Lessons from the Pros

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The Silence Between the Notes

I have recently returned from another amazing trip to Online Trading Academy Headquarters in Irvine, CA, and as usual I am totally re-energized. There is something about getting the chance to spend time with my fellow members of the Online Trading Academy community which always puts a smile on my face and helps me recharge the batteries for the coming months ahead. This time around I was fortunate enough to spend a number of hours talking with the founder and President of our fine company, Eyal Shahar. One of the many things which strikes you most about Eyal when you meet him, is his way of thinking. He has a unique ability to get you thinking in new and different ways, well outside the normal. In fact I would say that he has always managed to help me to consider things from different perspectives which I may not have considered before.

One of the many topics we discussed at length was the importance of attention to detail. In any area of life we should always pay great attention to the small things as well as the big things. In fact I would go so far as to say that one of the biggest mistakes anyone can make in life is to only focus on the “bigger stuff” and overlook the things which they think don’t really matter. In the vast majority of cases we can see that it is often the case that in reality, it is actually the attention we give to the smallest details which makes the greatest impact in our results. The reason I am sharing this notion with you is because I have believed in this outlook for some time now, yet it was also reaffirmed to me during one of my conversations with Eyal and it got me thinking about the subject and how it related to trading on so many levels. Eyal said to me, “Always remember that it is the silence between the notes that makes the music. Without the silence, the notes are just noise.” I have never heard this saying before, although I was assured that it had been around for some time but nevertheless it makes so much sense and I immediately thought about its implications within profitable trading.

You see, I meet so many newer traders who are seeking guidance and knowledge to help them on their speculative journey and while most are incredibly motivated (much like I was when I first started and continue to be to this day), they are often still rather unaware of the disciplines and practices required to attain consistency in trading the financial markets. The mistake is often made that truly profitable trading is the result of hours at the screen and high frequency of trading activity. Over time and with the right education, experience and support, it becomes apparent that this is far from the reality.

Let me draw your attention to a screenshot of the last month’s activity for our Graduate Pro Picks. Please be aware that these are not actual trades taken in a live account but are in fact educational trading ideas which are posted ahead of time and have the results tracked in accordance with the actual market movement. They are primarily designed as an advanced educational tool to support the ongoing development of our graduates. Remember that every trade is planned ahead of time with stops, targets and management, and the results are shown whether it be a win, a loss, or a breakeven. Here we have a selection of Pro Picks taken from February 12th to March 5th in Forex (we have them for all of the major asset classes as you can see):

Using the Trader's Dashboard

This last month (at the time of writing this article) has most definitely been a quiet month in the world of Pro Picks. Notice how we had a few winners and a few losing trades too, although as expected the winners were overall larger than the losers. However, the more striking aspect of the above data is in the fact there were a number of trades posted which never met entry during this period. I have highlighted them in the purple box. In fact, there were more trades which did not trigger, as opposed to ones which did. This may be striking to some of you reading this right now but in the realms of professional trading this is very common.

One of the biggest mistakes in the world of the amateur trader is in their thought process and approach to the market. I understand that the Global FX market provides plenty of opportunities daily, however we still need to filter these and only use the ones which have the greatest degree of odds stacked in their favor. The typical novice trader thinks that part of successful trading is actually pulling the trigger as often as possible. They usually believe that the more they trade, the more they make, which in reality couldn’t be farther from the truth. This is that concept of “the silence between the notes” we were talking about previously. Less exposure means less risk in my book. Sure we need to actually take trades when we see them, but only the ones which match our plan. If it does not meet the plan, it certainly does not merit our attention. One of my old mentors always used to drill into me that the trades we don’t take are often more key to our ongoing success than the ones we do take.

This “silence” is a concept of trading which is rarely spoken of in most articles and media and one that I firmly believe needs to be addressed more often than not. In fact, I would say that of the many reasons why a trader should write and use a detailed trading plan, one of the more vital aspects is found in its use of a filtering tool to highlight only the lowest risk and highest potential reward trading opportunities on offer. In two weeks I will be revisiting this “filtering” concept in greater detail and talking about how we can apply the “silence” in our trades in the FX market on a more frequent basis. I hope you found this useful.

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.