Heads Up!

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"Thinking is easy, acting is difficult and to put ones own thoughts into action is the most difficult thing in the world."

Wolfgang Von Goethe 

If you´re wondering why I´m quoting Goethe rather than some tired old trading cliché people normally quote, it´s because it sums up a key issue in trading, i. e. it´s much easier to be a thinker/analyst than a doer/trader and have to deal with the consequences, risk and uncertainty of your actions.

Action and Performance are what matter most in trading.

For example you can read all you want and know everything about what it takes to attain peak physical fitness but its not until you actually commit to doing it that you really learn what it takes and how to achieve your goal. 

Likewise, if you want to get to the top in any business, sport or endeavour, nothing beats the hard yards of constant training and ´match´ practice. 

 

And remember, when you start in the trading business you are pitching yourself against some of the sharpest minds and best performers in the world who do this professionally for a living.

 

So there is no getting around the fact that your only job is to perform at the same level. If you want to be one of them, you have to be ´on the pitch´ and doing it. You have to perform and be on your game - constantly.

 

Sure, you first have to learn the analysis part which takes a while but with guidance and practice it´s not too difficult to get to the point where you can spot where the ´best´ opportunities lie.

 

However, it's one thing to be able to analyze your charts, it's another thing to execute, risk manage and realize that opportunity and deliver peak performance. 

The gold is in taking action, not in the analyzing! 

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While you´re here - a few words to the wise.

 

In no particular order - just things I have learnt over the years and I think are worth a quick look at the outset of any trading career.​

  • Trading can be very rewarding, financially and personally. It really can change your life - but it is not an easy ride - especially when you are just starting out. I know from personal experience how tough this game is. I made plenty of mistakes during my own learning process which cost me time and money - just as most have. However, I didn´t see this as a big issue at the start, in fact quite the contrary because I know it helped me. Aversion therapy is strong medicine! 

 

  • Making mistakes is part of the education process but there are some things you needn´t have to experience personally to learn from them. Forewarned is forearmed as they say! But one thing is for sure, to achieve your goals like anything else in life, you have to put in the work and learn the business from the ground up. Jump in blindly and you´ll lose your money - it is as simple as that.

  • Your emotions will play a part in your trading. Forget what people say about being ´robotic´ or emotionless - its just not like that - you will feel it when you trade, even more so if you are in drawdown, and sizing up can be tough with regard to emotions. For the most part it´s down to fear. But, the problem is, the fear of losing will prevent you from winning. Most traders feel uncomfortable talking about this but it is, in my view, one of the biggest issues traders have to deal with. Putting your ´hard earned´ on the line day in, day out is not for the faint hearted. However, the flip side is that objectively, there is nothing to fear in the markets but fear itself - to paraphrase F. D. Roosevelt! You just have to learn how best to control this, which comes down to trusting your process and focusing on beneficial habits. Risk management is also critical and the realization that this is not a ´home run´ sprint but a middle to long distance race.

 

  • There is no ´holy grail´ set up or trade. The only holy grail aspect to trading is to have a process driven system, a plan that you execute accordingly and a clear understanding of risk. ​

  • Trading is not easy, clear cut or straightforward - nothing in trading fits that description. The thing is you just have to accept that this is what trading is, adapt your mind to the reality, be flexible and use it to your advantage. Once you do that, you´ll stop trying to ´fight´ the market, realize the market is always right and be comfortable going with it instead.  ​

  • At times trading requires a more nuanced or deeper reading than the more ´standard´ technical analysis and fundamentals. For example a particular currency pair may be on the move at any point in time due to M & A activity whereby a corporate may be buying an entity in another part of the world and needs local currency to complete the deal. Similarly you need to have a feel for how bond markets affect currencies, the difference between nominal and real yields/rates and how intermarket relationships can affect markets across equities, currencies, commodities and fixed income.   

 

  • The above said, trading doesn´t have to be complicated. It is complex but once you understand the context of the day, week or whatever time frame you are trading and have the knowledge, strategy and process that accommodates for it, it needn´t be complicated.

 

  • Trading is as much about waiting for the set up as it is in actually executing. I´d say probably 80/20 - if you don´t have patience to only take the better set ups - it will quickly burn you out as a trader.  

  • You don´t need to know every style or method of trading. You need to find and learn one that suits and resonates with you. Once you feel comfortable with that, it makes the rest so much easier. 

  • Hesitation, prevarication, procrastination, waiting for confirmation (whatever that is ?) kills trading profitability. Similarly there are times when not trading is the best ´trading´ you can do. If there is nothing to do - do nothing.

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  • There are no secrets held by the financial ´illuminati´ which, if you knew, would instantly turn you into a megastar trader. You can normally spot this on trade ´educators´ websites or YouTube channels by phrases such as "They didn't want me to tell you this" or "Trade like the Banks". Complete nonsense. Nothing further to be said here.

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  • You can check your charts for a few minutes while you´re in bed every morning or on the beach and make a fortune. No you cant - get real. This is a professional business - if you are not able to be likewise - forget it.

  • Wherever you see the word Lifestyle or a picture of a Gucci shopping bag and or a Lamborghini - well, what can I say - if you fall for that you really should consider something other than trading :). If you are looking for a forex trading coach make sure they actually trade and don´t simply make money from broker commissions and ´shilling´ courses! This sort of stuff is particularly acute in the crypto trading scene - be alert.

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  • Finally, you have to develop a flexible independently minded approach. Blindly trying to follow someone else´s strategy without internalizing that approach and adapting it to what suits you best will only lead to failure. You have to ´own´ it and make it your approach. Only then will you actually start to understand it, believe it, trade it and make money from it. Add this to preparation, discipline and patience and you´re on the right track.