Winning Forex Edge

By: Matthew Lee

Table of Contents
Introduction Chapter 1: Learn to ACT and THINK Successfully Chapter : The Art of Money Mana!e"ent Chapter #: Is $our LA%IN&SS Holdin! $ou Bac' (ro" Bein! Successful) Chapter *: Are $ou A Losin! Trader +ue to ,-&&+) Chapter .: Are $ou Cut /ut to Be A Trader) Chapter 0: Co"poundin!1 -is' Control1 and Le2era!e 3 &2erythin! you N&&+ to 'now Chapter 4: (ine Tunin! $our Tradin! Beha2ior

Chapter 5: How $ou Should Act and Beha2e 6hen $ou7re 6innin! Conclusion

Introduction
What if I told you that being successful in trading Forex is 50% the responsibility of technical market decisions you make and 50% psychological decisions you make? Its true, almost 50% of hat makes a trader pull the trigger on lot si!es and entry and exit points relies on psychological and pre" determined decisions based on hats happening in the traders life at that present point in time# If more traders could make rules before they e$en sit do n to trade and actually stick to their plan of action, there ould be many more millionaire currency traders in this orld#

Instead, day after day traders push the button on their trades for psychological, emotional, and hesitant ays# %ne of the most common mistakes I see traders make day in and day out is thinking about a large loss they had in the markets as they are making their ne trade# &he trader ill literally start to s eat bullets as he executes a trade that he kno s is technically right but fears emotionally# 'y ob(ecti$e in riting this book is to sho the inning Forex traders mindset and ho you can ork to re"

program your mindset to trade like a inner# Its not easy to change your psychological thoughts of trading or to lea$e your emotions at the door, but Im going to do my best to sho you the possibilities of trading like a inner#

Chapter 1: Learn to ACT and T I!" #uccessfull$

I made this )hapter * because I firmly belie$e this is one of the most important aspects of being successful in anything in your life# If you cant learn to act and think like a successful person, then youre going to fail or be mediocre in e$erything you do in your life# +$erybody kno s that pessimistic person ho looks at e$ery single e$ent, (ob, and action in his life as bad# Who ants to be around a person like that? If youre unhappy and you already think your trade is going to be a losing one then youre se$erely stacking the odds against you to in# In Forex, especially for ne traders, it seems as if they dont e$en care about learning the language and nature of the market# I$e seen countless numbers of traders that dont ha$e any business making trades solely because they dont e$en understand hat the ord ,I, means# -et, these are the same traders ho are trading half of their life sa$ings in the market on a daily

basis# &here are many people in this orld you are setting themsel$es up for failure in e$ery ne business $enture, (ob, and relationship in their life# -ou ha$e to ha$e the determination to be successful in trading# -ou ha$e to be able to spot your fla s that you make day in and day out and sit do n to really fix them# ,eople act in hat I call .cycles#/ &hey make actions in a ne$er ending cycle that usually ill go on for their hole life, or until they learn they ha$e a real problem# In the human race this is most noticeable in social, relationship, and addiction problems# I hate to say it, but the decisions humans make ith money act in the same ay# &here are people ho ill li$e in debt their hole life and then there is the opposite end of the spectrum of those ho ill be frugal and sa$e their hole life# From this point on, I ant you to start to think 01))+00F122-# If you dont understand something, back up and learn it3 Winning at anything in life is determination# 2ook at 4#5# 6o ling, the author of all the 7arry ,otter books# &he lady as homeless riting her books on notebook paper# 7er determination to be successful is hat got her to here she is today, 8 BILLI/NAI-&# If she can go from rags to riches riting books then you can sit do n to thoroughly learn ho to be successful before exchanging

currency# It all starts ith education#

If you do not understand e$ery aspect

of trading Forex then from this point on you need to follo this plan of success9 *# 0top trading3 -oure ne$er going to be as successful as you potentially could be if you do not stop to learn about e$ery aspect of the currency exchanging market# :# Write do n +;+6-&7I<= that you >% <%& understand about trading Forex# ?# <o , start to =oogle e$ery term that you >% <%& understand# &here are many helpful Forex education ebsites out there that ill fully explain e$ery aspect of trading to you#
4.

0till dont understand? ;isit a Forex message board and ask your @uestion# &hey are many helpful members ho ill ans er your @uestions perfectly#

5# 7ead to your local bookstore and in$est in a 786>A8)5 co$er book that you can sit do n and read at your leisure#

B# %nce you understand e$ery aspect of trading, its time to trade ,28money# I ant to touch on this topic for a momentC some of the most successful Forex traders out there today got their start trading play money# Its true# &hese guys kept strict records and spreadsheets on their ins and losses ith F85+ '%<+-# >o you e$en keep strict records and spreadsheets on your ins and losses ith 6+82 '%<+-? 8 good portion of you are probably reading this and chuckling a bit right no , but its not funny3 -ou cannot cut corners to be a successful trader#
7.

%kay, no once you ha$e established a firm track record of being successful in trading ith play money, its time to start out ith real money slo ly# &heres no reason to be risking more then you ha$e to# -ou "ust ha$e the determination to be honest and reali!e if youre a inning trader or not# If youre not an established inning trader, hats the point of trading large lot si!es?

D# 8ssuming youre an established inning trader, you need to make sure that you continue to keep strict records of ins and losses as ell as being honest ith your trading decisions#

%nce you sit back to reali!e the errors youre making in trading currently, its generally all uphill from there on# &he rest of this book is going to ork on finding your fla s and errors in (udgment you are making as ell as ho to fix them so you can ork on changing the ay you make trades#

Chapter %: The Art of &one$ &anage'ent

&he most important tool in any traders arsenal is their bankroll# For that reason, I am going to try and teach you the art of money management from the perspecti$e of a successful trader# First off, my E* rule in trading currency is .ne2er trade "ore then you can afford to lose89 If a losing trade is going to affect your standard of li$ing then youre trading ay too much money# -ou ha$e to learn ho to make trades ith money that has nothing to do ith your .li$ing/ money# Ay ha$ing a set bankroll for your trades, you ill not think of trading as9 .If I lose F0 pips this trade, I shouldnt be able to go out to a nice dinner this Friday night#/ %r .If I lose G?,000 this month, I shouldnt be able to go on a nice $acation next month#/

If youre making your trades based on emotional and real"life decisions, then its going to be impossible for you to e$er gro as a successful trader# &he second the money goes into your trading account, it needs to be remo$ed from any real life decision# When you lose 50 pips, you cannot compare it to losing ho e$er much in numerical dollar sense, it (ust has to be, I lost 50 pips today, Ill stick to my plan and get it back tomorro #

6hat is the proper a"ount to :e set aside for strictly tradin!) Well, nobody can ans er that but yourself, but I al ays recommend :0% of your sa$ings# sufficient# The Most Co""on -easons New Traders -is' More Then They Can Afford To Lose: *# If I can make H amount of dollars, I can ork from home ith no boss3 :# If I can figure out to make enough money to pay my bills, I can @uit my (ob and trade full time3 If youre a beginner, I recommend e$en less, *0"*5% is

?# If I can figure out a secret trading strategy, I can become rich and ne$er ha$e to orry about dri$ing in traffic anymore# F# I can @uit my (ob3 +$ery ne currency traders has dreams of finding that golden techni@ue or system that ill allo them to turn the markets into their o n personal 8&' machine# &he truth is that the market does not operate in that fashion# &here is no .set pattern/ that the market mo$es year after year# 8 real trader ill make smart financial decisions based on real technical patterns on a pre" determined plan# 8 proposition trader ill make not so smart financial decisions based on present financial needs, greed, and dreams# Which trader are you going to be? -ou ill be the real trader that has a 0+& trading bankroll# -ou ill make smart financial decisions on real technical patterns# -ou ill ha$e a pre" determined plan3

Chapter (: Is )our LA*I!E## olding )ou +ac, Fro' +eing #uccessful2a!iness is hat holds potential millionaires back to being stuck at a dead"end (ob here they are told hat to do on a daily basis# -ou see, there is some people that are honestly so la!y that they ha$e no moti$ation hatsoe$er to go out and do anything on their o n# I kno this so ell because I used to be one of these people# Id need a person in a higher po er to tell me .&his is hat youre doing this eek and I need it done by Friday#/ I finally honestly sat do n and thought about hat as making me unhappy and ho I could fix it# I reali!ed I as unhappy from the draining lifestyle I as li$ing of dri$ing in traffic, being stuck to a desk I hours a day, and recei$ing peanuts for all of my hard ork# I set myself on a mission to learn about ays to generate income from my home# I no ha$e been able to @uit my (ob and I ha$e fi$e established streams of income# I$e ne$er been happier and its all because I rid myself of la!iness and had the moti$ation and determination to li$e a better life#

%kay, enough ith my story, lets address the t o different types of la!iness9 ;roducti2e la<iness 3 -esistance to wor' or e=ertion while :elie2in! there is a :etter1 faster1 cheaper1 "ore interestin! way to acco"plish a !oal8 This is !oal dri2en la<iness8 &his is the person ho is offered a GJ0,000 a year (ob and turns it do n because he al ays belie$es there is another ay of making money# &his is the type of person ho ould rather ork for *00 hours straight on a pro(ect that ill produce him G*0,000 then ork a set schedule to make a stable income# In general, this is the entrepreneur style of la!iness#

+estructi2e la<iness 3 -esistant to wor' or e=ertion when one does not :elie2e that wor' or e=ertion will produce anythin! worthwhile8 &his is a$oidance dri$en la!iness# It is deri$ed from an inner conflict about accomplishment# It de$elops in someone due to negati$e reinforcement and is primarily manifest as ha$ing such lo self esteem that the person lacks moti$ation to contribute good things to him or herself#

&his type of la!iness is $ery dangerous because its hard for the person to change to either producti$e la!iness or belie$e that he or she can be successful again# -ou ill see destructi$e la!iness commonly in people in the follo ing situations9 4ust laid off or fired from (ob Aad in$estment decision lea$ing them torn financially 6elationship issues Aad business decision <ot happy ith health Ksmoker, drinker, obeseL 7ad a recent catastrophe or death in the family happen >estructi$e la!iness is directly related ith depression and can at times take the ork of a licensed psychologist to mentally fix the person# &he 8merican ay is that e$ery citi!en ants more than can ha$e# ,eople ant the easy ay out and ill do anything to get there# 2ets touch on ays you can moti$ate yourself to stop being la!y9

7a$e a set schedule +;+6->8-# 7ere is mine9 4 AM M Wake up# Immediately drink a full glass of ater# K ater is said to be the best energy pro$ider of your bodyL# +at a healthy cereal ith banana and milk# 'ake coffee to drink as I check my e"mail, morning ne s, and anything Im curious about# 5AM 3 0ho er# &hink of hat I ant to accomplish today# ,onder on the day of the eek and here I ant to be by the end of the eek# >AM 3 0tart my day# =lance at morning currency ne s and setup my charts# 1?AM 3 N//N 3 Follo my plan of trading# )ontinue to trade until lunch time# 1 :#? 3 2unch# =reen &ea ith either a sand ich or a healthy fro!en lunch meal# 1:#? 3 .;M 3 )ontinue my trading# Work on any other business that needs attention 0;M 3 Workout at the local fitness center and listen to my fa$orite music# ,onder on my days acti$ities#

&he rest of the day is (ust dinner, researching on the internet, and relaxing# I am as producti$e as possible for a good six hours, hich I$e learned is my most producti$e time of orking# 8ny longer, I burn out, any shorter I feel lackluster and non"producti$e# I$e orked on tuning my 'onday through Friday schedule for the past couple years into the most comfortable but most producti$e ay of orking# &he hole purpose of ha$ing a schedule as that setup is it puts you in a routine here la!iness is not an option# If you find yourself performing non" producti$e tasks e$ery single day of the eek, then you 78;+ to put yourself on a strict schedule or youll ne$er get out of the habit# &he habit ill essentially follo you into e$erything in your life that re@uires your brain and any real ork# 8ll the time I see lo er and middle class people look at rich people in nice cars and nice houses and say, .Wo , that guy must ha$e got lucky/ or .7e must ha$e inherited all of that#/ For some reason, people ithout money ha$e a firm belief that its something that is (ust so damn hard to achie$e# Well, thats not true friends# &hese people used their mind and applied a

strong ork ethic to better their life# -es, there is a small percentage of rich people ho achie$ed their ealth through lucky occurrences such as the lottery, inheritance, or competition, but the ma(ority of upper class and higher income citi!ens orked hard to make it to the le$el they are at no # Isnt it time you rid yourself of all la!iness and made a change for the better? =et in a set routine and learn currency trading as much as you kno your fa$orite hobby or sport# Its a re arding hobby that could bring you a skill that pays you for life3"N

: hours of orld currency market ne s research# 8 good ma(ority of times you can tell the direction a market is heading during the day simply by reading about the current ne s of the economy

F hours of strict chart analysis# +$en if you are not making trades for large sums of money its al ays a good idea to get in the habit of analy!ing charts, pi$ot points, and indicators on a daily basis# In Forex, charts are your best friend and should be taken $ery seriously3

* hour of Forex education# &here is so much to learn about Forex and nobody ants to learn it all in one day# =et in the habit about learning something ne about the markets e$ery day# >o research on a ne

trading pair, Forex terms you dont understand, or ne trading strategies3

* hour of Forex mentoring and team discussion# I ha$e a team of people that I talk to on a daily basis about the markets# Its $ery relie$ing to speak to people ho go through the same experience of being a trader on a daily basis# &alk to them about trades they are making, trends they are obser$ing, ne strategies, or (ust talk to them as a friend3 I lo$e my hour of team Forex discussion3 Forex message boards are great places to meet ne people3

Chapter .: Are )ou A Losing Trader /ue to 01EE/=reed is considered the E* reason that destroys corporations, partnerships, and businessmen and omen e$ery year# When does one reach a le$el of money that is +<%1=7? 7o can a professional Forex trader let go of his prospering positions in the market for a real profit? Well, Im going to tell you right no , its not easy3 I struggled ith greed for many years and I finally reali!e no its one of the E* reasons that as holding me back from being the extremely successful trader I am today# Ill gi$e you a hypothetical situation that I faced literally on a day"to" day basis# I ake up and reali!e there is a =6+8& trading opportunity bre ing up# I setup my charts like I ould on a normal day and am excited to enter the market# I enter the market and decide that I ill set profit target at F0 pips

based on current market conditions and hat my system is telling me# 8bout F hours later I reach my F0 pip in and think to myself, .'an3 &he market seems to really be mo$ing today, e$en though I decided earlier to only bank F0 pips, maybe I can try for another F0 pips before the end of the day# Im going to hold on to it for a little hile longer and see hat happens#/ Well, Im sure you kno hat happens I times out of *0 next, I end up

losing the F0 pips I banked plus some more# It happens all the time3 Its such a rush to in that you dont ant to let it go and you truly belie$e you can (ust keep on inning for the next hour, day, eek, and months to come3

'y E* rule of a$oiding losses such as the one I (ust described is9 +eter"ine your entry and e=it points B&(/-& you "a'e your trade and STICK T/ IT N/ MATT&- 6HAT@ If you can learn to control your urge for greed, you ill essentially put yourself ahead of I0% of other traders out there# 8ny professional in$estor ill tell you they al ays ha$e a plan no matter hat3

7ere are a couple important facts to remember about greed9 *# -our ill to in '10& exceed your greed# &his simply means you $alue being a inner at the end of the day as opposed to ha$ing a 71=+ in or 71=+ loss# -ou $alue ha$ing a real stream of income as opposed to being on top of the orld or being at rock bottom#
2.

=reed gets its fuel from fear#

>o you kno

hat fear is? Fear is the

emotion that results from belie$ing a negati$e outcome is more certain than a positi$e one# 'any traders ill F+86 that they ill ne$er see such a prosperous position in the market again, and for that reason they must take full ad$antage of hat is occurring in front of them# Well, I got ne s for youC I find prosperous positions on a daily basis# 0ure, some of them $ery much so extend beyond my expectations after I sell, but I ne$er look back# 2earn to be comfortable ith entering and exiting the market as pre"determined positions3 >ont let your emotions take o$er your trades#

Chapter 2: Are )ou Cut 3ut to +e A TraderI purposely made this )hapter 5 because I kno a lot of you are sitting there and thinking, .Wo 3 I make all the common mistakes the beginning traders and unsuccessful make on a daily basis#/ 0ure, you might make some of them, but +;+6-&7I<= in your life can be fixed# Would you rather go through your hole life li$ing from day"to"day kno ing you could of mastered a trade that can bring you real and steady income month after month or ould you rather (ust complain that it as too hard to learn or too hard to understand# First off, I ant you to understand that a ma(ority Kat least J5%L of successful traders out there today found trading difficult to near impossible hen they first started# &heres nobody that simply oke up and said .Wo , exchanging currency is so easy3 I can in e$ery single day ithout e$en understanding ho the market orks3/ &hats a utopia and dream orld that (ust does not exist# +$ery trader faced a number of obstacles and difficulties to reach here the le$el they are at today#

-ou are cut out to be a trader if the markets honestly excite you and you ant to do nothing but continue to learn about e$ery aspect of the market# If youre here to simply make a lot of money ithout doing a lot of ork then you are not cut out to be a trader# >espite popular belief, being self employed as a trader is not easyC there are a lot of ups and do ns that one must be able to deal ith on a eekly if not daily basis# Its been pro$en that people ho choose their career or make career changes solely based on financial moti$ation almost ne$er become large in the field they are aspiring to dominate# Its true3 &he people ho really make the big bucks are people that ha$e an undeniable passion for their (ob# 8 great example is a realtor# -ou can $isit almost any real estate association and <orth 8merica and $ie that fi$e percent of realtors make I0% of the money# Why is this? &hey ha$e created a passion and a e that their hole community and net ork of associates sees# &hey actually care about their customers and truly lo$e their (ob# For that reason, e$ery time one of their customers has a friend or relati$e that needs to sell property, guess ho they call? &he

same realtor, thus the reason hy 5% of realtors in e$ery community through 8merica are making I0% of the money# <o , I kno youre probably thinking hat the heck does selling real estate ha$e to do ith trading currency? While the t o are not e$en close to being related, it sho s that you must ha$e a real passion for trading if you ant to be successful# ,assion is the number one reason hy rich people become richer# If you belie$e you can de$elop an honest passion to the point here you can eat, sleep, and breathe trading then you 86+ )1& out to be a trader# If you dont ha$e the honest passion for trading and atching markets, then this might not be the right (ob or hobby for you# +$eryone has their o n passion, find yours and exploit it to its full potential3

Chapter 4: Co'pounding5 1is, Control5 and Le6erage 7

&2erythin! you N&&+ to 'now )ompounding is simply ho you ill make money during you e@uity run ups or your inning streaks# 6isk control refers to ho you ill retain your account e@uity during the losing streaks or setbacks# -ou should al ays try to adopt a strategy that uses money management as a basis for setting a strategy to maximi!e your e@uity gains and minimi!e losses to a minimum in order for you to gro at the highest rate possible# I$e learned through years of trading that the best money management scenario is to use the most aggressi$e strategy possible during the good times and exposing your account to the lo est risk possible during the bad times# -ou must be able to change your psyche of thinking and be able to absorb losses, sometimes large losses# 8s long as you can deal ith the losses, youll be able to take full potential of the large ins# 6emember, one of the most

common mistakes failing traders make is exiting a losing position in fear that the position is going to continue to be a losing one# Fear is hat makes the seller bail hile many times the position ill turn around and make a nice profit for the traders ho ere able to handle the small loss# 6hat is le2era!e1 how does it wor') 2e$erage is basically using money you dont ha$e3 Isnt that the 8merican ay? -ou are essentially using a line of credit# 2ets say your account has G50,000 and you$e decided you ill ne$er risk more than G50,000 at one point in time, then youll ne$er ha$e a use for le$erage# &he second your account controls a great position then G50,000 you are using le$erage# If you ha$e a G*00,000 position and your account only has G50,000 then your le$erage is :9*# Its really simple# -oure basically controlling a position ithout actually ha$ing the real money# With this concept comes a lot of danger, so listen up3 8ny professional trader ill tell you that hile le$erage can be a blessing to ha$e it can also destroy your account and finances# -ou must learn to use le$erage to your ad$antage during a prosperous trade and minimi!e its effects during a negati$e trade#

2ets look at $arious pros and cons of using le$erage9 ;-/S of Le2era!e: 8llo s the trader to reap the benefits of profits he or she ould of not ha$e been able to other ise accrue# Forces the trader to learn as much as possible about the markets in order to lo er risk# 8llo s the trader to control a large position ith a small amount of money#

C/NS of Le2era!e: 8llo s a trader to lose much more money then he or she had planned on losing# +xposes a trader to a great amount of financial risk# &raders belie$e its .play money/ and thus abuse it#

2e$erage is great for disciplined in$estors but disastrous for ne in$estors or compulsi$e in$estors KgamblersL# 2earn hat type of trader you are and act accordingly3 How to "ini"i<e your losses &he key to mastering minimi!ing losses is learning to deal ith small losses in order to reap the benefits of large gains# &here are countless numbers of times that I ould open a position and itd immediately take a *0 pip loss# -ears ago I ould ha$e sold the position right a ay and said the heck ith it# <o , I ill stick to my plan and hold on to the position# &ime after time a lot of these small losses ill turn around and turn into huge gains# -ou must learn ho to effecti$ely plan for losses and be able to psychologically and emotionally handle them as .(ust a part of the business#/ 6hat7s your tolerance) 8s you begin to trade more and more often you ill slo ly reali!e that your tolerance ill change as ell# -oull find yourself anting to be bra$er and feel as if youre a god of the markets# -oull find yourself anting to really push the positions youre in and you ill often ha$e a feeling of being in$incible# -ou must reali!e that ithout a proper tolerance for the markets,

youll @uickly find yourself back do n to s@uare one# %nce youre back do n at s@uare one, youll finally learn that your risk tolerance is hat ruined you and hopefully not make the same mistakes again# 8$oid becoming bra$e and stick to a solid plan of in$esting3 How do you control your e"otions) +motions are a $ery tricky sub(ect as it affects people differently# &here are many different ays in hich e$ery person has in dealing ith stress, (oy, and fear# 'ore often then you e$en reali!e your emotions ill @uickly take control of a situation# What happens hen emotions take control of a situation? 'ore often than not, the outcome is horrible# -our angriness or (oy is the force pulling the trigger for the trade rather than hat is 6+82# 8 $ery smart man once told me, .0on, you gotta learn hats real in life and hats (ust feelings#/ I$e follo ed that one sentence of ad$ice into becoming a professional trader# When the market turns south and you cant handle it, close out for the day and go do something non"trading related# %nce you let your emotions take control of your trading position, you$e lost control and are no longer a professional technical trader#

+motions of anger hen Id take a large loss influenced my trading decisions for a long time, but slo ly I ould analy!e trades Id make hen angry and reali!e ho much money I as actually losing# <o , hen my emotions get out of control the first thing I do is shutdo n my computer until I$e completely cooled off# Chapter 0: Are Syste"s Aust ;sycholo!ical) Should $ou Let A Syste" +eter"ine $our &ntry And &=it ;oints) It seems these days that e$ery trader has some type of system they are follo ing# From the ay I see it, there are three different systems a trader can follo 9 7omemade system ,rofessional 0ystem Ktrader must manually enter and exit the marketL ,rofessional 8utomatic &rading 0ystem Ktrader does nothing at all, the program automatically enters and exits the market for the traderL I$e seen them all in my days and almost daily Im asked by beginner traders, .What type of system should I use?/

Well, first off, if you are a beginner trader I highly ad$ise creating your o n system of indicators# )hances are youll use false indicators hich ill result in you losing money# I dont ad$ise against using professional systems, but you must be able to sort through I0% of the A0 systems and find one that is suitable for you and really profits in the long run# I suggest looking for systems ith pro$en and documented track records# &he last type of system I ad$ise not using#

&he trading soft are orks ith a program that actually enters and exits the market for you# -ou ha$e !ero control of your money as ell as your entry and exit points in the market# &he reason I ad$ise against using automatic soft are systems is the lack of control and the possibility for errors that can occur# &hink about it, hat if one day youre a ay from your computer and the system crashes after it has already entered the market# -our position heads do n *00 pips and you ha$e no ay of kno ing hat is going on, mean hile your program has crashed3 Aelie$e it or not, e$en ith a real system in place many traders do not follo the rules of their system# Its ama!ing to me ho many traders ill trick themsel$es into really belie$ing that their system is telling them to open

a position hen its really not#

8 trader must ha$e confidence in e$ery

single rule of the system in order to be successful hen using a system to determine the entry and exits points of his or her trade# If after a period of ten trades you do not belie$e in your system, then its time to re"think and re"organi!e the system youre using currently# &he second you trick yourself into belie$ing that you ill lose in the long run follo ing your system then theres no reason hatsoe$er to continue to follo it# 8 system orks ell in helping you to look at the big picture instead of focusing so hard on the results of one particular trade# For many traders, it helps to put exchanging currency into a .big picture/ in hich they start to look at it as a real business instead of taking each trade one by one# For many traders, I firmly belie$e in trying $arious systems ith small position si!es until they find the right one for them# Ay putting all your hope in one system, you are setting yourself up to be disappointed if the system doesnt perform ell, thus influencing your emotions on systems in general# I personally follo a couple of different homemade systems I$e fine tuned o$er years of trading# >ont be scared to create your o n system once you completely learn the currency market and ho indicators ork#

Chapter 8: Fine Tuning )our Trading +eha6ior

In order to be the best and most profitable trader you can possibly be, you must learn to be able to thoroughly examine e$ery aspect of your trading beha$ior# Its your trading beha$ior that ill determine hether you are the trader that has G*00,000 in profits at the end of the year or do n G?0,000 dollars# Are you really a:le to ta'e action) Well, you should be able to kno this about yourself by no # -ou must be able to take action on your plans, ideas, and concepts if you ant to be a successful trader# &here are people that are born to act and ill take action e$eryday in their li$es# &hen there are others ho literally ha$e to be forced to take action on anything in their life# Are you a:le to deal with the decisions you "a'e1 !ood or :ad)

%nce e make a decision, no matter the result, e ha$e to li$e and belie$e in the result that e are about to make# If the action of the decision you make does not act in a particular ay, e still ha$e to be able to li$e confidently ith the decision e ha$e made# If you think about life in general, its (ust a result of all the pre$ious decisions e ha$e made# 8 person simply cannot li$e ithout making decisions for him or herself# <o matter hat trading decision you make, you must be able to li$e ith the decision you make, good or bad# &he second you start to second guess your decisions, you are going to become a $ery indecisi$e trader that ill make a lot of mental, technical, and emotional errors# +o you tric' your "ind into :elie2in! so"ethin! that7s not true) &his sub(ect is $ery important because too often traders ill trick their mind into belie$ing something about the market that is simply not true3 &here is t o main terms that you should learn about trading, hat you 'now and hat you :elie2e8 &he t o are actually @uite different, but people ill act as if they are the same# ,eople 5<%W technical facts, ne s facts, and $arious statistics, but hat they belie$e from the information is completely different#

For example, lets say you spent a couple of hours doing technical and fundamental research on the +16O10> pair# -ou belie$e the euro is going to rally on the dollar based on $arious researches you$e performed# In addition, your friend ho orks as an in$estment banker has also confirmed that he belie$es the euro is going to ha$e a strong rally on the dollar once ne s is released# 8round ?pm 'onday ne s is released in hich the exact opposite occurs# &he euro begins to drop rapidly and youre stuck ith the position# <o , you ha$e t o options, you can go ith hat you 5<%W and hat you A+2I+;+# -ou 5<%W the euro is dropping rapidly and youre losing money, but you may still belie$e the market ill rebound and you ill in# The Buestion is1 when do you stop :elie2in! and start actin! on what you 'now) <o belief is orth more than your money is# -ou can only act so far on a belief as opposed to an actual occurring fact# If you begin to $ie that your belief is not being backed by an actual track record of success, then you ant to immediately re"think your beliefs# &he reality of beliefs is they begin to li$e a life of their o n hich gi$es the trader a sense of security hen many

times it leads the trader on a destructi$e path here the trader begins to make trades on hunches and beliefs rather than real statistics# Are you a:le to handle :ein! wron!) I kno it sounds like such a stupid @uestion, but its really a huge deal# If you cant handle being rong, then making trades on a daily basis is going to become a $ery difficult task to accomplish# &he sub(ect of being rong comes up $ery often in the trading orld due to the amount of times e$en the best trader in the orld is rong# Its a feeling of outright inferiority hen e follo through on a decision and it turns out to be dead rong# &he real danger of being rong is hen a person starts to attach their ego to the money they make# +go is a dangerous trait as it ill make people take actions and make decisions based on !ero merit# &raders ill build up such an ego about trading that hen they are rong they feel like a complete loser# When this occurs, the temporary loss of money fuels our anger and

ants to get the money back into our account immediately# &his stage is here I0% of beginning traders ill break rules in an effort to recoup the losses that had (ust occurred hours before# * in ? or * in F times the trader ill be successful hen breaking the rules of the system, but the other

B0"J0% of the time, the trader is rong and ends up losing more and more# -ou must be able to handle being rong hen youre rong about your trading decisions#

Chapter 9: o: )ou #hould Act and +eha6e When )ou;re Winning

Its often said that hen a trader is right you can begin to $ie his true skill and pride for his or her ork# &heres not a better feeling hen trading then being consistently right# I can remember times hen I ould go on a string of *5":0 trades here hat I predicted ould happen in the market is hat exactly happened# Its like the market as playing to the tune of my brain a$es# &he most common mistake people make hen ha$ing a string of good trades is upping their unit si!e ith the belief that their inning streak is going to keep going for months to come# 6hat should you do when you are on a winnin! strea') When you are on a inning streak, instead of upping your unit si!e temporarily I recommend treating yourself in the outside orld# =o out for a nice dinner, take your lo$ed ones out for a mo$ie, buy something nice for yourself, but do not up your unit si!e3 +$ery trader should ha$e a ay of

re arding themsel$es for a nice inning streak# -ou deser$e it after you kept to your strict plan of trading and practiced great discipline to beat the markets# 6hat you should not do when you are on a winnin! strea' -ou must learn to think that e$ery trade is .(ust another trade#/ Aefore you e$en sit do n to trade you should ha$e a pre"determined plan of gro ing your account and gradually upping your unit si!e, under no circumstances should the unit be increased based on a recent inning streak# )ountless numbers of traders ill begin to feel like they are superheros in the market and ill start to enter the markets for @uick scalps# &he larger the

ego, the more often a trader ill enter in an effort to ha$e a small rush to pick up a fe pips# 6emember the kid in preschool ho ne$er anted to follo the rules? &hats ho many traders ill act hen they are on a inning streak# &hey begin to honestly belie$e the market ill act in their fa$or no matter hen they decide to enter or exit the market# +$entually, this type of beha$ior ill catch up ith the trader and the result is the trader ill become stubborn and push him or herself into a hole that they ill ha$e trouble getting themsel$es out of# %nly hen the trader really sits back to

$ie the beha$ior they$e (ust exhibited due to a fe

inning trades do they

reali!e the long string of mistakes they$e made due to their inning streak# 8fter the trader starts to hit a small losing streak, no hat I call

.market re$enge/ kicks in and the trader goes into full blast mode here they ill do anything to get their money, ego, and feeling of superiority back# Im sure you kno at this point hat happens next, the traders initial inning streak turns into a losing streak here the trader returns all the pre$ious innings plus a lot more pips and actual money# +$entually, a trader that acts in the ay I (ust described ill reali!e that a inning streak is actually detrimental to being a consistent inning trader# &rading on re$enge is a concept that (ust does not make sense# 6e$enge is usually an act of getting back at someone, but hen you make a rong trade and use re$enge as your moti$ation, you are actually (ust setting yourself up to get back at yourself# -oure trading against yourself, hich is impossible to do3 In order to be successful you must be able to take your ins and stride and not become emotionally in$ol$ed hen you make a rong trade#

Conclusion
Aeing a professional trader is a lifelong experience in hich you learn one more skill of piece of information ith e$ery trade# If I ere to start my trading career all o$er again from s@uare one, I ould ha$e set aside six months of strict market education# Instead, I as gullible enough to belie$e I could (ump right into the markets and start to make a stable income immediately# I as lucky enough to meet experts in trading that taught me the ropes and helped me to keep e$erything in perspecti$e# If I hadnt of met those people, I probably ould of ga$e up trading a long time ago# Ay building a good support net ork of both traders and non"traders, you ill be able to build more as a trader and a person# While the life of a trader may seem glamorous at first look, it actually is a long and hard grind for years# %nce you become an expert trader and put in years of experience, trading ill appear as normal as aking up in the morning# -oull be able to steadily enter and exit the market ith no hesitation at all and ill ne$er second guess yourself# &rading could be one of the most re arding tasks you e$er learn# 8s long as you are able to keep your ins in stride ith confidence you ill be able to gro your confidence

ith the least amount of risk# &he lo er the risk, the more comfortable you ill be able to feel on a daily basis# =ood luck out there, its a great orld3