Having been away recovering from a Major Op for several months I thought it a good time to take stock and set out my thoughts on what I believe are the key overall steps to trading success:

Realistic expectations:

There is no quick and easy ‘Golden Button’ to trading riches

• Time scales to achieve consistent profitability
• Earning potential in the first few years
• Realistic targets

Hard Work, Discipline & Patience

• You have to be prepared to put in the effort to learn, understand and implement the knowledge
• You have to be disciplined to be able to execute your chosen trading methodology
• You have to be patient and wait for the right trading set up rather than trying to force the market

A good Trading Education:

• Cheapest is not necessarily and most often is not the best
• A good trading education will save you losing money in the markets
• The right educator – trustworthy and consistent track record
• A comprehensive course covering sufficient strategies, money & risk management and the development of a Trading Plan
• A comprehensive Seminar/Workshop with follow up support

Personal & Ongoing Mentorship:

• One on One Training and Guidance from a Top Trader to deliver a Personal Mentorship Programme (PMP) tailored to your needs and expectations
• Most people who get to the top in all walks of life have had personal mentorship
• Whilst this may seem potentially expensive it will be money well spent
• There are many facets to being a top trader and like anything in life it takes time, guidance and support to achieve such success

A Trading Plan:

• Covering: Why? What? When? How?

Back test your chosen strategies:

• Build up some stats on chosen strategy’s potential profitability
• Could use this excellent Back Testing Software

Evidence of sustained profitability in a Demo Account:

• 6 months to a year

Capitalisation:

• A sufficiently Capitalised live trading account

Money and Risk Management

• Use Fractional Money Management
• 1% Risk for any one trade

Compounding:

• Compound your profits in the early years to build you trading capital up to a sufficient level to be able to withdraw periodic and regular % profits whilst still continuing to build your trading capital.

Accountability Partner:

• Total honesty helps maintain trading discipline
• Friend, fellow trader, partner and/or mentor

Journal & Record Keeping

• Post trade analysis will highlight areas requiring attention

Ongoing Education & Development:

• Never stop learning
• Trading conferences and exhibitions
• Network & build your links with fellow professional traders
• Running your trading endeavours as a business

Get the Balance Right:

• Trading can be addictive so pace yourself, maintain your relationships and have fun along the way
• The markets will always be there tomorrow

Whilst the above may seem a rather daunting list it can be tackled in bite size chunks over time, as learning to trade is more of a marathon than a sprint.  If you want to be a professional at anything then that normally takes several years of hard work, so why should trading be any different.  The end result will be well worth it though. However, by taking up a Personal Mentorship Programme, this can fast track you through the Jungle of the Financial markets and speed up the learning process.

If we can help you in achieving any of the above then don’t hesitate to contact us.  We are normal, friendly and approachable people.  Just send an email to info@fxtribe.com

I just had a great weekend away surfing in Cornwall and it struck me that trading the Forex markets is a bit like surfing.

There is little point in trying to surf when the conditions are poor, such as when the wind is onshore and the surf is messy, crashing and dumping, with white mush all around you, rather like a choppy market.

Or when the waves are negligible and all appears calm such as when the market tightens up and stagnates.  In these conditions surfing and trading can seem frustrating, tiring and too much effort for little or no rewards or even losses.

Surely it is better to wait for more ideal conditions when the wind is offshore and the waves are breaking cleanly, allowing a better and more enduring ride.  Similarly when the market is trending and moving in waves trading can seem almost effortless as you trade the rise and fall of the waves on your selected time frame and net those pips.

So try and assess the market conditions and ask yourself do you like what price is telling you or is too choppy or consolidating and stagnating, if the latter then go and find something better to do.  As for me, when the market conditions are poor I’ll be off surfing or sailing, sea conditions allowing!

Top Trading Tip:  Try and develop a feel for the current market conditions and instead of battering against the market or struggling to find a wave to trade, preserve your trading capital by going and doing something else instead and come back another day when things may be more conducive to profitable trading.

Here is a screen shot of a short trade on Silver 4hr chart I took today.  Here is a short video:   Watch This NOW.  The strategy was a Wolfe Wave and the trade is at break even with 1st target reached and profits banked on 216 pips (with spread taken off).  I am staying short with my next target at 37.20.  If you would like to know how to trade like this then why not sign up for or next 2 Day Forex Mastery Workshop in London on the 24th & 25th  September 2011.  Safe trading.

There is currently (midday 4th August 2011) a potential Bullish Butterfly setting up on the UK FTSE 100.  This could present a substantial long trade opportunity with a relatively small risk.  Potential targets are the 5700 area and 5900 area.  The strong impulsive move down could also be an Elliot Wave 3 and should finish around 5460 area. If price continues to fall then look for a bounce around the 5320 - 5330 area where we could have an extended bullish butterfly and an extended EW3 finishing.  Safe trading

Here is an example of the sort of trades we take at FxTribe, in this case we are short the EURUSD on the 1st August 2011 and on the Daily there is the potential for a Bearish Gartley pattern to form and we are trading the B to C leg of this potential harmonic pattern.  Also we used a confluence of setups to enter this trade on a lower time frame in particular a 15 minute Bearish Butterfly.  We have taken some profits already and have moved to break even so what ever happens to price we have had a successful trade already with the potential to make further gains.

Whilst chatting online last week to another trader who had recently completed a personal mentorship programme with Sunil Mangwani, I asked how their trading was going?

The answer came back, rather melancholy, that ‘I’ve only made XY% profit so far this year’.   To which my reply was great, that’s a neat profit!  The ensuing online chat was then along the lines that constant steady profits no matter how big or small when compounded grows ones trading account nicely over time.

When starting out in the world of Forex if you can consistently make profits, whatever their size, then you are moving in the right direction.  So if you are learning how to trade Forex, then set your overall expected profit targets at a realistic level and over time these will be exceeded and you can set a higher bench mark for yourself.  The more pressure you put on yourself to make money, the less well you are likely to trade.  Far better to focus completely on the process of trading than on the expected outcomes, as they will take care of themselves if you can get the process right and down to a fine art.

Top Trading Tip:  Focus on the process of trading such as implementing your chosen strategy to perfection, along with good trade planning, risk and money management and the profits should take care of themselves.

When I first started trading I felt I had to be in a trade or I was going to miss out on a move and as result I found myself over exposed to the markets even though I was managing my risk on each trade properly.

I soon began to realise that over trading can kill your account quite rapidly.

I now plan all my trades down to the last detail and only take those which appear to have a higher probability of succeeding.  Sure I still have losing trades but the profits from my winning trades by far offset those losses, which are inevitable.

So following on from my previous Blog about trying to have the Patience of a Saint and the Discipline of a Soldier when trading the markets, if we apply those ideas to our trading and stick rigorously to our Trading Plan, Trade Plan, Strategy and Risk & Money Management we should be able to stop ourselves from Over Trading.  After all we need to preserve our trading Capital to take best advantage of those moments in the market when we have total clarity of the likely direction and are thus in for the kill at the right moment.

These events tend to take place when we get what Sunil and I call confluences taking place, where everything seems to come together at one point in time across several timeframes, but more on that topic in a future blog article.

So even if you only take one good really good well planned trade a week it will most likely pay well and you will minimise your losing trades and on balance will see your account grow faster.

Top Trading Tip:  Try not to take impulsive, unplanned trades and don’t Over Trade and kill your account, pick and plan your trades carefully, as Less really can mean More.

A common problem encountered by novice retail traders is their overwhelming desire to trade, no matter what the market is doing.  They switch on their laptop or PC check their charts and expect to get into a trade and make some money during the time they have allotted.  Many end up ‘Forcing’ a trade and this approach can lead to losses.

We have found that waiting for a quality set up and entry signal pays greater dividends over time.  Yes, you will be in fewer trades, but that doesn’t mean less profits, in fact the opposite is nearer the truth of ‘Less can mean More’

To be successful with this approach, as Sunil Mangwani so often says and constantly reminds me, you need the ‘Patience of a Saint & the Discipline of a Soldier’ to be a consistently profitable Forex trader.  Waiting for a quality set up may mean you miss what seems like a potentially good trade but it also means you don’t get sucked into a losing trade.  If a slightly dodgy set up occurs and goes in the desired direction, don’t chase price, wait for a decent pull back and then join the party but when you take that trade make sure it is a quality set up based upon one of your chosen, tested and proven strategies.

Endless entries into poor trades will eventually cause one’s trading account to be quickly depleted.

So try and think of yourself as a soldier waiting in ambush or a wild animal waiting for its prey to come by and then at the right moment pounce and execute the trade.  For both these examples failing to pick the right moment could mean the difference between life and death so try trading as if your life depended upon it and bring some real focus, patience and discipline to your trading and let me know if it makes a difference.

Top Trading Tip: It is better to be Patient and wait for a quality trade set up to occur before taking a trade than being impatient and trying to force a trade.  Try and be patient and disciplined in your trading as this should reap dividends over time.  Remember ‘Patience of a Saint and the Discipline of a Soldier’ and lie in wait for your foe!  Less can really mean More.

When you are trading do your emotions drive your actions?  Do you chase price, only to have the market turn as soon as you pull the trigger? Do you bail out of a trade as soon as it looks like it could go against you? If so you are probably at the mercy of the 2 key emotions that can stop you becoming a successful consistently profitable trader, and they are FEAR & GREED.  Fear can lead HESITANCY which can make you fail to take a potentially good trade and Greed can lead you to take on too much Risk and make poor unplanned entries and eventually probably blowing up your account.  Lastly the result of poor trades due to all the above can lead to UNCERTAINTY, with you wondering what the heck is going on in the markets

The best traders have learnt to control their emotions when trading.  How have they achieved this?  By knowing their chosen strategies inside out, backed up by a robust Trading Plan and historic data which proves their strategy works, if implemented with constancy and accuracy over a period of time.  If ever uncertain about the markets or a particular trade then check your plan and if necessary stay out!

All traders have losses but the best traders minimise their losses by precise implementation of their strategies and using strict Risk and Money Management.  Having such a robust Trading Plan and following it to the letter, provided the right market signals are given, leads to unemotional trading, but you do need to understand and work on one’s own Psychological Trading profile.

My own Psychological Trading profile is that I have an impulsive nature when trading and thus I have worked on developing my trade planning, patience & discipline, but more on the latter two topics in a future blog.

If you need help with any of the any of the above here are a few pointers:

• Great Book on Trading Psychology:    
• Personal Mentorship & Workshops
• Trading Beliefs

Top Trading Tip: Try and plan down to the last detail every trade you take as this can take the emotion out of the equation.  Try and focus on the process and not on potential gains or losses.  Also give some thought to and try and identify and analyse what your own Psychological Trading Profile is, as once recognised, you will be half way to addressing it and improving your trading.  And If you are ever in doubt then stay out!

It is often said that ‘the best stop is a great entry’, meaning that as soon as you enter the market price moves in the direction of the trade and never goes near your stop.  This takes time and practice to achieve but is a laudable target to aim for.

I also remember being at an International Traders Conference a few years back and trading live with some top traders and as the novice traders inevitably asked the question ‘Where would you put your stop?’ you could see the expert’s eyes glaze over!

So to answer that novice’s question and put it to bed, here goes ……

• Firstly, I recommend always use a Stop Loss to manage your Risk.
• Secondly, it depends upon what strategy you are using and what that requires, which you will, of course, have back tested a thousand times over before trading live.
• Thirdly, your stop should be placed just beyond a particular technical level, plus an allowance for the spread, beyond which your trade plan is wrong and you definitely want out.
• Fourthly the size of the required stop will dictate (along with your account size) your position size.  So if you have a tight stop your position size can be larger, but if you have a large stop you will probably have to reduce your position size, so that your risk on any one trade remains fairly constant.

A technical level is above or below a key support or resistance level, beyond a pivot level or a key fib level and so on, but a point beyond which you know your trade was in the wrong direction.  If you can’t manage you risk because the stop is too big then stand aside and wait for a better setup. If you need help with these concepts then maybe you could benefit from attending our next Forex Mastery 2 Day Workshop in London.

Top Trading Tip: Always use a Stop Loss and place it beyond a technical level (also allowing for spread) and manage your risk by altering your position size to match your Stop size, so that your Risk remains fairly constant for every trade.  If you can’t do that because your stop is too big, then stand aside and wait for a better setup to occur.