The 5 essentials of ‘unshakable’ trading

Happy New Year!

I hope you and your family had a happy festive period and didn’t overindulge too much.

Anyway, the markets are back in action, and the brokers returned to full and normal hours this week, so it’s back to business…

Now, the big thing at this time of year (of course!) is the dreaded New Year’s Resolution.

Whether it’s a fitness goal or a financial goal you’re working on, ill-chosen courses of action can do you more harm than good.

It’s easy to get swept up in the enthusiasm for change without really taking time to consider if it’s all leading to a positive outcome for you.

That’s why we’re taking a look at common-sense trading approaches today.

If you’re kicking off 2019 with new trading goals, maybe even a brand new trading strategy, take 5 minutes to run it all through my 5 filters for ‘unshakable trading’ first. Make sure your New Year trading plan isn’t likely to turn around and bite you instead!

The 5 Essentials of ‘Unshakeable’ Trading

1) Truth: Does your strategy or trading approach have a logical basis? Does it take into account the ‘truth’ of real-time trading?

I’m a big believer in Price-Action trading (trading without indicators) because it lays the market completely bare – you’re letting the MARKET reveal to you what it is thinking. But make sure you’re not trying to force your own will on the market by expecting a fixed amount of profit every day, or a set amount of trades per week…

TIP: Let the market show you when to enter trades and when to rake-in your profits by following PRICE-ACTION.

2) Trust: Do you have complete trust in your trading system? Are you willing to accept a random distribution of winning and losing trades knowing you can make money over the long term? Can you pull the trigger on your trades without hesitation?

Having trust in your system and your ability to trade it are the essential building blocks of trading with discipline.

3) Discretion (or ‘The freedom to decide what should be done in a particular situation’)

Do you have a ‘safety-switch’ built into your strategy? Do you know exactly when you shouldn’t trade?

Perhaps you should avoid trading when an economic report is due. Or when extreme volatility hits the market and you don’t know the reason why (it could be some geo-political event yet to hit the news – bombings, political assassinations etc…)

Or, as we saw with the USDJPY ‘flash crash’ last week – a perfect example – when low levels of liquidity are in play due to globally recognised holidays, or whatever.

TIP: Make sure you consider exactly when you’d be better to stand aside and let the dust settle instead of wading-in with lower probability trades.

4) Responsibility: You simply must be willing to take responsibility for your own actions as a trader.

We’ve all placed trades the wrong way around – buying instead of selling – or entered a typo on the price and missed a good trade, or any of a hundred other ways you can trip yourself up.

There’s no shame in making mistakes, it’s the ability to learn from them that can give you your biggest breakthroughs. There’s no mileage in blaming other parties for trades that don’t work out in your favour.

TIP: Keep a daily journal of your trading exploits, warts and all. Read back through in from time to time. You’ll be surprised at how far and how quickly you can make progress without really noticing.

5) Reason: You must be able to think things through clearly – to understand what’s going on when you look at a chart and to arrive at your trading decisions logically.

It means if you’re right at the start of your trading journey you will need to start building-up your knowledge of the markets.

And the best way you can do that? Get a bit of background reading under your belt then jump in and get some real-life experience. Nothing beats the knowledge you will acquire by testing things first hand.

Just make sure to keep risk and exposure in check while you navigate the inevitable ‘apprenticeship’ period, it’s pretty much unavoidable.

And common sense dictates you won’t achieve much greatness without laying those firm foundations first!

Wishing you a happy and prosperous 2019!

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