Peter Thiel: Going from Zero to One

perspective on investing before the go big.

What are the factors to know the vast scale of success

on investing start ups?

#DecodingInvesting

Overflows

I choose to grow each day

To be purposeful at work and play 

And throughout life's highs and lows 

I choose a life that overflows 

I choose to take steps forward 

To make sure each day is fully explored

And whether I meet with joys or sorrows

I choose a life that overflows 

I know that no diligence is wasted

That little by little goes far when added

I know that goodness echoes 

So I choose a life that overflows

Someday I'll look back 

At my well-traveled track

I'll beam because my heart knows

I chose a life that overflows. 

Life is a choice. 

#StartTheWeekRight 

#Monday

Source: The Coffee Bean and Tea Leaf Planner 2016

Profit Taking Friday!

protect your gains. 

have you secured your profits? 

#fridaygains

6 Factors That Influence Exchange Rates

These are could influence in exchange rates although 

trade what you see not what you think.  

You can only trade what the market gives you. 

What would you like to add? 

You can also find more infographics at Visualistan

Top 6 Mistakes To Avoid When Trading Forex

Throughout the forex education process, it goes without saying that you will bump your head quite a few times as you learn to trade. The road to mastering forex is treacherous and most traders will wipe out their accounts several times before they can truly call themselves experts. Still, their troubles can often times be traced back to six well known and avoidable mistakes.

Most trading mistakes are caused by poor judgment and a lack of preparation. When you don’t know where the traps are when trading, you cannot help but fall into them. When you are well informed about which mistakes to avoid, half of your problems are already solved.

So how do you know if you are falling into a trap? More importantly, how can you avoid them? Here, we will be going over the top six traps beginners fall into, and how to make sure you don’t fall victim to them.

6. TRADING WITHOUT A TRADING PLAN

It is amazing how many traders fall victim to this trap. We somehow convince ourselves that knowing how to trade is as simple as staring at a chart and being spontaneous. Simply put, this does not work, ever! Forex trading should not be a spontaneous endeavor.

If there is a single hard and fast rule in forex, it is never trade without a plan. Every position taken without a plan is called gambling, NOT trading. After all, how many generals would send troops into battle without prior planning? This should be your mentality going forward.

A trading plan means, at the very least, having clear entry triggers and exit levels. You should also know well in advance why you are taking a specific trade. Is there a piece of news coming out that could impact your position? Did technical indicators show this was the right move to make? Know what you are trading and why you are trading it.

Your trading plan must be logical and make sense. Furthermore, you should trust it. Write down your plan and make sure it includes everything you need to consider when making your trading decisions.

Working from a trading plan will reduce the tendency many beginners have to second guess themselves. Furthermore, it will help you avoid making cumbersome adjustments to your positions half way into a trade.

5. TRADING BASED ON EMOTIONS 

Do you trade based on emotions? Despite what Hollywood would want us to believe, trading is not an emotional game. When you let your emotions get involved, your judgment gets clouded.

Beginners always seem to follow a pattern. They trade emotionally, lose some money, get more emotional and lose even more money. Emotional trading is often the reason traders employ robots to do their work for them.

Trading is all about making decisions based on cold, predetermined and well-weighted probabilities. 

Ensure your trading psychology is well balanced. The trick is to leave your emotions outside when you enter the trading zone.

4. NOT HAVING A MONEY MANAGEMENT STRATEGY

One of the reasons beginners find trading to be so frustrating is that they fail to implement a money management strategy. A money management strategy is the business aspect of trading. It should outline how you treat your capital after you get started. Many traders do not have a clear money management strategy and consequently never build their capital.

Trading must be taken seriously, just like any other business. Do you have a plan for how you will build your account? How much of your profits will you reinvest into the account?

You should know if and when you will be withdrawing from your account. It is also important to find out what charges you will incur directly from your trading activities and account for them. These outflows must be incorporated into your overall plan to build up your account balance. If you do not have a plan for controlling the outflow of money from your account, make one now.

3. TOO MUCH LEVERAGE

This is the big one. More traders have lost their entire account because of overleveraging than any other practice. Greed causes you to add to the size of a position more than you normally would. When the trend moves even slightly against you, the losses hurt even more. The prospect of making a killing in just one trade is what causes most traders to overleverage.

Leverage is a double edged sword that cuts sharper when it moves against you. Long term success in trading is greatly enhanced by using leverage sparingly.

You can avoid the temptation of overleveraging by setting maximum limits for every trade and never exceeding them. You do not need to use all of the leverage available to you. Most professional traders never leverage their positions more than 8:1. Your sweet spot should be somewhere around this ratio.

2. OVERTRADING

Do you engage in excessive trading? Markets punish new and inexperienced traders in the most cynical ways. No sooner have you made a huge profit in one trade than you give it all back in the next few that you take. Most rookies become extremely preoccupied with mimicking any successful trade they make. 

After a while, greed takes over and they begin taking foolish positions.

Similarly when a trader takes an abnormally large loss, or a series of losses, they begin to focus on recovering their money. This practice is called revenge trading and is a sure way to cloud your judgment and lose more money.

Taking a break and clearing your head after a period of significant gains or losses is very much recommended. The dramatic change in your capital will affect your judgment, no matter whether you can feel it or not. Remember that there is always tomorrow.

Whenever there is a 10% or more change in your capital, (in either direction) in a single day, it may be a good time to stop trading and clear your thoughts, even if you’ve just logged into your platform.

1. IGNORING DEMO TRADING

Some forex traders jump prematurely into live trading and quickly lose money because they have failed to develop their skills. Without demo trading, traders have no way of assessing their own trading expertise without risking money.

Demo trading is boot camp for forex traders. It’s a rite of passage. Most people simply do not have enough money to loose over and over again, until they reach that moment where they feel comfortable and confident enough to trade seriously. Demo trading gives you a risk free way to practice. Never trust yourself with money unless you can show consistent profits on a demo account first. The trick is to take demo trading as seriously as you would a live account. Otherwise, what’s the point?

CONCLUSION

In forex, there are many traps out there that you must be on guard for. What every trader comes to realize eventually is that your account could very well be wiped out if you fall into any one of the six traps outlined above.

That being said, you are now in a great position where you can avoid these six common mistakes. Being well informed and keeping a clear and level head is the best way to ensure your long term profitability in forex trading.

This is a useful read that can be applied on trading,

what's your personal take on this? 

Written by: Prime Pair

Too Late to Learn?

 

Trading does not have an age limit to learn to trade 

as long as you 're willing to learn you can, 

what's your excuse?  

Source: Imgur

#SaturdayMovieDate : The Big Short

The best Movie of all TIME, 

Would you agree?

#SaturdayMovieDate

Warren Buffet Investment Quotes

From: Visually 

What's your biggest take away from Warren Buffet's quotes?

Greed vs Loss: How Take Profit Levels Can Help

The forex market moves fast — and so do emotions.

It can be difficult to separate your emotions from forex trading entirely; as everyone gets a little stressed when a trade is going poorly and a little too aggressive when a trade is going well. This is human nature. Your trading plan can quite easily be disrupted and turn into a battle of greed versus loss.

This is why take profit levels are vital. Take profit levels are often incorporated into forex strategies in order to defeat the natural human inclination to allow a trade to ride when it is performing well. Many traders will feel as though it’s best to wait while a trade continues to take the most amount of profit possible. But this can also lead to a situation in which profit is actually lost because of a sudden downturn.

Try reading: When to Demo Trading to a Live Account

Here’s everything you need to know about how take profit levels can help…

Setting Up Different Take Profit Levels

You may know what a “take profit” is, but what is a take profit level?

When you set a take profit, you set a specific price at which the trade should close. This is used to capture your profit automatically the second that the price hits that number. A take profit level is the price level at which a take profit action occurs. Take profit levels are multiple, staggered levels that are used to control a trade.

A single currency trade may have multiple take profit levels — usually done by creating multiple trades in the same direction. For instance, there may be a take profit action set at every increase at 20 pip intervals. These take profits are designed to capture profit as quickly and reliably as possible. The first take profit level will generally be initiated quickly, making the trade profitable early on.

Take profits are generally mixed with stop losses as well, so that there is more room for profit and less room for loss. All of this creates a reliable trade management strategy that completely removes emotion from the equation.

The Emotional Benefits in your Trading

Forex strategies need to be consistent if they are to be profitable. That being said, every trader occasionally has an emotional moment, during which they may either close a trade early or let it ride.

If you have an inconsistent trading strategy, there’s no way to improve upon it. Though you may be able to make money short-term, you won’t know what portion of your strategy is actually working or not. Eventually you will find that your strategy turns; it’s impossible to maintain consistent results with inconsistent trading.

Take profit levels completely remove the potential for an emotional impact on trading. Rather than having to make a snap decision regarding when you will take profit on a trade, it will already be set for you — all you need to do is avoid deviating from the plan and changing the trade itself. In fact, with the appropriate take profit and stop loss levels set, you don’t even need to manage your trading; you simply need to initiate new trades and work towards an even more profitable trading strategy.

The Market Benefit of Take Profit Levels

Take profit levels aren’t just about your emotional status. Some traders aren’t emotional and are more than able to control themselves when they’re dealing with the forex market. But there are some things that are simply beyond human ability.

Tracking the forex market in real-time can be one of these things.

The forex market changes very quickly and this can be even more true if you’re trading a currency pair during a time of particularly high volatility. It’s possible that a level of profit could be hit upon very suddenly and then lost entirely thereafter; in other words, the market can spike suddenly and then retreat.

If you’re relying upon your own reflexes, you’ll need to watch the market constantly and you’ll have to be able to react very quickly to the market change. You could potentially miss your chance and a profitable trade could become a losing one.

This can be avoided through the use of a take profit of course.

A take profit will capture your profit even if the take profit amount is only held for a brief moment. You won’t need to watch the market or your account 24/7; instead you’ll be able to trust that the trade will close exactly when you want it to.

A take profit level also enables you to use far more complex strategies. It can be impossible to track multiple currency pairs and multiple take profit levels, which means that you may have to take profit only once if you’re relying on yourself to close the trade.

By setting automated take profit levels, you streamline the forex marketing monitoring process and take the burden off of yourself.

Identifying Your Take Profit Levels

How do you determine which take profit levels you use?

It differs for each strategy. Most take profit levels are staggered, with three to four take profit levels focused on the lower limit and upper limit of what you believe the currency pair will hit. But the analysis that is generally used to determine a take profit can be quite complex, based on a variety of key performance indicators and strategies.

For instance, in a support and resistance strategy, the take profit may be set a little above the current market price, a little under the resistance price, and in between. This would secure profit just as the trade moved upwards and as the trade met its resistance price — in addition to the area between these two. Even if the trade never met its resistance price, at least two of the take profits may still be initiated. The stop loss would then be set to still ensure a profitable trade even in the event that this occurred.

See our guide on choosing a trading strategy for help.

Of course, it’s very difficult for traders — both new and accomplished — to determine their own take profit levels, even if they are very knowledgeable about analysis and strategy.

This is where forex trading signals often come in…

Live forex trading signals tell the trader exactly how to initiate their trade, including which take profit levels and stop loss levels they should use. These signals use a significant amount of analysis and past market behavior to determine the way that the currency trade will likely go. They are able to use their algorithms to find the most profitable trades, which includes both take profit levels and stop losses.

For many traders, live forex signals are the best way to trade without having to invest a significant amount of time into the process.

To put it simple, Use Take Profit Levels!

Regardless of what technical analysis and what strategy a trader may be using, take profit levels are an intelligent way to trade.

A take profit level ensures that the investor will be able to capture profit according to their plan. Many trading signals incorporate take profits for just this reason. Take profit levels free up an investor to step away from the computer and to trust that their trades are being closed as they should be.

Avoid the temptation of emotional and irrational trading by not engaging in the battle of greed versus loss. Start using take profit levels in your trading from today. 

Written by FxPremiere

Placing Take Profits is equally important as placing Stop Loss,

what else do you suggest on this?  

Ten Lessons I Have Learned in Working With Traders

When I sat down to write this article, I thought it would be challenging—but useful—to distill over 20 years of trading experience—and 25 years of specializing in brief therapy—into ten lessons that I have learned while working with traders (including myself!). In that time, I’ve written two books on trading and worked with dozens of professional traders at a proprietary trading firm. What has this taught me? Let’s break it down:

1. Trading affects psychology as much as psychology affects trading – This was really the motivating factor behind my writing the new book. Many traders experience stress and frustration because they are trading poorly and lack a true edge in the marketplace. Working on your emotions will be of limited help if you are putting your money at risk and don’t truly have an edge.

2. Emotional disruption is present even among the most successful traders – A trading method that produces 60% winners will experience four consecutive losses 2-3% of the time and as much time in flat performance as in an uptrending P/L curve. Strings of events (including losers) occur more often by chance than traders are prepared for.

3. Winning disrupts the trader’s emotions as much as losing – We are disrupted when we experience events outside our expectation. The method that is 60% accurate will experience four consecutive winners about 13% of the time. Traders are just as susceptible to overconfidence during profitable runs as underconfidence during strings of losers.

4. Size kills – The surest path toward emotional damage is to trade size that is too large for one’s portfolio. We experience P/L in relation to our portfolio value. When we trade too large, we create exaggerated swings of winning and losing, which in turn create exaggerated emotional swings.

5. Training is the path to expertise – Think of every performance field out there—sports, music, chess, acting—and you will find that practice builds skills. Trading, in some ways, is harder than other performance fields because there are no college teams or minor leagues for development. From day one, we’re up against the pros. Without training and practice, we will lack the skills to survive such competition.

6. Successful traders possess rich mental maps – All successful trading boils down to pattern recognition and the development of mental maps that help us translate our perceptions of patterns into concrete trading behaviors. Without such mental maps, traders become lost in complexity.

7. Markets change – Patterns of volatility and trending are always shifting, and they change across multiple time frames. Because of this, no single trading method will be successful across the board for a given market. The successful trader not only masters markets, but masters the changes in those markets.

8. Even the best traders have periods of drawdown – As markets change, the best traders go through a process of relearning. The ones who succeed are the ones who save their money during the good times so that they can financially survive the lean periods.

9. The market you’re in counts as much toward performance as your trading method – Some markets are more volatile and trendy than others; some have more distinct patterns than others. Finding the right fit between trader, trading method, and market is key.

10. Execution and trade management count – A surprising degree of long-term trading success comes from getting good prices on entry and exit. The single best predictor of trading failure is when the average P/L of losing trades exceeds the average P/L of winners.

Well, I’ve already hit ten and I have at least ten more I could jot down. Number 11 would be that successful performance mentors have content expertise in their particular domain. What I mean by that is that teachers of concert musicians themselves have experience as musicians; basketball coaches invariably have played the sport themselves. You learn trading by seeing your mentor trade and by having your mentor observe your trading. The right mentorship goes a long way toward shortening learning curves.

Figure it out: what proportion of baseball players, golfers, actresses, chess players, singers, or bicyclists can make a consistent living from their performance activities? Is trading really so much easier than those activities? The stark reality is that expertise in any performance field is the exception, not the rule, requiring dedicated practice and training. If you are emotionally prepared for the learning curve—and excited by the challenge—you are well ahead of the game. Start with finding the Three M’s: right methods, markets, and mentors. Those are the foundation of success, upon which you build skills and experience. Enjoy the journey! 

Written by:  Brett N. Steenbarger, Ph.D. 

What do you think?

Trade Forex Like a Sniper…Not a Machine Gunner

  

Today’s Forex Lesson is “Awesome”. In fact, It’s probably one

of my best trading lessons I have ever written. It took me at least 2 days of brain power and probably 20 coffees.  Please pay it forward, share it with others. Enjoy.

A sniper in the military has an edge over his or her enemy; their edge is unwavering patience, mastery of their weapon, and the ability to remain consciously in control of their mind and body for long periods of time in high-stress situations. We can apply these same concepts to Forex trading…

Forex trading is very similar…you need a trading edge (weapon), you have to master this edge, you need to develop and maintain rigid self-discipline and control, and you have to execute your edge flawlessly in the face of constant temptation to over-trade and over-leverage. Now, trading is nowhere near as stressful as war, but it still requires conscious control of mind and body.

Those traders who learn to pick and choose their trades wisely, trading like a Forex “sniper”, are typically the ones who succeed long-term, whereas those traders who act like machine-gun traders by shooting at everything they see (trading too much), tend to run out of ammo (money) very quickly and fail to accomplish their goals in the market. Let’s discuss how you can learn to trade like a sniper instead of shooting at everything (taking every trade) that comes your way…

• Accept that less is more in Forex trading

One of the things that we traders can learn from a sniper in the military is that in certain situations less is indeed more. Forex trading is definitely a “situation” where less is more. However, it is very common for beginning traders to feel that more is better; more Forex indicators, more trades, more analyzing, more money on useless trading robots, etc.

What is the result of such misinformed beliefs? The result is almost always over-trading; indeed, most beginning Forex traders are like machine-gunners; spraying bullets (money) at everything they deem to be a trade and likely causing more damage to their trading accounts than good. The first step that you need to make if you want to trade more like a sniper and less like a machine-gunner, is to truly accept that less is more in Forex trading.

Just like a sniper waits patiently for his or her pre-determined target to come into view; you need to learn how to wait patiently for your pre-defined trading edge to show itself in the market. As price action traders we have a very effective trading edge that allows us great opportunity to trade the market with sniper-like precision, and the daily charts provide the best “battleground” for us to execute our edge on.

• Higher time frames

As I mentioned previously, the daily chart should be your “battleground” for developing your ability to become a Forex sniper. Why, you ask? Because it is the daily chart that gives us the “highest value” or highest-probability targets when compared to any time frame below it. Weekly charts are also accurate, but they don’t give us enough targets each month and they are less practical to trade than the daily chart.

These targets are price action setups, and you should think of them as higher-value on the higher time frames, because in reality the higher the time frame the higher-probability the setup becomes. This is the primary reason that trading higher time frames drastically increases trading success. Think about it this way; a sniper is on a pre-planned mission to take out high-value targets that can change the course of a war, and in Forex trading you should be looking for the highest-probability trade setups that can have the greatest positive impact on your track record.

Machine-gun trading the lower time frames is not going to do anything but cause you to lose all your ammo or money a lot faster than you think. There is really no sense in ever trading any time frame below the 1hr chart since the value or probability of the targets or setups decreases dramatically as you move lower in time frame. You want to stick to the high-value or high-probability setups of the daily chart as much as possible, and especially while you are still learning to trade.

• Patience

If there is one thing that a sniper in the military definitely IS, it’s patient. Patience is like the “magic” ingredient that makes everything work for a sniper in the military, and it is also the “magic” ingredient that you will need to use if you want to become a Forex sniper. Most beginning traders lose money in the markets, and most beginning traders are also anything BUT patient. See the connection here?

There is a tendency for traders to want to “force” the issue of trading by manifesting signals that aren’t really there or by jumping into a signal that has not closed out yet. When it comes to money it is human nature to be impatient, this is otherwise known as greed, but if you don’t learn to become a patient Forex trader, you will never forge the type of overall self-control that it takes to succeed as a Forex trader and become a Forex sniper.

• Mastery of strategy

A sniper will train for years to sharpen and perfect his or her shooting skills, and a sniper knows exactly what their target looks like and pulls the trigger without hesitation. Similarly, you will need to “train” with the particular Forex trading strategy you choose to employ in the markets so that you know EXACTLY what you are looking for every time you open your charts. However, you will need to do more than that; you will need to truly MASTER the Forex trading strategy that you choose, because if you don’t master it, you will never achieve your full potential as a Forex sniper.

Mastering a trading strategy begins with education. If you choose to employ high-probability price action trading strategies, I can provide you with the Forex trading training you will need. However, you must put in the time and effort to learn and master it; I cannot do this for you. You need to be realistic about this, it will take time; it takes time to become a master at anything, and Forex trading is no different. But, if you put in the necessary time and take advantage of the insights discussed in this article, you will begin trading like a sniper sooner than you might think.

• Developing a sniper-like Forex trading mindset

Sniper-like Forex trading breeds confidence and discipline. The more you strive to trade like a sniper and less like a machine-gunner, the more your Forex trading confidence and discipline will improve. This is because you will be rewarded for patience, and as you start to see your patience pay off over time, you will want to maintain it.

It is the initial stages of developing a sniper-like Forex trading mindset that most traders fail at, usually because they do not understand the power of patience and discipline. It tends to feel better to be a machine-gun trader because you feel powerful and “in control”. The problem with this mindset is that you can never control the market, in fact, the more you try to control the Forex market the more it will actually control you. The only thing you CAN control is yourself by learning to trade like a sniper, and if you do this you will significantly increase your chances of success as a Forex trader. 

Quality over Quantity, 

will you filter your trade to get the best trading idea? 

Source by: Nail Fuller 

Why You Need A Forex Trading Journal

Journaling?!?

Isn’t that only for silly high school girls who write about their silly crushes on silly high school boys?

Heck ya!

Ok, not really… high school girls keep DIARIES.

Forex traders keep trading JOURNALS.

Two entirely different things! Get it right! Geez!

Keeping a trading journal is actually a crucial task in any performance or goal-oriented endeavor. The key is to have some way to measure, track, and stay focused on improving your performance.

World-class athletes do it to keep track of what helps them to be better, faster, and stronger on the field or court. Scientists do it in the process of finding their next greatest discovery. And forex traders do it to help get them duckets!

What “getting them duckets” means in simple terms is to become disciplined, consistent, and most importantly, profitable.

A disciplined trader is a profitable trader and keeping a trading journal is the first step to building your discipline.

This might sound simple or easy but we assure you that to actually get started can be very difficult. In fact, many forex traders give up after a while and rely on the logs that the forex broker provides.

The logs or transaction history from your forex broker gives information that is, at best, marginally useful as it doesn’t tell you much of WHY you entered and exited the trade.

That information provides NO help to your next trade.

Zero. Zilch. Nein. Nada.

A forex trading journal isn’t just about writing in the prices of your entry and exit and the time you executed the trade. The trading journal is also about refining your methods and mastering your own psychology.

To be even more specific, it is about your individual emotional psychology before, during, and after the trade.

For example, your trading method says to buy USD/JPY.

But your gut feeling tells you that the trade is NOT going to work…

So you remind yourself, “I don’t think this trade is going to work. BUT I have to follow my trading plan so I’ll take it.”

During the middle of your trade, the price comes 3 pips away from your stop loss and you’re thinking, “OMG. This trade isn’t looking so good. I knew it! Why didn’t I listen to myself? I’m such an idiot! I’m about to lose here! I’ll just exit now.”

You then decide to close your trade.

A few moments later the price shoots to your original profit target. Had you stayed in the trade you would have made a gazillion pips.

This is why you should write a trading journal. This is a classic case that probably happens to too many traders.

We fail to stay in the trade, we fail to trade the plan and most importantly, we fail to distance our emotions from our trading!

If you keep trading like that and you don’t keep a trading journal, the balance on your trading account will become a big fat ZERO before you realize what you’re doing wrong. 

tracking our progress,

what do you think?  

Source by: BabyPips

IF YOU WANT A MILLION DOLLARS TRADING, DON'T FOCUS ON THE MONEY. DO THIS INSTEAD....

When people get interested in trading, there is usually only one reason behind it:money. And there is nothing wrong with it. Trading is a great opportunity to generate an income where you are not paid by the hour and you can even set up your trading in a way that it generates a more passive income stream where you make some money on the side.

This is all good and being motivated by money can be a great driver. However, this can quickly change into the contrary when a trader approaches his monetary goals from a wrong perspective. In this article we want to highlight some research findings that show that when people view money in the wrong context it can actually harm their trading and, then, we want to help you adopt a healthier relationship with it to set yourself up for success.

If you need money, you won’t get it – research confirmed

When it comes to being driven by money, there are usually two things that happen when a trader has a wrong perception:

#1 Unrealistic expectations

We are all guilty of that to some degree: when starting out as new traders, we projected that it would only take a few years to turn a few hundred or thousand Dollars into a huge pile of cash and quit our day jobs. Having unrealistic goals quickly leads to frustration when those expectations aren’t met. The quitting rate for new traders is astronomical (40% quit within 1 month) and one of the main reasons are probably wrong ideas and expectations.

Source and references here

Once a trader sees that trading isn’t going to be the easy and fast way out, there are usually three things that happen: he either quits, he takes a riskier approach to trading (larger positions, more trades, gambling mentality), or he starts system-hopping if he still believes that there must be a trading method out there that can generate those returns.

Investors with a large differential between their existing economic conditions and their aspiration levels hold riskier stocks in their portfolios. 

– Kumar: Who Gambles In The Stock Market? – Accessed through: econ.yale.edu

#2 The need to trade

High expectations, as we said, can lead to taking more trades and increasing risk to meet return goals. As we will see shortly, setting yourself goals for X amount of money is the surest way to trading failure.

Especially traders with small accounts struggle with that because they soon realize that a small account will not get them to where they want to be. Although you can read that trading a small account is no different, it’s just not true. Trading with less capital is definitely harder – much harder. With a small trading account, your wins are often close to meaningless which then creates the need to trade more and introduce more risk in your trading.

High net worth investors are likely to have lower turnover.

– Anderson, Stranaham: Account Turnover and Demographic Profiles: Which Investors Trade Too Much? – Accessed through: Bradley.edu

What not do when it comes to trading goals

When it comes to setting goals, there are a few don’ts and I will explain why you have to avoid them at all costs if you want to become a better trader.

#1 Daily/weekly return goals

I see so many traders say that they want to generate 3%, 4% or 5% per week because they have calculated that this will help them achieve their goals in a certain amount of time.

Monetary goals are the worst of all because it creates the need to trade and it puts the traders in a constant state of hunting for signals. 99% of the time, such traders will never meet their goals and they end up losing money because they take mediocre trades, hoping to realize their target.

You can’t control how much you can take out of the market. The only thing you can control is the risk of your trade and the types of trades you take. The outcome is not in your hands. Some weeks, you will get more and better trades and sometimes you just have to sit it out. You have to eliminate the need to trade as much as you can.

#2 Capturing x points per week

Go to any trading forum and you’ll see people looking for methods that give them 20 pips per day or 100 pips per week. Again, those traders tackle the problem from the wrong side and measuring performance in pips is meaningless because you neglect the risk-aspect of your trades.

Traders who set themselves points/pips related goals are more likely to close winning trades too early when they hit their goal and rob themselves from making larger gains. Or, they desperately try to ride trades too long and then end up with nothing. Always stay open-minded and take what is available.

Characteristics of good goals

When it comes to goal-setting, whether it’s trading related or in your regular life, you have to set goals that can be achieved through your own actions. Often, people set goals that they have no control over and then they are frustrated when they don’t reach them.

This becomes obvious when we come back to our two anti-examples. Setting yourself the goal of achieving a certain amount of %-return is not going to work because you have no control over it and no matter how hard you try, your actions don’t control the outcome. You can’t control if the market gives you enough signals, if the signals lead into profitable trades and how long you can ride your trades.

The graphic below compares the things that we as traders can’t control and the things we can control in our trading. At first glance it is obvious that 90% of all traders focus exclusively on the left side and they try to control the uncontrollable. They are even often completely blind to the fact that as traders we have so much things we can influence and then see themselves as victims.

By the way, there is a great non-trading related TED talk about setting goals, being your own coach and think in terms of the process: Building your inner coach by Brett Ledbetter

The right goals

Now let’s explore how goal setting is really done in trading and what you should be focusing on if you want to become a better trader. Here are 4 things that will almost guarantee trading success:

#1 Execution

This is also the so-called process-oriented mindset where you detach yourself from the outcome of a trade and only focus on making the best trades possible and follow your rules as closely as possible. It sounds cliché, but it’s the so important if you want to improve as a trader.

Even with a good system, you will often have losing trades and there is nothing wrong with that. You only have to control your reaction to those losses. Thus, you should accept that as long as you follow your rules, you have done your job as a trader and that it’s not your job to force trades into winners.

#2 Routine

Many (or most) losing traders don’t follow a routine and their trading is all over the place. A good routine will help improve your trading A LOT because it adds structure and a new level of professionalism. I love and honor my routine and it gives me structure and certainty. I know that as long as I follow my routine and do my work, I have done everything I was supposed to do.

My edge is directly related to the quality of the work I put into my trading.

#3 Habits to form a routine

This ties in with the previous point. We have all heard the quote below so many times that it has lost its meaning, but it so true. A professional trader is a structured and organized trader who has adopted good and helpful habits.

We are what we repeatedly do. Excellence, then, is not an act, but a habit. Aristotle

Here are some of my personal habits that I connect with successful trading:

• Setting a few hours aside every Sunday to recap my last trading week and create extensive trading plans for the upcoming week.
• Using a physical checklist before entering trades to make sure I avoid unnecessary mistakes.
• Journaling all my trades after I have taken them.
• Performing a detailed performance review each Saturday and going over all my past trades once again to find weaknesses and analyze trading behavior.

You can see, there is no secret or something earthshattering new here. Successful trading is the sum of repeating good habits that form your routine.

A personal tip: create an environment where you enjoy the process. Each Sunday, I start with a gym workout, I go for a swim and have a good breakfast at my favorite restaurant. Then, I head to my favorite coffee shop and do my Sunday prep for the next 4/5 hours while enjoying amazing coffee, nice company and some good music. I wouldn’t miss this routine for the world and for me this does not have anything to do with work.

#4 Recognize and focus on progress

This is especially important for new traders or people who trade with small trading accounts. It’s very easy to get demotivated and frustrated if you are not seeing the level of success you were hoping for. However, to make sure that you are growing, focus on how far you have come already. Remind yourself of where you are coming from and how you started and how much progress you have made already. It’s unrealistic to believe that you can become a professional trader within 1 or 2 years, but by making constant improvements week after week, succeeding is not an accident but it’s plannable.

“You don’t try to build a wall. You don’t set out to build a wall. You don’t say ‘I’m going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start there. You say ‘I’m gonna lay this brick as perfectly as a brick can be laid,’ and you do that every single day, and soon you have a wall.” – Will Smith 

Interesting perspective, what do you think? 

Source By: Rolf