Forex Trading Philosophy

“BIGNESS comes from doing many small things WELL. Individually, they are NOT very DRAMATIC transactions. Together they Add Up!”

– Edward Finkelstein

The following assumptions form the core trading principles to achieve Consistent Profits and Emotion-Free Trading:

  • Price Action is the primary and ONLY TRUE Leading Indicator
  • Small profits can grow into significant profits when defined in a proper business plan (i.e you do NOT need to hit homerun trades to make a lot of money)
  • Accuracy is best achieved by anticipating vs. predicting price movements
  • Protecting Profits is a traders highest priority for long term success
  • Consistent winning is best measured by Trading Efficiency Quotient: .E.Q = Total PIPS/Hours Trading)
  • All Swing trades start out as Scalping Trades (i.e. scalping is the foundational trading skill)

These 6 assumptions lay the foundation for the 3 core areas of competencies that a Successful Trader must achieve.

3 Pillars to Successful Trading

So what does it really take to increase your chances of becoming a Successful Trader? The problem for many traders is expecting success by learning only 1 or 2 competencies.  Some traders believe all they need to learn are technical charts (trade setups), others believe it’s all about getting the fundamental news (market conditions), and others are just happy to roll the dice (personal mindset).

Think about the Trading Zone as a 3 legged stool. You need all legs to support you and the FxST training system is specifically designed to give you just that.

forex trading zone

The 3 core competencies every trader needs to master represent the skills and knowledge for long term trading success:

  • Market Conditions – What type of market cycle we are in?
    • Range- Are we in a flat market where we can play edges or anticipate breakouts?
    • Trend- Are we better off trading in a certain direction with the trend?
    • Fundamental News- Is the market being driven by economic news?
    • Trade Setup – What type of strategy you are going to trade?
      • Reversal- Is the market overbought or oversold and ready to reverse?
      • Trade Momentum- Should I be looking to trade with the momentum and direction?
      • Retracements- Should I be looking for retracements to attack the trend?

 

 

  • Personal Mindset –What is your current state of mind as a trader?
    • Emotional State- Are you focused, tired, greedy, fearful, anxious, or nervous?
    • Clear Objective- Do you have a plan of what you are trying to accomplish daily?
    • Confidence- Do you have confidence in what you’re doing?

 

You could have the perfect trade setup, but if the market conditions do not compliment that type of strategy, you are still going to struggle with that trade.

First Step To Successful Trading – Know Yourself

Who am I? To answer this, we must first learn to become more aware of ourselves and our trading. To be aware, we must STOP and PAY ATTENTION! We need to STOP and objectively watch and experience ourselves in action.

We live most of our lives by habit and this reflects in our trading. These habits keep us stuck in patterns that limit our trading potential. Once we detect a pattern we were previously unconscious of, we can choose differently, if we want. With awareness comes choice and with choice, we gain freedom.

Start building the awareness habit in your trading: STOP and PAY ATTENTION. Take the initiative to become aware of how you subconsciously react to different things while you trade. Become aware of how your thinking creates your reality. Probe the messages underlying your emotions. Learn to honor your body’s wisdom. Awareness reveals to us a whole new fascinating experience while you’re trading.

  • FxNewborn  The Forex Beginner Coming To The Business With an open Mind
    • Knows nothing about Forex
    • Knows nothing about Investing or money management
  • FxMindset  An investor in other markets (Stocks, Real Estate, Etc…) with no Forex experience
    • Knows proper Money Management Methods for other styles of investing
    • Has a low knowledge of Forex (needs to understand the Mechanics)
  • FxMechanic   Understands Forex To A High Degree, Just Needs Proper Money Management
    • Knows all the mechanics of the Forex Market (Technical Analysis & Fundamentals)
    • Despite high Forex knowledge, still has trouble managing money
  • FxMastery  Understands Forex and Money Management and applies it to a high degree
    • Has a very clear Understanding of Forex Price Movement
    • Has a proven business plan in their trading that they execute with precision

Second Step To Successful Trading – Know Your Objective

Introduction To The Forex Profit Matrix

What kind of profit do I look for? To identify the types of profit traders seek is another key step in awareness. To better assess this, we first need to understand the two elements involved, Risk and Reward. We’ve all heard these terms, but how do we put them into context with our trading?

Once we can relate it to something we already know and understand we then can expand on it and begin to master the technical aspects of the task at hand – CONSISTENT PROFITS.

 

  • Junkie Profits– Focused on trying to make Money Rather than Controlling Risk.
    • Usually feels like your gambling when your placing trades
    • Can lead to large losses and gains (causing emotional High’s & Lows)
  • Sucker Profits– Taking profits too soon and assuming full risk without full reward.
    • Usually someone who has experienced a Large Loss and lost confidence.
    • One of the most dangerous profit types to fall under can end in “Account Blowup”.
  • Sunshine Profits – Understands the power of small Consistent Profits without the risk
    • Usually someone who is focused on eliminating risk out of the trade immediately
    • Has a strong understanding of the double a penny concept (exponential growth)
  • Optimal Profits– Has achieved FxMastery as well as how to exponentially grow a Forex account
    • Understands The Art of removing risk from trades in doing so maximizing Upside gain.
    • Understands core concepts of executing a business plan and scaling positions out.