Nial Fuller – 2nd Skies Trading

Tag Archive for: Nial Fuller

Avoid Pin Bars as They Give You Bad Entries

This is part 3 of a 4 part series. Listen to the last one here: Don’t Fight or Trade Like This, or if you missed the previous one, checkout The Blind Entry (How It Will Leave You Trading Blind)

I’ve shown over the last few content pieces how the idea of confirmation in price action is an illusion. This video demonstrates that when retail traders are getting in the market, professional traders are already in profit.

Here’s the transcript for the video:

“Hello, traders here.

Chris Capre, 2ndskiestrading.com.

So I’ve recently shown over the last few content pieces how the idea of confirmation in price action is an illusion and it’s not what professional traders are looking to enter the market.

I’ve also shown how entering on a 50% retrace tweak entry on a pin bar is a sub-optimal or retail entry.

I think it can be easily said that when retail traders are getting in the market, professional traders are already in profit.

This video further demonstrates this about the pin bar entries, such as the 50% retrace entry, or the sell on break being also a retail or sub-optimal entry.

Now, I’m going to use an example here from a live trade I’m in right now and this is one that I’ve discussed in my members trade setups commentary in the price action course.

So, I sold right at this resistance level.

I felt like we’re still in a range type structure and that if the market protruded up to this resistance right over here, that sellers or offers would enter the market and push the pair back down.

And that is exactly what happened. So I got in at 1.4975 and literally it was about 6 pips off the intraday high.

And so I put a stop just above these little wicks right over here, particularly this one here, which left me with a 30 pip stop.

Now, I’d like to compare this entry versus the 50% retrace entry or sell on break so that you can see the differences.

Now, going to another chart here, first off using the 50% pullback entry here, you would’ve missed this trade completely.

So according to the faux authorities on price action, particularly Nial Fuller, the next entry would be the sell on a break of the lows here.

In fact, pretty much every other person who teaches the cut and paste or carbon copy version of price action that you see out there, especially around the pin bar, would all say you either sell on a retrace or you sell on a break of the lows.

Now, this gives you a much worse entry, and about as late or a retail entry as you could possibly get. So that puts you in at about 1.4943, roughly.

Now, assuming in most cases we’re going to have the same stop, just above this here, most of the time we’re gonna have the same stop on the same type of entry.

You are going to need a 70 pip stop compared to my 30 pip stop which is at 1.5003. So you need 70 pips, I have 30.

Now, just from a risk to reward perspective, when you are hitting +70 pips or +1R which would put you at 1.4863, that’s right about… that’s actually below the intraday lows.

So this right here is your intraday, that would be your +70 pips or your +1R.

When you are hitting your first +1R, my entry at 1.4975 is up already 112 pips, is at +4R. So now the moment you’re getting your first R, I’m already up 4 times that.

In fact, by the time your entry in the market right here at 1.4933 which is a pretty razor sharp entry if you’re selling on break, I’m already up +40 pips from my 1.4975 entry. Or in this case, +1.33R.

Again, coming back to the perspective that it is

“more often a professional is already in profit when a retail trader is entering the market”

you can see the differences quite clear here between the two entries.

But let’s play a little fantasy here. Let’s say that the market pulled back magically to your 50% level perfectly.

Let’s say you got the absolute highest uptick on the pullback. The best possible entry in the trade. It just happened to go there. That would be 1.4958.

Now, again, assuming most of the time we will have the same stop loss placement, your stop loss is 47 pips if you put it at 1.5003 whereas mine is still 30.

So when you are hitting your first +1R at 1.4910 which is right about here, there, so when you’re hitting your first +1R, at 1.4910, I’m already up 65 pips or +2.16R.

So, with that being said, it should be very clear, especially with all the other content I’ve posted before this, it should be very very clear the differences between a professional trader’s entry and a retail entry, especially being offered by the faux authorities on price action.

If you want to continue to have sub-optimal retail entries, then you can use the 50% retrace entry.

But if you want an entry location that gives you better accuracy and a higher +R per trade, many times double the +R available, then you’ll want to adjust your entry method.

And this is what I teach in my price action course, particularly how to get plus high R trades like this.

Now, if you found this video lesson useful, please make sure to like, share and tweet it below, and I’d love to hear from you what “a-ha” moments you have from this video.

So please come over to see this video on my website as well at 2ndskiestrading.com where all the discussion is happening and leave your comments there.

But thank you for watching this video, again my name is Chris Capre at 2ndskiestrading.com, where I teach you how to increase the way you trade, think and perform.”

Now that you’ve seen the video and had a chance to analyze the two methods and how they perform differently, which one wins?

What do you think? Please share and comment below.

This is part 3 of a 4 part series. Listen to the next one here: Don’t Fight or Trade Like This, or if you missed the last one, checkout The Blind Entry (How It Will Leave You Trading Blind)

Beware: Nial Fuller’s Trading Is Like Gambling

Nial Fuller’s trades from the Million Dollar Trading Competition are out, and the results are horrible!

He traded using his supposed price action strategies. The results showed he had abysmal risk management, often traded without a stop loss or take profit, closed trades early panicking, and was gambling + day trading.
Read more

Trading Strategies

Nial Fuller’s 71% Drawdown in the AxiTrader Competition

UPDATE: Click here to see my analysis of Nial’s Fuller’s trades in the AxiTrader Million Dollar Trading Competition – it’s more shocking than I originally thought.

A former student of Nial Fuller who is now in my price action course asked me about Nial winning the AxiTrader competition.

Of course Nial Fuller talked about how he used “sophisticated money management strategies” and “wasn’t day trading“, but it turns out he lied – he was day trading, and was using horrible risk management.

With all things Nial Fuller, once you dig into the details, a completely different picture emerges from what he says.

So make sure to read this article about why Nial Fuller lied about his price action trading in the million dollar trading competition.

Now I’m not going to talk about the fact he and AxiTrader are business partners, or the fact AxiTrader actually allowed their business partners to join vs. pure clients. I’ll leave that to y’all to decide on.

But here is my summary of why Nial Fuller & AxiTrader represent everything bad about the trading industry below.

Only Nial Fuller would:

Enter a trading competition with the absolute smallest acct possible (5k)
Trade less than 10 times (by his own admission) for 6 weeks
Completely throw risk and money management out of the window by having a 71.4% drawdown over 3 days!
Another 50+% drawdown over another 3 day period!
Call his risk and money management system ‘sophisticated’ (see below)
Brag about it

And for proof, below is an image which shows you the details Nial forgot to mention about his heavy 71+% and 50+% drawdowns.

Keep in mind, this is the same guy who on Aug 20th, 2015 was bullish on the GBPUSD lauding his bullish fakey setup (commentary below).

Now make sure to remember the chart below & attached to this commentary.

Remember, this is a buy signal in line with his bullish views on the market.

Why am mentioning all this?

Because the same pin bar fakey setup Nial Fuller was lauding above, magically a few months later was a trade that “Sucked Traders in and spit them out like used chewing gum“ (in his own words – see below).

So which is it Nial?

Is this a great fakey pin bar trade that you were bullish on, or a ‘classic’ false break that ‘suckered traders’ (like yourself)?

And will you (ahem) Nial Fuller make some ‘editorial’ adjustments to your above article now that the hypocrisy is fully on display?

Inquiring minds want to know.

EDITORS NOTE (Jun 1 5.18pm EST)

After an editorial review, I realized I made a mistake. While Nial Fuller was bullish after the fakey pin bar combo that failed for 600 pips, the ‘false break that suckered traders in’ he was referring to was the break of the support level down below. My mistake and I apologize for the error.

BUT….

In a strange twist of irony, even when I’m wrong about Nial, I’m right. How so you say?

A look at this commentary of the false break that ‘suckered’ traders in ironically reveals the same thing. That he was ‘obviously bearish’ after the break of the key support level and looking to sell (see below – 3rd line).

To top this off with a cherry – after the market formed the famous false break, he was still bearish and would consider selling (see below as well).

So different trade – same result. He’s bearish, but later, he wants to point out any of you that were short were ‘suckers’.

Regardless, this should give you a good idea about Nial Fuller.

Along the lines of marketers and all things bad for the industry, only AxiTrader would:

Invest $1MM in someone who threw money and risk management out the window
With a 5K acct
Over 6 weeks and do < 10 trades
Produced a 71.4% drawdown + a 50+% drawdown

and say ‘YES, I WANT TO INVEST $1MM IN THAT GUY.”

Brilliant!

Now ask yourself the following question:

Who is Nial trying to attract with this promotion?

Is he going after the veteran trader? Is he going after someone who’s had a few years of experience and knows what is a reasonable return on risk?

Or is he going after the newbie trader who will only see the % gain and dream of tripling their account? And what kind of clients are AxiTrader going after by promoting results and performances like this?

I’m guessing you can figure out the answer (newbie traders who wouldn’t see the difference).

And this is why Nial Fuller and AxiTrader represent everything wrong with the industry. They talk about % gains, but fail to mention the risks it took to get said results.

In fact there was no mention of the risks or the downside. Only upside! Those don’t make for the best marketing materials. Nor do they make the return seem so impressive now do they?

They certainly don’t speak of a ‘sophisticated’ risk management system. But you won’t hear that from Nial Fuller or AxiTrader. And that is why they are bad for the industry (IMO).

Nial Fuller & AxiTrader are targeting newbie traders in the hopes they will open up an account playing on the idea ‘you too can triple your acct’.

But one last question naturally arises, which is:

When does making less than 10 trades over a 6 week period represent anything about one’s skill set or ability?

To put this in perspective:

Would you understand a basketball player’s strengths and weaknesses over 10 shots sparsely taken over 6 weeks?
Would you know what kind of golfer someone was by watching them hit the golf ball less than 10 times over 6 weeks?
Would you feel comfortable putting $1MM behind a poker player whom has only played 10 hands over 6 weeks?

Let me know on which planet or universe you think this is a good idea. Yet this is what Nial Fuller & AxiTrader would want you to believe.

I know this article is controversial. I know it may irk some feathers. But I’m willing to bet many will cheer my sentiments/opinions on this as a key topic that has plagued the education industry.

Do you agree with what I’ve said above or not? If so, why not?

I’ll look forward to your comments below.

Trading Strategies

5 Reasons Why Hedge Funds Aren’t Trading Confirmation Price Action Signals

This article is going to be a tad ‘controversial‘ to many developing traders out there. It is not meant to be negative in tone or start arguments.
It is to get you to question what you’ve been told about price action. It is to open up a dialogue, about another way of approaching PA beyond the typical narrative.
The general price action story spun out there goes something like this;
To make any buying/selling decisions and pulling the trigger, it ultimately comes down to one final piece of the puzzle.
This final piece comes in the form of a ‘confirmation price action signal‘. And said ‘signals’ only arise in the form of a 1 or 2 bar combination.
They come in many names, such as pin bars, inside bars, fakey/false break setups, or engulfing bars.

And the follow up to this magical fakey pin bar signal…

Regardless of the name, the idea is the same. You should not enter the market till you see one of these famed 1-2 bar price action patterns.
Thus far, everyone spinning this narrative are derivatives. What do I mean by this?
Those who preach confirmation price action signals, copied all they knew (with minor adjustments) from someone else.
Many of them were students of one individual (Nial Fuller). A little investigation will reveal Nial Fuller’s price action strategies are also derivatives.
He was a member of J16 and copied all he knew from there, again with only minor adjustments.
If you look at most of the price action mentors, you’ll see the overwhelming similarity & repetition. Now you know why the narrative around PA sounds the same.
Essentially, they are either a derivative (copy) or a derivative of a derivative (copy of a copy). What you’ll also notice is none (or almost none) of them have institutional experience.
What’s really being sold here is a ‘green light buy/red light sell‘ methodology. It’s targeting easy prey who don’t want to do the work, who want understanding price action to be easy, who want to be lazy traders (in their own words).
Yes, with just three simple setups that are easy to find, you too can make profitable buying and selling decisions! Or so you are told…
The reality is far different from this (especially in institutions and hedge funds). By the end of this article, I’m guessing you’ll start to see why.
Below are my 5 reasons why hedge funds don’t trade confirmation price action signals.

Reason #1: Paying 5-6 figures To Train Their Traders?

photo: smbtraining.com (does it look like he’s sitting there just waiting for daily pin bars to form???)
The skill and time required to identify pin bars, inside bars, fakey’s and engulfing bars is minimal (a few months max). Shoot, you can even build an algo to do this for a few hundred dollars.
Bank traders on average will make 2000-4000 trades before they can trade the bank’s money. Hedge funds will also spend large amounts of money and time either training or finding talented traders.
If trading is as simple as finding these three patterns to enter the market, why spend so much to find/train traders what a $300 algo could do?
There is a reason for this.
Because reading and trading PA goes beyond confirmation price action signals. Because buying and selling decisions aren’t as simple as these 1 and 2 bar patterns.
If they were, there would never be the need for such expensive and exhaustive training programs. Would you ever spend that much training someone to trade daily pin bars?
My guess is no.

Reason #2 Macro + Technical

If a fund is not trading algorithmically, most likely they are incorporating a combo of macro (read fundamental) + technical analysis.
I talked about this in my article Book Review: Cultures of Expertise in the Forex Trading Markets. The author (Leon Wansleben) is a sociologist who followed forex traders at a top-10 German bank desk for over a year.
Never once are the words ‘pin bar’, ‘engulfing bar’, ‘inside bar’ or ‘fakey’ mentioned in the book.
What you do find is traders working a combination of macro/fundamentals + technical analysis into how they trade.
They also discount the ‘lower time frames are noise‘ meme pretty quickly. Why?
Because most bank traders have to be reading the intra-day price action (due to flow trades, which accounts for about 70% of their trades).
By the end of the book, you realize entering the market goes way beyond pin bars, engulfing bars and inside bars. You realize they aren’t even trading those to make their buying and selling decisions.

Reason #3 Confirmation Decreases Accuracy and Profitability

“I was in (insert derivative name here) price action course and quickly realized how weak it is compared to yours.
I’ve made over 20% in the last few months using your methods. I’m glad you poked giant holes in his price action strategies.
Otherwise I’d still be waiting for pin bars and inside bars, missing hundreds of pips.“
After posting my video How A Typical Pin Bar Entry Is A Retail One, many struggling traders started to see price action differently.
They realized how many times they were sitting on the sidelines doing nothing when others were making money. They also realized how waiting for ‘confirmation signals’ decreased their accuracy and profitability.
To learn why this is the case, watch my video below.

Reason #4 Waiting for Confirmation Price Action Signals is Passive Trading

Hedge funds and bank traders are (if anything) passive when it comes to entering the markets.
Institutional traders would not (and could not) be making trading decisions once a daily pin bar has formed.
If they were doing this so consistently, they’d be picked off by HFT’s or predatorial funds who could see their entries a mile away.
This is on top of the fact they’d all be competing for the same liquidity and relative price, which would only mean a worse entry and lesser profits on the same trading idea.
A little investigation into how predictable these entries are will change your perspective on trading.

#5 The Pepsi Challenge

Ok, let’s say you are a devout believer the real way to trade price action is via confirmation price action signals.
Let’s say the above 4 reasons didn’t convince you. We can simplify this through a pretty simple test – The Pepsi Challenge.
Your challenge, should you choose to accept:
Walk into a dozen or two hedge fund offices, bank trading desks and prop trading firms. Then ask them these two simple questions:

1) If you don’t see a daily pin bar, engulfing bar, or inside bar, are you staying out of the market?
2) If you do see a daily pin bar, engulfing bar, or inside bar, are you loading up on your position even more than usual?

I’m willing to bet the answers to the above questions will be a resounding NO.
More likely, you’ll get several laughs, along with someone perhaps escorting you out of the office.

To Date

As it stands right now, nobody has taken me up on this litmus test (let alone proven otherwise). I’m still waiting as I posted this challenge many months ago.
I am confident(while open to being wrong) that after you take this test, you’ll look at price action differently.
Once you let go of the current narrative, you’ll be forced to examine how order flow and the balance/imbalance between buyers and sellers is reflected in the price action. You’ll begin to see how liquidity impacts the PA and volatility.
And you’ll start to trade contextually, meaning through the price action context.
That is when your real training in PA begins, when you let go of the freshman narrative. You’ll also realize trading those 1-2 bar patterns does not build your trading skills.
If trading pin bars really built PA trading skills, then bank traders would be going through thousands of reps on those alone.
It takes no skill to find those signals and spend your time looking for them. And doing so discounts all the other candles in the process.

About All Those Other Candles…

All those other candles is what forms a structure. This ‘structure’ is (by and large) a representation of the order flow.
The order flow gets reflected in the PA, and this PA forms the price action context.
This is where your study should be.

In Conclusion

Looking for 1-2 bar patterns doesn’t make you a price action trader. It makes you candlestick trader, and that is a different approach to the markets.
When you investigate it, hedge funds aren’t trading via confirmation price action signals. And when you stop waiting for confirmation, you’ll find yourself getting better trade locations and higher + R per trade.
Looking at the market contextually will change your mindset. You’ll start trading and thinking in probabilities.
You’ll also discover how waiting for confirmation is a retail traders mindset.
With all that being said, do you agree or disagree with these forex confirmation price action trading misconceptions? Can you see how hedge funds aren’t trading price action signals this way?
Even if you don’t agree, please do comment and share below (in a non-negative tone por favor).
Regardless, I’m hoping you’ll really open up to other ways at trading price action.
Until then – may good health, trading profits and success be with you.

Confirmation Myth

Don’t Fight or Trade Like This

This is part 4 of a 4 part series. Read the previous entry here: How the Typical Pin Bar Entry Is A Retail Entry

Here’s the transcription for the audio (Bringing a Knife to A Gun Fight)

“So pretty much every ‘guru’ who teaches price action teaches the same derivative, carbon copy, cut-and-paste method of trading price action.

That you need ‘confirmation‘, and the confirmation comes in 3-4 patterns such as a pin bar, engulfing bar, inside bar or whatever bar.

In this recording I’m going to put that perspective of price action into a different light.

And when you see it in that light, you’ll realize how ridiculous the other version is.

Imagine you walk into a martial arts studio, and the ‘guru’ is saying, “oh yeah, I can teach you how to be a martial artist and survive a fight.”

And they say, “ok, here is my martial arts…whether you are in a street fight or competition, you only need these 4 kicks to survive and win the fight.

“This is all you really need to use to fight. Now to use these 3-4 kicks, you’ll need ‘confirmation‘ that you should use the kick.

This confirmation comes when the person you are fighting is standing in front of you and not moving.

They don’t keep their hands up and their head is out. If you have all of these things in plae, then you’ll have ‘confirmation‘ that you can throw these 3-4 kicks.

But if you don’t have these, well, then you must stand there. In fact you shouldn’t do anything. You should just sit there and wait till the person you are fighting does what I said above

That is all you will ever need to win a fight by using these 3-4 kicks. And this is the only way you should attack. Barring that, you don’t want to do anything.”

Now ask yourself, if you walked into a martial arts studio, and the ‘guru’ there told you this, what would you think? Would you really think this is a way to fight or train in martial arts?

Of course not, and it’s the same for trading.

Yet anyone teaching the idea of confirmation via a pin bar, engulfing bar or inside bar, is pretty much teaching exactly that.

They all say if you don’t see these things, you should do nothing. Some even say walk away from the markets.

How ridiculous is this idea, that you should only spend your time looking for these things to enter and engage the market, and if these 3-4 kicks are not there, just stand there and do nothing.

I’m guessing by now you are seeing the insanity of this.

Yet this description above pretty much describes every price action, carbon copy, cut-and-paste guy out there, whether it be Nial Fuller, Jonathan Fox, or any other derivative.

And they are all derivatives of J16, which Nial used to be a member of before he went off thinking ‘I can do this same thing‘ and went and created his course, which is his own derivative version of it.

Since then, it’s only produced weaker and weaker derivatives. Very much like inbreeding weakens the genes, it’s the same with this version of price action being described.

And it’s weakening your understanding of price action.

You have to get beyond this, you have to get beyond the 3-4 kicks to win a fight type of price action out there. This is taught in the form of ‘confirmation’, and its not the kind of trader, or martial artist you want to be.”

This is part 4 of a 4 part series on the confirmation myth and how it reduces your profit and accuracy. Read the previous entry here: How the Typical Pin Bar Entry Is A Retail Entry

Featured Article, Forex Strategies, Trading Mindset & Risk Management

A Trading Mindset: Books To Give You A Mental Edge

Professional trading and training can be like a marathon that never seems to end. Simply trading each and every of the +225 trading days a year isn’t actually healthy for the learning process and skill development.

There are times when we have to spend more time reviewing and less time trading. There are also times when we need to do more study and training than trading.

Traders often tend to be a passionate bunch and love to digest good reading material.

As someone who consistently reads 1-2+ books per week, I’ve built up a decent library, particularly around trading and the trading mindset.

In today’s article, I’m going to share half a dozen forex trading books, centered around the trading mindset and building a successful traders mindset. I’ll give a brief description of each one, plus a link to the book on Amazon so you can order whichever you feel most drawn to.

It should be noted, most trading lists like these will typically share some of the staples, such as Market Wizards or Trading in the Zone. Since these have been done and done time and time again, I’ll be sharing some alternative forex trading psychology books which share a unique perspective on trading, mindset, success and training.

Enjoy.

#1 The Playbook by Mike Bellafiore
I’ve talked personally with Mike before. He’s one of the good guys in the industry doing some unique work for traders, training traders and the industry. He runs SMB which is part prop desk, part training program. With decades of experience in trading and running a trading desk, Mike has a unique perspective on trading, training traders and what it takes to become successful.

If I was ever to work/trade for a team, I’d probably work with them.

This is probably the longest forex trading book review of them all since I have personal experience with Mike, but his unique approach to trading also applies to the mindset. In The Playbook, he shares a lot about working with his trading team, getting them through the same obstacles we all experience.

He shares his insights into working with traders who aren’t cutting it vs. the ones who show potential, guiding them towards success.

He puts a tremendous focus and effort on mindset. Two quotes that stick out from the book are;
1) “You do not become a great trader by being shown cookie cutter technical setups and then soon become successful. That is a myth from what I call Trader Disneyland. It would be wonderful if Trader Disneyland existed, but it is marketed and spun that it does, yet it doesn’t.” (That means you Nial Fuller & Jonathan Fox)

and

2) “Many novice pedestrian traders focus on the next position. Consistently successful traders focus on the process and care little about the outcome of the next trade. The distinction is enormous.”

There are many gems in this book, including the actual ‘Playbook‘ idea he shares, but definitely a top read in my library for a traders mindset.

#2 The Way of the Fight by Georges St. Pierre
The Way of the Fight? What does this have to do with trading?

Yah good question. Georges St. Pierre is a Mixed Martial Artist. He is a former 2x World Welterweight Champion in the UFC and holds several records that still stand to this day.

Not only being one of the good guys of the world of mixed martial arts, Georges is a trailblazer in terms of training, preparation, mindset, and integrating many styles seamlessly.

In his book The Way of The Fight, he shares his experiences, challenges, training methods, and how he personally and mentally approaches mixed martial arts at the highest level.

Two gems that stand out from this book are;

1) “Almost anybody can be greatly successful. However most are not willing to go through the process and just want the result. It’s having to go through the process that stops people, not their limited potential.”

and

2) “If your enthusiasm is continually diminished by defeat, you will not have enough mental fuel to survive the learning curve.”

Definitely worth a read. Inspiring, challenging and clarifying.

#3 The Hour Between Dog & Wolf
Former trader turned Neuroscientist, John Coates spent almost a year studying an entire trading floor of institutional traders. With his training as a Neuroscientist, he shares some amazing information about how the brain and body works through the typical days of trading for professional traders at the highest level throughout an entire year.

In The Hour Between Dog & Wolf, you’ll learn more about your brain and body than any book I’ve seen out to date.

Ever had that ‘gut feeling’? You’ll learn about that. Want to know what stress hormones do to the brain, body and performance? You’ll find out in here.

A must read for traders wanting to learn about their brain, body and how trading affects them both.

#4 Cultures of Expertise in the Global Currency Markets by Leon Wansleben
This is a advanced forex trading book I covered in an article before (click here to read the full article and review), but had to mention it again.

Leon Wansleben is a sociologist by trade who also gets to spend time watching an entire FX trading desk. You’ll learn about how the traders work with the analysts, how they trade on all time frames, including intra-day lower time frames (Sorry Nial Fuller & Johnathan Fox for being flat out wrong again), what the bulk of their trading day is like, and more.

He covers how the top traders manage risk with exceptional skill while building emotional courage and stamina to survive the learning curve. He also goes in depth how they are trading price action and order flow, often in combination with fundamental analysis.

Another must read for getting a unique perspective on the trading mindset.

#5 Earn the Right to Win
After losing a coaching job, Tom Coughlin was found sitting at the NFL combine, which is where the potential new college grads will show off their skills and physical traits, hoping to get noticed by coaches and scouts for standing out.

While taking detailed notes on every player there, Tom was greeted by a friend in the industry who said this to him:

“Tom, what are you doing here? You don’t have a coaching job.”

Tom’s response says it all, “Not now I don’t.”

Tom has won two Super Bowls with the NY Giants. He is the oldest coach to ever win one, and has done an impressive job, often times taking the teams with the lowest winning records into the playoffs, and coming out champions.

When you finish this book, you’ll see the value of preparation, how managing one’s time and maintaining discipline leads to success. A great book from a great guy in the NFL.

#6 How to Be Like Mike by Pat Williams
Anyone who has been a follower of this blog and forex training site would already know I’m a big Michael Jordan fan. In this book Pat Williams goes through the many phases of Michael Jordan’s career, from his early failures in High School, to coming back stronger, to his winning the NCAA championship at UNC, to his early struggles at the bulls, and onto his 6 NBA titles.

You’ll learn more about MJ, and all the amazing little things he did in this book than any documentary I’ve seen yet. Sharing perspectives from players and coaches around him or against him, along with other greats in sports, you’ll see why MJ is and continues to be an inspiration, sharing a unique mindset on success.

Three quotes of the hundreds I’d like to share are below:

1) “Success isn’t something you chase. It is something you have to put forth the effort for constantly; then maybe it’ll come when you least expect it. Most people don’t understand that.”

2) “I was sitting on the bench and MJ came dribbling past us at full speed. Then he shifted into another gear and went to the hoop. I’ll never forget that fire in his eyes, that look of determination. It scared me to see that look. I’ve never seen it before. I’ve never seen it since.”

3) “You can’t turn it on and off like a faucet. I couldn’t dog it during practice and then, when I needed that extra push late in the game, expect it to be there. But that’s how a lot of people approach things. And that’s why a lot of people fail. They sound like they’re committed to being the best they can be. But when it comes right down to it, they’re looking for reasons instead of answers.”

A treasure trove of a book, and something I continually go back to.

In Closing
Whether these advanced forex trading books were from traders directly, or from high performers in other fields, you’ll notice several patterns in their thinking and mindset.

Most focus on training, preparation and process more than result. Most struggling traders have this equation reversed.

Most have a highly evolved training routine, and work at their chosen skill every single day. There are no lazy traders or examples of success from being lazy (sorry again Nial).

And most consistently, they realize having skills is one thing, but having a stronger mindset is far more powerful.

Food for thought, but I hope this gives you some enjoyable reads.

Featured Article, Forex Strategies, Price Action Trading

Fixed % Equity vs. Fixed Dollar Amount | Which is Better?

Last year Nathan at winnerstradingedge.com wrote a brilliant piece which you can find here talking about Why Nial Fuller’s Method Doesn’t Work (referring specifically to his risk models).

In this article, he is responding to Nial’s claim that the superior forex risk management system is to risk a fixed dollar amount per trade. It should be noted Nial’s main claims were 1) a fixed dollar amount could get you out of a DD (drawdown) faster when winning, while 2) it would take longer to get out of the same DD if you used a fixed % equity model.

Nathan decides to demonstrate in two scenarios how a fixed % equity model is actually far superior. Nathan’s data shows clearly using a fixed dollar amount actually hurts you both in DDs (drawdowns) and during winning streaks.

I completely disagree with Nial Fuller and have always endorsed a fixed % equity risk model as being far superior. I will demonstrate this later with data and several scenarios. But first, onto Nathan’s results.

In this chart below, he shows two accounts each with the same starting balance of $10000. The two accounts were either using a 2% risk per trade method (representing the fixed % equity model) vs. the fixed dollar amount (risking $200 per trade each trade). Below is the graph showing the performance of the two models.

Nathan in his experience noticed how traders go on winning streaks. He thus tested two scenarios, whereby the traders go on either a 10 win-streak, or a 10-loss streak. The green line is our model (fixed equity % model). The red line is Nial’s model (the fixed dollar risk method).

During a winning streak, our fixed % equity model pulls away from Nial’s fixed dollar amount and continues to gain further as it goes on. This happens around trade 5 and continually separates further after each winning trade.

For the losing streak, our fixed % equity model again outperforms Nial’s, by losing less each trade, thus protecting your capital.

After Nathan published this data highlighting the differences, people on both sides disagreed. But nobody was providing any more data to back up either side. We at 2ndSkiesForex decided to run the numbers ourselves and further demonstrate how a fixed % equity model was far superior.

The first forex risk scenario we looked at was a 10 win trade recovery after the 10 loss series Nathan presented above. Here is how the data plays out below.

After 10 losses, Trader A goes on to win the next 10 using the fixed % model:
-As per the chart above, Trader A has a balance of $8171 at trade 10. This continues below-

$8334.42 at trade 11
$8501.10 at trade 12
$8671.12 at trade 13
$8844.54 at trade 14
$9021.43 at trade 15
$9201.85 at trade 16
$9385.88 at trade 17
$9573.99 at trade 18
$9765.06 at trade 19
$9960.36 at trade 20 for fixed 2% rule

After After 10 losses, Trader B goes on to win the next 10 using the fixed % model:
-As per the chart above, Trader B has a balance of $8000 at trade 10
-Since the math is easy, at trade 20 Trader B has a balance of $10000, for a whopping .4% difference.

Now in comparing the numbers as a whole over these last three scenarios, lets look at the following three facts:
1) During the first 10 win UD (updraw), you get +1.58% BETTER performance (more upside) using a fixed % model
2) During a 10 loss DD (drawdown), you get +1.71% BETTER performance (or lesser DD) using a fixed % model
3) During the next 10 win UD (updraw) you get -.4% LESSER performance (or lesser gains) using a fixed % model

So in two out of the three forex risk scenarios above, the fixed % equity model outperforms the fixed dollar amount. The total edge is +2.89% over the fixed dollar amount using the fixed % equity method.

But lets take this a few steps further and lay out the other 4 scenarios from here to see which performs better. They are;

Scenario 1 = 10 more straight wins from trade 20

Scenario 2 = 5 more straight wins from trade 20

Scenario 3 = 5 more straight losses from trade 20

Scenario 4 = 10 more straight losses from trade 20

Scenario #1: (10 more straight wins from Trade 20, or T20)
Trader A Balance = $9960.36
Trader B Balance = $10000

After 10 more trades (T21-T30), the fixed 2% model will have a balance of $12143 while the fixed dollar model will have a balance of $12,000. Summed up, the fixed % model has $143 MORE in profit, or a 1.2% GREATER gain. Hence the fixed % model wins this scenario.

Scenario #2 (5 more straight wins from trade 20)
Trader A Balance = $9960.36
Trader B Balance = $10000

After T25 (or 5 more straight wins), fixed 2% model has a balance of $10998.69 while the fixed dollar amount has a balance of $11,000, or a whopping $1.31 more, which is only a .01% gain over the fixed % model. Pretty weak difference. But a win nonetheless for the fixed dollar model.

Scenario#3: (5 more straight losses from trade 20)
Trader A Balance = $9960.36
Trader B Balance = $10000

By T25, the fixed % model has a balance of $9002.78, while the fixed dollar amount has a balance of $9000. Summed up, the fixed % model has $2.78 MORE in profit, or a .03% gain over the fixed dollar amount. A small difference, but nonetheless a win for the fixed % model.

Obviously from here the answer gets much uglier for the fixed dollar amount model as this progresses, but here are the numbers below.

Scenario #4: (10 more straight losses from trade 20)
Trader A Balance = $9960.36
Trader B Balance = $10000

By T30, the fixed % amount has a balance of $8136.84, while the fixed dollar amount has a balance of $8000. So the fixed % model has $136.84 MORE in capital, or a 1.7% gain over the fixed dollar amount.

When you tally up the 2 scenarios by Nathan, plus the 4 we just ran, the score is 5-1 with the fixed % equity model being the far superior model.

Here are the numbers and scenarios summarized below;
Scenario A (Nathan’s scenario – 10 wins from 10k) = +1.58% better performance for fixed % equity model
Scenario B (Nathan’s scenario -10 losses from 10k) = +1.71% better performance for fixed % equity model
Scenario 1 (as per my description above) = +1.2% better performance for fixed % equity model
Scenario 2 (as per my description above) = -.01% worse performance for fixed % equity model
Scenario 3 (as per my description above) = +.03% better performance for fixed % equity model
Scenario 4 (as per my description above) = +1.7% better performance for fixed % equity model

This comes out to a grand total +6.21% better performance for the fixed % equity model across 6 scenarios.

Translation

This shows a huge advantage using the fixed % equity forex risk management model which is clearly far superior to the fixed dollar amount method. This is only across 20-30 trades using any one scenario above. The more trades this gets applied to, the better the performance. Over a traders lifetime of 500, 1000, or 5000+ trades, this edge becomes exponentially superior.

Keep in mind, you cannot do any risk of ruin calculations using a fixed dollar amount, however you can using our % equity model. Anyone using Nial’s fixed dollar model is simply throwing money away over time.

This should end the debate between which forex risk management system is the better model. Clearly the fixed % equity forex risk management model wins by a Mortal Kombat Fatality.

I would like to state I am welcome to see evidence to the contrary if/when it is presented, as I am totally open to seeing it.

Make sure to share this “how much to risk per trade” article as it discusses a critical topic for your trading. But more importantly – leave a comment whether you agree or disagree, and why.