Stocks & Commodities V. 26:10 (36-39): Top 10 Trading Habits by Jody Samuels TRADING FOREX
Avoid That Trader’s Trap
Top 10 Trading Habits Here are 10 habits you can incorporate into your trading. They are simple and they work.
by Jody Samuels ere’s a story about two currency traders — I’ll just call them Frustrated Farah and Successful Stacey. Farah, who’s a technical junkie, has fallen into the typical trader’s trap. She is out of trading shape, with no business plan, no profits, and has very little discipline. She trades emotionally and hasn’t developed a trading plan, either. In short, Farah lacks a model for her trading business. There’s a good reason why she’s frustrated. Whip yourself into shape by learning entrepreneuri al FIGURE 1: THE TRANSFORMATION PROCESS. Stacey, on the other hand, used to be a skills and habits. technical junkie, but has transformed herself into a successful entrepreneurial trader. She makes money THE TOP 10 TRADING HABITS consistently, trades with discipline and unemotionally, and 1 Establish a trading business for the right reasons. operates with a clear trading plan. In short, Stacey is in Make a list of your reasons for entering the trading trading shape and has the foreign exchange trader’s edge. business. If your main reason is to make a quick There’s a good reason why she’s succeeded. buck, you may as well go to the local casino, buy a How do you avoid falling into the trader trap? Let me tell lottery ticket, or look into the get-rich-quick schemes you a little about my own trading history. I was a successful you find on the Internet. Many people are attracted investment bank trader for 15 years. When I left the instituto trading because it appears to promise more money tional business and started out on my own, I realized there for less work, resulting in an independent lifestyle. were many traders who wanted success but couldn’t attain it. And it can, but not without dedication and hard Why? Those traders had the technical knowledge, they had work. It also helps if you have a passion and a love learned about Fibonacci, support and resistance areas, chart for trading and strongly believe that your heart and patterns, moving averages, and other technical indicators. In mind are in the right place to do it. fact, they had learned all of the technical aspects of trading that should have helped them succeed, but they were still 2 Complete a trader’s business plan. For many people, looking for the trader’s holy grail. trading is a hobby, while for some, it’s a business. Technical knowledge of trading systems alone, I realized, Where do you fit in? If you want to make trading a does not a successful trader make. Learning entrepreneurial hobby, then treat it as a hobby. But if you want to skills and lifelong habits does. When I looked closely at the make some serious money, you have to treat it like top traders, I saw that they were all entrepreneurs, and they all a business — even if it’s a part-time business. As had developed good habits. They treated trading like a most people know, there are many aspects to buildbusiness, and that made the difference between them and the ing a business. All entrepreneurs can attest to that.
H
restWith of the mytraders. skills as a forex trader, together with what I’d discovered about other successful traders, I developed a system that embraces an entrepreneurial style to become successful. My system is based on cultivating 10 habits that, if followed, save traders time and effort, help them make more money, and encourage them to achieve their full potential as forex traders.
Imagine building a trader’s business plan, which will be your blueprint for success. Take that step toward making trading your part-time or full-time business.
3 Define your goals. How much fun would it be to go to a hockey game where there was no goalie? How
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Stocks & Commodities V. 26:10 (36-39): Top 10 Trading Habits by Jody Samuels TRADING FOREX
interesting would it be to go to a baseball game without a home plate, or a basketball game without a net? How far can a game go without goals? What would be the point? Even businesses have goals; you wouldn’t get far without them. You need to thoroughly think through your specific goals for your trading business. In defining your goals, answer the following questions: • Do you plan to trade part time or full time? • What time of day will you set aside for trading on a consistent basis? • What specific goals do you have about daily, weekly, and monthly profits and returns? • Do you have certain metrics that you are tracking on a weekly and monthly basis? • How do you define a successful trader?
4 Commit to your education with a trading coach. How do successful performers structure their learning in any field of endeavor? They have a coach and they build their skills by studying, learning, and practicing. Most expert performers engage mentors at various points in their careers to help them learn and grow. If you think you can train on your own, you’ll need to define structures to keep you accountable and on track. To keep yourself on track to achieve your goals, think about getting a coach. Often, it’s too easy to get locked into your own head and your own ideas.
5 Understand and exploit your unique trading personality. There are many different trading styles because everyone is unique. Different personalities are better suited to trade with certain styles. If you enjoy sitting in front of the screen watching the market action all day long, you may prefer momentum trading or daytrading. However, if you like to analyze the markets, establish your trade plan, and let your trade play itself out, you might be better suited to swing or position trades. Neither style is right or wrong. What is key is finding the style that suits your temperament and personality.
6 Follow a s ystem. If you look at successful organiza-
7 Plan the trade and trade the plan. The path to greatness lies not only in our performance, but also in the systematic practice we put into the performance. Trading mastery is a function of internalizing market patterns, rehearsing execution skills for trade entries and exits, and learning from constant market feedback. Without a trading plan, our emotions get in the way and we run the gamut of fear and greed. Planning the trade and trading the plan is the practice you need to develop.
8 Measure you r perf ormance. Elite performers such as chess masters and concert pianists study and practice daily in order to constantly improve. They keep notes so that no aspect of performance is overlooked. Look at the performance metrics that professional traders monitor to figure out their strengths and weaknesses. Keeping score builds the motivation to continuously improve. It also tells you which areas need improvement. Track every trade you make and take stock every week or month, just like you would take inventory in a business.
9 Learn the secrets of successful traders. If you study the successful traders, you will see that they have ambition, determination, patience, and a positive attitude. They usually hang in there, more determined than ever, when others throw in the towel. They take notes and learn from their mistakes, applying these lessons to succeed the next time around. Successful traders thrive on independence. They are take-charge people who can come up with creative and intelligent solutions. Trading needs a lot of stamina, and successful traders have that in spades. And they never doubt they are worthy of success.
10 Add balance to your life. If you adopt a holistic approach to trading and realize that it shouldn’t be your whole world, you’ll better achieve the work– life balance that we all strive for. You’ll need to ask yourself how trading fits into your life, how you are planning to simplify your life, what the rewards will be if your trading is on target, and what kind of a life you have outside of trading.
tions such as Microsoft, Federal Express, and WalMart, you’ll find these companies are doing the same thing, the same way, every day — consis-
It takes 21 days to establish a habit. I know these habits work not only from applying them to my own trading but also
tently. They all arrived at a winning formula that they execute on a daily basis. As a trader, ask yourself if you have the winning formula to get that trader’s edge. If you do, are you executing that formula or system consistently, or are you still in the technical trader’s trap, always looking for other systems to use? If you have a system, follow it.
from traded those traders I have Oneable example a client who for three yearscoached. and wasn’t to putistogether three months of consistency in his trading results. After applying these 10 positive habits, he has made between 5% and 25% return on his trading capital every month for the last 12 months, bar two. Another client tells me this program has affected his family life in many positive ways. He has
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Stocks & Commodities V. 26:10 (36-39): Top 10 Trading Habits by Jody Samuels
incorporated weekly goal-setting sessions with his family, and this has led to consistency in trading. I’m confident that if you apply these habits, you will begin to save time and effort, make more money, and be well on your way to achieving your full potential as a forex trader. Jody Samuels (www.fxtradersedge.com) is a leading coach for successful traders and the creator of the FX Trader’s EDGE program. Samuels’ trading expertise spans the finan-
cial, currency, and commodity markets as a trading professional for a US global investment bank and sales professional for an energy company.
SUGGESTEDREADING Samuels, Jody [2008]. “Determining The End Of The Trend,” Technical Analysis of STOCKS & COMMODITIES, Volume 26: Bonus Issue.
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