I Still Haven’t Started With Live Trading Yet, Because I Am Afraid to “Click”

Relatively often, I find myself in situations where beginning traders are telling me that they have done all the necessary work such as backtesting and profitable papertrading, but they still can’t find the courage to click “live”. Therefore I will try to summarize a few pieces of advice and tips in today’s article.

First of all, I would like to repeat that this advice is only for those who really underwent the necessary preparation work, i.e. they have done backtests to verify functionality of their system and have done papertrading for some time and were able to trade profitably for a couple of months (alternatively they have done only papertrading, i.e. without backtests, but in that case for a longer period of time and more precisely). Without these basic steps, the beginner doesn’t show a diligent and serious enough approach to trading and they absolutely shouldn’t click “live”, because they aren’t ready enough!

As long as the beginner fulfills the requirements above, then, based on my experience, there are three types of fear to “click”, which I will try to describe more closely.

Fear no.1: I am afraid to lose money

I think that in connection with trading, this is one of the most common and most natural types of fear. Nobody wants to lose money and, for the vast majority of beginners, the concept of occasional loss that is part of a long-term profitable trading, is difficult to take in. Up until now, we were used to getting some kind of reward for every activity – in trading, this type of thinking is failing and it is even getting worse because of the factor that after a few hours, days, or even months of activity the outcome can be loss. This is why the fear of loss of money is completely natural and not always wrong. This fear has its positive side, because it helps conscientious individuals and it is pushing them towards better preparation and to make an effort to not underestimate anything.

And thus, it is important to realize if this is the fear that is stopping us to “click”. If the answer is ‘yes’, then it is important to openly confess to yourself if possible loss per trade represents a considerable amount (i.e. amount that we aren’t willing to lose, because in our normal life it represents a lot of money) or if it is an amount that doesn’t mean anything significant and a factual loss of such amount won’t be a major problem.

If we are talking about the first option, i.e. situation when possible loss from trading is unbearably high and it represents a lot of money, the advice is rather simple: Either you are undercapitalized, or you risk per trade more than what we are willing to lose and bear. In such case it is necessary to increase the account or move to a cheaper market (with lower volatility), alternatively lower timeframe – to achieve decrease of our stop-loss to a level that won’t be as painful. Or alternatively to do both (i.e. slightly increase the account and through a change of market or timeframe decrease the risk per trade).

If it is the second option, then the fear of loss of money probably isn’t the real problem. Maybe you are just telling yourself that this is the main problem and that the fear of loss of money has the biggest influence on you – but it can be just a conscious belief, which is far from what is happening in your subconscious. Then the real cause can be one of the other types of fears.

Fear no.2: I am afraid to fail, I am afraid I am not good enough

This type of fear is more serious, because it is connected to subconscious models resulting from failures and lack of success in the past (which lead to lower self-confidence).

In the past if we suffered some substantial failure (even deeper, in our childhood) which could negatively influence us, or if we failed in something essential (effort to sustain a business, effort to make a significant change, etc.), our self-confidence can be considerably broken and our subconscious can slow us down from any other effort in order to protect us from another possible disappointment.

The advice here is substantially more difficult and if there is a deeper problem, it can be helpful to consult this with a professional psychologist who can help to find and eliminate such subconscious blocks and fears.

Personally, I have tried various types of meditation and other alternative ways for similar types of subconscious fears, but I respect that not everyone is willing to try them.

Yet I think that the best way is simply to click and live through the possible first loss in the market – to see that there is nothing horrible about it!

Broadly speaking, there are only two possibilities to “force” yourself into this first click.

The first one is to plan and prepare everything in advance. The better and more detailed planning of our first click, the higher the probability of its realization.

First of all, set yourself a target that for example next week (don’t postpone it too much) at a particular day and time you do that first click. For example, you can say that it will be on Wednesday, which is for some reason the calmest day for you and that it will be between 4 and 6pm, the period you have done your training on. But, ideally, you will do that first click in the first 30 minutes after the market opens and you definitely take the first trade according to plan as soon as it occurs.

Afterwards, for the rest of the week, visualize that “Wednesday” (or you can choose any other day) before you go to sleep. Imagine that the day has come, imagine in detail how you sit in front of the computer and you patiently wait for a trade according to plan and when it comes, you click on the mouse without any hesitation. Experience and envision your feelings (it doesn’t matter what feelings you have, don’t think about them too much), imagine both possible scenarios – that the first trade will be both loss and gain. The day before your set date, stop thinking about anything and when that day comes, just calmly do what you have visualised a few days ago. You will see that it isn’t as bad as it seemed – once this first experience is behind you, the other ones will surely be simpler and you will slowly get used to it!

The second option sounds a bit crazy, but it works as well. Now go to your computer (or at the earliest possible moment). Open the chart and click BUY or SELL (completely blindley, it is absolutely insignificant if you buy or sell), count calmly to 3 – and then close your position. And it is done. Your first trade is behind you; you clicked. Nothing terrible has happened, you are alive and healthy, you survived, and it wasn’t difficult at all! So why so much fuss about it? It was a piece of cake! Done; now you just have to repeat it based on your signals according to your trading plan, and you are where you want to be. There is no need to make it complicated.

Fear no.3: I am afraid of change

The last type of fear may sound a bit strange, but it also has its own reason and explanation.

The human brain doesn’t like change. The human brain prefers the past (which it likes to idealize), it declines to its deep-rooted stereotypes (this is why most of the people like to run on “autopilot”) and it refuses any kind of change. Just try to imagine how you would react if your boss arrives to your workplace tomorrow and exchanges people amongst departments and also changes their job descriptions from last week.

Trading is a change – a significant change. It can mean anything (a successful future isn’t guaranteed) and whatever outcome will be, it can sound terrifying. If we lose, it can be an unpleasant change to worse; if we succeed, at present we think that it will be great to start a new dream life – but in reality we can’t really imagine actual steps towards such a considerable life change, because in that current moment such a big change is rather dramatic for our brain! And so, our brain can subconsciously sabotage us to keep us as long as possible in our current comfort of apparent certainty that at least we know what tomorrow will bring. The brain loves its certainties (even the bad ones and horrible ones – for many people unsuccessful and depressing relationships are still better than none at all, and rubbish and hated jobs are still a better solution than to take a risk, leave a job and search for a new one) and subconsciously it can block many of our efforts to change. For example, it can constantly block our efforts to click “live”, which could be understood as a first step towards possible change.

So, what to do in such a case? Simply initiate in our life as many small changes as possible, which slightly “derail” our routine stereotypes and help us gain more self-confidence to click.

Choose a different, new route to work from tomorrow on.

Do something you have wanted to do for some time now, or do something crazy this weekend, like bungee jumping, go-carts, etc.

Try a meal you have never tried before and go to a restaurant you have never been to before.

Do something, anything, that changes your usual rhythm and stereotype for a couple of days or weeks. It is necessary to train your brain for changes, to teach it new flexibility. Then it should be considerably easier to click, because once your brain gets used to a repeated disruption of stereotypes, it will be much better prepared for a change – and so for your first click.

What Drives Your Trading? The Need To Avoid Losses, Or The Desire To Win?

Yesterday I had an interesting consultation with one of my long standing professional trading clients: He observed that his desire to win was oftentimes superseded by the desire not to lose. He said whenever he traded like that he would lose money.

I was delighted that my client had made this profound observation about his deeper emotions. These kinds of insights, when they come to you without being prompted, are the domain of an emotionally trained brain that has learned to go deeper beyond the intellectual part of the brain into the hidden subconscious terrain.

Your trading decisions are made with the intellectual part of your brain which resides in the neo cortex:

Yet 95% of all your thinking feeling and actions are automatic. They reside in the amygdala, which runs the survival instincts and every part of the business that keeps you functioning on a daily basis as a human being. Without the amygdala you could not operate the way you do. I believe that you can already see how this system has hidden value conflicts readily built into the operating mechanics of your brain.

Imagine you had to consciously think how to move every limb in your body, which muscle to engage and limb to use to wash your hair, operate the buy and sell button on your trading account, and how to do all those routine tasks you do every day without giving them another thought.

The amygdala ensures your survival and it does so on auto pilot, which is great.

The problem is that you are making your trading decisions with the 5% of your conscious intellectual brain, while your actions are driven by the 95% of your subconscious brain.

Your body is the final feed back outpost: When you notice feeling uneasy, stressed or hesitant you are observing the final warning signs that you are not in sync with your desired outcome. Your feeling tone is the last feedback, sign before the road comes to an end. There is a barrier beyond there is no further to travel on that road. You must either turn back, or face the consequences of walking beyond the barrier.

The secret is to align the subconscious part of your brain with the conscious part of your brain. When the subconscious and conscious parts of your brain are aligned you are congruent with your desires and intentions. Change can happen now.

Guided meditation is a very effective tool that allows you to access the deeper levels of your subconscious mind.

When you learn to notice whenever your trading decisions arise from survival needs versus the desire to make a winning trade you start thinking like a winning trader

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and other books on trading psychology and personal development.

Her unique guided meditations for traders increase cognitive awareness and improve trading.

Carry Trading: What Is It and How to Profit From It?

This article will describe this long term trading strategy used mostly by institutional investors. We will be highlighting rewards and risks in a simple way to make it possible for you to use it as well.

With carry trading, you can make or lose money even if the price of a currency pair remains static for a long time. It will also help you understand the reasons behind some of the market’s moves, especially during volatile and risk-off periods.

What is carry trading?

Even though it is possible to have carry trades in a variety of financial instruments and investments, the basic premise is the same.

Positive carry trading occurs when someone borrows an asset with low interest rates to finance the investment in an asset with a higher return. For example, borrowing money at 2% and then investing the funds in an asset that pays 5%. This is easily done in the Forex market because currencies are traded in pairs, so a positive carry trade is obtained when a trader buys (“carries”) a high interest rate currency (for example, AUD) and sells a low interest rate one (such as JPY).

Negative carry trades, as expected, are the opposite of positive carriers strategy. This situation happens when the yield of holding an asset isn’t sufficient to cover its financing costs. For example, shorting AUD/JPY.

So how does this type of trading work in Forex?

Because you’re holding positions overnight, interest much be debited/credited when the contracts are swapped, depending on the interest rate differential between the two currencies, and whether you’re long or short. You always “receive” interest on the currency you own, and “pay” on the currency you sell. Then the differential is debited/credited on the account.

If the currency you bought had a higher interest rate than the other one in the pair, that’s a positive carry. The opposite would be the negative carry.

How to make profit with this financial instrument?

The best potential carry trades are obviously the ones where there is a big interest rate differential between the two currencies, but that alone is not enough. For a trade to be profitable, your position should at least maintain its value over time. However, in some cases, if the interest rate differential is very big it may be possible to make money even if the market moves slightly against your position.

Remember this type of trade does not yield good profit in a very short run. Instead, the trade yields good profit with a long term strategy.

Reducing Drawdown by Almost 70% in 7 Minutes

In today’s article, I will show you, step by step, how effective work with Market Internals can lead to drawdown reduction by up to 70%, taking just seven minutes of work (on a regular PC – using a laptop would take a little more time). So, let’s get to it.

In this example, we will work with an extremely simple idea, which is to buy EMD.D (15-minute chart), when the first bar closes above yesterday’s close (i.e. breakout at 8:45 Exchange time or rather at 15:45 local time for me in Spain).

This simple idea doesn’t look bad at all; it seems like it has a decent potential – although there is still a long way to go in order to reach a completed, successful system.

There is definitely a need to decrease the number of trades, filter out “the bad ones”, increase average profit per trade and, what is most important, to substantially reduce the drawdown. It isn’t even important to present complete statistics – the first look at equity already shows what we are talking about. And how do we accomplish such an improvement? That is exactly the task for Market Internals!

First of all, I have put the above code in my Market Internals smart code and I have prepared a special chart/workspace for such purpose.

This MI smart code contains a few of my own MI conditions (it took me 6 months to put all of them together) and now I let TradeStation run all these conditions and let it find the one that is the most suitable one. To avoid the danger of over-optimization right from the beginning, we need to apply this process on 70% of In-Sample data and we keep the remaining 30% as Out-Of-Sample data.

Now we run optimization, which will take around 2 minutes on an average PC (around 6 minutes on a laptop).

As soon as optimization finishes, I arrange the In-Sample data by using the fitness function. In this case, it was a TS Index.

Now it is time to choose only one from the TOP solutions. Most of the time there is more than one usable solution. One that we can find roughly in the top 5-10 of the best outcomes (this isn’t a classical optimization of systems, but moreso a search for the most suitable switches – i.e. Market Internals conditions – there is quite a lot of these conditions in smart code, therefore more than one can work really well). In this case, the solution I like the most this time came up in row number two. Therefore I will choose this solution and I have a look at the In-Sample data.

The outcome looks great, so I will verify it in the Out-Of-Sample data.

Everything looks fine here as well, so I’ll quickly check the overall equity.

A look at the overall equity tells me that OOS isn’t much too different from IS. This means that everything is perfectly fine. Of course, I could carry out some more robustness testing, etc. – but that is up to each and every trader individually.

The whole procedure took me less than 7 minutes – and I am done.

Below are the results AFTER I applied the MI condition.

Drawdown improved by 69%, NP/DD ratio improved 120%, AVG Trade improvement was 65% – what else can you wish for after just 7 minutes of work?

This is just another demonstration of the application and power of Market Internals.

Buying Into Bitcoins

With the 21st century demand for quick and big profits, one of the most controversial new investment vehicles has been Bitcoins, the virtual currency. It’s gained controversy partly because of its volatility, partly through the instability of Bitcoin exchanges and partly because their in-traceability meant they were a favored payment method for criminals.

Things are changing and after a particularly volatile spell in which one of the main exchanges, MtGox, filed for bankruptcy, the currency seems to have settled into a more stable pattern allowing investors to be able to take a measured view of whether to risk their money in a currency that technically doesn’t exist.

Volatility

Although Bitcoins are becoming increasingly popular, the market is still quite small, meaning that good and bad news can have a disproportionate effect on the price. The long term outlook for Bitcoins is potentially good, meaning that the upside on price is stronger than the potential for a decline over the long term. Most brokers recommend that you consider Bitcoin a medium to long term investment because of its volatility. Think of it in terms of real estate. No one buys and sells houses many times a day and there can be significant drops in property prices but the long term trend for property prices is usually up. The same can be said for Bitcoins. Whilst there is a significant daily trade in the currency, many Bitcoins are held as investments as analysts believe that it’s likely the price of Bitcoins will rise long term because they are becoming more widely accepted.

Influencers

As with all financial instruments, prices are influenced by supply and demand. Bitcoins are no different but what has caused big fluctuations in price has been the unusual nature of the news that influenced the supply and demand:

• The bankruptcy of MtGox, one of the biggest Bitcoin exchanges

• The closing down of Silk Road which allegedly accepted Bitcoins for drug trading

• The disclosure by the US government that, despite the negative uses of Bitcoins, they believed that the currency had a future

• The media has also stirred up interest by reporting on milestones in the currency’s rise and fall, trumpeting the rise to over $1000 and its subsequent plummet on bad publicity.

Generally the advice on investing in Bitcoins is to sit and watch the market for a couple of weeks to get an idea of how the currency trades, its volatility and trends. It’s difficult to find rumor that hasn’t instantly affected the value, so many suggest investing a small amount and simply watching for opportunities, a little like setting take profit levels with shares and Forex, you can do the same on Bitcoins; it’s just a bit longer process and a little less automated.

Just like with any investment, the value can fall, and events like the collapse of MtGox and the closing down of Silk Road, negatively affected Bitcoins; not just because demand was reduced but also because Bitcoins were falsely linked with the companies by urban myth. The market seems to be becoming more regular, but not necessarily regulated, as more exchanges come online. Some of the exchanges will go the same way as MtGox but others will consolidate and become stronger and more reliable. No doubt official regulation will be applied to Bitcoins in due course at which time the volatility is likely to reduce.

Bitcoins represent an exciting and potentially lucrative medium to long term investment vehicle. Exciting because it hasn’t yet been accepted into the mainstream of currencies or investment vehicles. One thing investors like about Bitcoins is their conviction to prospects as was in gold

FXLORDS offers a full range of premium services such as Forex trading signals, Forex managed accounts and Forex training courses to give our clients the opportunity to benefit from day-to-day Forex market trading, and so, became one of the finest sources of financial services and information.

Why It Is Tough To Deal With Uncertainty

One of the most frequently asked questions I get from traders at all levels of experience is how to deal with uncertainty. Undoubtedly we have a tough time to deal with uncertainty. This isn’t only true for traders, it is true for life in general:

Usually our discomfort around uncertainty is highlighted when we work towards a larger than normal goal

Traders and investors are particularly aware of the issue because they make more “important” decisions in the face of an uncertain outcome daily then most people. Your trading system may back test extremely well, you may use a fully automated system, or a fool proof hedge, none of these strategies ease the fact that our brains find it tough to deal with uncertainty.

We are having a hard time with uncertainty because your brain can’t see into the future

You read that correctly: From a neuro scientific perspective the brain can only see in the past.

It makes all its decisions from past reference points. Past reference points are the experiences that have built up in your life from the moment of conception to the present day.

The problem is that most of us have not had a plethora of blissful, positive experiences to fall back on, rather there is a mixture of good bad and traumatic, as the brain’s memory bank recalls it.

The discomfort of “uncertainty” is deeply rooted in our survival instincts.

Man has had a tough time to survive until now. Humanity is still in its infancy, relatively speaking. We are still operating is if we are living in an environment that is dangerous. The appearance of danger is directly linked to the level of our evolutionary development. The lower down the evolutionary scale you reside the more you are influenced by your environment. As you move up the evolutionary scale you begin to have more influence over your environment.

We have not yet adjusted to the next evolutionary step in our development which is using our mental muscle to co-create our lives in line with our desires. The fear of uncertainty is a survival emotion, hence it feels “natural”.

Becoming aware of what you feel and understanding why you have these seemingly uncontrollable emotions and feelings is always the first step that enables you to initiate change.

Set the intention to become aware of your feelings of uncertainty, observe them for their validity. You will find that most of these automatic feelings are false flags.

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and “Holistic Feng Shui For Your Brain” and other books on trading psychology and inner growth.

Her Transformational Guided Meditations increase cognitive awareness and improve focus and create mental clarity.

“Market Quality” Concept With Market Internals

In today’s article, I would like to share with you a concept that I have presented to some of my students. It’s a pretty simple, yet powerful concept on how Market Internals can be used:

Take an existing Market Internals, let’s say NYSE TICK.

Use NYSE TICK to define market “quality” zones: non-trending, trending, and strongly-trending.

By doing this, we have created 3 different zones of quality for this given market, which I will call “Market Quality” (MQ).

For each MQ zone, we can either set up different risk exposure/numbers of contracts or even switch between different trading strategies.

Let’s take a look at an example:

If we use NYSE TICK (this MQ concept can be applied to all other Market Internals, anyway), then the first step is to specify the zones as non-trending, trending, and strongly-trending.

According to my experience, the limit when a non-trending market changes to a trending one is at 300 to 400 for a long position, and -300 to -400 for a short position. Then, we need to set up the limit in which trending goes to strongly-trending, which is, based on my experience, somewhere at about +1,000/-1,000.

The definition of these 3 different MQ zones, when using TICK NYSE, looks like this:

LONG:

Non-trending: 0 to 400

Trending: 400 to 1,000

Strongly trending: above 1,000

SHORT:

Non-trending: 0 to -400

Trending: -400 to -1,000

Strongly trending: below -1,000

Now, when we have defined the different zones for market quality (MQ), we need to ask ourselves, what do we do with this information? And there are two viable options.

The first one is risk management, or changing the number of contracts.

You simply test the number of contracts (1-3 or 0-2) for each zone and see how your system behaves when you use a different number of contracts, according to the MQ zone you are in. In this same way you can work, not only with the number of contracts, but also with your stop-loss. It is clear that each zone represents a different volatility and, therefore, using different stop-loss levels for each MQ zone can bring interesting results.

This is one of the basic applications of the MQ concept (it can be further developed into a more sophisticated form).

The second option is using MQ zones to switch the systems – something like this:

Switching systems based on Market Quality zone:

Non-trending: scalping system

trending: trend-following system

strongly trending: mean-reversion system

For non-trending market conditions, you will simply use a scalping system that doesn’t need big moves for profits. As soon as the Market Quality changes to a trending market, you will switch to trend-following strategies (for example a breakout strategy). And, as soon as the market reaches a certain level, when the trend might be reaching its end (when NYSE TICK gets above +1000/ below -1000), you should start looking for some counter-trend entries (mean-reversion) strategies, that are waiting for a counter-trend correction after a significant market move (and you try to make some profit from this correction).

Using this approach, you will get one “universal” system that will change its settings according to the Market Quality. This is just a theoretical example – the practical application is up to you. And it is quite a load of work to get from theory to practice. So, let’s get to it!

You can also work further on this concept, develop it to more forms and find other ways to use it – the example with TICK is just one of many ways in which Market Quality can be used. Or, you can use a “hybrid” of both these approaches – according to the MQ zone you can switch strategies, change your stop-loss, or maybe alter the number of contracts.

What I would do is keep the number of MQ zones low. 2-3 zones are absolutely enough – in the case of more zones, there is the risk that you could not have a sufficient number of trades in each sample.

Anyway, now you have a strong and interesting concept, so roll up your sleeves and get to work!

Happy trading!

Could Your Trading Improve With Waking Meditation?

The idea of entering a state of waking meditation while you trade seems almost bizarre, I know. Yet, I can assure you if you took the time to master the art of waking mediation your trading would be greatly enhanced:

Let me explain why:

It all begins with your mood: The University of Massachusetts found that 33% people who meditate regularly felt that their mood improved.

When we are in a good mood, mind and body relax. Suddenly what appeared to be a problem, or challenge becomes manageable. You get a sense of being in control, rather than being at the mercy of your environment.

If this alone weren’t enough to convince you of the benefits of meditation, the next piece might convince you that learning the waking meditation technique is an absolute must to help you enhance, or maintain a high trading performance:

When you learn to remain fully conscious in the deeper meditation frequencies like the waking theta brain wave, you have access to information your brain cannot access when it operates in beta or the lower alpha waves.

Your brain use used to operate in beta and in the lower alpha states.

Typically when you focus on a task you are in some form of alpha state. At this frequency you function on auto pilot: You don’t have to think about every step you take, feel at ease and in flow. You are not focused on time, or on your body, your focus is on the task you are performing.

This is a great state to be in which also reduces habitual feelings of tension and anxiety, however these brain waves don’t allow you to access additional information.

In order to access additional information which you cannot fathom with the intellect you need to go deeper.

Learning to operate in the waking theta brain wave requires practice. It also requires unlearning of old conditioning, because old conditioning acts like an interference wave that throws you continually of course whenever you try to enter the waking theta state.

In order to create a noticeable shift in the quantum field you need to be able to focus without interference for a minimum of 17 seconds. You probably think that 17 seconds doesn’t seem very long. If you were to try to focus on one subject for 17 seconds you will be surprised how difficult it is.

In the waking theta brain wave you lose a sense of time while also becoming hyper aware. It is a form of super focus. Regular practice with pyramid energy is one way to train your mind to become comfortable in these higher frequencies.

If you were to learn to be comfortable to perform ordinary tasks in the mental state of waking theta your entire life would change, because you would lose the need to constantly react to what is going on inside of you and around you. Would that have a positive impact on your trading? I should say so.

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and “Holistic Feng Shui For Your Brain” and other books on trading psychology and inner growth.

The ABC of a Successful Trader

Forex Trading is built upon appropriately educated, disciplined and self-controlled individuals whose years of expertise in the field of Foreign Market Exchange has led to true mastery of trading skills. A successful trading business functions much like a team of highly adept soldiers: Like good soldiers, professional traders must visualize the battle before entering into the fight with their opponents. To secure victory both soldier and trader alike must take the proper steps before diving into action.

The “Holy Market” and its “Commandments”

Market treats all traders equally as such; it is the accurate implementation of strategy that determines the fate of a trader. Being a successful trader is an indication of outstanding work being done hours before markets open as well as long its working, simply in booking profits and controlling urges fore example that relentlessly instruct you to “go back in and make some more money”

Preparation is half the battle

The key to successful trading is good planning. A great trader is a person who knows exactly what he is looking for. He will put in the time and effort required to research and develop strategic plans that encompass short- and long-term goals.

Planning includes establishing a list of the actions required for a successful trading day, namely one that is set to yield profits. The first step is to review the trading journal of the previous day to prepare for the next trade. The second step is to perform a chart analysis to find out which currency pairs you will follow. Finally, the third is to prepare your trading platform; do so by reading the latest global economic data from the international economic calendar. This will reveal whether the currencies you are monitoring have been affected by the latest economic developments.

Develop your trading sense

Having the dexterity to trade is an advantage for any trader, but such skills can take years of practice to develop. Most traders use their “6th sense” to spot and grab opportunities of small price discrepancies both within and between the markets.

Much like a manager, the trader has to rely both on analysis and his intuition to spot the trade set ups at the right moment. However, a novice trader can still develop this sense and make consistent money by rigidly following the principle of risk and reward in Forex trading. This principle demands careful study of what the trader is going to risk.

Discipline 100%

The best traders are intensely self-aware. They know their limitations and focus on what can go wrong by investing their energy in limiting and controlling their risk.

To achieve success in Forex Trading, the most essential step of all is to stick your strategy. A carefully laid plan will guide the trader through the fundamental and technical analysis required to interpret the price movements, translate the technical indicators, and identify the ideal trading positions. A good trader is a disciplined trader; he is like a hunter, preparing for days to achieve the perfect trading set up. He chooses an appropriate stop loss point which marks the amount of acceptable risk; he never allows more than the most efficient amount of risk. He is never gripped by greed, fear, hope or regret and does not exaggerate his expectations of success. His excellent decision-making skills prevent the opinions of others from leading him astray, and he does not over-analyze or over-trade. Despite his success, he remains humble and always provides honest guidance to novice and fellow traders.

Detach from the need of money

Successful traders view trading as an exercise, and they focus on getting the most out of the market in accordance with their plan. In short, a good trader should not be motivated by financial reward. If this rule is broken, as it unfortunately often is, the market will turn and move against any trader who has an excessive desire for money.

Greed is the main enemy of all traders. It presents a profound hurdle on the way to the success. Desire for possession must never govern a trader’s actions; the results of such loss of control are always catastrophic. In small part, trading is an opportunity to make money in a certain amount of time if all rules are obeyed. However, it is also a chance for self-fulfillment and a test of one’s worthiest capacities, and it must be respected as such.

Stand strong like a rock

A good trader must stick to the rules of his strategy. He must not allow emotions like greed, fear, hope and regret to overtake him; these in particular are the four worst emotions for a trader. Consistently profitable traders have an unshakable emotional system regardless of conditions.
Like greed, dealing with emotions during trading is also a constant challenge. The first thing that a trader must do is follow a strategy that is comfortable for him. To avoid emotions, the trader has to enter trading with realistic expectations; bet a logical amount of money on a trade; and learn to enjoy trading by risking less money, gaining experience, and developing belief in his strategy.

Adapt to change

The very best traders are always eager to learn and improve their skills to keep up with the continuing changes in the market and technology. A trader should be flexible enough to cope with the technological advances and read intensively.

In the constantly changing Forex environment, the trader must be flexible. If the market throws something unexpected at him, the trader should be able to analyze it and take action quickly. Success in the Forex market demands a non-stop learning process through which traders come to understand the volatility of the market and in return gain the expertise needed to make profits.

Good decision-making skills

A successful trader must possess excellent decision-making skills. Once you realize that your trade is going to close at a loss, exit immediately. Successful trading is mainly based on good decision-making and is highly related to the relevance of the present data collected. Successful traders are also independent in their decision making.

The primary difference between the professional Forex trader and the beginner is that the first knows exactly what he is looking for and when to enter the market.

Successful Forex brokers who gain recognition respect each of these rules. They work hard to be successful and even harder to stay in front and remain profitable. They know that the market will reject those who disobey these rules in favor of money because trading is a practice of passion not of greed.

The successful trader

George Soros gained international recognition when he toppled the Bank of England on September 16, 1992, a day that is preserved in history as “Black Wednesday”. He was given the nickname “the man who broke the Bank of England” because Britain was then forced to abandon the Exchange Rate Mechanism aimed at fixing the pound’s rate to the Deutschmark.
Soros risked $10 billion and generated $1 billion in profit in a single day.

“The money that I made on this particular transaction would be estimated at about $1 billion. We very simply used the forward market-you borrow sterling and you sell the sterling that you have borrowed. And then you buy back the sterling when the loan expires”. (Soros, 1992)
George Soros was also accused of triggering the Asian financial crisis by selling the Thai baht and Malaysian riggit short in 1997. Thailand proactively spent almost $7 billion to protect the baht against speculators and finally asked the International Monetary Fund for its help. In The Crisis of Global Capitalism: Open Society Endangered, Soros (1998) responded, “The Prime Minister Mahatir of Malaysia accused me of causing the crisis, a wholly unfounded accusation… We were not sellers of the currency during or several months before the crisis; on the contrary… we were purchasing ringgits to realize profits on our earlier speculation”.

Soros gained more than $790 million in this trade. “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong”, he summarizes.

The 3rd most notorious trade that Soros ever made came in 2012, when he recognized the possibility that the yen could go down after the damage that Japan’s economy had suffered during the devastating tsunami of 2011. Sure enough, the yen did indeed weaken, and when it did, in order to boost the economic situation, many speculators opened USD/JPY positions betting that the value of the dollar would rise against the yen. In this case, Soros gained $1.4 billion.

The main technique of Soros and other top-notch traders is to spot upcoming vulnerabilities in a country and then go right after currency before it falls. A currency pays off better when its rate is fixed in relation to other currencies, as in the case of the pound and Thai baht.

Vulnerable countries try to buy up their currency when it is being sold, as people can turn around and sell the currency themselves. These countries do so in an effort to artificially sustain the fixed rate. However, this artificial balance is very sensitive, and when the countries cannot fight the market forces any longer, the balance collapses. This is exactly what happened in the Soros cases.

As Soros demonstrates, a threat for others can turn into a profound opportunity for traders who are alert and prepared to act. Soros is an example of a good soldier who used his disciplined mindset, an analytical approach, and all his market commandments to become a successful currency trader. He both masterfully and calmly conducted himself within the currency war market and demonstrated a combination of patience with discipline to identify the perfect time to execute his trades. Clearly, an adept soldier’s qualities can become the qualities of a great currency trader as well.

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When Will The Next Market Crash Happen?

If only would be paid for every prediction of the next market crash I’d be very rich. We are so used to being brainwashed that most of us don’t even notice any more to what extend this is happening 24/7.

Fact:You are not thinking for yourself, you are constantly told what to think

The permanent barrage from the financial media that only serves one objective that is to make you do something that is not to your benefit, but fills their offers in one way or other, has reached a point of beyond excess. Today you simply cannot turn on CNBC, Bloomberg or any other news channel without being brainwashed. This is not news any more.

I regularly receive emails from so called “leading market analysts” telling me of the big crash. Big crash mean that we must see a price drop of at least 15% in a short period of time.

Artificially induced fear rules the world of trading and investing

I just have one question: What happened to the big gold rally forecast by well respected analysts like Martin Armstrong for the last two years?

I don’t know about you, but I am sick and tired with these pumped up hysterical market calls designed to get your attention and flatter their producers’ egos. If I make the same market call long enough eventually it is going to happen.

Alas this is not the worst part of it:

Our brains simply cannot cope with this constant overload. If you think that listening to the news will help you become a better trader, think again. All it does it panders to a deeply rooted insecurity inside you that makes your mind susceptible to authority, fuelling insecurity, greed and dysfunctional trading behaviours.

Today everyone has guru status who has appeared on TV at least once

The entire guru industry is a media machine designed to disempower you and make the many trade forecasting services a lot of money. Unbeknown to your conscious awareness your brain is addicted to this kind of information overwhelm. If I asked you to stop listening to the news from today on for the next week or so, you’d find it very hard to do.

Most of what you are told is plain fabrication with no base on reality

Yet the story is repeatedly sold to you from many angles that eventually you believe it. Welcome to the biggest brainwashing machine out there.

Fact: Most of so called gurus are brilliant at selling and lousy at trading

I know quite a few of them and have seen their trading accounts. Believe me, you would be shocked.

I wonder: How many times have you been caught out in a trade you took just because you got swayed by the opinion of some trader who comes across as extremely knowledgeable and competent? I dread to think. I used to do it too. In fact, I lost way more money following the advice of other traders, brokers and famous analysts than I managed to lose trading my own style.

Distinguishing between what is true for your trading psychology and personality and separating the wheat from the chaff is a tall order.

Most traders’ brains are simply not trained to manage their minds in a constructive way that serves them. They are too immersed in their unconscious addiction to know ahead of time where the market is going. I know this is tough talk, alas it is one of the few truths out there. Freeing yourself from the addiction to market news is one of the kindest things you can do for your brain and your trading account.

Mercedes Oestermann van Essen is a success coach and trading psychology coach. She works with financial professionals and entrepreneurs assisting them to create brain coherence and manage their internal states.

She is well known and respected for her cutting edge insights in the field of trading psychology. Mercedes Oestermann van Essen is the author of “The Buddhist Trader”, available on Amazon.com and other books on personal development and trading psychology.