THE PSYCHOLOGY OF TRADING 'IN THE ZONE'

Techniques to deal with FEAR:
1. Face your fear. Acknowledge it, face it head-on and use it as an opportunity
to learn and progress.

2. Acceptance of responsibility. You must accept that you alone are responsible
for your fear...this will put you in control of your fear.

3. Reality Check: As a trader, if your greatest fear came true, what is the worst
that could happen? Your honest answer can help you examine and deplete the
energy of your fear.

4. Identify the thought choice. Choose a different thought choice other than that
you are afraid of losing money. Choose the thought choice, " I know that not
every trade will be profitable, and that's ok".

5. Acceptance of risk. When the trader has complete acceptance of the risk and
all possible results, then he can be optimistic, committed and realistic about the
next trade and the outcome.

6. Eliminate self-sabotage. Don't link your self-worth to your trading
performance. You are not how you trade! Don’t let losses erode your self-worth
or self-confidence.

7. Have a solid trading plan and adhere to it. This allows a trader to trade
without fear, knowing he is prepared for any potential event.

8. Have a love and passion for trading. You need a motivation far beyond
money. If you only trade for the money, you would be best to find another career
and avoid risking both your emotional and financial well-being.

9. Pay close attention to your trading environment. Does it suit you? Is it
comfortable? Is it noisy or quiet? Do you have privacy? Can you control
interruptions? Can you play music to enhance the feeling of having fun? Do you
have everything you need to trade successfully...a good Internet connection, a
good PC, a big enough account, a good trading system you are comfortable with,
etc.

10. Forget about yourself and your fears. If you completely focus only on what
needs to be done, you will neutralize your fears. They will never stop you.

Millionaire investors use only six (6) minutes a day on investing.

The following is an extract from the Market Watch commentary article
written by Paul Farrell on Sept 20, 2011:

"Finally, in researching 5,000 millionaires, money manager Ric
Edelman discovered that on average millionaires spend about six
minutes a day on personal finance.  They don't waste time watching
cable news, reading self-serving brokerage reports, attending
seminars, studying stocks tables, subscribing to financial
newsletters, pondering economic reports, reading the financial
newspapers, etc., etc.

They invest in their business and build Lazy Portfolios that operate
quietly in the background, generating long-term returns with minimal
effort and attention.

Yes, folks, things are tough and will get tougher.  But still life
is for living and having fun, not wasting time investing.  Winning
portfolios are certainly a heck of a lot simpler than Wall Street
and your financial planner want you to believe. They complicate
investing to justify all the money they're siphoning off.

There are far more important things in life: loved ones, family,
hanging out with friends, doing charities, sports, hobbies, movies
.. plain old, ordinary, everyday living.  Don't get sucked into
buying risky stocks and greedy investments."

The trading wisdom from these 5,000 millionaires
should augur loud and clear to all of us:  10 minutes a day should
be just nice to do our trading/investing.  So, don't spend too much
of your time trading, following or researching the market.  As life
is short, you should live and enjoy your life fully, serve as a
philanthropist to help the poor like those wise millionaires!

Successful Trend followers

Successful Trend followers
· understand the power of compounding
· knows their goal is to compound their accounts over time
· are NOT big risk takers and are actually more risk averse than one might suspect
· have a detailed plan of exactly what they are supposed to be doing at all times· follow that plan
· understand what challenges they likely will encounter, they are mentally prepared

Successful trend followers are ordinary people like you and I, and are not market “wizards” with exceptional skills and knowledge. Loses happen and your greatest drawdowns are always ahead of you. Trend following is not retirement in a box. You need to do your homework.

Paula Webb, in her book Success Without Fear - The ‘RACRS’ Edge for Traders, suggests there are three (3) steps we all owe ourselves as we strive to reach our goals:
1. Determine exactly what is needed to reach your goal
2. Assess your skills and expertise levels and determine what you need to learn to accomplish your goals
3. Do what needs to be done

Be a Good Loser is the only solution to cope with the Downside!

Yesterday, my friend asked for clarifications about how to take care
of the downside.  I would say, "To become a "Good Loser" is the only
way to cope with the downside."

Let's see how other Master Traders managed to cope with the downside:

1)  Seykota: "Win or lose, everybody gets what they want out of the
market.  Some people seem to like to lose, so they win by losing
money."

Seykota: "Risk no more than you can afford to lose and also risk
enough so that a win is meaningful."

Vince Lombardi: "The difference between a successful person and
others is not a lack of strength, not a lack of knowledge, but
rather a lack of will."

Successful trend traders like Ed Seykota, David Harding, Richard
Donchian, Richard Dennis, they all know that by having a strong will
in trading is a must especially during the drawdown periods, and in
most cases they have gone through 40% - 60% drawdown before the big,
big trends come.

So do you possess a strong will to trade like those successful trend
traders?

2)  "Whenever we get a period of poor performance, most investors
conclude something must be fixed. They ask if the markets have
changed.  But trend following presupposes change." - John W. Henry.

Markets are driven by people and their emotions; this is what all of
these markets had in common - people - and people just don't change.
What really has changed is the level of our confidence in what we do
or the system we use.

So if one is not sure of what he does or has lost confidence in the
system he uses, it is time to stand aside and re-test his trading
system or strategy with the Demo account again until he regains his
confidence.

You may want to ask me, "How I can become a Good Loser yet with good peace
of mind?"

My answers are simple:

i)  Reciting my secret weapon - "The Daily Affirmations."
Since I have expected the worst before I take any trade and I know it
cannot be worse than the worst anticipated.  So why worry?  Don't
worry worries until worries worry you.

ii)  Look at my drawdown, what is the "% value" of drawdown against
my trading capital or my recent equity peak?  Compare to 40%, 50%
or 60% drawdown experienced by the great trend traders, which is
higher?  Mine has never gone more than 35% so far.

iii)  Treat my drawdown as "Abstract Money', and this is just
temporary advance to the market as cost incurred to acquire a big
trend down the road!

iv)  I know Trends will surely come, as sure as the sun will rise
from the east tomorrow morning!  Of course, I make sure I don't
blunder on your money management so I can "live" until tomorrow to
trade!

That's how I become a Good Loser!

The world of trading is full of hurt and pain!

The world of trading is full of hurt and pain, and you can thank the market’s maximum adversity for it. Maximum adversity will rarely allow a trader to make easy money. Success does hurt. It’s painful. 

Most people need to suffer firsthand the failures of trading before they are truly ready to learn. Until they endure disappointment, they will continue to believe the marketing hype that suggests trading should be easy and fun. Certainly trading is relatively simple when you get down to the mechanics and execution, but it’s not easy to implement your trading plan successfully.

When you lose money, it will hurt. When you trade with the trend and lose 70% of your trades, it will hurt. When you are in drawdown, which you are for most of the time, even with a higher accuracy system, it will hurt.

Successful traders know this from experience, and they know how to manage the pain to stay on the course. They know how to numb it. You will need to accept that you can experience a long streak of consecutive losing trades. You will need to learn how to deal with that particular pain. You will constantly be trading through drawdowns, some minor and some uncomfortably large.

Inexperienced traders aren’t prepared for the pain, and they believe trading and making money should be easy. Once they face the pain, they shy away, not realizing that it’s the conquering of the pain that leads to continuing successful trading.

I conquer my hurt and pain by:
1) being a mechanical system trader, I don’t predict the market direction, it helps me to remove my emotions and disappointments from trading.
2) trading with proper, sensible and defensive money management: I don’t risk a large percentage of my account on any one trade.
3) diversifying my trading in 20 pairs to reduce the risks and uncertainties.
4) using simple, objective, and independent trading strategies with a very good chance of surviving into the future. Although it’s painful to trade a rough and bumpy non-optimized equity curve, I know I am trading the realities.
5) expecting to lose before I place my orders each day, and I welcome my losses.
6) not following the market, I trade 10 minutes a day. I keep myself busy and away from trading the market, I lessen the pain of trading. It allows me to trade almost pain free!

My dear friends, it’s unfortunate but there is every real chance that you will need to experience failure firsthand before you can succeed. Failure includes pain. Successful trading is accompanied by constant hurt and pain, but please remember that it is also very rewarding because at the end of the day, you will make good money!

It’s better to be out of a trade and patiently waiting and wishing to be in, than to be in a trade impatiently waiting and wishing to be out!

The problem with human beings is they want what they want when they want it.

The concepts of delayed versus instant gratification are undoubtedly one of the most important choices that separate rich thinking from poor thinking. It certainly is the difference between success and failure in trading.

Patience and delayed gratification are some of your greatest assets to becoming successful. Impatience means you will need to trade at least twice. The money lost due to the lack of patience forces you to make multiple trades that may or may not work out, and eventually you lose time and more money.

Impatience at trading is a bad habit that takes money out of your trading account. So it is better to be out of a trade and patiently waiting and wishing to be in, than to be in a trade impatiently waiting and wishing you were out!

Patience in trading is the ability to do the following:
• Sit back and patiently wait for the TNT Index to reach your Strike Zone Level without experiencing anxiety, tension or frustration.
• Let go of your need for immediate gratification.
• Accept your human imperfections and frailty in your trading process.
• Committed to learn how to trade with calm, calculated, and considerate actions.
• Find people who can help you, and hang on to those relationships.
• Feel peace, contentment, and satisfaction that you are on the path of financial recovery or growth.
• Curb your enthusiasm, energy, exuberance, and excitement after you have experienced a winning trade. Do not become overconfident, for pride comes before a fall.
• Accept that there is no need to rush in this learning curve, that overnight reformations rarely last long, and that gradual change and growth have a greater durability, give yourself 1 to 3 years to master your investment skills. Remember, this is not a sprinting race, this is a marathon.

Traders who can develop patience while trading can ultimately achieve what they want. 
“One moment of patience when trading may ward off great disaster or financial loss. One moment of impatience may wipe out your trading account and destroy your attitude, not allowing you to be emotionally prepared for the next trades.”

Markets are not efficient–they are MOSTLY efficient.

Huge, huge difference. A market that is “mostly” efficient will place a reasonable/logical value on most assets, most of the time. But every so often it will completely go off the rails, or otherwise offer mispricings that traders and investors can profit from (or save money by staying away from). Facebook, the biggest IPO of all time, had ample warning signs that silly season had commenced.

Price is set at the margins.

In a Sotheby’s auction, who gets the oil painting? The guy who is willing to pay the most, i.e. the one who makes the highest bid. In a hot real estate market, who buys the property? Again, the guy (or gal) who makes the highest bid. What does this have to do with the “rational” market value of the painting or the house being bought? Often very little, sometimes nothing at all. Market valuations–for growth stocks, real estate properties, paintings or whatever–are NOT determined by “a fair and sober assessment of value,” but rather, by the marginal impact of what the most enthusiastic market participants will bid.

Valuation is not the only factor that drives price.

Efficient market theory teaches that “the market price is the rational/logical price.” But there are many factors driving price that have nothing to do with rationality or logic at all! Facebook’s private market value was in large part driven by “greater fool theory” — a self-reinforcing trend of belief that Facebook’s value would keep going higher. That “greater fool theory” mentality was carried over into the public IPO, with high school investment clubs trying to buy FB shares at the open in the hopes of “selling into the pop.”

When everyone agrees, prices get stupid.

Studies have shown that crowd estimates can be surprisingly accurate on average–but only when there is sufficient diversity of opinion. Market valuations are the same way: When you have a diversity of opinion, reasonable estimates prevail as outliers cancel each other out. But when there is a critical mass of one-sided opinion — when an overwhelming majority shares the same general view–you get serious mispricings.

If you don’t know who the sucker at the table is…

It’s the old poker truism, quoted by Warren Buffett and many others. “If you sit at the poker table for an hour and can’t tell who the sucker is, then the sucker is you.” This crusty old saying has some real wisdom in it: It is a way of asking What is your edge? If you don’t KNOW what your edge is… if you don’t understand how or why you are likely to prevail over your competitors… then it may be you don’t have one. Countless Facebook buyers thought that, because they understand what the company does, they understood the valuation case for the stock. Not the same ballpark. Not even the same sport!

No one can predict a trend’s beginning or end until it is over.

Markets go up, down, and sideways. They trend, they flow, they surprise. No one can predict a trend’s beginning or end until it is over. However, if your trading strategy is designed to adapt to change, you can take advantage of the changes to make money as John W. Henry, one of the world’s top hedge fund company founders, noted:

“If you have a valid basic philosophy, the fact that things change turns out to be a benefit. At least you can survive. At the very least, you will survive over the long term. But if you don’t have a valid basic philosophy, you won’t be successful because change will eventually kill you. I knew I could not predict anything, and that is why I decided to follow trends. No matter how ridiculous those trends appear to be at the beginning, and no matter how extended or how irrational they seem at the end, I follow trends.”

That is why I chose to be the trend trader as I want to survive and win, too. I trade the market trends with peace of mind!

When there’s nothing to do, do nothing!

These people are paid for their ACTIVITIES:
...
Wall Street investment professionals get paid to turn up every day to "do" something, but not for making you money.

Analysts keep their position by writing reports even when there's no real reason for one to be written.

Market commentators are paid to have an opinion, even on days when they have to invent one.

Fund managers are paid to invest, not sit on piles of cash even at times when cash is king.

Investment newsletter writers have to make a recommendation because a publishing deadline is near, not because they've a great stock to recommend...

But, do you think you could be paid for trading activities at times when you should not trade and stand aside??? What you think will define whether you end up as a Winner or Loser eventually!

Warren Buffett said,
“You don't get paid for activity. You only get paid for being right. The trick is, when there's nothing to do, do nothing!"

Loser tries to look for reasons to trade and feels that he has to trade in the market at all times; but the winner tries to look for reasons not to trade and has the patience to wait indefinitely until he finds the right timing!

 

Grow your risk tolerance muscle as it will dictate how wealthy you are

Today let’s talk about Risk Tolerance muscle.

Assuming an investment with a return of 50% per annum, what would be the future financial scenario like in 5, 10, or 20 years’ time? The big picture is really exciting, right?

However, even if the annual return of 50% is achievable, but in reality many people cannot make it to the end of the journey (compound the investment as planned to achieve the 20th year result stipulated) to achieve great wealth.

You will only be able to find out the answer unless you have completed the journey and grown your risk tolerance muscle...

Let’s work out the assumptions:

To grow your $10,000 account using compounded plan to over $576,000 in 10 years, $4,378,000 in 15 years and $33,252,000 in 20 years, you need to go through the trading journey with severe tests, at different periods, of your psychological strengths in taking losses.

The following is an illustration basing on our basic money management and trading lot size with a 250 pips stop loss assumption:

1st year: USD 10,000 = 0.33 mini lot x 250 pips = USD 82.50 or SGD 107.25 / losing trade
10th year: USD 576,000 = 19.2 mini lots x 250 pips = USD 4,800 or SGD 6,240 / losing trade
15th year: USD 4,378,000 = 146 mini lots x 250 pips =USD $36,500 or SGD 47,450 / losing trade
20th year: USD 33,252,000 = 110.84 standard lots x 250 pips = USD 277,100 or SGD 295,230 / losing trade

Are you still comfortable taking the big trading losses when your lot size grows with your increased capital?

Different people have different risk tolerance levels. Your level dictates how much wealth you are going to accumulate, as risk tolerance level will increase commensurate with your experience and confidence with the system.

My advice: Grow your risk tolerance muscle by going through the journey with passion, commitment, determination, discipline and patience, the rest will come into place and your life will be very rewarding, enriching and fulfilling. But don’t forget to do charity with your great wealth god bestowed on you!

WHAT IS "REVERSE COMPOUNDING"?

Most investors are familiar with the "Magic of Compounding Interest", but what they fail to realize is that it works in reverse as well. This "Damaging Power of Reverse Compounding" graph (below) shows how much an investor must gain back at various levels of portfolio losses. With a 10% loss, an investor must gain 12% to be back to even. With a 20% loss, the gain must be more than two times that at 25%. As losses become more extreme, so does the reverse compounding. With a 60% loss, an investor needs to make back 150% to break even and with an 80% loss, they have to gain 400%!

A Trader's Pyschology

A picture is better than a thousand words.

Trading Wisdom that took me a few decades to learn how to avoid the trader’s greatest & fatal enemy – “FEAR”!

Markets are driven by greed and fear.

We get into the markets out of greed and get out due to fear.

Fear is something that we predict or think may happen in the future; it is a projection of our mind. Fear is a fantasy rather than fact, it is unreal, and it is an illusion.

The moment we get into the markets, our FEAR takes over our greed:
When we go long the market, and if the market moves against us, we FEAR it may move further down.
When the market moves in our favor, and if it suddenly starts going the other way, we FEAR it may change its course of direction.
When we are holding a winning position and enjoying good profit, we FEAR if we were to hold onto it for any longer, the market may reverse anytime and we will have to give back a big junk of our profits.
When we suffer a losing position, we FEAR if we were to stop out or cut loss too early, the market may go back to our original favorable direction!
When we read the news, we FEAR if the news is working against our position.
When we look at the technical charts for the confirmation hints of the market heading north, we FEAR when the chart formations/patterns point towards the south direction.

FEAR will keep haunting us as long as we are in the market. If we follow the market movements for 1 hour, we will suffer the FEAR for that 1 hour; if we follow for 4 hours, we have to endure our FEAR for that 4 hours; if we follow for the whole day, we will end up eating, shitting and living with our fear for that whole day, OMG! What kind of life is that?

FEAR will immediately disappear once our positions are closed, it is no more there.

So, FEAR is self-inflicted, it is an illusion, it is unreal. FEAR lands us up with irrational, destructive mindset to make unwanted, self-sabotaging, fatal trading mistakes!

Avoiding FEAR is the NO. 1 mental challenge a trader has to learn to master before he can become the Ultimate Winner!

It took me for a while to realize that “Avoiding FEAR” is extremely vital and critical to my forex trading success! Below I have listed out my hind sights, which in fact are just some commonsense everyone knows. But in reality they are the most overlooked and yet the most powerful and effective ones which I used to achieve trading with peace of mind, without FEAR and to become one of the Ultimate Winners.

Trading wisdom I used to avoid FEAR:
1. Don’t follow the market
2. Don’t read news
3. Don’t read technical charts
4. Don’t listen to craps
5. Don’t focus on the outcome of your trades
6. Use a mechanical trading system
7. Have a balanced, diversified portfolio
8. Have Risk/Money Management
9. Plan your trade and trade your plan
10. Stick with your trading rules
11. Maintain an “Abstract Money” mentality
12. Be a “dumb”, don’t think
13. Have belief and faith in “Trends”

Sitting on the sidelines while waiting for a trend to develop needs patience

The following is an excerpt from an article written by Jay Lakhani, a professional trader,

It has often been said that looking at one's screen during the trading day is like sitting in front of a slot machine and trying to resist gambling. Successful traders in the FOREX have learned that they cannot buck the major price trend of the individual currency pair they are trading. You still don't want to let impatience cause you to trade against the trend.

While patience is important not only in waiting for the right trades, it's also important in staying with the trades that are working. You must know how to wait patiently for the optimal time to exit your trade. Closing a winner too early is not going to allow your account balance to increase exponentially at an ideal rate. So, this is where the 'persistence' mental factor comes in as well. You can be 'patient' until the cows come home but if you don't persistently control your impulses and don't persistently follow your exit rules, and then your profits won't balance out losses over time.

"Be patient with winning trades; be enormously impatient with losing trades. Remember, it is quite possible to make large sums trading/investing if we are "right" only 30% of the time, as long as our losses are small and our profits are large." - Dennis Gartman

Large Stops kill

I have been asked many times about the higher volatilities of certain currency pairs, “Wouldn’t it be better to use a larger reversal stops for certain pairs to avoid the unnecessary whipsaws?”

Hypothetically, it is the easiest way to make a trading system seem more profitable to use larger stops, they give a system plenty of room and time to reach its profit objective or exit point. However, larger stops will catch up with you in time and they will hurt you.

Traders will generally keep increasing the size of their stops until their system produces a hypothetically acceptable equity curve. They unwittingly curve fit their system to the historical data. By increasing the size of their stop, they manage to avoid incurring a string of losses; they believe they have discovered the optimal stop. But all they have done is to curve fit their system to their data only.

And invariably, due to the market’s maximum adversity rule, when they start trading, the market will deliver a new string of extraordinary losses they weren’t expecting. The losses will be so large that they’ll either be discouraged from trading or the losses will damage their accounts beyond repair forcing them to stop trading.

Stops directly define your initial risk; they affect your money management strategy for position sizing. The smaller the stop, the larger a position size you can put on. The larger the stop, the larger your initial risk and the smaller your position size. Remember, money management is the secret to survival and big profits.

A system using smaller stops with a lower expectancy will make much more money than one using larger stops with a higher expectancy when money management is applied. Larger stops kill money management performance. Larger stops kill big profits. If money management is the secret behind large profits, which it is, then small stops is the secret behind extraordinary profits.

So, please beware of and avoid using large stops. LARGE STOPS KILL!

Develop your PASSION first before you can become a Forex Winner!

PASSION is the single most important key to any success. If you want to be successful in anything you pursue, you’ve got to love what you’re after. Without passion, nothing you do is going to bring any results at all.

There are a lot of successful people out there, they are all passionate in what they do. Michael Jordan loves basketball, Tiger Woods loves golf, Bill Gates loves software and Warren Buffett loves investing.

Everyone of them love what they do and that’s why they can create amazing results in their pursuit. The moment you are doing something that you love, you are not “working” any more, instead, you are “enjoying” the fun of doing it.

You’ll feel that you’ve the drive and motivation that can keep you energetic and going all the time. And when you do something passionately and with enthusiasm, you’ll achieve what you want. But before that, you have to “ACTIVATE” yourself first, get yourself “ENTHUSIASTIC”. The word “ACTIVATE” here means to MOTIVATE, DRIVE and INSPIRE.

One of the millionaires’ habits is “Love what you do, have passion for it.”

Below are 3 simple steps how you can develop the power of enthusiasm and your passion in Forex trend trading:

1. Dig it deeper
Dig deeper into Forex trend trading, the deeper you dig, the more you’ll find out how rewarding and fulfilling it can be; and the more you appreciate how it can help you, e.g. achieving your financial freedom, relieving yourself from the rat race, avoiding the fierce competitiveness of business world, etc., the more you’ll fall in love with it. So dig deeper, get to know more about Forex trend trading and its potentials and you’ll develop enthusiasm.

2. Give it a life
Enthusiasm or lack of it, shows through in everything you say and do. Life up your handshake. When you shake your hand, make your handclasp and say “I’m glad to know you”. Successful people’s handshakes are firm and filled with passion.

It is just like when you smile, give it a life, life up your smile. Nobody likes an artificial, pasted-on smile. People go along with those who believe what they say and do. Say and do with life. Put vitality into your Forex trading, put enthusiasm behind what you do.

3. Spread good news
When someone burst in and suddenly said, “I’ve got good news!” Immediately you’ll feel energetic and he will get 100% of your attention. Good news does more than getting attention, good news pleases people. Good news develops enthusiasm as well. No one ever won a friend, no one ever made money, and no one ever accomplished anything by spreading bad news.

Be an “I-feel-great” person all the time. Just say “I feel great” at every possible opportunity and you’ll feel better. When you tell people you are awful, you’ll feel awful eventually. Spread with passion about the positive things and goodness about Forex trend trading to the people you like to help, tell them how it can help solve their financial problems and enjoy uncommon freedom if they’ve learnt to master the investment skills.

Make money work hard for you and generate non-stop passive income without dependence on your presence.

A very thought-provoking poster: “Linear Income versus Leveraged Income” by Robert Kiyosaki, I was attracted particularly by these six words “Income not Dependent on your Presence” appearing in the bottom right “I” quadrant.

“E” Quadrant = Employee
You have a job
Time = $

“S” Quadrant = Self-Employed
You own a job
Time = $$

Both the above (E & S) trading their time for money starting over again and again every day at zero

“B” Quadrant = Business Owner
You own a system so people can work for you
People = $$$

“I” Quadrant = Investor
Your money works for you
$$$ = $$$$$

Both the above (B & I) generates Income without dependence on your presence

Smart people work hard to trade their time for money without fail day in and day out, they could not afford to stop working. Once they reach their retirement age, they are forced to retire, so is their income stream put to a stop, too.

And to add salt onto their bruises, this appears to be the worst timing in their life journey that though they’ve finally finished clearing their financial loans, they now need to get ready again to face their last but insurmountable life challenge – the unavoidable, spiraling, expensive and immense medical expenses imposed by the merciless hospitals.

Wise people make money work hard for them by generating “passive income not dependent on their presence”, they could afford to enjoy uncommon financial freedom, live their hassles-free lifestyle, have a lot of time and fun with their loved ones, be in pursuit of doing something they love, do charitable and voluntary works, serve the communities, etc… so to live fully their transitory but fulfilling life.

How about myself? I consider myself an Investor, so I am already in the “I” quadrant, to achieve enjoying the above passive income is just a stone throw away. What I need to master now is how to become a Real Winner in forex trading, follow the trend trading journey without fail for 1 to 3 years, nurture the right Mentality, cultivate the right Trading Habits and Behaviors, develop the Winner’s Attributes, strengthen my Risk Tolerance muscles, I can assure that I am well on my way to attaining my goals in the not too distant future! 


Cheers!

BIG MONEY was never made in the buying or selling, it’s in the WAITING!

Trend followers are not lucky; they are prepared for the unexpected. They take whatever the market offers, they don’t predict the future. They make money by being patient and able to live with and accept volatility, and avoiding untimely, unnecessary and excessive trading.

“I’ve found that the big money was never made in the buying or selling. It is in the WAITING.” – Jesse Livermore, a late 19th early 20th great trend trader.

First, you need to WAIT for the Equity Curve/TNT Index to reach your Strike Zone level to engage the best timing to enter when the Odds are on your side. After you’ve taken your signals and entered, trading becomes a WAITING game, you will WAIT until the Equity Curve/TNT Index rallies above your Profit Taking level to take profits.


Trend Trading is a WAITING GAME, the BIG MONEY is in it, but it takes you time and patience to play it successfully!

Why Success Breeds Failure in Trading.

Many wealthy clients that each one of encountered over the years that managed to blow up tens of millions of dollars trading FX. Most of these people were extremely successful entrepreneurs, often self made men who started with literally nothing, to accumulate vast fortunes in shipping, real estate, construction and other business endeavors. Clearly these were capable, talented men (and they were uniformly male) yet they managed to blow up their massive accounts with alarming speed.

WHY??

Our uniform answer was ego. Each one of these men battled very long odds and through sheer will power were able to succeed and bend the market to their will making fortunes in the process. Having won in such difficult conditions, they couldn't imagine the possibility of losing and therein lie their demise.

In real life you can often bully your way to the top. But in trading you cannot. The market is always bigger and always richer than any one individual. The London Whale was only the most recent of long string of traders to discover that naked truth. Above all else trading is about the suppression rather than expression of ego. Trading is always first and foremost about being humble.

However humility is not a common trait amongst most traders. Most of us are well educated, intelligent people who have enjoyed a fair measure of success in life (we wouldn’t be attracted to the markets if we weren’t intellectually curious). But it is precisely those qualities that make us very vulnerable to failure in the markets. Stubbornness in the face of adversity is frequently necessary to succeed professionally in real life, but it is a guaranteed recipe for loss when it comes to trading. That’s why some of the smartest people often make the lousiest traders. Let’s all try to remember that the next time we battle with the FX market.

Cheers.

You don’t need to know what will happen next to become the winner!

Some of my friends asked me about the fate of the Euro Zone Crisis, I told them why bother to guess whether the Crisis could be solved or getting worse!

To me as a Trend follower, I just follow the market price. As the price will move, it will tell the truth, it will tell everything. Every happening will be reflected in the price movements.

The beauty in Trend following system is I don’t need to predict, anticipate, hope, guess, forecast, speculate, presume, etc… I just need to follow the price movements, up-trend, down-trend or sideway trend. I make money when trends appear, and when they appear, they persist. And the best is the trend will sure to come, as sure as the sun will rise from the east tomorrow morning.

So what I need to do is just “plan my trade and trade my plan”. If I am trading with BIYD Strategy, when the market dips below my Strike Zone level, just pull my trigger then; and when it reaches my Profit Taking level, just take my profit with whatever comes along, don’t be greedy, be happy and grateful to the market!

Like those great sportsmen, after reaching their “Finishing Line”, take a rest, celebrate, preserve their energy and wait for the next round again!

I took my profit today!

I went into market using my BIYD strategy on April 18 when my equity curve reached the strike zone. Today, the equity curve reached my take profit point and I close all my positions. 28% profit. Not very much but am contented. At least, it is better than the bank saving interest rate.

What is my trading philosophy?

Capital Preservation

My investment plan is designed with one objective in mind – to maximize the portfolio performance while at the same time using the power of compounding to grow my wealth. My respect for compounding leads me to have a strong emphasis on managing downside risk.  This is very important because the damaging power of "reverse compounding" can be extremely destructive to a portfolio.  Most investors are familiar with the magic of compounding interest but they fail to realize that it works in reverse as well.

That is why I always look at the downside risk first before looking at the upside potential.  I never chase the market and I never break my risk management rules no matter how "good" a trade may look.  I play a defensive game and maintain a modest return target of 20-30%.

Long-Term Trend Following

I am a hardcore trend follower. I do not day-trade or scalp the market. As trend follower, I wait for the market to move first and then follow it.  I never predict market direction. Trend trading demands a high level of self-discipline and patience to follow precise rules based on price action alone. As long as price data is available, all else is inconsequential. Media, fundamentals, broker opinions, talking heads, and so on are simply not necessary to profit.

Ultimately, all I seek is one thing: To enjoy long-term consistent profit with total peace of mind.

Why I choose forex trading as a tool for my road to financial freedom?

The majority have the misconception that Forex Trading is an extremely high risk investment.  The truth is exactly the OPPOSITE!  In fact, Forex is one of the safest, most rewarding investments to ACCUMULATE WEALTH, if one know how to do it properly.

Here are just a few of the major advantages:

ADVANTAGE	FOREX	STOCKS
1) High Liquidity	USD4 trillion a day. 24-hour global market, with instant filling of market orders.	NYSE: USD1.65 trillion a month. Investors frequently "caught" due to market illiquidity, trading suspension, price gap, etc.
2) No Market Manipulation	The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.	Susceptible to large funds and syndicates cornering the market and manipulating prices.
3) Low Complexity	7 majors, and a dozen cross pairs.	NYSE: 4,000+ stocks NASDAQ: 3,000+ stocks
4) Short Selling Allowed	No restriction on short selling. Trading opportunities exist regardless of whether the market is moving up or down.	Short selling is either restricted or not allowed.
5) Use of Leverage Allowed	USD4 trillion a day.	Equities: 1:1 or 2:1 Futures: 10:1 – 20:1
6) Less Risky	Unlike stocks, major currencies will not go bankrupt or become worthless. Guaranteed Limited Risk: You can only lose up to what is in your trading account.	Companies including blue chips have been de-listed and gone bankrupt overnight. In the futures market, your position may be liquidated at a loss bigger than what you had in your account.