99% of traders fail, yet 99% do the same things all the time. Be different and step outside the box.
When I started out, I followed all the classic "trading laws" such as the trend is your friend, multi-timeframe analysis is the way to go, only trade the majors, and so on...
I was struggling and never felt 100% comfortable with trading. It wasn't until I started doing this differently and started questioning those "trading myths" that my trading saw improvements.
I stopped trend trading and explored different approaches. And suddenly the charts made a lot more sense.
I stopped doing multi-timeframe analysis and my confusion stopped.
I started looking at a lot of different Forex pairs, instead of just the majors. And suddenly I could find way more and way better trades.
Those old myths might have had their right to exist 10, 20 or 30 years ago. But maybe the market and trading, in general, has changed. You need to start questioning things. Don't just blindly accept what people tell you and try how a different approach would feel.
I came across the concept of the "power of silence" recently and it reminded me about an article that I wrote a while back.
In music, if you do not pause between the notes all you get is one beeeeeeeeep. As the famous quote goes: music is the silence between the notes.
If you don't rest between workout days your muscle won't grow. The stimuli are set during the exercise, but the growth happens on rest days.
If you work 24/7, you will burn out and your work quality will suffer. You need to rest so that your mind can recharge and also process what you did in order to come up with ideas for the future.
In trading, you need to trade less if you want to have better results too. Over-trading and always wanting to be in a new trade is dangerous. You need to stop trading when there is no trade, when you do not have an edge, when you feel too emotional or can't perform at your best.
In this episode, I provide more tips on how/when to trade less and how it might transform your trading.
Traders often ask me how they can trade without emotions and trade like a robot.
I always tell them that it's not necessary to avoid emotions and it's also not possible. We are human after all and emotions are what separates us from other life forms. Emotions are powerful and important drivers. We just need to use our emotions in a better way.
You need to stop being reactive, avoid impulsiveness and stop trading when you are too emotionally charged.
Why we can't manage our emotions effectively is because we are not fully aware of them. In today's world with social media, 24/7 phone access, and constant distractions, we have lost the connection to ourselves. We do not recognize when emotions come up. And, therefore, we act based on our emotions without knowing it.
We need to get to a place where we are aware of our emotions when they come up and before they take over. In this episode, I provide practical tips how this can be done and how funneling our emotions can actually help us trade better.
The wrong goals: Money, return, pips
You cannot control how much you take out of the market. You cannot control how many setups you get within a week or within a month. You cannot control how many of your trades will go on towards your TP and how many fail. Of course, over the long term, you can have fairly accurate statistics about your performance and expectations, but the short term follows different rules. Anything can happen on a week to week basis.
Thus, having results-based goals can be detrimental to a trader’s performance. If you hit your goal early, are you going to take the rest of the week/month off and miss potentially profitable trades? If not, why do you have such a goal in the first place?
If you are short of your goal, you are more likely to over-trade or take excessive risk. This will, most likely, bring you further away from your goal and lead to an overall bad trading quality.
Finally, where do those results based goals come from in the first place? How did you come up with them? Most likely, they are just made up. I have seen countless of traders performance wishful-thinking calculations where they pull up a spreadsheet and backward engineer how much return they have to generate to meet an artificial goal, such as making 1 million Dollars within a given time period. Obviously, this has nothing to do with reality and the market and the world could care less about what you want. Your one and only job as a trader is to make the best trades possible, but you cannot control when they happen.
I understand that this is a controversial topic but I believe it is important that you approach it with an open mind.
Backtesting might have its place and purpose, but 99% of all traders will never see any benefit from their backtest.
We can probably all agree that trading is 90% emotions (maybe even more). However, during a backtest, all emotional factors are excluded.
What makes trading hard is letting winners run, cutting losses effectively, waiting for the right situation, staying out of the market when there is no trade and being patient when growing your account.
During backtesting, you fast forward candles, you fast forward holding time, drawdowns and losing streaks are over within minutes and growing an account happens quickly.
The learning effect is then absolutely 0. That is why backtests never lead to the same results during live trading.
Of course, live trading can be costly, it will take much longer to learn the craft but it's the only way.
Keep in mind, this is my experience and what I have seen when coaching hundreds of traders over the past 12 years.
If you are not seeing the results you are hoping for, maybe it's time to start questioning your approach.