Trading Mindset & Risk Management – Page 6

Developing A Successful Forex Trading Mindset Pt. 2

In my previous article Developing A Successful Forex Mindset Pt. 1, I discussed how your trading mindset is essentially a product of three things;

1) Your Neuro-Physiological Wiring

2) Your Mindset of Level of Mindfulness

3) Your Psychological Conditioning

I focused specifically on how your Neuro-Physiological Wiring, specifically how your mind and brain are integrated and help in your development as a forex trader.

I also talked about the three main fundamental functions of your brain (regulation, learning, selection) and how these mental functions are critical for building a successful forex trader mindset.

Today I’ll focus on number two from above – how your level of mindfulness helps to build your trading mindset – gearing it towards success or failure.

Your Level Of Mindfulness
As a general definition of mindfulness in trading, your mindfulness equates to the degree of awareness and attention to both your inner and outer worlds. Although this is particularly critical during the trading process (including just before and after), it is also connected to your mental activity and thoughts separate from trading.

Why?

This is because there is no compartmentalized section of your brain just for forex trading. We didn’t evolve to be forex traders sitting in front of a computer for our survival, so we are using skills and neurons from all portions of your brain. Because the brain is an interconnected whole, our experiences in life around wealth, mindset of abundance, family, memory, fear, greed, confidence, and more, all effect our trading mindset, and thus – how we make trading decisions in the moment.

Particularly true for trading (but also in life), your brain learns primarily from what you attend to in the moment. In an ode to Star Wars fans, Qui-Gon Jinn once stated, ‘your focus determines your reality‘. Thus, since your mind essentially learns from what you focus on in the moment, your level of mindfulness is the gateway to taking in helpful information (and avoiding non-useful info). How you perceive information (internally and externally) via your level of mindfulness, is what facilitates your learning process and thus trading mindset.

30-80x a Second
I’m going to be sharing a few ways you can build your level of mindfulness to sharpen your mental faculties, but wanted to briefly mention the potency of mindfulness practice.

In a study in 2004 by Lutz et al., he examined various Tibetan meditators as they went deep into their meditation and he found something highly impressive. Lutz noticed these meditators produced an uncommonly level of powerful and pervasive brainwaves, whereby unusually large regions of neural connections were pulsing in a ballet like synchrony. These large regions of neural connections pulsed at 30-80x a second allowing them to unify large territories of the mind.

Part of Einstein’s incredible mental faculties were his ability to involve large regions of his brains to work together via the cerebral cortex. His level of activity and connection (or higher) has also been found in those meditators who have build up their level of mindfulness via a sitting meditation practice. So a genius level IQ or mental abilities, along with highly perceptive qualities are not reserved for people born with these gifts.

Like all things in the mind, they can be learned and developed, particularly through mindfulness practices.

Mindfulness & Wisdom in Trading
As a whole, trading wisdom and mindfulness is not your ability to spot price action patterns in the charts, or understand proper risk management. Trading wisdom and mindfulness comes from a few steps;

1) Understanding what hurts and helps your trading process

2) Based on this understanding and experience, letting go of those habits which hurt your trading process

3) And strengthening those that help move your trading forward

As a whole, mindfulness and wisdom in trading are supported by the three basic functions I mentioned in the last article (regulation, learning and selection). Your brain learns through forming new circuits, strengthening new ones and weakening others. It selects through experience what is valuable and what is not.

Mindfulness in turn leads to new (and accelerated) learning, since your attention shapes what neural circuits are built. Regulation is done through a combination of excitatory and inhibitory activity. Thus, by learning to improve these three processes, you will improve your neural functions, and thus improve your trading mindset.

Two Methods For Building Mindfulness
Although there are dozens of methods to help you build mindfulness which will flood into your trading, I will talk about the two that I have practiced for over 12 years now; Yoga & Meditation

Over a few thousand years old, Yoga has hundreds and hundreds of scientifically proven benefits, such as reducing fat, increasing muscle tone, improving digestion, enhancing your sex life, glandular function, and relaxing your central nervous system (or CNS).

Your CNS regulates an enormous amount of activity from motor to mental activity to breathing. Are you mouth breathing rapidly? If so, you are likely to be more excited, emotional and less relaxed/focused during trading. Yoga is a great practice to help build both a relaxed CNS, but also to build awareness, both physical and mental.

To really do yoga well, you have to maintain awareness of your entire body, and control your internal energy. Any inability to do this will manifest in your yoga practice. Don’t believe me, try and do a balancing pose (like tree pose) and see how long you can hold it? I’m willing to bet almost any experienced yoga instructor can hold it for much longer than you. How so? Through a greater ability to relax their body, mind while maintaining awareness.

Thus, Yoga is a fantastic option for building mindfulness as that is the root of all yoga practice.

Meditation is another alternative, particularly silent sitting, sometimes known as vipassana, shi-ne, zazen or many other names. More than likely there is a center around you that offers a silent sitting practice, but those who engage this practice fully not only notice mindfulness benefits, but greater clarity, happiness and without a doubt – better neural functioning.

The general goal of any silent sitting practice is to build your mindfulness and awareness in the moment.

Many people wonder how I became a successful trader being self-taught. I am unlikely smarter than many of those I teach. Nor did I take a single economics or business class in college. But one edge I had for sure, was my yoga and meditation practice over the last 12 years.

This helped accelerate my learning curve as I figured out much quicker what to focus on, what price action setups were high probability, how to build my trading skills and trading mindset to be successful. If there was one key edge between me and others, it would be this, and the benefits continue ad infinitum – probably the best investment and ROI I could have ever come across in my life.

Regardless, these are a few options for building a successful trading mindset and your mindfulness in trading.

In Closing
Your mindset, brain and mental activity is what forms your trading mindset, and thus – determines your level of success. Mindfulness in trading equates to the degree of awareness and attention to both your inner and outer worlds. This would mean your emotions, your level of relaxation or excitation, your ability to focus in the moment and detect the order flow in the market, along with how your mental activity is helping or hurting your trading decisions.

Mindfulness increases your learning process by focusing on what is beneficial and profitable for your trading process, while avoiding what sets you backward.

Two practices you can engage in to build your mindfulness are yoga and meditation, which will sharpen your focus and mental activity so you get more out of your brain and mind when trading.

This is part two of the three part series on Developing A Successful Trading Mindset, so stay tuned for the last edition soon. But I hope this gives you some ideas of looking beyond the strategy to what may be keeping profits and success in trading just out of reach.

Kind Regards,
Chris Capre

Setting Trading Goals for 2013

Now that 2012 is wrapping up for traders, I’m guessing many of you (like myself) are dying to get into the new year of trading. During this time, it is a fantastic opportunity to reflect upon what successes you had last year, but also what you need to work on.
A common practice and tradition for people before the new year is to set goals or what some refer to as ‘resolutions‘. Did you know that over 80% of all New Years resolutions around losing weight or getting into shape fail? Similarly for traders, virtually the same amount of profitable accounts last year (avg. 28%) is virtually identical to the year before (avg. 26%).
Yet I’m willing to bet most of you made trading resolutions last year that were all designed to help you become successful. Being that around the same amount are, it’s safe to say these ‘resolutions’ failed, so why do you think that is?
The key is around setting proper goals, for if they are done incorrectly, you will move forward without a real plan of action, just attacking the charts hunting for profits and intraday price action setups, but no real progress towards your trading.
This article is designed to share with you an easy 5 step strategy for setting proper trading goals in 2013. This is so you can make the significant changes to your trading you feel is possible.

Step 1 – Make Your Goals Specific
If a goal is not specific, there is no way to focus on it, or take specific actions to achieve it. Your efforts become dis-coordinated towards achieving your goal, and your energy never drives home any specific change. Stating to yourself;
“I will stick with my trading method“ is too general and not specific enough.
Sure, your method may be to trade price action, or the ichimoku cloud, but that is too vague. Does this mean one system or many? Does this address risk parameters? No. Does it address the specific rules of your system? No.
You have to be specific with your goals, otherwise your efforts will be scattered and ineffective.
Although the most common goals will be numbers oriented, try to avoid these typical ones below;
I want to make a 100% gain on my account
I want to make 10% profit a month
I want to make 500 pips per month
Why?
Because you cannot know what the market will bring. You may have a goal of 20 pips per day, but what if the market is offering you 100 pips on your price action setup? Why would you not take what is offered?
Consequently, the market may have low liquidity and be in a super small 15 pip range, perhaps waiting for a big announcement. So why try and force more out of the market then what it is offering?
Focusing on performance means you may sacrifice technique to get there, and this leads to bad habits in trading which will cause greater losses down the line.
Instead, set some clear ‘process‘ oriented goals which focus on technique instead of result. If you do the technique correct, and trade following your rule based system, then you trade the system as is, and build positive habits towards trading successfully. I always suggest – focus on doing the technique correctly, and the money will come.
Some examples are;

-I will execute proper risk management targeting minimally 2x my risk on every trade
-I will stay in a winning position until my system gives me an exit signal
-I will spend 30 minutes each day preparing for my trading day, and 30 minutes reviewing my trading day
Not only are these ‘process‘ oriented goals which build positive behaviors to improve your trading, but they are specific. Instead of saying, ‘I will use ‘better‘ risk management techniques‘, they state specifically what they are. ‘Better‘ is ambiguous and hard to define, so how do you know if you achieved the goal?
Specific goals (both small and big) are critical because you direct your efforts in a specific direction where the goal is clear. Each smaller goal is simply a step on the path to a larger goal and gets you that much closer.

Step 2 – Goals Need to Be Measurable
Along the lines of goals being specific, they also need to be measurable. For example, maybe for the last year, across all your trades, you achieved a 1.5:1 reward-risk ratio for all your winners. Well, with the goal of having a 2x reward-risk ratio, this is something you can measure.
You can also challenge yourself by adding a time value beyond ‘for the year 2013‘. An example would be;

By March 1st, I will targeting nothing smaller than 2x my risk

or
By March 1st, over half of my trades winners will be 2x my risk, and the other half no less than 1.5x my risk
You may accomplish these goals earlier, but by having a goal be ‘measurable‘, it becomes a measurable indicator directly related to your goal, which will provide you with clear results and a feedback loop which communicates how you are doing, and what specifically you need to work on. You can even get specific by making smaller measurable goals which are just one step on the way up towards your bigger goals.

Step 3 – Make Your Goal Attainable
Ask yourself, ‘is your goal attainable?‘ Saying you want to achieve 70% accuracy with all your trades may be difficult if you’ve never had a year (or even month) above 50%.
The questions you have to ask yourself ‘Am I prepared, capable and have all the tools needed to achieve my goals?‘
Maybe you do not even have a rule based price action system with an edge to begin with. So how can you say you want to achieve 70% accuracy when you a) do not even have a system and b) have not tested your system on demo or live to see how it performs?
Perhaps one of your goals is to write in your trading journal every day. Well, ask yourself – do you even have a trading journal?
First figure out what you need to achieve your goals, then determine whether you have everything you need or not. A goal must be attainable, but only if you have the right tools in place.

Step 4 – Make Your Goal Realistic
It is easy to make a goal, just like it is easy to make a new years resolution. But setting a realistic goal is a completely different thing. Just like a goal needs to be attainable, having a realistic goal keeps you honest about where you are and what is workable to you without putting undue stress on yourself.

For example, using the goal, ‘I will spend 30 minutes every day preparing for my trading day‘, what if you work 9 to 5, and your trading day starts at 5:30? Maybe it takes you 15 minutes just to get home, so spending 30 minutes preparing for your trading day may not be realistic if you need to be trading at 5:30 when your price action setups form.
This is the failure of many exercise or weight goals. Saying you want to lose 50lbs in 3 months is one thing, but maybe it would be unhealthy for you to lose that much weight so quickly.
The same is for trading – make your goal realistic. If you are going to make your goal a performance number, like 1000 pips per month, yet you’ve never made over 200 pips, you may be setting yourself up for failure and disappointment which will have a negative psychological impact on your trading.
Thus, find a goal that is achievable, but will force you to work and stretch your current abilities.

Step 5 – Make Your Goal Timely
Obviously you will start working on these new goals beginning the new year, but what is your deadline or finish line? Would you ever join a race if you had no idea how far you had to run? Of course not. Thus, not having a finish line for achieving your goals can cause your motivation to wane, or discipline to slip by taking breaks from working on your goals consistently.
Remember, the finish line is not just an ending you are moving towards passing. It is a guide on how to manage and use your time and effort. Most traders fail to manage their time effectively, both in front of the screen (trading, analyzing the market for setups), and away from their screen (reviewing trade journal, analyzing performance/stats).
It is common to think ‘next week, or next month I will use proper risk management, or write in my trade journal‘. How many times have you said this to yourself, and how many times have you not hit your goals on time?
The difference between successful people and those who are not, is successful people know how to manage their time well, set small goals that lead to the larger goal, and constantly make progress towards them. By knocking down the smaller goals, it makes the larger goal seem much more possible.

Each step you take should have a finish line for achieving your goals, so you know how to effectively manage your time and build towards your new heights.

In Summary
Creating resolutions and goals at first seem simple and straightforward, especially if they are just done in your head. But you’ve committed to becoming a successful trader.
You’ve spent money, time, and made many sacrifices to complete the journey. Why waste that time and effort to fall short and not get the financial freedom you want? Why spend so many hours and dollars to not get a return on your investment which is the the best kind of all – independence for both money and time?
Thus, make sure you know what you need to achieve your goals, that they are specific, measurable, attainable, realistic and timely.
I always suggest starting off asking, ‘What Do I Need To Trade Successfully‘. This is a critical step towards achieving any goal. But once you’ve asked these questions, then you know what you need to do and where to go. Now you just need a map and to set your goals for getting there.
Maybe you want to achieve your goals in a few months, a year, or maybe a few years. Regardless, you need a map, and clear goals/steps to get there, so make sure to make your plans and goals workable by following the five steps above. Doing so is the fastest way to reaching your goals and crossing the finish line.

Thus in 2013 accept the challenge to become a successful trader by working with a trading mentor, study a rule based system, do the work, and enjoy the rewards as they are more than worth it.
I’d like to end with a quote that was inspiring for me in my early years of trading from Hannah Moore:
“Obstacles are those frightful things when you take your eyes off your goals”
Kind Regards,
Chris Capre
Make sure to out my latest trading articles:
My Top Trading Mistakes for 2012
Developing a Successful Forex Trading Mindset Pt. 1
The Ideal Trader

Forex Strategies, Trading Mindset & Risk Management

Developing a Successful Forex Trading Mindset Pt. 1

Today’s lesson is just to give you some brief tips on how to develop a successful forex trading mindset. Without a profitable and successful trading mindset, you will be swimming upstream against your emotions/fears, thoughts and unconscious habits which undermine your success. Perhaps you have noticed this already in your trading, almost as if you are being kept at arms length from trading profitably.

Your trading mindset is really a product of three things;
1) your neuro-physiological wiring

2) your mindset or level of mindfulness

3) your psychological conditioning

Too many traders always seem to feel it is the system which is holding them back from being profitable. Yet I teach the same price action strategies to hundreds of people, and while many are profitable, others using the same systems are not.

What is the difference between the two? Their Trading Mindset.

So I will briefly share some key points about the mind, the brain, and how you can help develop a successful trading mindset. For today’s part 1 of the article, I will focus on the first point, and will cover the other two in the following articles.

Neuro-physiological Wiring (i.e. How Your Brain is Wired)
When your brain changes, so does your mind and vice versa. They are integrated and help in your development as a forex trader. Neurons that fire together wire together, and mental activity helps to create new neural structures (positive or negative ones). Simple unrelated thoughts (about past, present or future) can having significant effects on your trading mindset.

It should be noted there is no compartmentalized portion of your brain just for forex trading. Everything in your past conditioning and wiring can and will have an effect on your trading success.

The good thing about this is – your mind is neuroplastic and can be re-wired into a whole brain state. Any subtle changes in brain chemistry, heart rate, etc. can and will alter your concentration, memory and emotions (all critical for trading successfully).

Fantastic ways to alter your neural programming and to build a whole brain state for better performance + a successful trading mindset are a) ERT training, b) a brain gym or using binaural beats c) right diet and lifestyle.

As a whole, your brain has three fundamental functions:

1) Regulation (physiological processes necessary for survival, perception, etc. through exciting or inhibiting neurons)

2) Learning (forming new synapses, pathways and circuits by strengthening or weakening current ones)

3) Selection (working with perception and experience moving towards what is valuable or not)

These three fundamental functions are critical for all mental activity – especially in forex trading.

Regulation
If you have not taught your brain and central nervous system to relax, to breathe slowly and more deeply, your trading will likely be more emotional, panicked and stressed. You will miss details and make irrational decisions (not trading your strategy, trading with fear, risking too much). But you can train your brain to regulate the physiological and mental activity through exercise, yoga and breathing practices.

Learning
The best ways to accelerate the learning process is to a) work with a trading mentor, b) practice, study and train to use rule based systems, and c) to train in the markets which provide a feedback loop for you.

Selection
In concert with the learning process, your experience in the markets will help provide a rich context and feedback to help you move towards what is beneficial and valuable for your trading. This is done by discovering what works and consistently making profits, while moving away from what does not.

Your brain has survival strategies (physical/psychological) hard wired into its cells, and these can help or hurt your trading. It should be noted, when a survival strategy runs into a high energy (or uncomfortable) situation, the brain will create alarm signals that can and will influence mental activity.

Some of these strategies are;

1) to look for stability/solidity in a constantly changing world
2) to divide what is connected creating a subject/object relationship
3) to avoid pain/threats and seek pleasure

Can you see how these strategies may effect/hurt your trading? Any of the three stand out?

Food for thought, but perhaps you can explore how they have influenced your trading. This is the first step to building awareness around what makes you tick as a trader, and what you need to work on mentally. Overcoming and transforming these obstacles can (and likely will) mean the difference between making money and losing money.

Regardless, each of these three fundamental functions and strategies will play a critical role in building a successful trading mindset. Additionally, how your brain is physically wired will either support (or hamper) your learning process.

The good thing is, you can completely train and re-program yourself to be hard wired for successful forex trading. The only thing missing is working with a proper mentor, a training program, and the right effort.

I hope this helps gives you insights into the mind and why developing a successful trader mindset is important.

I’ll explore more in part two of this article series, so stay tuned, and happy holidays to all!

Kind Regards,
Chris Capre

Forex Strategies, Trading Mindset & Risk Management

The Ideal Trader

Over the last two weeks, I wrote on the subjects of ‘Quality vs Quantity – Which is Better For Trading?’ and ‘What is A High Quality Signal‘.

The main theme has been around dispelling some freshman arguments and confusions others have written espousing the quality is better than quantity argument, and what really constitutes a high quality signal.

One question that should have arisen out of this is ‘what is the ideal trading method and frequency‘ based on what I have now explained.

That is what I will focus on today – the ideal trading frequency (or what I think is the ideal trader). In other words, what kinds of trading strategies and frequency would offer you to make the most profits.

I will first talk about time and how that plays a crucial role in trading (and life). Then I will unpack a few trading strategies to give you the maximum punch for your efforts.

Time Is A Currency

I was recently traveling internationally walking down the streets, and I noticed a huge line leading up to this machine. I asked my local friend what all those people were waiting for. They told me if they punch their tickets, they get $.30 off their subway fare.

I then went up to someone in line and asked them how long they wait on average. “About 15 minutes”. I could tell immediately this person misunderstood how valuable time was.

They waited there 5x per week on average of 15 minutes (1.25 hours) all to save $1.50. If they really valued time, they would work an extra 1.25 hours to make more money than the $1.50 they were saving waiting in line.

This extra effort in overtime pay certainly outweighs the $1.50 gained.

Or they could use this extra time to figure out new ways to do what they do, likely leading to a promotion and thus higher pay.

There are plenty of more effective ways to use their time. But the reality is, when you do not have money, you think money is more valuable than time. When you have money, you think time is money and is really more valuable.

Why?

Because you can replace lost money, you can always make more money (an almost unlimited amount), and you can multiply money exponentially.

But…you cannot replace, make or multiple time. Once time is spent, it is gone forever and cannot be replaced, re-done or re-used.
Thus in reality, time is a currency, and often mis-spent.

Using your time well in a highly efficient and intelligent manner will almost always lead to having more time and more money. Find someone really successful and active, and I’ll find you someone who understands time is a currency.

So How Does This Relate To Trading?

The only way one can possibly ‘multiply’ time is to be able to do two things at once.

When it comes to trading, the only way to do this is to trade set and forget strategies on the 4hr and daily time frames. These are strategies where you do not need much time to manage them.

Real set and forget strategies are rule based systems, meaning there are rules for entries, exits, stops, limits, taking profits – everything.

You do not have to make discretionary decisions to use them. All you have to do execute the rules using minimal time and effort to trade them.

While the trade is playing itself out, you are off doing something else (reading a book, learning a new language, training in a brain gym, etc). This allows you to get maximum effect for the least amount of time used.

But I thought you said trading in quantity can be more profitable?

I did, and it is a fact, that if you can take your systems edge, and execute it a few more times a month with similar accuracy, you will make more profit then executing it less.

In fact, in my prior article dispelling the quality is better than quantity argument, I showed that the system with over 15% higher accuracy trading less, was still making far less profits and pips than the system trading more frequently and less accurately.

So quantity does matter.

Thus, trading set and forget strategies is useful because it allows you to do other things while making money. Being able to make money while sleeping is incredibly potent for building financial abundance.

But…and I mean but…trading only a handful of times per month does two negative things to your trading;

Limited Feedback Loop = Slower Learning Curve
Not Multiplying Your Edge = Making Less Money

Let me unpack these two briefly.

Limited Feedback Loop = Slower Learning Curve
It is a Neuroscientific & Cognitive fact that if you are under-stimulated, or become bored with your trading process, that it will interfere with your learning process. Being bored means you are not challenging yourself enough, nor getting enough feedback from the markets.

Every time you make a trade, it gives you feedback on your abilities, on how you find entries and exits, how you control risk, read price action signals, and make trading decisions.

You don’t become a good golfer or quarterback by sitting on the sidelines most of the time.

You become better at trading, by trading and making trading decisions – win or lose. Each trade is a feedback loop from the markets which offers you information that can bring you closer towards your goal, re-enforcing good habits while negating bad ones.

But if you don’t trade often or enough, you are missing out from seeing how much you really understand. There is a reason bank traders often have to make 4,000 trades before the bank lets them trade money. Without being challenged enough in relationship to your skill level, being bored or under-stimulated will not induce development, and it will actually hurt the learning process.

Thus, if you are only trading around 4-5x a month, you are hurting your learning process and curve, as you are missing plenty of high quality signals every day.

Not Multiplying Your Edge = Making Less Money

Although I’ve already demonstrated this in my prior article on quality vs quantity, the bottom line is your system should have an edge and expectancy.

If you are trading at 60% accuracy, making on average 2:1 reward to risk per trade, ask yourself who makes more money;

Trader A using that system 5x a month?

Trader B using that system 10x a month?

The answer is obvious – it’s a mathematical fact that if you can multiply the amount of times your edge plays out, you will make more money.

So in summary, trading more often while keeping your edge, will not only challenge you and stimulate you more, but will also help you make more money and profits.

What About Set and Forget Strategies?

The downside with set and forget strategies on the 4hr and daily time frames, is they do not come as often as intraday trading setups will.

Ask yourself how many signals offering 100 pip targets and 50 pips stops come in relationship to 60 pip targets and 30 pip stops?

Obviously more of the latter. And since daily signals only come once per day per pair, mathematically there are less of them than signals on the 4hr, 1hr or smaller time frames.

Although you may think only high quality signals come on the 4hr and daily time frames, you simply have not been trained to see them, as there are plenty of them coming daily on lower time frames.

A quality signal has nothing to do with time frame, but having three things;

Is a pattern that repeats itself with consistency and accuracy
Is a signal that offers low risk and high reward potential
Is a pattern that offers itself a clear entry and exit pattern

That is all a signal needs to be high quality, and this is not time frame dependent. If someone tells you otherwise, they do not understand trading and you should run away from them.

Although set and forget strategies can allow you to use your time efficiently, they do not allow you to multiply your account at the same pace as trading intraday will offer you more signals, and plenty of high quality ones. The one downside in trading intraday is you usually have to be there and manage the trade.

With training, this is not stressful, and becomes quite enjoyable. It also offers you a greater opportunity to learn, as you are observing more candles and price action formations, thus seeing more patterns and gaining more chart time. The latter two will without a doubt increase your learning curve, but only spending a few hours per week will take you a long time to log your 10,000 hours or really master reading price action patterns.

Thus, trading intraday signals and setups allows you to generate more opportunities for profit.

Which Is Better Then, and What Is The Ideal Trader?

In reality, the best combination is to trade both set and forget strategies, along with trading intraday setups. This is the ideal way to generate the most profits in the least amount of time.

You really get the best of both worlds as you can make money sleeping, also finding great intraday price action setups each day, and I have students doing exactly that, week in-week out.

Now I do not recommend sitting at your computer for 8hrs per day just trading intraday, then spending another 1-2 hours per day finding your set and forget setups.

The brain really can only achieve maximum concentration for short periods of time, often less than a few hours. Luckily, the best intraday trading setups are during peak times of volatility, so you only need to be around for a few segments of the trading day to capture some serious pips and profits.

I recently did a live intraday price action trade banking +1415 pips of profit in about 4 hours with over a 4.75x reward to risk play. How many days will it take you to make +1415 pips of profit, or 4.75x your risk trading daily price action setups? Food for thought, but i’m pretty sure you won’t do that in a day, or even a week for that matter.

In Summary

The bottom line is, the ideal trader can trade a few hours of the day highly concentrated, finding a few high quality intraday price action setups, while also making some set and forget plays. This allows them to multiply their profits and edge from the intraday trading, in concert with making money while sleeping.

This really is the ideal trader and offers you the most opportunities – not just for making profits, but for accelerating your learning process as you are constantly in the feedback loop from the markets, and learning at a faster pace.

Now there are other critical factors for helping the learning process, along with finding what is ideal for you, and what is the ideal trader mentality. These things I will discuss in the next article which will be coming soon so stay tuned.

Until then, no matter what religion you are, or wherever you are in the world, I wish you all the best of holidays, and that good health, abundance and a ocean of good things come to you, and those you care about.

Kind Regards,
Chris Capre

Forex Strategies, Trading Mindset & Risk Management

Trading With Amnesia

Last year the Colts were the first team in NFL history to go 0-13 following 9 straight playoff appearances. They had the single biggest lost of 2011, the worst AFC record in 3 years and finished with a 2-14 record which was the worst in the league that year. Because of this, they got the first overall pick in the 2012 draft. They chose Andrew Luck who is the subject of today’s lesson.

Being the first overall pick in the draft is a special honor, and burden due to the high expectations. Once he was selected first, former first round draft picks were interviewed and asked to give advice to Luck on his first season. Prior to yesterday’s game, Luck was also interviewed about the Colts amazing turnaround, being 7-4 and in 2nd place in the AFC South division. They talked about his reactions to the advice given by former first round drafts.
The one that really stood out for him was one of the quarterbacks suggesting he develop amnesia. What he meant was, you are going to make mistakes, and although you want to learn from them, you want to forget about them so that you can focus completely on the next pass, the next play and the task at hand.
By developing amnesia, you are willing to risk again, regardless of the last loss. You are willing to forgive yourself for over-leveraging, for not following your system, for pulling the trigger too late. Developing amnesia in some sense can be a great skill because each trade is its own, where there is no past mistakes haunting you. No fear of repeating the last major loss, no thoughts about losing more money.
If you are constantly brewing over the last mistake, trading in fear, it will take you out of the present moment. It will reduce your intelligence, awareness and cognitive skills needed to trade successfully. But if you have forgotten about the last mistake which cost you a lot of money, you can treat the newest trade as a fresh start, as another chance to do it right.

Quarterbacks need this skill because they can throw the ball 20, 30 or 40 times in a single game. Imagine what it takes to make a major mistake on live television, being watched by millions of people, and then having the throw the ball again.
In last Sunday’s game, Luck did not have a perfect game by any means. In fact for 90% of the game, his team was behind and he had made some major mistakes. He threw for three interceptions in the game, some of which were rookie errors. He threw a total of 54x and only completed 24 of his passes for 44% accuracy, which is incredibly low for such a talented quarterback.
In the last four minutes of the game, his team was down by 12 points and they had the ball, but had to go 85 yards. He had already thrown three interceptions, and time was running out. Yet, in 1 minute and 23 seconds, he completed 5 of the next 8 passes and scored a touchdown.
Luck got the ball again with 1 minute and 7 seconds left in the game and had to go 75 yards. With less than 4 seconds to play, he threw for a touchdown pass and won the game.
These last two amazing drives would have been challenging for the best ever to play the game. Yet a rookie quarterback did the amazing, and won the game.
None of this would have ever been possible if he hadn’t forgotten about those three interceptions. If he kept dwelling on them, he would have not been focused enough to make the crucial plays, to be totally aware and pass where he needed to, run when he needed to, decide when he needed to. He would have been stuck in the past which is a dead place you can never go back to ever. And that is where his intelligence would have been, stuck in a dead zone and imprisoned by his mind.

This often happens to traders, especially developing ones who haven’t built up a consistent track record. Ask yourself if you have ever been paralyzed to make a trade. Perhaps over-analyzing because you fear another loss. Perhaps not pulling the trigger because you are afraid to lose more money. Ask yourself what limits you from trading profitably? Are you afraid to make a mistake and what that means about you. Worried you might make a bad choice, or risk too much, or be completely wrong.
Has this ever happened to you? Does this sound familiar?
I’ve been there, and almost every successful trader has at one point or another.
In what may seem like a paradox, you need a good memory, and amnesia at the same time. Pattern recognition becomes easier with a good memory, especially if you’ve seen the patterns hundreds of times before. You know what follows, and you know what to do, so you just do it and execute your forex trading strategy.
But at the same time, you also need to trade with amnesia, you need to forget your mistakes, stop punishing yourself, stop getting back your losses in trading, stop being critical of yourself, stop being afraid, and treat the current trade like a fresh start, like its completely new and disconnected from your past mistakes.
This is skill that can be learned, and a strong memory can be developed as well. The mind is neuroplastic and has the ability to rebuild neural connections, the ability to build a mindset of success, for trading and life. Brain gyms are a great way to build up your memory and pattern recognition, while ERT training (Emotional Repolarization Technique) is exceptional for re-building neural connections, re-programming bad habits into good ones, fears into strengths, confusion into understanding and awareness.
Yes, you do need to remember your mistakes and learn from them. Reviewing your journal weekly is helpful for this, so you are aware what you need to work on and what are your strengths. But dwelling on your weaknesses and mistakes is not helpful, and will likely harm you psychologically from trading successfully.
In conclusion, there are three things needed to trade successfully;
1) A Strategy With An Edge
2) Proper Risk Management
3) Successful Trading Psychology
Andrew Luck did not have a fantastic first game of the year and made tons of mistakes. In many cases he did some embarrassing things when the whole world was watching. But he was never paralyzed by a bad pass, an interception or a critical mistake. He understood he’s going to make hundreds of passes, and one pass cannot define him or his career. He remembers his mistakes, and yet has amnesia about them so he can be totally present in the moment.

You will make hundreds of trades in a year, perhaps even a few months. No one trade will define you, and never will, whether its a big winner or a horrible loser that cost you a lot of money. How you move on and treat the current trade will determine how you perform. Do you hesitate to pull the trigger in fear you’ll make another mistake, or do you treat it as just another pass attempt and an opportunity to move forward. If you struggle with this, there are ways to get past this, but there will always be another chance to make a good trade and move closer to the endzone of success.
I hope you enjoyed this article and look forward to hearing your comments.
Kind Regards,
Chris Capre

Forex Strategies, Trading Mindset & Risk Management

Trading and Fear

Inspired by watching The Dark Knight Rises on my recent flight, I wanted to write an article about trading and fear. Of all the emotions that affect a trader negatively, fear would be at the top of the list.

Ask yourself;

-Have you ever not pulled the trigger when your system gave you a signal?
-Have you ever been paralyzed by a series of losses (or one big loss) that prevented you from taking a trade?
-Have you ever made a poor decision because you were thinking of your last losses?
-Has the fear of losing money ever affected you from doing what you know would help your trading?

If any of these have happened to you, do not worry, you are not alone, and are likely in a large group of traders – a majority if anything.

Fear is a highly powerful emotion that has paralyzed many at one moment or another. It has confused you, separated you from your intelligence, your wisdom, your ability to make a good decision. This is true not just in trading, but also in life.

Of almost every mental, emotional or psychological issue I’ve encountered with traders, fear has always been at the root of the issue.

Fear of losing money, of hitting your equity threshold and trading too large, fear of failure, fear of being wrong, fear of making a mistake, fear of about anything you can imagine, with fear as the common denominator.

There are really three stages to fear for a person, especially in forex trading, which I will briefly go over, and talk about how to remedy your fears.

Stage 1 – Paralysis and Confusion

Being such a powerful emotion, at a base level, fear tends to cloud our judgment when experiencing fear on any level. If we are not aware of it, or do not know how to deal with it, it will paralyze us, such as paralysis analysis. It will actually reduce our mental and cognitive resources, forcing us to use a more primitive portion of our brain called the Limbic System (our most ancient brain). You may have heard this as fight or flight, but really when fear takes a hold of us, we are separated from our natural intelligence in the moment we most surely need it. We become the deer on headlights, frozen when we should act. And this leads to confusion.

By having no awareness of fear, or being run over by it, we take the path of confusion, and this leads to bad trading decisions.

Perhaps not pulling the trigger, even though our system has a signal. Perhaps leveraging too little for being afraid of losing money. Whatever the reason, fear at the basic level is of no use to us, and if anything at all – is highly damaging to our life, and our trading performance.

The only way to pass stage 1 of relating to fear, is to first become aware of it, then realize how it affects you. Once you do this, you have the ability to use fear, which is just a highly potent energy.

If you have trouble becoming aware of fear, there are several options, such as doing yoga, practicing meditation before trading, listening to binaural beats, or using a neurofeedback device to monitor your neural activity. Any will work in their own way, but they will help you become aware of it to get past stage 1. Without it, you will forever be a servant to your fears. But after this, you can use fear to your advantage which is the next stage.

Stage 2 – Using Fear To Your Advantage

Imagine being aware that you have the fear of failure. It could, like in stage 1 paralyze you from making an important decision.

But…it can also be used to enhance your performance. It can be used to your advantage to become a better trader.

In The Dark Knight Rises, Batman wasn’t afraid of dying, and this lack of fear of death separated him from an energy – an energy to do something beyond normal. He eventually used this fear for his gain.

How Can Fear Be Used For Trading?

Imagine being afraid to fail, which in stage 1 means you are paralyzed. But if you have the awareness of it, recognize your fears, you can use this energy (which is all fear and emotion are), to perform better. You can use this to work harder, to do the things that build your skills, to practice your technique and system more, to put more hours behind the chart, to fear failure more than inaction.

Fear can be used to push you to the next level, and it is often fear which is at the root of someone who is highly driven. They fear the outcome of failure, so they work harder to make sure it never happens. In stage 2, fear is used as an energy to enhance your performance, to work harder than the next person, to not accepting mediocrity as you know how it sets you back. Instead of being paralyzed and confused by fear, you transform it into a vehicle for your success.

If done correctly, it can bring you a tremendous increase to your efforts which can lead to success. And although this may seem like a victory, it is a limited one – and certainly not the golden prize, which is the next stage. Generally successful traders have fear, but they use this to their advantage and have built a successful trading mentality.

Stage 3 – Transformation of Fear

You always hear about fear and greed in trading, but this comes from the belief they cannot be overcome. This is shortsided and misunderstands the mind. Fear can be transformed and something you are rid of. Imagine how you would be able to act in trading and life if you were without fear of death, without fear of loss, without fear of failure?

Imagine if you never had to deal with those energies, that all your intelligence and wisdom was directed to the problem at hand, to the moment? You would never even have to take the side-road of using it for your advantage. You could just act freely, uninhibited and without hesitation. There would be nothing to protect, no future scenario you worried about, and nothing to lose.

Fear does not have to be a part of your life and especially your trading.

Just imagine what you could do without fear? Imagine if your resources were used to advance your trading and life? Go over your trading journal and look at how many times you hesitated, with the trade ending up a highly profitable winner? I’m willing to bet if you turn those non-trades into profits, or losing trades into winners, you would have a completely different account than you do today.

The good thing is you do not have to become a buddhist monk or a shaolin warrior to overcome fear. With a little ERT training, and willingness on your part, fear can be transformed. Your neural pathways can be reprogrammed towards success, intelligence and wisdom, all without fear. It’s really just a question of will, effort and a desire to take things to the next level in trading and life.

On An Ending Note

Ask yourself where you are in your experience with fear and trading, and then ask yourself what you have done about it, and what you would do to turn the corner. Ask yourself what are you willing to do to become a successful trader. I have tons of students email me saying they will do anything. But when the moment comes time and time again, they choose the path of fear, they choose to not take the risk which is what this game is about (financial and psychological).

Our decisions and focus determine what we manifest in trading and life. The question of how it ends is always within you. In reality, trading is putting yourself in front of a mirror where you are given two choices;
-either become prey to your weaknesses, confusions and fears
-or rise to overcome them and empower yourself to live a different life

Regardless of which path you take, I hope this forex trader psychology article has provoked, challenged and inspired you to look at fear in a different way, and given you options to take your trading to the next level.

Forex Strategies, Trading Mindset & Risk Management

3 Ways Archery Helps My Trading

Last week was the first time I had gone back to my archery school in over a year. Approximately 2mins into the class, I realized how much I had missed formal archery classes, but also how archery helps my trading.

Now I am not suggesting you need to grab an Olympic bow and start taking archery classes to take your trading to the next level. But, it often helps to acquire a second skill or practice to assist your main endeavor – i.e. trading.
For example, Joe Namath was constantly reminded by his coaches he needed to work on his footwork. So he did what every quarterback does…he took up dancing! Footwork was critical to his position, and dancing helped him improve his footwork dramatically.
In almost all skill based endeavors, an additional practice can really improve one’s core skill. I’m going to share with you three ways Archery helps my trading.

1) Focus on the Complete Process
In archery, to hit the target consistently, you have to repeat a specific motion with the precision of a Swiss watch. But to do this, you have to be completely present and focused on the moment and process.
I had developed a habit of pulling my back shoulder towards my head. As my teacher corrected me on this, my concentration naturally became more focused on my pulling shoulder. But, in the process, I wasn’t rotating my front elbow properly.
I quickly realized too much concentration on one area meant less on another. Now just imagine if I was a tightrope walker and had this problem 😮

I find this to be the same with developing traders – they focus too much on strategy (particularly the system and entry) but not enough on controlling risk. Managing risk is a game of pure mathematics, and with most traders, they take profits too early, but get hit for their full stops.

Does this sound familiar?
This is a mathematical disaster waiting to happen, and unless you understand your risk of ruin tables, along with how your system performs over time, you may be 60% accurate or better, but mathematically doomed to lose money.
To be a successful trader, you have to focus on the complete process and every aspect of trading. This means just as much attention to proper risk management, building a successful trading psychology, AND a winning system. If any one is lacking, you will unlikely make money over time.

2) It’s All In the Mind
My last session before returning home was the advanced practice focused solely on shooting at longer distances. Normally, I train at 18m, but for this class it was at 30m.
Obviously, some adjustments had to be made, like changing the sight, getting used to holding the bow higher, etc.
After a few rounds, I was shooting close (but not quite) to what I normally would at 18m.
At the very end though, things got interesting.
We ended by shooting three rounds back at 18m, and it ‘felt‘ incredibly easier. Yes, precision becomes more critical at longer distances, but it also felt easier as a whole. Something changed in my mind, and I definitely felt more confident about shooting at 18m.
But what I noticed is with the top shooters in the school, they almost shot identical to what they did at 18m. Why were they able to shoot the same at 18m as they did at 30m?
The difference was in the mind. To them, their mind was just as focused on the task at 12m as it was at 30m, and they were also just as confident. That difference in the ‘thinking it was harder’ for me, definitely translated into my experience of it, particularly my confidence.

Just like archery, so much of trading is in what goes on between your two ears. Take a look at your last 20-30 losing trades in your journal, and see how many of them are related to mental errors, as opposed to you executing everything perfectly, but the trade just not working out?
Now do the math and see what you would have done if you had executed the strategy perfectly. Try the same for your last 20-30 wins, particularly the ones whereby you exited too early, and do the math again. Take a look at the results, and I’m willing to be with over 90% of you, your performance would have improved (if not been highly profitable) if you had used the strategy according to its rules.
Numbers are the best sirens for traders, so see the financial impact your mind has on your results. Now imagine that every month for the next 5 years and see what the difference would be. You are likely talking about two different trading careers.
So ask yourself how many errors do you make simply because of your mind & emotions, then see what you can do to make less errors. For traders more often than not – it’s in the mind.

3) Repetition is Key
Nobody will become a professional golfer swinging the club only 5-7x a month. The same goes for throwing a baseball, playing piano, and trading as well. There is no way you are going to really understand trading, patterns, price action, or the markets if you are only pulling the trigger less than 7x a month.
If you are currently doing this, you are not getting enough feedback from the market, and almost certainly not finding good setups, because there are plenty that happen per day.

Just like in archery, repetition is key to getting the process and technique down. This does not mean you will become a better archer shooting an arrow every 10 seconds as opposed to every 20. There has to be deliberate practice and you have to be able to concentrate on each trade, just like each arrow.
Thus, repeating the process more often will generally lead to better development, so make sure you are trading every day unless there is absolutely no signal with your system. But if that is the case, consider getting another system. Trading is like a feedback loop which communicates information on you, what you see in the markets, and how you are doing. Any lack of feedback usually means a missed opportunity to both profit and learning more about yourself and where you need to develop.

In Summary
Often times, when learning any skill based endeavor (like trading), finding another practice to engage in will often help augment your development as a trader. Many things come to mind, such as playing chess, learning an instrument, training in a brain gym, playing poker :-), and also archery. All of them have aspects which develop key skills highly useful for trading, and could provide the necessary tools to take your trading to the next level.
In terms of trading though, make sure to realize how a lot of it is in the mind (confidence, emotions, etc), to focus on the complete process (risk management, trading psychology, strategy), and how repetition helps develop your skills as a trader.

Forex Strategies, Trading Mindset & Risk Management

What Limits You From Trading Profitably?

The Question
I was recently talking with a student in one of my trading courses who is an eager beaver. They definitely have the desire to trade for a living, but I noticed something of a repeating pattern for them. They would constantly not trade the system as is, make modifications to it and adjust the risk parameters.

I have often wondered why a developing student who wants to learn how to trade, but hasn’t made it on their own, make all of these decisions which would hurt their trading.

I am certainly guilty of this in my early days, without a doubt. But like in Archery, I trusted my teacher, and decided to practice the technique he taught me. Originally, this was not the case, but he told me that when I can shoot consistently and the technique is 2nd nature, then I can bring in my own style. Until then, I followed his technique.

But the question has been with me for some time, as to why traders like myself (back in the day), or others would make decisions that obstruct them from the goal they so clearly want – to trade profitably and for a living.

The answer to this mercurial piece of the puzzle came together this past July.

A Weekend of Training
For about 6 weeks this last summer, I was on vacation in the US visiting family and friends. But for one weekend, I was in a training that helped me answer some long lasting questions about trading, for myself and my students as to why some do things which hurt the learning process.

The training was a QRA Level 1 intensive. QRA stands for Quantum Reflex Analysis and it was a weekend where I was pounded with information. QRA is based on Biophysics, particularly on the work by Fritz-Albert Popp, an award winning physicist with hundreds of publications.

QRA is mostly focused on the healing of physical illnesses, but also works on a psychological/emotional level.

Although I remember many things from the weekend, one moment stood out amongst the rest.

The trainer was talking about someone who had cancer that came to see the Doctor and head of the QRA program. They were wanting to get cured of their cancer, but the Doctor kept running into strange ‘blocks‘ in trying to help with the healing process. It dawned on him that the client actually had underlying psychological or limiting beliefs that were interfering with the healing process.

The Answer
Imagine – someone has cancer and they have tried everything to cure it, spending hundreds of thousands of dollars and going through tons of painful treatments and surgeries. They obviously want to live and want to be free from the disease. But the whole time, there was something interfering with the healing process – and it was them the entire time. It turns out they actually had a sub-conscious belief they did not deserve to live, and this program was running in the background the entire time.

Suddenly, the light went on and it all came clear to me – this is what happens to traders who use improper risk management even though they know the math is against them. This is what happens to traders who don’t trade the system, even though they know it makes money. This is what happens when;

-a trader jumps in too early, before they get a signal
-or chases a trend when they know they shouldn’t
-trades out of emotion, trying to get losses back when they have no signal
-overtrades
-adds to a losing trade
-gets over-confident and thinks they ‘got it’ after just a few months
-trades way beyond their position sizing
-takes profit before hitting their target
-doesn’t accept their risk and panics, exiting too early only to watch the trade run to their limit
-fails to pull the trigger when they do get a signal

You know the story, because it has happened to you, just as it has happened to me.

Have you ever wondered, why you make the decisions you do, even though you know they are not helpful to your trading?

Is it your fear that overcomes your clarity? Is it your impatience that overcomes your discipline? Why do you not prepare for your trading day when you know how challenging trading is?

Whatever it is, it is currently in you, in your psyche and wired into your brain, causing you to repeat many of the patterns that has held you back.

You have known this in some way (hopefully), but it is very possible (and likely) you have a program running in the background, which is interfering with you trading successfully and reaching your goals.

You Mean I Don’t Want to Be Successful?
It is actually possible (like the patient), some part of you does not want to trade successfully. It is actually possible, some part of you is afraid of being successful, of being wealthy, of being a disciplined trader, of reaching your goals. If any of these, or many other programs and unconscious beliefs are there, then they will always short circuit your process and efforts to trade profitably.

The good thing is – you can change all this. The brain has an ability to learn new things. It has neuro-plasticity, meaning it can be re-wired with amazing flexibility. You can learn new things at almost any age, you can increase your IQ, you can develop skills regardless of your background and training. Thus, regardless of what patterns and behaviors are inhibiting you, they can be re-written.

I have actually trained in both QRA and ERT (Emotional Repolarization Technique), doing dozens of sessions designed to re-wire my neural connections, to function in a more optimal state, in a whole-brain state, to remove any unconscious programs which would interfere with my trading, along with many other things.

If I could have started my entire trading career over, I would have started with this training from the very beginning. If I could recommend one thing to build a successful trading mentality, for those having psychological issues interfering with your trading, to combine with your learning process while working with a mentor, it would be this.

Two Questions
With all of that being said, I would like to end with two questions;

If you could watch yourself trade, like an observer, what advice would you give yourself?

and the other…

What would you do, study and train in order to trade successfully?

I hope you enjoyed this forex trader tip article, and that it has brought up some intriguing questions for you. Please feel free to share, along with your thoughts on the article.

Kind Regards,
Chris

Forex Strategies, Trading Mindset & Risk Management

Getting Back Your Losses in Trading

I wanted to write a forex advice article today about what happened to me this weekend, and how it relates to trading.

A Dutch Friend
Last Friday, a very good friend of mine named Mark came into town for a few days. Mark is Dutch and trades derivatives for a multi-national Oil and Chemical company. Anytime he comes to see me, two things are certain to happen;
1) we are going to have a glass of good Scotch
and
2) we are going to play poker at the casino and will likely not get home till sunrise

For the first two hours, my table play was going a little slow as I just wasn’t getting any hands. Unfortunately this led to me losing many of the blinds and small bets, now down to about$110.

Luckily, some really good hands like a flush, trips and full house came my way where I won some decent sized pots. I was now just over $1000, so doing well on the day being over 3x my buy-in.

A Two Pair Hand
Then I got an A3 suited sitting in the big blinds. Everyone folded except for two players who limped in. Sensing weakness I decided to raise and the other two called.

Flop lands A / 3 / 8. I’ve got two pair and there is no flush draw on the board. I probably have the best hand since the limpers unlikely called my raise with 8 /3, and an A 8 would have likely raised with all folds prior.

One folds and the other calls with me being in position.

A Jack comes on the Turn with no flush possibility. He checks, I raise $50 on a pot of $75 and he calls. I probably still got the best hand. Maybe he had J8 pre-flop, but AJ is unlikely to limp pre-flop. J3 is unlikely play to a raise, so I probably have the best hand.

The River card comes a 7 which he checks. I bet $125 and he goes all in. To call, I need to put in about $350 more which would leave me with around $500 left. Now I have to go into a deep think to figure this out.

Overall, his betting really confused me. He limped in out of position, called a pre-flop raise out of position, had no flush draw, and called every bet along the way. It is unlikely he had pocket Aces as he limped pre-flop. Maybe a KJ, but he would have likely folded the Ace flop.

Because his betting pattern didn’t make sense, usually that means a bluff or a trap.

I decided to call.

Turns out, he had 9 T off suited, and on the river had hit his straight (7-J). He had <16% chance of hitting his straight on 71% pot odds, so way inverted R:R.

Regardless, he won and I went from over $1000 to about $500 in 5mins.

Needless to say, I was a little stunned – not because of the money, but because of how I misread the play.

In The Past
For the next 10 hands, I was mostly stuck thinking about the hand – wondering where I went wrong, what I could have done differently, going over his reactions to see what clues I missed.

And herein lies the problem…I was stuck in the past and completely separated from the present. All my energy, concentration and focus was in the wrong place.

Next thing you know, I’ve lost a few more hands and am down to $250, and am now negative for the day. It was now 4.30am so a good chance I was going home a loser which almost never happens for me in poker.

What Would I Do…
Immediately I started to think about trading and what would I do in a similar situation. I came to one conclusion – that was to let it go and get present with the moment.

By 5.30am, I had a stack of over $600 after winning two big hands and got up for the night.

What made me write about this was something I saw in a trade journal today from one of my newer students. They had lost a big trade and then lost the next few trades shortly after. They did not follow the system, but had enough awareness to write down they were trading to ‘get back their losses‘.

Perhaps they really couldn’t lose that money and were expecting to win to pay some bills. Or maybe they made a mistake and are now punishing themselves for such a trading crime. Whatever the initial ‘reason‘ was, two things are completely evident;
1) they have not accepted the loss
and
2) they are stuck relating to the past and not the present

The irony of it is, you cannot ‘get back‘ your losses. Once you’ve lost that money, it is gone.

< Than Your Full Edge
The great thing about this market is you can make money anew at any time. But you cannot ‘get back your losses‘.

In fact, this is when your account is most vulnerable, because you have psychological justifications for not trading according to plan or system. You’re trading off emotion, but also fragmented from the moment and separated from your intelligence.

Has this happened to you before?

I’ll confess it has happened to me, many times in my earlier days. Regardless of what happens, the best thing you can do is let it go so you can be present in the moment. Maybe you need to take a break to get your head straight which is not a problem.

But remember who is making money in this market and who you are really competing against;
-professionals
-institutions
-seasoned traders
-computer algorithms

Anytime you are trading <than your full edge and intelligence, you are at a severe disadvantage to the above players.

By trying to get back the losses, you are doing one, if not all of the following;
a) stuck in the past (disconnected from the present)
b) not accepting reality as is (never works)
c) likely trading off more emotion than clarity (no bueno)
d) managing your P&L, not trading the market or your system (a big one for newer traders)

In Conclusion
Part of developing into a successful trader is becoming more self-aware. This is especially true when things go really bad as we are faced with a poignant, and often psychologically painful (or uncomfortable) reaction to reality. But nothing could be more important because when our psychological compass is off, you are at the greatest risk for making further losses.

This was the same for me shortly after I lost my big hand and likely has happened (or will) to you in your trading. But hopefully you can now realize how critical it is to not try and ‘get back your losses‘ as its a futile effort.

When recovering trading losses it is best to start all over again with the present moment, and make the best trades you can. If you do, in no time, will you be back to winning again, and likely have a higher balance than before the loss. Then the loss was more of a learning experience instead of a hurdle to your growth.

I’d like to end with a short story about a Buddhist Lama and their student.

Being really unhappy with how they have led their life, a student who has just started to meditate came to his Lama and shared his disgust with how his life has been going.

He then stated to his Lama:

“I wish I could just start my life all over again”

The Lama, after a very short pause responded:

“Your wish has been granted”

I hope this helps and that you found this article useful.

Kind Regards,
Chris Capre
Founder
2ndSkiesForex.com

Forex Strategies, Trading Mindset & Risk Management

Improving Trader Psychology Through Neuro-Feedback

I was planning on continuing with part 2 of the Best Support & Resistance levels article, but someone came to me with the following question just yesterday;
“Dear chris,
Do you know about ‘binaural beats’ and if so, would you comment on their possible uses regarding performance/trading. thanks”
First off, many of you are probably asking ‘What are Binaural Beats‘?
Ironically, I’ve been working with these for over a decade as my specialty in Neuroscience at the University was Human Learning & Memory. I was studying methods how to improve memory performance, but also the learning process and how to accelerate it.
Binaural Beats are also known as Binaural Tones. They are sounds/tones which produce specific stimuli in your brain, but that will not suffice so lets dive into them more deeply.
How Do Binaural Beats Work?
Basically, your brain when perceiving two tones with subtle differences between them (or with frequencies slightly different than each other) will pick up the difference between the two frequencies when the difference is < or = to 30Hz.
When this happens, the brain will hear this difference as a binaural tone/beat.

But this is where they effect the brain.
You have probably heard of all the different brain waves which tend to correlate to different patterns of thinking. The breakdown is below;
Gamma Waves (> 40Hz) are usually associated with fear, perception, problem solving and strong mental activity
Beta Waves (13-39Hz) are associated with busy/anxious or nervous thinking, active concentration, paranoia and arousal
Alpha Waves (7-13Hz) are associated with a state of relaxation while being fully awake. Possible pre-sleep, REM sleep, & Dreams
Theta Waves (4-7Hz) are associated with deep meditation, relaxation and NREM sleep
Delta Waves (<4Hz) are the product of deep sleep, loss of body awareness
How does this relate to Binaural Beats?
Remember the part about the difference between the two frequencies creating the binaural beat you hear in your brain? Well, if the difference created from two frequencies is say 10Hz, then your creating a binaural beat which will help to stimulate Alpha Waves in your brain. These waves are associated with being in a state of relaxation while being awake.
Basically, the brain (through a frequency following response mechanism) when it receives a stimulus such as a binaural beat that has a frequency associated with a particular brain wave (i.e. alpha, delta, theta, gamma, beta), your brain will adjust its frequency towards the one it is hearing.
This is where Binaural Beats become useful and is called by neurophysiologists as Entrainment.
Entrainment (also known as Brainwave Synchronization) is using frequencies (and the frequency following mechanism) to stimulate your brain into a particular dominant frequency.
How does this help me as a trader?
By using binaural beats, you can train your brain to be in a more optimal state for trading (Alpha or Theta Waves) which are associated with a more relaxed state and meditative state. Being anxious, fearful, unfocused, paranoid, etc. will obviously cause you to make more emotional decisions (fear of losing so you close your trade early), more irrational decisions (I just lost and have to make it up, so i’m doubling my position size), essentially clouding your mind which needs to be clear, alert and sharp when trading.

Your mind is your main tool for trading, so the sharper it is, the better decisions you will make. The worse the state its in, the more likely you will make poor trading decisions, along with repeating negative patterns which are accompanied by certain brain waves and neurological states.
Binaural beats are a neuro-feedback technique to train your brain to be in an optimal state while trading. From my experience, this is far superior to biofeedback, such as strictly monitoring HRV (heart rate variability) which can often be a secondary effect from your mental state.
On top of it, using just biofeedback only informs you when your not in an optimal state. Although this is useful, you are still left with the work to get yourself back into optimal state. Try going from being really angry or frustrated (about a big loss, or anything) to optimal thinking in a short period of time. Not easy is it, especially when your trading and money is changing hands fast, or you have to make quick decisions.
This is why I prefer neuro-feedback as a far more valuable tool, particularly binaural beats and isochronic tones because they are training your mind to be in that state through the frequencies which create a neurophysiological pattern of thinking more conducive to trading.
Where Can I Listen to Binaural Beats?
Many of you may be asking, where can I get these binaural beats? The easy way is YouTube where you can search for them and find plenty of samples. I use much more tailored binaural beats through a company called Entheos which you can find here.
The product line is through their ‘Daily Mojo‘ section.
I listen to about 20-30mins a day of these tracks before I start my trading day, but after I’ve done my morning yoga and meditation.
I also have another training program I use called LimitlessIQ which has a large suite of products for tailored states you are wanting to create (zen like focus, stress relief, faster brain cognition, etc). I also listen to 20-30mins of these before starting my trading day, so a total of 40mins to an hour of preparation each day just using these techniques. If you think about it, all professionals prepare before they perform, and usually, the level of preparation they engage in is related to their level of skill or challenge.
It should be noted LimitlessIQ uses a slightly different technology called Isochronic Tones. The difference is instead of creating the desired brain frequency through two tones with the brain picking up the difference between them, Isochronic tones are evenly spaced that turn on and off rapidly. So they are not relying upon a combination of two tones, yet create the intended frequency through the on/on effect.
Eyes Wide Shut
I personally find both highly effective and can literally feel the physiological changes in my brain when listening to these in seconds. You can play them while trading, but ideal is to do so for 20-40mins before you start your trading day, with your eyes closed just listening to the beats.
Why eyes closed?

Your brain is wired to take in more data through your eyes than anything else (about 70% of all data your central nervous system takes in). So when your eyes are open, you will be reducing your bandwidth by taking in visual stimuli. By having your eyes closed, you are, in effect directing all your energy into creating the dominant brain waves which will help to produce a more optimal neurological state for trading. It should also be noted binaural beats are best listened to through headphones so you can easily isolate the difference in the sounds.
Summary
Binaural Beats are a tool to help improve your trader psychology simply by altering your neuro-physiological patterns which underlie your thinking. By training (or entrainment), you can stimulate your brain and thinking patterns to match a more relaxed state which will ultimately improve your trading.
Neuro-feedback is more preferable than bio-feedback as it offers you more information, but actually helps to train your brain to create more beneficial thinking patterns, while bio-feedback means you have to adjust your state. By listening to binaural or isochronic tones per day, you can help to create a more optimal neurological state prior to trading so you can make the most clear and relaxed decisions while trading.
Keep in mind though, these are not tailored states for trading – just associated states which will most likely improve trader performance through more optimal thinking patterns.
I will have more to say around this come mid-late July, as I am working directly with a Neuroscience lab in California that I’ll be meeting with soon. But imagine what it would be like if you could train your brain to work in the most optimal way for trading. Imagine being less harangued by emotions, fear, distraction, etc. Then imagine what this could do for your trading.
To be continued…
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