Many people go through a phase where they’re stuck in a trading loop, they make profits and then lose those profits, only to make those profits again and end up losing them, if that’s you then today’s lesson is meant for you.
As a new trader you’re due to tip over some obstacles which can lead to a bad habit in your trading career, and you find yourself stuck in a break-even or sometimes a losing streak, you then start to feel submerged and anxious, but you still feel like you can progress and that is true, you can still progress but it’s all dependent upon you.
I’m here to help you find your ‘Light’ in trading, and in this lesson I’m going to share 5 very important pieces of information that will help you excel at your trading, fix your bad habits, and help you level up in your trading experience, all of these tips that I’m going to provide you with have been learnt over an extended period of my trading career, and if implemented correctly, you’ll be a beast in this business.
5. Learn price action and how to read the charts.
This is something that’s compulsory if you really want to be a winner in Forex trading. But some of us have never heard of price action or just don’t know how to read the price charts, you’re going to have a pretty tough time with the charts and trading in general if you haven’t studied enough on these two topics, even if price action isn’t your main trading method, it is utilised in almost every other strategy, so learning and trading with price action will quickly improve your trading and help you read the charts A LOT more better, if you currently don’t understand price action, or not knowing how to read the prices or trade price action is like you trying to get around a city without a map, you’ll get lost and fed up of the city.
4. Probabilities and not certainties
People need to change the way they think when it comes to trading, especially if you want to quickly improve, and you need to resolve the idea of ‘being a successful trader’ within your mind.
I find it that many people who get into trading probably got into it by seeing someone making a lot of money through it without even knowing what trading is and what they’re actually doing, a trader is someone who uses probabilities and takes advantage of those probabilities and doesn’t consider certainty as part of the business, the only thing that you can be certain about is that the markets move up and down every second and that’s what makes it impossible to figure out the certain direction it will go in, that’s why we say no to certainty and yes to probabilities.
A mistake that’s common in a lot of people who recently joined trading, is that they seem to think that they know for certain what the market is going to do next, one of the biggest mistakes and demises in the trading industry. We’re only looking to trade what we see from our strategy, and not what we think, that’s why we have a strategy in place and also a stop loss, and this gives us an edge and increases our probabilities on winning trades, but that still doesn’t guarantee you a successive win.
So putting all of this together, it means you cannot know for sure which trade will be the winning trade and which trade will be the losing trade, but trading a high probability method like my price action strategy, over a time and placing a series of trades you’ll find yourself profitable, because that’s what it’s designed to do, make you profitable but even with that you’ll still end up having loses, and that’s just part of the business. It’s really critical to keep this fact in your mind after each trade you take, because you cannot let one trade’s results influence your feelings or behaviour in the market. You must stick to your plan and keep trading with discipline and consistency.
3. If you’re confused and you’ve gone into a losing streak, TAKE A PAUSE AND STOP TRADING.
Perhaps the hardest ‘pill to swallow’ as a trader is just owning up to your mistakes and ripping the Band-Aid off quickly, so to speak. When you are in a bad losing streak and you feel out-of-control, flustered and even angry, it’s really time to just stop trading for a while. This is especially true if you are trading with real money and losing money over and over. You have to plug the whole before your whole ‘ship’ sinks.
This is probably the fastest way to improve your trading because once you stop trading with real money you eliminate all emotion-fuelled trading mistakes and you immediately start realizing the mistakes you were making. When you are in a losing streak and out-of-control, it is basically impossible to fix your trading problems if you don’t stop trading live for a while. You need to get an objective clear-head in order to see through the haze of trading errors that you were making.
2. Understand how to place a stop loss appropriately.
A stop-loss is simply designed to restrict an investor’s loss on a position. It is crucial to learn how to precisely place a stop loss when opening a position as it can change the outcome of the trade. If you understand how to place a stop loss correctly you will have a great edge in the market as your trading will improve.
Traders who don’t have experience under their belt tend to place their stop losses in close proximity to the entry price. This mistake is pure greed which has negative outcomes such as obtaining needless losses multiple times. Knowing where to place a stop loss in conjunction to price action would mean they would have remained in multiple trades which they otherwise would have lost.
1. Stop over-trading
If you as a trader want to dramatically improve your trading you will have to quit over-trading. Simply ‘less is more’. New traders have an incorrect thought that more trading is desirable than less, they spend excessive amounts of time in front of their charts which would result in seeing signals which aren’t actually there. You will need to learn to set a trade and forget it.
Although at the beginning of your trading journey you will spend some time looking at charts as you will learn and master the strategies. When you have completed this stage there is no need to sit all day looking at charts as you know what you’re looking prior to opening your charts. A key advice to help you quit over-trading is creating yourself a trading plan which you follow strictly.
