Mindset
Why bad psychology might be stopping you from succeedingYou are a Human. This is good.
You are capable of making complex decisions. You can identify patterns. You can enter excellent trades.
This is also bad. Between your ears is a narcotics factory that will put Heisenberg's mobile meth lab to shame.
You've entered a trade. This is it. The BIG one. A one-way ticket to infinite infinity pools.
Adrenaline dilates your pupils and switches off your digestive system. Suddenly you're not hungry anymore. Endorphins , stronger than morphine, are spewed out of the pituitary gland. Dopamine released from the middle of your brain means you can no longer hold in your excitement. This trade's a winner! Anandoline kicks in, you're hungry again. There's some the leftover beef bourguigion in the fridge. Who needs speed when you've got PEA ? Shit, the trade's gone sour! Suddenly you're anxious. It must be the serotonin .
Being Human is something we can't get away from.
But we can learn to master our mind.
A recent study by DailyFX analyzed 43 million real trades to measure trader performance. They found that across 15 most traded currency pairs, the majority of trades were successful .
Yet traders are still losing.
Why? They lose more money on their losing trades than they make on their winning trades.
So if you're reading this and it applies to you, you're probably very good at identifying profitable trading opportunities. Over 50% of your trades may well be profitable. Because you're Human and you're awesome.
So how can we be more profitable?
If your trading strategy has a high strike rate, then a low risk-reward ratio will suit - but you have to let the trades play out. If you don't do this, it will ruin your trading edge. If you fall into this category, then a 1:1 or 1:2 trade will suit you fine. remember to give the trade enough room to breath. I've seen traders make amazing calls, yet they place a stop loss 10-20 pips away from their entry. This is simply not enough.
If you're not so confident with your trading strategy and you've not been consistently making winning calls, you first might want to learn from people that know more than you. Knowledge is power! The second thing you might want to do is have a slightly higher risk-reward ratio (1:2 or 1:3, even 1:4). If you fall into this category, try identifying excellent setups on the Daily or even Weekly charts. Trading on the hourly charts and expecting 1:4 trades to come in every time simply won't work.
Set your stop and take, and leave it alone.
Close your laptop and enjoy a caipirinha by the pool.
Happy trading everyone,
AvidTrader
"Money is made by SITTING, not TRADING" - Jesse LivermoreOne of the major reasons why traders lose money is because they ride out their losses and close profitable trades too early.
While being patient can help us to achieve our maximum profit potential, being patient on the wrong side of a trade can be costly.
This is a great insight into why we are naturally predisposed to riding out losses and not quitting while we are ahead. It's an exert from a book that I recommend you all read called "Trading For A Living" by Elder Alexander.
"Roy Shapiro, a New York psychologist from whose article this subtitle is borrowed, writes:
'With great hope, in the private place where we make our trading decisions, our current idea is made ready....one difficulty in selling is the attachment experienced toward the position. After all, once something is ours, we naturally tend to become attached to it....This attachment to the things we buy has been called the "endowment effect" by psychologists and economists and we all recognize it in our financial transactions as well as in our inability to part with that old sports jacket hanging in the closet.
The speculator is the parent of the idea....the position takes on meaning as a personal extension of self, almost as one's child might....Another reason that Johnny does not sell, even when the position may be losing ground, is because he wants to dream....For many, at the moment of purchase critical judgement weakens and hope ascends to govern the decision process.'
Dreaming in the markets is a luxury that nobody can afford. If your trades are based on dreams, you are better off putting your money into psychotherapy."
If your trades, before you enter them, do not have predetermined take levels and stop loss levels, then you are setting yourself up to fail.
Sitting really does make money, but before we sit, we must first SET and FORGET.
Happy trading,
AvidTrader
XAUUSD SHORTANOTHER CONFIRMATION TO MY PREVIOUS BIAS
GOLD LAST WEEK DOUBLE TOP REJECTION FROM THE 38.2 FIB LEVEL INDICATES WEAKNESS
WE HAD A TREND LINE BREAK LAST WEEK AND NOW SEEMS IT WILL MAKE FURTHER DOWNSIDE MOVES OFF THE PIVOT POINT FROM LAST WEEK
TARGET 1220 AND BELOW
EURUSD a little outlook for what to trade next weekIf you´ve been following me the euro have been very good to us this past weeks with 3 winning trades and 1 loss. For monday i´ve got a Bullish Cypher pattern if price heads south to but it up at strong Support.
If price heads north we are gonna sell it at the blue Bat pattern at a lesser, but still good reistance area, but compared to the Cypher this pattern got a lot higher R:R so its well worth it.
We always try to be one step ahead of the market, and put in orders when we don´t have any emotions aboute it. We use the IF THEN method to see, if this happens, we do that, and if it does this in stead, we do this in stead. We are planning for several senarios while we don´t have our emotions haning on the outside of our cloth and then we just stick with our analysis cause we know its tested and profitable so we just have to control out emotions, and focus on money management!
A subject i see more and more here on TradingView not beeing giving much of a thought, but its almost more important than your trading method if you want to see the returns you are dreaming about. How come some people that have the same size account, makes the same amount of pips make a totaly different return on account. It´s MONEY MANAGEMENT the art of when to increase or decreace your position size! So please spend some of your weekend reading on Fixed Ratio money management vs. Smoothed Ratio money management, you will be amazed!
I´ve got a starting point for you read the book by "Ryan Jones - The Trading Game Playing By The Numbers To Make Millions" It will change your trading career!
Kind Regards
Thomas Jeff
