Category: Trading

TradingTrading Psychology

How to effectively improve your trading

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.

Books & TrainingsTradingTrading Psychology

How the best traders improve their trading: self-development

The best of the best traders are constantly constructively satisfied and at the same time dissatisfied with their achievements.

Traders' StoriesTradingTrading Psychology

Lessons from 50 years of trading experience: key skills and achievements

Survival on the market

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.

Proactivity

Such an attitude is called proactive. They actively looked for the new opportunities that the change brought. They repeatedly changed their systems, tested them, refined them, learned new things about the markets and used this in their decisions. They were constantly learning and continue to learn, as many of them are still actively trade! What is a threat to some may be an opportunity for you. Try not only to survive on the market, but actively (pro-actively) take advantage of the opportunities this new thing brings. The world belongs to people who learn. A system that “always works” is a huge rare thing, and at best brings only small profits. Set your mind on learning, developing your system and psychological advantage.

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/

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Trading

Best Practices in trading: Reduce stress level with cheat sheet

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 is a manual what to do step by step

Cheat sheet allows you to keep the right path and avoid mistakes.

  • You will remember much easier what you should do if the information is given in the form of simple commands and each of them is placed one under the other.
  • You should use cheat sheet at least for one year. It does not matter that you already “know it all”. The idea is to look at any time into the notes, if any doubt arises.

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.

Where is the entry?

Which conditions must occur in the market to enter perfectly? Note them.

  • How do you manage the order?
  • If the market will do it – I do it.
  • If the market will do x – I do it.
  • If the market will do y – I close the order from hand.
  • What kind of scenarios can happen? Be prepared for anything.
  • Where is the exit?

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?

  • You will make worse decisions under pressure and the only thing left for you will be either to “hope” or “pray” – and these two toxic states lead to losses.
  • You will make worse decisions under pressure and the only thing left for you will be either to “hope” or “pray” – and these two toxic states lead to losses.

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.

Get even more from this!

This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".

  • You will learn what makes up a successful trading in the context of key factors: system, discipline, decision-making.
  • You will find out how Best Traders, Market Master, International Champion, World Trade Masters think and make their trading decisions.
  • You can learn techniques and methods of working with your psyche, building self-confidence and professionalism as a trader.
  • The course will help you focus on the best paying setups.
  • During the course you can develop self-discipline and self-insight that are essential to long-term profitability.
  • You will learn some tested exercises to control your emotions and stress levels. If you have ever made an ill-informed decision under the influence of emotion or stress, then imagine that after this course you will achieve unparalleled levels of self-control in the most difficult trading and life situations.

Trading

How to stop the “emotional stun” in trading?

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”?

3F Reaction: fight, flight or freeze in trading

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.

Get even more from this!

This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".

  • You will learn what makes up a successful trading in the context of key factors: system, discipline, decision-making.
  • You will find out how Best Traders, Market Master, International Champion, World Trade Masters think and make their trading decisions.
  • You can learn techniques and methods of working with your psyche, building self-confidence and professionalism as a trader.
  • The course will help you focus on the best paying setups.
  • During the course you can develop self-discipline and self-insight that are essential to long-term profitability.
  • You will learn some tested exercises to control your emotions and stress levels. If you have ever made an ill-informed decision under the influence of emotion or stress, then imagine that after this course you will achieve unparalleled levels of self-control in the most difficult trading and life situations.

Trading

What trading system is the best for you?

Imagine that you have easy to understand and use system. You will spend no more than half of the month on the market, and in that time you will earn enough not only to cover your monthly expenses but you will also be able to put more capital into further trades and into increasing positions. You spend up to 2 weeks a month trading. The rest of the time you can use whatever you want eg. relaxation, visiting the family and friend, what you are interested in…

The majority of novice traders who I have met want to learn the system which will allow them to make money as soon as possible. The best very quickly and very much. BUT instead of reaching their goal, they become capital providers to the market. This is because of this approach.

I want you to realize that there is a whole industry: books, system providers, analysts, media – which knows how to allure the novice to the market and take money from them. To do this, they use simple tricks – they aim at your greed: “you can earn a lot of money, very quick, here is a recipe, here is a magical indicator, fantastic system which will make you rich very quickly, Holy Grail”… and so on.

I will talk more about this next time. Now I want you to realize that novice traders are being allured into a trap by the fact that someone used the way their mind sets the goals to manipulate them.

Today we will use a similar mechanism of mind but for a completely different purpose.

We have started this lesson by describing the perfect situation. It may surprise you, but it is the right and “the only right” approach! For me, it is a starting point to explain you what system you need. It is very important – by this you will become very resistant to primitive manipulations.

Let’s break it down:

You work two weeks a month, which gives you 10 trading days, the rest you allocate for the other activates.

Your total monthly costs are… (X)

Let’s assume you want to “make your living” which means to cover monthly costs but also save some money and increase your trading capital (X).

So, by simple calculation we learn, that you should monthly gain from the market (W): W = X + Y

Consider now, how much for you is ‘X’ and ‘Y’? That will be a subject of today`s task at the end of the lesson.

The amount of the money marked as ‘W’ will be our reference point: you need a system that will give you exactly
‘W’ or more per month. You need the system which will allow you to do it within 10 trading days or less (as we planned).

Let`s continue:

10 trading days can be done 20-30 transactions (at max). 3 transactions per day is really a lot! It is important that they are good, well prepared – then they have a chance to bring you the expected result. No matter what the system, probably/average 10-12 of them will be profitable, the rest will be lost or come to break even or close to it. Most of traders after making this simple calculations:
  • change the way of seeing their system, change the perspective, it means that they start to see the system as what it should be: a good tool for achieving their own goals.
  • They calm down, know what they looking for and know that have the basis for creating a realistic plan for achieving their goals.
  • They are less susceptible to primitive manipulations derived from greed – to which we are susceptible until we are grownups.
  • The basis for changing the look of profits – as a necessary result of actions and looses – as non-removable effect of the system.
And at the end of this part of the lesson, let`s reply directly to the question… So, what system to choose? – The one that will help you achieve your goals.

Get even more from this!

This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".

  • You will learn what makes up a successful trading in the context of key factors: system, discipline, decision-making.
  • You will find out how Best Traders, Market Master, International Champion, World Trade Masters think and make their trading decisions.
  • You can learn techniques and methods of working with your psyche, building self-confidence and professionalism as a trader.
  • The course will help you focus on the best paying setups.
  • During the course you can develop self-discipline and self-insight that are essential to long-term profitability.
  • You will learn some tested exercises to control your emotions and stress levels. If you have ever made an ill-informed decision under the influence of emotion or stress, then imagine that after this course you will achieve unparalleled levels of self-control in the most difficult trading and life situations.

Books & TrainingsTraders' StoriesTradingTrading Psychology

The cardinal rules of trading according to the best traders in the world

The cardinal rules of trading according to the best raders in the world

One day I came up with the idea of finding the best traders in the world and then asking them about everything that is relevant for achieving success on the market. I wanted to know their full story — from the beginning, up until now. In the result, I interviewed almost 100 traders from all over the world. One of the questions was “What are the cardinal rules of trading according to you?” Check it out, what some of them told me…

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:

  • A passion for trading,
  • Self-control,
  • Humility,
  • Faith in yourself and your trading plan,
  • Being good at chart reading,
  • Being kind to others and not trying to get it all,
  • Being patient to wait for your trade,
  • Being at peace with yourself and with the markets,
  • Being joyful in the knowledge that you can win in the markets,

All of the above add up to truly loving to trade, and:

  • LOVE as “Perfect love drives away fear”.
- Joe Ross

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.

- Rober Miner

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.

- Andrea Unger

Plan the trade, trade the plan. Define the market.

- Mostafa Belkhayate
  • Learn to allow yourself to lose or not be right.
  • Develop a procedure or trading plan.
  • Whether discretionary or automated plan the trade, trade the plan.
  • Never catch a falling knife.
  • Bulls make money, bears make money, pigs get slaughtered.
  • Determine your targets and stops based on expectation.
  • The market is always there. Trade to fight another day.
- Albert Bruno

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.

- Phil Newton

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.

- Jeff Wilde

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!

- Todd Judkins

There is more trading wisdome!

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

Trading

13 Examples of What Triggers Emotions In Trading

Here you will learn about several things that can trigger emotion when trading and throw a trader off balance mentally. Finding that right cause of the problem is a key step to regaining balance and attentiveness for the future.

13 examples of of What Triggers Emotions When Trading

    • Too large a position size (entry) in relation to your capital:
    • A series of losses normal for the system.
    • There was a change in the market and the trading system just stopped working.
    • A sense of uncertainty about whether the new trading system you are working on will actually work.
    • The trading system you have chosen is not suited to your temperament. That happens!
    • You chose the wrong market, the wrong TF or the timing for the best entries is different, you are not in good overall shape.
    • Confluence of events.
    • Momentary oversensitivity. A minor problem in trading that has arisen can be felt by you as very painful and serious at a time when you are particularly sensitive to stress.
    • You have a cold or illness.
    • Severe stress from another source (or several) has arisen, e.g., illness in the family, an accident or death of a family member or a friend or loved one.
    • Personal problems e.g. quarrels, divorce, tensions at home, especially permanent ones.
    • Serious problems at work, especially permanent.
    • You had an accident.

Very important: stress from various sources accumulates. At times when you have strong or permanent stress in a field other than trading be more attentive. Severe stress magnifies emotion while trading and the number of mistakes. At the same time reduces intellectual agility, so both the analysis before and the execution of the position itself, may be more difficult for you. It is still possible, but it will be more difficult, so you should be more careful in such situations. You should have your psyche properly prepared so even when emotions while trading arise you will know how to deal with them

Offhand, you can think about what to do to reduce stress from non-trading sources.

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Trading tools used by best traders

The best traders from the largest trading funds have the best coaches (including psychology!), access to the best knowledge, training, development programs. 

One of the big advantages of working in a large and rich fund is the abundance of trading tools that allow you to be very good and constantly further improve your professional level.

One of such trading tools used by trading funds is a fairly simple process…

Trading tools used by best trading fund traders: changing observations into growth targets

Yes, I know this may not tell the uninitiated anything, so I will describe with an example.

It’s worth it, because it’s an excellent trading tool that works brilliantly.

A trader builds entry plans for the next period (week, month).

After that time, either alone or with someone (coach, mentor, supervisor), he sits down and analyzes what and how it worked out. Which elements were good. E.g. which analyses (own or bought) worked best and why.

What could it depend on?

Can we do something better, differently next time? Sometimes you have to do something differently because there is no benchmark (the best of the best don’t have one, they have no one to compare with, and some of their work is completely new approaches that no one but them has). The only thing you can do in such a situation is to try to do something differently and see what will happen.

If you don’t have anyone to help – just sit over the descriptions of what you intended and what came out and think about it, you’re sure to find something

But that’s not all.

The real vein of gold starts here: if you saw something, something you can change, improve – either in the analytical, technical or psychological sphere, then do what the best do:

Turn it into a concrete goal and a plan to execute for the next period.

Let’s say you’ve noticed that you’re having trouble getting in, that you’re hesitant and have a lot of resistance, or that you’re getting “too nervous” when running a position. 

Noticed problem:

“You get “too nervous” when conducting a position and this occurs constantly.

Possible reasons:

What is the reason? 

Am I sufficiently prepared?

Do I actually have a rational, solid basis for these inputs?           

Attempt to solve:

How about addressing the consequences? What will help? Meditation? Relaxation?

Maybe there is a technical cause, additional knowledge, additional information that can help me improve the position?

Concrete action.               

And here is the vein of gold I was talking about. Action.

You may not find a solution, but… one time you will. And you will give the next step.

But if you don’t look, you won’t find anything. You will constantly have the same problems and make the same mistakes. You will have the same reasons for losses and the frustration will only grow.

Trading tools used by best trading fund traders: turning problems into challenges

The best trading fund traders have the process described above “imprinted” in their list of activities.

This trading tool can be called “turning problems into challenges.”

This is one of the best practices in training fund traders. The best are constantly learning and improving themselves and their craft. 

In one sentence: turn the problems you find into plans to find solutions.

Educate yourself constantly and every day be better than you were yesterday.

Further challenge: create such a process for yourself – systematically search for problems (or possible problems, or opportunities), think about what you can do and then plan and act.

  1. Systematically search for problems or opportunities.
  2. think what you can do, how to use this possible knowledge to improve yourself.
  3. plan your actions.
  4. Act and observe the effects. Does the problem disappear?

Once you get the knack of the whole thing – thinking, looking for a solution, planning can take you 15 – 20 minutes a week. Plus, of course, the action itself and pondering during.

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Trading

Learn how to trade: 2 unexpected tools that help you understand trading strategy

2 tools to help you understand the system. Learn how to trade by following live trading and by…. teaching others. That’s right!