Are you Revenge Trading? Tips on what to look out for.

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Revenge trading comes from one thing and one thing only, blaming the market for your loss. But let’s think about this. The question should be who is responsible when you have a loss? Of course, the correct answer is you. The market didn’t cause you to have a loss. So getting mad at the market and trying to seek revenge really doesn’t make sense, if you’re responsible for your actions, then when you seek revenge for the loss, you are actually attacking you, as it was you who pulled the trigger, trading is all about taking responsibility, I’ve seen enough days in trading to handle losses and believe me some big losses. Losses that would make you cry, because they did make me.

When you get mad at the market and try to get your losses back in an emotional way instead of a rational and logical way you are viewing the markets through your emotional filters and not is the best state to be trading. If you are frustrated and angry, you are just going to make trading mistakes that will most likely cost you more money. Many people are confused at why revenge even comes into play during trading. But it’s really very simple. Think about gambling, for example. You can only lose what you decide to bet. When you bet the money, it’s easy to take responsibility for your losses because most likely you had to actually physically place the bet on the table, and you can only lose what you decided to risk.

Let’s look an example: Let’s say you lose 35 pips in the last trade. Will 20 pips profit be enough in the next trade? The market may be clearly telling an objective observer that’s all there is in this trade (20 pips). But to the person who just lost 35 pips, 35 pips is what they will see in the markets, the trade rallies 20 pips they hold on for a bigger gain and it reverses ending up 20 pip loss, adding to the earlier 35 pip loss. Now we are in a state.

But let’s think about this. Does one trade really have anything to do with the other? The market doesn’t know or care how much you made or lost in the previous trade. It has no bearing whatsoever on your next trade or your next fifty trades. One trade has nothing to do with the next trade. They are not related in any way, other than in your own mind, you almost have to be Zen like, present and in the now moment. Attempting to get back in one trade what you lost in the last trade doesn’t make any sense. You can only profit from what is available in front of you. And again, the opportunity or lack of has nothing to do with your last trade or last three trades.

When you feel compelled to get back what you just lost. The flight or fight mechanism kicks is, your survival instincts as money now a days is very much attached to our survival. We move from the pre-frontal cortex to the reptilian part of the brain and become highly emotional. You want to flow with the market, not fight it. You can’t fight it, because you can’t win that way. You can’t change what the market will do. You can only change yourself.

 

Are you suffering from Trader burnout?

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SEVERAL WAYS TO OVERCOME A TRADING BURNOUT:

Forex trading may seem like an easy job to outsiders. To them, all a Forex trader does is sit in front of a computer, read a bunch of news articles, put up some lines on a chart, and then money will magically appear.But every trader will tell you that is not the case. Every single time a trader goes on his trading platform, he knows that he will be exposed to a variety of stressful situations. This makes Forex traders very susceptible to what I call “mental burnout.” This pertains to the collapse of the mind due to overwork or stress.

Mental burnout can be triggered by many factors like over trading, extreme market conditions, unrealistic expectations, and of course, losses. Mental burnout is indeed a terrible thing as it interferes greatly with trading performance. If you want to find out whether you are undergoing or about to undergo a mental burnout, then keep on reading.The first thing you must understand about mental burnout is that, typically, there is not one single event that can trigger it. It is a gradual process that happens over a long period of time.Burnout is also very broad, as it doesn’t only affect one part of your life. It can manifest itself in school, at work, in your relationships and sometimes even affect the burnout victim physically.Burnout can sneak up on you without notice, so it’s very important to pay attention to the early warning signs. Below are a few questions for you to ask yourself to see if you are about to burn out or are already experiencing burn out. The more times you answer “Yes”, the more likely you are to experience burnout:

  • Are you beginning to question why you should care about your trade rules?
  • Even with proper diet and fitness habits, are you having frequent migraines, muscle aches, and sickness?
  • Do you feel self-doubt?
  • Do you feel helpless, trapped and unmotivated?
  • Do you hold off in closing a losing trade even though you know it’s already doomed?
  • Have you started to eat more, take drugs or consume more alcohol than usual?
  • Do you feel angry towards others for the smallest reasons?

If you feel that these warning signs apply to you, here are some tips that might help you recover from a trading burnout.

1: TAKE A STEP BACK:

When you are feeling more stressed about your trading than usual, you run the risk of making things worse if you force yourself to trade more and work harder. Taking a moment to unwind could help you clear your mind and make it easier for you to focus later on.

2: ASK FOR HELP:

More often than not, trying to overcome a burnout on your own can result in twice the pressure you already feel. In this case, there is nothing wrong with consulting a friend or even a psychological counsellor. After all, it’s possible that burnout might be a result of a different concern other than trading and it is best to isolate which problem you really need to work on.

3: TAKE CONTROL:

One of the major causes of burnout is the perceived loss of control over a situation, which is something that traders could be prone to given the market’s dynamic nature. When you feel this kind of anxiety when trading, try to regain control by setting simpler goals. These can be in the form of managing your time wisely, updating you trade journal regularly, or developing a trading plan and sticking to it.

4: REMEMBER THE WARNING SIGNS OF BURNOUT:

Simply go through the list of questions above and make sure to take it easy with your trading when you answer “Yes” more than a couple of times. Also take note of the usual factors that trigger a burnout for you and try to work your way around those problems.

5: RECALL THE FEELING YOU HAD WHEN YOU FIRST STARTED TRADING:

Do you remember that light bulb moment when you first understood how fundamental and technical analysis made sense? Did you fell giddy when you placed your very first trade? Use that excitement you felt when you first started trading to renew your enthusiasm for the craft. This way, you will be able to focus more on the positive aspects and less on the stressful ones.

6: FIND A TRADING BUDDY or BOUNCE IDEAS OFF A CLOSE FRIEND:

Instead of holding hands and cursing the Forex market, share your trading thoughts with your buddy instead. He might be able to help you determine your common mistakes and correct them, allowing you to avoid stress from these problems down the line.If you do not have a trading buddy, use your closest friend to talk to, sometimes this will reason matters out.

7: TRY AND SPOIL YOURSELF:

By this I don’t exactly mean having a relaxing massage or getting your nails done. We all have our own ways of unwinding –be it through a beach vacation or a few rounds of golf –it is important to know what works for you and then do it.As much as I know you love trading, make sure you also do something else that you enjoy on a regular basis to avoid burnout.

THE 5 MOST COMMON MISTAKES NEWBIE TRADERS MAKE

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THE 5 MOST COMMON MISTAKES NEWBIE TRADERS MAKE

It isn’t always easy being a newbie. Whether it’s in taking on a new job, starting your own business, or trying out a different sport, the degree of uncertainty in a new and unfamiliar undertaking can sometimes be overwhelming and push you to make mistakes. Trading is no different. Here are five of the most common mistakes that newbie traders can make:

TRADING WITHOUT A PLAN OR JOURNAL

Even newbies fresh out of school and in their first week of trading know that the market is as unpredictable as the next “American Idol” or “The Voice” sensation. More often than not, in the attempt to make the most out of the opportunities the market presents, you get so lost in the emotions that you forget what you are supposed to do.

With your own money on the line, planning and researching trades and not being impulsive are they key goals. To help you achieve this key goal, which is to become a consistently profitable trader, you need a TRADING PLAN and maybe a TRADING JOURNAL.

It can be a simple outline of your entry and exit conditions and your RISK MANAGEMENT rules, and it needs to be written down so that you can refer to it, record and review your progress. I use my TRADING PLAN all the time to refer to my entry and exit strategies. Your TRADING PLAN helps to keep you focused.

NOT SETTING A STOP LOSS

Trading without a STOP LOSS is like trying to train a Labrador puppy to walk beside you nicely without a lead (unless you are Caesar Milan). It is impossible and crazy.

Stop Losses are there to protect. They are not 100% guaranteed as the SNB day (when the EUR/CHF peg was removed) illustrated. They are the best insurance you have, however to stop your account being wiped out. Over the past three to four weeks in particular we have seen very volatile markets and short squeezes that could potentially wipe out accounts. Therefore setting a STOP LOSS allows you to survive and fight another day even if you have a losing trade.

REVENGE TRADING

You would not be a trader if you had not ventured into this area at one time or another. Pure and simple REVENGE TRADING is when you get emotional over a losing trade and then try over aggressively to recuperate the loss. I have revenge traded and like most traders my REVENGE TRADE was twice or three times the position of the original trade.

It is difficult but you just have to try to accept the loss and not let your judgement in the future be clouded by your ego. The textbooks will tell you that instead of REVENGE TRADING you should focus your efforts and energy on analyzing what went wrong and figuring out what you can do to improve your subsequent trades.

LETTING LOSING TRADES RUN

This is an interesting subject. The textbooks also say that newbie traders often let their losing trades run all the way to their stops instead of cutting losses early.

As a POSITION TRADER, I am at odds with some of the textbooks. I fully understand that mentally if the trade is going the wrong way, maybe on the back of a significant news event, it may be the correct action to exit a trade early, I have no problem with this.

Knowing when to let a losing trade runs comes with experience. If you have entered the trade with a clear objective and assessed the risk you sometimes need to allow the trade to move around within the parameters you have set. Having said that a geopolitical event or poor headline economic data sometimes means that no matter what you have planned, it needs to be forgotten and the trade exited.

 

This is how you trade forex

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Good day to you fellow Traders

What a beautiful start to the second half of the trading year, our first LTA after the summer doldrums with profits banked and stop at break even. Chart provided explaining exactly why we were looking at the trade form the fundamental and technical perspective. SMS text sent out to our clients, order set along with an alert set - 15 to 20 pips before the level.

  1. Short term shift in Governor Stevens comments giving us a fundamental bias
  2. Perfect chart
  3. Perfect entry level

Here is what was written on the live trading floor along with chart provided ahead of time

“TRADE A) Long AUD/USD @0.7350 or nearest buying zone with 35 pip stop, target will be 0.7580

Now do we need to do anything more than this? Where looking at a 230 pip trade; now believe me, we are going to be doing this on a regular basis for the remainder of 2015. Trading bank supply and demand levels is a very lucrative way to trade when implemented correctly. The understanding of how the markets function and why certain price levels are important is crucial part of trading success.

We have caught the very bottom of what is potentially the right shoulder of a reverse head and shoulders, this is called presumptive trading and something retail traders struggle with. The Majority of traders will wait for the right shoulder to form when the professionals are already in the trade and banking pips. All our analysis is prepared Sunday with the charts drawn ready to be published Monday morning

We plan all our trades on Sunday when the markets are closed and post early Monday morning, now how many of you plan your trades Sunday afternoon or even plan them at all. Professional trading is about pre-planning and when our plan created ahead of time falls it to place we execute with such confidence and clarity there is no second guessing. Most retail traders open the charts and then hunt for a trade, ultimately this type of trading ends up with inconsistent results because they have no plan, no methodology and have no understanding or presumptive trading, planning the trade ahead of time.

Please watch our trade of the day video from yesterday to gain a greater understanding of the trade.

Fundamental view and trades for the cable

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The chart explains exactly what we are looking for cable and believe me there is a 300 pips move either way coming up on cable:

  • For a Bullish Setup: I am looking for a close above 1.5642 on a daily with a target of 1.5940.
  • For a Bearish Setup: I am looking for a close below 1.5465 on a daily with a target of 1.5170

What to expect from Bank of England’s simultaneously publishing its interest-rate decision, the minutes of its policy meeting, and the Quarterly Inflation Report forecasts today

One of the biggest days for sterling today

My Internal sources from the institutional world are all not in any favour of rates hikes till next year for sterling, please do not take this as gospel but that is my personal view as well, I am a firm believer that the UK will only make a move when the US does. The quarterly inflation report will likely highlight economy looks stronger than it did three months ago. Growth bounced back to 0.7% in 2Q, slightly better than the central bank had projected. Productivity looks perkier.

Faster supply growth could, in principle, mean weaker inflationary pressures. But probably not in this case as wage growth has picked up smartly too. The expansion seems to be gradually shifting onto a more sustainable footing. There are probably fewer reasons to think inflation will undershoot the 2% target in the medium term. Indeed, “some” members said in the July minutes that the risk of inflation rising above the target in the medium term had risen. In other words, we do not expect the BoE to push back on the recent upward move in interest rates.

We at Platinum believe that we will see a 25bp BoE hike in February next year, followed by hikes of the same magnitude in August and November

Given the vast amount of information that will become available at the same time, the initial GBP reaction, therefore, may not necessarily be the right one in the first few instances and in some regards “Super Thursday” could turn into the UK version of US non-farm payrolls day as one of the most significant trading days for the pound. As such, we would expect GBP volatility to be elevated each quarter when the minutes and decision are accompanied by the release of the Quarterly Inflation Report

What will matter for FX markets from the variety of BoE releases is the voting pattern and the extent to which some members’ decisions were “finely balanced” from the Minutes and the medium-term inflation projections based on current and market-based rates from the Quarterly Inflation Report. We would isolate these themes as focal points for the currency

Have a wonderful day

Kind Regards

The Platinum Team