Thursday, 24 September 2015

The Curve of Death in Trading


Reading Time: 3 Minutes
The curve of death is something most people struggle with. It’s the real barrier that stops them from becoming a consistently profitable trader. You may jump from system to system, tweaking your methods a little here and a little there, but that curve of death is what destroys most traders.

It happens usually after a run of good results. Maybe you’ve had a great week, month, or quarter. Your equity curve is growing steadily and your trading plan is working a treat. But then the drawdown comes. A losing trade followed by another loser. You get frustrated. The next trade doesn’t go as expected and your profits for that week are suddenly wiped out.

Now what should happen at this point? Ideally, you ignore it and continue soldiering on. In reality, however, most people begin to allow their emotions to get the better of them. They begin to ‘feel’ the losses and become frustrated. This causes them to make mistakes, magnifying the problem of mistakes and causing even more emotional trading.

The curve of death is akin to the very peak of a rollercoaster. The climb is slow and steady, but the descent is oftentimes brutal and over very quickly. In a day you can lose weeks worth of success, perhaps even more.

It’s very frustrating but usually it isn’t noticed. People tend to blame the market or their trading plan. Perhaps the market was ‘acting up’ or the trading plan suddenly lost effectiveness. Most people don’t attribute the mistakes to themselves because they have no way of doing so. Sure, at the end of the plummet they will feel dreadful and annoyed with themselves, but then the search turns outward to what could have caused it.

A great way to combat the curve of death is to simply jot down the results of each trade. Mark down the profit or the loss on a sheet of paper. For the trades where you make mistakes, highlight them. At the end of the week or month, tally your totals. One total will be what you actually achieved in terms of profit or loss, and the next should be what you WOULD have made without the mistakes.

When you see how much you’re giving away each time you’ll definitely want to correct your behaviour.

If you want to learn how I trade the five minute timeframe profitably on Forex and Indices, jump over to - decisivetrading.usefedora.com

I hope you’ve had a great trading week!






Thursday, 17 September 2015

What Type of Stop Should You Use When Trading?


 Reading Time - 4 Minutes



Stops are one of the most important safety nets when you’re trading. A stop sets a maximum loss amount, protecting your account. You should always have a stop when you enter a trade, because there has to be a point when you’re willing to admit that the trade is unsuccessful whilst still protecting your account.

There are many different types of stops that people implement when they’re trading. You get the people who use fixed stops – so, say after they enter a trade, their stop goes five points above the signal candle. Then there are those who use fixed number stops – these people will have a stop of say twenty points for every trade, regardless of the market or situation. You get trailing stops – these stops follow the market, so let’s say the market moves in your favour by ten points, your stop will also move down by ten points and continue to do so after every ten point move in your favour. There’s also the wide stop users – these stops are enormous compared to their trades. So let’s say they are looking for fifty points. There stop might be three hundred points, or an ‘end of day’ stop, whereby they just let the market run until the end of the trading day.

There are lots more types of stops, but those are the most widely used out there.

So, different stops and lot’s of different methods. My advice is to be like the market – dynamic. The market is never the same from one day to the next. It is always changing. Volatility jumps around and you need to be ready for that. Lot’s of people use fixed number stops and fixed stops and are very successful with them, however I like the market to dictate my stop.

What does that mean? Well, you need to think about your stop, just like you think about every part of your trading. Let’s say I use a fixed number stop of twenty points. It works fine on the Ftse 100 and I’m making good progress. Then December comes along and as is the norm, volatility goes through the roof. I go from a steady account builder to wiping out my account very quickly. Or august comes and the markets slow down over the holidays. Suddenly your twenty-point stop seems huge and you’re struggling to make ten points a day.

One stop I would definitely recommend against is the wide stop or end of day stop. They are a recipe for disaster. Sure, I know lots of people say they use them and are very successful and oh hey you don’t know what you’re talking about. It only takes a few bad trades to decimate your account. And even when things are going well, they are useless. So let’s use the example of a three hundred point stop to make fifty points. You average two trades per week on the one hour timeframe. You have seven successful trades and one loser for the month. You have now made fifty points for the month…does that seem worth it? Eight trades to come out on top by one trade?

There are various ways to use dynamic stops and most of them are a personal preference. I definitely rate them as the best. If you want to know more about my stops – about my entire trading plan actually, jump over to:

Decisivetrading.usefedora.com

I hope you’ve all had a great trading week!




Wednesday, 16 September 2015

Training Course Launch

Here is a video with information about the training course which launches today. It is designed to teach you how to trade the Ftse 100 and Forex Pairs successfully on the 5 minute timeframe. I'm also offering a 50% discount for the first month


Wednesday Quote Hour


Monday, 14 September 2015

Mark your Progress as a Trader


Reading Time - 4 Minutes.

Training Course Release Date - 16th September.
 

This can be a really good way to show yourself that you are improving. I didn’t implement this for the longest time and as a result, I found that even as I was improving I was still angry with myself and frustrated. Because I couldn’t really see the improvements, I was only focusing on the losing trades.

What I did to change this was really simple. I stuck an A4 piece of paper to the wall behind my computer. I have a red marker, a blue marker and a green marker. When I have a losing trade I draw a small red circle on the paper. A breakeven trade is blue. And green for a winning trade. Next to the winning trades I also mark down the risk/reward I achieved.

When I first started doing this I was at best a breakeven trader, meaning I maintained my account with winners and losses. I wasn’t really going anywhere. The A4 sheet was a colourful mix of dots. But I hadn’t really noticed that I was a breakeven trader. Sure, I knew that my account was steady and I didn’t need to add funds, but it hadn’t really clicked in my head. I was focusing on the losing trades when what I should have been doing was congratulating myself for making the transition from a consistent loser to someone who can maintain an account (trust me, most people never make it that far!)

As I progressed I could see it right there on the wall. Green dots with risk reward equalling to more than the losses. Good weeks were right there for me to see. Bad weeks were glaring back at me.

I remember one specific incident where I had built my account to £1,000. I was becoming cocky and certain that this was it, I was on the route to my millions! And of course I blew it in one trading session whereby my rules went out the window and my emotions took over. I can still remember that day very clearly, of putting up the countless red dots on the wall after the day was done. I was left with £167. Quite a loss.

So I turned it into a sort of game after that – this after I had licked my wounds for a day or two! I limited myself to trading the minimum position size of £2 per point. And I was determined to get the account back to £1,000 only using minimum position sizing.

It took a while, but I did it. Now for professional traders that is nothing, but for me it was a huge achievement. And looking at all the green dots on the wall made me feel proud of myself. I still use the same method, although now I mark the trades in a Trading Diary rather than on the wall. I was able to watch myself progress, profitable days turning into profitable weeks, then months.

It was a great feeling and it got me out of my head on bad days or after losing trades. Because I would just look at the wall and say to myself, Stop being an idiot, you can’t avoid the losses, but look how far you’ve come, look at all those winners!

I hope you have a great trading week!




Thursday, 10 September 2015

Upcoming Training Programme (16th September)


Well, the long slog is almost over! It has taken me an incredible amount of time/effort putting the course together and getting it to a level where I knew it would be exactly what I needed when I was learning/struggling to trade.

This course is focused on the Ftse 100, trading the 5 minute timeframe. The methods can be carried across into other markets and also Forex pairs, however the specific setups (candlesticks) are tailored to the Ftse 100.

I’ve tried to build the course in a way that it covers anything that can come up when you’re trading. I’ve shown you how to plan your day, spot key levels and turn the three strongest level identifiers into powerful trading zones. On top of that there is an advanced money management section and also a section dedicated to dealing with emotions when trading.

This is exactly how I trade the Ftse 100 and is a no nonsense approach. There is an in depth full week of reviews and trading results included so you can see exactly how it works week to week and what to expect. I also give countless tips and advice during the week of reviews.

My intention has always been to help people become successful traders and with the course almost completed, I know that this can help you achieve your goals. As a thank you for all the support through the YouTube channel, Facebook page and also the blog, I am offering the course for a 50% discount for the entire first month, which will be £100. For the information and methods I give you as well as the work I’ve put into it I think this is a very cheap price!

The course will be ready next week and I plan on launching it on Wednesday the 16th of September so I’ll keep everyone updated. As part of the course I will also give all purchasers first access to the Subscription service I’m going to launch next year and also at a discounted rate. In the training programme I mention the subscription service, however I was at times still undecided whether or not it was going ahead. This was purely because I love the freedom that trading gives me and tying myself down to a full time service was something I had to think about seriously.

The subscription service will be a live trading room where you can speak to me, ask me questions and also follow my trades. It will likely be in the morning session for two hours per day (I usually have at least one trade per day before 10am on 80% of trading days).

As you will see in the programme, the trading system is highly effective. I regularly have trading weeks with no losses at all. Thank you again for all of the support.

I hope you’ve had a great trading week!





Wednesday, 9 September 2015

Morning Ftse 100 Review and Subsequent Trade Opportunities 8th September

Note the expectation of a breakout opportunity and how well the predetermined zones worked later in the day. I also touch on the training programme which will be available from next week.


Wednesday Quote Hour


Monday, 7 September 2015

Trading is Freedom


Reading time - 3 Minutes

One of the reasons I love trading so much is that it allows you almost unlimited freedom with your workday. I’m not tied to a desk in an office with overhead strip lights giving me a pounding headache all day. I can trade anywhere I can access wifi.

In my previous life, I worked a job in construction. Oftentimes travel to and from work was an hour each way, with my eight hour workday sandwiched in between. That’s ten hours per day dedicated to work. That’s a fair chunk of life dedicated to earning a wage that allows me to…live life.

Now for me, I enjoyed the work. It’s why I stuck at it year after year. However, it was physically and mentally exhausting and left me with little time for myself. I didn’t get to spend enough time with my girlfriend and if I wasn’t working weekends then I wanted to sleep late and not do much at all.

Not ideal, right? But with trading I found a perfect career. I can and have worked from all variety of places. I have traded from Hotel rooms, cafes, airports, balconies, and on the train. As long as I can access wifi, I can work. It’s very freeing and also enjoyable. I think that’s key if you want to be successful at trading – at anything, for that matter. You need to love what you’re doing first in order to become successful at it.

If you’re reading this then you too have found trading and I’m presuming you enjoy it. As long as you put the effort and dedicated practice in, you too can trade successfully (and from anywhere!) It’s no big secret society whereby you need to know investment bankers to be profitable. It’s a process that you can learn and master.

I’m currently developing a trading course after receiving requests over email/on my videos. I’m hoping to have it finished by the middle of next week. I think too many people look at trading as some mystical mix of math, science and algorithms. And because of that, a lot of people who are successful at trading play on those beliefs and essentially rip people off and sell them a lot of garbage at huge cost.

It doesn’t need to be that way. It can be a simple process (not easy though, it’s not easy mastering it). With the right guidelines and map of what you should be doing, anyone can develop into a successful trader. My YouTube videos were always aimed at helping people out so that they didn’t struggle like I had to. So I suppose the in depth training course is the next step.

I hope you all have a great trading week!




Thursday, 3 September 2015

Why do we Expect Millions in Months?


I have always wondered about this. Not least because I was also one of those people in the very beginning! I expected riches, millions in months, after a very short learning curve that I would master by studying hard and ‘putting in the hours’.

And yet trading for a living is known to be one of the most difficult career paths you can take. Failure rates are estimated to be as high as 95% and failure in trading means you lose all of your money.

The only suitable answer I can come up with is that it’s human nature. I think we all expect the rewards to come quicker than is likely or possible. Think about a time in your life when you took up something new only to later give it up; The guitar that you bought and expected to master quickly; The foreign language course you signed up to, determined to be chatting with the locals on your next holiday; The novel you were going to write and become a bestseller on your first try.

First of all, I’ve got a guitar in my bedroom hanging on my wall. I think if I ran my finger across its upper surface I would disturb dust that has been lying peacefully for the better part of three years. I was actually getting quite good at playing it as well. I could muster together a couple of simple songs.

So why is it gathering dust? It seemed to turn into a chore, something that I really had to work at to improve. I had expected that and I thought I had prepared for it…but somewhere in my mind did I expect to learn it faster than normal, to be cutting Jimi Hendrix melodies within a year? Probably.

And it’s worse when it comes to something like trading for two main reasons. The first is that the media portrays traders as filthy rich playboys who do very little work and are only concerned with what colour their next Ferrari will be. And the second issue is that a lot of people don’t enjoy their current jobs. Maybe that’s because they just don’t like the industry they are in or they aren’t paid enough, but for whatever reason, they are looking for an escape route. And they think trading is a quick and easy swap of careers.

Well, for anyone reading this who has been trading for any length of time, you already know that it’s not that easy! It takes a lot of work and sadly most of the real benefits come through experience rather than simple study. And that’s why it takes time. People get frustrated and angry with themselves when in reality they are probably doing the right thing, just expecting results faster than is possible.

Trading is a fantastic job, but it takes a longer-term view than a couple of months. You can learn whilst you work your full time job. If you swing trade you can still work full time and trade like a professional at the same time. With trading, like everything else, the experience you gain is with you forever and each day you learn a little bit more. If you stick with it and don’t do anything crazy – blow accounts trying to make fast money – you will improve and you will eventually be able to tip your middle finger at the job you don’t like and do what you enjoy.

What a sentimental lot of tosh, eh? It’s true though!

I hope you’ve had a great trading week!