If you are trading without first assuring your survival, you are just playing a game, a crazy gamble that a drunkard places over the weekend in Las Vegas casino. No real trader who aspires to reach constant profitability will participate in the Market without first assuring their survival.
The above is absolutely essential and goes without saying. It is assumed by default that your risk and money management, as well as psychological well-being, are taken proper care of.
Before anything else, you need the willingness to put in countless hours of work into the Market. Only this will allow you to gain this important subjective feel of the Market as you watch it. The trading ideas will come to you effortlessly and it will only remain for you to execute them. This is how you build your trading system.
Ask yourself: “Why am I not putting enough time into watching the Market? Why am I not willing to take losses, make mistakes and yet continue with my method, learning and improving with each passing day?” Find the answers. Write them in your diary. Propose the solution and implement it.
When you spend enough time on trading and seemingly totally committed to your success in trading, ask yourself this: “Why am I not acting on each and every idea I have? Why am I closing the trades before my targets are reached or my system tells me to close them? What am I afraid of?”
Honestly answering these questions in your daily diary will lead to important improvements to your trading system. Go back to the first step – putting countless hours of work – and repeat the process times and times again, with humble understanding that you will never be good enough to cease improving your method and your execution of it.
Above all else, remember – it is only possible to go through this difficult process when you have absolutely, perfectly ensured your financial and psychological survival! You cannot be worrying about your well-being or losing more than you can afford to lose AND going through the mandatory learning process of taking losses, making mistakes and being clueless.
It is important to be able to see the first signs of a fading trend. There is no better exercise than to watch hundreds of strong moves on history – the moves that always, inevitably fade, lose strength and reverse. Nothing lasts forever, and in order to stay in balance, Market must go through constant change, allowing some instruments to appreciate while others must depreciate. Inevitably, they will trade places, as one trend changes into another.
Take any market you trade and see a trend fade. Do not just look at one instrument, ask where the money is going if it is flowing from this market? If stock market becomes bearish, the money must go somewhere, whether it is bonds, metals, oil or just cash.
Each currency constantly moves in cycles. Each one has a cycle on each timeframe, starting with Weekly, then Daily and H4 inside of it. My job is to read traders’ emotions in every cycle. My job is to read price action in each cycle. My job is to watch how cycles change.
A currency cycle does not end without reason. In order for any bullish cycle to end, another currency’s bullish cycle must replace it. Even pausing of the cycle does not happen without reason – another currency must temporarily generate a strong move in the same direction in order to force the main trending currency to pause.
By trading at the end of the currency cycles I am ensuring the greatest potential for currency appreciation or depreciation.
By watching all currency cycles, I ensure an understanding of the reasons why a cycle ends or is paused.
By patiently executing one cycle after another, I ensure long term profitability, guaranteed through the edge present in my trading method. I do not have to worry about any individual trades – my job is to catch the cycles.
At the end of each successfully identified cycle I will always come out on top, regardless of likely losses accepted while trying to establish the winning entry. Through not worrying about an individual entry and instead concentrating on catching the cycle, I ensure relaxed and free trading.
It is often difficult to recover from frustration of bad trading. When you make the mistakes you know you shouldn’t have made. When your read of the Market had been particularly poor and you are feeling absolutely disgusted with yourself about it.
Notice your thinking, notice your feeling, hear your self-talk. Instead of learning something from your mistakes and using frustration as merely a catalyst to do something about it, you are succumbing to your frustration, carefully nurturing it together with your ego. You do not want frustration to end, because then it will be time to take action, fixing the issues you have in your trading. You’d much rather play the victim of big bad Market, who is out there to get you.
You can be pathetic or profitable – never both.
There is always something interesting going on in the Market. Different events will make different traders feel differently. Our job is to read their emotions and feelings the best we can and find out where the crowd will be trapped.
Let’s take a look at what consistently profitable trader might be going through in his trading.
Is this how you feel in your trading?
Price is moved by traders. Traders are moved by feelings and emotions. Our job is to read these emotions on the chart. When traders are under stress their behavior becomes much more predictable, allowing us to profit from their mistakes.