This is my special gift to those who want to start charting and trading. Whether forex, or crypto, or binary options or stocks. As long as the goal is to profit from the price movements of assets, then trading is trading.
This work will not appeal to those who think they will double their capital in a few days and start driving Lamborghinis; but it is meant for those who wish to make trading a profitable vocation that can help them cater to their needs, and have something to give to those who are in need.
Trading is like a hard nut with delicious juice inside. The trouble is getting to the deliciousness. It takes a lot of work and a lot of suffering. In fact, it seems that there is a prerequisite amount of pain that one must endure in order to become successful at it.
A fresh person with no experience whatsoever in trading will not find this book very useful because it skips the rudiments of the trade.
However, even with some experience it can still be very hard to make any money in this business. Therefore, this is a compilation of some facts which when put together, can mark a turning point in the trading career of any trader.
It will help you make money, and keep making it until you get used to making money from trading. However, these are the things to keep in mind.
Trading Starts In The Mind
In the beginning, I prayed for a way to make 1 dollar every day. That is quite a small amount of money, but it can amount to something considerable over time. 1 dollar per day is 365 dollars in a year, a lot more in ten years, and something different over a lifetime.
One dollar for me could be five dollars for you, and a thousand dollars for someone else. It is not the exact amount that matters but the mindset behind the prayer.
What I was in fact wishing for was a way to make small amounts of money on a consistent basis. Trading with that wish in mind means that I have a certain approach to the markets. No matter what the market does, I aim for my one dollar, and as soon as I have it, I go away.
There will always be another day to trade. The markets will always be there. True, it may change in form, but it will still be there. In the future we may no longer trade currencies against each other; it may be cryptocurrencies against one another. But it will still be trading.
This kind of mindset will likely require some good capital so as to avoid the adrenaline rush that has made many a trader go “all in” on the markets. All in is something you do with gambling not with trading. If you can go all in, then you are a gambler at heart, not a trader. You need to acquire the mindset of a trader, which is what will keep your account safe.
The mindset is king. It is even more important than having the skills. One may have excellent skills and yet fall short because the mindset is not there. For example, who told you that you must make a profit every day or every week? That would make you a king or a god of the markets. Such arrogance!
The mindset of a winner in trading would allow you to take a loss with dignity. Walk away today; live to trade again tomorrow.
This is pretty much the best kept secret about trading. Success is not calculated by how much money you make – it is calculated by how long you can keep the money. Many people make a lot of money with trading, and then they make videos online in which they call themselves kings of the trade. Alas! They often lose that money soon afterwards.
“Flipping an account” which means doubling or tripling the balance in a short time – is a very attractive, and very interesting, but it is also something that you never hear professionals doing.
Have A Strategy
In order to survive in trading for a long time, one needs to have a strategy. This means having a particular approach to the market – a set of rules under which you buy or sell. The strategy must also tell you how to manage losses.
Otherwise, you will be proud and happy during a winning streak, but will lose everything as soon as a losing streak happens.
Having a strategy is just like having a plan. It gives you an idea of why you are here, what you want to achieve, and how you want to achieve it. However, having a plan is not all it takes. In fact, anyone can have a plan.
The problem is following said plan when things don’t go the way you planned. “whatever course you decide upon, there will always be someone to tell you that you are wrong. There are always difficulties arising which will tempt you to believe that your critics are right. To map out a course of action, and follow it to the end takes courage -” Ralph Waldo Emerson.
Ralph Waldo Emerson was not a trader, but he was a philosopher – a very good one! His words are just as relevant in trading as they may have been in military affairs, as well as anything else.
Bad days will come, and when they come, you will doubt your strategy. You may start to amend it; this way or that, thinking that you are making improvements to your trading strategy. In truth, that is desperation. Emotions can run wild sometimes during the heat of the trade; and unconsciously one may want to make a big win to recover the losses.
Sometimes, that can work. Most times that can lead to ruin. That is like jumping off a cliff and learning to fly as you fall. Generally a bad idea.
A good bird should train before the big flight, and should stick to the rhythm of flapping its wings. Even when the air is turbulent, it should continue to fly in its pattern. It may take shelter for some time, but the storms always pass, and so life always goes on.
There is nothing wrong with a trader taking shelter and resting his wings. However, changing your system on the fly is a very bad idea.
They often say no system is perfect. That means changes will often need to be made to a system, even if the system is profitable. Well, such changes will have to be made after testing, and being sure that they are beneficial.
Without adequate testing over extended periods of time, these “improvements” could burn your account.
Therefore, it is a lot more professional to have a strategy, and then stick to it. An additional strategy is an added boost, but that is only after passing it through the normal process of testing.
Have your Own Way Of Seeing Charts
One of the biggest lies of trading is “candle charts.” The markets do not work in four hour cycles. They do not work in one hour or fifteen minute cycles either. The markets are fluid, and they move in a fluid, flowing manner.
Candle charts can be useful for analyzing historical movement of prices, but as a trader you are not trying to analyze historical movements of prices, are you? You are trying to profit from movements that have not yet happened. Candle charts can help you do that with some training, or if you are very intuitive.
To make them work for you on the long term, you need to have your own way of seeing the charts. Some people turn them upside down, others superimpose other charts on them, while others use trendlines.
The bottom line is that you need to see the charts differently than what the chart shows.
There is an argument about using the MT4 platform. Some argue that it was created to make money for the creators, not the users. Of course, others argue that there are traders who successfully use that tool, and who owe their success to the developers of that trading platform.
Nevertheless, for trading to work, it has to be done on your terms. You have to decide your entry independent of a chart.
Have you ever wondered why some professional traders use multiple screens? They do so because they need to see the price movements through different systems. They understand that one chart may not be enough.
You need to understand that as well. While multiple screens may not be feasible for the average trader, but at least multiple charts can be. While looking through candle charts, you can still look at other charts.
Most importantly, you must also look at the charts in your own way, through your open eyes, and with your own mind. This is the only way to trade for the long term.
Of course, this brings us to the topic of indicators. Are they good or bad?
Indicators Are Good For Decorating Your Screen
Indicators are many, and they come with many different features. However, relying solely on indicators to trade will ultimately need to ruin. For one thing, they are based on rules and strategies – someone else’s rules and strategies.
As a person who has simply purchased the indicator, it is impossible to say you fully understand it, and how it works. In most cases, people do not want to understand how it works; they just want something that tells them when to buy or sell.
They want something that eliminates the thinking process – the need to exercise their brains. Thinking is hard, and most people want to avoid it. People actually pay as much as several thousand dollars for some kinds of indicators, so naturally it had better be good.
The problem is that it cannot be good forever. Indicators are built on strategies, and strategies are based on how the markets are behaving now. They can change behavior at any given moment – meaning that any systems built yesterday can suddenly become obsolete today.
In that case, the shiny colors on the indicator can be good for decorating the screen – they can make it look good and even impressive.
If something impressive on your screen is what you want, then it doesn’t look like there is a problem. However, as profits are the main thing, it seems that indicators alone cannot do much to help a trader in the long term.
Alone. But they may work when combined with something else?
When combined with an intrinsic knowledge of what you are trading and how assets move, indicators can be a very good working tool for traders – they can give the trader a different perspective; help them see angles to the markets which they may otherwise miss.
Some traders trade signals that are combined with other market conditions. Monitoring both situations can be strenuous and time consuming. With an indicator, the trader can greatly reduce both the time and stress involved in trading this system.
Sometimes trading comes down to making split second decisions. Indicators can offer one the advantage of speed; therefore ensuring that the trader enters into the trade on time, therefore making the profits.
Indicators can even help one monitor the win rate. However, it is important to keep something in mind regarding win rates.
You Don’t Have A Fixed Win-Rate
That is one thing that traders, especially new traders seem to be missing. The win rate is unpredictable; it can change so quickly. An indicator that shows an 80% win rate today will probably show a 20% win rate tomorrow.
Remember that win rates are based on strategies. A win rate is like a performance report; indicating how well a strategy is doing at the moment.
Also remember that strategies – like indicators are likely to fail at some point; they are likely to go out of sync with the markets. Sometimes, the out-of sync (ness) could last a short while, and other times, it could last for very long.
Sometimes, strategies that are out of sync can come back into fashion and become profitable again. Other times a strategy is gone and gone forever.
The important thing to take away from all this is that a win rate is not fixed – it could change, and could quickly go from positive to negative.
It is therefore a good idea to keep its frailty in mind. Making trading decisions based on the win rate may not be a very good idea. For example; taking very big trades.
If a win rate was constant, then one could double a losing bet. However, it is not – which means martingale is fire. Fire like hell.
There Is A Special Place In Hell For Proponents Of Martingale
By all means increase your lots/stake but not when you are losing… do this when you are “sure.” This is exactly the opposite of what the martingale strategy preaches. Martingale encourages people to double their lots with each loss.
The idea is to keep doubling the lots until you win. Theoretically, this should work because the win should come in the end, no matter how long it takes.
It could take quite long. The trader should keep in mind the fact that the markets can act irrationally for quite a long time, and you cannot continue to double your lots indefinitely. With the martingale strategy it is very easy to go from 1 to 100 very quickly.
If you have an uncommonly large purse, and can keep doubling your lots then you should be fine. All it takes is one win to recover all the losses, and even to make a small profit.
Before using this strategy it is important to ask oneself if one has an uncommonly large purse. Can you keep going for as long as it takes?
The martingale strategy encourages one to risk big for the chance of a small profit. It is stupid, and can only be propagated by wicked people who want to see small traders burn. If there is a hell, rest assured they are going there.
Closing
If you have not yet passed through the pain phase, then you are uncommonly lucky. Maybe you will never pass through it. if it comes, however, you will have to bear it with grace. It will burn away your impurities, and make you worthy of the money that one can make through trading.
Remember that trading starts in the mind. The approach you have to this business is the biggest factor that will determine whether you make it or not.
