The Key Of Success In Forex Trading Is Not Just Education

[Trader Raider]

I am new on this forum just passing through but I have read with interest on people's views here would like to contribute my two cents worth of advice for newbies.

Yes overall you do need to work the "edge" have good money management get the psychology right so that you can execute trades to the plan without bias or prejudice. I would also like to brain dump some of the finer points which may or may not already have been discussed in various other parts of this forum:

• Trading is a personal skill developed over time experience to REACT to price action in the moment not trying to PREDICT it. Sure you can PREDICT a bounce off support or resistance or a breakout congestion or a trendline break. But until you get CONFIRMATION of a price move ( early notifications of this can be found by monitoring cle closings on the smaller timeframes) this remains a setup only not the signal to trade. PREDICTING is for the fundamentalists or those who trade on long timeframes as instrinsic value comes more into play here. Instrinsic value doesn't come into play in the shorter timeframes so the market will "float" between buyers sellers until one side develops a stronger conviction of their position. Through crystalising of their convictions via physical trading price will be driven in a particular direction until a new market equilibrium between buyers sellers is established (BTW that's the trend lifecycle to put this into simpler terms).

As one may have already heard the plug before - the fundamentalists buy low sell high whereas the technicals buy high sell higher (or sell low buy lower for shorts)

• Another key is that entering on any REACTION in price has to be within an environment where price movement is sustained as so to give the trader the best opportunity to make some profit the move. Volume or liquidity in the market is the key indicator here. But in the decentralised forex market where no overall volume indicators are available how can one tell whether even after the baseline setup entry signal has presented itself that it is still OK to enter the trade? The answer is in the "pattern" of the charts. Charts with long wicks short bodies generally indicate a "whippy" market which has a greater chance of going anywhere because there isn't a critical mass of buyers sellers in the market to sustain the momentum of a move. However charts with short wicks longer bodies generally indicate there is a greater undercurrent behind the move. This will of course will give the REACTION a better chance to trend further to say the next line of support or resistance which would be an obvious exit point.

TIME not just timing is important - this characteristic can be observed always when comparing patterns in high low volume scenarios such as:

• • first 1-2 hours of financial market opening versus lunchtime or out-of-sessions periods
  • typical trading day versus public holiday or holiday period (eg. Xmas / New Years)
  • busier European or US session versus quieter Asian session
  • primary USD currency ps versus exotics
  • heavily traded EURUSD versus USDCHF even though they are inversely proportional (hint - put alerts on EURUSD if you intend on trading USDCHF)
  • larger timeframe charts versus smaller timeframe charts
  • reaction to a major sessions versus the quieter Asian session
  • US news announcement versus that of another country's local announcement
  • any time really when charts don't display "text-book" setups where you can clearly draw lines of congestion or trend lines touching the end of cle wicks or bodies

Analogy : anything can happen but it is always easier to resist or deflect the flight path of a tennis ball than that of a shotput ...

• The process of learning how to trade successfully is ABSOLUTELY NO DIFFERENT to learning how to drive. In the beginning you would have learnt some basic theory by studying a learner's manual likely paid for some lessons with a driving instructor. Once graduated you were able to drive on your own under probation. Unfortunately however driving school didn’t teach you how to practically deal with evading a child that has run onto the road to chase a ball to sense whether a car is hiding in your blind spot to unlock your brakes in slippery conditions to contain your road rage with a hoon that has just cut you or to safely manouver the car when you experience a high-speed type puncture. So during the early years you would have most likely had a few close shaves some skirmishes quite possible (hopefully not though) an accident or two. However as you processed hopefully learnt your experiences on the road such experiences became less frequent. Eventually your discretionary skills took over your original mechanical approach to the point where you can confidently drive a car ( maybe with a swich in one h a mobile phone in the other) hle most surprises with a positive reflex outcome.

Just like learning how to drive there is no substitute to "on-the-job" training when it comes to learning how to trade successfully. You can read all about it talk all about it learn all the theory about Bollinger Bs every other indicator until you go blue in the face. But after learning the basic principles strategies on demo accounts the enthusiam interest passion is still there to take it to the next level a live account albeit a small one is necessary to see whether the newbie is serious to take it to the next level. Unfortunately too many people overstay their time on demo accounts (ala "driving school") never shift their trading paradigm "academic" to "real world" experience by putting hurt money on the line. It is also an acid test too to see whether your personality desire is cut out to be a trader without spending a prolonged time on a demo account to finally tell you the same thing. As you blow your mini account possibly several times over you will either respond in two ways. It will eventually put you off trading (which BTW is nothing to be looked down upon as trading like all things whether you are learning to be a doctor or plumber etc is not for everyone). On the other h however such failures could have the opposite effect make you more hungry to succeed. If you find yourself becoming ENERGISED these losses frustrations which I like to better term as "investments in yourself" you should welcome yourself on the path to evolving as a succesful trader. Your journey essentially becomes a "continuous calibration of your trading ideas thoughts actions to a desired outcome".

To borrow a quote Bruce Lee the greatest martial artist of the 70s:


"Absorb what is useful
Discard what is not
Add what is uniquely yours"

• Finally trading is NOT INVESTING as many people think it is so do not trade just for the money or aim for the highest ROIs because this does nothing but introduce psychological issues in dealing with fear greed resulting in a clouding of judgement. I can’t emphasise enough that trading is a SKILL that has to be learnt with a passion a belief that you will one day get there ... because it is a journey with a destination that is never quite reached. it is through the continuous refinement of this process in whatever methodology is used that the byproduct to this is a rewarding outcome.

Goodluck to all

[MickMason]

Originally Posted by Trader Raider

REACT to price action in the moment not trying to PREDICT it.

trading is NOT INVESTING as many people think it is so do not trade just for the money

Oh no not this again......deja vu or what!



Mick

[mcboogs]

so do not trade just for the money or aim for the highest ROIs

I have to disagree here in fact I think that statement is patently ridiculous. I think you should beat yourself for ever uttering something so stupid. It's a shame because there is some useful stuff in your post it is very well written organized. Ultimately though it is paralyzed by this drivel.

Money is the only incentive for trading for two reasons which I will exp on.
1) It's the only reward for trading.
2) It's the only practical way to evaluate the skill of a trader.

In regard to (1) poker blackjack sports betting... most forms of gambling have a much higher entertainment value. There's nothing fun about succesfully predicting/reacting to a currency exchange rate with no monetary reward. Nobody would trade currencies commodoties or stocks if there wasn't a financial incentive. People would play cards watch sports.

I will take more time in discussing (2). First off I am confused at your assesment of not trading for the money when you make a huge point of trading being an acquired skill something I absolutely agree with. Most acquired skills can be evaluated externally - Someone who learns to drive can show competency get a license. A doctor can become a surgeon perform operations. An athlete can excel become a professional etc. etc. These skilsl which can be evaluated also produce "rewarding outcomes". If you have a license you can transport yourself. If you are a surgeon you can help fix people. If you are a great athlete you can do something you love for a living. Trading can be evaluated very simply - by the money brought in by the trader.

Furthermore by trying to be succesful at all these things you have to deal with "psychological issues". Your insight on trading psychology is absurd [I'm not sure it can even be called insight it's so far off] foolish just plain wrong. Running away psychological pitfalls is not the answer to learning becoming proficient at anything - for example everyone is a little apprehensive the first time they drive. A doctor probably craps his pants the first time he takes a scalpel to a real person. Athletes even the best ever are nervous before games. If they tried to avoid these "psychological issues" they wouldn't be succesful.

Fear greed are very real emotions that are critically important in trading because they can cloud your judgement. Unfortunately you were dead wrong when you implied that means they should be avoided because a trader should trive to underst learn to control these emotions not run them.

How you manage to make a good observation of trading as an acquired skill then go on to spout the utter nonsense I quoted is baffling to me.

Here is how perceiving trading as an acquired skill should look:
1) It is an acquired skill it takes time effort to learn.
2) There are tangible evaluation methods.
3) There are "psychological issues" which must not be avoided but understood confronted controlled in order to be succesful.

Another part of your nonsense which borders on verbal diarrhea really bothers me - A content happy human might be characterized as someone who lives that "journey that is never quite reached". That kind of philosophy allows people to live fulfilling lives take things in stride. Many succesful traders also happen to share this sentiment which plays a role in their emotional make up which allows them to be good traders.

However it is laughable to think that kind of subjective evaluation can be applied to trading. A trader isn't evaluated by how he/she internally experiences trading or how the process of trading has enriched his/her life... A trader is evaluated by the money he/she extracts the markets all other parts of a person's life are immaterial when evaluating their proficiency at the acquired skill of trading.

Bottom line: Trade to make money.

[Trader Raider]

Mate I think you have got your undies in a knot because you have not read my quote in the context of the whole paragraph. also what is this crap about associating the term "rewarding outcome" that I have used to something akin to seeking a greater spiritual experience? Read it again but better still let me rephrase it by simply saying "focus on getting the process right the outcome will take care of itself". You are beating yourself up because you are too focused on the wrong end of a different stick.

Trading is like studying short-term WEATHER PATTERNS (I'm sure everyone can relate to this unless you live in the tropics it will be either wet hot or dry hot). The day you can objectively step back into the larger timeframes observe your trade setups how they play themselves out in the smaller timeframes * you should see your trading performance greatly improve. You are doing yourself a psychological disservice by eyeballing your broker platform to see how many pips / dollars you are up or down in the moment or whether the notional 30 or 100 pip target or stop loss is about to be hit or that you are just 5% away reaching your monthly ROI target or doing your dough. Work on developing a disciplined money management process to "take care" of these monetary-based psychological issues BEFORE you enter the trade. especially for newbies those who haven't quite reached there yet they shouldn't even get hung up at this stage on what their stats or equity curve looks like. Their ideas processes tools are not locked down yet are constantly being re-baselined through the trials tribulations. Remember the market doesn't give a rat's backside what your trading status or position is. It moves to the beat of its own drum you just need to be available when those alerts go off as the market presents a potential opportunity.

On a final note it is all part of shifting your existing paradigm of what constitutes trading I will say it again that trading is NOT ABOUT INVESTING OR TO MAKE MONEY. See trading as a sport a chess game a mental challenge a trade / profession or whatever vehicle or self-expression for yourself to excel in. if you refine your tools processes to the point where you can consistently achieve positive results the byproduct or "rewarding outcomes" that you seek in the form of money lifestyle will follow - it doesn't work the other way with the "tail wagging the dog". If you must see it just like your "poker blackjack sports betting" you might even enjoy it more.

Boy liven up people - I'm outta here

* NOTE : (Better clarify myself before I get jumped on again ...) Before you enter a trade you would have technically identified entry exit points determined your position size based on the technical stop to manage your risk confirmed the chart patterns for clear momentum to give a sporting chance of seeing the move project towards a logical exit point (refer to original post on how) then entered the trade with a stop or OCR unless you intend to trail.

But you should still see these defaults as guidelines because anything can happen in the market - unless you are away then your defaults will hold. However if you are still available to periodically monitor how the pattern unfolds in your PRIMARY timeframe until momentum is exhausted (by this I mean not constantly glued to the monitor unless you work off the 1min charts) you can then determine whether your initial analysis was about right or that you need to exercise some discretion with a manual override.

[Trader Raider]

The attached series of trading docs www.innerworth.com probably sum it up much better than I ever could ...

[Caprica]

Originally Posted by Trader Raider

But until you get CONFIRMATION of a price move ( early notifications of this can be found by monitoring cle closings on the smaller timeframes) this remains a setup only not the signal to trade.

Have you back tested your cle stick strategies?

Personally I found that cle sticks not to stack up very well in back testing modifying the system to wait for confirmations makes the expectancy of the system even worse.

[ibvr2004]

Agree. You need capital to trade as well.

[trender30]

Originally Posted by MickMason

Oh no not this again......deja vu or what!



Mick

HAHAHA I rememeber that one!