Lessons from the Pros


What You Believe Is True

As of late, I have been making a conscious effort to reengage myself in my own personal development, away from the arena of trading. As far as speculation goes, it has become a simple process of following my rules, sticking to the plan I have in front of me and remaining patient and disciplined at all times. This is how trading in any of the financial markets should be and once you know yourself and how to control your behavior, it becomes easier sticking to stops and letting winners run and not allowing the emotions get in the way of the trade working out.

I have always encouraged my students to put the time and effort into attaining the “less is more” approach to their currency trading. Being a full-time trader does not mean in any way that you have to sit in front of your monitor all day waiting for a setup, afraid to even go to the bathroom in case you miss an opportunity! In fact, I would say that it is the complete opposite. Look at the charts, find a setup which is in line with your trade plan, place your entry, stop and target and then simply go do something else, giving you the freedom to get on with the other important and enjoyable things in life.

However even after doing this for a number of years, I can also be guilty on occasion of spending a little too much time analyzing the charts. Trust me, this doesn’t happen often and really just involves me looking over a few more currency pairs than I normally would but it does still happen nevertheless and we all have to make sure we balance the time we spend trading with all the other important aspects of life. As I stated at the start of this article, I am currently getting back into the habit of focusing on my personal development journey, reading as much as I can, setting new goals and fitting more into life when time allows. During this process, it struck me just how many concepts I have explored over the years, many of which were important discoveries and “ah-ha” moments linked directly to the progress I made in trading overall. You see, before I was a trader I was a Life Coach and during my training I had my eyes truly opened to many things and I started to look at the world through a very different set of eyes. Without a shadow of doubt, my lessons in coaching proved to be intrinsic in my progress as a market speculator.

One of the most important lessons I learned very quickly, was when I was having a friendly debate with my coaching mentor of the time. The topic we were debating at the time is not relevant now but know this: I was passionate about putting my point across to her and adamant in my reasoning and logic. I wanted so badly to be right and for her to recognize me as being right. After talking and talking to her and arguing my case as to why she needed to see that I was right, she did the most amazing thing (although I didn’t see it as amazing at the time). She allowed to me say my piece, listened to me intently, smiled and said to me, “Sam, what you believe is true.” Wow, I didn’t know what to say back to that! At first I was frustrated with her response but as I let it sink in, it really dawned on me what she was actually referring to all along: If we believe in something so strongly and passionately, we put ourselves into a position where we can really achieve great things. Yet on the flipside of this, we are also in danger of becoming so blinded by what we believe and what we think, that we can easily damage ourselves in the process and not open our eyes to what is right in front of us. We all need beliefs to drive us but like anything else, these beliefs, no matter how deep they run, need to be balanced out with a good dose of objectivity too.

In trading this is one of the biggest traps that most speculators face. Sure, you need to believe in yourself and your methods but you also need to recognize when your beliefs are holding you back and stopping you from moving forward, sometimes even pushing you back. It is easy for a trader to quickly build up a belief system about the FX markets because there are so many beliefs about the markets in the world and on the internet right now. I newer trader especially, is like a sponge for information and can’t seem to get enough of the books and websites out there, all of which have been written by people and companies with their own beliefs which drive them. Who’s right then and who’s wrong? This is a tough question to answer, almost impossible in fact and do we really need an answer at all? After all, the market is not something any of us can ever control, the single biggest reason why a trade plan and risk management are so vital to a trader of any skill level.

One person may believe the market is going to go up today when another thinks the opposite. Both people will enjoy their share of being right and wrong on different days but the one who comes up trumps in the end is always going to be the person who believes in their plan, believes in their actions and knows that they will not always be right on every trade. This is the objective quality which sets them apart from the rest. Take this example below:

Looking at this chart we can see that we have the trend traders dream. Their belief is that the trend will always be the best way to take their trades. After a number of higher highs and higher lows in early August, the EURUSD went on to make an easy 800 pip push higher from the middle of the month. Any trader with a belief in the trend would have profited nicely in this time. So what about those who use other methods to trade, like Institutional Levels of Supply and Demand? Well take a look at the next example below: 

Here we can see that the trader who sold the EURUSD in early September at the level of supply around 1.3150 made the right choice not to follow the trend at the time because they believed in their system of finding low risk/high reward opportunities to buy at demand zones and sell at supply zones. On this occasion they turned out to be right. Who therefore is right in the long run is the final question?

Like I said before, it takes a little more than just a resilient belief system to succeed at anything in life. It also requires a solid measure of objectivity to understand that sometime you will be right and other times you will be wrong. Keep the losses small when you are wrong and let the winners run when you are right is all it takes to make it work in the end and this comes from the discipline to follow a plan in the first place – a plan which is both objective and one that you believe in. I hope this was useful to you.

Take care and be well,

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.