Tag: smart money profile

Here is what happened in the markets this morning.

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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:

#1) Why?

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.  

  • Shane & the Guth family have put an extraordinary amount of time, learning, trading and energy into creating the course content for the class we signed up for.  Take the time to read it.  Study it.  Pretend that you will be tested on it, and eventually be ready to teach it.  Shane is thoughtful, smart, and efficient.  If it isn’t relevant to your goal of trading the markets competently and consciously, it has been weeded out.  To disregard or overlook the course content is a disservice to yourself.  Watch Wade’s videos repeatedly.
  • Do your trading log. Every trade. If there is a silver bullet, it’s this combined with your own personal screenshots as well as your weekly progress report.
  • Take them and archive them.
  • Analyze your own trading.  It won’t take you that long to start understanding the majority of the important information that the charts show us, but it may take a while to understand what actions you are taking based off of that information.  It’s not always clear in the moment but it almost always is in hindsight.  Plan, do, Review.
  • Show Up Consistently with a good attitude.  Ira happens to be not only one of our great instructors but a great trader. When I asked Steve about Ira, he told me that “Ira has been relentlessly consistent at this…” Doesn’t seem like a coincidence to me.
  • Find a battle buddy.  The community at the institute is one of the most amazing things about it, and there are people of every age, background, and level of student that you could want.  Meet the people, interact daily on fxlive and roll up your sleeves and jump in… Like anything I’ve been a part of, you get what you put in.
  • Read the books!  ‘The Forex Mindset” is a tremendous resource as is another book called “Mindset”. Treat these books biblically during your tenure as a student.  Review them, re-review them.  Each time I have read ‘The Forex Mindset,’ I have gathered different insight and in some cases understood things I had already read differently.
  • The Traders Cog is real.  When I first saw the traders cog, I decided I was just going to skip it.  As it turns out, I’m 31 weeks in and right on schedule.  Maybe you can skip it, but if you don’t, some smart people that have been down this road made it up… and it’s pretty accurate.

 

#5) You will probably ask yourself all of these questions…

  • Am I ever going to get this? Yes
  • Does anybody actually make money consistently at this? Yes ( a lot do)
  • Are we sure this Market Makers thing is real? Yes
  • Is this a total pipe dream? No
  • Am I destined to be one of the failed 95% of retail traders? No
  • Am I wasting my time? No you have a current plan for financial freedom that’s working? If no, then no
  • Are there real fx365i students who have learned how to do this and are profitable? Yes
  • If people are doing so well how come no one talks about money? Because its the skill set you’re after.  If you can consistently pull pips for profit, you can get free financially.

 

#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%…

 

Payton Parnegg

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A couple of weeks ago I noticed that there were some very specific bad habits beginning to frequently occur as I was trading. Each time these habits would come up I would think “Wow that was stupid, I definitely won’t do that again.” Then guess what, I did those things again, and again, and again.

So I decided that I needed to take some time to dissect these specific issues and find out why I kept repeating these mistakes. It has been really beneficial, and I plan to do the same thing with any recurring bad habits in the future. This is what I wrote.

 

The Issue

After seeing considerable profit in a trade, I tend to ride it negative. I have caught myself doing this fairly frequently. This happens due to the overconfident belief that price will go where I expect it to go. Most of this journal entry is written from the perspective of being in a trade, so most of the following observations apply to my mindset while in a trade.

 

Why does this happen?

A) I believe that price “has to” go places.

B) I stick to bias too rigidly, failing to take in new information.

C) I look at obstacles as “springboards.”

D) I tend to forget that breaths are normally larger than anything I want to ride through.

E) I stay in trades too long in hope of eventual profit due to the fact that I am limiting my trades.

F) I get greedy. After seeing a decent profit, often times 10-20 pips, I still expect more.

G) I am too excited to think logically.

 

A) Belief that price “has to” go somewhere

Price does no have to go anywhere. I can call directional bias, and set a profit target, but more often than not, price does not go all the way there. And if it does, most of the time it does not go straight there. Movement is only semi predictable.

To help with this issue I think that I need to remember that I don’t need to get all of the pips all of the time, anytime the market moves. Even in a predictable and unsurprising profit release it should be my goal to grab some pips out of the middle, maybe catching one of the two ends of the move, but I should never expect to get every last pip. To reinforce this, I should remind myself that 10 pips is a good trade. 10 pips is 25% of my current weekly goal. That’s not bad for one trade, yet often times I find myself turning up my nose at these profits, expecting more, and believing that I will get more.

One thing that I am realizing is that I need to treat my profit targets more like a maximum. I tend to just think that price will go to my target, and that’s that. So instead of saying, “there’s my target, that’s where price is going and I’m staying in this trade until it gets there,” I should be saying, “I could see price possibly going here, so I will stop myself just before there if price were to go that far in my favor.”

 

B) Sticking to bias too rigidly

This is almost the same as issue A, and the many of the same fixes apply. I need to be open to new info. I also feel like I need to feel the market to some degree. When price is moving strong in a direction and then it slows or stalls, it may not be a bad idea to get out with some profit. Usually I will find some content to back this up, often times though it is found after the fact. My point is that I should pay attention to stalling in price and look for clues as to why it may be stalling, instead of sticking to bias or belief that may not be true.  I always need to be looking for clues while in trades.

 

C) Looking at obstacles as “springboards”

Frankly, this issue is just dumb, but it is something that I have caught myself thinking.  Sure sometimes things such as dots or average prices will cause a slowing or some kind of rotation but to think that this will be followed by an acceleration in the original direction is just unfounded. It is purely imagination. I suppose where this came from in my mind is the fact that liquidity lines can fuel price movement, which, as I have learned, does not apply to dots or average prices in the same way.

To fix this issue, I should be treating obstacles as obstacles, and not imagining a magical propulsion of price in as a result of them. Perhaps instead I should imagine price rotating off of them into a breath, whereupon I would be stopped out with -20. This is a good scenario to remind myself of the reality of what may actually happen. I know this reality because I’ve been there and done that, and it ain’t fun and it sure ain’t cool.

I should also be looking at these obstacles as targets (maximums). Instead of setting a target far away on the other side of prominent dots or average price lines, perhaps I can use these points of interest as targets, or just play it by ear and watch closely how price reacts to them. This ties into what I said in the last section about feeling the market. Basically, if I see some funky stuff about to go down, maybe I should just get out of the trade, especially if I’m up in the trade.

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C) The Sense of Having a Quota

This is most definitely one of the biggest factors in what causes me to switch from being precise and patient to being a loose cannon. I feel as though I have to pull some pips, often lowering standards for trading habits in hope of getting lucky and getting a few pips. This is by far most noticeable after losses. After I have lost, I feel as though I need to “get my pips back,” which most of the time leads to losing more pips. This is a variation of that sense that there is a quota to be met, or a target that I need to reach.

This “quota mentality” ties in to the “target mentality” that I have been working on lately. It seems that in the same way I can set a pip target while in a trade, and often ride it negative while waiting for price to reach my target, I can also have a pip target for the day, or some idea that there is a number of pips that I should end up with. Such targets or quotas can be dangerous if we treat them as a minimum that we must reach. One thing that helps me be consistently profitable in trades is the idea that the target should be treated more like a maximum. I think this mindset can be applied to the issue of having a daily or momentary quota also, so that I look at my quota for the day as a maximum, with the minimum being dependent on opportunity.

Regarding this issue as it relates to losses, I believe that I need to just learn to be okay with losses. Most of the time this is not an issue, but when I am not closely monitoring my emotions, that sense that I need to get my pips back can creep in, and lead to all sorts of ugly trades. I haven’t thought of a name for this yet, but it is the close relative of the Big Bad FOMO Monster. I need to keep in mind that having some pips and losing them does not mean that I have to get them back, most of the time this ends badly, and leads to out of control desperation trading.

I have noticed these problems at high news events, which often times seem harder to trade, perhaps due to the fact that emotion can quickly take over. I’ve had a couple of bad high news days that have gone something like this: I get in based on FOMO, I get stopped out once or twice, then I get back in because I am frustrated by the fact that I am losing money instead of getting paid like we are all “supposed to” on high news days. Then I make another trade or two, all within a few minutes, trading both ways, with no clear directional bias, or complete disregard for bias if I had actually established one. Then I leave even more frustrated than I already was, with the question, “What just happened?” resounding in my mind. These are the kinds of days that I want to avoid.

 

Some good habits to avoid the quota or target mentality:

  1. Look at any target, quota, or variation thereof as maximum, and not something that must be reached at all costs, and do not disregard risk for the sake of a quota.
  2. Welcome losses as the price of doing business, view them as a piece of the puzzle in my trading career, do not become emotional from losses, they are normal and should be expected. It is my job as a trader to limit them however, which means that I need to be in control and constantly observe my emotions.
  3. Exercise extreme caution during high news events.
  4. Get comfortable with smaller profits in each trade, for each day, and even for the week. Try to take some 10s in each trade, or for the day, and remember that all I need is 35-40 pips per week

 

Conclusion

Most everything in trading ties together, and the product of all of these aspects of my personality, style, and habits defines who I am as a trader. All of these rules or habits to help me stay on course do not work by themselves, so focusing too much on one rule may lead to oversight in other aspects of trading. These good habits have a synergistic effect, producing exponentially better results when combined. I must learn to ingrain all of these habits into my identity as a trader in order to succeed and become a consistent, disciplined and profitable trader. I am confident that with time, and constant introspection I will be able to do this.

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Editor’s Note: Fx365i student Chris Gibson was kind enough to share some excellent insights  from his trading journal.  This is the first in a two part series.

The Issue

Sometimes when I trade, I find myself switching from being very conservative and controlled to being very reckless and out of control. I get desperate for pips and lose sight of the value of conservatism in the number, frequency and style of trades. This typically leads to taking too many trades, taking trades too often, and taking lower probability trades. Trades like this are often based on nothing but emotion. Most of the time the main problem here is that I take too many trades.

Why does this happen?

A) Desperation mindset kicks in

B) Defense is forgotten in the name of offense

C) The feeling that there is a quota to be met for the day

 

Understanding these issues

All of these issues tie together, but to get a better understanding of all of them, I want to focus on them individually.

A) Desperation Mindset

I sometimes become desperate for pips. I become overwhelmed with a desire to get pips, to the point of becoming blind to the fact that there is no room for recklessness in trading. I feel like this is based in ego, and the desire to succeed. It is very important that I keep the consequences of this in the forefront of my mind. There needs to be a clear understanding of cause and effect, of actions and consequences, because the truth is, that the very thing I think I need to do to get pips for the day is going to be the thing that can result in me being down 20-30 for the day (this amount is 50-75% of my weekly goal in the wrong direction!). I must always remember that if I choose to trade in a desperation mindset, it can almost be guaranteed that it will end terribly.

There is much to be said about the need to keep your cool when trading, and not trade based on emotion, the type of trading that desperate trading exemplifies. I think the solution to desperate trading is broad, since the idea is rather nebulous, but some good habits to form would be:

  1. Keep in mind the consequences of foolish trading, and the value of wise trading
  2. Take a break (or better yet stop trading) when I feel myself becoming emotional
  3. Exercise discipline in limiting trades
  4. Value discipline over pips
  5. Remember that there are always more trades
  6. Remember that less is more

 

B) Forgetting Defense In the Name of Offense

One thing that I have found important as I have been learning to trade forex is the value of a good defense. Offense is important of course, because I would get nowhere without it, I would have no pips if I had never made an offensive move to take a trade. Despite this fact, I think that it is more important to focus on defense of pips that I already have than to focus on getting more, and not allow my desire for more pips to leave me with less than I had to begin with.

The whole idea of defense in trading forex is kind of funny because no one is coming out to get you, you are safe behind your screen as long as you are careful with your trades, but as soon as you enter a trade, you have made a very serious decision to expose yourself to the risks of the market. So then, it is not necessarily the market I have to defend against, since I am the one who is clicking the rate indicator. The real fear should be of myself. This is who I need to defend against, this is the enemy. He is the one who takes my pips. The portion of my being who exposes myself, my money, and my emotions to all kinds undesirable things, this is who I need to watch out for. There is an expression: “the best defense is a good offense,” But the opposite is true in trading; the best offense is a good defense, and if I defend against my own tendency to become sloppy and careless in my trading habits, I have a great chance of being consistently profitable in trades.

 

Some good habits to form so that I can keep my defense strong:

  1. Take each trade seriously: Would I take this trade if I were trading $100 pips?
  2. Recognize the risk of each trade.
  3. Remember that my desire for more pips could lead me away from my goals if I’m not careful.
  4. Call it a day at the very first reckless trade, it is too easy to lose and make a couple more reckless trades after the first, especially if I lose a lot of pips early on.
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