How do you stay in-line with the constantly ebbing and changing markets?
Interesting question right?
This is something I often get asked about, although not normally in those words. A trader will typically ask about tweaking and changing their trading method after they have either just lost or been losing.
How do You View The Forex Market?
Often a trader would have gone on a winning run or been generally profitable, then out of the blue starts making losses and cannot explain it – other than the explanation that the market has changed and they haven’t changed to stay in line with it.
Obviously this does sometimes happen. This is the reason why winning robots and EA’s don’t go on winning forever. The market changes and the rules set in the robots always stay the same, so they will eventually stop working.
This also happens for traders. There are many, many, many (and I could write a lot more “many”s ?) habits that traders either stop doing, or they start doing. Most commonly, these include things like getting into the cycle of loss and revenge.
This plays out where the trader makes a losing trade against all their expectations: maybe they thought the trade was just a great trade, or they risked more than they normally do / should have and are now are upset because they have lost money, so will try almost anything to get it back.
They start hunting for the very next quick trade they can find (the revenge part). This will often be a completely rubbish setup, as the trader is just in a rush to ‘win’ their cash back. They enter the setup and lose more money.
That is one example of many. However, if the trader was consistently profitable beforehand, they should be aware of a lot of these common mistakes and trading errors.
Where they will need to be careful is continually making good decisions, as this does not change no matter what level you are trading at. This could be hundreds of millions of dollars – I discuss how some of the biggest traders struggle with fear and it plays a huge part how they trades. Read the lesson here A Study on Thinking, Feeling & How Professional Traders React to Emotions – or it could be only a couple of pennies each trade.
Often an edge can stop working because you the trader have stopped looking at things the way you did previously. This includes both minds as well (subconscious & conscious). Let me tell you about my own experience with this, which will help you and hopefully clear up your own thoughts.
When I first started trading, I was involved in trades thinking they were high probability A+ trade setups.
With all the information I had at the time, to me they were high probability trade setups. As I look back at them now however, there is no way I would ever trade these same setups. I would flick straight past them. This is because I now see things differently than how I once did.
Do You Really Need to Make a Change?
So do we ever need to change? Obviously if things aren’t working, then we can’t just keep doing things the same way and expect a different result. At the same time it is a very fine line between remembering that a profitable trading edge is not built in just a few trades and this is where something like the Forex Tester can come in really handy. With this, you can smash out a lot of trades really quickly and do literally a year’s worth of trades in a couple of hours.
That being said – nothing beats forward testing. In other words, actually trading real time.
You need to first of all be really mindful and think about your trading edge. If you are thinking about changing anything major in your trading because you have been making a few losses, you need to STOP and PAUSE. Has this really been losing, or has it been normal losing that you can expect within your overall trading edge?
I will very often get emails from traders after they have just played an A+ trade that did not work out. They cannot work out what went wrong and I have to explain to them – NOTHING went wrong. Price quite simply did not go your way and you lost the trade. We have an edge, not a guarantee.
Change Happens Over Time
As we make more and more trades, something quite amazing is happening all the time that we don’t even notice and that I highlighted it above in my quote. Our subconscious mind is taking in everything and it is remembering everything.
Every trade we make it is remembering. Whilst we may not ‘consciously’ remember this, and we may not remember the details of the entry or exit prices or how the setup looked etc, the subconscious remembers all.
Do you ever get ‘that’ feeling or that intuition about a trade where you just know? You either know that something just does not stack up about it and is not right? Or that this setup is a very good setup and you should be in it?
Now, I know a few of you have probably just said to yourself “did he really just say that feeling?” and the answer is yes I did, so you don’t need to go scrambling for your reading glasses, you did not misread it.
The truth is however; women and men both have intuition or a subconscious or gut feelings or a sixth sense. Some choose to push this away and ignore this completely, others listen to it very intently.
When you are away camping for the weekend and you are have a great time with your friends or family, all of a sudden without looking or even seeing it, how are you are able to tell that danger is around and present?
For example there is a wild cat or some other predator lurking? Have you been in this situation? You just know there is danger. You have not SEEN it, but everything inside you screams it, right?
THIS is your subconscious. Whilst you don’t pick up on the clues at the time or consciously recognise what is happening, your subconscious brain remembers every feeling in the past and all the clues. It takes it all in.
When you are camping it may have noticed all of a sudden all the birds went from chirping happily to stopping and flying out of their trees. It may have picked up on a rustle in the bushes. This may have caused the hairs on the back of your neck to stand up giving you that danger feeling you needed as the warning sign.
The only way this feeling gets better and more refined and the only way you can build this muscle is from time in the markets and from trading more and more. This will build more experience for your subconscious mind to be able to take from..
That’s the reason why a trader who has traded for 30 years has instincts that are FAR superior to a trader who has traded for 1 year.
As I explained at the start of this lesson, the EA and robots do not change their rules to be in line with the ever-changing markets, but as I have just explained us humans have a magical ability to be ever-changing and adapting.
We don’t need to be making large, random changes in our trading methods just for the sake of making a change. What we do need to do is continually practice and refine our method, and that comes with tracking and reviewing.
Track & Review
The very best way to consistently track & review your trading is with a trading journal and a trading routine. If you already know how you need to use your journal and what you should be putting in your journal, then all you need to do is have the journal and start filling it out routinely, followed by tracking and reviewing.
If this is the case with you, then click the yellow box below and download your FREE PDF & EXCEL Trade Tracking Journals.
If however; you are not as clear about what you need to put in your journal when you fill it out and what routine you should have or how to go about creating your own, then BEFORE downloading your free journals, I suggest you first go and read this lesson here;
No matter what method you trade or what time frame you use – whether it be the weekly chart or the 1 minute time frame – the key to becoming and remaining successful is great decision making over and over again.
Before making any drastic changes in your trading, make sure that what you are going through is not just a normal and to-be-expected losing streak.
There is a time and a place for changing things in your method FOR SURE, this includes everything from a full 180 to small tweaks to tightening things up making them more profitable. This all starts with the track and review. You cannot do tweaks to continually make things more profitable if you don’t have a baseline, and you cannot make any larger changes if you don’t have a sustained record of what is not working out and why.
What do you think? Does our trading change overtime or do we ‘manually’ need to make changes? Would love to know your thoughts below…