Lessons from the Pros


Definitely, Maybe…

o the uninitiated, trading and investing with consistency can present itself as a daunting task to say the least. While the actual principles of buying and selling in any market are essentially rather simple in nature, putting these to plan in the live market on a daily basis can be far from easy for the newer trader. I guess this is why the statistics do not lie: there are around 38 million active trading accounts in the world today, with about 95% of those account holders having no formal education in market speculation whatsoever. Of these retail traders and investors, about 90% lose and 10% make money. A daunting state of affairs when the statistics are laid out like this and thus no surprise to find that many aspiring traders and investors fall by the wayside after numerous attempts to make their speculating activities work on a consistent basis. However, here at Online Trading Academy we know that success in the markets comes from arming yourself with two very distinct weapons. Firstly we need to get the right education from those who know what they are doing in the markets and secondly, we need to have the ongoing support throughout our trading to keep us on track when questions arise.

As I said at the start of this article, trading the FX markets, or any other financial markets for that matter, is actually a simple task but factors like emotion, doubt and impatience tend to stop many novices and even seasoned traders in their tracks from time to time, making the whole speculation process not as easy as it should be. One of the unique teaching tools we employ in the Academy, is the crown jewel of our educational content called the XLT (Extended Learning Track) Program, which is an ongoing online teaching environment. In this web-based program, we educate graduates of our classroom courses in the Live markets, showing real-time trading opportunities and scenarios on a daily basis. Our students have the chance to look through our instructor’s eyes and see what they are seeing, a process which allows them to build consistency and discipline and get trading at the same time.

I was personally leading a live XLT session on Thursday 19th July in the currency markets and towards the end of the session, I was asked if I could take a look at the Australian Dollar Futures contract by one of the students:

sevans 20120731 - xlt-screen
Take a look at the screen shot above. This is a screen-grab of the recording of the live session. You will see my name at the top left, with a list of the students participating below and their questions coming in on the chat box. The main screen with the charts, is me sharing my PC desktop and charts with the class and shows the date and time as it was happening. The student posted the highlighted question saying that they wanted to sell the Aussie Futures contract (AD) but needed some guidance. At the time we were in a strong long-term upwards trend in the AD but the student knew we were approaching a level of Supply. As we looked into the charts deeper for an opportunity to get short, more student comments came in:

sevans 20120731 - xlt-student-comments

By now, we have drilled down to a smaller time frame to highlight the origin of the Institutional Supply level and we were looking for a short entry at 1.0356 with our stops just above 1.3092, the point at which we are proven wrong. Notice how another student in the XLT posts his comments how he was in the short trade himself and that he had already made 215 pips by being long on the currency before closing this out and taking the short (comments are highlighted in green). I am drawing your attention to these comments for a specific reason. This student had already successfully traded the pair to the upside, closed out the trade and was getting into the short at the supply at the very same time as I was showing the entry to the class. Clearly this is a trader who knows what they are doing, has a plan and follows it. Yet, if you look to his second comment in the chat box, he expresses concerns as to whether the level may fail to stop prices moving up. When I saw this, I remember asking him if this changed his mind about taking the trade short. His reply was a resounding “no” but he still has his concerns never the less. I would like to pat him on the back for fighting his feelings and taking the trade, as this requires discipline to do. So what is my point in telling you this? 

I have been trading for almost eight years now, have taught thousands of people worldwide and worked for a fund, yet I would be a lair if I said that I never doubted my plan when taking a trade from time to time. It is human nature to doubt oneself from time to time. I wouldn’t be human if I didn’t! However the difference between me and a novice trader is actually quite minimal. I will never let my doubts get in the way of taking a trade which meets the criteria of my trade plan. I take each and every trade without question, as I know that I can never really know what the outcome will be. In the XLT program, I work with students who have been taught to recognize trade setups and can do this as well as I can but they, like me have a little doubt from time to time, even when they are knocking them out of the park. My job as their instructor is to make sure that they are following their plan, managing their risk and being patient. It does not matter what you think about the potential outcome of a trade. It only matters what you do when an opportunity arises on the charts which meets the rules of your trade plan.

 Let’s take a look at how the trade worked out:

Our supply level held nicely in the end and while it did come close to the stop order, it did drop well and hit both targets as planned in the live XLT session beforehand. Think about how the student or even you would have felt if you had passed on this trade because of what your feelings were telling you, as opposed to what your plan was telling you. In my opinion, the greatest foe of any trader once they have gotten the right education is doubt. There is absolutely no point in learning how to trade and recognize low risk, high reward levels of supply and demand in the FX markets, if you go on to pass the trade when the opportunity arises. Stick to the rules, manage your risk and execute your plan flawlessly, for nobody can define your trading success but you!

 Wishing you a top week,

 Sam Evans


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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