Admission

Hello everyone it's been a while since my last entry and I have plenty of good reasons for doing so...or so I think they're good ones.

I apologize for not keeping the equity curve chart updated as well as I would like to. I'll update it shortly.

One of the many reasons I haven't kept this blog up to date as well as I would like to is that I'm actively trading.

I recently came across this thread on forexfactory.com Here

The post that really prompted me to add this entry was this...

"Those that can, do; those that can't, teach or sell signals. The more flowery the website and/or praise, the greater the scam. "

So you can probably guess why I'm writing now. According to this guy I'm scamming you...how dare I do such a thing. I mean this blog costs all my readers to much in fees that I have to be a crook.

While I consider myself an exception to this comment I will also say that there is quite a bit of truth to what he's claiming. Don't buy signals from any site and always do your homework on why you're taking any signal. Everyone out there is looking out for himself so you have to do the same. Don't blindly trust anyone...not even me. Always challenge what you read and see. Until you are able to prove for yourself that what someone is saying is true always be slow to act on their advice.

Take care and good luck trading!

Looking for Reasons NOT to Trade!

by Mark Schumacher

With a title like that, you must think I have gone mad! Not so (or at least I don't think so)! Allow me to explain. When I first started trading the FOREX market, I went for every possible trade I could find. My profits were certainly random, at best. I just couldn't figure out why I wasn't being as successful as my perception of some of my other FOREX trading friends. Could I possibly be doing something wrong? Possibly, but I doubted it.

A friend of mine had a saying that really stuck in my head: "Exceptional traders only take exceptional trades." Honestly, I didn't really get this. Does this mean that every trade I take should turn out to be exceptional? How do you know when it is going to turn into an exceptional trade?

After thinking about it for a while, it suddenly dawned on me that maybe this meant I was supposed to be very critical of every trade. At about the same time, my wife and I had one of our few "discussions of opposing views." I was ticked as all get-out. I went back to my computer mad at the world. Let's see ... exceptional trades ... mad as a bee in a squirt gun fight ... exceptional trades ... I'll show her ... OK, potential trades, let's see if you can trick me!! Made several "exceptional trades" in a row! I calmed down, proud as a turkey the day before Thanksgiving, and reflected on the process prior to taking those trades. Getting into a row with my wife worked! I better try this again! So, before going into my "man-cave" to trade, I picked another "discussion of opposing views" with my wife. Viola! Did well again! The next morning, did the same thing with my wife, except at the end, she asked me if I was mad enough to trade now. I told her I was. (Oops! She figured me out... smart lady, that wife of mine!)

Since my marriage was vastly more important than trading, I tried to figure out what getting mad did for my trading. Then it hit me. Wow, I was looking for tricks the market might throw at me and I had found quite a few. So, instead of looking for reasons to take a trade, I had been looking for reasons NOT to trade. Looks like I am on to something! Fast-forward five years and here is what I found.

So what are some good reasons NOT to trade?

• Trading against the Trend
• Ignoring Support and Resistance
• Not checking the news
• Not noticing the market does different things at different times of the day
• Getting into trades that don't have as much momentum as others
• Ignoring how I felt (if you don't feel well, consider not trading)
• Not getting into the trade going Long close enough to Support
• Not getting into the trade going Short close enough to Resistance
• Not checking to make sure the potential reward was worth the risk
• Asking myself, "what are the reasons this trade wouldn't go in my intended direction?"
• Have I stalked this trade properly?
• What barriers are there for my trade to get to where I want it to go, especially the Dow, the US Dollar Index, and Gold?
• In order for my trade to be successful, does it need to break a new daily high or low? If so, does the Percentage of Daily Run [(High - Low)/Day ATR] make it possible, given what has already happened today?
• Am I wishing myself into thinking the indicators are showing me an exceptional opportunity while they are really only showing me a so-so opportunity?
• What are the early warning signs of a loss going to be if I get in this potential trade?

Overall, I believe this process has made me a much more conservative trader. I no longer take nearly the number of trades I used to take. However, I feel my consistency helps me be a more confident trader.

For me, the bottom line is this: properly stalk the trade ahead of time, when the potential trade meets my pricing criteria, check for any last-minute reasons NOT to trade, and then consider trading full steam ahead.

http://tradingviews.com/b/articles/archive/2010/04/28/looking-for-reasons-not-to-trade.aspx?cid=89700

My Universal Basics

This is a quick explanation of how I trade ANY system.

I deem Money Management more important than any system. BUT any system I use must fit my criteria.

1. I always enter a trade knowing my entry and my exit.

2. I will never start off a trade with at least a RR of at least 1:1.5. (99.9% of the time I use a 1:1.5)

3. Once PA has moved to half the distance of my Take Profit I will move my Stop Loss to my original entry. Thus creating a potential Break Even trade. Once PA is at that spot I have effectively turned my trade into a 1:1 trade. (I call this +BE)

The opposite is also true if PA has moved half the distance to my Stop Loss I will move my Take Profit to my original entry. For those of you that would say "That's not giving your trade an opportunity to make money". I would respectfully disagree. I have already lost half of my risk therefore all I want to gain back is my lost risk and then call it a day. I have essentially said "My edge on this trade has evaporated and I'll live to trade another day". (I call this -BE)

These are the building blocks to being a successful trader IMO. I won't even consider trading a system that will give me less than a 1:1.5 from the beginning of the trade.