MANAGING YOUR EMOTIONAL EQUITY & TRADING CAPITAL

[FX4Newbies]

So... when you are getting into a trade, are you paying attention to your state of mind and your emotions?

Just before you click...

1. Are you entering the trade by following your trading method to the letter?

2. Are you entering impulsively hoping that you can grab a few pips?

3. Are you entering trying to recover previous losses: revenge trading?

4. Are you entering because of a hot tip from a trading buddy or some online service?

5. Are you entering out of boredom, because you have been waiting too long for a trade and your time is running out?

Be very clear as to your WHY for entering the trade. Any other reason other than #1 will often trigger an emotional state of mind as the price begins its "song and dance". Fear would likely begin to surface and would, with it, bring other negative emotions.

Learn to guard your emotional equity as much as your trading capital.


FX4Newbies

In response to this and other posts...

Let me just throw out here some of the popular trading methods/edges out there:

1. Price Action Trading (Naked/Clean Charts): heavy reliance on reading candlesticks and their formations etc.
2. Harmonic Patterns/Fibonacci Levels.
3. Mean Reversion Methods.
4. Andrews' Pitchforks.
5. Zone Trading. (Trading breakouts and trading from one price level (S/R) to the next...S/R meaning Support/Resistance.
6. Pivot Levels.
7. Elliott Waves.
8. Ichimoku Kinko Hyo ...decided to add this as well.
9. Methods that include trend or momentum indicators...and the like.

There are more but, we'll stop here for now. By the way, these are not listed in order of preference...just randomly listed.

All of these methods have specific triggers to provide the trader with clues or "signals" to get into a trade. Honestly, Mr. Market does not care what you use, as long as you get in! Once in, the mental-emotional war can begin. So how should a trader decide which one to choose? More on that to come...

Regardless of the method you choose, it should generate trade ideas that provide these two opportunities:

1. A LOW-RISK entry.
2. A HIGH-PROBABILITY profit target.

Your trading method should be as sharp as possible in giving you trades that meet both of those criteria.

That's it for now....enjoy your weekend.


FX4Newbies

 

[FX4Newbies]

A Question for You:

Of the methods listed in the post above, which do you think should be in the Top 3?

 

[FX4Newbies]

Here is a powerful quote from the PDF found here:

What money means to you psychologically

Anecdotes, comments, discuss. " You won’t be losing money so much as you’ll be losing what money means to you psychologically. The minute you start using money psychologically you’re banging nails into your trading coffin. "

www.trade2win.com

"Trading is a game between your emotions and your psychology. It’s a game between amateurs and professionals. It’s a game between your account size and time. If you have what it takes and you get a really good coach and you put in all the work, discipline, personal sacrifice and training that’s needed, then there is a high probability you will succeed. However if you don’t do these things the odds are stacked against you. Approximately 80% of all would-be traders lose their trading accounts in a very short time and never recover. This means that nearly 80% of all those who attempt to trade are not disciplined, don’t have the right psychology, don’t have the right coach, don’t trade to a well-defined and worked out system or simply run out of money, time and commitment before becoming sufficiently skillful traders."

Posted it here because I agree 100%!!

Just chatted with someone who is using a highly touted method they bought online (won't say where), and for 2 years they have been up and down with it. That tells me something is missing somewhere.

If you have been in a similar cycle, stop! Make some serious changes before you get going in 2025. If you're not using a method that is working, it shouldn't take that long to figure out that something is wrong somewhere.

 

[FX4Newbies]

In response to this and other posts...

Let me just throw out here some of the popular trading methods/edges out there:

1. Price Action Trading (Naked/Clean Charts): heavy reliance on reading candlesticks and their formations etc.
2. Harmonic Patterns/Fibonacci Levels.
3. Mean Reversion Methods.
4. Andrews' Pitchforks.
5. Zone Trading. (Trading breakouts and trading from one price level (S/R) to the next...S/R meaning Support/Resistance.
6. Pivot Levels.
7. Elliott Waves.
8. Ichimoku Kinko Hyo ...decided to add this as well.
9. Methods that include trend or momentum indicators...and the like.

There are more but, we'll stop here for now. By the way, these are not listed in order of preference...just randomly listed.

All of these methods have specific triggers to provide the trader with clues or "signals" to get into a trade. Honestly, Mr. Market does not care what you use, as long as you get in! Once in, the mental-emotional war can begin. So how should a trader decide which one to choose? More on that to come...

Regardless of the method you choose, it should generate trade ideas that provide these two opportunities:

1. A LOW-RISK entry.
2. A HIGH-PROBABILITY profit target.

Your trading method should be as sharp as possible in giving you trades that meet both of those criteria.

That's it for now....enjoy your weekend.


FX4Newbies

Some of the most popular methods online from my general observation seem to be:

#1 - Price Action/Clean Chart
#2 - Harmonic Trading
#7 - Elliott Wave

Of these three, only the Harmonic Trading has an element of time built-in, and there are times when harmonic patterns give triggers but, time and price are still not ready.

When putting a system of trading together, try to avoid using just one method. That is an important way for you to reduce risk.

 

[ChelseaR]

Some of the most popular methods online from my general observation seem to be:

#1 - Price Action/Clean Chart
#2 - Harmonic Trading
#7 - Elliott Wave

Of these three, only the Harmonic Trading has an element of time built-in, and there are times when harmonic patterns give triggers but, time and price are still not ready.

When putting a system of trading together, try to avoid using just one method. That is an important way for you to reduce risk.

How do you incorporate time factors in Harmonic Trading patterns to ensure they align with price action and improve the accuracy of your entries?

 

[FX4Newbies]

Hi ChelseaR,

I am referring to Harmonic Trading and Harmonic Patterns as separate approaches, though there is a common thread, i.e. Fib ratios. The completion of a harmonic pattern would generally be an entry for those traders, but there are times when the price does not turn as expected. So what are some options to fine-tune the entry in time?

1. Fibonacci Time Tools.
2. Divergence.

As far as price goes, whatever you use to establish strong Support and Resistance levels. Some people use Pivots. Some manually draw horizontal lines from the Monthly down. Some may use Volume./Price Analysis.

Btw, I wouldn't say "ensure"...just improving accuracy. 😉

Take care.

 

[ChelseaR]

Hi ChelseaR,

I am referring to Harmonic Trading and Harmonic Patterns as separate approaches, though there is a common thread, i.e. Fib ratios. The completion of a harmonic pattern would generally be an entry for those traders, but there are times when the price does not turn as expected. So what are some options to fine-tune the entry in time?

1. Fibonacci Time Tools.
2. Divergence.

As far as price goes, whatever you use to establish strong Support and Resistance levels. Some people use Pivots. Some manually draw horizontal lines from the Monthly down. Some may use Volume./Price Analysis.

Btw, I wouldn't say "ensure"...just improving accuracy. 😉

Take care.

Understood, thanks!

 

[FX4Newbies]

Understood, thanks!

Most welcome!