Here are the next three to add to your trading arsenal for the year…
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Lifestyle change #4:
"I will acknowledge that bad patches are inevitable"
We both know that markets can and will only move in three different directions.
Up, down and sideways.
As trend traders, we only make profits when a market moves a continuous direction.
With a rising market, we buy (go long), ride the trend up and sell it at a higher price for a profit.
With a falling market, we sell (go short), ride the trend down and buy it back at a lower price for a profit.
But as you and I both know, markets don’t move in straight lines forever.
You’ll face a time when the markets trend will come to an end and both buying and selling pressure starts to slow down.
This inevitably will then lead to smaller price ranges which will result in a sideways market. As a trend trader, this is the period where we will take a bunch of consecutive losses.
The problem is, during these cycles or bad patches, this is where novice traders tend to throw out their proven trading strategy.
They decide to go back to the drawing board, to find or create a new system that won’t result in a drawdown.
And unfortunately, this very reason leads to the downfall of majority of traders. You see, finding that perfect fail-proof system is and has always been an impossible quest.
There is no trading system in the world that can predict market movements with certainty every time.
That’s why, with a trading strategy that’s proven to yield consistent profits, through good and bad times, you need to just keep at it.
Eventually, the bad patches will once again fade away and the favourable market environments, will make up for any of the losses…
And so, whether you have chosen to follow your own proven trading strategy or my MATI Trader System
, make sure you stick to it and apply a careful drawdown (risk) management policy, and keep at it until the market rectifies itself.
Talking about drawdown management, this leads to the next lifestyle change to make.
Lifestyle change #5:
"I will follow the three golden rules to money management"
Whether you're trading stocks, Forex, crypto- currencies, indices or whatever you trade nowadays, make sure you stick and apply these ever-green rules to your trading.
1. Never risk any money you can't afford and you are not comfortable to lose.
2. Only risk a tiny percentage of your portfolio with each trade you take.
3. Have a drawdown management game-plan for when your portfolio is down more than 20%.
In lesson 5 of the MATI Trader System programme
I go over a system to ensure you never blow your portfolio and to know when to get back into the market after a bad patch.
Lifestyle change #6:
"I will answer these four questions to find my trading personality"
There are three steps that every successful trader takes on a regular basis.
Open a trade, hold the trade, close the trade.
The problem arises when we start asking the main questions in order to follow those three actions including;
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What, why, when and how much...
I can't answer them for you as we all have different trading personalities, but I want you to write these questions down so you can make an effort to answer them and apply them to your trading lifestyle for the future. Ready?
What markets and via what instruments do I want to trade in 2020 and beyond?
When do I want to trade and when do I have time to trade in a day?
Why do I actually want to trade?
4. HOW MUCH?
How much money am I prepared to start with my portfolio to trade and how much money do I expect to make a year with trading?
Once you’ve answered these four essential questions, you’ll have an idea on how you’re going to go about trading on a day to day basis.
In this article we have tackled three lifestyle changes that involve your:
METHOD (To stick to your proven strategy during the bad patches).
MONEY (To follow three time-less money management rules).
MIND (To answer the four essential questions to identify your trading personality).
In the next article, we will head into the next three trading lifestyle changes, to help with your trading success.
Don't forget to set a reminder next Monday at 8am.
Analyst, Red Hot Storm Trader
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