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Trading Psychology: 5 Unique Insights from 10,000 Mantras

4 hours in, sweat on my forehead, a sore left knee and one feeling of exhilaration, I completed the 10,000^th mantra.

Yes, for over 240 minutes (minus the necessary 1 minute ‘loo break’) I chanted the same 9 Tibetan words 10,000 times in a row.

Personally, I thought it would be a tad easier, but the reality (and surprise) was much more challenging vs. how it appeared ‘conceptually’.

What I learned from sitting on my derrière, all 240+ minutes, reflected back some gems about trading and the mindset of breaking through.

Here are the 5 unique insights I got about trading psychology chanting 10,000 mantras in one sitting.

#1: 2,000 Punches & 1 Month of Meals

I recently started martial arts again (which I’ll be writing about in more detail soon), but am taking Wing Chun classes.

I am NOT taking martial arts because I want to be able to fight well, nor am I taking Wing Chun because I want to be Ip Man 😮

Photo of Ip Man training Bruce Lee

I’m taking it as a mind-body training with the goal of elevating both to the next level.

In my first class, I was practicing the basic punch and it looked sloppy (that’s putting it mildly).

The senior student helping me (who is awesome) said this while working on my punch, “to really get this down, you’ll want to do a lot of punches, like 2,000 punches until the muscle memory is fully wired in.”

It is pretty easy to balk at feeling like you have to do 2,000 punches before you can throw that sucker well.

But if that is what it takes, I’ll do it, and I’ll use the One Month of Meals Method which goes like this:

If you were to walk into your kitchen right now, and right in front of you was all the food you’d eat for an entire month, you wouldn’t feel hungry.

The irony is, you’ll eat that amount of food every month, and already have been for decades. Yet done one meal at a time, it’s quite workable.

And that is how you should approach big projects which require tons of reps.

Trading is no different. I often give my students homework on what they should practice.

One such method is to practice a trading strategy, or even a price action skill to hone their trading and improve their performance.

For this, I suggest Forex Tester 2, which is like the driving range for traders. Below is a good video explaining some basic methods of how you can use Forex Tester 2.

For those interested in getting a discount on Forex Tester 2 – click here.

Now consider the following – most professional golfers hit about 300-500 golf balls a day, either on the course or a driving range.

With that piece of info in your brain, how many reps and practices are you doing per day?

For a good article on what it means to trade like a sniper – click on that link.

Getting back to the practice, while doing my 10,000 mantras, I grouped them into 5 groups of 2,100. This was much more manageable because I’ve done rounds of 2,100 before.

Why 2,100?

When you do a mantra practice like this with high reps, you have what is called a ‘mala’ which is like prayer beads you see in many religions. Below are a couple of mine.

Normally in my tradition, they have 108 beads as do the two on the right (108 being a special number).

I have a smaller mala (blue one on the left) which has 21 beads on it. So for each round of 108 on my main practice mala, I turned the 21 bead mala 1x. Once I completed a full round on that mala, I knew I did 2,100.

Five rotations later, I did 10,500, but only counted 10K because I’m guessing I didn’t do a few quite so well.

If I was counting down, that would be like looking at an entire month of food in front of me.

But breaking it into smaller meals made it more digestible.

So whatever your goal is with trading, break it down into smaller bite-sized chunks, then shoot for those as they become much more manageable.

#2: You Must Challenge Your Self-image to Grow

Your self-image is the overall corpus of how you see yourself. It is the sum of your habits, attitudes and beliefs. It is essentially what you think it is ‘like you’ to do.

Think you’re good at playing basketball? That is part of your self-image.

Think you’re not the best dancer (as I certainly am not)? That is part of your self-image.

Your self-image has boundaries whereby the lower and upper boundaries of your self-image determine your success in trading.

If your self-image was already setup to succeed in trading, you’d already be there.

To change your self-image requires it to be challenged, and it has to be done so via a new self-image which is in direct conflict with your current one.

If you haven’t had the experience of consistently profiting from trading, then currently it is not in your self-image to trade successfully.

GOOD NEWS – YOU CAN CHANGE YOUR SELF-IMAGE!

How do you change your self-image? By challenging it, by finding its limit, by building experiences of going beyond what your self-image thinks it’s ‘like you’ to do.

If you think you cannot do 300 push-ups in a row right now, you’ll need to build up to that. Only until you’ve done it several times will your self-image think it is ‘like you’ to do it.

That is where testing yourself enters the picture.

The self-image will only grow (think expand) in terms of what it can do, through testing & challenging it.

Whatever thoughts enter your mind, whatever doubts, fears, worries, excuses, or moments where you want to quit – that is your current self-image resisting.

It will resist change and want to stay where it is, and this is what you have to fight against.

Hence the formula is simple – if your current self-image doesn’t fully know it is ‘like you’ to trade profitably, you’ll need to expand it till it knows it inside and out.

NOTE: For those wanting to learn strategies and techniques to grow a self-image for successful trading, check out my advanced traders mindset course.

#3: Concentration Oscillates, Coming Back is Key

Go for any long run, or do 1,000’s of reps of anything in a row, and your mind will wander.

Shoot, let’s be honest here – how many paragraphs or lines in this article did you read before you got distracted and thought of something else?

This Sunday, while chanting the mantras, it became appallingly clear an imperfectly trained mind will result in an oscillating level of concentration.

During the 4hr chanting bonanza, my mind cycled across a giant spectrum of concentration, between a zen like focus while walking across a tight-rope 1,000 feet in the air vs. a monkey on crack after eating 9 tablespoons of sugar!

And of course everything in between.

There were definitely periods of being highly focused while others of barely being there.

The point being – unless your mind is perfectly trained, your ability to concentrate will oscillate.

What’s important to note is, the periods of focus aren’t a problem. It’s when you are highly unfocused that the worries, fears and doubts creep in.

Your brain on average produces between 50,000-70,000 thoughts per day. If you aren’t focused or controlling that mental activity, then it is controlling you and coming from your unconscious mind.

Ever been in a trade you initially felt great about, yet all of a sudden, it’s only moved a few pips against you and you feel under a death grip of worry it’s going to stop you out?

That is your unconscious and limiting beliefs taking over your conscious mind, and if you don’t correct it quickly, or know how to deal with it, it will take you underwater.

The key lesson here is to keep coming back. If you have a plan to bring your mind back when it wanders, some sort of mental cue you engage, that method will pay dividends in building this muscle.

By coming back, you train your mind to develop stronger and stronger levels of concentration.

And make no mistake, the science is clear – those who have greater focus and clarity form better memories and make more calculated decisions.

If you practice mindfulness meditation, even after a short period of time, it can re-wire your brain, and improve your concentration.

Better memories = greater pattern recognition while trading and the results from more calculated decisions are obvious to any trader.

Want to increase your edge and profits while trading? Keep coming back.

#4: My Ass Hurts & Why That’s A Good Thing

Ever sit on your rump in one place for 4 hours in a row, moving only once? Doesn’t feel good, eh?

At the end of the 4hrs of chanting mantras, my ass hurt, but in many ways, it was a badge of honor and a good thing.

There is a great story about a Buddhist master and his ass:

******
He was at a riverbank saying goodbye to his greatest student with whom he shared everything he knew, experienced and understood.

After a final embrace, he bid his student farewell, who then picked up his backpack, and walked away over a stone bridge to the other side of the river.

Just before the student was finally gone from sight or sound, his teacher called him back.

Walking back to find out why, his teacher’s eyes were clear and penetrating while he said the following, “You being a special student deserve one of my greatest teachings of all. Make sure you cherish this one deeply and never forget it.”

With his student attentive, ready to receive such a great and profound teaching, the master turned around, pulled up his robe, showed his bare ass and said “LOOK!”

“You see this ass? The one with lumps on it from sitting and meditating all these years? You now know what I have gone through to realize what I did – all through persistence.

You need this mindset! This is the essence of what I have taught. Practice without stopping, and it is only a matter of time. Exert yourself with mental toughness and the no-obstacle mindset. Do this until you’ve mastered what you set out to do.”

The first time I read this story, my initial response was laughter wondering what this student was thinking when he saw his master lift up his robe and show his full moon.

But after that moment of humor and imagination, I realized any high level of skill I’ve built in my life has been through tons of practice.

Watch a professional athlete today and you’ll see them practicing more than they are playing. Football players play one game a week and practice for 5-6 days. Basketball players practice at least 3-4x for every game they play.

“The ratio is clear – always practice (and train) more than you perform, no matter what the skill.”

Discipline and an unrelenting practice builds mental toughness, along with a mind that only knows success. Do this and it is only a matter of time before you find the pot of gold waiting for you.

At the end of my 4hr session, my ass hurt. However, in my mind, that was a good thing as it was working towards my commitment and goal.

Hence the question has to be asked – is your ass hurting today?

#5: You’re Either Committed to Succeeding, or Quitting

The stats suggest about 7.5% of all traders accounts at the end of this year will be larger than what they started with.

That may seem daunting, and the number is not exactly enticing. I think one of the problems is there are many people telling you it’s ‘easy’.

Anyone telling you it’s ‘easy’, or portraying images of people sitting on beaches with their ever so light laptops, hands folded behind their backs as they smile with glee, enjoying the lifestyle of a professional trader from some remote beach isn’t being honest.

They are selling a dream, and targeting those of you who do not want to work for it, who want it easy. Essentially they are looking for (no pun intended) easy prey.

Trading is a mental performance discipline, and by default will challenge your mind, brain and mindset to go beyond what it already knows and what habits you already have.

Anytime you push yourself to go beyond what you can easily do now, you’ll run into a little voice, and it’s often a naysayer type voice (negative).

It’s the one that tells you why you cannot, should not, and will not do it. It is great at coming up with excuses, finding reasons why you should take the next off-ramp, how there really is no benefit in crossing the finish line.

The difference between those who break through vs. those who break down, is the former group fights back against that little negative voice.

The latter individual listens to this voice, believes it, and gives into it.

I’ve never met anyone who feels confident about themselves, while continually NOT finishing what they started.

“The strength, confidence and rewards go to those who punch through, who test themselves, experience their limits, and keep going.”

I’ll be completely frank, I had anywhere between 10-20+ moments of that voice popping up in my head, like a dude wearing lederhosen in the middle of the New York Stock exchange, clearly standing out, trying to get my attention.

And let me tell you, he did a pretty convincing dance.

But regardless of what that voice in my 10lb dome said, my mind was resolved from the beginning – that is part of becoming successful.

If you listen to that voice and believe what it’s saying, it will win.

And it is an expert at weeding out half-hearted commitments.

What it really comes down to is – you’re either committed to succeeding, or quitting.

In Conclusion

There is nothing easy about becoming a professional in any skill, let alone trading.

The path to a successful trading psychology and mindset come only through training.

My guess is if you incorporate some (if not all) of these 5 insights into your trading practice (and life), you’ll see the benefits to your performance and profits.

For those wanting to train your mindset, build up your self-image and learn how to pull the trigger, check out my advanced traders mindset course where I teach you how to do this successfully.

With that being said – is your ass hurting today? Are you committed to succeeding?

Please make sure to comment below and share this with anyone you know can benefit from it.

Lucy & Trading Forex Successfully – What You Can Learn From Lucy

This weekend my girlfriend and I watched the new movie Lucy with Scarlett Johansson. Entertaining, funny and somewhat provocative, the movie describes a woman who (through a strange turn of events) develops an ultra-powerful brain.

Being that I have studied Neuroscience at the University, while my partner has studied the brain from a health perspective, an interesting debate ensued after the movie during our summer saunter home. And out of the blue….the conversation shifted to trading (I wonder why :-0).
We’ve both trained traders, but from different fields, and we both realized there was a lesson inside the movie for those of you wanting to build a successful trading mindset. Below is our key takeaway from the movie, what we noticed about it, and how struggling traders can breakthrough to profitability.
Unsuccessful People Believe in Events, Successful People Focus on Process
In Lucy, Johansson has CPH4, a new and powerful drug, put into her stomach that is to be sold worldwide by a ruthless businessman. After being kicked in the stomach, the CPH4 releases into her bloodstream, overcoming her blood-brain barrier, causing her brain to expand in capacity and abilities. Within minutes (after a gravity defying series of convulsions), she starts to develop super human abilities (or are they ‘human’, just undeveloped in us???)
Philosophical and scientific debates aside, why do movies like this sell? Why do we constantly see movies about random ‘events‘ that turn people’s fortunes instantly – Limitless, Powder, Trading Places, Brewster’s Millions (yes, I’m old)?
The answer is, because they follow the general meme of most media, literature and culture – they focus on ‘events‘, not ‘process‘.
What do I mean by an ‘event‘? For this article, when I’m using the word ‘event’, I’m specifically referring to the end result moment in a long chain of events.
An event is the big paycheck, the striking it rich moment, the they’ve made it moment.

Media typically focus on events because it keeps the dream alive. Nevermind the largest wealth gap in history happening right now, or that home incomes dropping to multi-decade lows around the world.
Events get more reads, clicks and attention, giving people the idea that in a flash of lightning become rich, become a world-class athlete, some super special trader, or ultra-intelligent like Lucy.
But an untold sub-text lies underneath all these rosy ‘events’. There’s a harbinger behind each of them. That is, when you hear about an event, you don’t hear about the long process said-now-successful person went through to get that big paycheck.
A $57 Million Dollar Payday
Richard Sherman, the feisty outspoken cornerback for the Super Bowl Seattle Seahawks, recently landed a record breaking deal of $57 Million, becoming the highest paid cornerback in the NFL.
You’ll hear/read tons of stories, piling to the heights of Mt. Everest in the media about his big paycheck, the terms of the deal, how much it is, whether he is worth it, and how it breaks records.

What you won’t hear about is how Sherman was born in Compton (a really rough neighborhood in California), and how many people he knew were killed due to gang violence. Or how he was the Salutatorian in his High School class (second of all students academically) spending hours studying after a long day of practice, or an all-american track star, or a super late round draft pick in the NFL.
How many stories have been printed about his ‘process‘, all the hardships he went through to get this big paycheck, or how hard he worked over the last 8+ years? Compare that to the number of stories printed about his ‘event‘ and record breaking payday. I’m guessing the event articles outnumber the process articles by a margin of 10:1, maybe even 50:1.
Why? Because stories about ‘events‘ sell, and those about ‘process‘ don’t. Who wants to hear about how they have to work harder to become successful when you’re already working down to your bones? Who wants to hear they may have to put in 7 day work-weeks for 7+ years on end, when you barely make it through a five-day work-week with a family to take care of?
Few if any, but I’m not here to give you a false picture about trading. I’m here to help you become a successful and profitable trader.
14+ Hours Behind The Charts for 7 Years Straight
Outside of the members in my trading community, most don’t know I spent 14+ hours behind the charts for the first 7 years of trading, or worked 6-7 day work weeks at the broker when I was only paid for 5, or how I skipped out on many parties or weekend events on warm sunny days practicing on forex tester 2, and refining my price action skills. There was no ‘event’ behind my current success, just a relentless focus on process.
Breaking the Bank of England (An Event)
I’m guessing you’ve heard of George Soros’s big trade where he broke the Bank of England. But how many of you know the story behind it, about how he and Stanley Drunkenmiller did painstaking research for months on end, constantly getting rejected by investors to help finance his trade idea, or all the other work put into it?

Simply put, popular culture (especially in trading) has been trained to think ‘events’ just happen, and that ‘process’ is less important. You have to reverse this equation, and make process first.
Process Creates Events
By putting process first, you create the grounds for events to happen. Creating a garden doesn’t simply happen by buying a bunch of plants. You need to buy good soil, build a plant box for them, dig holes and plant them, give them nutrients, pull out weeds, and make sure they get the proper amount of sun regularly. Trading is absolutely no different.
First you had to study the basics of the market and the terminology behind it. Then you had get a free demo account and learn how to use the trading platform. After this you had to learn how to read charts and understand price action in real time. Then you had to find a trading system which made sense for you, then build a trading plan, then practice reading the patterns in the market, then train to accelerate your learning curve, learn optimal times to trade, build consistency in your trading execution, build confidence in your trading mindset, and then perhaps shift to live trading.
All of the above doesn’t happen without a focus on process in trading. Only seeing the event doesn’t help you get through the tough moments, help you keep the right perspective when draw-downs occur, or pick you up after a big loss.
Process keeps your head down until you have covered the distance. It helps you to continually move forward when you want to quit. So reverse this equation, re-direct your focus on the process, on what’s in front of you right now.
In time, you’ll find that big paycheck. It is there, and many of my students are now getting that big paycheck.
Like the one student of mine who just got $5 million in seed capital for his new trading fund, or Tony who started his own private fund after doing 110% return on capital over a year, or another Tony who made 100% return in just a few months risking only 1% per trade, which we talked about in our private members webinar, showing his real myfxbook account (image below).

I have many students trading forex successfully, but they all got there via process. There is no reason you cannot be next.
Always Preceded By This
Events do happen, but they are always preceded by process. So take the time to see where you are (and are not) focusing on process. Then build a plan of action re-directing your efforts to each of these skills, create timelines to complete them, and measure your progress until you get there.
Remember, the very underlying reason behind ‘the holy grail‘ is a pill, a one shot silver bullet, a solve-all-your-problems thing which takes you from losing money to super trader. Does such a pill or thing exist in Football, Basketball, playing piano or Martial Arts? No. So why would you think this exists for trading forex?
Why would you think all you need is a system to be printing money out of your laptop and trading account daily? Does having the best bow make you a professional archer? No, and neither does one system help you make money week in-week out trading. Process, and focusing on the little details does.
In Closing
The underlying cultural sub-text of the movie Lucy, is that events sell, but process doesn’t. Yet it is a focus on the process which gets you the big paycheck. Most of the world’s richest today got to where they were via process, not events. Many of them were homeless, or surviving on next to nothing at one point in their lives. Now they can buy a small island of Fiji.
You have a method and road map, now it’s time to dig into the trenches and do the work. The results are worth it, and so is what’s waiting for you.

Forex Strategies, Price Action Trading

Trading Forex in the Summer – A How To Guide

By now we have fully entered the summer trading months which are traditionally slower to begin with. When you combine the summer + the lack of ‘flow information‘ shared by bank traders under investigation, you have an environment of lesser volatility, smaller moves, and more false break setups.

With that being said, how can we maximize our time, while still remaining active and consistently profiting? Below is a mini how-to-guide for summer forex currency trading.

In this article, I will share 2 simple tips to help you trade pairs with stable volatility, larger moves, and also remain active during the slower summer months.

Summer Forex Currency Trading Tip #1: Switching Pairs & Instruments
Below is the weekly chart for the EURUSD, the most heavily traded pair on the planet. Do you see that red line under the price action part of the chart? That is the weekly ATR which measures the average trading range (in pips) per week.

The average range of the pair on a week to week basis has been declining for years with it currently being at an all time low. It is the same for most majors, including the USDJPY and GBPUSD. If you are expecting a few hundred pip move on any of the above pairs, you could be sitting on your hand for days which is not the best use of your time. So what can you do about this?

My suggestion is to switch pairs that are more volatile. For example, instead of trading the GBPUSD or the AUDUSD, why not switch to the GBPAUD? It is far more volatile due to the ‘weighting‘ of the pair. If you can learn to spot good moves on the AUDUSD, then it will usually correspond to a directionally opposite move in the GBPAUD.

Take a look at the two charts below to get a better idea of this concept. In the first chart, we are looking at the AUDUSD 1hr intra-day chart. You’ll see the pair selling off heavy in the middle of the chart after a breakout pullback setup around 9330.

The trade happened in the Tokyo session, and took about 1.5 days to drop 135 pips. Now take a look at the chart below of the GBPAUD at that same time and notice the pattern.

As you can see. the GBPAUD also make a breakout pullback setup off the role reversal level, yet it runs for +300 pips (a larger move by 2.2x). The size of each stop would have been relatively similar, which would have led to more profit on the second trade, and money in your account. Even an every day 40-50 pip directional move in the AUDUSD can lead to a +120 pip move in the GBPAUD.

Thus start looking at pairs which are naturally more volatile, and will be less affected by the lack of ‘flow information‘ shared by bank traders who are currently less active.

An additional suggestion would be to add other instruments, such as global indices and commodities. The Asian indices such as the Nikkei 225 and Hang Seng tend to have consistent volatility.

Along those lines, recently spent time with an HFT trader at IMC (Chicago). He mentioned how IMC is quite active in trading the Asian indices because of the higher volatility. Gold and WTI Crude Oil will also offer some greater volatility. Same with the German Dax and FTSE 100, so consider expanding your instruments giving you multiple options to trade.

Summer Forex Currency Trading Tip #2: Spend More Time Training
Since you are naturally less active during the summer months, why not use that time to build your trading skill set? Forget the idea of walking away when there is no trades to play golf, watch a movie, or read a book.

You want to be a professional trader who has the freedom of working from home, not having a boss who tells you what to do, what to wear and how much you get paid.

Do you get better at golf by sitting on the beach? Do you get better at playing guitar by reading novels? Do you get better at martial arts by playing video games? No, so why in the world do you think this applies to trading? It doesn’t, hence take advantage of the time available.

For those not familiar with it, Forex Tester 2 is a fantastic live simulation platform. You can take virtually any pair, and load up 13+ years of data on any time frame, then live forward trade it as if the price action was forming in real time.

I did a great video on forex training with Forex Tester 2 which shares several ideas how to accelerate your learning curve. This is especially relevant for those trading daily and 4hr strategies.

Ask yourself how long would it take you to log 500 trades if you only trade the higher time frames? Years perhaps? In less than a week, you can log the same amount of trades in FT2.

Think of it being the equivalent training of the golfer at the driving range, hitting ball after ball. Professional golfers on average will hit 500 balls a day. Do you think that helps their golf game and perfect their swing? Ponder that a moment for those of you only trading 3-5x a month, and how long it will take you to build your skill set.

I’ve had several students log thousands of trades after a few months using FT2. Go figure their trading is improving the most, and showing the greatest profits over the last few months.

NOTE: In the link I shared above to the video on FT2, there is a link where you can get a $50 discount on it.

Along the lines of using FT2 to improve your trading performance, I recently did a private member webinar, where we showed a myfxbook account from one of our students. He is trading over 70% accuracy, and up about +96% on his live trading account, with his average wins well out-sizing their average losses. He profit factor is currently +3.08 and is up +1780 pips for the last 4 months.

Below is a screenshot from their myfxbook page we discussed in the webinar.

They trained over and over again in FT2 and are a member of my price action course.

While others are being lazy traders, they are building their skill set. If anyone is going to really trade for a living, it will be the ones who put in the hours and properly train.

In Summary
These are just a few tips you can use to help stay consistently profitable trading forex in the summer, while using the time effectively to build your trading skill set.

There are many more tips which I share with my course members, along with more ways to utilize Forex Tester 2, building a successful trading mindset, how to train properly, along with adjusting to the ever evolving markets in real time.

Trading Strategies

Don’t Trade Forex Unless You Are Doing These 4 Things

You might have had a few profitable months trading live this year, but if you are like 92.5% of all traders out there, when the clock strikes 2015, your account will be negative.

In almost all endeavors, the dividing line between success and not making it is a fine one. Likewise, such a dividing line is drawn daily by what you do, and what you do not do.

Another way of putting this would be – those who will be profitable at the end of 2014 will generally do the things consistently others will not.

The great thing is, you can be one of those in the green at the end of this year. To get there though, you’ll likely have to make a few changes to what you are doing.

Here are some simple steps you can take to put yourself in the 7.5% who will be green at the end of the year. These are the 4 things you should be doing (minimally) if you are trading forex.

1. Being Mentally Prepared

Ever go to a professional sports event 1-3 hours before the game started? Besides empty seats and reporters giving up to date info, you’ll see one constant every time. The athletes themselves are preparing.

All professionals simply know you have to prepare before each game/event/match. Keep in mind, these professional athletes are already successful, yet they prepare regardless. In trading it is no different, although most of our preparation is mental.

Being mentally prepared, means knowing what you are going to do during your trading day, and how you are going to do it. It is tuning your mind to give yourself the greatest mental edge possible.

Ask yourself do you prepare mentally each day? Do you have a routine you go through before you hit the buy and sell buttons? What do you do to build a successful mindset?

Interesting Story: I had a student who started off his first month of live trading in the red. The next month, he upped his game gaining +11% for the month, mentally prepared for each day.

Ironically the following month, he stopped his mental preparation, and as suspected lost money.

After doing his private follow up session with me, we got him back on his mental preparation routine. Where is he at for the month of May? Up almost 7%.

2. Have A Trading Plan

One of the most important documents you will have as a trader will be your trading plan. This is what you will follow each day from the beginning to the end of your day. It is to guide your actions, along with helping you measure habits and patterns of behavior, to see what is working (or not).

There are generally two types of trading plans:

1) Day-to-Day Trading Plan (actions to do/follow daily)
2) Business Trading Plan

Most ‘authorities’ and ‘masters’ of price action promote only the first one, and they do so in a highly limited way.

Generally such freshman trading plans cover the typical vanilla things, such as;

1) Price Action Signals to Trade
2) What instruments you will trade
3) % Equity Risk Models
4) Stop Loss and Take Profit Rules
5) Rules for Entry & Exit

Look familiar? These plans are completely inadequate by themselves. They myopically focus only on the mechanics of an actual trade.

What about mental preparation? What about reviewing your trades? How you will treat trading as a business, and measure properly if your business trading plan isn’t working?

Just like the CEO has a business plan, or the NFL coach has a game plan, you should not be trading without a trading plan.

NOTE: For a really good article on How to Build a Proper Trading Plan, click on the link.

3. Have a Way to Measure and Review Trades

Most traders in the red come end of the year do not measure their trades. The irony is, usually a small adjustment to what you are currently doing will help you trade consistently profitable. One of the best places to find this information is in measuring and reviewing your trades.

Measuring your trades is initially done through a trading journal and performance worksheet. The former notes all the details about each trade, while the latter analyzes the performance of each pair, strategy and time frame.

Have you considered the fact you may do really well with a few pairs, yet consistently lose money with others? How would you know without measuring your trading performance?

Reviewing trades is probably one of the hidden secrets you’ve overlooked to boost your performance and skill set. Sometimes looking at charts of past winners and losers will help you spot patterns and price action context you missed before.

NOTE: For a good article on reviewing trades, visit the following link: Reviewing Trades – Two Crucial Tips

I actually have a folder full of screenshots for winning and losing trades. I also have a folder of screenshots whereby the charts show great examples of a price action pattern working out. By reviewing these charts at the end of the week, I am wiring into my brain to look for these patterns, thus being more likely to spot (& trade) them in real time.

For more information on end of the trading week review, click on the link here.

4. Continual Training

Most developing traders seem to think that once they are profitable, the training ends. Does a concert pianist ever stop training? Do high level martial artists ever stop training? Do Buddhist monks ever stop training?

No. So why would you think that training ends at some point?

Do you have two hours set aside to trade each day, but no trades available with your set and forget strategies? Don’t walk away and be a lazy trader – study, practice, or best of all – do live simulation trading.

Is it a holiday and the markets are closed? The answer is the same.

Anytime I am not trading for the day (for whatever reason), I Use Forex Tester 2 to Accelerate My Learning Curve. FT2 allows you to do live forward simulation trading on any pair or time frame, with at several years of data available.

Need help with your pin bar trading? Use forex tester 2. Having trouble trading support and resistance key levels? Jump on forex tester 2.

It’s like the golfer going to the driving range – but for trading.

This is a great way to build your skill set and get real practice time executing trades in with live forward simulation. You could literally do 50-100 trades in one hour with forex tester 2, which may take you an entire year to do on your own.

I could spend a day talking about the benefits of this as the list is long, but for those trading daily and 4hr price action strategies, you’ll need to increase your trade/rep count to build a sufficient skill set. FT2 is the best way to do this.

You Will Need This Though…
One might think that having a strategy with an edge is one thing you shouldn’t bother trading without.

I agree, but I think this should be a part of your trading plan. If it’s not, then your trading plan is incomplete.

In Summary
All high level professionals do a minimal amount to perform well in their chose field, and that minimum amount they do is often more than those who are not successful. Trading is no different.

If you decide to trade anyways without doing these 4 things above, expect sub-par performance. More importantly, don’t expect the best out of yourself.

With that being said, what things would you add to this list?

Featured Article, Forex Strategies, Price Action Trading Videos, Trading Videos

Finding Key Support & Resistance Levels Like a Pro – Part 1

Having trouble building your skill set for finding key support & resistance levels? Then you’ll need to train in finding them. The key lies is first identifying the price action context. Once you have this is in place, then you know what levels to look for.
In the beginning, we talk about one type of trend (volatile trends), and how to identify them. Then we discuss using this type of trend to determine what levels to find. We end by showing how you can use Forex Tester 2 to help build your skill set in finding key support & resistance levels.
For those wanting to get the $50 discount, you can get this and order by clicking on the link Forex Tester 2 $50 Discount

Forex Strategies, Price Action Trading Videos, Trading Mindset & Risk Management

Using Forex Tester 2 to Accelerate Your Learning Curve

One of the best things you can do to accelerate your learning curve is to do simulation trading. There will be times the market is slow, or you don’t have setups. If your only training is watching videos, and making trades in the market, then your learning curve comes to a halt when there are no setups. This is where forex simulation trading comes in.

In this video, we discuss how you can use Forex Tester 2 to accelerate your learning curve and build your skill set.

For those wanting to get the $50 forex trade simulator discount, you can get this and order by clicking on the link Forex Tester 2 $50 Discount

Forex Strategies

What If Your Trading Plan Cost You Money?

I recently got a daily forex trading plan from a new student and eager beaver who asked for some help with their plan. The moment I opened it, I realized it was incomplete and needed work. To be fair, they had gotten this template from another course, so cannot fault the student.

I generally suggest having two trading plans:

The Day-to-Day Trading Plan which includes your daily procedures
Your Business Trading Plan

What we’ll be focusing on here is related to #1 above. Below is the general outline of their current forex trade plan, which I’ll go over, show you what needs to be changed, and what is missing.

Their Current Trading Plan

Introduction
Price Action Signals to Trade
Rating a Trade
Time Frames
Pairs/Instruments to Trade
Risk-Reward Ratio
# of Positions
Position Sizing
Stop Loss & Take Profit Rules
Rules for Entry
News Events
Documentation
Losing Trades

Do you see anything confusing, missing, or out of place here?

trading plan 2ndskiesforex

What I Would Change

#1: Introduction – I think this was a good start. However, two things in this introduction stood out;

a) the opening statement, ‘The goal of this plan is to avoid emotion-based trading‘
b) ‘the trading plan may be adjusted, and the rules edited‘

Lets start with A – If the goal of the trading plan is to ‘avoid emotion based trading‘, the current plan only helps for that day, but doesn’t get at the root cause of ‘emotion based trading‘.

Where should the real work be done for this? Prior to any trading, and in the ‘training’ phase! How? Proper training, building your sub-conscious skill set, and removing limiting beliefs.

For B – this is fine to allow the trading plan to be adjusted, but how often? The trading plan should be an evolving document as your level develops and grows as a trader. But put a time factor to this and stick with it.

I would have in the introduction why I am trading, what I am trying to achieve and what my daily goals are. More on this later.

#2: Price Action Signals to Trade – A military general doesn’t start their plan with tactics. They take all the information in to get a broad picture – i.e. the ‘context‘. In trading, this relates to understanding the price action context first. So this section needs to be later in the plan.

What would I put here? Pre-trading preparation, i.e. how will you prepare for each trading day (physically, mentally, market analysis, etc).

#3: Rating a Trade – We haven’t even gotten to our price action context first. This comes before rating a trade for quality. So this should be done here, starting with our top down analysis, how we find the correct context, then go from here.

NOTE: In this template from the other course, their highest point rating for a trade was ‘big size‘ for the signal bar.

Now let me get this straight – the size of the 1-2 bar pattern, is given the most importance? One bar out of the 30-50+ bars which comprise the validity of the signal?

confusion about trading
Seems like a confusion to me on what price action is about. Yet ‘Trading with the Trend’ is 5th on their list? How does one bar by itself, have greater value than the entire trend and order flow to this point?

Lastly, the 13-pt rating list completely rules out intra-day trading. A trading plan should be flexible enough to incorporate both.

# 4 & 5: Time Frames – by now, we are too far ahead of ourselves with this plan. Once we know the context, only then can we know the tactics (price action strategies) to use. We cover this in more detail with our course members.

One other thing about this is the fallacy that the time frame is more important than the instrument you trade. Should be the other way around.

Pairs/Instruments to Trade – Although this is completely necessary, I think in one section you can have the pairs/time frames you are trading.

# 6, 7 & 8: Risk-Reward Ratio/# of Positions/Position Sizing – The first one is completely irrelevant by itself without understanding the Risk of Ruin.

You can use my risk of ruin calculator to find yours. For more information on the risk of ruin formula, click on the link above.

Number of Positions – kind of irrelevant. Although you may have a fixed % equity risk per trade, what if you start your day, and realize 4-5 high quality setups on deck?

fixed percent equity risk model superior than fixed dollar amount graph 1 2ndskiesforex

My suggestion is to have a max risk per day, and per trade. If your max risk per day is say 5%, and you spot 5 trade setups, then you can risk 1% per trade. If only 2, then you can risk 2.5% per trade. As long as you keep the risk of ruin at zero, the number of positions should not be limited IMO.

Position Sizing – Can all be addressed under one section, which I’d label ‘Risk Management‘

# 9 & 10 & 13: SL & TP Rules/Rules for Entry – should be addressed in the strategy itself.

#11: News Events – I’d say make this part of the ‘pre-trading preparation‘, under the ‘market analysis‘ preparation.

#12: Documentation/Journal – I agree this needs to be part of your forex trade plan. But there is nothing in here about reviewing your trades, or end of the trading week analysis. Monthly, quarterly and yearly reviews would be recommended.

What About Training?

I generally recommend having a completely separate plan for training, very much like professional athletes have practice/training routines, which are separate from game-day preparation. Trading should be no different.

For those trading higher time frames like daily and 4hr strategies, I’d recommend using your non-trading time for practice/training. This is not just demo trading, reading books, or studying course material. We suggest going beyond this with live forward simulation trading, just like fighter pilots do simulators, or baseball players have batting practice.

practicing forex trading 2ndskiesforex

Our favorite tool for this is Forex Tester 2, which allows you to go back in time, and then live forward trade it bar by bar as if they were appearing in real time.

You can get a $50 discount on Forex Tester 2 by clicking here.

In Summary

As you can see, the template they were working with was quite confusing, lacking key things, and out of order. Had I been working off that trading plan and not known better, I would be approaching the market incorrectly every day, missing a dearth of things.

It is important to understand a professional trader will see things on a more sophisticated level than your traditional 1-2 bar pattern trader. Professionals, by default, can recognize opportunities beginning traders will not, like a good poker player can make money on more hands than a weaker one. This also goes for one’s daily forex trading plan, so having a more evolved one will give you a greater edge.

professional traders 2ndskiesforex
Ask yourself, how sophisticated is your trading plan? Does it feel unorganized, confusing and incomplete like the first template? Does it even include pre-trading preparation? What would you recommend adding to this trading plan?

Please make sure to share your answers, along with whether you agree or not, and why you agree/disagree.

Forex Strategies, Trading Mindset & Risk Management

2 Tips For Summer Forex Trading

Often due to low liquidity, summer forex trading can be fickle, whimsical and often times dull. Staring at charts for hours or days when the price action is slow isn’t going to make you a better trader, or make more profits. We need to be using our time to improving our edge whether we are trading or not. So what do you do when the ‘watching the corn grow‘ moments come by?