Building a Super-Charged Trading System: What Matters in Currency Trading

11/16/2007 12:00 am EST

Focus:

Rob Booker

Author, Man Vs. Market: Lessons from Trading on the Road

In his workshop, Rob Booker didn’t say a thing about technical indicators, charts, or complex trading strategies. Instead, he led attendees down the path of psychological readiness—a state of being that is crucial to a life of successful trading results.

Watch the complete workshop here...

He noted that while many traders come to the party, only a small percentage actually figure out how to make a living at it. Most simply can’t handle their money or their mindset, and never break through to the other side.

A large mistake in currency trading is attempting to conquer all markets. Rob emphasized the need to specialize—find out what you do well, experiment with it and test it in a variety of market environments, and then stick with what works.

He took his audience through a double-digit list of common myths that often sabotage their trading strategies.

His first one—the mantra often heard around traders— ‘take the emotion out of trading’—is just not possible. Instead, Rob suggested that you just try to make sure your emotions don’t dominate the trade.

Another common belief that Rob told traders to forget about: the more monitors you have and the more stuff on your charts, the better trader you will be. Actually, the more complex you make it, the more likely you will just be confused.

Rob also disabused the notion that progression as a trader is linear. It is not. In fact, traders should realize that there will be many plateaus, accompanied by exponential leaps forward. The error traders make is when they switch gears to another track before giving the current one adequate time and attention to determine if they are on the right path. He commented that most people leap forward only after long periods of testing and evaluation.

He stressed the importance of risk management, which, unfortunately, is the least obvious element of everybody’s trading. It is not okay to give your profits away. Rob told traders that making money is easy; keeping it isn’t.

His advice: risk as little as possible in every trade. If you intend to trade for a living, start small. Rob noted that it takes one-to-six months to wrap your head around your own psychology, before you can make money. Also, he reiterated that traders don’t have to shoot for the moon; a lot of time trading for 20 pips will serve your needs just fine. A big mistake is focusing entirely on making money. Instead, your focus should be on protecting your money, so test your strategy cheaply, with small lot sizes.

One last bit of advice Rob gave: take some time off and improve the quality of your life. Most people make big leaps forward when they get away from it all.

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