You’ve heard the phrase “Defense wins championships.” Let me tell you why these th...
Trading Lesson: Destination "Pro Trader Town"
01/22/2018 6:00 am EST
A newbie trader seeking a professional career as a permanent resident of “Pro Trader Town” requires preparation and planning, writes Stephen Nos Biggs. About 90% of traders never make it to pro. In this first of two articles, we will explain how to get started.
Adopt a proven trading system
Make sure you have a trading system that has a proven edge. You may find the answer in a clever song like Ed Seykota's Whipsaw song, or with Nial Fuller's process that won the AXiTrader Forex world championships in 2017. You may decide to find a mentor and have his system become yours.
Save yourself pain. Avoid the decision to be an inventor. Find a system that is already proven in live trading environments for various traders in all time zones and markets. This trading system adoption increases the odds for success on each trade you make. Once you have selected your system, you will have an objective way enter and exit trades.
When traders create trading systems they always think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk. If there is no money at risk, traders think objectively and are open to every possibility.
Results: finding low-risk trading opportunities. Make sure you have a system and trade based on a proven objective approach.
Follow your chosen system
Once you have chosen your system with a proven edge, then follow it, in a completely disciplined way. If you follow your system, there is a high probability after practice in demo mode that you can profit from the forex market based on the trading opportunities you have found.
Study and practice your lessons
All successful traders are well educated in the market they trade (stocks, forex, futures, etc.). Consistent study and practice give your trades an additional edge over the retail crowd you trade against. Recall for every trade there is a winner and a loser. Get educated and practice. You will acquire the knowledge and experience you require to master the Forex market. Remember your destination is “Pro Trader Town.”
There are some remarkable trader teachers in our community. Sam Seiden, Gil Ben Hur, Michael Noyelle, Ken Mann and Ed Seykota have been invaluable to me as teachers and now as mentors. Spend time finding traders who enjoy the teaching aspect of our profession.
Avoid those who are not able to share their success as a trader. Read about the forex market, and enroll in a proven forex training program. While you study, begin gathering and creating historical charts for your library.
Understand asset management
The purposes of asset management are avoidance of ruin, maximization of the edge your system provides, and sound sleep. You have assets so you must use them wisely. Most teachers use the term money management but we feel the better term is asset management. We know that each trader has various levels of each of the first three traits or assets, so the great equalizer is how effectively you can manage the 24 hours you have.
You have assets. You must use them wisely.
Your capital: this will vary for each trader.
Your knowledge: subject to accumulation and deployment based on your effort.
Your intelligence: "if I knew then what I know now ...."
Your time: we all begin each trading day with the same amount of this. Do you sleep in or trade the European open? Do you wake for the Asian open and close?
Each one of these four assets can be used to improve your skills and shorten your journey. Failing to maximize and manage any of them is a recipe for failure.
Program your brain
There are several traits that must be in your trader’s DNA whether they are there now or you acquire them over time. There are also two that must be eliminated. A trainer like Charles Faulkner is known by successful traders worldwide. The path you take to self-actualization to assure that traits needed are present and those that are toxic are eliminated can be costly and time-consuming.
Eliminate greed and fear and replace them with confidence and patience.
Your trading system assures that you don't need to win every trade in order to profit long-term. This fact is hard to understand and apply. Why? Because we are taught since kids that any score below 70% is a bad number. In the forex trading environment, 3 winners out of 10 can be a successful system with the proper asset management.
Think baseball where .300 BA gets you to the majors. Think basketball where 50% accuracy from the 3-point line gets an NBA tryout. Soccer where 25 shots taken and 3 successes win most matches.
Define a risk-reward (RR) ratio greater than 1-1.
If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio greater than 1-1.
With attention and application for each and every point outlined in this article, you will almost assure your arrival at “professional” trader town, where life can awesome.
See you there.
Szeri & NosBiggs Trading Incorporated in 2012 as Trading Consultants Inc. The firm trades its own capital, as well as for selected clients. They trade using their Forex 8 Steps Method and teach from their web properties SzeriNosBiggsTrading.com.
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