The 4 Principles that Drive Elite Traders Performances

Even tho it sounds gimmicky these 4 principles really do drive success for traders. At least, I can attest it for full-time FX traders – others, I can’t say, that’s not my edge.

Performing from your sweet spot
Acquiring and building a skill
Being able to deliver whenever there’s opportunity
Remaining on top

Those four topics are the pillars for trading success, you want to become a full time trader – focus on those four, in that order!

I’ve just listened to an amazing podcast on chat with traders – Aaron Ffifield had James King on and the conversation was amazing that I’ve decided to make a blog post about it.

You can find the link to the podcast here:

You can also find James A King website here:

Now that we’ve shared this information, let’s dive into it!

What drives elite trader performances?

Ambition? Hard work? Talent? Yeah… But…That’s not the entire story

Neither is the 10,000hour rule, which I guess is rather reassuring for quite a lot of you?

In the point James King shares he makes it clear that he sees excellence as a pyramid, that has four core levels:

Screw using PowerPoint pyramids, might as well use a real one!

Those four principles are key to your success as a trader. As always, the first one, performing from your Sweet Spot is the most important. Since it’s the base, without it, everything would break.

Performing from your Sweet Spot

So what’s a sweet spot? Is it in the kitchen next to the candy jar? Nop, sorry to disappoint! I’ve got bad news, worse than the joke I just made, I actually can’t tell you what your sweet spot is.

You’ll have to ask yourself some questions, but we’ll come to them afterwards, let’s first address why do we need to perform from our sweet spot – it’s easier to perform when the goal you pursue aligns with the quality that makes you unique.

I’m not chasing someone else goal – I’m unique so I’m chasing my own goal and it’ll be way freaking easier if it aligns with things I’m good at.

So what’s your sweet spot? It will depend on your strength, interest and values – and those are not necessarily related to trading at all, it could be things you used to excel at when you were a kid.

What comes naturally to you? Do you like spending time reading news and staying up to date with what’s happening in the world? Are you better at solving puzzles? Are you always up to date on everything?

Once you’ve figured out what comes naturally to you, it could define your trading style, if for instance you love reading news and understanding how countries are being governed, then maybe trading the macro/fundamental side of things could be something you’d be better at that trading technicals? If on the opposite you hate watching news (#WelcomeToTheClub) but you like trying to solve puzzles, build stuff and have a strong imagination it’s likely you’d see better results in your trading if you were a technical trader.

If you are interested in technical analysis and trying to find levels where price is likely going to reverse and can spend a lot of hours without having to be motivated by someone else it’s a good sing – because the truth is, you’ll have to put in the time. So if trading gold interest you more than trading currencies or even equities you should focus on that side of things.

To find your sweet spot and to know what you should focus on to become an elite trader ask yourself, where have you excelled at in your life? What have you been highly responsive to training? What personality do you have (btw I highly recommend doing the Meyer Briggs test, it can help you find your strengths as well as your weaknesses, which is rather important!) What are you always motivated to do? What type of asset class are you the most interest in?

All of this leads to the question what are your values, what’s the most important to you? Is it money? Is it fame? Is it time? autonomy? etc Based on your values you may discover that working at a prop desk or a hedge fund doing research may be a better place than trading your own capital.

Find your sweet spot – and execute from there.

And yes, we’ve spent all this time not even talking about trading or performance but just about figuring out what we want to focus on.

Skill Acquisition

Here’s the good news, you probably won’t need to spend 10,000 hours working your ass off before you master a skill, if you do, it’s probably not your sweet spot or you’re following a shitty methodology 🙂 Let’s dive into the 7 key factors when building a skill to excellence.

Start with the comprehensive foundation

You don’t have to do extraordinary things – you have to do ordinary things extraordinarily well –> think about our friend Bruce Lee 🙂

You want to master the basics, without a mastery of the basics to stand on you’ll go nowhere.

Apparently in Tennis 85% of points are made in the service / return and return service – yet most tennis players only spend around 15% of their time practicing those skills.

You want to find what are the big levers for success, don’t focus on tiny marginal gains, focus on the big levers. That’s where the value is at. In trading it’s probably around entry / stop sizing and exists. That’s where the money is made, it’s not about anything else.

Practice over theory

It’s what you can do not what you know that matters – knowing how to kick a ball the most precisely as possible but not being able to do so in practice is useless. You’re better off not knowing the theory behind it but be able to hit every target that’s set.

Turn your learning into practice, don’t spend too much time on theory you have to think, do and produce –> once you’ve practiced enough you can articulate what happens then that’s fine, but practice over theory.

It’s all on you

I don’t really care if you end up super mega successful, your neighbor doesn’t either, it’s only on you, it’s your future. Don’t expect to be given the answers (well, that’s kinda what I’m doing here on a daily basis) you have to figure it out for yourself.

People can explain to you a strategy, but it’s on you to understand it and develop it. Advanced skills need to be discovered they can’t be taught.

Take responsibility over your future.

We need challenge to change

If we remain in our comfort zone we won’t evolve sadly, heck I wish sitting in my hamac would enable me to improve my 5k time, sadly I need to push myself to be able to build more muscles.

We need to spend as much time as possible in a challenging zone to be improving, you need to be absolutely focused on what’s happening – if you’re thinking about what you’ll be eating at dinner tonight when practicing you might as well stop straight away!

Get uncomfortable, learn to enjoy being challenged, but if you’re at a point where you’re starting to panic, you can take a break 🙂

If it doesn’t happen when you’re competing, it doesn’t matter.

There’s no point in practicing things that will have absolutely zero impact on your trading results – so many kids dream of becoming a football star, they go home and start practicing tricks with the ball, the problem is, being able to do fancy tricks with a football probably won’t win you a championship – being able to shoot straight, run faster, control the ball, tackle is what matters. Well, I think, I’m not a big football fan.

Create uncertainty

It’s nice to practice when you’re comfortable at home with zero stakes where you control all the factors, however you want to have uncertainty. You need to train in the conditions you’ll be executing – and then imagine even more extreme conditions – for instance for traders you may want to focus on extremely hard to trade markets, periods with drawdown, making decisions with a time limit, it’s all well having a backtest tool that you can pause to make a decision, but in live market conditions you’ve don’t have all the time you want.

Learning is the mindful search for solutions

It’s not mindlessly repeating a solution, it’s a mindful search for a solution repeated over and over – for instance think about your phone, to be able to unlock it with your finger you have to scan your finger several times, in different angles / positions –> what it’s doing is that it’s learning through variability to be able to recognise it whichever angle you end up using.

If you only gave your phone 1 try to collect your fingerprint I’m willing to bet your phone wouldn’t open as quickly as it does now, it would reject you quite often as well just because you didn’t train it with different conditions.

Out of every successful trader I’ve met (and the ones James has met) it’s very rare for them to rely on 2 extraordinary things – instead, most successful traders have mastered the basics and just don’t do mistakes that cost them their career.

Anyway that’s enough for our second point – the skill acquisition to become an elite trader.

Delivering on demand

Being able to execute your strategy whenever the time calls for it even tho you’re under pressure is key.

I remember Josh Waitzkin in the art of learning was talking about the ability masters have to switch on and off – for him he could just listen to one song and be pumped up ready to fight.

Outliers are able to flick a switch to regulate their emotions and execute. You want to be able to enter a flow state and have access to all your knowledge and training.

You need to spend time building your skill of getting into the zone – it’s a skill like all the other ones.

Your thoughts + Your actions = Emotional State

If you realize your are in a suboptimal state, think what are you doing, thinking, how you’re sitting, breathing etc.

Your thoughts and actions will change your emotional state.

The sea won’t always be calm. You need to be able to get comfortable even in the worst weather.

If you feel overwhelmed try to break the feeling down – is it because you’re in too many trades? If so only take 1 trade at a time until you’re comfortable. Is it because you’re trading a new asset class? Trade with a smaller risk!

A nice short section, but it’s so key.

Josh Waitzkin recommends listening to a song every single time before practicing – for instance before every single workout for a month listen to the same song. After a few months of that habit it’ll probably pump you up as soon as you hear it.

Sustaining Success

Let’s start this section with dark reminder: More people die going back down Everest than going up.

It’s actually got a name in climbing, the “post summit peril”, you’re tempted to bask in the view, enjoy life, congratulate yourself and switch off your focus really enjoy the moment. When you go back down….

There’s two key biases we need to keep in mind

Continuity bias – We believe the future is the same as what we’ve experienced, we down play the risk since we’ve made it so far, it’ll just remain the same.
Illusion of personal control – We downplay the rate of luck / variance in our success, we forget we were lucky because we had a favorable backwind – it makes us complacent because we believe it’s 100% thanks to us, we forget the circumstances were in our favour.

Those two key biases probably won’t impact us immediately it’s a slow process that will definitely lead to your long term demise sadly.

Although we want to strive to become the best, you can never allow yourself to believe you’re there –> when you’re second you have the drive to keep moving forward, when you’re first it’s easy to loose all motivation.

To do so, develop a comprehensive understanding of what it’ll take to win and a comprehensive understanding of where you are –> that will enable you to find your weak spots and what are the important levers you want to focus on.

If you really understand what is holding you back, the solution will probably fall into your lap 🙂

If you look at the best teams, for instance the All Blacks when we think of rugby, they don’t focus on being the best in the world in their sport, they look outside of their “industry” they are competing to get the best win rate in every sport. They’ve set bigger targets.

Standing on your own success won’t be enough. You need to keep evolving

What you need to keep in mind is that you’re basically evolving in a ever continuing circle of improvement – even tho you’re at the top of the current cycle, you’re not at the top of the mountain, you’re only in a transitional moment towards the next cycle.

That’s it for today!

I hope you enjoyed this one!

Oh and, James A King released a book I’ve just ordered on Amazon so I can’t speak about it, but the podcast was fantastic, you can find it here

Once again;

You can find the link to the podcast here:

You can also find James A King website here:

November 15, 2020November 15, 2020

My Advanced Self Review

In this post I’ll try to answer a few questions: Why do I do my ASR (advance self review) weekly? What do I look for? How do I come up with ideas to check?

First of all, let’s remember, I don’t know what’s going to happen after I take a trade. All I know is that I can always improve.

I don’t know where the price will go after my entries

There’s an edge to our entry, we know that the probability of it going in our favor is X%

There’s one common thing that unites every successful trader I know. We all admit we do not know where the market is going to go after we take a position.

To take an example:

If I take a 4 hour script entry that fits my rules. I can tell you that in 50% of the time it will be a 3% win. The probability of it turning into a break even trade is of 8%. The probability of a loss 42%.

But that’s all I know. Well…

I can also tell you that in 22% of the time, the next two candles will go against my position. in 42% of the time the next two candles will chop around, one will be bullish and the other one bearish. In 36% of the time the two candles will go in my favor.

I can keep going more and more in detail, about every single entry type I have. The average return you can expect from those

However, I still can’t tell you where the price is going.

It’s just a question of probability and risk management.

However, I believe I can still improve my trading. Add new rules or filters. Discover new ways of taking a position. Rules I can remove etc.

That’s where the ASR comes into play.

ASR stands for “Advance Self Review”

You want to learn from what you experience in the market.

Let’s dig into how I do my Advanced Self Review

The first thing I do is go back through the week and look for all positions I could’ve taken, I look for trades I may have missed, trades I took and how the market moved.

At this point I don’t look at my trading journal, I look at the chart as if I was backtesting. I keep track of every single set-up that happened and their results.

I look for reasons why the market made a high there, is there something that could explain it? Is there a way for me to forecast it in the future? Does it bring up similar thoughts I’ve already had while doing my advanced self review?

Listing all the potential trades

Once I have tracked every single trade set-up that fits my rules I look at my execution.

How many trades did I execute that I was supposed to execute? How would I grade myself?

In my 4 hour trading, what I share here, I executed on 4 trades, two on NZD/USD and two on GBP/NZD.

After reviewing the week I can say with confidence that those 4 entries were all valid.

Well there was CAD/JPY, it was a pretty trade set-up – however it didn’t fit all my rules, so I did good to stay out. It wasn’t a script entry, that’s the rule it broken, it didn’t close low enough
There was also GBP/CHF, that one was pretty too, however, it didn’t fit my rules, it wasn’t a script entry. So I stayed out. Why wasn’t it a script entry? Because there was one bearish candle before the candle I’d have entered.
NZD/JPY was another one. Once again it wasn’t a script entry, the price action had been going sideways for 20 hours. It was nearly a script entry. Just the question of the close 3 candles ago. The fact it was so flat cancelled the script signal.
USOIL is another one. Well, I didn’t like the entry candle anyway so I’m happy I didn’t execute and it wasn’t a script entry either
CAD/CHF wasn’t a script entry (I’d have been interested the 10th of Nov. at 11am French time) because it didn’t close low enough. However it was also outside of the area of supply so all in all I’m not sad I didn’t take it.
EUR/CHF provided a script entry. However for me the price action was too slanted and it had spent too much time within the area of supply – so didn’t take it
EUR/GBP didn’t provide a script entry either. A question of the close a few candles ago. So good I didn’t execute

EUR/NZD provided a script entry, however it was below the weekly stack so I didn’t take it. That’s interesting data point, those are rare, so I’m highlighting it for future references. I want to collect more data on those trades. It fits my plan everywhere except for that.

USD/JPY also provided an entry. After a clear double / triple top – I’d have been happy to take it, however to have a weekly stack I’d have needed to use two weekly candles rather than just one. Which is my rule. However, I’ve seen those trade set-ups play out quite a few times. So I’m highlighting this trade to compare it to previous trades that did the exact same. I want to see if the average return is positive

How well did I execute my trading plan? Is there anything I should look into?

Okay now that I’ve mentioned every trade that I could see that worked with my daily zones was there any trades that I should’ve executed?

The answer is no, I executed the 4 trades that presented themselves to me and that fit every single criteria of my trading plan.

However, there were two trades that I didn’t execute because I wasn’t the biggest fan of their weekly stacks.

Now I know I want to go back and check previous occasions where the weekly stack required two candles instead of one AND if it’s okay to take trade entries that are just outside the weekly zone?

Time to look back in my data set

Not going to share the results about that analysis to keep my trading plan more or less “private”even tho I’m sure you can reverse engineer it if you spend enough time here.

Sorry 🙂

Now once that is done I try to understand why the market offered so many potential entries? The reason – price had finally been pushed to areas of supply / demand since institutions removed their hedges to cover their asses during the US election.

That was my ASR for the 4 hour strategy. I’ve been using it a lot longer than my script so it’s normal I take less lessons out from it than my script trading.

A shorter version of my ASR for my scalping

Let’s quickly look into my scalping, I promise it’ll be quicker since I won’t go into as much detail. I want to mention it because I discovered something important while doing it.

The fact that last week was the worse week in terms of result of my scalping strategy over the last few months definitely made it interesting.

While doing my ASR, I noticed there had been 21 valid set-ups.

I took 15 of those set-ups.

However that’s because one day there were 8 trades, where I limited myself to 5, I wasn’t feeling too good after 5 trades that resulted in 1 BE and 4 losses. So that’s 3 trades I had identified and could’ve executed. I took Friday off too, there was only one trade that showed up, a BE. So that makes up 4 trades.

So I’d have executed 19 out of 21 valid set-ups.

That’s already pretty good, I’m quite happy about that. Sure I missed two trades.

Focus on your execution of your trading plan, not your results.

Executing a profitable trading plan will pay out in the long run. That’s all you need to do to become a profitable trader.

For a third week of living trading this plan I’m quite happy with that. In university you get an A for an 85% – I’d have scored a 90% here.

Is there any lesson here?

From there I need to understand why this week was so poor compared to previous weeks.

In my previous trading I was able to identify that the market could either be trending or correcting. I figured my scalping – which mainly focuses on short moves works better in a correcting market.

First I discussed it with a trader, a good one, that trades a very similar strategy.

We agreed that we want to avoid trading the market in such condition. Or at least, trade differently.

That made us realize that it was the market type that “caught us”.

If you’re dressed for a summer day in winter you’re going to suffer if you live in Canada. You have to adapt to the conditions. You can’t tweak the external conditions to fit you.

You have to adapt to the condition of the market

Anyway. I then looked and did some research on my side of things into market regimes.

I came across this video: https://www.youtube.com/watch?v=VMqXstX4ALs

I thought it was rather interesting.

So I kept digging into it.

Here’s my scalping returns:

I then added his market regime indicator to my chart, I edited it slightly and changed the time frame.

I then went through every single trade taken in my data set for the last three weeks and figured out what market regime they’d be in:

I don’t know about you but I find that quite interesting, the average return of my strategy in “Neutral” market is over three times higher than in other market conditions.

I kept digging into this. However it’s important to mention two things.

1- To make a change in your trading plan I recommend having a lot of data. Ideally I’d have 100 neutra trades, 100 quiet trades, 100 volatile trades. That would be better,

2- Make sure you are not curve fitting your data. I could correlate my trading returns with the amount of rain a specific region gets if I look deeply enough. You need to be careful with this.

Anyway.

I kept digging and searched for a way to improve the results while having a higher amount of data, so I split those three categories into two.

And the results looked even better.

I hope that helps.

I’m not saying you have to look into the market condition, it could be interesting for you, sure, but that’s not the point of this post.

You have to reflect on why your trading plan stopped you form executing winning trades and what you could add to your trading plan that would enable you to remain “safe” from conditions that do not fit your trading style.

Once you have collected enough data you’ll be able to tweak your trading plan to increase even more your profitability.

On that note, have a fantastic week!

August 17, 2020August 17, 2020

Dealing with my biggest drawdown (trading)

Fuck it, I guess I should admit to it…

My last 8 trades in a row were either a break-even or a loss

Can you imagine that?

8…

It hurts to just mention it, my ego took a serious beating…

But wait, instead of running away from losses let’s dive into them

Let’s put some music on (I like Worakls) on and talk about them, since I can’t out run them

This made me (re)backtest my strategy for 2020

I had recently adjusted it based of new knowledge and new testing.

The refinement I just mentioned took place without me backtesting the new trading plan, instead I truly believed they were worthwhile tweaks and additions so I just blindly added them to my plan.

It made my trading more mechanical, fuck yeah, that’s what I’m about!

So I just went through all the backtesting and applied those refinements, this lead to this:

In 2020:
42 positions up from 33
A strike rate (including BE) of 42.86% and only 28.55% of winning instead of 66.65% (including BE) and 54.44% of winning
An average return of 0.33% it used to be 1.31%
A total return of 14% instead of 43%
Eh fuck. Why did I adjust my plan

What the FUCK happened?????

That’s a good question..

II tweaked my trading strategy based on what I thought, on a logical basis would work better than what I used to do. And since it was only slight refinements I didn’t dive deep enough in my backtesting to make sure it was good changes.

So that made me deal with a 28% strike rate (of winning trades) instead of 55% which was the result of my previous plan

I tried to improve my plan, but instead I made it a hell of a lot worse.

It hurts, I thought everything I had done was good, smart and the right choice, well, it may have been in past years, but in 2020 it wasn’t the case…

Anyway, that’s the story about how that losing strike happened.

Even with a 28% winning rate the probability of having 8 trades in a row that aren’t winners is of 7.22%

Which is actually quite high knowing how many trades we shall take over our life time.

Let’s do an exercise to know the probability of having trades going “bad”

It’ll be fun I swear! The most important part is to know the probability of your winning trades (only winning trades, don’t include your break-even in this strike rate for this exercise)

So what is the probability you’ve got?

P= __%

So for me, according to my older plan, that P is equal to 55%

Now let’s do a tiny winy bit of maths (I recommend using http://www.wolframalpha.com if you don’t love maths and don’t have a calculator next to you :D, that’s how I passed my maths exams at uni!)

To get the probability of having X losses OR breakeven in a row we’re going to do:
(1-P)^X
Eheh, never thought I’d be talking maths on my own blog, what happened to me…

So for me that is (1-0.55)^X

Let’s have a look at the probability of having 5 losses OR breakeven in a row

(1-0.55)^5=1.85%

Okay that’s already WAY MORE REASONABLE!!! So in that case, with my previous strike rate, the probability of having 5 losses in a row is only of 1.85%

Over a lifetime of trading you’ll definitely take more than 100 trades, well at least I will that’s for sure so the probability of having 5 losses in a row within the next 5 years is actually pretty high…

Okay so that’s good to know I guess? I mean I understand the maths behind the probability of having a drawdown, I didn’t fail Math 202 at uni Max… I know you did!! Is there anything else you can talk about?

ABSOLUTELY!!! Well maybe 🙂

Use a deck of cards to represent probabilities

Oooohhhhh, finally a useful idea Max you were kinda wasting my time up to now..

(I really should say, thank you so much for reading this far, it means the world to me <3)

Okay so now unto the exercise I started talking about..

So with my 55% winning rate how can I represent that?

Well I’ll be lazy and say that it represents half the deck of cards because it makes life easier

So every single black card within the deck is a winning trade that represents 50% of the cards

I also had 11% chance of my trade being breakeven

In that case I’ll take 6 cards and turn them to breakeven trades

The RED 1, 2, 3, will represent breakeven trades to represent around 10%

The RED 4, 5, 6, 7, 8, 9, 10, J, Q, K will represent losing trades (20) out of the 56 card deck to represent 35%

So I delt myself 5 cards (avoid dealing more than 5 cards since with cards the cards that are already present influence the probability of what’s coming afterwards when it’s not the case in trading)

So here’s the result:

8R = L

2B = W

2R= BE

10R= L

3B= W

That’s perfectly normal distribution for me, I have no issue with it I wouldn’t be surprised if it happened in real live trading to me. Just another day at the office.

This morning before having the courage to write this blog post I did the same exercise, I had 7 red cards in a row (I delt myself 3 hands of 5) the probability of having a R card that is always (more or less) the same.

But that surprise this morning made me realize, even with a 55% winning rate, the possibility of having 7 losses or BE in a row was there and I saw it in the cards.

That kinda sucks I’ll admit, but there’s nothing we can do about it

So I’m going to be dealing myself cards every single day from now on to represent the probability of having a negative streak of trades.

That being said, I’m also going to revert back to my previous trading plan and ignore all the changes I had applied to it because well… Yep it ain’t working.

Thank you for reading this post, I hope it was helpful!!

September 18, 2019

The right questions

That’s a bloody heavy title… Definitely not going to be able to address it within one blog post, but…

I just listened to an enjoyable podcast with Warren Berger and Shane Parish on Fs.blog and they talk a fair amount about questions…

Here’s a quote from Warren Berger that explains why I believe asking the right questions is key

Now, yes, that can easily be understood for engineers, for entrepreneurs and scientists, but what about traders?

Questions for traders

What is the market?

It helps to think about the entire market, what is the stock market? why does the stock market (on average) go up? Why do currencies exist? Why are there several currencies? Why is the price of a certain currency worth more than another one? How can I forecast that?

Now this won’t improve your trading 10-fold I’ll give you that, but having a larger understanding makes the next steps a lot easier…

Plus, the more you learn the more intrigued you’ll be trust me, I’ve fallen into a dark rabbit hole more times than I wish to admit

Why FX?

You can easily ask yourself, why do I trade FX? Why do I trade this way? Why do I need a trading plan? (I hope by now you know why you need one!!!! Otherwise this blog has failed you I’m sorry! :S ) What are the positives and downsides of having a trading plan? What will I learn from my trading plan?

(A previous blog post about trading plans can be found here!)

Knowing the answers will give you the motivation to build one? You can ask yourself the same questions about anything btw, would that be why you want to trade full-time, why you need a routine, why you should eat healthy etc

How do I trade?

How do I build the right foundations to become a full-time trader? What is the process I should follow to achieve my goals? What set-ups am I allowed to trade? Why can I trade those set-ups and not others? Why is limiting the number of trades I take good?

Those questions will probably make you understand that sticking to your plan has way more benefits than downsides, you will understand that the only reason you trade those set-ups is because you are playing out an edge with a positive expected value and you definitely don’t want to start playing around because that will costly…

What questions to ask?

Now I’m not going to list hundreds (I easily could) questions instead here are a few questions I like to ask myself

Why did I take this trade? Does this trade fit my trading plan? Did I forecast it?

Why will the price go in that direction? What is the structure telling me?

Should I stay out? Why shouldn’t I pull the trigger on this position

What would my mentor say if I took this trade?

Would my mentor take this trade? Does it fit with his previous “behavior?”

Why would this trade turn out to be a loss?

How will I feel after taking this loss?

Am I still happy taking this trade?

Hope those questions help you.

I truly believe that everyone has the answers to the right questions (yes even you!) you just need to ask yourself the right questions…

If you can’t answer a question, then dig into it? Ask yourself what do you need to know in order to answer it?

Ask yourself questions and the following questions

How do you make money trading while traveling?

I trade currencies

How do you I make money trading?

By betting that a currency is going to be worth more than another one

Why are currencies worth something?

Because it’s a store of value

How do we know what value that is?

Ugh… I’m not digging my own hole, I’d need an entire semester to debate this

How can you analyze that one currency is going to be worth more than another?

Well, there’s fundamentals, news, technical analysis, etc

I use technical analysis…

What is technical analysis?

It’s looking at the historical movement of price and forecasting that it will do something similar in the future

How do you forecast it?….

You get it by now right? I can stop this game?

Please.. Say yes…

Ask yourself the right questions and your trading and life will improve. Sometimes those answers will force you to look up something else to be able to answer it but in the end you’ll be better off

It’s easy to make something sound complicated, the truly hard part is to make something that’s really complicated sound simple

Once you are able to explain your trading strategy, why you take certain trades and not others you’ll have truly mastered your trading plan, and that’s exactly what successful traders do – it makes executing it a lot easier!

It’s only with the right questions that our lives can improve

Most of the biggest discoveries started with why or how, so get used to those two words and use them!

Anyway, I will definitely fall into a rabbit hole if I keep writing this post, I hope you enjoyed it! If you did, please do leave a like or a comment 🙂

Onwards

September 11, 2019September 11, 2019

Forecasting is key

Forecasting, backtesting and having a trading plan are the three pillars of successful in the FX market.

Do you have a forecasting routine? If so, keep it up! (let me know what it is)

If you want to become a full-time FX trader, you will have to develop a trading plan, backtest it, and forecast potential moves.

That’s (more or less) everything you need.

What is forecasting?

Figured I probably should do a quick explanation of what I mean by forecasting…

It’s basically “guessing” where the market will go next and how…

Sounds rather easy right? It doesn’t even take that much time

Forecast for EUR/CAD on the 11th of September

This is my forecast for EUR/CAD, I just drew on trading-view the potential scenarios that could happen, I know there are many other potential ways the market could evolve during the day, but in my view, this is the most likely.

You could use different drawing colors based on “I’m willing to take this scenario” & “Not willing to take this scenario” (that’s actually a good idea, I should do that)

If it’s this easy what’s the benefit

Let me start this section with: I go a lot more in depth with my forecasting process, just scroll down if you already know the benefits

There’s five key benefits for a trader, ~~but I was lazy while building this infographic so here’s 3 key points..~~.

1- It will increase your confidence, you are able to track whenever or not your forecast actually took place, which in turn will increase your confidence in your ability to be a few steps ahead of the market (which is key to be profitable)

2- You’ll be prepared, doing your forecasting is basically drawing out all the possible/probably scenarios – you’ll be able to decide ahead of time what price action you’ll want to see before taking a trade – all you need to do is execute your plan

3- It’s easier to profit, having done your forecast in the morning you are a less likely going to miss a trade during the day since you are able to place your alerts at all the key areas. Plus, it also increases the likelihood of you sticking to your trading plan

And the bonus two…

4- It will decrease your emotional attachment to potential trades, and trades you are currently holding: by drawing out several possibility you know that there is no guarantee that the price will do exactly what you want it to, it doesn’t care, instead it makes you realize, we are only playing an edge

5- It allows you to switch from analyst to a trader.

It’s really important to be an analyst when it’s the weekend and when doing your forecasting, however, when the markets are live, and there’s a potential trade set-up in the making you need to become a trader, not an analyst. Having done the analysis that morning will help you execute.

Here’s a video explaining it if you don’t like reading…

My forecasting process

Now let’s dig into my process, that’s probably why you’re here (sorry for making you wait)

I recently did a tweak so here’s a breakdown of what I used to do and what I do now, not a huge difference, but really happy so far

I used to draw at least three possible scenarios:

Two potential entries, so how the price gets there and where I’d be interest
One scenario where I wouldn’t be able to take the trade, either the market goes in the opposite direction or just impulses through everything I was eyeing up

That was done first thing in the morning and last thing before going to bed, because that way I would force myself to think about the possible, the probable and admit, the price isn’t necessarily going to go where I want it to

In the morning it was to plan the day ahead, at night it was to have my subconscious think about the market while I was sleeping, and once again, forecast where the price would go over the next seven/eight hours

It was a really cool exercise, but I wasn’t getting the most out of it…

Now I do my forecasting somewhat differently

I use my trading journal to track those morning forecasts (I keep everything in my excel file, from reason to trade, to monthly asr, to journal, to forecasting etc, I like having everything in one place)

So to ~~quickly~~ explain, I track the day of the forecast, the pairs I’m interested in, the direction, then three potential scenarios that could play out (out of many), a screenshot of the potential moves + drawings.

Then here’s the addition, I then come back the next morning and figure out which one happened, sometimes it was a fourth option, that happens.

But here, you can see I had forecasted the move 12 times out of 15 – not picture perfect but pretty darn close.

How do you think that makes me feel? How would that make you feel?

More confident in your skill? Yes

Happy because you get to collect more data? Yes

More likely to execute the next time you see a trade set-up? Yes

I highly recommend you to do the same

It takes less than thirty minutes in the morning, yet you have the entire day planned ahead

You know what you want to see before taking a trade – that’s key, it reduces your hesitation to trigger a trade, and avoids you from taking low quality trades

You are also able to be “free” and that’s one of the main reasons people start trading, they want to have free time. If you don’t know what you want to see in order to take a trade you’ll just stay in front of your computer, and basically be a slave to the market.

Don’t be a slave to the FX market: Forecast in the morning

Anyway,

I hope you enjoyed this blog post! If you did, please leave a like or share it? ❤ Would mean the world to me!

Onwards,

September 9, 2019September 9, 2019

Building a Trading Plan

Having your own trading plan, is (probably) the most important part to become a successful trader, would that be stocks, FX, commodities or whatever you want to trade.

Why is a trading plan so important?

It gives you the opportunity to write down exactly what you can do and how you should do it.

It’s like a cooking book, the only way to really improve a receipe is to know what ingredients to use, the amounts and how long you should cook it for.

I’m awful at cooking (Really bad, my old roommates refused to eat anything I cooked)

I know how to make salads tho, that’s the only thing I’m decent at!

Why do you think I spend so much time in cheap countries where I can eat out three times a day?? (Maybe it’s because I don’t need to cook)

Anyway, back to the subject at hand…

Becoming a good cook is relatively easy, you just follow instructions, it’s the “chef” that makes up the dish and writes down how to do it properly.

You can work in a great restaurant and make a lot of money if you’re a really good cook, especially if you work well with a famous chef.

Trading, is rather similar to working in a restaurant (not talking about the insane hours, but sometimes…)

The only way to become a chef (a really really good trader) is to become a cook (someone that can implement a trading plan), it will take time, but the more practice you get as a cook the easier it will be for you to become a chef.

Ask for help building your first trading plan

You become a good cook by learning from others how to cook, would it be your parents, siblings, a cooking book, youtube videos, an online course, a bootcamp etc etc

It’s the same with trading.

Learn from someone else

Find yourself a mentor, whoever that is (not me) and ask them if they can explain to you their trading style and share trades they took.

Once you know how they look at the market, the trades they took you can break it down.

Bring a bottle of coke to a lab and they can reverse engineer it.

You could know the exact ingredients Coca Cola use for their famous drink.

Do the same with a trading plan.

Create your first trading plan based on someone else, even better, if you can copy it. My mentor shared his to all his students, that’s what I used at first.

I knew:

The entry types
What he wants to see in order to take a position
How he manages trades
How he records them
His risk profile

That’s all I needed, I more or less copy pasted it at first.

Once you have a trading plan, backtest it

Now it’s time for you to work, you can’t let someone else do all the work for you…

You know what set-ups your mentor looks for so go and backtest.

Try them out, figure out their results and ask yourself

Do they have a good strike rate?
What is their average return?
Do I like trading them?

Based on those questions and the answers you have for them you can quite easily make your mind up, should you keep those set-ups in your trading plan? It’s up to you.

Those are my results with a backtesting exercise I did earlier this year.

I was able to figure out which trade set-ups I prefer and how I wanted to manage them.

It also gave me a lot more confidence in my trading, I saw what was possible, and it became way easier for me to execute on my trading plan.

Once you’ve backtested your plan you can then decide what to edit, what to change, what to ignore, what you want to focus on etc…

Make it your own.

Make sure it becomes your own, don’t copy the exact same trades if they don’t fit you, adjust the trading plan to your own personality – and backtest it once again – it’s all about refinement,

To go back to the cooking comparison, a chef will try out so many variations of the same dish just to make sure he has the perfect mix of flavors, smells and texture.

It’s the same with trading, just keep trying it out.

Tweak it until it becomes your own, your precious, your trading plan.

Now, you can easily argue that you don’t need to write it down, it’s in your mind, or you can easily draw it.

But…

The best way to learn is to teach someone else.

But you don’t need to teach someone else, you just need to be able to explain it on a word document.

Take screenshots of your favorite set-ups

Write down what you want to see before being able to take a position

Explain how you are going to manage your position once in the trade

What are your rules in term of taking a second trade once you got tagged out of a position, are you allowed to re-enter? Once? Twice? Three times?… Create rules and put it in your trading plan.

If you want a video about creating a trading plan, check-out this interview on Chat with Traders, I’ll admit, I have only watched it once, but Chat with Traders is hands down one of the best podcasts out there for anyone interested in trading.

Now I feel like I’m probably rambling… but…

GET YOURSELF A TRADING PLAN.

Honestly, I truly believe it’s the best way to improve your results if you’re in the FX market.

Copy someone else trading plan, (or spend countless hours trying to build one)

Backtest it (it’s worth doing the work!)

Refine it

Make it more personal, something that fits your personality

Backtest it again, keep updating it

Write down your rules

Stick to it.

The only way you can improve your trading is to have a process, otherwise you may just be lucky or unlucky but you wouldn’t know because your trading is not consistent.

Being consistent with your process, will turn you into a consistently profitable trader.

Anyway, I hope you enjoyed this article, if you did it would mean the world to me if you could share it! Or let me know in the comments what you would do!

September 1, 2019September 1, 2019

Not doing shit is key.

Let me rephrase: Not taking trades is key.

Yep, you read that right, I’m here to say that doing absolutely nothing is (a hell of a lot) better than taking trades every single day.

Okay, this subject is mainly going to be about trading and investing, but it may apply to over industries too…

Do you know why you shouldn’t take too many trades? (Think about it for a few seconds)

Just wanted to give you a few seconds to think – I’m not addicted to pineapple photos!

There are three key reasons you may have thought about:

1- Trades in your trading plan don’t happen every single day so you definitely shouldn’t be taking more trades than what your plan tells you to. (Absolutely agree with this one)

2- Your broker commission, hell, I enjoy trading with FXCM, I don’t have (too many) issues with them, yet I’m still paying 5% of the risk I am willing to take per trade on average… (Fuck… I just realized it, it’s way too much )

3- Focusing on quality trades instead of just average trades.

I’ll mainly focus on this third point (even though the commission one just pissed me off ugh)

The importance of focusing on quality trades & not over-trading.

This may sound pretty obvious, but sadly it’s a lot harder to actually follow this rule. Mark Hutchinson (from Falcon Trading) brought up an interesting concept.

80% of the trades taken should be high probability trades and the other 20% can be valid trades.

You want to wait for those high probability set-ups before putting a trade on, but sometimes you can have a gut-feeling the trade will just go in your favor before you see the perfect set-up and you should still act on it.

I really like that rule, usually my trading follows a very similar breakdown between valid and high probability, and I do believe it’s really beneficial for me.

That being said, I didn’t stick to it last month (July) and I ended up having a negative month… Yep… It happened I have no shame, I committed a few mistakes, anyway, that’s not the subject.

You may know of Michael Marcus (he was one of the traders interviewed in Market Wizards) who, in less than 20 years, managed to turn 30,000$ into $80 million trading commodities.

One of the quotes of his I really enjoyed is:

“One of the secrets to trading success is cutting down the number of trades you take”

When someone with his track record talks, I tend to listen, and that advice, is (I think) spot on.

Taking too many trades reduces the quality of your portfolio

Now let’s think about an investment portfolio, your returns will be the sum of all the trades and opportunity cost is really important here (in FX too due to leverage requirements) …

If you take trades that have a lower expected value you’ll reduce your overall yearly return and therefore make less money while increasing your risk, is that something you’re into? (I’m definitely not, I want the opposite)

I came across a cool website by Safal Niveshak – which I would highly recommend checking out (especially if you’re into investing)

The last article he posted was: Is your stock portfolio a warehouse or a museum?

In it he argues that we want our stock portfolio to be a museum and not a warehouse, which makes sense, so do go and check-it out

In it he quotes Jason Fried book Rework (a book I really enjoyed) :

“You don’t make a great museum by putting all the art in the world into a single room. That’s a warehouse. What makes a museum great is the stuff that’s not on the walls. Someone says no … There is an editing process. There’s a lot more stuff off the walls than on the walls. The best is a sub-sub-subset of all the possibilities.”
Jason Fried – Reword

Makes sense when explained like that? Right? We want our trade portfolio to be a “sub-sub-subset of all the possibilities” and only the ones where we truly believe to have an edge in.

From there, he picks the explain of Costco v. Walmart

We want to focus on returns on invested capital, 28% sounds a lot more attractive to me than 12% (which is still good).

Less is better – quality over quantity.

Now in this part of the post I’m really tempted to bring up Bruce Lee quote about not fearing a man that practiced a thousand kicks once, but fearing a man that practiced one kick a thousand times (see what I did here?) but that won’t be my main focus.

Instead I’ll just pick a recent example

One of my friends (Aldo) realized that taking better trades is not only more enjoyable but also doesn’t necessarily reduce your trading returns. Especially while traveling and not being able to spend as much time on trading.

That being said, I’m kinda forced to bring it up, I mean I love the guy…

Bruce Lee has another quote (not about the number of kicks this time)

He probably didn’t say this quote thinking about investing or trading, but it applies to everything in life.

Anyway, I hope this was helpful.

If this was useful and you enjoyed reading it, it would mean the world to me if you’d leave a like or even commented 🙂

Cheers!

August 29, 2019

Turning your hobby into your “job”

Congrats! It’s amazing you’re at this point!

If you’ve recently came to realize you could take your side hustle/passion and make it your primary source of income congrats! That’s amazing, I still remember the day I realized I could sustain myself trading forex – was when I was writing cover letters for jobs just before graduation, I didn’t end up applying for those jobs after that realization (except one, McKinsey but they shot me down – something I’m grateful for)😊

But yeah, congrats, that’s really impressive! Would it be trading, photography, your blog, designing cool tee-shirts or whatever it makes me so happy when I hear people are making a living doing what they love.

Maybe you take photos of fruits and vegetables and somehow managed to turn it into a business… I mean it looks cool!

That being said, it’s not because you are able to go and turn your hobby into your sole income that you should quit your job or become a digital nomad – first you need to transform it from a hobby into a business and start looking at it that way.

When it’s a hobby it’s amazing, you get most of the upsides and you are quite blind to the downsides while being able to stop whenever you wish since that’s not the only thing you do.

Be prepared for the transition!

If you decide to take your trading and make it your income source and quit your job then be prepared for:

Having lower returns that what you’ve come to expect in the first first few months since you’ll have some added stress, it happens to a lot of people who just took the jump

Create a rather strict routine, it’s not because you don’t need to be at the office at 8 or 9am that you should still be in bed… You will have nearly no external barriers to becoming a couch potato, you will be the responsible for everything. While making sure you prioritize sleep, I didn’t in the past, and that’s one of my biggest regrets, making sure the brain gets its off time is really important

See your income fluctuating, you won’t be making the exact same amount every month/every quarter (which is why I believe it is extremely important to have a six-month cash buffer before taking the step (mainly to reduce the pressure)) That being said, if you make three times more (on average) than what you spend you can probably just take out a fixed amount every month/quarter depending on your choice.

You’ll spend way more time on your computer (next to an ikea plant)thinking that it will mean you will make more money – sadly that doesn’t go in hand, I wish it did, but instead it’s actually important to start disconnecting from the charts, if you spend too much time looking at them you will likely want to take a trade or micro-manage them – which in turn will probably have a negative impact on your income/returns.

Accept the fact that your passion is now your job, which means you will need to find a new hobby and start learning something new in order to maintain your self development and your brain plasticity.

An advice I would give to anyone about to go full-time with their trading or side hustle would be to measure the amount of time they spend on it while still spending time at their job. Why?

If you spend an hour and half on the charts while working per day, make sure you don’t spend more than three hours (the double amount).

I understand that it may sound counter-productive, after all, you have now way more time to improve your craft and boost those returns, but if you were able to get to this point and replace your income with if there’s no need to spend that much more time working on it. There’s a point where spending more time will not only bring you diminishing returns but also reduce the enjoyment you get from it.

Something Neil Cartwright also points out is keep doing what brought you to this point, keep doing the exact same thing, don’t become too cocky, it’s not because your trading as really improved that you should stop your previous routine, if you used to watch content everyday, keep doing it, if you were meditating, keep doing it, if you were back testing three times a week, keep doing it. You probably got the point by now, but, just keep doing whatever you used to do.

It brought you here so it must be a good thing!

Now it’s your primary income… It’s a business

Now it’s a business, so start thinking about your monthly costs, how can you optimize and streamline the process, how can you leverage up and increase your profits, get in touch with a great accountant and figure out how to reduce your taxation etc etc.

While talking about the business side it’s also important to mention the fact that most successful businesses don’t pay out a 100% dividend, instead they constantly re-invest in the company (usually they do it to buy new machines or have more marketing or hire more staff, for us that just means leaving money in the trading account).

Now, if you’ve already been on this blog you’ll have noticed I also provide a monthly trade recap, which is basically an overview of my month (I have one way more detailed that I keep for myself) but the reason I do this, is because I’m treating my trading as a business.

Businesses need to publish quarterly income statement and all the other stuff, why wouldn’t you? If you run a business selling tee-shirts, wouldn’t you be looking at your revenue/profit/ad spend/ROI etc? If you don’t I would be surprised if your store keeps on going.

If you own a coffee shop, I’m sure you will be looking at your profits, revenue, costs etc while trying to figure out a way to boost your profits and potentially open in a new location?

Trading is a business, so make sure you spend time treating it as one. Don’t forget to think about the monthly reports, create a trading report where you will write down every single trade you took, the return, the reason for the entry and exit and all of this.

Obviously, you will have to keep doing your Advanced Self Review and spend time trying to find the tweaks you need to go through in order to improve.

A good example would be my mentors, even tho they have been trading for more than five years profitably they are still reviewing their months in order to make sure they are still on their top game and continuously improving.

Make sure you still enjoy it – and don’t only do it for the money

It’s not because you are going to turn your hobby/passion into your primary income source that you’ll start to despise it, I still enjoy trading and learning about the market remains one of my favorite things to do. But, you must start treating trading as a business instead of a fun activity you do because you think it’s nice side income or just because you want to keep yourself busy. We all get what we want from the market, so make sure you align your wants to this new reality.

Lastly, it’s something I’ve only recently started to realize but it’s not because you are now making money doing something you love that you should be blind to other opportunities. Diversity in your income source makes you anti-fragile and that should be the end goal.

Aim to become anti-fragile – being self-employed and having turned your passion into your income source is fantastic but keep in mind there’s no shame starting something new on top of that or even potentially getting a job in a industry you’re really interested in.

And I definitely recommend picking up this book, Nassim Taleb is one of my fav. authors 🙂

For example, I’m really into space because my long-term goal is in that world, if I get the opportunity to work in a cool start-up with really smart individuals in that industry I’d jump on that chance.

Anyway, I hope this was helpful.

I hope this was useful! If it was it would mean the world to me if you’d like this post or even leave a comment if you’d add something to this article!

Cheers!

August 24, 2019August 25, 2019

10 common ways trader beat themselves

Knowing the issue will help, I hope.

Let’s face it, trading isn’t as easy as it appears to be while trading either demo or (especially) on Instagram if you follow any of those gurus or even ever posted a photo with #forex and heard about how Mr. X. just sends you signals and you can become a multi-millionaire following them starting with 50$.

But it’s possible, I mean yes it’s hard, but running a mile under 4 minutes is possible, more than 1,400 individuals have beaten it, but no-one had ever managed until one person did – and he didn’t have any super powers knowing that others have now managed (and beaten him).

I’m in no way comparing running a mile under four minutes to being a profitable trader, I think the run is a hell of a lot harder – and the numbers probably prove that.

BUT, in both cases it required a lot of training, visualization and time in order to achieve it. I think it’s rather similar

Roger Bannister is the one that did it first!

Anyways, here’s what I think are ten small challenges that traders are often faced with

1- No patience, they expect to be profitable from the get-go

We all dream to be able to pick up trading within a month, but that’s not really the truth, I mean you can learn quite a lot in a month, (highly recommend reading Scott H Young blog) but a to become a lawyer you’ll have to study for around five years? A doctor? Even more no?

I mean, the same goes with anything, you can’t expect to become a professional footballer by just playing for a month

Another example would be video games, I mean if you start playing League of Legends to playing professionally within a month? It’s possible, but good luck

(I already wrote about this, but during the first three years I lost money every single time… Yep… That happened)

2- Do not understand the true nature of variance

Trading is all about probabilities, I mean screw that, it’s not even exact probabilities, but yep, it’s all about applying your edge over and over again.

Variance is the technical term that we use to describe the routine ups and downs that are built into trading, poker and so many different “industries” in which there is a large amount of short term luck involved.

It’s important to remember that it’s possible to “run bad”, sometimes even if you only take high quality trades you can still take three, four, five losses in a row, you need to accept it.

We need to think like a casino, don’t focus on one day, instead focus on the bigger picture

Even if you have a 60% probability of getting a winning trade (so 40% chance of a loss) you can still take a loss – I mean there’s a 1% chance of taking 5 losses in a row if you have a 60% probability of success.

There’s not much you can do about it, it’s just probabilities. That’s why you shouldn’t focus on the short term, instead look at your results on a monthly (and even that) basis, even better look at them on a quarterly and yearly basis.

Trading is and always will be a long term game. That not only applies to Forex trading, or penny stocks or even equity trading, anything that is a question of probability will be a long term game.

3- Failing to maintain their risk profile the same

The issue with changing your risk profile is that it screws up the entire probability model – if on one trade you risk 1% and another one 4% but the probabilities of them happening is the exact same – can you please tell me why?

The only reason I see is because somewhere your confidence increased or you wanted to make more money without really considering it

That being said, if one type of trade you take has a 70% probability of playing out, and another one a 40% and you know those stats because you have taken those trades a hundred times or more then that’s fair.

I personally only risk 1% while trading because I believe my trading plan is profitable.

4- Don’t stick to their trading plan

If you have a strategy, stick to it.

Don’t change your type of trading and chase a shiny object all the bloody time.

Don’t try tweaking your strategy after a month and decide to follow a completely different way of trading every month, that just isn’t going to workout sadly – you will just get stuck in this negative environment and get stuck – never fully seeing the results you want.

(Sorry not writing much on this one, it’s pretty straight forward).

Okay, I don’t have my trading plan on a white board, but you get the idea (I want a white board for that reason tho – I think it’s amazing)

5- Over-thinking

Don’t get me wrong, thinking and making sure you take the right trades is bloody important – but there’s a point where it’s too much.

If it’s in your trading plan, take the trade, if it’s not don’t.

Make sure you are a trader during the week, not an analyst.

By that I mean, during the weekend it’s really important to forecast all potential scenarios and figuring shit out. Once the market is live tho, you must be willing to jump into trades if they are in your plan. Don’t hesitate, just pull the trigger.

Another issue can be learning too many strategies – don’t get me wrong, I love learning more about macro trading, trading news and all those cool different ways to trade the FX market, afterall it’s my passion, but make sure you stick to what works fo you and don’t try to mix up too many things, find your niche and work on it. Once you have an extremely solid foundation then you can start adding more confluence factors on top of it, but it’s important to keep it simple.

I love the “KISS” acronym, I think that’s key to trading too – keep it simple stupid (short).

6- Not enough capital

If you are planning on going full-time within a year that’s more than possible, people have done and people will keep doing it, but it also depends on how much capital you have and how much you need to maintain your life style

If you need 4k per month to maintain your current lifestyle, trading with a 20k account is probably not enough, you’d need to make 20% per month to achieve that monetary return and that’s without even including taxes.

But if you have 100k accessible to you – it becomes a lot easier – instead of having to make 20% you could just make 4% – which is still a lot tho…

If you have a lot more then it becomes easier yep

So make sure you don’t have unrealistic expectations, you will need some capital in order to make it & on top of that will need to have money saved up on the side – you don’t want to feel the need to make money every month, and accept the fact that you will never make the exact same amount month to month, this isn’t a job.

7- Not being willing to spend the time in front of the charts to learn

You will have to sacrifice a certain amount of time, would it be a few hundreds or more you will have to there’s no choice.

If you’re reading this pretty obscure blog I’m sure you’ve already heard of the 10,000 hour idea to become a master at any craft – would that number be right or not, it’s for sure going to take time.

As much as I wish you could learn all about it by reading blogs and books it’s not really possible. You will definitely have to spend time back testing your strategy but also spend time learning in a live environment, it’s way different than paper trading, trust me on that.

On top of that, even once you are full-time you’ll need to actually be in front of the charts when there’s a trade.

The 4hour work week isn’t really a thing, you will have to be in front of the charts when a trade alert is triggered. But sadly, trade alerts don’t always happen exactly when you want. It’s important to realize that. A lot of people talk about taking trades while going to the bathroom while working – it’s never been to that point for me, I just have trading view open on my laptop but… It could be your reality

8- Not studying their past trades – both willing and losses

Best way to discover what you are good at and also missing out on is to review your own actions. It’s great to learn how someone else trades and getting their own perspective on how to do something, but in the tend trading is a lonely game, it’s all about you.

The only way to get to the next step is review what you do right and what you do wrong and work on improving those things.

Jared Tendler (he has a cool interview with Chat with Traders) has a great concept, the inchworm, I’m going to do a blog post about it in the future, but it’s mainly about this:

In life we are the average of what’s great and what’s shit about us. To improve you need to get your positive even further along that side of “greatness” but you also need to improve the lower end on that curve, things you suck at, because once again, you are the average of those great and “shitty” things.

Make sure you know what you are doing good, and what you suck at, that’s the only way to improve.

Airports are actually rather good for those sessions

9- Revenge trading

It feels good to take another trade after being tagged out – I swear – it gives you control on what’s happening instead of being incapable of controlling the market (I wish my trading account was big enough, SEC come to me (please don’t use this against me in a case).

But, taking a trade because you just got tagged out isn’t the best thing, make sure it’s a valid trade, heck, sometimes it’s worth taking another shot at a potential trade, but… as a rule of thumb, it’s not.

Understanding your emotions is key, acting on them less so, especially in trading, when it comes to relationships it can be useful, but not for trading.

Denise Shull is my go to when it comes to emotions and trading, highly recommend it. I think it’s called Market Mind Games – it’s basically Wendy Rhoades in Billions.

Denise Shull has a great series of videos with Real Vision

10- Not knowing when to disconnect from the charts

That’s one of my favorites, the reason most people get stuck into a bad spree is that they decide to micro-manage all their positions, jump on the 15 minutes then the 5minutes.

Not disconnecting from the charts will really make you want to trade more often, it will also make you want to micro-manage your positions, it’s really not going to be any good.

Go out, enjoy life, spend time with friends and family, learn how to do something new, enjoy it.

Enjoying beers during sunset seems like a rather good way to disconnect to me

August 19, 2019August 19, 2019

Focus on trade execution, not your PL

That’s probably the hardest part of trading, or at least it is for me, I mean it’s human, we correlate making money to doing good because that’s how we are brought up – if you do well you will be rewarded. It’s pretty counter-intuitive that doing something great will end up making you lose money.

(Maybe if we were to give more to charity that wouldn’t be the case, but I am myself not the biggest donor out-there so I am not going to preach you to do something I personally do not do)

But in trading you will have to accept the fact, sometimes a “perfect” trade will be a loser.

Sometimes I feel like this when it happens – shouldn’t but hey I’m human

Sometimes a shitty trade you definitely shouldn’t have taken will result in a winning trade.

Yet, you should feel bad about yourself when you make money by taking trades that aren’t part of your trading plan, and feel great when you end up losing capital when taking a trade that fits your trading plan.

We are in the industry of playing out our edge, the aim is to stick to it and in the long-run avoid fucking it up.

Sometimes a “perfect” trade will be a loser.
(that does suck, but you have to accept it)

One trick you can do to start accepting the fact that you will take amazing trades – that result in losses is look at the balance statement of your favorite company. Are you thinking about Amazon? Tesla? Blizzard? Starbucks?… Whatever it is, they all have costs associated with their business, even your local coffee shop (even if you live in Amsterdam)

Try to understand and see trading as a business, not as something entirely different.

Another trick to trade your plan instead of your profit and loss is, once you are in a trade, hide your risk reward – instead of managing it according to your potential return it really increases the likelihood of you moving your stop according to the structure instead of potential return

For example, I am currently short on EUR/USD my stop is “randomly” placed a 1.14% profit, had I placed it at 1.25% or 1.5% I would be out of this trade by now, I barely stayed in it

The only reason I placed it at that level is because I didn’t know it was 1.14%, otherwise I would’ve made it a round number

If you use tradingview to get your charts, here’s how to hide your RR tool:

Don’t forget, trading is a business, you will incur a loss and a similar business model to ours would be a casino, they make insane amount of money every single year, but they have down days too when there’s a really good/lucky player betting big

Like read this:

The University of Las Vegas found that the 23 Vegas casinos bringing in over $72 million each in the 2013 fiscal year ended up with over $5 billion of their visitors’ money, altogether. That’s an average of over $630,000 a day, per casino

All they do is apply their small edge day in day out and they don’t care about the daily or even weekly profit, they know that in the end, they’ll make money.

We are in the same game.

Focus on your trading execution, not your PL