,

How to Trade Profitably in a Bear Market

2022 is starting off as one of the worst years in the history for the S&P 500. It’s down over -18.25% and the peak to trough YTD is -20.75% as of this writing (3rd week in May).

Of the first 95 trading days for the year, 2022 is coming in the 2nd worst at -17.7%. The only year to beat it out was 1932 where the S&P 500 did a -32.9% in its first 95 trading days.

S&P 500: Worst Performance through 95 Trading Days

Source: @Charliebilello

Needless to say, many traders are feeling the pain, and this is not surprising. Fed by the incessant mantra “buy the dip” and “stocks only go up”, traders are now experiencing something they haven’t for the first time…a bear market that is actually lasting more than 5 weeks.

If you’ve never experienced a bear market for an extended period of time, it only means one thing…you haven’t been trading long enough.

In this article I’m going to share with you several tips on how to profit in a bear market, including saving some key tips for last, so make sure you read this article all the way through.

Before we jump in, just a bit of context.

My trading career started in mid-2000 which was the last 9 months before the dot-com bust. Essentially, in my first full year of trading, I saw the closing vestiges of a raging bull market, followed by one of the worst bear markets in history. I learned very early on two important things about trading:

  1. How to trade in bull and bear markets
  2. “stocks don’t always go up”

Now after having a professional trading career on the buy and sell side (Wall Street broker + Hedge Fund trader), I’ve seen a market crash or major market sell-off every two years.

Hence, below are some of my most important tips to trading in a bear market. Read them many times over and learn these well because they can help you a) avoid losing all your money and b) teach you how to make money in a bear market.

Tip #1: Why Markets Sell-off Faster Than they Buy-up

If you want to trade a bear market, you have to understand how the price action behaves differently in a bear versus a bull market.

There is a famous saying on Wall Street the “markets take the stairs up and the elevator down”. This means bull markets tend to go up slower than they go down in bear markets.

Why?

Most will say “because of fear and psychology”. While this is true, it’s only a partial truth.

Yes, when you are afraid, you will act faster (read: hammer that sell button when your stocks are crashing), versus acting slower when markets go up (“I’m good, stocks only go up” = complacency).

But this misses some other critical market dynamics as to why markets sell off faster than they buy up. And this has implications for how you can avoid taking big losses.

One of the most important reasons why markets sell off faster than bull markets go up is when prices reach their peak and start to sell off, you (and likely everyone else) are generally at your highest level of leverage.

If a stock has been going up for one, two maybe three years, did you just buy once and hold over those three years? No…you likely bought several times, thus increasing the size of your position (and thus leverage).

How to Trade Profitably in a Bear Market 01

 

If you buy a stock 1x with 1000 shares at $50, when that stock sells off after a bull run, every $1 drop is only $1000. However, if you bought 1000 shares when the stock was at $50, then added another 250 shares at $60, then another 300 shares at $70, and another 200 shares at $80, along with another 100 shares at $90, and another 150 shares are $100, when that same stock sells off $1, that $1 sell off isn’t a $1000 loss. It’s an $2000 loss! That’s double the loss in your account for the same $1 sell off in the stock.

As a whole, bear markets rarely (and I mean RARELY) happen when there is low leverage in the market because pullbacks don’t cause huge losses and dealers often are in positive gamma (whereby they buy the dips and sell the rips as a natural part of their option dealer hedging activities).

The bear’s claws only inflict a small flesh wound.

However, at the end of a bull run, when you (and everyone else) are levered up, the same cut from the bears claws is no longer a scratch, but = a gaping wound that needs a tourniquet and triage fast or you’ll bleed out.

It’s why @meetkevin (one of those real estate agents cum-youtubers, cum-financial analysts???) lost $12 million in 90 trading days.

Forgive me for saying this, but how can you call yourself a good stock investor, or ‘financial analyst’ if you lost 2-3 years of youtube income (your main income) from your stock trades in 90 days? IMO, people like this should not be allowed to give any stock investing or trading advice, but I digress.

The final points on tip #1 are:

  1. Markets rarely crash when leverage is low
  2. Markets can (and often will) sell-off aggressively when leverage is high
  3. You will lose most of your money when you are the most levered
  4. And therefore…always watch your leverage

Hence, if you want to trade profitably in a bear market, avoid being over-levered. All it takes is one trade going against you to create a massive loss.

Tip #2: Volatility Increases in Bear Markets

The second major bear market I ever traded was the 2007-2009 GFC (great financial crisis). The stock market peaked in July 2007 and lost about 21% over the next 61 weeks. It then proceeded to lose 25% over two weeks!

From every bear market I’ve traded, and every market crash I’ve seen, volatility is generally a) calm heading into the top, b) starts to increase as the bear market gains traction, then c) skyrockets when the capitulation happens.

Thus, volatility tends to increase markedly during bear markets.

Why does this matter to you as a trader?

  1. If you are highly levered, the volatility (amplitude in moves up and down) can increase your losses in a short period of time
  2. You will need bigger stop losses to account for the bigger swings
  3. What seem like bull rallies are just volatile short covering rallies

We’ve already covered why you need to avoid being highly levered during these times. The second point is straight forward because a typical daily move in a sleepy bull market will seem like child’s play in a volatile bear market. 2% moves do not often happen much in the S&P 500 during a multi-year bull market, but they can be quite common in a bear market.

Hence, you will need to adjust by a) having larger stop losses in terms of how far you expect the market to move, and b) reduce your position size to accommodate for the larger stop loss.

The last point from the list above (#3) is important because it requires perspective. In a consistent bull market, a 10% rally over two weeks is rare. In a bear market, this may simply be a short covering rally, so don’t get fooled into thinking a sharp rally means the bull market is back.

Tip #3: Control Risk Per Trade & Have A Max Risk Per Month

Along the lines of widening stop losses and adjusting your position size, controlling your risk ruin and having a max risk per month (read: guardrail) will help you from digging too deep a hole.

Remember, losing 50% on your account means you have to generate a 100% return, just to get back to break even. That means you have to work twice as hard just to recover your losses should you take a big hit.

To avoid this, control your risk per trade to a fixed % of your account each and every trade.

The bottom line is, you don’t know if you’ll win or lose your next trade. If you did, you’d risk more on the next trade you know you’ll win, and either a) risk less on the next losing trade, or b) not trade it at all.

If you don’t know whether you’ll win or lose the next trade, how can you control risk or position size properly? The answer is – you can’t! Thus, you need to risk a fixed % of your account on each and every trade.

NOTE: We recommend 1% per trade, but you’ll need to figure out your risk of ruin to determine what % you should risk per trade.

Having a small fixed % risk per trade means you never have to take a big loss on any one trade. You live to hit the buy and sell button another day.

How to Trade Profitably in a Bear Market 02

Source: Dylan Calluy

Along the same lines, you should have a guardrail to make sure you don’t cause too big of a loss on any given month. This is the red-line whereby if you lose x% in a month, you stop trading, no if’s, and’s or but’s about it.

Think of your worst losing month over your entire trading career. Now imagine if you stopped trading after you hit -5%, or -9% that month? How much would you have saved if you had stopped trading at that point?

Thus, install a cut-off valve that insures you don’t blow a gasket and wash an entire account down the drain.

Tip #4: Learn to ‘Sell the Rip’ and Get Bearish

Ever noticed how a stock could beat earnings, beat on revenue, have great forward guidance, and still sell off?

That’s because of one thing – order flow. If the order flow in the markets is dominantly bearish, it doesn’t matter the ‘reason’, the market is going to sell off.

It doesn’t matter if ‘sentiment’ is dominantly bullish, if the flows are bearish, the markets will sell off.

Period.

You don’t go out to the ocean, notice the waves are breaking left and say “Yeah, I’m going to try and surf where none of the waves are going.”

That would be stupid. The same goes for trading.

In a bear market, the order flow is predominantly on the sell side. Bears are in control, so don’t be an idiot surfer and think you can surf where there are no waves.  Surf with the waves!

In a bear market, don’t blindly follow the mantra “buy the dip”. Instead, sell the rips. Trade with the dominant order flows and you’ll be trading with the largest flows in the market.

Below I’d like to show you the P&L of one my students over a 30 day trading period whereby the SPY lost 12%.

Student's P&L 01

And his stats during this period.

Student's P&L 02

Do you seem him swinging for the fences? No, he’s controlling risk on each trade.

Do you see any major pullbacks, even though he was only 53% accurate and had 8 losing trading days over that 30 day trading period? No, he risked a fixed % per trade and never was in danger of exceeding his max risk.

You’ll also notice he was short (or selling) on 75% of his trades instead of “buying the dip”.

This is consistent trading with someone who trades the price action and order flow as it appears on his charts.

I’m guessing the majority of traders who have been buying the dip in 2022 have been losing money, while those selling are making money.

Trade with the dominant order flows.

NOTE: if you want to learn how to read the price action and order flows in the market, check out my Trading Masterclass whereby I teach you how to read the price action and order flow on any time frame, without indicators!

Tip #5: Understand How Option Flows Influence Price Action

Ok I just got done talking about order flows, but there’s another aspect to these order flows. The options market has become huge. It’s now surpassing share volume on most stocks and indices on a regular basis.

That means option flows are often directing the price action of your favorite stocks.

Hence, if you want to know why the stocks are moving the way you do, you have to understand how option flows move the price action each day.

Option dealers and market makers are hedging positions every day. And in bear markets, dealers (due to their hedging activity) will have to sell shares as the market falls.

This reduces liquidity, which further exacerbates the sell-off. Hence, its just another reason why bear markets are faster than bull markets.

It’s too much to go over all the ways option dealers and market makers hedge in all situations, but I did do a presentation at the Fintwit conference in Las Vegas recently whereby I cover some of the ways option dealers and market makers hedge, along with how this affects the markets.

After you watch the full presentation, it should start to make sense why the markets move the way they do.

It should also become obvious on why you need to learn about option order flows and how they influence the price action daily.

By doing so, you’ll be trading more in line with the dominant order flow in the market, and find stronger support and resistance levels to trade from.

If you’d like to learn how option flows move the price action and learn from me live, check out the Benzinga option school whereby I teach classes Monday through Friday on how option flows move the market and how to find the best setups.

How to Trade Profitably in a Bear Market 03

Source: Jamie Street

In Closing

I often forget my first year of trading had a bull and bear market, so I never felt uncomfortable trading bear markets. In fact, most bear markets became some of my most profitable moments as I learned to take advantage of the volatility and change in price action.

However, if you haven’t been trading that long, and have only really known a bull market like we had the last decade, I can understand how this would be uncomfortable.

The first thing to do is relax so you can get your mind straight and trade the market as is. This means:

  1. Understanding how bear markets move faster than bull ones
  2. Thus, bear markets are more volatile
  3. Because of this extra volatility, you need to have wider stops and control risk
  4. You need to trade with the dominant flows and exorcise the ‘buy the dip’ mentality
  5. While learning how option flows impact the market and learn to trade with them

Now if you’d like to trade live with me, join my classes daily (Mon-Fri) and get feedback on your trades, check out the Benzinga option school where you get access to all that, along with my weekly newsletter, trade ideas and morning market commentary.

There’s a lot more I’d like to cover in this article, such as what specific strategies to use, how to find the best entries and exits, along with how to manage trades, but this article would easily become another 10,000 words, so it is my hope the 5 tips above give you a different perspective on bear markets, and how you (like my students) can profit from a bear market if you learn the right skills.

I hope to be working with you soon and helping you become my next profitable trader.

8 Resources for the Trading Mindset, Meditation & the Brain

brain neuroscience and trading mindset
About a fortnight ago I did a trading seminar in Toronto.
I spoke about Neuroscience, the self-image, comfort zone and the trading mindset which had a strong impression on the attendees.
One of them emailed me the following question shortly after:
“Could you point me towards some resources on the trading mindset, buddhist meditation and personal growth?”
I really appreciated this question because part of my work here is to have a positive impact upon people.
Changing someone’s brain and mindset is no small thing.
Most people repeat the same mistakes in trading (and life) because it takes effort and hard work to re-wire the brain.
But doing so in a positive and meaningful way can impact someone for life, just like many people along the way have impacted mine – sometimes from meeting them just once.
And such an impact and change will undoubtedly improve our trading mindset.
In answer to this individual (David), I decided to share 8 powerful resources for buddhist meditation, mindset and personal growth.

#1: Calm.com

What is it? A website that plays calming background music and imagery.
Sounds can have an effect on our brainwaves, breathing and heart-rate. Mozart and Beethoven are notorious for helping to create alpha waves within our brain (~4-10hz helping to keep our minds relaxed but attentive).
I personally use this first thing in the morning to start my day off right and create a calm environment for trading.
You can select from a suite of background images and sounds whichever appease you best.
Click here to check out what they have.

#2: Lion’s Roar

A great website for learning about meditation, buddhism, perspectives on culture and life where you don’t have to be a buddhist to benefit from (nor become one).
The website’s tagline is ‘Buddhist Wisdom for Our Time‘ and I often find some great articles or books in here which reflect a great perspective on an every day challenge we all encounter.

#3: Change Your Brain, Change Your Life (Book) by Daniel Amen

Dr. Amen is one of the pioneers that has done SPECT analysis on the human brain (over 80,000+ brain scans) and has helped us see the brain (and it’s health) in a completely new perspective.
His book Change Your Brain, Change Your Life really demonstrates how the brain impacts our behavior (more than we likely imagine).
He also offers some really good tips on how to improve brain health and has a fantastic ted talk sharing a few key points from the book.

#4: Lumosity

Plenty of gym’s out there to train your body and muscles, but what about your brain?
Enter lumosity.com. Developed by a team of Neuroscientists who made brain entrainment fun and enjoyable.
A ton of my students use this every day and have shown not only better scores in their testing (via lumosity), but continually report a sharper memory, increased focus, and quicker response times.
Your brain needs training, and this program gives you specific tasks to work on memory, speed, problem solving, and more.
Want to train your brain? This is one of my recommendations.

#5: Wheat Belly

Wheat what?
Belly.
As you might have guessed, this book is about wheat and how gluten affects your gut and brain.
This one was an eye opener for me as I LUV’D my bread (part italian) and pretty much ate it (or some form of gluten) every day for decades.
I cannot tell you how much I enjoy sinking my teeth into a good slice of freshly cooked bread.
BUT…I want a healthy brain and gut, and my desire to have those is stronger than my desire to be without them.
I know bread lovers, this one is trodding upon diet which is generally the ‘out of bounds’ area for traders, likely to incite a ‘what the F do you know, don’t tell me what to eat’ type response.
So I’ll just say read it, decide for yourself and I’ll support whatever decision you make.

#6: How to Meditate by Pema Chodron

Pema Chodron is a Western Buddhist teacher who has an amazing ability to teach meditation and buddhism for the every day person in our every day language and experience.
The subtitle to this book (How to Meditate) is ‘A Practical Guide to Making Friends with Your Mind‘.
And that is what we have to do when trading – make friends with our mind.
We cannot beat ourselves down, we must build ourselves up (and our self-image).
We have to learn how to relate to our minds beyond the western psychology and ‘talking about our feelings‘ method.
Western psychology is being replaced by modern day neuroscience and eastern meditation/school’s of thought.
This book takes the latter path but does so in a way that anyone today can relate to.
If you want to become more friendly with your mind and have it start working for you, meditation for trading is one powerful method available .
So check out this book which offers some great insights on the process.

#7: Through the Wormhole by Morgan Freeman

Yes – that same Morgan Freeman (the actor) has a great show called ‘Through the Wormhole‘.
It’s available via iTunes and covers some fascinating topics while asking the hard and provocative questions, such as:
-What Makes Us Who We Are?
-Mysteries of the Sub-conscious
-Is Luck Real? (traders will love this one 😉
-Can Our Minds Be Hacked?
I think you’ll find this show interesting because many of the minds, scientists and thinkers will without a doubt challenge the way you see yourself, your mind and your experience in the world.

#8: The Advanced Traders Mindset Course

Wait…you can’t mention your own course.
Yes…I can.
I’ve spent the last two decades studying Neuroscience, particularly focusing on improving cognitive performance.
Over the last 15 years, I’ve been meditating every day, completed a 1 year meditation retreat, and used this for my trading process and mindset.
I’ve worked with a teacher who constantly challenges me beyond my comfort zone and help me continually grow.
In 2014, I spent over 700+ hours building this course for one purpose – to change the way you think, trade and perform.
Students in the course are no longer seeing their trading and mindset the same.
They are having the ‘aha‘ moments and finally understanding the how, what and why they have performed the way they do.
Many have completely changed their performance numbers around with one student up +12R for the month of May.
I’ve even had many students wanting to teach this to their kids.
This training is that powerful.
For those wanting to achieve peak performance in their trading, visit my ATM Course page and reserve your seat for the next release (only available for a short time).
Did you find these 8 resources useful?
Also what resources do you use to help with your trading mindset and personal growth?
Please share this article with anyone you think would benefit from this as we all need better brains and minds for trading and life.

2 Tips You Need to Know About Trading Support and Resistance

One of the more crucial lessons in my price action course is called ‘The 10 Key Tips For Trading Support & Resistance Levels You Must Know‘.

In today’s article I’m going to share two forex support and resistance trading tips from the course lesson which can have a massive impact on your trading and understanding of price action.

The first one will focus on the price action context around key support and resistance levels between higher TFs (time frames) and intra-day TF’s.

For the record, I view the higher TFs as the daily and 4hr chart while the lower TFs to be between the 1hr and 5m charts.
The second key point around trading support and resistance covers the order flow and price action around high probability trades.

Intra-day Price Action Context Can/Often Will Contradict Higher Time Frame Context

Because of the higher time frame myth narrative (which states the only way to trade price action is via the higher TFs), those following this narrative have neglected a key part of price action.  That is learning to understand and read intra-day price action.
Because of this, traders have treated anything in the lower time frames as ‘noise‘ which is a false understanding of price action and time frames.

Lower time frames are just a different lens into price action and sometimes can offer a more nuanced understanding of the order flow behind the PA.

This has led to many traders not understanding that intra-day price action can and often will have it’s own context. This is a problem because we have to understand how the intra-day PA may affect or inform our trades for that day.

What it also translates into is intra-day price action context can and often will contradict the higher TF context.

Hence if we are trading with the intra-day context, but against the higher TF context, our holding times by default should be shorter and we should be anticipating (or be prepared) to exit quicker.

I’d like to share a good example of this principle with the USDJPY which has been in a large 550 pip range since the end of last year.

USDJPY Daily Chart
usdjpy daily chart

What you are seeing above is the USDJPY daily chart.

After a large bull run from 107.50, the pair entered a corrective phase forming a large range near the highs between 115.75 and 121.15.
You’ll see the range marked by the red box and the first two pullbacks into support (#’s 1 and 2) which were around Dec. 16th and Jan. 15th.

In the next chart, you’ll see the intra-day price action context on Dec. 16th via the 1hr chart.

USDJPY 1hr Chart
usdjpy 1hr chart

Notice how the intra-day price action context is completely different from the higher TF context?

By not segregating the two types of context (intra-day and higher) we can often get scared out of these trades as they run into our key levels impulsively.

Many times I hear struggling traders email me how they had a trade setup to buy or sell at a particular level and trade location.
Yet because they were watching the intra-day price action context only, they abandoned the trade.

However right after you let the trade go and canceled it for fear of getting stopped out, the market touches there entry location, bounces right off of it and runs straight to your target.

A great example of this is the USDJPY pair on Dec. 16th (see below)
usdjpy 300 pip bounce off key support

Hours later after not taking the trade, you are wondering why you abandoned your trade plan and missed out on a perfectly good trade.

Has this ever happened to you?

It’s certainly happened to me, and likely all of us at one point.

The key point here is it’s important to understand intra-day price action context can and will contradict the higher TF context.
This DOES NOT mean we abandon the lower TF context for the higher one. We have to understand it is information and can often add to our trade ideas.

But ignoring it and focusing on the higher TFs only is not the approach as this leaves you lacking a key skill – learning to understand and read intra-day price action.

And this skill will be of great value to you in locking in high +R trades when learning to manage them.

Impulsive Rejections & Short Holding Times At a Key Level are a Positive Confluence Factor

This one is important to understand regarding the order flow and PA around (and off) a key level.
Many times the PA will just consolidate around a level before making a move (to hold or break). There are plenty of price action clues we can learn to read which will intimate the more likely scenario.

But anytime you see a very large reaction off your trade location around a key support or resistance level, it usually indicates a positive confluence factor to your trade.

Why?

Because the sharp bounce more often is caused by large institutional players holding/defending a key level with strength.
Being able to reverse the move into a key level takes size and volume, and pushing back with vigor indicates the ability to absorb the pressuring heading into the level (often called ‘absorption’).

By creating a heavy imbalance between the buyers and sellers, this further reduces the counter-move interest and shows the order books are likely heavily stacked to one side which further supports your trade idea and location.
Also the fact the PA spent little time at a level indicates the speed of the buying interest from the institutional side which is also highly supportive for your trade.

The key take home point from this is to a) be able to observe and read the price action and reaction off the level to get an insight into the order flow around the level, and b) understand this impulsive bounce likely indicates a high profit potential trade.

An example of this is in the chart below on a live trade setup for the EURUSD we profited from heavily and I traded with my own money (really can’t believe I have to keep saying this as I’m only always trading with my own money).

EURUSD Live Trade
live price action trade eurusd profits heavy

Looking at the chart above, you are seeing a screenshot of when I was in the trade, showing my entry trade location (1.1075), my SL at 1.1050 and my TP and 1.1250/60.

This trade ended up hitting it’s target, but notice how the pair bounced off the support level quickly forming a pin bar rejection in the process.

NOTE: If you were trading the illusory pin bar 50% retrace tweak entry, you would have gotten a much worse entry location vs. mine.
It is important to understand why confirmation in price action is an illusion and how it hurts your profits.

Regardless, the nice tail rejection + closing on the top of the bar indicates strong buying off my entry location.
The fact the next two bars also repeated the same meant a) my trade almost never went in the negative, and b) the strong impulsive reaction off the level indicates a high +R potential trade.

And that is exactly what happened profiting +186 pips on a roughly 25 pip stop for a +7.5R trade.
How often do you get those trading your daily pin bars?

In Review

Ignoring the intra-day price action context will leave you with a weakened skill level and ability to understand the overall price action context. Yes, intra-day context can and often will contradict the higher TF context, but this does not mean we ignore them.

It is simply ‘information‘ and can be highly informative for us when either trading intra-day, with trend, or counter-trend.
The information can also be informative to us about our trade when you learn to read the subtle price action clues before, and at the level.
Also we have to be aware of highly impulsive reactions off a key level as that could indicate a larger profit potential for our trade.

You may have a typical +2R profit target for your trade, but a highly impulsive and quick reaction (or short holding time) at your trade location may indicate there is a larger move in play (and thus more profit potential).

With that being said, what tips do you use to help trade price action around key support and resistance levels?

Please share, like and tweet these forex support and resistance trading tips along with sharing it on any forums or with anyone you think can benefit.

, ,

The Blind Entry (How It Will Leave You Trading Blind)

This is part 2 of a 4 part series. View the next one here: How the Typical Pin Bar Entry Is A Retail Entry or if you missed the first one, checkout The Price Action Confirmation Myth & the Retail Mindset

blind entry 2ndskiesforex 1

Preface

I’d like to preface this post before I share the meat and potatoes stew.

People are going to have differing opinions on how to trade, particularly when it comes to price action, and that is to be both expected and accepted.

I think as colleagues, it is perfectly ok to offer a critique on a trading method.  It helps bring greater clarity and information to the trading world, especially for developing traders.

As long as the critique and constructive criticism is not personal, and not based on speculation, but simply comparing the differences in technique or approach, then it seems perfectly fine (IMO).

We see this in science, mathematics and medicine, so there is no reason why it cannot or should not be here.

I’ve recently posted a video on Why Confirmation is A Retail Traders Mindset, and not how professionals think.

This article is my critique and explanation of how and why the forex blind entry method communicates a retail traders mindset about price action.

Let’s begin.

The Critique On The Blind Entry

There is this retail version of price action, that trading a support or resistance level without a ‘confirmation signal’, is trading the market ‘blind‘.

It is called the ‘blind entry‘, because if you are trading without any confirmation signal, then you are trading the market blind.

I want you to think about that for a moment.

That a trend which has been moving for 1500 pips, selling off for 7, 8 or 9 weeks/months in a row…that if you are shorting without a price action confirmation signal (such as a pin bar, engulfing bar, or inside bar), that you are trading blind.

If that is how you approach price action, that trading without such a confirmation price action signal, is really trading blind, then you really don’t trust price action.

You don’t trust trading trends, you don’t trust price action context, you don’t trust an imbalanced order flow in the market, you don’t trust key support and resistance levels.

In reality, you really don’t trust your ability to trade at all now, do you?

Do you really think that a professional bank, prop or hedge fund trader has been sitting on the sidelines of the EURUSD downtrend these last several months, simply because they did not get a daily price action signal to ‘confirm’ the trend is valid?

Is that what you really think?

One has to ask the question, if attempting to join a well established trend, or entering the market without a ‘price action signal‘ (in the form of a 1-2 bar pattern) is trading ‘blind’, you really have to question that approach to the markets.

You have to question that understanding of price action as it is likely causing you to lose money.

In Closing

Are you one of those trading these price action confirmation signals?

Have you been sitting on your hands in trends that have moved thousands of pips, not trading them because you didn’t get ‘confirmation’?

If so, I want to hear your feedback and how this series of videos and articles is changing your perspective on trading price action confirmation signals.

Can you see the difference now in the two versions of price action being taught?

Which one do you think wins over time and why?

I want to know, so please comment and join the discussion below.

Did you like this article and find it useful?

Please make sure to like, share and tweet it below.

And do watch my next video in this series where I show the difference between the 50% retrace tweak entry vs. a professional traders entry.

 

This is part 2 of a 4 part series. View the next one here: How the Typical Pin Bar Entry Is A Retail Entry or if you missed the first one, checkout The Price Action Confirmation Myth & the Retail Mindset

, , , ,

The Price Action Confirmation Myth & the Retail Mindset

This is part 1 of a 4 part forex price action strategy series. Read the next one here: The Blind Entry (How It Will Leave You Trading Blind)

I can always tell where people are in the trading process based on how they speak about confirmation. Why is that? Watch, and find out!

Here’s the transcription for the video:

“There’s a really big misunderstanding about confirmation.

When I hear people talk about confirmation and how they talk about confirmation, I can always tell where people are in the trading process based on how they speak about confirmation. Why is that?

Because there’s been this proliferated idea in the trading education world that to trade a setup or trend or something like that you need this thing called confirmation and the confirmation comes in the form of a pin bar, an engulfing bar, an inside bar or whatever.

So that’s the general idea that’s out there when it comes to trading price action.

The thing is, is that when I hear somebody talk about price action in this way, I know exactly what level of trader they are and what level of trader they’re not, because how somebody speaks about confirmation is very indicative of where they are in their trading process.

If a trader is looking for confirmation that a trade will work and they’re doing this because they’re saying “ok, we gotta wait for a price action confirmation signal from support or resistance“.

Well, where does this idea and need for confirmation come from? It comes from a beginner’s understanding of trading.

Why is that?

Because beginning traders are looking for certainty in the market. They’re looking for solidarity, they’re looking for something really really potent that says “I need confirmation”.

The reason why they need confirmation is because they don’t trust price action, they don’t trust their skillset.

They don’t trust trading as a whole. They don’t trust trading with trends, they don’t trust reversals. They don’t trust support and resistance, they don’t trust price action as a whole.

In the beginning, traders want solidarity, they want certainty. And because of that, they’re looking for confirmation in the form of a pin bar or something like that.

The pin bar ‘confirms’ that this trend is going to continue.

The thing about it i,s is that this is something that professional traders have let go of that a long time ago. And they have to let go of it to become a professional trader.

The reason why that is, is because that idea of certainty, of confirmation and the way that a beginning trader is looking for it, that wanting things to be really certain, that A++ setup.

Where that comes from is a beginning understanding of trading.

“Professional traders don’t look for certainty, because they’ve realized it’s an illusion.”

What professional traders are looking at, which is a different perspective, is trading and thinking probability.

So if you hear somebody talking about confirmation, “we wanna trade with the downtrend and we’re gonna wait for a pullback towards resistance and a pin bar off that resistance as confirmation that the trend is still in play and we can trade it“.

How many have heard that story before?

The reason why you’ve been told that is because the people who are teaching that aren’t trading professionally.

If they were you would know this, and all professional traders would know this because professionals aren’t looking for confirmation signals via a pin bar.

So if you hear somebody talking about that, you know where they are in terms of their level of trading.

They’re still a beginning trader themselves, and if you think about it, if somebody is talking about an A++ setup or they’re saying “hey, we’re waiting for a pin bar from resistance for confirmation“, besides the fact that I would suggest running from them as far as possible, because they’re still beginning traders.

You have to ask yourself “look, if you’re only willing to wait for a pin bar or an inside bar, or a false break, if you’re only willing to wait for those signals before you enter the market, well then you really don’t trust price action, do you?”

You don’t trust trends, you don’t trust price action context, impulsive vs. corrective, volatile vs. non-volatile trends, you don’t trust support and resistance, you don’t trust your own ability to trade.

You have to wait for all these other things to be in place and then this one final supposedly magical pattern and supposedly there’s only like 3 of them, which is amazing to me that this idea is actually out there, that there’s only 3 possible ways that the market is telling you a trend’s going to continue.

I don’t know about you but that seems kind of absurd to me. It seems a little insane to think that a market that is so complex, across so many players, across trends that continue.

Confirmation via a pinbar is an illusion, it’s a beginning way to look at trading.

So, your job as a professional trader… you know you’ve kinda crossed the Rubicon and made a big leap in your trading when you look at trading in terms of probabilities, not confirmation in the ordinary sense.

Confirmation, the way it’s normally talked about is a very dubious notion. It’s a very slippery idea that doesn’t really exist in the way you think it does.

If you’re constantly looking for those things you’re going to miss thousands and thousands of pips in a trend that is already well-esablished.

If you’re looking for confirmation, you won’t be able to make this trade and this trade and this trade and this trade. And that’s… what is that? +240-250 pips?

In a period of, what, 3 days? On one pair? You won’t be able to do that.”

This is part 1 of a 4 part series. Read the next one here: The Blind Entry (How It Will Leave You Trading Blind)

Have you been trading price action via ‘confirmation’? If so, I want to hear from you and what you see as the difference, so please make sure to comment below.

Was this article helpful? Please make sure to like, share and tweet it below to anyone you think can benefit from this.

, ,

(Video) Forex Live Price Action Trade +140 Pips USDCHF

Watch as I execute a live price action trade on the USD/CHF. Currently up +143 pips, I explain my entry, stop loss placement and why I took the trade.

Here’s the transcription for the forex trading video:

“Hello traders here. Chris Capre, 2ndSkiesForex.com.

Today I have a live price action trade here for you on the USD/CHF where I’m going to explain my entry, my stop loss, my take profit levels and why I took the trade.

As you can see from the chart, I’m up about +143 pips roughly at this point and it matches down here in the platform. You can also see that this is a real money account.

FXCM with all their platforms whether you’re on the institutional platform, the Active Trader, or the more common retail one which is their Trading Station 2 with New York Close forex charts will always say real when it’s a real money account and it will say demo when it’s a demo account.

Moving on to the trade here, we can see it was opened about 24 hours ago, it’s about 6 4-hour candles.

I’ve been talking to my members about this in my price action course, that the 0.95/0.9525 is a key support level.

On the 20th, the bids held this area really well, you can see there was kind of a lot of absorption of the offers here and they eventually started to push back and in that process the market tried to come back a little bit but then the bids stepped in and pushed it up another leg higher.

So I was thinking that it may not come back to the 0.95 level again so I was willing to get in at 0.9529.

I don’t consider this a textbook entry as you can see, it did go to about 0.95 again, so that would’ve been the textbook entry.

So my entry wasn’t perfect by any means, but the overall trade location was solid, this range support area has held 3 times now, so this is a really good trade location.

My stop loss placement was just a few pips below the low of the lowest push below this 0.95 here. So I have at this point a 54 pip stop and being up about 142 pips gives me almost about a plus +3R, it’s about 2.6.

Now, in terms of my target, it’s at 0.9825 and that’s the most recent spike highs.

So assuming that the bulls are gonna continue to maintain this range, at a minimum they should attack about this high right here at 0.9750 which would still offer me about +4R, but I’m gunning for this one here, expecting that it’s gonna try and make an attack up here and that would give me about +5.5R.

In terms of trade management, if the price action attacks this 0.9800 handle or above here pretty aggresively, I may be open to lifting the limit and then gunning for a larger move back towards parity or maybe 0.9950, which would add a lot more profit and R onto the trade.

In terms of the stop loss management, at this point I’m likely gonna lift the stop pretty soon here, and lock in some profit soon, perhaps just under 0.96, which would be this kinda area right over here.

And that would neutralize all the risk and lock in some profit and be in a risk free trade at this point.

But that’s pretty much it in terms of my entry, stop loss, take profit location and my price action analysis behind this.

I’m simply playing the range here, it’s a medium term range structure and so I’m playing the range on both sides, with a slight bullish bias right now.

But did you find this lesson useful?

Please make sure to like, share and tweet it below, and I’d love your comments on this and what “a-ha” moments you had from this.

Also make sure to check out my website, dev2ndskies.wpengine.com, and check out all the free forex trading articles and videos there.

If you want to take your training to the next level, make sure to visit my price action course, where I teach you how to make + high R trades, just like this.

And that’s pretty much it, this is Chris Capre with dev2ndskies.wpengine.com where I teach you how to change the way you think, trade and perform.”

, ,

What You’ll Learn From Becoming A Successful Trader

becoming a successful trader

“What does being a trader mean to me… it means the key to financial and personal freedom.” – From a former bank trader.

I actually find this quote above to be a dime a dozen statement. Anyone can parse out such a blatantly obvious and banal sentiment.

If offers no unique insights into trading, let alone an original perspective.

How about the ‘Get out of the 9-5 grind‘ – Cut and Paste. ‘Be your own boss‘ – Carbon Copy.

Any old (or young) bloke can write such waste.

Have I read/seen/heard any good ones? A few interesting reflections for sure. You can tell they’ve dug past the outermost crust, reached through the thick mantle & arrived at a rich core.

Coming from a buddhist, trader and 20 year student of neuroscience, here are 5 things I’ve learned from my 15 years of the markets.

#1: Money is Liquid

Most people work for a company (i.e. someone else). If that is you, you most likely get paid a fixed amount on fixed dates (neither are your choosing).

And it’s X amount of dollars on such fixed dates (barring an infrequent bonus). This causes us to relate to money in a very fixed & solid way.

Trading changes that completely. When each pip for or against you is $1000, your wealth is changing in real time constantly.

This forces you to see money in a completely different way.

Relating to money in a very fixed way doesn’t produce creativity, nor develop new neural networks in the brain. It doesn’t lead to challenging your ideas & looking at things from a different perspective.

It leads you to believe you are stuck and dis-empowered. Innovation and creativity do not arise in a fixed mindset, or a brain that isn’t growing.

When people start to trade for the first time and see how their money can grow, it changes something in your brain.

The limits are lifted and you start to see new possibilities (that money is liquid). This is a healthy thing for the growth and development of your brain and trading mindset.

#2: Novelty Helps the Brain Grow

Ever work in a warehouse? I did in high school.

It sucked. Great pay, but I would have preferred the Iron Maiden. Repeating the same motion every day 500x a day took me about…ohhh…2.5 days for me to say ‘F-THIS’.

Lamentably, most jobs keep you doing relatively the same things. Novelty in the workplace is not a commonality, but a rare commodity.

Trading changes that completely. No trading day is ever the same. The markets are in constant flux.

When I started in 2001, the market could move 100 pips on the first tick from an NFP announcement. Today…maybe 20-50 pips.

The GBPJPY (used to be called ‘the beast’) would move 250-450 pips a day on average.  Now it boasts a whopping 109 pips on the daily ATR.

Markets present you with an ever flowing river of unpredictability and novelty.

How does this help your dome?

Novelty stimulates the brain. It helps excite dopamine production which is helpful for building new memories, learning, and creating new neural pathways.

Novelty also increases the activity in the pre-frontal cortex (PFC), which helps you build greater insight, empathy, and self-control.

The novelty of the markets is simply good for your brain.

#3: Markets Are A Giant Mirror To Your Mind

Perhaps you’ve realized it, but the markets are a place for self-discovery. Regardless of the market you trade or where you are trading from, it is always one giant mirror to your mind and trading mindset.

Every action and thought you have affects your performance.

“The markets completely reflect back your mind to you, making it painfully obvious what your psychological strengths and weaknesses are.”

If you are disciplined in trading or not in the face of uncertainty, the markets will let you know.

It is completely unbiased and untainted how it reflects these things back to you.

The market does not judge you, and will mirror something back whether you are George Soros, a middle aged bank trader, or a young 20-something just starting out.

Any flaws you have will be brought to the surface and available to see whether you want to or not.

What person do you know that can so accurately reflect such things back to you without judgment, bias or an agenda?

What entity do you know out there, that every moment you engage it is constantly reminding you to observe your own mental, emotional and physical condition?

The markets are a giant mirror for your mind and mindset, and a fantastic place for self-discovery and growth.

#4: Understanding Risk vs. Reward

Recently my partner and I started looking at new homes. We met with a Sotheby’s agent as they had a few good listings in our area.

After talking with them about the numbers, my trading brain started to go off.

The law here requires non-permanent residents to put a minimum of 35% down on the house. Assuming a house value of $1 million, that comes out to $350K.

As soon as I started to hear the numbers, my trading brain went to work. Last year the market here gained about 4.5%.

Assuming a similar return, I’m putting down $350K to gain $45K on the overall property value (4.5% on $1M).

Now is that the most efficient use of my capital? I could put $350K into the markets and confidently get a 20% return. That would = a $70K return vs. my $45K on the house.

Considering I am not far away from my permanent residence status, when evaluating the risk vs. reward of the situation, it is actually more expensive and less profitable for me to put this money into a down payment.

Most people would never go through this line of thinking. Most wouldn’t do the math, or particularly evaluate situations from a risk vs. reward perspective.

This is a highly valuable skill in life beyond the numbers.

We will always encounter situations in life that will require us to understand, evaluate and assess the risk vs. the reward.

Simply put – the things we learn in trading are valuable for us in life.

#5: Learning How & When to Take Risks

Speaking of risk, one thing you’ll get intimately familiar and comfortable with via trading is taking risks.

Whether we want to acknowledge it or not, in life you have to take risks. It is not only good for your brain, but is a governing factor behind what you achieve.

Those who don’t take risks never get ahead. They live the same run of the mill life & never leave their comfort zone.

Yet leaving our comfort zone is often where the most growth is. It is where most successful traders and people spend their time.

By and large,

“successful traders & people in all fields have taken risks, oftentimes large ones for big payoffs that last them a lifetime.”

That is one thing you’ll get an instinctual feel for when trading, because it’s a part of your every day work and passion.

Learning how and when to take risks is a highly valuable skill which can pay dividends well beyond the charts.

It can literally define the direction you take and the trend of your life. Hence what you learn from trading can enrich your mind and life in ways most jobs never will.

Did you find this lesson useful? Please make sure to like, share and tweet it below.

Also I’d love to hear what ‘aha‘ moments you had by sharing your comments and thoughts below.

, ,

Don’t Make This Mistake In Trading

mistakes in trading

You followed your trading plan. You got in at a great trade location. You were calm as a hindu cow throughout and executed perfectly from A-Z.

But…that noise your platform makes when you lose money…you heard it, and your account is now smaller.

‘I did everything right, it looked great, and yet I lost money. What went wrong?‘

Nothing. You did nothing wrong…up until that point right there.

Why?

Because you made the one failure almost every losing trader makes. You missed one essential element that will drastically affect your trading performance.

Reinforce what you did correctly.

‘What does that mean?’

It means regardless of how much you won or lost on a trade, you reinforce what you executed correctly.

‘What if I only did one thing out of ten correctly?’

Doesn’t matter – reinforce it.

‘How does this help me when I lost money? I want that money back.’

Ya, no shit! So does everyone else in that situation.

‘Ok tell me – why do I need to reinforce what I did correctly when I lost money?’

Because beating yourself up damages your self-image. Because not reinforcing habits doesn’t help to reproduce them.

By thinking about and reinforcing what we did correctly, we increase the likelihood we’ll repeat them.

“We cannot control the movement of the market, but we can control our thinking process.”

And what we think about from the beginning to end of our trading day matters. It heavily determines our performance.

The more we control what we think about, the less mental errors we’ll have while trading. And that leads to greater performance over time.

It also leads to a stronger self-image that believes it is ‘like you‘ to trade successfully.

This tip is just one slide in twenty-six from just one video of the Advanced Traders Mindset Course.

Want to change the way you think, trade and perform? Enroll now and join hundreds of members in ATM Course.

NOTE: Course registration closes in 3 days!

I know, sorry to give you such late notice, but I have been talking about it for 5 weeks now, and it’s been plastered all over my site.

Remember, one of the key dividing lines between success and failure in trading lies in your mindset. Make yours a successful one.

, ,

Discipline = Freedom + Success for Traders

I wanted to share a unique lesson this week, one that is different from any of my other ones.
Recently I was at a meditation retreat with my teacher. As many of you know, I have been practicing meditation and buddhism every day for 15+ years now. For 14 of those 15 years, I’ve been working with one teacher.
Who I was 15 years ago is not even recognizable to the person I am today, and my teacher is the biggest reason behind that.
She guides, challenges and helps me grow in all aspects of my life. Her in-exhaustable wisdom, penetrating insight and poignant clarity continue to amaze me every time I am with her.
It is a relationship I am ever grateful for.
Back to the Retreat
During a private moment with the senior members, she was taking questions from the group, when one of the students asked a question about discipline.
meditation retreat 2ndskiesforex
I wanted to share her response because it speaks to the heart of what discipline, training and taking things to the next level is really about (in trading, and life).
I’ve changed a few words to make it more tailored towards trading, but the message is the same, and all the credit remains with her for this message below.
Without further adieu, here is her thoughts on discipline & training.
Discipline Is Not the Anti-thesis of Freedom
“I’ve often seen in people this idea, or framework of thinking, that force, rigidity, and intensity in one’s work is the antithesis of freedom & creativity, and it’s absolutely not.
One pattern that revolves around discipline is people floating around from one system to another, and another, and another, but what people end up doing is spinning their wheels and never going deep.
They’ll let go of one system because they think it is ‘under-performing‘ for that week or month, all according to our wants and needs to succeed ‘now’.
What we are really doing is playing out our conditioned scripts and never breaking through.
Breaking the Cycle
The only way to break out of this cycle is to harness the power of habit in a positive direction. That requires discipline, it requires a focused training.
There will be a level of force and unhappiness that comes with this sandwich. But for anything that requires us to succeed, we have to go deep, and that takes discipline & training. We have to develop this habit and power.
bruce lee discipline 2ndskiesforex
Michael Jordan
An Olympic athlete doesn’t always feel like getting up that day and training for hours on end each day.
I’m pretty sure Michael Jordan didn’t always feel like practicing or training hard. But he did it anyway, and that communicated something to his self-image.
To transcend our current limits, we have to go beyond what we feel like. We have to transform this feeling of constantly wanting to do what we feel like, and then making excuses in trading and why we aren’t performing the way we want to.
There is so much energy out there today about doing what you feel like, doing whatever you want.
michael jordan discipline 2ndskiesforex
Taking Things to the Next Level
But if the goal is to take your skills, awareness and mind to the next level…if your goal is to be something, do something, perform a skill at a higher level than you are now, then you need to start working on those hidden levels, in those areas of your sub-conscious and unconscious mind where we have some heavy conditioning in place.
So if you want to go beyond the level of success, performance and the mindset you have now, that takes training, that takes discipline, that takes force, even when we don’t feel like doing it.
Discipline = Freedom
I too have moments like that, where I ‘don’t feel like it‘. But what I remember in those moments is that discipline will give me freedom.
If I do the practice and train whether I feel like it or not, this very action repeated many times, will lead to an accumulation of skills, wisdom and knowledge that will allow me to transcend my current limits.
Part of what is happening for me in those moments is my nervous system is reaching its limit to participate, act and execute in a particular way.
In that state of duress, in that level of concentration, what is being challenged is our limits, and it is only there that we can learn to expand that.
We can’t expand our limits while ‘doing what we want‘, or ‘being a lazy trader‘, or spending < an hour in front of the charts and then being on vacation the rest of the time.
That is an illusion, and no-high level professional works like that in any field.
Discipline = Power
There is a huge power to doing things we don’t feel like, and that power is called discipline.
Perhaps though discipline isn’t the best word, because we can easily associate it with some form or punitive measure or experience. But the reality is, discipline is our potency.
If we cannot have it, if we cannot hit the mat every day, or keep playing the guitar when Jimi Hendrix isn’t coming out of our strings, if we don’t push up against those limits, against that inertia, then we won’t grow.
We’ll remain shallow, and we’ll just end up repeating the same mistakes over and over and over again. If that is your experience, then you know the variables and recipe behind said experience.
Habitual Momentum
There is so much momentum to repeating our habits and cultural scripts. They have incredible momentum and energy behind them.
To establish another direction, to challenge and go against it, we will feel it, and that will not always be comfortable. Yet in those moments, there is a huge power available to us, to make discipline our habit.
Those Who Really Develop
If we look at the defining moment of someone who matures, develops and takes things to the next level vs. someone who doesn’t, it’s their capacity to stretch beyond what they don’t feel like doing.
It’s their ability to hold a discipline.
If discipline isn’t our strongest point, that’s ok, we can start with where we are. We can go to that limit, stretch the envelope a little bit each time in a controlled growth way. Discipline is a super power we have.
If you can tolerate insecurity, tolerate discomfort, and go against what you feel like doing, hold that discipline and train – there is no limit to how much you can grow, develop and succeed.
That is a great power we have, and for those who take this on, it is only a matter of time before you climb that mountain and have a successful trading mindset.
climbing mountain 2ndskiesforex
Netflix + Video Games
I certainly have moments where I exert beyond what I think is possible, and many times after that I need to rest my body and mind.
It’s usually in these times when we start to have those fantasies of laying on a beach for days on end, or just lying on the couch watching movies. I’ve done that.
Recently after some graduate school exams, someone told me after their finally done, that they just watch netflix and play video games for 3 days to decompress.
I heard that and thought ‘oh wow, that sounds like heaven‘. So I tried that, literally watching Breaking Bad from beginning to end, playing video games for long hours.
breaking bad 2ndskiesforex
But after doing that, although there was some rest I caught up on, I can say the overall experience wasn’t truly satisfying. It was helpful to get that rest and down time in, and we need that in certain moments.
But the rest of it wasn’t really satisfying…not in the same way where I can experience the fruits of my discipline, work and what I’ve created.
Shifting the Fantasy
So I’ve shifted to a place now where when I experience those fantasies, that when they come up and I want a ‘vacation of freedom’, a ‘vacation from discipline’…I’ve learned that too much freedom can be just as much a poison as too much discipline, so that’s not the solution.
Hence I remind myself that it is an illusion, and that I don’t want the fruit of that. What I really want is the fruit of taking things to the next level.
Even if it’s painful, even if I don’t like it, I’ve found the fantasy to be limiting. I’ve found that discipline in training yields me a feeling of being regret-less about my time.
I don’t have those regrets of ‘oh, I wish I had done that,’ because I am doing ‘that’, and there is something really gratifying in that experience and knowing.
I am definitely not a master of it. It’s hard, and I have times just like you that I wrestle with it. But I can say that I love what discipline gives me, especially in my meditation and mindfulness practice.
Highly Successful People
When I talk to people of high caliber, people who have a unique perspective and are highly successful, this is totally the difference.
This isn’t someone just doing what they want to do, or feeling what they like all the time.
They definitely aren’t following the fantasy being marketed by people out there that you can just work one hour a day and have all the money and success you want.
They aren’t staying in the little house of their mind, of what their mind wants, or what feels comfortable.
They’ve put themselves in environments that challenge them, that demand from them, and stayed in those environments through discomfort, foraging their way through.
And for those that have had this experience, you’ll see they are of a high caliber and performing at a high level.
The fruits of their work, discipline and training are obvious when you meet and talk with them.
highly successful people 2ndskiesforex
Ultimately, I think time is really precious, and we should question what our cultures teach us about how we should spend our time, and what it is really for.”
Wow is all I have to say to that.
I hope you enjoyed this article and found it insightful, poignant and informative about trading, success and discipline.
Please do share your comments and thoughts as I’m itching to hear your feedback.
Just Released: For those wanting to build a successful trading mindset while re-wiring your brain for success, check out our Advanced Traders Mindset Course, only available till April 2nd.

, ,

The Three Parts of Your Trading Mind

In this weeks lesson for the Advanced Traders Mindset Course, we went through a very important topic for building a successful mindset. We covered the three parts of your trading mind, addressing some of the critical topics below;
1) how these three parts relate towards your trading performance
2) how you can tell if these three are in balance
3) why the training you are doing isn’t going to work
4) what part of your mind creates each trading mistake you make
5) how to fix analysis paralysis
and more…
three parts of your mind 2ndskiesforex
Lamentably, most traders failing to achieve consistency or profitability are not working on all three parts of the mind. Most likely they are working on one part.
This creates an imbalance, and thus when you need to pull the trigger – you hesitate, get nervous, fearful, worry, experience doubt, have analysis paralysis, or any combination of those, and thus never hit the button.
Most likely, you end up watching the trade activate as you planned and hit your profit target with relative ease. The common response from here is frustration, regret, anger (towards oneself/market), and probably a host of other things.
Sound familiar?
Thinking and results mindset - disappointment
The reason why you have this experience repeatedly, is because you are training only one part of your mind.
This is done mostly via watching the market, doing ‘analysis‘, reading trading books, watching trading videos, basically stocking everything up to the ‘thinking-analytical’ part of your mind.
What you are missing is the other two parts of your mind which a) likely need training, and b) are probably imbalanced since you put 90% of your effort into only one part.
The result is…well you know what the result is…it’s the current state of your account, it’s the inconsistency, the repeating of the same mistakes over and over again, the inability to maintain any profits, discipline, or control your risk.
My teacher uses the phrase, ‘putting a big foot into a little shoe‘.
If you are putting something quite large (the mind/your trading mindset) & trying to stuff it into a little shoe (thinking/analytical part of your mind), the result will not work out as planned.
If you’ve experienced analysis paralysis, are still repeating the same mistakes, can profit for a few weeks, but then blow it all up in a few days, you are not alone.
The good thing is you can change this. You can re-wire your brain for trading success. You can learn to train all three parts of your mind.
fire bulb
We covered this in a 1+ hour video in our Traders Mindset Course. Registration closes April 2nd (2015) and we’ve already filled over 150 seats in the last few days.
To learn more about the Adv. Traders Mindset Course and how you can get past your biggest challenges in trading, click here.