
3. Cut your losses short
They’re clichés for a reason. They work, and they’re true. But doing them is another story.
Today I want to add something to this list:
4. Take Action
Here’s a quote that needs emphasis:
“I watch trade after trade go by that would have been a winner, but the one I ended up taking was a complete loser.”
Some quick shots at this issue off of the top of my head:
1. Never hesitate.
2. Be on your toes. Focus in sharply on your chart and pull the trigger.
3.
Control your risk. Most of the time you don’t take the trade because
you are subconsciously aware of how much you could lose.
4. Curb the doubt. You know what you’re doing. You didn’t doubt your actions on the demo account.
5. Take the easy ones.
Overanalysis
You
rightfully want and should plan out all of your trades, but don’t think
that just because you didn’t spend 2 hours planning it out means it
won’t be a winner. In fact, I find that the more I think about things
the more things get screwed up, to say it plainly. Traders that have
tendencies to overanalyze markets get caught up in a freakish pattern
of actually undertrading, which is just about as bad as overtrading. In
both scenarios the result is, many times, negative, depending on how
you do things.
My daily plan is put together in a matter of
minutes. I see what I need to see, and realize that there is only so
much news out there that is truly going to shape the charts in front of
me.
Ultimately, when someone comes into the market with a fist full
of cash and moves it sharply, no fundamental data is going to tell you
exactly when and where this is going to happen. But the technical
levels and methods we use here will. Many of these levels are formed on
an intraday basis, however, so constant monitoring plays a major role
in your success.
Get comfortable, but not too comfortable
You’re
not going to trade successfully if you’re under too much stress. By
nature, I ‘m high-strung. I have always been this way and doubt it’s
going to change any time soon. I take trades I’m comfortable with only,
and doing this allows me to ‘keep peace’ with myself and let the rest
follow.
Best way to do this? Profit. Build up a bank of initial
profits, and your mind goes at ease on subsequent trades faster than
you can imagine. Do what you need to do to post some initial balance
higher than what you started with and the rest becomes much, much
easier. A way to do this? Next point:
Take the Easy Ones
I
use this as the slogan for this website for a reason. There’s no sense
in taking trades that are ambiguous or pose a very low probability. Key
word of this slogan is “TAKE”.
You actually DO know what's going on. The good versus bad subconscious
When
we talk about our subconscious minds in terms of trading we generally
refer to it in a negative sense, because usually it comes up when we’re
talking about fear of losing. But there’s a good side to our
subconscious, one which we don’t realize is there most of the time
because we’re too busy remembering all of the bad things that have
happened.
Anyone that has a basic knowledge of psychology might be familiar with the "Little Albert" experiement,
where "Little Albert", just a child, was conditioned to be afraid of
small, furry animals. We don't touch the stove because it's hot. We
don't put our arms in spinning lawnmower blades for other obvious
reasons. In trading, this subliminal conditioning which might have led
us to a fear of losing is one which never gets us ahead, as we all know.
But
here's the good news: when we learn how to trade, we are subconsciously
storing a library of information in the back of our heads. Whether we
realize it or not, its there. So when we see something on an intraday
basis that is so obvious and so plain, are we taking it? Yes or no?
Most
of you are pros already….I can see it in the charts that get posted and
the comments that follow. But my experience knows full well that you’re
not taking all of the trades you post. Don’t think your knowledge or
education is any less than anyone else that takes up trading for a
living. Do what is obvious, and use your initial judgment. It’s usually
right.
Many times, you know EXACTLY what you’re doing, and how
the market is behaving / reacting, but your doubts cloud your actions.
Until finally, you get so fed up and bored at staring at charts, you
pull the trigger on a losing trade.
“AAA” stands for “Action, Action, Action”.
Keep saying it. Easier said than done, I know. But get it done.
Naturally,
I can't stress the importance of all of the other tenets I teach here
(eg risk management, daily planning, etc), and this piece of the puzzle
is in no way intended to undermine or contradict any of it. Put
everything together, and most importantly, when you see it, take it.