” How much money did you make in the Forex market today?” Is it that important and do I really care? Today, I'm going to talk to you aboutsomething that may, on the surface appear counter intuitive, but once you hear whatI've got to say; you understand the principles and the mindset behind it, Ithink it should have massively helped you in your trading.
Now, when you ask mosttraders how they're getting on with their trading or are they having a goodday, they'll immediately reply with how much money they've made or how muchmoney they've lost.
Of course this is a very natural approach.
Now, if you makemoney, it feels good you can now go buy the things that you want and that's agood feeling.
So you've had a good day.
On the other hand, if you lose money.
It'sbad! It means you've given your money away to someone else.
Someone you don't even know.
You've got nothing in return for the hours that you've spent atthe screen.
You may even blame on someone else.
You may even blame it on the broker.
It's a bad feeling but quite frankly, this is the wrong way to look at winningor losing in the market.
The wrong way to look at a winning trade or a losingtrade.
The wrong way to look at your trading progress.
Now, I hope if you'vebeen following me by now, been watching my videos, you would have seen the one onthe law of large numbers.
Do go and check it out if you haven't already done so.
Sowe know that it's impossible to only have winning trades.
We know that when weplace a trade in the market we have no idea if that's going to be a winner orindeed a loser, and we should be caring about even less.
We know that we've got astrategy and we know the expected return on the strategy based on our backtesting, but we have no idea when those losses will com.
We also know that whenwe're trading, we should be risking the same percentage risk on each trade so inthat way, when we're having the inevitable losing streak, we don't getwiped out of the market.
And also when we're having the winning streak, thatwe're increasing our risk exposure in dollar terms so that we can capitalizeon those winning periods, as well.
Because all strategies will have the winningperiods, and of course, the losing periods.
So once we understand these principles, it stands to reason that a good day or a good trading day, is not about how much money that you've made.
It's about did you followyour trading plan? The trading plan that you back tested, in terms of strategy andin terms of risk management.
Did you stick to what you know works well? Didyou deviate from the plan and let your emotions dictate your action? Listen, this may sound a bit off the wall, but the worst possible trading day could bethe most profitable day in terms of the money that you actually made.
Our brainsare like finely tuned machines.
If we make money, which remember, it feelsreally good because we can go and buy all those things we really wan, but webroke our trading rules, then the chances are, this good thing that our brains lovewill want to repeat itself.
So we'll continue to break these rules in thefuture trades.
If our trading plan says we should only be risking, say 1 percentof the account on each trade, but because we decided on this particular trade, itlooked really good; high probability that so good that it can't fail, we decided toincrease our risk and it was a winner.
Indeed, we were correct.
Good feeling yetwe've conquered the market highly likely that the brains going to want to repeatthis feeling of success; repeat this feeling of being able to crack themarket and will be increasing the risk on other trades as well.
But the laws ofprobability, would it take that one day you're going to get wiped out.
Same formoving stops.
Remember a stop order is where you place an order in the marketto exit a losing position.
Now it doesn't matter who you are.
No one likes to getstopped out.
But if you move your stop because it was getting too close, and itresults in the trade moving back in to break even or even profits, then you mighthave the feeling of yeah, I'm now a genius! Absolutely wrong! If you move astop and it turns back into profit, you've had a bad day trading.
Becauseyour brain now, would repeat this feeling of being a genius and want torepeat this process of moving a stop, as it's getting close.
This is going to leadto a slow bleed of the trading account.
Possibly, into a complete destruction.
So, a good trading day is not about the dollars that you've made in the day .
It'sabout, did you trade your plan withoutdeviation? Did you stick to the risk management perimeters, and did you stickto the strategy rules that you previously set out? Now, you can stillhave a losing day in monetary terms but still have a great day if you've stuckto your trading plan.
A bad day is if you broke new rules and lost money at thesame time, but a really really bad day is when you break the rules and you makemoney, because your brain is going to want to peat this process, time and timeagain.
And it's going to result in you not being a trader but ultimately agambler.
So, what can be done to ensure that, going forward, from now on, everytime someone says to you, how you're getting on with the trading, you can sayit's going just great, thanks well? Firstly, you need to have a trading planwhich involves a strategy and some risk management criteria.
Then you need tomake sure that each and every trade that you take is complying with the tradingplan.
Now, a good way to do this is to have a checklist which is completed oneach and every trade before you take it.
It's very time consuming, but believe meit's a truly worthwhile endeavor.
That way, you can ensure that your trades arealways good trades and when you're having good trades you having a good day.
And when you having a good trading day, the profits will be sure to follow.
Now, if you don't have a trading plan or indeed, a strategy you may want to checkus out here at Forexsignals.
Got lots of material on how to construct atrading plan and risk management, and so forth.
I also share and teach variousstrategies which I trade live in front of the members several times a day onour live stream.
So, as I say you, may be able to check that out as well.
So a goodtrading day, it's not about how much money you make, it's did you stick to yours.
I hope you enjoyed the video.
Hope you found the content useful.
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Until thenext video! Happy trading! Speak to you soon!.