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The Habits of Highly Successful Traders: Part 2

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The Habits of Highly Successful Traders: Part 2

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Author: Shanda Matieshin


Todays post is going to be a discussion about the second habit of successful traders. So what is the second habit? Resilience.

Resilience is an interesting topic to discuss. Lets start with the definition

Resilience – “the capacity to recover quickly from difficulties; toughness.”

            - “the ability of a substance or object to spring back into shape; elasticity.”

The two definitions above can give us a pretty good idea of just what resilience means. Think of an elastic band. Just like the second definition says… elasticity… what exactly does that mean?

Being like an “elastic” means that you are be stretched in a million different directions but ultimately come back to your original shape and form. The forces of nature can try to pull you this way and that way but you stand your ground and always come back to your center (original form).

Nothing can permanently take a different shape or form. No matter what happens you remember your center and always come back to this place. 

So now lets apply it to the markets and being a successful trader. Being a long term successful trader will mean that you have endured a few loses and setbacks in the markets. But what will define your ability to keep moving forward is resilience. The ability to bounce back from setbacks is what makes successful traders. When your account is being pumbled by losses it can be hard to remain in a calm and peaceful state. But that is EXACTLY what successful traders do.

Experiencing a losing streak can make it incredibly hard to bounce back and continue trading. Newbie traders will want to adapt their strategy (when it is perfect the way it is) or completely change their strategy all together. Bouncing around from strategy to strategy only continues to pull the elastic and stretch it farther than it can be stretched. What happens when the elastic stretches to far?

It snaps. This is what will happen when you continue to adapt your strategy or move strategies based on spur of the moment decisions. You never truly master any strategy at this point. Continually moving strategies is the actions of a new trader who does not yet understand how to master the markets and wants to find the “perfect” strategy to make money NOW. To put it bluntly… this is NOT the way to success in the markets. Testing multiple strategies and moving from one strategy to the next pulls the elastic farther.

You stretch yourself so far and ultimately you will snap. This snap will represent you throwing in your towel and giving up trading altogether.

So how do you develop resilience in the markets and develop the ability to bounce back from loses with no loss of enthusiasm?

Well… it takes time. Through long hours dedicated to the charts you will find that your ability to bounce back becomes easier and easier. You confidence in your strategy and in yourself as a trader grows as you have more time on the charts.

The first losing streak or setback is always the hardest. But once you have gone through a few losing streaks you know that your winning streak is on the way. You develop an inner confidence in yourself and your strategy by spending hours and hours on the charts. This really is the way to develop confidence in your strategy. Take the time to backtest and identify your ideal setup. By looking at your ideal setup and knowing exactly what will make you take the trade you gain confidence to take trades in real time.

I would suggest you write out EXACTLY what makes you want to enter a trade in the market. Are you looking for a support and resistance level? A daily candlestick pattern? Write these characteristics out and have them beside you each trading session.

Another important list to have with you at all times is what makes you NOT take a trade. Perhaps it is when the market has been moving against your desired position. When the market is trending. Any market characteristics that help you make trading decisions are so important. When you can pinpoint these characteristics you will have a better chance of making great trading decisions in the real market.

Backtesting is an incredibly powerful tool for developing confidence in your trading abilities and your strategy. Through backtesting you can discover all of your statistics. If you find that your maximum losing trades in a row has been 8 in your backtesting and in your live trading you have had 3 losses in a row, you can have more comfort in knowing that your trading is still in line with your strategy. This is the power of backtesting. You really start to understand your strategy, where your strategy is strong and where it is weak. You can then have a new level of confidence trading in the live market with real money!

At DARA we help traders analyze their trading data. It is so important to gather data in your trading so that you can always learn, refine and grow. Backtesting helps traders to learn their strategy, refine it and grow when in live market conditions. Without gathering the data on your strategy you will be lost in the markets. We have developed a journaling software to help traders analyze their trading statistics. Learn more about how you can take your trading to the next level in 2019 by journaling and measuring your statistics!

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Developing Confidence in Your Trading Strategy - How to be solid as a rock while trading

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Developing Confidence in Your Trading Strategy - How to be solid as a rock while trading


By Alexander Vladimirov

By Alexander Vladimirov

 

                                

The importance of Strategy

As with any profession, you need to put in time and effort to be successful at it. Your strategy is the pillar that your trading will be based on. If your strategy isn’t a good one, you will fail in the long-run. A strategy is generally something which is built over a vast amount of time after many trials and errors. Of course, there are a vast amount of strategies that exist, but how do you choose the correct one? We’ll tackle this topic in another article, but this is why it’s so difficult for newcomers to get started and not lose all of their money really quickly.

Evestin Forex robots will allow you to inherit already built strategies and help you develop into a profitable trader no matter what your experience level is. If you have your own strategy – you can combine it with some automation. If you are new, you can see how, over time, a good strategy and discipline equal positive results, until you can develop your own.

The importance of mind-set and self-awareness

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Mindset is very important because things can get really ugly if you’re in a negative trend. You start to doubt yourself, the market, the broker and everything around you. New traders often enter this cycle and will start to revenge trade (this is when you double your lot size after an already lost trade in order to win back your money and even profit). Revenge trading is usually done shortly after the trader closes his trade.

Tip of the day:  After a bad trade – step back, relax, take a walk and come back to the markets in the next day. There will always be opportunities on the market – it’s important you have the money for them. Use losers to learn a lesson and strengthen your trade execution!  Always make your trade with a clear and calm head!

The importance of numbers

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At the end of the day, trading is a numbers game. Before entering each trade you should know a few things.

  • what is the long term trend
  • based on the long term trend – how many pips am I going after (take profit)
  • where will I place my stop loss
  • what is my margin level and risk tolerance
  • If you know your numbers you will build confidence because you will know beforehand what to expect. If you have a good strategy and know your numbers, you will eventually be in profit.

The importance of patience

Last but not least is patience. This skill encompasses all others above. Patience is the skill that allows you to enter the trade at the correct moment. After a certain amount of experience, there are things you see in the market, just by looking at it. You have a better sense of the direction it’s going to go. While you have to follow your strategy very clearly, sometimes it would be needed to withhold from entering a trade, or maybe exiting one a bit earlier. These should be rare cases, of course. Patience is also what generally leads you to be profitable as it will allow you to let your running trades run until the end. Many traders suffer from closing their winning trades too early. This is something that will make the numbers not add up in the end.

Our robots have all of these skillsets integrated. Take your trading to another level by starting your free 30-day trial below:

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