The more you think of the cash, the harder it will be to make it
Trading is as simple as just turning on your screens, clicking buy or sell, and then sitting back counting your cash. No no no…… I know some companies market their products like this, but in reality, that’s not how it works. There’s a bit more to it. In my experience, the biggest issue for people is starting out trading with far too little capital in their accounts. Most new traders, because they only have $1,000-$5,000 in their trading accounts, end up sweating on the outcome of every trade. They are so worried about losing money they forget there is an actual trading process. All they can think about is making the next $500.
When you go into a trade thinking about the outcome, or even wishing for it to happen, you become blinded by the price action and more often than not, just start randomly buying or selling, trying to get the cash into your account. The harder you try to get that $500 the worst you seem to go…. every trade seems to go against you. As soon as you buy it goes down and as soon as you sell it goes up. Sound familiar?
This is a common outcome for traders who are thinking about the outcome instead of the process.
The trading process will get you the cash – just follow it
It’s easy to get lost in all the ‘market noise’ each day & that’s why traders at the banks have a simple process to keep them on the path. They know if they stick to the process the outcome will take care of itself…. you just need to be consistent. This trading process (or routine) should be systematic and needs to be habitual, as I’ve written about previously. (Read our Daily Routine)
In fact, we set up the myFXTradingHub page specifically to guide you through the trading process. Let me run you through the simple process:
- Market Insight – Check the overview of current market conditions.
- Correlations – Check the markets are normal, if not which currency pair is out of sync.
- Upcoming Events – Take note of the fundamental drivers.
- Daily Analysis Snapshot – Identify which majors and subsequent crosses to trade today.
Following this process will stop you, first of all, just turning on the screens and trading the first pair you come across.
It will force you to analyze the market and isolate the best trading opportunity, thereby reducing your overall risk straight away, as you’ll be trading with the market and not against it.
Having clear goals & objectives on the draw-up & drawdown side of things is absolutely critical
If you don’t have any goals in mind then all you’re going to be doing is trading to ‘make some cash’. Once again when you’re trading to make cash, instead of making good trades, you end up draining your account. Now, this comes down to having a very clear structure with your capital management. If you’ve gone through our FX Pro Trader Course you’ll be familiar with the ‘4 consecutive loss rule’ & also dynamic capital management, for the experienced traders. The 4 consecutive loss rule is the ideal starting point as it takes you through both the draw up and drawdown process, so you know how to manage your trading. But for those traders looking for a bit more specific help, we have set up an extremely clear capital management system for our Funded Trader Programme.
If you find your struggling with your own system then check this out. It is very specific & includes:
- Set draw up and draw down levels.
- Set loss limits: daily, weekly & maximum drawdown limits.
- Set trade size scaling plan
- Set rules around trading live economic data
My experience so far has been amazing
I’ve recently started trading a $100K account using all of our rules of engagement for the T4TCapital Trading Programme. Previously I was scaling up and down from 5 lots to 50 lots depending on the opportunity and I found I was really losing focus because I myself didn’t have a set structure. Because I’ve been trading so long I just adjusted things as I saw fit. But now we’ve got the T4TCapital Trading Programme in operation I wanted to experience what our traders are experiencing, and I’ve found it extremely invigorating. I know my maximum drawdown is $10,000 should everything go pear-shaped…which I will ensure it won’t. So from the very outset, my mind is at ease as I know I’m not risking the kitchen sink.
Now you may ask why don’t I just stick $10,000 in the account and trade that? Well, it’s all about psychological edge. If I just put the $10,000 in an account, all I’ll be thinking of is…..oh no if I have a losing trade, I’m a step closer to zero. I’ll start sweating on the outcomes …and boom the trading process is gone and I’m in trouble. Exactly what I was talking about at the start of this article. But if I have $100,000 in my account, I know I’m Ok and I never have to worry about getting to zero. It’s a completely different perspective. All I’m thinking of is going through the trading process and letting the cash come into my account.
I have specific Rules & Limits to follow
But the best part of using all the rules of engagement is I have specific goals to work with & limits to control my trading activity in achieving those goals. I found it really easy to concentrate on my trading because every other aspect of my capital management system is taken care of for me. Our backend management solution closes out all trades if by chance I have some running and I hit my drawdown limits. So with all of that taken care of all my need to do as part of my routine is simply have a look at how much cash I’ve got to play with (checking daily or weekly limits) and what my maximum trade size is.
I have a daily limit – so I know how much I can afford to lose each day.
I have a weekly limit – so I know how much I can afford to lose each week.
So I don’t have to worry about crunching the numbers each day…it’s already been done for me.
No longer do I have to think about my account, so I can get on with the job of trading. And I’m finding chasing down those draw up levels more like a game than a business. It’s damn exciting. Every winning trade is a step closer to a draw up level and bigger trade size and every losing trade is a step backward, so I find myself really isolating the best trades because every trade is important to me.
This has all come from adopting the T4TCapital Trading Programme Rules. So simple!
So I want to put this out there to my fellow traders. If you feel like you’re having issues ‘sticking to the plan’ or you’re simply in a rut, then give me a call and I’ll talk you through the process. Check out the Rules of Engagement for the T4TCapital Trading Programme – especially the Daily, Weekly & Maximum Loss Limits.
If we get enough people responding then we’ll consider setting up a full-time service to manage your capital for you, so you can get on with the job of trading, without worrying about you blowing up your own account. It’s extremely comforting knowing someone else is going to turn your account off when you’re having a brain explosion.
Or better still join the T4TCapital Trading Programme and see first hand how it can work for you.