The start of a new year can be a very exciting time, but also a very dangerous one. It’s exciting because it’s looked at as a fresh start where you can erase your sins of the prior year & start anew with new dreams, new ideas & new tactics.

From a trading perspective, this means a clean slate on your balance sheet & the chance to get off to a hot start. But be warned, this is a dangerous way of thinking for a few reasons.

TOO MUCH EXCITEMENT

The honest truth is that the market doesn’t offer as many opportunities as you may think. Correction, the market doesn’t offer as many GOOD opportunities as you may think. Most of trading is sitting on your hands & waiting for those good opportunities to show. However, when you’re overcome with excitement, waiting is easier said than done, especially as everyone else on your social media feed is bragging about how much they’ve already made. This will often cause a trader to bail on his/her plan & give in to finding action, vs. waiting for good trades & trust me that always ends poorly.

TOO MUCH CONFIDENCE

Getting off to a hot start is great, but it’s important that you don’t allow yourself to become overconfident. Overconfidence can lead to overtrading & the diminishing of quality of trading opportunities. It can also lead to overleveraging & trading a position size that is way too big. This year in particular, we have a major news event (Non-Farm Payrolls) happening at the end of week 1. No doubt a lot of traders will get lucky & happen to be on the right side of this move by pure accident. This can lead to a massive amount of overconfidence and cause a lot of major problems down the road.

TOO MUCH ANGER

Anger can cause a handful of responses. The need to get back at the market for what it took from you aka revenge trading. Or cold feet, fear of entering new trades because of the previous trades results.

It’s important to understand that trading is a marathon & we’re only at the beginning of the race. Take it from someone who has ran multiple marathons (not all smartly), you can’t win the race in the first mile…but you certainly can lose it.

If you want to hear more about this topic make sure you check out the video below featuring the live discussion that we had on it.

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Paralysis is the inability to move, act, or function. Usually, we refer to this in the physical sense, but it’s also very common in trading, typically occurring when a trader runs through so many different outcomes in their mind that they find it impossible to make a final decision or prediction.

One of the main reasons this occurs so frequently in the financial markets is because many who are new to technical analysis (reading a price chart) tend to focus only on finding the “pattern” or the “signal” vs. learning how to perform analysis & make solid predictions. (Creating a directional bias).

Creating a directional bias works as a filter for your trading & if done correctly will allow you to pick a given direction to focus on. Once you’ve decided on the given direction or the path of least resistance, then the “pattern” or “setup” becomes important, but only if aligned with your directional bias.

Your directional bias is your opinion on future movement which stems from your ability to understand what the price chart is telling you. Sounds simple, but as I mentioned before, most newer traders don’t work on developing this skill because they don’t see how it directly relates to them taking trades in comparison to a specific pattern or setup.

Hopefully, this article has provided you with an idea of how it does & if you’re more of a visual learner & want more on this subject, I highly recommend watching the video above for more insights.

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Since I started coaching traders back in 2012 the majority of my time & energy has been spent preparing them for success & walking along that path with them. However, for about a month each year, I dial things back & take time to focus on my own personal development as a trader. During this time I typically focus on one of a few things; reading books, taking/reviewing old courses, or working on a new strategy.

This year I’ve focused my attention on revisiting volume spread analysis in the Forex market which was something I’ve previously ignored in the past due to the fact that the Forex market is a decentralized market & therefore any volume reading isn’t a “true” number. As of writing this I still haven’t come to any conclusions on whether it’s something I’m going to implement or not but what I can tell you is that the journey of looking for an answer to that question has already proven to be beneficial.

What I’ve done for the better part of our holiday break is walk through historical data, one bar at a time for many years on many pairs with the goal of merely making observations. This is a 180 degree turn around from how I treated the testing process when I first started trading. Back then, I was only interested in finding the answer to a predetermined question. I was looking at the testing process as being binary, looking to only see if my idea worked or didn’t work.

The truth is, a trader needs to approach testing less like a math question & more like a hypothesis, meaning that yes there is an initial or proposed thought, but that thought is created from limited evidence & it serves as only a starting point for further investigation.

So I’ve been enjoying the process of “free testing” or what I’ve referred to in the past as the “eyeball test” as it’s allowed me to make many key observations about price action that will benefit my trading whether I come up with something new or just implement them into what I’m already doing. As someone who devouts himself to the Kaizen philosophy of continuous improvement, this has certainly been a small deliberate step in the right direction.

For more on this subject, including some of the struggles that I’ve faced during this process, please give this podcast episode a listen.

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What if I told you that a losing trade could actually be your biggest confidence booster? Well, you’d probably think that I was crazy & immediately move on to the next article of interest. But hear me out…

TRADING IS A JOURNEY

Becoming a successful trader is a long journey & it’s certainly one that doesn’t happen overnight. In my experience of coaching traders & speaking with some of the best minds in the field, saying that it takes about 1 to 2 years to become consistently profitable would probably be on the low end. Some may be discouraged to hear that but before you blindly trust that internet guru telling you that it can happen over the weekend with his super-secret $99 course, think about any other skill-based career in the world and ask yourself if you can become one of the best in that field in just a few days…Yeah, I Thought So. The point being, mastery comes from consistent improvement, so the goal of an aspiring trader isn’t to master the markets right away, rather to slowly develop the skills needed that will eventually lead towards that mastery.

HOW CAN LOSSES BE A GOOD THING?

To start, we know that no strategy wins all of the time & that the markets will do what they want, whenever they want to. Our job as traders is to understand the probabilities of specific setups & pair that with solid risk management techniques. In order to have a winning trade, we must be correct in 3 areas, the entry, the stop & the target. The entry is where we initially get involved, the stop is a level where we would exit the trade for a loss & the target is where we would exit a trade if we are right.

So let’s say you enter a trade & price immediately pauses around your entry before it starts moving in your direction only to make it halfway to your target before reversing & stopping you out. This would be considered a losing trade.

Now while most new traders would simply look at the outcome of the trade & see it as a negative, a professional trader would review the entirety of the execution & see it as a mixed bag. Sure the trade lost, but you were right in one aspect of the move, the entry. How do we know this, because price fought, held & eventually reversed in your favor at that level. So when reviewing this trade, you should be able to take confidence from the fact that you were correct in making the right prediction when it came to the entry point & what you need to continue to work on perhaps is becoming more efficient with your target placement.

CONFIDENCE IS KEY

Trading is a game of confidence & if you don’t have it the market will tear you apart. Confidence comes from proper preparation, but more importantly, experience aka time in the markets. During that time in the markets, it’s important that you continue to feed that confidence as much as you can because trust me, you’ll need it to get over the numerous obstacles that will stand in your way.

So the next time you think about punishing yourself for a losing trade, take a second to focus on these 2 things.

1. The things you did right.
2. The things that you can improve on for the future.

For more on this subject check out this episode of The Trading Coach Podcast

Thank you for taking the time to read this blog & if you liked it please let me know by sharing it on social media or just giving me a like.

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First and foremost, I haven’t stopped day trading. However, I no longer approach my day trading in the same way that I did when I first got into trading. Here’s why…

I NEVER PLANNED ON DAY TRADING

If you don’t know my story, I was the genius that quit all three of my jobs so that I could dedicate all of my efforts to becoming a super trader. Silly I know, but after a longer, than expected struggle to find success, I eventually became a consistently profitable trader whose full-time job was to analyze the market. As a swing trader, I had a lot of time on my hands because trades were far and few between so I started playing around on the lower timeframes as a way to spend time in the markets and train my eyes to pick out certain patterns and tendencies. As I improved I eventually added day trading to my arsenal as an alternative way to participate in the markets and because…well…I had nothing better to do.

Once I started teaching and as I started to grow my family, I no longer had the energy nor the time to spend the majority of my day in front of the computer. Time with family became a priority, time spent helping other traders develop became a priority and after years of dedicating nearly 12 hours a day to my trading, it was time to start reaping the benefits of my investment by spending MY TIME doing only the things that made ME HAPPY.

I love trading, and I really enjoy day trading which is why I still do it today. But instead of sitting in front of my computer all day, I only dedicate a very specific 2–3 hours a day to it. At this point in my life, I no longer want to be a slave to my computer screen because that defeats the purpose of everything that I’ve worked for. I got into trading because I saw it as a way to gain financial freedom. As I achieved financial freedom, my values shifted to achieving time freedom. And because of that, it was easy to give up some of what I like in order to have more of what I love.

I hope you guys enjoyed this post! And if you’re interested in hearing more about the differences between Day & Swing trading please check out this podcast below.

Your Trading Coach — Akil

www.TierOneTrading.com

In order to be successful, you have to become very comfortable with being uncomfortable. This is true in life & is very true in trading as well.

In general, it’s important to understand that stress is what allows growth. A muscle doesn’t get stronger until it is stressed beyond its comfort level. Your best ideas often don’t come until you’re surrounded by others who inadvertently or purposely put the pressure on you to keep up. Having a proper understanding of what stress is will allow you to see it in a different light & instead of running from it, you’ll begin to embrace it.

THE MARKET HAS ONE JOB

When I was first introduced to trading, my mentor told me that the markets have a single job. To inflict as much pain as possible on you & to do so for as long as possible. I wish I could say that this was an exaggeration, but in my experience, he was pretty dead on.

The truth is that the markets really are trying to bring you pain & it’s not just a saying amongst traders, it’s literally a technique used by the big players in the industry because they understand human/crowd psychology & what is a disadvantage to us becomes a meal ticket for them.

90% (and some would argue even more) of the work should be done before you ever enter a trade. Entry reason, target projections, stop location, risk management, etc. Once you’ve done this work you’ve got to trust it & not get baited into making a mistake like getting scared out of a trade.

Trust your plan & more importantly trust yourself. If you can do those two things I think you’ll start to see the results that you want to see & that belief cycle will kick in & you’ll become more & more confident down the road.

For more on this subject check out the video below!

The formula for success in trading is simple. “Consistent Analysis + Consistent Execution = Consistent Results.” Unfortunately, this is easier said than done. Although most traders struggle, due to problems existing on the psychological side of things. Many of those disciplinary issues can be attributed to a lack of routine and lack of process.

Trading is a business and like any other job, a trader needs to follow a consistent routine. This routine should be present in their daily schedule in terms of when they wake up, when they perform analysis, when they’re allowed to trade & the numerous other aspects that go into creating and maintaining a proper trade-state. But even more important than a proper trading routine, is having a proper routine for how you perform analysis.

In order to earn consistent results, there needs to be consistency in the types of trades you take and without a consistent approach to your analysis, well the only thing that will be consistent is your inconsistencies. Having a process is key to reading the charts the same way each time you look at them and the process that I follow is called I.P.D.E.

STEP 1 — IDENTIFY

I always begin my analysis on my (defined) higher. This is important for two reasons. Firstly, it allows me to take a birds-eye view on price & see what’s going on from a macro perspective. Secondly, because I can’t execute trades from this timeframe, it allows me to subdue the trading thoughts in my head & only focus on performing analysis. I know that this may seem strange that a trader wants to subdue their trading thoughts, but trust me, with confirmation bias occurring so easily, a trader can get into a lot of trouble seeing what they want to see, instead of seeing what’s actually there.

The main questions that I want to ask myself during this first step are

1) What is the market doing? (trending, consolidating, recent candlestick close, etc)

2) Where is price relative to important levels of structure?

After these questions are answered I can move on to the next step in the process.

STEP 2 — PREDICT

Once armed with the answers from step one, I then want to take that information & use it to form a prediction. This prompts three subsequent questions.

1) What direction is price likely to move in next?

2) If price moves in that direction, then where is it likely to go until?

3) If price moves in that direction, then how is it likely to get there?

In the chart above I start off by IDENTIFYING that a bearish trend is coming to an end and that the market is close to completing a classic reversal pattern called the Head & Shoulders. I can then make the PREDICTION that IF price can violate the neckline, THEN we’re likely to see a continued move to the upside. IF we do get said move to the upside, then our likely destination is a retest of previous inside structure.

STEP 3 — DECIDE

Once we’ve made our prediction we can now decide on if & how to attack the potential trading opportunity. At this point, we are reviewing the situation & referring to our rules for engagement within our trading plan in order to see what price and/or any indicators you may be using has to do in order for us to get a reason for entry. At this stage, it’s important that we work through all three aspects of our trade meaning entries, stops & targets & make sure they are all aligned before considering it a “good” opportunity.

STEP 4 — EXECUTE

Once price provides us with our reason for entry then we simply need to take the trade. Now although this step seems like the easiest, this is also where trading psychology starts to work it’s way into the equation as we all know the emotional tugs that often come with putting ourselves in a situation where we have money at risk which is out of our control.

In the chart above, after price breaks the neckline of the head & shoulders pattern, in then retraces back into the previous level of structure & provides us with a beautiful formation of candlesticks for what we call a higher high, higher close entry. Knowing our entry allows us to determine our stop loss & ultimately our overall risk to reward ratio for the trade. Assuming it meets all of our requirements then our last duty (aside from actively managing the trade) is to push the buy button.

I.P.D.E. is my preferred process when I trade, but it doesn’t mean it has to be yours. The point that I wanted to get across in this article is that you need to HAVE and FOLLOW a process in order to be consistently profitable and I challenge you to try one out as I guaranteed you’ll have much more clarity in your analysis then you did beforehand.

For more on this subject here’s a podcast episode

Thanks for taking the time to read my words & if you enjoyed it, I’d appreciate it if you’d SHARE & hit that “applause” button below. Also if you found a section that particularly hit home, make sure you “highlight” & “tweet” it!

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I’m currently going through a phase where I’m working on adding a new trading strategy to my arsenal & if you’ve ever done the same then you know that the process can be very time consuming & very frustrating as it features a lot of failures. When this occurs you have 2 choices on how to view things,

1. You allow these failures to eat at your confidence & drag you down or
2. You use that as learning experiences that motivate you to try the next thing.

I think it was Thomas Edison that said “I haven’t failed, I’ve just found 10,000 ways that didn’t work”

There’s no perfect path through life. Rather, life is a series of ups & downs. The key is to maximize your ups, survive your downs & learn from your experiences.

It’s amazing how your perception of life events will change when you look at them through a different lens. I challenge you to try & take the positive from each situation & see how it changes your current path in life.

Thanks for taking the time to read my words & if you enjoyed it, I’d appreciate it if you’d SHARE & hit that “applause” button below. Also if you found a section that particularly hit home, make sure you “highlight” & “tweet” it!

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Have you ever felt overwhelmed? If so then don’t worry, because it’s completely normal. With the amount of information that is available about how to trade, I feel as if for the newbie, knowledge-seeking trader it’s almost impossible not to.

The unique thing about trading is that there are so many ways to become successful. However, this is what makes it very easy for newer traders to think that they have to learn each and every one of these ways in order to be successful.

Something that I commonly see is a trader stuck in a trade-state called “analysis paralysis” where their mind is analyzing so much at once, that they actually become frozen in the moment due to an uncertainty of what to do next. A solution to this problem is simplifying the process on two fronts

FOCUS ON YOUR FOCUS

Instead of trying to do it all, the first bit of advice that I give to each new client I work with is to start simple and focus on a single way of trading. It honestly doesn’t matter what you choose, but once you decide you need to have tunnel vision and ignore everything else that the market is doing.

The next step after deciding on a single way to trade is developing a rules-based process for how you evaluate the market and eventually decide what trades to take and when to take them.

MY RULES BASED PROCESS

I follow a four-step process when analyzing the charts called I.P.D.E.

For a look at how I perform this process on the chart CLICK HERE to check out my youtube channel where I have hundreds of videos on technical analysis.

IDENTIFY — What has the market done? What is the market currently doing? I’m a structure-based trader so most of my analysis has to do with where the market is at relative to previous levels of support & resistance.

PREDICT — Based on the above, what do I predict the market is likely to do next. These predictions aren’t my thoughts, rather rules-based predictions based on using an “If/Then” syntax. These predictions also come in 3 parts. 1) What direction is the market likely to go it? 2) How far is price likely to go in that direction & 3) How is the market likely to move if it goes in that direction?

DECIDE — After I’ve formed my bias I then decide if or how I can get involved in the above prediction. These are based on rules I have for confirmation of my prediction.

EXECUTE — Waiting for my reason for entry and pulling the trigger on the trade.

When you can simplify the process, you’ll become a lot more comfortable ion what you’re doing and when you’re more comfortable in what you’re doing you’ll feel a lot less overwhelmed.

For more on this subject please check out the podcast episode that I did on it below

Thanks for taking the time to read my words & if you enjoyed it, I’d appreciate it if you’d SHARE & hit that “applause” button below. Also if you found a section that particularly hit home, make sure you “highlight” & “tweet” it!

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I’ve been vigorously working on developing a new trading strategy & decided to document my journey in a YouTube series called “Building A Forex Strategy.” The goal of the series is to show traders the process in which I go through and of course hopefully come up with something that works

One of the key points that I’ve emphasized throughout the series is that strategy development and testing should be looked at as a journey instead of a straight route to a predetermined destination. What I mean by that is that the true value of the testing phase isn’t in the numbers that you produce, rather the observations that you make along the way.

After passing my baseline test I moved on to phase 2, which consists of attempting to boost the win percentage of the system by filtering out losing trades. The way in which I filter out losing trades is by looking for a confirmation signal at entry.

I had 3 ideas in mind on how to accomplish this, unfortunately, none of them produced an outcome that performed better than the baseline test. So after becoming frustrated I decided to move on (for the time being) and start working on phases 3 & 4 which dealt with target taking and stop losses.

After a failed test of an idea that I thought might help with getting me out of losing trades earlier, I observed that although it didn’t help in that capacity, it did look to help with filtering out losing trades when it came to my entries. So I immediately jumped back to phase 2, retested everything with this new filter and ended up with a result that was positive and potentially usable. It’s still way too early to tell if this strategy will be a success or not, but if it does, it’ll be super cool to explain to traders how a key component of its success came by accident.

They say we can make our own luck. Why? Well because luck happens when preparation meets opportunity. If you’re doing things the right way you’ll be able to catch things and if you don’t they’ll slip through the cracks. Remember traders, testing isn’t about getting to the end result. Rather, it’s about the journey that occurs between the start and the finish.

Here’s a link to the video presentation I did on this subject

Thanks for taking the time to read my words & if you enjoyed it, I’d appreciate it if you’d SHARE & hit that “applause” button below. Also if you found a section that particularly hit home, make sure you “highlight” & “tweet” it!

You can also follow me on…YouTube |Instagram|Twitter| Facebook |Li