Proper Preparation for Trading Success
Self confidence is directly correlated with the trader's perception of his level of preparation coming into the trading day, which lead to his/her ability to perform successfully. Good preparation also influences the skill level that a trader believe he/she possesses.
One of the key as a trader is that you must spend the necessary time to make trading skills "automatic" and create winning trading habits. If you wish to immerse in total focus, you cannot be thinking of which technique or strategy.
In our live trading class this evening, one of our trader shared his "difficulty" in holding a position that took sometime to reached the target profit. This triggered TY to share the trading style of one of our past FX trader. How he manage his trade and his winning mindset. [Important key: Winning Mindset]
Many years back when we first started our FX Course, I only concentrate on passing down the knowledge on Fibonacci trading and nothing else. Months later, in one of our traders gathering, this particular trader (let's called him Trader XYZ) showed up and shared with us his progress and what he has gone through before coming to this current stage, what he told us surprise both of us, at the same time, we are so happy to know that he has put in the hard work and passion in pursuing this trading business. During that time, I do not have a live trading room, so, all the follow up teaching are done through Facebook. To cut the story short, he printed all my posting and he studied hard, spend time analyzing why some of my trades and Fibonacci are different from his.
His "BELIEF" in Fibonacci and his forward testing has proved to himself that this "BELIEF" WORK! What he need to do next is to plan on the trading size.
Let me use his trading style to illustrate using today's ES (S&P-500).
Price has reached a major resistance level yesterday, this morning, his only "FOCUS" is, identify a Fibonacci for entry.
He only managed to get his trade entry 2442.75 at around 9:15pm, after getting the trade entry done, next is to set his target profit which is 2419.50. Total of 93 tics profit.
Let's go back to our class discussion this evening, the current practice by most of our traders on entry size(s) are not consistent, and through the recent class game (using live market chart to identify entries and exits), some traders start to realize that they need to "keep this constant" in order to achieve "best result".
What about trader-XYZ? He will always set his default size as 20. He believe that as long as he keep repeating the same trading strategy again and again the same way, even if he suffer few losing trades, few small gain trades, plus few big gain trades, his big winning plus small winning trades are more than enough to cover his losing trades.
And whether he is using 1 lot, 5 lots or 20 lots, the trading strategy is still the same. Since there is only "ONE STRATEGY" and it works for him, he has decided on using 20 lots to grow his trading account.
Let me show you the numbers using today's example:
If he used:
1 lot X 93 tics, that is = USD 1,162.50
5 lots X 93 tics, that is = USD 5,812.50
20 lots x 93 tics, that is = USD 23,250
Trading strategy remain "constant", only the size changes. Now you see the different?
I shall use 2 examples that I have showed the class today using "Moving Pivots" as the main trade entries to show you the results on why it is good to just use only "ONE STRATEGY". Your mind are very clear on what you need to DO!
** The Blue belt is the Resistance Moving Pivots.
The first 2 trades we lost a total of 13 tics. (this contract, per tic is USD10)
If we used:
1 lot, you lose $130
10 lots, you lose $1,300
20 lots, you lose $2,600
There after, we gain back 32 tics.
1 lot, you gain $320
10 lots, you gain $3,200
20 lots, you gain $6,400
Total net gain for this afternoon is 19 tics.
1 lot, you gain $190
10 lots, you gain $1,900
20 lots, you gain $3,800
The second example, we have 3 winning and 1 losing trade. (per tic is USD12.50)
We gain 24 tics for 3 winning trades and lost 8 tics on 1 trade. Net balance we still gain 16 tics.
If we used:
1 lot, you gain $160
10 lot, you gain $1,600
20 lots, you gain $3,200
After reading this, I hope I have shine some "LIGHT" on your trading path!
Have a well-planned trading day.
See you again :)