Za7 Blog

Balance: $21114 Goal: $50,000

That’s some hawt profit right therr. Its a 72% ROI calculated on June’s beginning balance. Its beyond my expectations and I am amazed. But really, it doesn’t mean I am a good trader yet, nor does it mean that I am entitled to at least this every month. I still focus on making good trades and managing them appropriately. I am much closer to my goal and it gives me confidence that I will be hitting my $50,000 account balance goal sooner than expected. I still focus on improving and using my margin appropriately. Actually, my broker says 200:1, but on the EUR/USD, it is 129:1. So my entries are quite a bit more conservative than other traders’. But I like to make more entries when I see price action presenting an opportunity.

I just listed the trades that were not included in the previous June entries and the sum for the month. I was actually $9200, but the last day I decided to take losses on open trades that were large size to minimize risk. For a long time, I had a dream of making $1000 profit in a day, I skipped right past that to make a $3003 day. Its not going to my head, I know my average daily profit is more important. I keep a running daily goal of 1% ROI and most days I make it. I like to keep the goals modest and exceed them, its a much better feeling than setting a 3% daily ROI goal and never acheiving it. You would start to feel cheated and try to overtrade because you felt like it was a certainty. Well, since these profits are not certain, I will continue to keep my goals modest and hope to exceed them. I still have quite a few negative trades and my main focus is not profit right now, but putting trades in position to help me get free of these negative trades for minimal loss. I have a few plans that are working well. I take profit on trades that I am fairly certain will turn to 0 if I leave them open, but other than that, account management is the name of the game for the start of July. As of July 11th here, I am up + $2532 and the account is under very little risk.

I want to mention something that might help you in your quest to be a successful trader. I have read many Forex books, but my favorite is Mark Douglas - The Disciplined Trader. It opened my eyes to many things about myself and my trading that I could not have figured out on my own. Reading it again, I am reminded of one of my favorite topics - Scarcity and Abundance. It drives us and also causes us to fear and make mistakes. Scarcity is the mindset that there is not enough for everyone, it is rooted in fear and drives people to react instinctively and usually irrationally. Abundance is the opposite, there is plenty for everyone; we all can win, we all can get what we deserve, we can don’t have to rush. Let me outline how these two ideas play out in trading:

Scarcity will:

• force us to buy at the top of a rally because we don’t want to miss out on the move.
• take profit early for fear that our profits will not easily come again.
• make us to believe that our trade size needs to be bigger than usual because this opportunity won’t happen again soon.
• push us to trade more and more in the belief that we have not taken enough profit yet.

Abundance will:

• allow us to wait for price to come to us because this price pattern happens often.
• give us satisfaction to pass on a trade because we understand there will be more like it again soon.
• permit us to trade less often since we feel satisfied with our current profits

These are very similar to fear and greed reactions and motivations. I believe that the fear we experience comes from the scarcity thoughts we have. I believe that once we understand and acknowledge these emotions, we can begin our defense against these destructive thought patterns. Our defense is to recognize when these thoughts start to occur and shift our thinking to the abundance mindset. Here are some questions to ask when you are in this situation:

1. Do I have enough already?
2. Do I need to stay out of the market right now?
3. Where is this move going to pause so I can get a better entry?

Here are couple of links to a great website I found a couple years ago. It has a wealth of very well written articles. I found it when I Googled the word “Discipline”. Here you can learn more about the Abundance Mindset. There are also over 20 excellent audio podcasts for free that are entertaining to listen to while you watch price action. They will stimulate your thought and make you question some things. All the stuff on the site is free and I have no affiliation with Steve.

Account screenshots for June:

I wish you the best trading and hope you find these thoughts useful.

Adam

This entry was posted on Thursday, July 10th, 2008 at 10:29 pm and is filed under Forex. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.