The 5 Steps To Becoming A Trader

This is the best truth I have read about trading in the 4 years I have been trading. I hope you find it meaningful too. Below is the link . Enjoy.
http://www.edheath.com/uploads/2/5/5/6/2556719/5_steps_to_becoming_a_trader.pdf?utm_content=buffer72773&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Understanding the phrase ‘when you hit your target, leave the markets’

As a young trader, about 4 years ago, like all other traders, I read a lot about trading on anything that I could land my hands on. For those of you that know my background, you must have guessed that I spent lots of hours online reading anything on the internet related to trading. 

I soon discovered that most traders would suggest that one should leave the markets after hitting their targets. I understood it to mean that one should have a target and once hit, they should stop trading. 

I actually started trying it out on live accounts. I would set a target of 500 USD per day on an account of 5,000 USD and if I hit the target (made the 500 USD) maybe at mid night, the following day, I would not trade. I would convince myself that I had hit my target so I would have to let go of all my trades.

Soon, I realized that daily targets never worked that well for me.  I would set a target of 500 USD but on some days, I hit stops of more than -1000 USD. I had to adjust. So I started setting weekly targets. Which if I managed to hit in the middle of the week, I would stop trading for the remaining days of the week. But again, some weeks, I would never reach my target and end up making losses. So I modified my strategy to set monthly targets. However, along the way, I realized how wrong I was. Not that targets are bad, but I was totally messing up the whole concept.

Four years later, I now understand what the phrase ‘when you hit your target, leave the market’.

It basically assumes that as you were setting the trade, you placed your stop loss, your entry and your take profit (target). Should you hit the predefined target, then leave that trade. Unless you had pre-defined to stay in and rock in more profit. Otherwise, once take profit is hit, leave that market (trade) don’t be deceived that the trade is still rolling in your favor and you dive back in. 

Also it does not mean that when you hit your target, you should close all your other trades and go to have fun. No. It means that you leave that particular trade and let the other trades play out their own way. 

Let me use an example below. On my charts, blue lines are support/resistance, the brown lines are my entry and stop loss and the green lines are take profits.

As you see from the above trade, after the trade hit take profit or target (green line), it continued going down. Many a trader are tempted to dive back in and make extra pips. The most right thing to do is to respect your pre-defined target and leave that market after hitting your target.

You can even close the chart and monitor your other trades if you have any. This is what it means. To respect the pre-defined target regardless of what is happening in the markets. Otherwise, you will make the money and when you dive back in, you leave all the money you made in the markets and end up in negatives.

When traders say ‘Leave the market after hitting your target’, they mean, leave that trade. Unless you had set multiple targets. It does not mean stop trading and go to have fun. No. It does not mean close all open trades since you have hit your target on one trade.

In simple terms, the phrase, ‘Leave the markets, when you hit your target’ means that once you have hit your target on a particular trade, get out and be happy with your target on that trade. Just that.

 

When it is right you know it is right – none need tell you

A legend is told about a girl who kept herself pure. She was the good girl whom everyone in the neighbourhood respected. She was beautiful and well mannered. She had many men pursuing her but she always turned them down politely and with a smile.

However, as years passed, she knew she had to finally choose one.  She had no idea how to tell which one of the many men was indeed the right one for her or if they were just interested in using her. She pondered over it for long and could not get a solution. She decided to ask her mother. Her mother had never failed her over the years. She always had a solution to all the problems she had encountered over the years. “Mother”, she asked “How do you tell if a person especially a man is the right one for you?? How do you know that this particular person is the one?? ”.

The response surprised the girl. Her mother replied “You will know when the right one comes long”. The girl probed further and asked her mother, but how will I know he is the right one? The mother, not even looking at her or even raising her voice replied, “My dear child, when it is right, you will know it’s  right – none need tell you.” The girl was not satisfied. But she knew better not to probe any further. Like any other wise person, she knew that certain things are unexplainable. 

The mother meanwhile raised her eyes and looked at her daughter’s face. She realized the uncertainty her daughter was going through. However, like all mothers, she knew the best was for her daughter to dig deep in her own heart and find the light that will lead her hence forth. She was aware that certain things in life are unexplainable. They must be experienced to be understood.  One must be willing to get lost, so as to be found, to be hurt so as to find love, one must be willing to lose money as part of research and development before they can make money. The mother knew that patience and discipline are sacrosanct to her daughter’s success of finding the answers to the questions she had asked.

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You must be wondering how above the story is connected to trading. Truth is that it’s not. I am only interested in the last part “one must be willing to lose money as part of research and development before they can make money”. Many of us traders are used to losing money in the markets. Whether you accept that loss or not is a story for another day. But any consistently profitable trader will accept that losing trades are a part of winning the overall game and that every loss is one step closer to a win, or a string of wins, thanks to the variance in opportunity flow.

So each loss you take, what does it teach you?? Does it speak to you?? Do you realize and agree that it was indeed a wrong setup?? Was it a good setup but taken at the wrong time?  Truth is that every trader must find their own way of trading, their own strategy, and their own edge. You can always copy others and make it but ever wondered why profitable traders take the trades they take, why they get out when they do, why they avoid the markets at certain times and gladly walk away from the charts? Many cannot explain it. They just know. And no matter how much you convince them, they will never accept. For when something is right, you just know- none need tell you.  But like the daughter in the above story, how does one know that this is the right setup?? How does one know when to walk away, when does one know when not to place a trade?? How does one know when to get out of the trade??  The answer is simple. When it is right, you will know it is right – none need tell you (to trade or not trade, to close a trade, or stay away from the markets). Certain things cannot be explained. They must be experienced. You must be willing to spend lots of time and money in research and development before you can actually make money in the markets.

 But above all Patience and discipline are sacrosanct to trading success and seasoned professionals will happily walk away from their charts when their trading edge is not manifested.

If you are still as confused as the girl in the above story, in box me – sales@ikazooba.net  and I shall try to help point you in the right direction. You will travel the road alone. Only those willing to be lost will ever discover.