Will Smith Secrets Of Success

http://www.youtube.com/watch?v=q5nVqeVhgQE

That video really fired me up. This stuff is real, its the core of books such as Think And Grow Rich, it is biblical. I really like something Will said - "There is no reason for Plan B because it distracts you from Plan A". I'm wholly committed to becoming an excellent trader, and I refuse to harbor thoughts of going back to my previous profession or trying out something new in case this fails to work out. There is no turning back, I've burned all the bridges behind me.

One of the biggest and most important lesson that trading has taught me is how essential failure is. Society, education, and culture portrays failure as something negative, as if that is the end result. However I've come to realize that every failure is just life's way of showing us one more option that doesn't work. The path to success is built upon failure, or more precisely the continual eradication of the options that doesn't work. I've eradicated many mistakes in my trading, but there are still many more to go.

And so, I have my dreams, goals and targets, but I must not be naive to think that this journey would be smooth sailing. Just because you have a target and you feel fired up doesn't mean you'll definitely hit it. Disappointment and discouragement will hit you time and again, and it is in those times where you don't feel so fired up anymore when the true test of your mental capacity and character surfaces. Self encouragement and positive confession doesn't come naturally, it takes sheer willpower to discipline the mind to think positive thoughts and the mouth to speak positive words. It is easy to do that when you're feeling fired up after a good book, video, or sermon, but what matters is that you're able to do so even during times of failure and discouragement.

Here is one of the governing verses of my life:
Proverbs 23:7 - For as he thinks in his heart, so is he.

Common Scheme of Course Peddlers

I hope this post can save some people money. Recently I've been rather bothered by the increasingly shameless marketing techniques of course providers, especially those from my country. I must admit, their marketing skills are top notch, and the amount of students that they managed to suck in is a testimony of that. I'm not gunning down all course providers as there could be legit and good ones out there. However, from what I heard and from the courses I've took so far, the dark nature of many providers is very apparent. I'll just describe the core and most powerful technique they use.

Basically, many course providers provide a private forum, a facebook group, a whatsapp group chat etc. Through the week they'll make many calls/recommendations, some will turn out well and others will not. There will also be students who trade those calls and will boast about their winnings or thank the mentor for the calls. Now the course provider will then take screenshots of the original recommendation posts + the winning outcome together with the student thank you posts and put them on their public site/forum/blog. Some will also include the actual trade records. The idea is to give the public an impression that they made those calls before the event actually happened and hence boost their credibility. What people don't realize is that the losing calls and losing student posts get buried under the carpet. Now these providers are not dumb, they do know that no one wins all the time. So once in a while they'll post a small losing trade with some golden words like "Trading is a probability game, no one wins all the time, as long as we keep our losses small we'll make money in the long run". Again statements like that connect readers to them and instill trust. Many will also portray a very close mentor-student relationship by posting mushy SMSes. Some will even put on a good guy image by encouraging charitable acts or claim that their goal is to educate the public so they won't be slaughtered by the manipulators out there. Now who is the slaughterer?

Oh ya I just remembered another technique which I've noticed a few times recently. I know of a few courses who advocate trading pin bars on a 50% retracement. First of all I don't see the logic behind it, there is absolutely no reason why price should turn at an arbitrary 50% level of a freaking bar. Do you really think some huge Goldman Sachs trader is out there waiting for price to hit the 50% level of a H1 pin bar to press the buy button? No, price moves from S/D zone to S/D zone, period. Every market, every time frame, every single turn. Check it out yourself if you don't believe, there is ALWAYS a zone or an ignored zone where price turns. The only reason why Fib levels, moving averages, trend lines, indicators etc sometimes work is because they coincide with a zone. The best traders I've seen trade purely on naked charts. Ah I digressed, back to the 50% retracement thing. So these providers will then take a pin bar which turned out well, post it on their public site with a description like "If you had traded this pin bar using our 50% retracement strategy you would have made a whopping 6R profit!". This really grinds my gears because some of these pin bars could be pathetically small and lousy ones that aren't even good to begin with. So if you take a small pin bar and trade the 50% retrace of it, you'll obviously get a very tight stop and a small move will net you a multiple R profit. This kind of stuff looks good after the fact but did the provider actually take or post the trade before it happened? Another common one is posting inside bars that worked out. Inside bars are everywhere on every time frame, it is easy to just pick a few winning ones to show how effective your inside bar breakout strategy is!

It took me years to see through all this and experience it for myself. It is dark and sad but true. There are many shameless and evil people out there. I still struggle with a mixture of doubt and jealousy when I see some of their after the fact posts, but I constantly remind myself that they're just posting the winners and not the losers. It does not profit myself to get bitter and emotional about it. Our greatest competition is always the man in the mirror. I must discipline myself to stay focused and committed to my goals, to improvement, to growth. Too many people waste their time debating, arguing, and shaming others on forums when that time could be better spent on the charts, webinars, or educational resources.

In summary, never ever trust any course provider who does not post their calls/trades before the outcome. It is not enough to see screenshots where they appear to have made the calls before hand to a private group of students. Please do not ever get taken in by that. Also, it is ironic but the best educational material I've found so far are free. James16 (though they also have a paid group), ReadTheMarket (though they are also going to start selling a course), Sam Seiden's webinars, LoveJoy's videos, PriceIsEverything FF thread, and many other forum threads. The thing is this, people can't seem to believe that they can learn tonnes from a forum thread. The material is often unstructured and messy, it requires days and weeks of digging through hundreds of pages before the pieces start to fall in place, and a paid course often seems like the easy way out. However, I've realized that many forum threads are really treasure troves of knowledge, but the treasure will only be found by those who're willing to put in the hard work and time to dig for it. So.... if one is not willing to put in the hard work, he probably won't succeed in trading anyway and no amount of courses will help him.

Whew enough rant for today, glad to get it off my chest. Back to trading! :)

Self Mastery

I really feel that a huge part of trading is about self mastery. The ability to make decisions based on sound proven methods, to trade according to rules and not P/L, to manage our emotions etc. Well that seems very cliche and I've read and learned that from the start, but as time goes by the true meaning of it is really beginning to sink in. I'm just going to say this: "IT IS SUPER HARD".

I don't know if it is just me. I wonder if there is anyone who managed to attain a certain level of self mastery in just a couple of months. All of us have our inner demons, and they'll manifest themselves over time through our trading results. One big one for me is that I feel very uncomfortable whenever I'm in profit, especially if it is a multiple R profit. I'll then find any reason to get out of the trade, be it a lower time frame candle stick pattern or some lame reason like I'm going to sleep soon. The good thing for me is that I recognized that and I'm slowly overcoming it. I'm happy with my past few trades because I trailed my positions according to my rules and did not get out early at the slightest sign of trouble.

Our issues will manifest one by one and will continue to haunt our results until we overcome them. I reckon the entire process will take many years. Some traders manage to attain a level where they're completely emotionless about their trades, that is obviously the highest level but I really feel one does not need to berate himself if he still feels the euphoria or fear when trading. The important thing is to still be able to stick to the rules even though your emotions are crying out to do so otherwise. That is the stage I'm in now. Recently I could really feel my flesh crying out to just take profits quickly or prematurely cut loss etc, but I managed to discipline myself and not do it.

A trading journal is super important, I never fail to be disgusted by myself when I study my trades in retrospect. However disgust is one thing, progress is another. I really make a point to be very conscious about recurring mistakes in my trading and implement rules to work on them.

Emotional control also involves circumstances which can be very unpleasant. For me this is the typical stopped out by 1 pip before price takes off in my original direction, stopped out because spread got ridiculous during news spikes, and other unforeseen circumstances. I'll name some from today. My MT4 broker decided to mysteriously remove all my pending orders. I reentered them and it got removed again. Only on the third try did the orders not get removed. That wasn't too bad because I didn't miss out on any trade. However what happened next was epic. My broker decided to not fill any of my pending orders. That includes limit and stop orders. Imagine my shock when price hit my stop loss and I was still in the trade. I then had another trade which didn't execute because my limit order didn't trigger. To test it out, I placed multiple small orders on a pair to see if they'll execute. I'm looking at it now and I've never seen anything like this before. Price is just moving up and down my orders without triggering them. Only market orders work. Something is definitely wrong with my broker today and I have to do something about it before I continue trading. Heck I can't trade even if I want to. Times like this require emotional control eh? :P

Oh well, enough rant for now. So many things on my mind recently, hope I'll have the mood to write more about them :)

Holy Grail Of Trading

The above screenshots are from ReadTheMarket, and this concept of PAZ and Engulf is claimed by some to be the holy grail of trading. There is obviously a lot more to it (how to identify zones, multi time frame analysis etc), but slowly the light is beginning to dawn on me. I was looking through my journal and I realized a lot of my failed trades were due to taking a trade without waiting for an Engulf. It is hard to put it in words, but the above concept really is the missing piece of the puzzle. Not expecting a new reader to understand the screenshots without thorough studying of the other Supply/Demand concepts at RTM, but really it is worth the effort.

Potential Long Setup on S&P Futures

S&P Futures

This is the kind of demand zone I'm very comfortable to touch trade. Uptrending market, very clear consolidation right below a resistance level and a strong breakout. Broken supply becomes demand. When price returns to this level, the chance of it holding is high. As of now the reward risk of this setup is almost 3:1. My only concern is that price is rather high up on the curve, and arguably it is at a funky looking supply zone so we don't know how much supply will kick in. I will definitely place a buy limit at the zone, and will only pull it if I don't like the way price is approaching the zone. By this I mean if price starts consolidating and basing just above our zone, I'll pass on the trade. This is because the base will act as a supply zone, that in turn will be a major trouble area for our trade as well as greatly diminish the RR of our setup.

USDCHF H4 Short Trade - Win

USDCHF H4

This may be a 1R+ trade but I'm not happy with it at all. I took the trade based on M30 PA. The reason why I did not touch trade this is because the supply zones are stacked, which means price could easily shoot through the bottom zone to hit the top one. As such I waited for PA before I took the trade, which came in the form of multiple rejection wicks/pin bars on the M30. I was very aggressive with my stop loss and placed it above those wicks rather than the entire supply zone, this gave me a very tight 27 pips stop loss.

Because the market was up trending when I shorted it, it is hard for the mind to believe such a big move down is possible. When I took the trade, I kept telling myself better be careful with this one because it is counter trend. I managed to persuade myself to TP when price formed a M30 pin bar off a M30 demand zone. Now herein lies a very important lesson. If you took a trade based on a H4 zone, DO NOT TP early until price hits an opposing H4 or higher zone. If your read is right, price should do just that. This is how many professional traders make tonnes of money, they enter as a scalper but hold as a position trader. They find low risk opportunities to take a trade on the LTF, but select their target based on the HTF.

What I should have done was to simply move my stop to BE instead of TPing early. Again I broke my own rules and got shaken out early. Look at that sharp move down, my simple rule of trailing the stop behind each supply zone would mean I have at least 6.5R of profits locked in now. In fact, I would have been 12R in profits at the lowest point. A freaking 24% increase in the account.

I also want to take this opportunity to discuss a very popular method of trade management - Taking partial profits at the first trouble area and trailing the remaining half. Two of the best traders I know (Redsword and Julexo) do that, many others do so too. However I'm still not convinced that it is the best way to manage a trade. No doubt partial TPing is very mentally and emotionally assuring as you're guaranteed of a winning trade. However, I believe that expectancy wise doing so is inferior to trailing the entire position. Just look at this USDCHF trade and my previous GBPCAD trade. Trailing the entire position would have resulted in a lot more profits. Indeed I will have a lot more BE trades if I do not partial TP, but I truly believe the profits from these runners will be far greater than those who only let 1/2 or 1/3 of their position run. Again who am I to correct those legendary traders, but like everything in life, the way to convince yourself of something is to test it out yourself. That is what I'm doing, if over time I'm convinced that trailing the entire position is more beneficial for the expectancy than partial TPing, heck that is what I'm going to do.

Each day goes by with me believing my dream is possible. The greatest obstacle to that is the man in the mirror, because I keep sabotaging my trades. The thing is this, we need runners to offset our losses and create that massive growth in the account. It is of paramount importance that we really let our winners run. How many more times must I commit the same mistake before I conquer this fear?

Common Pitfalls and Lessons From S/D Trading

Kinda in a blogging mood again so just gonna attempt to list them common pitfalls and lessons I've learned from observing the trades of myself and other S/D traders. I'm kinda lazy to look for example charts though so hope the following points are easily visualizable.

1. Trading a lower time frame zone which is just before a higher time frame zone. This may sound basic but I committed this a lot when I first started touch trading. For example we may have a nice looking Drop Base Drop (DBD) M30 supply zone, however there is actually a H4 supply zone right above it. The higher time frames represent the biggest institutions, so think about it. If you're a big market maker, there is a M30 supply zone but you also know that there is another bigger H4 supply zone just above. Greed is your nature, what do you do? You'll simply shoot price through the M30 zone to fill your sell orders at the H4 zone right? That way you not only get more sell orders filled (hence more commissions), you also benefit from the extra liquidity provided from the M30 bears getting stopped out. The same concept is also applicable to stacked zones (one zone on top of another), it is similar but I think the perils of trading a LTF zone which is not in a HTF zone is higher than that of trading a lower stacked supply zone.


2. When I first started touch trading a few weeks ago, I felt like a fish on land. Seriously it was very alien to me as I used to trade PA bars. My win rate was horrendous (thankfully on demo), but it also prompted me to dig deeper into my own trades and the trades of others. I started watching Sam Seiden's webinars all over again, and I studied Kenneth Lee's famous supply/demand thread thoroughly. I learned so much that I actually felt thankful for the losing streaks I encountered. I realized that it is absolutely important to be able to identify the best zones and be very familiar with Sam's odds enhancers. Now the term "odds enhancers" may suggest that those are just additional strengtheners of something that already works. I realized that it is not so. Trading supply/demand without the odds enhancers is account suicide. Just try touch trading every single zone out there, I believe you'll end up with a win rate of 30% or less. I see so many traders trying to touch trade zones that have been tested multiple times, others that treat every swing high/low as a S/D zone, and yet others who try to short every DBD speed bump supply zone in an uptrend. I've tried all that and had my ass handed to me. There are just so many nuances in S/D trading that makes all the difference.


3. I dare say that my ability to identify the best zones have improved a lot since I first started touch trading. There are two main price structures that I feel most comfortable touch trading. First of all is that tiny supply zone that forms just before the break of an obvious S/R flip level. If price breaks down and comes back to retest it, there is a high chance that this zone will hold. The second is simply shorting the previous DBD zone in a downtrend. If the zone is well defined, we really get a high odds and low risk way to join the trend. However once price starts breaking supply zones and is making higher lows, I'll no longer take any touch trade shorts as a trend reversal could have happened. This is a more conservative way of trading which I picked from up Alfonso in his thread. As with every trade, it is absolutely important to check where price is coming from. If price has already hit a HTF demand zone and is bouncing off it, I'll also refrain from shorting.


4. There are many ways of trading S/D concepts. The two main branches are touch trading zones and waiting for some form of price confirmation at the zones before taking a trade. After trying out both, I came up with a hybrid which I feel makes total logical sense. If a zone fits my criteria for a touch trade, I'll touch trade it. Otherwise, I'll wait for price confirmation first. So for etc if a zone is not fresh, very wicky, or it is a lower stacked supply zone, I'll wait for some PA bars or a LTF pattern like Quasimodo before taking the trade. Yes it will increase my risk, but it'll also increase my win rate. 

In the end, I just want to say that it is very very important to first be able to identify good zones. Even pro traders who wait for PA bars at zones are able to do so. I restudied the Price Is Everything thread, Redsword makes it look easy but seriously, the zones he points out are actually really good ones. The same goes for another legendary trader Julexo. I'm always a student of the market. Loving trading more and more still and really hope to be able to achieve my goals soon. :)

Quick Ramblings

Haven't been blogging much because for some reason I rather spend my time trading or focusing on trading material. Just want to jot down a few quick ramblings before I lose the blogging mood again :P

1. There are really all sorts of traders out there. Seriously I see many kinds of persona in forums, facebook groups etc, and like in every arena of life, one has to be very careful who he trusts and pays attention to. Some people are gifted with the glib of tongue, they're able to portray themselves as some trading guru, going around giving trading advice and correcting others. These people often only posts their winning trades after the fact. Mind you there is a huge amount of such people out there, some do so because they're course providers or provide some form of trading service, others do so because they enjoy the glory and fawning other traders bestow upon them. You'll often hear them say things like "That trade was so obvious, how could anyone not see it?", or "I knew it wouldn't work out, didn't I tell you so?", or "Sigh I only made 20% this week, could have been much better"....  I guess I'm kinda annoyed because I've wasted precious time trying to make sense or understand why the trades of these people work, when many times I don't even think they were good trades. I soon realized that I was right, many of these trades are lousy ones to begin with, they only worked because bad trades sometimes do end up in profit too. Such trades are many aplenty on forums, and one has to be very careful who he studies. Seriously do not ever ever listen to someone who only posts trades after the fact. A trader could identify 20 zones on the M1 chart, take all of them on a demo account, and probably 1 of them will result in a 10R profit. Post that trade on the forum and naive readers will flock to him and worship him. I thought a lot about it and this is my conclusion - I'll only render respect to the trader who is willing to post his trades the moment he takes them and not after the fact. Even so I'll only render respect to him if he is humble, generous, and willing to share and help others."The older I get the less I listen to what people say and the more I look at what they do." - Andrew Carnegie


2. Keeping to our trading rules is harder that I thought. I have no problem cutting losses when I should, but my biggest problem is taking profits prematurely. It has been my problem for months, and ironically still is. However, as I witnessed the destructive effects of this time after time, the significance of it is beginning to sink in. I have a dream, this dream sounds ludicrous at first but when you break it down, you'll realize that it is not impossible. This dream is to take a 10k account and grow it to a million dollars within 18 months. I did the math, in order to do so, one has to grow his account by 30% every month. Compound the profits monthly and a 10k account will grow into a million within 18 months. That will mean I have to make 7.5% every week, 1.5% daily. Now is 1.5% daily hard? I would say yes, but not impossible. I risk 2% every trade, that means I have to make 0.75R daily. To find out if that is possible, simply trade and prove it to yourself. I was analyzing my trades for last week and here is the shocking discovery. If I had stuck to the trading rules I had set for myself, I would not only have met my weekly target, I would more than doubled it. I'll post a trade to illustrate why.

   

   GBPCAD H1

   This trade could have been 9R (18%) if I had managed it according to my trading rules - trail stop above each supply zone. There is nothing magical about it, I simply took a short at a well defined supply zone. The problem is this - I was watching it on the M1 chart, and the trade put me in the green and back to the red about 3 times. It is very frustrating when you see a sharp breakdown and your mind goes "Yes this is it!", and the next moment prices retrace all the way back up and puts you back in the red. Fear sinks in, you wonder whether it was a fake out, whether you should just get out to be safe. Repeat that 3 times and the mind/emotions is totally drained. In the end I told myself screw it I'm just going to get out around breakeven, anyway I'm going to sleep and can't monitor the trade anymore. Can you imagine how disgusted I felt when price sunk the way it did the next day? This trade imprinted something deep in me. I realized that it is possible to make a million in 18 months, but I MUST stick to my rules. Did I expect such a runner? Nope. Does it always happen? Nope. But the key is this - The way to catch a runner is to stick to the rules. The tricky thing is this - Trailing a stop means you'll never get out at the exact top/bottom. You'll ALWAYS lose out on some profits. Also, perhaps 7 out of 10 times you'll not get a runner. It can be frustrating to keep getting stopped out at BE or a small profit. However, one must bear in mind that once the runner comes, it can make the week or maybe even the month. And the above is only one trade. There are a couple others that I also broke my rules and exited prematurely. As such, until proven otherwise, I'm going to believe that my dream is possible. Of course to achieve 30% monthly consistently is easier said than done, at some point the psychological stress of seeing the P/L fluctuate by the thousands will kick in. But I'll deal with that when it comes, right now I just want to focus on getting my strategy and discipline right.