Tag: mindset

It has come to my attention recently that most people who embark on the journey of trading, provided that they learn a sound methodology like what we teach here at the Fx365 Institute, successfully learn how to trade the screen that is in front of them.

 

What actually becomes the challenge for people to overcome, is not the ability to get themselves into positive trades, or in the words of our Director of Education, Mr. LaCurtis Mayes, ‘I ain’t worried about being able to pull no pips…’ but instead, the ability to manage themselves emotionally at a large enough pip value to actually make their trading profits meaningful. 

 

As the adage says, 100 pips at a $1 a pip is not the same as 20 pips at $10 dollars a pip.

 

I don’t know about any of my fellow traders, but if you are anything like me, you may react differently in your trading as you move up the lot ladder in dollar amounts.

 

This is where the exercise of emotional weight-lifting comes into play.  For me, trading the same lot size for months at a time did very little for me emotionally.  But what I did find, was that when I multiplied my lot size by 20x I was confronted with a whole new set of emotional challenges.

 

After quite frankly being generally discouraged by my performance at this elevated size, I reduced my pip value by 15x and found that I now was trading very well, virtually emotionless, and making quality decisions.  The upside was that now I was trading without emotion, at a lot size that was 5x my original lot size.

 

  If you are feeling very stuck with moving forward with your trading, it may be time to experiment with stretching yourself emotionally.  Remember, as the FXCM disclaimer states,

‘Trading can be potentially risky and do not risk more capital than you may be comfortable losing.’  Having said that, if you push yourself into a lot size that is uncomfortable to you, even if you return later to a smaller lot size, you will likely end up trading with indifference at a lot size that is greater than where you first started.

 

Eventually, we can achieve the destination of being able to trade a $100+ pip with indifference.

 

Again in the words of Mr. LaCurtis, ‘if you are going along trading a dollar, 2 dollars and think you are going to make money at this, you’re fooling yourself.’ 

 

So here is to emotionally weightlifting and breaking through plateaus!

 

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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

 

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  If you are anything like me, the first time you saw the ‘lot’ ladder, you looked straight at the sum of money per month that you want to earn, you scanned left and saw how many weeks that correlated to in a perfect world scenario, and that somehow unconsciously became your expectation.  Am I right?
  Then, maybe you started getting beat up a little bit learning how to trade competently, and suddenly frustration, dare I say desperation started to set in because that mental expectation of ‘when’ you might be earning your dream trading income starts to get pushed further and further out into the unforeseeable future.
  This is when the negative dialogue I talked about in the last blog starts to set in and before you know it, the dream you had not long ago starts to become more and more vague.
  “Success consists of going from failure to failure without loss of enthusiasm!”
~Winston Churchill
  Well, here is what I can offer.  The law of reaping and sowing is biblical.  But remember, it is the farmer who is a diligent and persistent sower that reaps a plentiful harvest.  Certain retail traders make a fortune in each of the different financial markets.  However, anything that has the power of the forex market is not going to happen overnight.  In fact,
  “It’s going to take longer than you want, however when you get there and look back, it’s not going to seem like it took long at all.”
~Jeff Olsen
Your biggest successes are going to come in the last 20% of your journey.  This is not for the weak or the faint of heart.  Businesses of every type require sweat equity with little and often no return in the present, to gain high return for little sweat later.  This is no different.
Remember that the destination of two men is determined largely by the books they read, the people they surround themselves with, and the questions they ask themselves.  
Measure your days and trading sessions by this metric and no more!  Let the answers to these questions become your ‘diligent & fertile seed.’
  Did I learn anything today?  What could I have done differently?  What will I do in the future to not repeat the same mistake?  Have I ever gotten into a positive trade?  Could I ever get myself into another positive trade?  Have I ever taken a trade that was a bigger positive than any other negative trade I have taken?  Have I ever learned anything ever? (like how to read, or walk, or drive, or the current job you do, or a sport, or to play an instrument?)  Could I learn to eventually take more positive trades than negative?  Could I do that consistently?  Do I screenshot & Journal all of my trades?  Do I review all of my trades good & bad?  Do I celebrate my successes?
  Someone once said, ‘the darkest hour is that before dawn…’ but remember, if you are in your darkest hour or you think you are, the way out is by asking yourself all of the above questions and doing the heavy lifting emotionally to make it through.
By Payton Parnegg
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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!

 

The transition

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.

 

Conclusion

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.

 

Happy Trading,

Chris Gibson

chrisbgibson@gmail.com

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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.

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