This morning I received an email from someone who knows someone who knows me, and recommended my course. The mutual friend is Mark T. When Mark’s friend was thinking about signing up for my course, he had some questions, so Mark gave him my email address and said “You should talk to her about the course and ask for the Mark T Discount.”
Ha ha, I love that! I really do care about traders who become my friends, and I plan out great trades every week because I want you to make money. I want to make money too! I realize we are not in this alone. At least we don’t have to be. I’m not even a social person, in fact I could be borderline asocial. I keep to myself, I still don’t have a Facebook and, even though I would like to join a running club, I don’t do it. But I do talk to traders everyday. Yesterday, I figured out why talking to you has been so good for my trading.
I went to my daughter’s last high school cross country race yesterday. She is a senior and this was a big deal, running the final race and saying goodbye to something that has been a huge part of her life for many years. She ran a great race, 10 seconds faster than her goal, and all was about to end well as we were waiting for the awards ceremony to commence. She was running around (feeling like stud, I’m sure) having fun with her friends, and other parents were doing club things, and collecting in groups socializing and having a great time. All of a sudden it hit me. I could see “accountability” everywhere, and I was struck by how profoundly success follows accountability. It improves life in every arena. My daughter, a captain on her team, was accountable to her teammates to run hard even though it was the last race and she was ready to be done with it. She had put it out there to lead by example. The teammates followed her around like little puppies, and many of them can out-run her, but she was their leader and they were accountable to her. They planned goals together, planned for how to deal with the pain together, and there was a powerful energy in it that carried them all to perform amazingly. It’s quite something. No wonder all the parents had tears in their eyes. I could see it, Accountability, like magic glue or something that held people to a level of commitment which leads to a level of achievement that is nothing less than great.
What was I doing in that moment, waiting for the ceremony to start? I was sitting on a bench off by myself, looking at my trades stacking up on my cell phone. It was great! My trades were doing well, safely set to break-even, and I was talking to you on Twitter!
I know accountability is scarce for people like me, who trade from the privacy of their homes or offices (or a park bench). Accountability is magic though, and is very good for our trading practice. So I’m happy to participate with you and I feel the energy and the magic of accountability in trading that we plan together. It’s not perfect but it’s better than solitary confinement. It’s a way to stay focused on my own trade plans and see charts and setups from other people too. When I see other people do what they say and reap the benefit of a winning position, it makes me stronger every day. Here’s to you, Traders!
So, I got an email from Mark’s friend, and he listed four things that are important to his trading, and he wondered if my Combo Course would be a good fit for him.In case you’re thinking about the same things, below is my answer to him, followed by a link for The Mark T Discount available to anyone until November 15th.
Thank you for your email. I would be happy to talk to you about trading. Most people haven’t spent any time reviewing their goals before joining a class, so I would be happy to give you a thorough response. It’s always nice talking to traders who want to think!
I will review your list of trading goals in order:
1. PRESERVE CAPITAl
I completely agree. Did you know that the success rate for entry-level Forex traders is only 3%? That is,only 3% of people who set out to learn to trade the currency markets stays with it long enough to make a profitable career. Most people lose about $5,000 over the course of 2 years and then drop out. (These are loose statistics by the way, and I would have to dig up some support to back them up, but those are roughly the numbers). The reason is not because trading is difficult. You have probably already experienced the relative ease of learning a trading system and finding entries and exits in this 24-hour marketplace; but you have probably already discovered how easy it is to also give it back. I think the reason is because people get pie-in-the-sky high hopes and they turn a blind eye to their failures and keep throwing money out to trade after trade. I call it random trading, and none of it means anything. I wrote an e-book about random trading, called You Already Know. Perhaps you already saw it on my site, but if not you can download a copy from this link:
You Already Know
Back to your first point. Preserving capital is only difficult because people quickly get addicted to the feeling they get when they close a profitable trade. In order to grow a retirement account from a $1,000 trading account, you only need about 6 years and 5 trades per month. That sounds so logical to spend six years building a retirement account, right? But in the heat of the moment, we want it right now. We say we want to trade for the rest of their lives, but in reality the idea of putting in six years to build our wealth flies out the window during the day when we want to take another trade or another 10 trades! We go ahead and toss our profits right out the window with all our good sense in that hot moment.
It’s hard to preserve capital because trading is fun and some part of every stay-at-home-trader wants to have fun. If we could stop trading each month after our first 5 good trades we would be golden, but when 5 trades come in the first week of the month, no one stops trading, (including me, by the way!) It’s not that we’re “greedy”. That’s a bit harsh. But we think if 5 good trades “rocks” my retirement account, wouldn’t 10 be better? There is no end to that thinking, and we lose site of the goal, and allow more risk to enter our finances than was necessary.
All of that is to say, I agree with preserving capital. The operative question is how to do that. Less trading? Less risk? Better strategies? It really all comes down to the trader.
2. Take trades with risk/reward of 2:1 or better (most of the time)
I completely disagree. If you want Risk:Reward of 2:1, you don’t want me. And I’m totally ok with that. I don’t take offense. Believe me, there are plenty of people who will soap-box about an up-side-down risk:reward practice such as mine. You can find them all jamming up forums at ForexFactory, but you won’t find me there.
I have so much to say about Risk:Reward, that you’ll have to wait till my book gets published to get my whole spiel. It is a deceptive piece of a trading strategy and has come to mean nothing. Same with win percentage. These statistics don’t help anyone trade better.
Fact is, the more room you give a trade the higher your win percentage. But that doesn’t mean you’ll end up in the green! You could trade 100 trades in a row without a loss by not using stop losses, and in fact, I have done that. My setups are so solid and they almost always go in my direction (eventually) and placing the stop only insures that I will take a loss now and then. So should I use a stop-loss? Yes, but I would rather risk 3 to gain 1, not the other way around. A trader needs to know what his/her trades can do before applying a risk:reward to the strategy.
While I believe in strategies that don’t use stop-losses, I do not trade without a stop-loss, and I do not encourage people to trade without a stop loss. I’m just saying that the more room you give a good trade, the more likely it is to succeed. If your strategy is crappy it doesn’t matter how good the R:R is, the trades will not produce. If your strategy is good, R:R is a moot point.
Most of my trades are placed with stop-loss of -50 and profit target of +30. When something goes wrong, and I’m stuck in a trade that I still believe in, I’m willing to give it a maximum of -70 pips. I have to pick that maximum draw-down number in order to know how much money to place on each trade. I consider “risk” in terms of what percentage of my account I’m willing to risk on one trade, so I need to know my worst case scenario. I use the number -70 as my worst case scenario so I know how much money to put on my trade. It has nothing to do with how much I expect to gain in the trade. I don’t remember the last time I took a loss over -50, because it hasn’t happened much this year, but I use the maximum loss number to determine trade size, and it has nothing to do with how successful my setups are expected to be.
I try to enter trades when I’m expecting momentum. If I am right (with the timing), I can move my stop to break even very quickly, and then just walk away. If I am wrong about timing and momentum, I’m willing to wait a little while, but as the setups falls apart, I can usually close the trade with -10 to -30. I hardly ever wait for my stop loss. My initial risk was -50 or even -70 on occasion, but within 20 minutes moving my stop to break-even means my Risk:Reward is 0:30. It doesn’t get any better than that. And with a “usual” loss of -30 my R:R was 1:1. Therefore, R:R is meaningless (to me).
3. Get 20 pips each day consistently (more great) with little drawdown (i.e. from the edge)
I love this! I completely agree. And I think Edge Trading probably does this very well, too.
I try to get 30 pips with each Combo trade, and I usually trade a space that has 50 to 200 pips of “room.” People ask me all the time if I’m frustrated when I closed the trade with +30 and it went all the way to +200. The answer is no. I can get 30 pips over and over and over. Can you? If my trade is up 20 and the market movement slows down, I just take it. I am ALL IN FAVOR of just making money, and the way you do that is close your trade with profit and don’t try to hold on for the 100 pip winner. Repeat tomorrow.
There is nothing wrong with holding one once in awhile, but not until you have made your money. I have a blog post about that:
Hungry Trading And Fat Trading
4. Trade 2 hours/day, but no more than 4
Once again, I agree. I don’t think you need to trade more than 2 hours!
I spend about 4 hours a day but I write a lot of analysis for multiple sites, and that takes time. If you know the pairs you trade, you know how to use your indicators, charting should not take more than an hour. You might want to do that a couple times per day. You might check in and see that you’re done for the day after 15 minutes when no trades are setting up. I don’t waste my day in front of my computer
My course is already at a sale price, but I really like Mark, so here is an extra 10% off for the Mark T Special! I am happy to do that for you, especially since you come well recommended as someone who cares about making progress as a trader.
The Mark T Discount Link
If you have any more questions, let me know. Good luck!
Be calm, trade well.