Have you ever gotten a chance to look at the ‘lot ladder?’ I’ll bet that you have, and I’ll bet that if you are at ALL a driven person, or motivated by profit, then you probably got very excited.
Now did you ever get a chance to look at the ‘Traders Cog?’ Again, I’ll bet that if you are a motivated, driven person, you probably glanced at it and either subconsciously or consciously dismissed it a little bit. I get it, you are better than average, you have probably excelled at other endeavors in your life and usually don’t get held up by the same things ‘others’ do.
So, here’s the thing. That sequence of events may be one of the things, if not THE thing that is holding you back from where you want to go. What most student traders seem to do is to see the lot ladder, get started as a student, get really REALLY excited about all of the potential change that they are going to experience in their life, and then WHAM. Reality hits. Trading seems to be one of those things that requires a completely new skill set. It requires a technical & emotional skill set, and also happens to be something that doesn’t really care that much about how good you’ve been at anything in the past.
What happens now, is that over time, the enthusiasm wanes. Suddenly you are months and months into your trading career and you are less and less optimistic. Doubt enters the mind. The imagination starts to entertain other more ‘viable’ income options. And here in lies the GREAT MISTAKE. All the while, whether you can tell or not, your skills are improving. Amidst the doubt, you actually probably know how to trade for profit, and even if your account doesn’t say so right now, you are dangerously close to your personal breakthrough.
How do I know all this? Because it happened to me, and as special as I tend to think I am, I’m not that different from you. HOWEVER, I am making it to the other side, and I can now tell you this.
HERE is when you should start getting VERY excited about your FOREX trading.
You should start getting VERY excited about your trading when you have made it through the bottom of the ‘Traders COG.’ Because NOW, you can start your march up the ‘lot ladder,’ AND by waiting until then to start getting VERY excited, you will save yourself a lot of frustration that will NOT accelerate your learning curve.
Remember, anything that compounds in nature will accelerate over time. So while everyone else is being impatient, frustrated, disappointed, and maybe even looking for yet another shiny new thing, be the person that understands that years 3 & 4 can and will dramatically outpace years 1 & 2, AND a trader that earns 30-40 pips per week with control, scales their pips accordingly, and endures enough time, will earn remarkable returns.
Until next time, happy ‘pip’ing!
By Payton Parnegg
Here is this morning’s recap!
What is passive trading?
When most people hear the word passive, they think of something that can be negative. For me, having a passive attitude in trading has been a really positive thing. Some of my best trading days and weeks have been during times when I have a passive attitude in how I enter trades. To better describe this, my thought going into a trading session with a passive attitude is “I might enter a trade, and I might not.” Some of the worst trading days for me are when I wake up thinking “Boy, I can’t wait to get into a trade and pull some pips!”
What I have found is quite fascinating, it is almost as if I take power away from the market, and the Market Makers when I trade passively. Truthfully, that is exactly what happens when you trade more passively and less emotionally. The market makers make their money by fooling retail traders into entering positions, so the more emotionally you trade, the more you become a puppet on a string. The more passively you trade, the less power and control they have over you. It’s a beautiful thing!
After I talked to Steve, and read his blog post, I started to see the bigger picture, and I started to understand what was going on with my trading. At this same time, there was a period of a couple of weeks where I was really busy. I had to travel to California for work, I had a busy schedule each day, and I was starting work at 6AM, so there was really no way for me to trade during session. I almost tried to, I even brought my laptop with me. But I decided that I would take the week off. I was pretty busy the following week also, so I went almost 2 weeks without trading. This turned out to be a really good thing for me.
Taking time off from trading, accompanied with new ideas and a fresh mindset really helped me to turn things around. Does this mean that I’m pulling hundreds of pips a week? Nope. In fact I think that I’m at 18 pips for the week so far, but I’m ok with that. Slow and steady wins the race. The tortoise wins, every time.
I had always heard Rob G. say that whenever he loses two trades in a row, he takes the rest of the week off (I’m pretty sure he said that). I always thought “Why would he take the rest of the week off? Can’t he just start fresh the next day?” I think I’ve learned a good lesson here. Time off can be a powerful thing. If you find yourself spun out in your trading, take a few days or a week off. I’d bet that you come back with a new perspective. Taking a few steps back is a great way to get a better view of whats really happening.
My recent trades
Since this transition I have been doing much better. Once again, I’m not rich, nor am I slaying hundreds of pips but I’m in control and my trading is relaxed. This is such a stark contrast to the cortisol-fueled, greedy, upset, hunched over, anxious, money losing trader that I was a few weeks ago, “gargoyled” over my laptop, hoping and wishing that the market makers would let me have just one little piece of profit. Recently my trading has been much more enjoyable. I am managing my account by keeping a reasonable lot size. I am calm. I sleep in until 5:30 if I want to. I realize that I don’t have to trade. I no longer have to fight myself and make up all sorts of rules because I see the big picture.
My intention in saying all of this is not to boast or sound like I have it all figured out, but to just point out that we often make things a lot harder than they need to be. Sometimes all it takes is a slight change in attitude, or a simple shift in how we view trading to turn things around. I had taken something fun and made it stressful by focusing in the wrong things in my trading, then adding rules and more stress to correct it. That all went away (for now) when I started focusing on taking things slow and keeping things simple.
I encourage anyone who is having a hard time to remember that you have plenty of time to learn to trade (that’s another thing Steve said). Take it easy. It can be challenging but it should also be fun. If you find yourself stressed out, chill. Take a break. (Side note: taking a break helped me a lot, but I think that it is important to note that it wouldn’t have been such a powerful time if it wasn’t for the fact that I got some good advice). With that being said, ask someone for help! Get some advice. Participate and ask questions on the webinar. Read books. Use all of the tools at your disposal. Don’t be greedy. Keep the dangers of the market in perspective. Keep it simple and relaxed. The reason we learn to trade is to take stress out of life, not to add it.
The complications of greed
Several weeks ago, a friend of mine was asking me how my trading was going. I told him that it was going well and that I was slowly learning to be consistently profitable. This guy is a very savvy businessman, and has had a lot of success of his own, but has no experience with trading anything. Nevertheless, I value his opinion.
I explained to him how pips and lot size work, and told him that I was basically trading 10-20 cent pips, making a few bucks a week on positive weeks. With this info he gave the most logical encouragement he was able to give. Based on what he knew and what made sense to him, and he suggested that I lot up. He expressed the idea that by doing this I would force myself to take trades even more seriously and that this would more than likely help me grow as a trader. Since I was relatively consistent already, I expected that I would also make some extra cash by lotting up.
This made sense to me, and honestly, I was beginning to feel a little bit like I was in a demo account since I was trading such a small lot size. So lotting up was appealing for this reason, and making cash would be icing on the cake! I took my friend’s advice and threw a couple hundred bucks into my trading account and began to trade larger lot sizes.
My experience with lotting up, and focusing on profit
As soon as I began to consider the idea of lotting up, I began to dream about the money that I could make. It made sense to me that my trading would become more precise if there was more money on the line. I couldn’t have been more wrong.
As I began trading larger lot sizes, I found myself making a lot of really foolish decisions. There were days that I lost a fair amount of money, and still kept trading, taking as many as 4-5 trades per session. I would lose in a trade, and then be upset by the fact that I had lost an uncomfortable amount of money in a trade, but I would still hold onto the belief that I could make that money back. It didn’t work out well.
I didn’t know at that time exactly what I was doing wrong. I tried analyzing my trades, to no avail, because it was simply rooted in trade management. I was taking too many trades and taking foolish trades, mostly based on the hope that I could get my money back. I wanted to get back what the market had taken from me. I suppose the expression is true “Want in one hand…” and… well, you get the point.
After analyzing and making rules such as “rate each trade on a scale of 1-10 before entering,” “wait at least 5 minutes between trades” and plenty of others, I was still losing trades. I would follow this list of rules for the first trade, but then I would get trigger happy and start taking all kinds of foolish trades. I had made a little progress by making all of these rules but I was still failing to recognize the root of the problem. Not to mention the fact that more rules equals more work.
It wasn’t until a few weeks later that something really clicked. I was talking to Steve, our director of enrollment at the Institute, and he told me something that stood out to me. He said “A new trader thinks about how much money they can make, while a professional trader thinks about how much money they can lose.” You can find this in a blog post he wrote titled “Money Management In Trading.” It is a great post and I recommend everyone read it.
The effects of this paradigm shift
Realizing this key difference between new traders and professional traders has had many benefits. Many things that I was doing wrong began to almost fix themselves when I saw the bigger picture. Understanding this simple truth helped me to get to the root of the matter. It wasn’t that I didn’t know how to trade, or read the charts. It was that my trade management was horrible. Even though I was “able” to trade well, I chose not to due to the fixation I had on making money. I had become incredibly biased in my interaction with the market. I entered trades without thinking about what I could lose, always thinking “I know how to pull pips” and “I can make money.” The funny thing is that both of these things are true. But if I focus on those two things, I am forgetting that there is another element of trading that I have to keep in the forefront of my mind: the fact that I can lose!
After I began to keep in mind what I can lose by trading, and keep the dangers of the market in clear view (no longer obstructed by wild dreams of rolling in money) noticed myself not having to try as hard. I was almost not having to try at all to adhere to the list of rules that I had made for myself. Instead of forcing myself to rate each trade so that I would stay out of bad trades, I found myself staying out of low probability trades without even thinking about it. Instead of struggling with overtrading, I found myself naturally limiting myself to one trade per session, and often times going the whole session without trading. Once again, many of these big struggles that I was having were all corrected with my mindset. This mindset of thinking about what I can lose versus what I “could win” is closely related to something that I like to refer to as passive trading.
It’s that time of year again! Gyms will be over-run with temporarily zealous fit freaks, and life-changing resolutions are declared around the world. With the New Year upon us, it is, in my opinion, important to cast some direction and intention over the year ahead, as well as use the natural tide of change that rises upon humanity this time of year to our favor. Having said that, whether you are a new student with the fx365i, or one of our more seasoned students who wants to write a new chapter in their own history book this year, there are a handful of thoughts that I have had reflecting on the first 7 months of my trading career.
As the great Jim Rohn famously said, “any two years you can change your life forever. 18-20, 30-32, 68-70… Any two years.” To go along with these words he added, “for things to change, you have to change [and] for things to get better, you have to get better.”
I start with that thought because each of us arrived at the fx365institute with the belief that every successful entrepreneur has…
-a better future than their present
-has the absolute power to make it so
And with that, here are 7 things that will help you reach your goals:
Before you start on your journey, take the time to have a clear and defined written explanation as to why you have chosen to take the time and energy to learn to successfully trade the forex. Of course the obvious answer is to make money, but the reason why is what is going to pull you through the frustrating times you will have. The stronger and clearer this reason is, the easier it will be to work through your inevitable shortcomings as a trader and remain solution oriented rather than obstacle focused.
#2) Do not measure your progress in pips.
The immediate trading cliché that didn’t take me long to realize is that in Forex trading “You either win or learn.” As much as I would’ve liked to be a trading prodigy and had an alarming win rate from the beginning, the reality is that I learned almost nothing from a winning trade. At no point that I can remember did I take a positive trade and dissect my own screen shot to figure out where I went wrong. You can practice bad behavior and in the short term you can be up, however the market will expose your mistakes, and it’s ok. Instead measure yourself by the activities you are doing. Study the Virtual Classroom, read the Forex book, engage daily in fxlive, take and archive your screen shots, your trading journal, learn what all of the basic signals are on your charts, and measure your progress off of how well you are doing those things.
#3) Have a realistic expectation for how long this is going to take
One of the immediate shortcomings that I had was that I felt like I had uncovered Pandora ’s Box when I learned about the way that the market works and how we trade alongside the market makers. This caused me to believe this would insulate me from losing and that I would be well on my way right up the lot ladder fast. Here’s what I would tell myself now. Look at the lot ladder, get excited about the lot ladder. It’s real, and it’s not out of reach…however, before you get to start up it, you have to learn how to trade, so give yourself time. Cutty told me in our first conversation that he anticipated taking a year to learn to trade and a year to build up his trading account, which I promptly dismissed because admittedly, I’m young and overconfident. Turns out, from where I sit now, that’s not a bad business plan. Can it be done faster? Of course, but let’s get serious, there’s a reason Jim Rohn says, ‘any two years can change your life.’
#4) Be a good student.
#5) You will probably ask yourself all of these questions…
#6) Play to Win
There is a saying that says ‘if you mess up once it’s a mistake, if you mess up the same thing a second time, it’s a decision.’
While it’s likely in your trading you will make the same mistake more than once, make the commitment to yourself to understand the mistakes your making, take a pro-active approach to each step of your trading. Analyze, discuss, review, try again and dig in… Anything that can deliver the leverage and exponential returns the way that successfully trading the forex can is going to be a challenge, and of course is going to be worth it.
#7) Have Faith
‘The difference between belief and faith’
Years ago there were two friends. One day one of the friends decided he wanted to do something exciting, so he took up tight rope walking. After practicing for months and months walking carefully back and forth on a line strung feet above the ground, he began to feel the urge to accomplish something spectacular. He began to craft an exhibition where he would walk a stretched cable between two rooftops, high enough that if he fell it would result in death. To make his feat all the more impressive, he decided that he would not only walk the tight rope, but he would push a wheelbarrow across it with him.
He practiced and practiced while his friend watched on, impressed with his determination and relentlessness. After perfecting the stunt over and over again and arranging for the big day and exhibition, the time had finally come.
The two friends stood atop the skyscraper eyeing the cable stretched tight between the rooftops. Time seemed to stand still. The sound of chatter amongst the crowd standing below, although constant, faded away to the ears of the two men.
In the final moment as the tight rope walker draped his feet over the cable and steadied his grip on the wheelbarrow handles, the friend was faced with the choice of belief, or faith. His belief led him to have the utmost confidence that his friend would complete the exhibition, but it was his faith, that caused him to get in the wheelbarrow.
In closing, have faith in the journey, the frustrations you will face, the institute, and yourself. Have fun, and in a few years when you are living your ‘Why’, look back on this time as a distinct moment where you went for it 100%…