During this process I Iearned the importance of skill, technique, and timing. But more importantly I learned the art of giving way to force in order to overcome a larger and stronger opponent. And consequently I teach traders how to react to force rather than pushing forward with your own opinion, I have made far more money reacting to market moves than trying to predict the move myself. A wise person once said "Prediction is very difficult, especially when it pertains to the future."
With the pits virtually gone, today's traders sit in front of monitors, drink coffee, and let the Quants and Bots do the trading. But that's not where the big money is. The big money still comes from being a superior trader who can deal with all kinds of situations.
First, realize that you are not in this business to trade; you are in it to make money. And to do that you need patience. In fact, I would say that lack of patience is the number one problem of traders who come to me for coaching, and we always solve that before we move on. Now, here are some specific things to think about:
1. A currency pair comes in 475 pips higher overnight; what do you do? Well a while back gbp/nzd came in 475 pips higher and we made 500 pips in 24 hours. There's a technique to this...its not luck.
2. Are you using "stops"? If so, you're just making the brokers rich and guaranteeing losses on your part. If you had traded in the pits at the CBOT or Merc, you would know that markets trade toward the stops, and traders like myself pick them off and go the other way, taking the profits that you thought YOU were going to get. "Stops" are also a sure way for the market to take you out just before the big move is made. There are better ways.
3. Statistics show there are certain times to fade various chart formations, oscillators and other technicals. When do you do this and how?
4. Do you know when to reverse your position? Since the market loves to catch everyone going the wrong way, this is a great technique but you have to know how and when to do it.
5. How do you handle your swing trades? Do you try to trade in and out of them or leave them alone? My strategy: the only thing you should do is take profits as you go and scratch the rest. That's how you play with the house's money..
6. On your day trades, how do you ensure you have the least number of contracts on when the market turns?
7. Do you know the exact differences in accuracy between the various time lapse charts? In other words, looking at all the charts from a tick chart to monthlies. which ones are the most and least reliable when applying various studies and formations? Which ones can you fade?
8. And here's one of the most important things that Black Belt Traders learn: "How To Make A Plan". ....one of the big causes of trader failure is lack of or loss of confidence which basically comes from not having a plan. Its the plan that keeps you from panicking, from hanging onto losers, from moving stops (disaster) and taking profits too quickly. And finally, its the plan that prevents you from making the same mistakes that have hurt you in the past.
9. One of the Black Belt trading mantras is "Trade less. Earn more." Our students understand that its better to make 6 ticks with 95% certainty than to try to make 50 ticks with only a 10% certainty. And with this strategy you keep your liquidity costs low and add to your earnings at the end of the year.
10. Black Belt Traders know how to pick off stops and go the other way. Its an important tool in a traders arsenal. Its very profitable, quick and low risk. You can learn this technique in my morning "Currencies, Coffee and Croissants: club where I trade "live" with members and explain each trade as we go.
11. Finally, make no mistake.... its the big bank orders that make Forex move. But they do leave footprints and Black Belt Traders learn how to follow them.
And remember, just one little change in your trading can have an enormous effect on your income. Its very similar to what happens when a personal coach fixes a tiny flaw in a professional athlete and it takes them to new heights.