Change comes more easily if it is carried out daily over a long period. And it’s best if the new activity (such as analyzing or watching for a new type of exit) becomes part of your daily routine.
If you find something worth introducing or changing, the best way is to try it every day for a while to form a new habit.
The best of the best traders are constantly constructively satisfied and at the same time dissatisfied with their achievements.
The best traders I’ve met pointed to survival on the market as their main achievement. By studying their biographies, you can benefit in one particular way: you will strengthen your ability to adapt. Markets are changing and will continue to change, sometimes dramatically. Alternative data, big data and AI are coming into widespread use.
The best traders are defined by three key words: adaptation, proactivity and resilience. I’ve talked to traders who have more than 50 years of market experience. They started when orders were still placed over the phone with a broker.
Each of them has survived huge changes, not only survived, but was able to use these changes for themselves.
This is no small thing, most traders and investors, are not able to survive even a year on the market! And they not only survived but also tried to use the new that came along to their own advantage. And they succeeded.
P.S. I have included my conversations with traders in the book Conversations with Forex Market Masters. You can get it here: ForexMarketMasters.com/conversations-with-forex-market-masters/
We can have a really good plan, but when we do it under big stress, everything starts to fall apart. Mike Tyson summarizes it briefly in today’s quote of the week:
“Everyone has a plan until they get hit hard in the face”
– Mike Tyson
We are not able to stick to the plan, because under stress, our brain starts to work differently. We inherited stress from our ancestors – in an emergency situation they had few choices, very simple choices and none of them included complex intellectual processes. They were the fight, flight or freeze and pretending that they are not there.
We have no choice in trading – we have to learn how to act under stress, especially during the first months of the game. Therefore , let`s reach out for such solutions, which work just with the necessity to act in a very big stress.
As you probably already know under stress and especially under high stress (and I am preparing you for that) the mind works differently, it associates slower because intellectual capabilities are decreasing.
Under strong stress the mind works the best when it has clear instruction “step by step”. Under strong stress, under the pressure, don`t imagine that you will think clearly. Then, the best solution for reasonable action is “cheat sheet”.
Cheat sheet allows you to keep the right path and avoid mistakes.
Work according to the rules calms, and decision-making process is better.
For this reason, during the famous emergency landing in Warsaw, where the giant Boeing “were sitting” without chassis one of the crew members read the relevant procedure and others performed it point by point.
The lives of all the passengers and crew members depended on the proper performance of the landing procedure – therefore they do not relied on the memory that in a stress situation is sometimes unreliable. The entire crew focused on the correct execution of the instructions to landing without chassis provided for this plane model.
In each plane there is a set of instructions proceedings in every possible situation. When something unusual happens – the crew look into the manual and begin to implement the appropriate step by step instructions.
This knowledge will bring you closer to the market success.
Prepare a complete cheat sheet for each type of setup, if you still do not have it. If you have several types of setups – for each type of it there should be an instruction on a separate sheet. It is the basic document to use when you are on the market.
If your system provides two parts: a preliminary analysis and order execution, on one side write down analysis before putting order and on the other – a trade execution instruction.
Which conditions must occur in the market to enter perfectly? Note them.
What kind of scenarios can happen? Be prepared for anything. It is very important to prepare and later polish the cheat sheet. During its development and later improvement there will be a lot of questions. Then, you will have time to find the answers.
“But I do not know what to do when something like this happens in the market …”
Do you think that you will find out, when you will be on the market?
A place for a prayer is in the church, on live market it’s too late 😉 If during the trade occurs one of them – consider getting out off the market, you are not yet well prepared.
This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".
It happens that traders are stuck in the face of some event in the market. I had this, which led to the loss of the first deposit. After many years, I remember like it was today: I set the trend line on the GBP/JPY and set order of what I thought was right over it. It was a Sunday evening – in a moment the market was about to open. It happened in a moment. For an hour I was watching as it is slowly but steadily moving towards my trend line, then touches it….
Suddenly, to my surprise I saw that my order was activated ! It was not how it supposed to be! It had to start only after breaking the line – and on the chart it touched her perfectly!
There were emotions, stress and… I was stuck. I just did not know what to do. Helplessly I was watching as within a few minutes the market is falling down. Over my head flew dozens of thoughts. I was not able to make even the slightest move. I froze with emotions like an animal blinded at night on the highway by the car reflector.
It was my beginnings, absolute beginnings. I knew that there is something like SL but no thought was necessary, I was finally here to make money and not lose it, and “the market always turns!”. This time it didn’t and I had the first margin call. I was surprised and then broken down.
A colleague, in a similar situation, watched how in 9 minutes six thousand US dollars evaporate from his account, earlier he tripled account (like me at the beginning), he said that he was not able to do anything.
How to deal with such situation, when suddenly we are surprised and “stuck”?
In situations of very strong stress we have 3 types of natural reaction of the body. Let’s call them “3F”.
3F is: fight, flight or freeze.
These are appropriate reactions to all living beings. The first two are well known: the living beings in the face of threats (e.g. aggressor) flight, take the fight or freeze. It is a survival mechanism, deeply encoded in the genes.
However, in the market situations, as shown the above stories – it is rather an adverse reaction. Dealing with this in such situation consists of two elements:
Prevent „freeze”. First, prepare yourself mentally for what might go wrong. Prepare for it, the order can activate differently than you want (here I mention that I so quickly went live, that I often mistaken shorts with longs), is not the place where you want.
Electricity can go off (of course it makes sense to have a standby power supply so-called UPS). There may be a sudden huge move because of the news (also I had such a case, I entered without checking the calendar news …), etc.
Knowing a few possibilities of “what could go wrong,” you are in a different situation, the chances that something surprising will happen and you “stuck” rapidly decrease.
Expect the unexpected. And when it happen make a rapid assessment of the situation and be ready to take immediate action.
If you already think about what you would do in such a situation you have a good chance that it will work properly. And you won’t be found unprepared. And the situation does not finds you with your pants down.
Stop the reaction. If you see someone in such a situation, shout loudly, or if you stand close – push him, it is usually enough. In relation to yourself, use the same: shout loudly, use the “universal words,” get up rapidly from the computer. Any loud or rapid activity break state of “stuck” and will unlock your mind. Clapping your hands loudly works well.
This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".
I have seen many lists of cardinal rules. They are almost all the same. I will give you a different list of rules. One you probably have never seen before. There is no law against any of these things:
All of the above add up to truly loving to trade, and:
I don’t really have cardinal rules other than limit your potential losses. If you suffer too much of a consistent drawdown, step away from trading for a while. That’s something typical, what most experienced people will tell you. Stop trading and find out what you are doing wrong.
Also realise that trading may not be for you. I always use the example that I’ve been trying to learn Spanish for the last two or three years but languages are not for me. I find it very difficult and Spanish is probably the easiest language to learn, for an English speaker anyway. I just have a terrible time. I would not even think of making my living where I had to speak Spanish.
So many people should realise that trading may just not be an appropriate business for them. As far as the cardinal rules go, I don’t have ones. That makes it sound like it’s too simple if we make some rules and be successful. And it’s not the case.
Build a plan. I can’t tell you: trend-following is better than counter-trending, swing trading is better than scalping. Everybody has to find what kind of approach is best for his personality. Whichever thing you choose, build a plan of what you are going to do.
I always say that it’s hard to make decisions and imagine how hard it is to make decisions when you are under stress. And when you are trading, you are definitely under stress, that’s normal.
Decisions should be made before clicking on the mouse. Once you have clicked, everything should already be decided and you should know what you are going to do next.
Plan the trade, trade the plan. Define the market.
I follow my 3 basic trading rules. When I hit something I’m not sure about step aside, fall back on the 3 basic rules and if you’re still unsure leave it. There will always be another trading opportunity.
It is better to be out the market wishing you were in, than in the market wishing you were out.
Always know what you are going to do, when you are going to do it and why.
Never chase a trade. If I miss a trade, so be it.
Rule 1: Trade what you see, not what you hope to see.
Rule 2: The bottom-line is that the market doesn’t care what type of analysis you use or how smart you are - it is always right.
Rule 3: Never hope, wish or pray as that is a sure sign that you are in a bad trade.
Rule 4: When you are wrong, you are wrong and just get out of the trade immediately.
Rule 5: Don’t be impatient and force trades to happen.
Rule 6: Never enter a trade without a money management plan.
Rule 7: Have an exact strategy for entering and exiting all trades and never deviate from it.
1. Plan your trades and trade your plan without wavering!
2. Do the dance you are taught until you learn a dance of your own. In other words, don’t change a system you have learned until you fully understand the system, the market and yourself!
3. Trading is a business, so know your performance numbers!
Yes, I wrote an e/book containing selected interviews with the best ones of them. You’ll find there opinions of the world-famous traders, millionaires, winners of international contests, and people who had control over market and have plenty of personal experience in this matter. Some of my interviewees had more than 50-year experience in all of the possible markets.
You can fint here: “Conversations with Forex Market Masters“
I asked over 80 questions like the one above. I truly hoped to discover everything that decides about the success of the best ones, all the problems standing in the way of the profitability and possible solutions to them.
Check it out: “Conversations with Forex Market Masters“
2 tools to help you understand the system. Learn how to trade by following live trading and by…. teaching others. That’s right!
