Level up to trade forex successfully

[ForexMindGames]

Hi traders,

Trading is like a video game. In some video games, you can level up your character from level 0 to level 99. Final Fantasy anyone? As you level up, your attributes increase. Strength up, agility up, defense up and etc. At higher and higher levels, you can equip better weapons, heavier armor, faster boots. And defeat stage bosses.

So it is similar to trading. As you level up in your trading skills, your ability to attack and defendagainst the market increases. You get better at knowing when to enter the market (attacking skills ), when to cut loss (agility skills ), when to stay out of the market (defensive skills ). Also, you are able to manage your position size, when to up or down your position size according to your experience (constitution and wisdom skills). Last of all, with each trade, you are aware of your own psychology (mind skills).

In this thread, i wish to share my mind games of trading. Remember, trading is a mind game. As i share, hopefully all of us can level up from our current level to level 99. At a high enough level (level 70-80??), we should be able to extract profits from the markets consistently.

I will post my thoughts frequently and will help us level up from level 01 to level 99. Alright, i will be posting on level 01. Check back soon.

[ForexMindGames]

Hi everyone,

Level 01-10 will cover the most basic stuffs of trading. Yet these foundations are the most important to trading success. Remember the story of the 3 pigs and the big bad wolf? "I will huff and puff till i blow your house down!!!" growled the wolf.

Strong foundation = strong house to withstand earthquakes and hurricanes.

Weak foundation = straw house ready to crumble anytime.

[ForexMindGames]

LEVEL 01 ALWAYS TRADE WITH A STOP LOSS

Understand this and internalise into your soul. There are only 6 possible outcomes to any trade.

1) Large win
2) Small win
3) Breakeven
4) Small loss
5) Large loss
6) Account blown to zero

My trading system has a winning edge. I know this. Because my trading account is getting bigger when i trade my edge over the past few years. I just need to stay away from #5 & #6. And my account will grow over time. Here is my ultimate losing trade. Every trader have one or two. Be honest about it, learn from it and NEVER repeat it again. That is the mind game of trading.

[ForexMindGames]

LEVEL 02 - MONEY, MIND, METHOD, MYSELF

A good trader is like a sturdy chair with 4 legs. If 1 leg is damaged, the chair become wobbly and very risky to sit. Would you risk buttocks to sit on such a chair? Ouch!!



Likewise in trading, there are the 4 M's to become a successful profitable trader. Each M represents 1 leg of the chair. When all 4 legs are in your trading system, your chair is in good shape and so are you.

A professional trader will strive to maintain a strong chair. Once the chair becomes creaky, they will repair it. However, a novice trader will try to sit on their 1-legged or 2-legged chairs. Which chair do you have?

[AI Signals]

good sir, I agree with you . thanks for sharing

[sKratch1989]

Nice. For sure. I read somewhere to treat learning Forex like a game, and don't think about it in terms of profit as you're beginning.

There's no way you're going to see your profits increase when you're first starting out, especially if you don't have much starting capital. Even if you did have a large amount of capital, why risk it when you're still learning the rules of the game?

I try to place my trades and analyze in terms of % and think of pips. Right now my trades still consist of 0.01 lot orders, which has finally gotten me to concentrate on the game and not let greed get in the way of learning how to trade.

[ForexMindGames]

good sir, I agree with you . thanks for sharing

Thank you for reading.

[ForexMindGames]

Nice. For sure. I read somewhere to treat learning Forex like a game, and don't think about it in terms of profit as you're beginning.

There's no way you're going to see your profits increase when you're first starting out, especially if you don't have much starting capital. Even if you did have a large amount of capital, why risk it when you're still learning the rules of the game?

I try to place my trades and analyze in terms of % and think of pips. Right now my trades still consist of 0.01 lot orders, which has finally gotten me to concentrate on the game and not let greed get in the way of learning how to trade.

It is good money management to start small when starting out. I wish someone would have taught me that early in my trading career. Yes, trade small, analyze in terms of % & pips, and not let greed find its way in. You are on the good road to trading success.

[ForexMindGames]

LEVEL 04 - THE SMALLEST LOSER IS THE BEST WINNER

This is the difference between a consistently successful trader and a novice trader. A novice trader puts on a trade and sees imaginary money pouring into his trading account.


He neglects risk control. He does not think "How much can i lose on this trade?". Rather he thinks "Oh yeah! I am going to make $1 million dollars on this 4rade. I can feel it. I can smell the money!" Hey, stops are for losers. I ain't no loser. And because he hates to put stop losses, he ends up losing 50% of his trading account on that "i can smell the money" trade.

A successful trader first priority is risk control. He decides beforehand how much he afford to lose on that one trade. He finds out where is the best logical place to put his stop loss. Based on that, he will determine what % of his trading account to risk on that trade. And then based on that, he calculate his position size.

He will think like this:

Trading account = $10,000
Willing to risk 2% per trade = $10,000 * 2% = $200
Best logical stop loss for that trade = 40pips
Therefore, $200/40pips = $5 per pip
Position size = $10,000 * 5 = $50,000

A novice trader decides how much money he wants to win. A successful trader decides how much money he wants to lose.

[ForexMindGames]

THE SECOND M - THE PSYCHOLOGY OF THE MIND

Most trading books i read tells me to remove greed and fear from my trading. The authors forgot one thing. Emotions are mental issues, not physical. It is not like going for a surgical operation, where the doctor can cut out dangerous lumps from your physical body. However, emotions are all residing in my mind.

How do you propose to a neuro-surgeon to cut out greed and fear from our brains? Maybe there is a ala-carte menu on the neuro-surgeon's desk. Click "A" if you would like to remove greed and fear. Click "B" if you would like to insert more love and joy. Thank you for the selection. Your operation will be completed in 3 hours. Thank you and have a nice day. But hey?! In another 100 years, it could be as common as going for a cosmetic surgery.

Therefore i am proposing a new way. The tai-chi master way. What do a taichi master do when he is facing a opponent who is stronger and bigger than him? The opponent comes in with a strong punch, yet the taichi master does not block it directly. What he does is to deflect the energy of the punch by guiding the opponent's hands to hit elsewhere. Not hit him. Then the taichi master wallops him with his shadow kick when the opponent is temporarily out of balance.



When we trade, greed and fear will always be with us. We cannot control when they come. We cannot brute block them. These emotions are inside of us and stronger than us, like the giant opponent. So this is what we can do. We mimic the taichi master. We deflect and guide these emotions to our advantage. We need to feel these emotions, then channel these emotions and use them. Write down in your trading journal what you feel when you enter and exit trades. Observe for any recurring patterns. Are there any repeating emotions that causes me to make money or lose money? Identify these emotions. Use emotions to your advantage. Be like the taichi master.