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Three pillars of trading success 📈💲It's time for my mid week educational post. Today I want to talk about the three pillars needed by all traders for success in the markets. This isn't just the forex market either this applies to trading all financial markets. Be it forex, crypto or stocks, so lets get into the the three pillars of success. PILLAR NUMER ONE- STRATEGY You MUST have an edge before entering the markets. When will you enter the market? When will you close? What % per trade will you risk? What pairs will you trade? What timeframes will you trade? If you don't have any answers to the above you are entering the markets blind and it will end in tears. In trading, edge is your ability to select trades that perform better than random. You can think of edge as the process used to generate and execute entry and exit signals. Do not enter the markets until you are working a strategy with a proven edge. The stronger your edge, the more profitable you’ll be. PILLAR NUMBER TWO- RISK MANAGEMENT We can't avoid the white elephant in the room on average 80% of trader lose money or fail in the markets. Some say its even more and you will become one of the stats if risk management isn't applied to your trading. Some of the reasons losses like these exist in trading is down to the fact that aspiring traders don’t put any thought into their risk management tolerance. We only ever see the upside when we start out and many never do anything to protect themselves from potential losses. If you never made any money as a trader before or entered the markets before ask yourself the question below before starting out. How much money am I comfortable losing? Your first priority with trading is to stay in the game So manage your risk per trade and total risk at anyone time. Understand probability and ensure you are comfortable with your maximum exposure at any one time. Understand the maximal draw down in your testing when finding your edge. That way it will help you see what a potential losing run you could experience. PILLAR NUMBER THREE- TRADING PSYCHOLOGY We need good trading psychology to keep a balanced mind whilst trading, this stops your emotions leading the trade. The trade outcome cannot be controlled and you MUST detah yourself from each trade outcome. You will know when your trading emotions are nailed on when you do not 'FEEL ' anything when trading. If you have 'emtions' with your trades or when trading simply reduce your risk further. Two emotions that need particular attention are GREED and FEAR. You need discipline in controlling these two emotions or you are going to end up making losses as a trader. We all been there we make a few profits confidence kicks in and then greed before you know it your in whole world of pain. We all be there at some point with fear to and not executing trades due to a fear being in our trading game say from a poor run of form. Emotions will always be there we are emotional beings, but they will need controlling in order for you to be a successful trader. Practice developing the emotional control needed to trade successfully. FINAL THOUHGHTS Trading requires 100% commitment most see it as a hobby to start with but this can be costly hobby if commitment to trading is lacking. The sole reason most get into trading is to make money. One purpose of a business is to make money. Treat trading as a business at the end of the day it's your personal money that's on the line. Every trader needs to have a disciplined approach to the markets. Following these three steps will help you. In order to be a successful trader and run a profitable account, it is essential that you have these three pillars in your trading. Thanks for taking the time to read my idea. Darren 👍
Education
by pow_removetheguesswork
1
The Rule of 72 😃📈Time for a educational post from me. At some point as traders we have all had the thought of how long will it take to double my account. The rule of 72 is the easiest way to work that one out. The rule of 72 is a handy mathematical rule that helps in estimating approximately how many years it will take for an investment to double in value at a specified rate of return. Rule of 72: If 72 is divided by an interest rate, the result is the approximate number of years needed to double the investment. For example, at a 1% rate of return, an investment will double in approximately 72 years; at a 10% rate of return it will take 7.2 years. But the example above is based on a 10% return per year. We as traders have the chance if our strategy is consistent and profitable to return good percentages on capital in a matter of weeks. Time for more examples. Some traders can return 6% a month So 72/6 = 12 months to double the invested capital in your account. Lets say a trader returns 4% month on month 72/4 = 18 months to double your investment. The rule of 72 servers two purposes to us as traders. 1. I personally feel it helps to keep us grounded as traders. To many enter this game thinking they will flip 1000 into 10000 in a matter of weeks A 4% return per month is a good return and from the equation above it would take 18 months to turn 1000 into 2000! So I would like to think the rule of 72 acts as reminder of the challenges we face when it comes to expectations. 2. Having said the above the rule of 72 also serves as a reminder that as traders who do or potentially can go on and achieve consistent profits especially monthly we can make way more returns than what a instructional bank or establishment would offer to you as an investor. The rule of 72 then becomes an inspiration to take control of your own money game and aim for growth that no one else can offer you. Thanks for taking time to look at my idea. Darren 👍
Education
by pow_removetheguesswork
HOW TO use asymmetric compounding 🧐📈The pair in question and four winning trades allows me to cover a subject I've wanted to touch on. That subject is asymmetric compounding. Asymmetric compounding is a money management strategy that can accelerate the equity curve of an account. But you need the right strategy and data available to back up using asymmetric compounding. Higher the win rate the more asymmetric will work wonders on that equity curve. In simple terms asymmetric compounding is best suited to strategies with higher win rates as you need consecutive wins to make it work. The main reason for using this NZDUSD chart is the four winners in a row make it easier to explain the concept of asymmetric compounding. You traders should know the full ins and outs of your own strategies and if this can be applied. It's not just win rate also RR along with max losing and max winning runs need to be factored in. For this example on the four winning trades I am explaining the concept basing it on risking 2% per trade on the initial trade. As this strategy is a 1:2 risk reward strategy risking 2% sees us gain a profit of 4% on one winning trade. This is where you can then use asymmetric compounding on your next trade. Instead of risking 2% again you now risk the 4% gained from the previous trade on this trade. If the trade goes on to win the 4% risked on that trade has just earned 8% in profit. At this point you go back to risking 2% on the next trade until you have a win and then risk the 4% gain from that winning trade. The chart shows four winning trades at 1:2 RR so lets test the concept in numbers. If we was to risk 2% per trade on a £1000 starting capital account the results are as followed. Trade one 2% risked 4% gained= £1040 capital. Trade two 2% risked 4% gained= £1081.60 capital Trade three 2% risked 4% gained= £1124.86 capital Trade four 2% risked 4% gained= £1169.85 capital Now if we apply asymmetric compounding to the same trade sequence staring back at original 2% risk after two winning trades Trade one 2% risked 4% gained= £1040 capital. Trade two 4% risked 8% gained= £1123.20 capital Trade three 2% risked 4% gained= £1168.13 capital Trade four 4% risked 8% gained= £1261.58 capital Using asymmetric compounding on these four trades see a capital increase of £91.73 more than just risking a flat 2%. Below is an example of using a 1:1 RR strategy risking 1% per trade. If trade is a winner then risk 2% on the next trade which is the profit and the risk from the previous trade. # If that trade wins go back to the intial 1% risk then risk 2% again if that trade wins. This is a great concept to grow small accounts or even pass funded challenges as with the trades shown on the idea chart you would pass most prop firm challenges in two trades using asymmetric compounding. However I can't stress enough you as the trader need to know you own risk appetite for this. You also need to factor in how good your win rates and how often your strategy has seen winning runs that would benefit this concept. One way to found out is to back test and forward test your strategy to see how asymmetric compounding could work for you. Thanks for taking time out your day to read over my idea. Ill see you on the next one 👍 Darren
Education
by pow_removetheguesswork
The Power of "W" & its 3 compadres... How to Enter like a ProHi Traders, If you've ever questioned your entry strategy or have entered too soon, or found yourself gun shy and entering after the party is over, then you may find this guide helpful. This isn't a over the top strategy, nor is there any special skill needed to apply it to your trading. I've found personally, that the easier and more simple it is, the better results I get long term. Over the years, I've simplified this down to three confirmations before entering a trade. Yes, you will leave money on the table by not getting in at the exact bottom, but how many times can you count on a hand that you've done that successfully? Probably not many... Of course, this is just technical analysis and it will serve you well to have a "fundamental strategy" for picking the projects you choose to enter in the first place. But after you've located the projects you want to buy, you then can use technical analysis to locate a price point to enter the market. Here are the three confirmations I live by: Confirmation #1: ("W" Pattern) - RSI/ Price action forms a clear "W" pattern. - The two bottom points slant upwards. - You could call this a double bounce/ bottom as well. Confirmation #2: (MACD) - MACD signal line crosses above the histogram. - Signal lines are converging from each other. (Moving apart/ widening) Confirmation #3: (EMA cross/ Final Confirmation) - EMA cross - Price Action crosses above the EMA lines/ ribbon Pretty simple right? Well, you would think so but then comes the mental aspect. Having the mental fortitude to always live by the rules you set for yourself is what separates the pros from the amateurs. You don't FOMO, you don't fall in FUD, and for the most part, you don't listen to others, and especially don't listen to others without doing your proper due diligence. Conducting TA is only one step in the process and in my eyes, it's the second step. You have to have a process for locating projects that are going to present the highest follow-through on the TA you chart out. Bc yes, a lot of false signals can come from set-ups you think would be a winner, to only have the set-up fail on you. This generally comes down to a weak project with weak fundamentals. Hopefully, this was understandable and simple. If you've been around trading for any amount of time, you will most likely heard of all three of these indicators. Good luck!
COINBASE:ETHUSDLong
by MarkStPeter
CADJPY Daily Pitchfork ShortFOREXCOM:CADJPY I marked the pitchfork from the pivots on the weekly chart from June, September, and October. Confirmed with the Daily RSI and the Daily chart. It's very slight but there appears to be a bearish divergence on the RSI. I've only started dabbling in RSI divergences so I wouldn't consider this a confirmation, but it's worth noting. After looking at the 30M chart I am confident entering a short position. The Daily RSI is not what I like to see so my stop loss will be tight, probably only risk 0.5-1% with the TP at the median line.
Short
by UnknownUnicorn2349278
AUDCAD ShortWatching for a confirmation on the H4 and H1 for a good entry. After a few losses I started to solidify my system and the confirmations I'm looking for. -Set the pitchfork on the Daily chart and Weekly RSI -Does the trade coincide with the higher time frame trend? (If no then no trade) -Is the trade returning to the median line (If no then no trade) -Will the trade encounter a significant S/R in the direction of the trade? (If yes then no trade) While I continue to research the use of Median Lines, I have begun looking into Fib retracements to find the best entry points.
Short
by UnknownUnicorn2349278
The 12 Tasks Of Trading12 tasks of trading which include: 1. Self-analysis to determine if you are in a state of mind to trade Prior to starting your trading day, it is very important to make sure you are in the correct state of mind to trade. You need to analyse yourself and make sure you are at the best state of mind to avoid mistakes in the markets. You cannot finish fighting with a friend, spouse, or colleague and expect to make great analytical decisions. Therefore, the first and most important step, is always making sure your mind is clear and at its best. 2. Mental rehearsal to avoid mistakes The second step includes you rehearsing your set of rules and making sure you are going to strictly stick by them. This will allow you to avoid many mistakes in the markets and in your day. 3. Daily focus to lead you towards your goal It is very important to have goals, but specifically daily goals. You need to determine what your goals are for the day including the pairs you are looking at, the times you will be trading, your risk management, and what you aim at gaining from the markets that day. Once goals are met, it is important to step back and wait until the next day to trade. 4. Developing your own style of a low risk idea. For students of Opes Trading Group, low risk ideas and strategies are all taught to them during the course. It is important for every trader to develop their own ideas and strategies that are low risk in order to always protect their capital. Capital preservation is the most important rule of forex trading. 5. Stalking the charts starting from high to low time frames Looking at the charts from the higher to the lower time frames allows you to be able to see the bigger picture before looking right in. if you started looking from the lower time frames, you could have a wrong picture painted for you as to where the price could be heading. You cannot see the bigger picture if you are standing too close to something, it is the same concept on the charts. 6. Action requiring commitment and not thought Once a trade and an idea has been analized, it is important not to second guess yourself and take the trade. Do not second guess yourself if you believe in yourself and your trades. 7. Monitoring the trade to keep the risk low Always keep your eyes on your trades. Now that doesn’t necessarily mean you need to be glued to your charts, but check them every once in a while, and at important candle closure to make sure they are still playing out the way you expect them to. 8. Aborting is the trade is not going well If a trade does not go as planned (and the reality is some won’t), it is important to cut your losses if the trade is clearly not going to recover. There is no reason to hold on to a losing trade if there is no reason for it to recover. 9. Taking profits when the reason for the trade has ended A take profit is placed for a reason, however sometimes the reasons end before the take profit has been reached, meaning it is very important to close the trade even if it means closing it early. Never become attached to a trade that you chase the take profit only to find yourself back at 0 or even in negative. 10. A daily review to monitor and prevent future mistakes At the end of every day, all the trades taken should be reviewed. This will allow you to see what you are doing right, and what you are doing wrong. This will give you a good indication for what is needed for future trades. 11. Being grateful for what went well Something so many people pay no attention to and ignore is gratefulness. Any positive day in the markets, is a great day! Be grateful for all that goes right, no matter how small the profits might be, because 90% of traders lost that day. 12. A periodic review to make sure everything is still working well Every quarter it is recommended that you review your whole trading system. As the markets change, we need to be able to change and adapt with them, therefore a periodic review will allow you to know if things that are working still are or aren’t.
COINBASE:ETHUSDEducation
by opes_trading_group
4