There are 2 types of edges in trading, a trading strategy edge and a trading psychology edge.

You need to have both to succeed.

This post will focus on how to develop your mental edge, which is the more important of the 2 types.

The process of developing a trading psychology edge is simple, but usually not easy.

1. Start trading
2. Identify your advantages and weaknesses
3. Find solutions to your weaknesses
4. Review your results
5. Repeat steps 3 and 4 until you reach your goals

In this post, I'll give you strategies to uncover your trading genius and overcome your biggest roadblocks.

Keep reading to learn the details of each step.

1. Start Trading

This step might seem obvious to some people, but it won't be to others, so I'm going to talk about it.

In order to develop a mental edge in trading, you have to engage the markets on a regular basis.

Even if you only demo trade, taking trades will start to expose your psychological strengths and weaknesses, within the context of trading.

Here are some things that you might discover after you begin trading.

• You're afraid to take trades
• It's easier for you to follow a rules based trading strategy
• You have a tendency to revenge trade
• You're good at riding trends
• You take good notes
• You don't like backtesting
• You get easily discouraged after a series of losses

That's just a short list of what could come up for you.

But you'll only discover these things when you go through the process of taking trades and experiencing the emotional ups and downs that come with wins and losses.

Once you've taken some trades, now it's time to take an inventory of your strengths and weaknesses.

2. Identify Your Advantages and Weaknesses

Awareness is the first step to improving your performance in any area.

How many times have you experienced an event with a group of people and they noticed things about the event that you missed?

This is because they were aware of those things and you weren't.

You also probably noticed things that they didn't.

That shows that we will only notice things that we place our awareness on.

So start a trading journal and write down what you're good at and what you aren't so great at, while you're trading.

This is the first step to full awareness.

The things you do well will give you clues as to what you should probably focus on in trading.

For example, if you find it easy to follow a trend on the daily chart, then you should probably work on trading some sort of trend following, swing trading strategy.

If you lose a lot of money when you day trade, then that's probably something you should avoid.

Maybe you live in a timezone that makes it difficult to trade the New York Forex session. Then you could work on a strategy that trades the Asian session or the London open instead.

Like with any other skill, there will be things that are optional, and there will be things that you have to change.

In the case of day trading versus swing trading, you don't have to day trade. You can trade on other timeframes, so being bad at day trading is not a problem.

But let's say that you have a tendency to over trade and revenge trade.

That's a problem that has to be fixed if you want to become a successful trader.

So find ways to amplify your strengths.

That's pretty easy.

What about your weaknesses?

That will probably take a little more effort.

Here's how to get started with overcoming them.

3. Find Solutions to Your Weaknesses

The great news is that there are a ton of solutions out there to help you overcome anything you're working on.

You simply have to do the work to seek out these solutions and implement them.

I cannot list all of the strategies available because there are so many of them.

But I'll get you started with the 2 general categories.

I believe that there are only 2 parts to the human mind, the conscious and subconscious.

Yeah, you probably knew that already.

However, I feel that many therapists and coaches don't understand how to apply this concept effectively. Many are trained in a particular type of treatment. Most only follow the doctrine of that modality and think that everything can be solved through that lens.

Obviously, the more aware ones understand the limitations of their craft. But there are many who do not.

Not entirely their fault. They don't know what they don't know.

There are a lot of things that I don't know either.

But I do know that it's up you to you to use your intellect to figure out what will work best for you.

That said, let's take a look at a real example of why the conscious/subconscious theory is so important.

I have a friend who used to smoke. If you know a smoker, or you were a smoker, you know that it can be one of the toughest habits to break.

But guess how he quit?

He was on a smoke break at work one day…

He looked the the cigarette, and thought “This is dumb.”

So he quit cold turkey, on the spot.

That's it.

How was that possible?

I don't think that anyone knows for sure, probably not even him. But here's my theory…

There's always a reason why we do things. Our actions fulfill a need or desire in our mind.

Sometimes the cause of a desire sits in our conscious mind. But many times it sits in the subconscious mind.

I believe that the cause of his smoking habit was in his conscious mind. So he could use a conscious thought to change the behavior.

That's why it was so easy.

Now if the source was in his subconscious, even though he knew that smoking was a waste of time and money, it would have been much harder to quit.

So when you look for methods to help you change your behaviors, start with the conscious methods first because those will give you the easiest wins.

But if you cannot change with those methods, then it's time to go deeper and dive into your subconscious. 

It's not always possible to figure out if a behavior is caused by a subconscious or conscious source. It can also be difficult to figure out which part of your mind a treatment will work on.

That's OK.

Do your best and you'll get a good feel for it after trying a few different things.

Conscious Mind Methods

Methods for changing thoughts in your conscious mind usually involve mental visualization exercises, repeating affirmations or visual cues.

• Neuro linguistic programming (NLP)
• Mind Movies
• Visualization
• Vision boards
• Mantras
• Talk therapy

Subconscious Mind Methods

Changing your subconscious mind is a new concept to many people and it's probably new to you too. The reason why this works may not be obvious at first.

You're basically digging down into your subconscious and bringing the causes of your negative behavior to the surface. When you do this, it's much easier to resolve the issue so the symptoms never come up again.

This can be very powerful stuff and you really have to experience it believe it.

• Subliminal recordings
• Hypnosis with a therapist
• Cloud Sound Therapy
• The Emotion Code
• Clairvision

Again, this is just a short list of what's out there. But it will give you a great starting point.

4. Review Your Results

Now it's time to see how you've done.

Sit down on a Sunday morning with a coffee (or your favorite drink) and review your trading journal again.

Did the methods you used work?

If yes, then great, you're done! You can stop reading right now.

However, it's more likely that you still have things that aren't completely resolved.

That's just how it works. 

Unfortunately, modern mass marketing has given us the impression that there's always a pill or hack that we can use to instantly achieve any outcome that we want. 

In reality, that's rarely the case.

It's like mining. Miners almost never hit gold on the first try.

They usually have to do a lot of homework and drill several holes before they find a workable mine.

So put down your discouragement and dig your heels in for the long haul. Your transformation could be fast, but it's more likely that it will be a process.

That's how your great grandparents did it, along with every generation before them.

The idea of instant results is a new and often unrealistic ideal.

5. Repeat Steps 3 and 4 Until You Reach Your Goals

Instead of getting discouraged, do this:

1. Congratulate yourself for taking action.
2. Celebrate what did work. It's very likely that you made some progress, no matter how small.
3. Look for the next thing to try. Assuming you gave the first thing an honest try, it just might not have been a good fit for you.

I've had many cases where this has happened in my life.

For example, back in the day, I used to listen to a lot of Tony Robbins recordings. He's great, I have nothing against Tony.

However, I put too much faith in the idea that he had all the answers. I figured that since he had so many high-profile clients, he must have a solution that could help me.

So I would listen to his tracks over and over, and implement the strategies…over and over.

…and they did help a little.

But they didn't create the big shifts that I was looking for.

Instead of continuing to do something that didn't work, I should have reassessed my results after a few weeks, then tried something else. I just didn't know any better back then, and I'm OK with that.

It literally took me years to figure out that I needed to branch out and try other things.

I want you to learn from my experience.

If you didn't get the results that you expected, then don't get down on yourself.

Remember that one of the the most powerful tools that you can have in your trading toolbox is self-forgiveness.

It will take as long as it takes for you to become successful at trading. So get back up on your horse and keep going.

Of course, there can be the tendency to have “shiny object syndrome,” where you keep hopping to the next new thing. So you have to be honest and ask yourself if you've given the method an honest try, before moving on.

Only you can answer that question. 

Final Thoughts on Developing a Trading Psychology Edge

Most new traders think that the right trading strategy will make them rich.

Experienced traders know that having the right mindset is the real key to success.

A solid trading psychology will allow you to overcome losing streaks, keep expanding your knowledge, and persevere when most people would give up.

Implement the tips in this post and you'll start to see positive results.

Amplify your strengths, heal your weaknesses.

You can do it.

The post Develop Your Trading Psychology Edge in 5 Steps appeared first on Trading Heroes.

There's one question that I get asked more often than any other.

It goes something like this… 

I'm really frustrated because I've tried so many trading systems and nothing seems to work! What should I do next? 

So instead of typing out an answer to every single email, I thought that I would take some time to collect all of my thoughts in one blog post. 

If you are feeling frustrated with your trading, then this post is for you…

You are Not Alone 

Almost every successful trader has been in the position you are in now.

I have heard this story over and over and over, when interviewing successful traders. 

Therefore, the first thing you need to do is forgive yourself and make peace with the fact that this frustration is just part of the learning process. 

It's time to embrace the suck and move forward. 

This guide will show you the best process I know of to reboot your trading in a clear, systematic way.

When you follow these steps, it becomes much easier to figure out where you are going wrong and how to fix it. 

Step 1: Take Full Responsibility for Your Trading Results  

If you are blaming someone or something else for your trading losses, stop right now.

Everything begins and ends with you. 

So take a good hard look in the mirror and repeat after me…

I am 100% responsible for my trading results. 

Here are some ways that you might not be taking complete responsibility for your trading results: 

• Blaming your broker for running your stops 
• Blaming your job for not having enough time to trade 
• Blaming a trading course for not teaching you the right strategy 
• Blaming your mentor for not giving you enough attention
• Blaming Tim Ferriss because he hasn't figured out a hack for learning successful trading in 4 hours yet 

You get the idea. 

So before you move on, you need to take extreme ownership of your situation. Even if something may not seem like it's your responsibility, take ownership of it anyway.

Have a backup plan.

Have a backup plan for your backup plan. 

For example, you cannot control when your internet connection will go down.

But you can have your broker's app on your phone so you can still execute trades.

You can also figure out which coffee shops in your neighborhood have free WiFi, so you can still trade, even if your internet at home goes out. 

If you want all of the rewards of successful trading, you need to be responsible for the not-so-fun parts too.  

Step 2: Write Down Your Trading Strategy 

Do you have a real trading strategy or are you just parroting the last trading guru you saw on Instagram? 

I see a lot of traders start trading a strategy (with real money) that they learned the day before on YouTube.

Usually, they only watched the video once and only have about 80% of the rules right. 

I'm not judging, I've totally been guilty of that too.

But if you are wondering why you aren't getting the same results as the trader in the video, then this is one possible reason. 

There's nothing wrong with getting a trading strategy from YouTube, a course or some blog.

But take the time to write it down and go over the material several times so you are sure that you understand all of the rules to the strategy. 

You need to start building a playbook. 

An easy way to write down the complete rules of your trading strategy is to download this free worksheet. 

I know what you will probably ask next…

But what if I trade several strategies? 

Then focus on just one for now.

The one that you think has the greatest probability of success. For every strategy you add, your chances of success drop significantly. 

It's like juggling.

Anyone can juggle 1 ball. 

But how about 6?

That's much, much harder. 

I'm not calling anyone dumb.

All humans have limits…including you. 

Start with one thing at become a master at it. 

Step 3: Figure Out if You Have an Edge 

Now that you have your strategy written down, it's time to test that strategy to see if it actually has an edge. 

Obviously, there are a ton of different trading strategies out there.

But at a very basic level, most traders either have a technical or fundamental trading strategy. 

If you have a primarily fundamental strategy, then see if you can get historical fundamental data to backtest your trading ideas.

Can't get historical data?

Then you will have to forward test your strategy.

Read this post to learn more about forward testing. 

If you are trading a technical strategy, the read our backtesting guide for tips and tools. 

Either way, commit to testing your strategies in a demo account or with backtesting software.

If you cannot get positive results in testing, then there's no way that you will have an edge in live trading. 

Step 4: Keep Excellent Records 

This is super important. 

In order to figure out exactly where your trading is going off the rails, you need to have as many feedback loops in place as possible.

It's like the gauges on a dashboard.

Each one tells the pilot exactly what's going on with a part of the helicopter. 

Similarly, your records will allow you to see exactly what's happening in every aspect of your trading. 

So document everything you are doing. 

Here are the records that you should be keeping: 

• If you are backtesting, you should record every single test that you do in a spreadsheet. Yes, even the “bad” ones. 
• Journal every single one of your forward testing and live trades. It doesn't matter what you use, just use what works for you. Here are tutorials on how to use Evernote and Trello. 
• Also journal your missed trades. This will show you how much profit you are missing out on and more importantly…help you figure out how to stop missing out. 
• Track your win rate in live trading and how it compares to your testing results. If there is a big difference, then figure out why this is happening. 
• Record your physical and mental state when you are trading. You can do this in your journal as a qualitative entry, or you can use quantitative tools like Muse, a heart rate monitor, Apple Watch or NeuroTrader. Try to spot patterns in your readings that tell you when you should and should not be trading. 

I know that it's a lot to track. But if you are dedicated to becoming a successful trader, then you should leave no stone unturned. 

Take a look at what elite athletes do to train for their sport.

That will give you some clues as to what it will take to make it in trading. 

The “sport” is different, but mindset needed for success is the same. 

Step 5: Adjust Systematically 

Now that you have a process in place for tracking your progress, work on each step and don't move on until you have completed each step successfully. 

If you hit a point where something isn't working, then don't give up and jump to a new strategy.

Simply backtrack to the last step and try to figure out what changed when you moved on to the next step.  

You may have to experiment with a few different variations of your strategy before you find something that works. 

Trading is not easy. But if want the rewards, you have to be willing to put in the work. 

Final Thoughts 

So if you are ready to reboot your trading and start fresh, first take a few deep breaths. In fact, follow this video to learn a simple exercise for reducing stress and frustration. 

Now start at step 1 of this guide and work on each step until you complete it. 

I understand that it's much sexier to skip directly to trading. B

ut that's probably what got you to this point to begin with. 

Take your time, focus on the process and the results will come. 

The post The Trading Reboot Guide for the Frustrated Trader appeared first on Trading Heroes.

Really tough.

Without the proper tools, it can be almost impossible to succeed as a trader. But with so many forums, ebooks and trading products out there, where do you start?

It can be really confusing and you might feel like you are going through the spin cycle of a washing machine.

I've certainly been there.

But not to worry. In this post, I'll show you the three things that you need to equip yourself with to help keep you grounded, and on track.

…and no, it's not a magic indicator.

These general concepts will help you long after you have given up on that last trading robot or holy grail. I will also give you specific solutions that I have used and recommend.

1. Trading Community

“No man is an island.”
– John Donne

If you have ever been on any of the public trading forums out there, then you have probably lost some faith in humanity.

Yeah, it can get ugly.

The forum posts usually start off with the right intentions, but then things quickly degrade to name calling and third grade potty-mouth.

So then why would I tell you that you need a trading community?

Well, you need to choose the right community. A friendly and supportive community can make all the difference and see you through the tough times and help you develop.

As you might know by now, people in your everyday life might not support your trading dream. In fact, many will be downright against it.

Therefore a great trading community or even just one or two traders that you can consult with, can make all the difference.

If you haven't read Napoleon Hill's classic book Think and Grow Rich yet, you need to do it this week. In the book, he talks about a mastermind group.

This is a group of people who have a common goal and their participation in the group creates a synergy that makes all of the members better than would be on their own.

So if at all possible, find a solid group of traders that you get along with and keep in contact with them regularly.

Recommended Resources

I would highly recommend joining Walter Peter's Naked Forex Community. It is the most supportive community that I have seen so far.

With most groups, the instructor leads the group and everyone else follows…and that is great.

But what makes Walter's community different is that he also seeks out trading methods that members of the community are trading successfully and gets members to share it. Everyone helps out where they can.

A totally different type of community and more of a true mastermind group.

You can also follow my Forex Traders list on Twitter. It can be another great way to start talking to successful traders.

2. Mindset

Next, you are going to have to upgrade your mindset to become a successful trader. You have probably heard this many times, but what does this actually mean?

Well, I'm going to break down the three areas of mindset that you need to start focusing on right now, in order to give yourself the best shot at success.

Mental Toughness

Let's get real, sometimes trading is going to suck. You are going to have a losing streak, you are going to be frustrated and you might want to give up at some point.

But the only way out is through. 

If you start breaking down and not following your rules, then you are setting yourself up for revenge trading and a huge loss.

So find ways to develop your mental toughness. You can train for something outside of trading, like a sport or some sort of certification. You could also pretend that you are down 10% in a month and try to come back from it in a demo account.

Here are some other suggestions…

Recommended Resources

Chris Capre's Advanced Traders Mindset Course is great for this. I would highly recommend it. This course teaches you how to quiet your mind and develop the mindset that you need to succeed.

I would also suggest that you learn a new skill that you have always wanted to learn. I've taken up archery.

A photo posted by Hugh Kimura ?? (@tradingheroes) on Aug 1, 2015 at 6:03pm PDT

When you are a beginner again, it can be a lot of fun. It can also teach you how to push through the frustration and improve.

An Abundance Mindset

This can be a tough one to overcome, especially if it has been drilled into you for your entire life.

Have your parents or friends ever told you that money doesn't grow on trees, or that you need to work hard for your money?

Yeah me too.

Well, it wasn't their fault.

That is the reality that they know and it has helped them get this far.

So when you start making some money by just clicking your mouse a few times, then your conditioning is going to start kicking in and you are probably going to sabotage yourself and find a way to give that money back.

It sounds weird if you have never experienced it, but if you have, then you know how it can creep up on you without any warning. The cause is very subconscious but the results are real.

But that doesn't have to be your reality.

Do something every day that will increase your awareness of the abundance around you.

For example, here's something that I noticed the other day. People here in the US  have easy access to tap water.

Not all of that tap water is completely drinkable, but we have access to it.

A lot of people complain about the poor quality of the drinking water in their area. That's a scarcity mentality.

But what are bottled water companies doing?

They have taken that exact same water, cleaned it up and they sell it back to us for a profit. These companies make millions a year from something that is freely available to the rest of us.

Opportunity is all around you…if you are open to recognizing it.

Recommended Resource

If you have the opportunity to go to a Millionaire Mind event, I would highly recommend it. The events are free, but they try to sell you upgrades during the event.

You don't have to buy anything, if you don't want to. In fact, I would suggest that you don't. They can be quite expensive and since I have not taken any of them, I can't tell you if they are worth it or not.

However, I can tell you that the free seminar is totally worth it and it can change a lot of ideas that you have about money. It can seem a little over the top in the beginning, but they are only doing that to break your mental patterns and set the stage for change.

If that is a little too much for you or you don't have access to an event like that, then you can start small. One exercise that has helped me is the Infinite Bank.

You can read more about it here, but essentially, you carry a $100 around in your wallet at all times, but never spend it. That's not a lot to most people, but it is enough to buy most things that you see at the store.

Then throughout your day, you imagine all the things you can buy with that $100.

By the end of the day, you may have spent over $1,000…at least in your mind. You will notice that this can increase your feeling of abundance.

…and you will never be caught without cash at a cash bar

Just remember to replace it, if you do end up using it. 

Foregiveness

This is something that I feel is one of the biggest negative feelings that you need to overcome, if you want to become a great trader. It is easy to beat ourselves to a pulp when we have a losing trade or we don't fill out our trading journal.

…or any of the dozens of things that we do as traders.

But that is only going to make things worse.

Remember though, it's not your fault. As humans, we are programmed to look for what can go wrong and be prepared for it.

Therefore, we naturally look for what is wrong in a situation. We also seem to be particularly hard on ourselves.

This can be useful when we are trying to learn something, because we strive to get better. But more often than not, we take it too far and are too hard on ourselves, which leads to a downward spiral.

When we are able to forgive ourselves and see the situation more objectively, we can benefit from even a bad situation. We can learn what we did right, what we did wrong, and we will hopefully learn how to avoid that situation in the future.

Recommended Resources

Close your eyes for a second and take a couple of deep breaths. OK now imagine that you are in the movie Big. Or if you prefer something with more action, something like Face/Off.

Whatever the case, imagine exchanging bodies with your best friend. You are in their body and they are in yours.

Now imagine that you have just had a losing trade.

But just as you are about to beat yourself up again, you look in the mirror and see your friend's face looking back at you. You are in their body, after all.

When you see their face, could you say the same things to that face that you would say to yourself? Would you call your friend stupid or berate them for always getting things wrong?

Of course not. You would encourage them to suck it up and move on.

At least I hope so.

So treat yourself like you would treat your best friend. With love, understanding and encouragement.

I would also recommend reading Radical Acceptance by Tara Brach. It can help you smooth out a lot of those rough corners in your life and help you see yourself in a different light.

3. Education

Finally, you need to get educated. But you probably know that already.

However, many aspiring traders try to get by with free education on the internet because they are too cheap to pay for it. While you might be able to get the right education for free, you will save a lot of time by paying for an education from a reputable educator.

The problem with free education is well…it's free. So you have to sort through a ton of crap information, in order to get to something that works for you.

There are going to be opinions from everyone who can bang on a keyboard and thinks that they are a trading expert.

When you seek out reputable traders, you will have a method that has been proven to work. Then you have to tailor it to work with your personality.

Recommended Resources

Here are some of the paid resources that I recommend. There aren't too many of them. But that's the point

But don't limit yourself to that list. There is a lot of great trading education out there.

Discover what works for you!

Conclusion

Having the right community, mindset and education are the keys to becoming a successful trader. Many people focus on one or two of these things, but without the third, you will have a really tough time.

It's not always easy to find things that work for you, but keep searching, because they are out there!

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post 3 Things You Must Have for Forex Success appeared first on Trading Heroes.

We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light.

– Plato

Let's face it, even a professional currency trader will doubt themselves from time-to-time. You are not a good trader unless you are willing to admit that you may be wrong about a trade.

There are a lot of unknowns associated with trading…and that can be scary. 

But have too much fear, and you will squash any hope of executing successful trades. So how do you find the balance between being cautious and making money consistently?

There is no one magic formula, but there is a framework that you can use to find out what works for you.

I used to believe in formulas…but no more.

What works in the real world is usually in a big grey area.

That is why frameworks work much better. In this post, I'll give you the framework that can help you have more confidence in your trading.

This is one of the fundamentals of currency trading. 

Understand Your Trading Personality

The first key to successful trading is to understand how your mind works. You are an amazing collection of thoughts, experiences and opinions.

…and nobody is exactly like you. 

But therein lies a potential problem.

If you want to learn how to be a currency trader (who actually makes money), then you need to know what works for you and what gets in the way. 

To get started, you should figure out your Trading Timeframe Personality (TTP). Read this post to learn how to do it.

Once you figure that out, it will give you a huge advantage over other aspiring traders. There are other things that you have to figure out about your personality.

…but that will come later.

For now, just understand what general timeframe works best for you. Now that you have that important piece of the puzzle, you can do some critical filtering.

Filter the Noise in Forex Trading Education

Now that you have an idea of how your mind works, it's time to filter all the noise that is out there and learn about currency trading.

The biggest mistake that would-be Forex traders make is to look for a successful trading method, before considering the consequences.

Yes, there are consequences. 

Big consequences.

You see, if you don't understand what types of trading methods might work for you, then you will spend your time chasing systems that you are certain to fail with. This is just waste of time and energy.

But I get it. I've been there too. 

You think that there are only a few profitable trading systems out there. So you are going to jump on the first system that promises to give you consistent trading profits.

The reality is that there is wide range of trading strategies that can work for you. Since that is the case, take your time in choosing who you learn trading from.

In the beginning, only learn from educators who teach methods that match your trading timeframe personality. You might be surprised how much easier it is to learn when you are in sync with your strengths.

You will never be good at day trading Forex, if you are really built to be a swing trader.

…and vice versa.

Become the Master of One

Before we move on, it's also important to remember that you should only learn one thing at a time.  

You have limited mental bandwidth and doing several things at once will mean that you will learn things much slower. A study shows that even doing just two tasks at the same time, can reduce brain processing power by 37%.

Studies also show that women are better at multitasking than men. Since about 90% of traders are men, then I'm assuming that you are probably a man.

If that is the case, then that is even more reason for you not to learn more than one thing at a time.

So pick a trading course and stick with it until you master it or you realize that it isn't for you. If you decide that it isn't for you, then be sure that you have a good reason. 

Don't just quit because things are getting tough.

Embrace the suck and press on.

Test Your Trading Method Thoroughly

Speaking of doing one thing…

If there is something that will give you trading confidence, it is testing your trading method before you ever risk any real money. This means both backtesting and forward testing.

Backtesting

This is when you test your trading method on historical data. To learn more about backtesting and to get some actual methods to test, then read these posts.

There is no other activity that I have seen that has helped more amateur traders go pro.

…except for maybe active mentoring.

But that can be expensive.

Backtesting is affordable for most traders. 

It doesn't work for everyone, but chances are very good that it will give you the confidence you are looking for.

I use and recommend Forex Tester 2 for backtesting.

Forward Testing

This is when you test your trading method in real-time. This can either be done in a demo account or a small live account.

There are certain elements of backtesting that cannot be predicted. Things like scheduling conflicts and trading emotions can only be worked out in forward testing.

So before you put your entire trading stake on the line, be sure that you test in real-time. This will give you a ton of confidence.

How to be a Currency Trader Who Learns From Mistakes

This is one of the least sexy elements of trading. It is up there with risk management.

Zzzzzz…

But like risk management, this is also one of the most important.

To become as close to fearless as possible, you need to understand what you are doing wrong. This means that you have to journal your trades.

If you are making mistakes and you don't know it, then how can you correct them?

Reviewing your trades will help you in two ways.

1. You can see that you are trading well, but are just going through a normal drawdown.
2. You can correct things that you might not realize you are doing wrong.

There are many different ways to journal, so figure out what works for you. If you don't like typing, you can even video journal.

Final Thoughts on Being a Fearless Forex Trader

There is no way to be completely fearless in Forex trading. But if you understand how your mind works, know what your strengths are, and practice a lot, then you give yourself the best shot at success.

Confidence is a currency trader's most important weapon. 

Go get yours. 

Start your trading education on our resources page.

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The post How to be a Currency Trader Who is (Almost) Fearless appeared first on Trading Heroes.

When you don't have confidence in your trading system, it is the worst feeling in the world. It seems like you have no purpose and you question your worth as a trader.

Maybe even as a person.

Every single trade looks like it will lose money and you may even contemplate jumping back on the Trading Silodrome again.  Even normal drawdowns affect you deeply and you second guess every trade setup that appears on your screen.

So what is the solution?

The best solution will be different for everyone, but here are three simple ways that you can use to start building confidence in your trading method.  It doesn't matter if you learned it from a course or from a mentor or if you developed it yourself.

As Walter Peters says in his book, you want your trading to become boring.  You know that you will win some and lose some, but on balance, you will come out ahead.

If that is the kind of confidence that you want to have in your trading method, then keep reading.

1. Backtest It

Not every trading method can be backested. Strategies that rely heavily on fundamental factors or trader intuition usually cannot be accurately backtested.  But trading methods that primarily use technical entries and exits can be backtested.

Using historical data to see how well your trading method performed in the past is a great way to build confidence in your trading method. If you know what to expect from your trading strategy, you will be better equipped to handle drawdowns.

The downside is that since you do not have real money on the line, you will be missing the psychological stress element of trading.  But that can also be a good thing.

When you examine a trading method without any emotion, you can get a clearer picture of its real trading results. That in itself can give you confidence that the strategy is sound. Then it is up to you to execute the strategy as well as you can.

So if you want to start backtesting, you can click here to read the tutorial.

2. Demo Trade It

Another thing that you can do is trade your method in a demo account. This will help you build your confidence in taking and managing real-time trades.

As you probably know, almost all Forex brokers offer demo accounts. But not all demo accounts are created equal.

When choosing a broker to demo trade with, consider the following factors:

• How long do they allow you to keep your demo account open?  Having to sign up for a new account every 30 days can be a hassle and can cause you to lose momentum.
• Do they allow you to adjust the size of your demo account to make it more realistic to what you will be trading?  It might be fun to trade a $3,000,000 account, but it doesn't help if you will be trading a $5,000 account with real money.  Try to make your demo conditions as similar to your real conditions as possible.
• Demo trade with a broker that you will probably open a real account with.  This will allow you to learn the little tricks of their platform and give you even more confidence.
• Do they offer smaller lot sizes?  Over trading is a common cause of large trading losses, which in turn cause more trading losses.  Make sure that you are trading lot sizes that allow you to take the correct amount of risk on every trade (usually 2% or less).

When taking the factors above into account, really like using Oanda for demo trading.  They allow you to keep your account open forever and they make it really easy to adjust your account size and lot sizes.

But only trading play money can start to seem a little pointless. So once you have worked out all the kinks in your trading method and you understand how to use your broker's platform, you can move on to live trading.

3. Trade It In A Small Live Account

After you have successfully tested your method with fake money by backtesting and demo trading it, you are now ready to put some real money behind it. But don't make the mistake that most people make by putting a ton of money in your trading account in the beginning.

Having too much money on the line when you are first starting out will put undue pressure on you and give you even less confidence to take trades.  It's funny how our perception of what is a lot of money can affect our trading decisions.

I call it the Theory of Dollartivity.

The Theory Explained

For example, if you are used to making $75,000 per year at your job, then losing $1,000 is probably a lot to you.  But if you are trading a $100,000 account, then $1,000 is only 1% of your account and you are using proper risk management.

If you are not used to losing $1,000 on a trade, then it could really affect you psychologically. This could lead to a loss of confidence and poor trading.

However, if you start out with a $100 account and start risking $1 per trade, that is a lot easier to stomach. You can start trading your method and gain confidence in how it works and what you can expect.  Then you can gradually add more money to your account as you become more comfortable (and profitable).

This is why I feel that trading nano lots in the beginning is so helpful in the development of any trader.  You will be surprised how real trading becomes when you have even just $1 on the line.

Final Thoughts on How to Develop Confidence in Trading

So those are three ways that you can use to gain more confidence in your trading method.  Don't let their simplicity fool you.  By applying these methods, you can start to feel like you are making some real progress.

They have helped me and countless other traders. So get started right now.

Drop everything and figure out how to develop confidence in trading Forex by implementing one of these tips right now.

The post 3 Simple Ways to Develop Confidence in Trading Forex appeared first on Trading Heroes.

The storm's a-comin'.

…or maybe it has already hit you.

It can be disorienting, disheartening and even depressing. I wish that I was being a drama queen but unfortunately I'm not.

If you have already gone through this, you already know what I'm talking about. If you haven't, I want to prepare you for it.

Either way, this post will help you deal with people who want to smash your trading dream into a million pieces.

You might think that the people who are closest to you will always be your biggest supporters. But the opposite can be true and often is…when it comes to trading.

In all fairness, these people usually have your best interest at heart.

So what can you do? 

We will explore steps that you can take to reduce or eliminate the effect that these people have on you. Since protecting your mental capital (trading psychology) is just as important as protecting your monetary capital, it is vital for you to figure out how to stay as focused and positive as possible.

So if you are wondering what to do about people who are always bashing your dream of becoming a Forex trader, here are some honest and actionable things you can do.

Have a Heart-To-Heart Talk

The best place to start is to just have an open and honest talk about what trading means to you and asking the naysayer to be a little more supportive of your dream. If you get your feelings out there, then you may be able to hash out some possible misunderstandings and clear the air fairly easily.

But don't do all the talking.

Listen too. 

Ask them why they are so against it. Many times there are perfectly valid reasons.

They will usually think that it's dangerous, or it's not a real job, or they just don't understand it.

Do your best to understand where they are coming from. Many times, they simply don't want to see you get hurt.

Talk about how trading can possibly provide you with a better future, help you get out of that job you hate or just give you more options in life.

If that doesn't work and they seem pretty set on their negative stance then here's what you can do next…

Don't Bring It Up Around Them

As passionate as you are about trading, one way to avoid confrontations around the subject is to just avoid the topic all together. You obviously associate with these people for reasons besides trading, so if you still want to hang out with them, find other things to talk about.

Even though they are a close friend or family member, it doesn't mean that you have to talk about everything with them. Keep your trading aspirations to yourself and you might both be happier for it.

If they ask you why you never bring it up, just be honest with them. Tell them that it isn't a topic that you both agree on, and you value their friendship, so you think that it is just better if you don't discuss it.

How to Get Your Partner Involved

There may be situations where you have no choice however. For example, if the person that doesn't support you is your partner. You live with them and you should obviously discuss all financial matters with them.

But what can you do if they are really against you trading?

I haven't run into this situation personally, but I have heard a few great solutions over the years. Jessica Peletier mentioned in episode #2 of The Trading Lifestyle Podcast that her solution was to just keep talking about it until her husband was comfortable with the fact that trading involves both gains and losses.

This may take a little strategic thinking to ease your spouse into this, but it can be helpful. Don't lie to them obviously, but get them comfortable with the process first.

Also let them know what's going on, so they aren't worried.

If there is an analogy to trading that they might understand better, then try leading with that.

Using an Analogy to Trading

For example, trading could be compared to running a bakery. Some days you will do well and sell all of your muffins.

Other days, you might lose money because you only sold a small portion of your muffins. Just like in trading, there are winning days and losing days.

If you took out a business loan to start the bakery, that is like trading on margin because you are borrowing other peoples money to invest in the business.

In both trading and running a bakery, you have to figure out your system (or muffin recipe), manage the risk (don't bake too much, lease bakery space you can afford, etc.) and take the time to learn the trade.

Anyway, you get the point.

Use an analogy that your partner would understand.

Don't get me wrong, I'm not calling your spouse or partner dumb. Trading is just one of those things that very few people know anything about.

Just because you and I know something about it, that doesn't mean that others do. Not taking this into account can lead to major misunderstandings.

…and nights on the couch.

I also think that it is helpful to show your partner examples of people who are successful traders. This can go a long way to expanding their comfort level and awareness.

Set Risk Limits

Another method that I've heard about is to agree with your partner on an amount of money that would be worth risking in your trading account. Some traders have even gone so far as agreeing to give up trading completely if they blow out their account.

Hopefully it doesn't come to that, but it may be required, in certain circumstances.

When pitching trading real money to your partner, keep the money at risk as low as possible. When your partner knows exactly how much is at risk, they are more likely to let you do it because they are comfortable with what is at stake.

Then do your part and stick to your end of the deal, don't risk more than the agreed upon amount.

I would suggest starting with Oanda (if you can, in your country) for as little as $100. Actually, you can start with much less, but I feel that is the minimum amount to be “properly capitalized” for learning.

You can trade for a penny a pip (or less) and still only risk 1% on each trade because Oanda allows you to trade nano lots.

For example, if you have a $100 account, you could risk 1% per trade ($1 total risk) and still have a 100 pip stop loss if you trade for a penny a pip.

Nano lots also allow you trade much smaller lot sizes so you can trade for even less than a penny a pip, if you want to risk less or need a bigger stop loss.

Yes, you won't get rich, but that's not the point right now. You need to learn, and not lose a lot of money doing it. 

…and not piss off your partner either

Also be sure to demo trade and backtest so you have results to show before you actually risk any real money. If you can show positive results and dedication to your craft, even when real money isn't on the line, that will make your case much stronger.

If all that fails, you can always resort to sexual favors.

Just joking.

Kinda.

Now let's talk about people who are not your partner and what you can do to limit their negative influence on your trading.

Reduce or Eliminate Your Contact With Them

This is more for your friends or family members that you don't live with. But, there may come a point where you simply need to cut down on the time that you spend with some people, if they are having a big negative effect on you reaching your goals.

If you already tried avoiding the subject and it didn't work, then you may have to take more drastic measures. 

It may seem like a harsh thing to do at first and I'm not suggesting that you do this on a whim. Our personal relationships are our most valuable resource, so consider carefully.

But do you really need some of these people in your life if they are that much of a downer?

Maybe.

Maybe not.

You could try avoiding them for a little while and see what happens.

Are you happier overall? Is your trading better?

If the person who is always trying to squash your dream is someone you live with or a spouse or partner and you have already tried all of the above and there is no compromise, then you have a tough decision to make.

Do you make them happy and quit or continue to work towards your dream without them? Only you can answer that question.

Time to put on your big boy/girl pants and decide what is really more important to you.

Be totally honest with yourself and the other person. I personally couldn't be with someone who didn't support my trading goals, but that's just me.

Make New Friends

“You are the average of the five people that you hang out with the most” – Jim Rohn

This really is true. I'm not saying that you should be a snob and only hang out with people so you can get something out of them.

Assuming that you have sorted out the above or are actively working on it, then think about how you can expand your circle of friends that will support you in your trading. When you want to do something, isn't it easier when you have people who are doing the same thing and have the same goals?

For example, I love surfing and I hang out with some of my friends because they like to go surfing. I don't want to be a pro surfer, so I don't hang out with competitive surfers. I like to travel, have a good session and get a cold beer and some good food afterwards.

So those are the surfers I hang out with.

In a similar way, if you want to trade for a living, you should hang out with people who have similar goals or are already professional traders.

That was one of my reasons for starting this blog, a Facebook group and the podcast.

…and it has paid huge dividends.

So figure out how you can make more friends who have similar goals or even better, are already doing what you want to do. This can mean all the difference in the world when it comes to reaching your goals and can help balance out the negative influences in your life.

But Wait…Maybe They Are Right!

Huh? Isn't this supposed to be an inspirational, pro trading, feel good post?

No, I'm not here to blow sunshine up your ass.

This is a practical, actionable and honest post.

So in all fairness, I have to concede that not everyone is cut out to be a trader. My Mom for example, has a very black and white view of the world and wouldn't have the flexibility to adapt to constantly changing market conditions.

…and there is nothing wrong with that.

This is what makes her much better suited to be a school teacher.

That's not to say that she couldn't be a good trader if she put her mind to it and became more flexible.

I sincerely believe that anyone who is of able mind and spirit can become a profitable trader if they truly dedicate themselves to that goal.

When I say that people might be right that you shouldn't become a trader, I'm simply asking your to consider the fact that maybe you would be happier doing something else.

Maybe you don't actually enjoy trading. You might even hate it.

If that is the case, you may be happier and way more profitable doing something that you actually give a shit about instead of learning trading because some guy on the internet (ahem) said that you can make a ton of money at home, in your underwear.

Also be fair to people around you who are counting on you for financial support. Do not quit your job to become a trader if you have not proven yourself yet, that is just irresponsible.

If you really hate your job, consider switching jobs to something that gives you more free time or trading on higher time frames so you don't have to watch the market as much. There are always options.

How Do You Know if Trading is Really For You?

Simply decide.

Yes, it really is that simple. Notice the difference, I said simple, not easy.

If you really want this, just commit. If you don't, then go do something else.

It could take just a few years, like in the case of Chris Capre, or it could take a decade, like with Walter Peters.

But if you are truly dedicated, then you will do what it takes. You will put in the time testing, have the tough talks with people close to you and get properly educated.

What are You Going to Do About It Right Now?!

Anthony Robbins has a great rule that he never leaves the scene of a decision without doing one thing, no matter now small, to move towards his goal.

So I ask you, what can you do right now to minimize the negative effect that people close to you are having?

You can call someone and setup a lunch to sit down and talk with them, cancel a meetup with someone who is always talking bad about your trading or do an online search for other traders to talk to.

Whatever it is for you, do it now!

The post How to Deal With People Who Want to Kill Your Trading Dream appeared first on Trading Heroes.