3 Killer Steps to Forex Swing Trading for BIG Profits

A trading strategy for forex using the principles of swing trading is both very popular and relatively simple. It can be used with any time frame, and lends itself to short term trading. Taking off many smaller bites is often more profitable in the long run than fewer larger and more risky chunks. The advantage of using this type of approach is that the technical analysis requirement is not very onerous, and the key principles can be picked up quite easily.

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Three steps to Forex swing trading:

1. Trend analysis

Establish the direction of a trend, either up or down, for your chosen currency pair. One useful way is to apply the 10ma and 30ema lines to the chart, for whichever period you are charting (eg. the 5 minute, one hour or four hour chart). Use an indicator such as the ADX to establish the strength of the trend, and if it is reasonably strong, look for support or resistance points.

2. Entry point

Look for an entry point using normal candlestick patterns. Alternatively, watch the price oscillations as they move between the two moving average lines. You may want to set up an order for when the price retreats from its trend. Make sure that you buy cheap! In a downtrend, sell the pair, which is the same as shorting a stock or buying a put. You will then buy it back for a profit. In an uptrend, buy the pair and sell for a profit.

3. Set a stop loss and profit target

Always set a stop loss before you set a profit target. It is really important to make sure that your capital is protected. After that, set a profit target based on your favourite method: Fibonnaci lines, or a particular percentage, or even a swing back up onto the trend line. Whatever it is, be willing to take your profit and exit the trade – don’t get greedy and try and ride the trade. It is always better to lock in your profit and set up the next trade, if the trend is holding.

In forex, trend reversals can happen very quickly, and trades can be executed extremely quickly. Under the right circumstances, profits can be taken within a couple of minutes. With such an exciting trading environment such as found with forex, make sure that you investigate swing-trading-options , and have developed a solid trading plan.

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Analyzing a Forex Market

Analyzing a Forex Market by Rob Abels and Duane Davis

The following in an excerpt from Rob Abels and Duane Davis The Stryker FX System

Basically, with any type of investing (or trading), there are two types of analysis that one can do before deciding on a trade:

1.  Fundamental analysis
2.  Technical analysis

Fundamental Analysis

Fundamental analysis consists of looking at a country’s economic, social and political forces.  The currency of a country whose economy is strong and stable, is likely to go up while the currency of a country whose economy is weak, is likely to go down.  In other words, if a country’s economy is doing well, the currency will also do well.  The better a country’s economy, the more trust other countries will have in that particular currency.

In the case of the US Dollar, when there’s an announcement by the Federal Reserve that the Fed Funds interest rate will be raised by .25%, it’s very likely to have an affect on the dollar.  Similarly, if the Bank of England decides that it’s going to lower interest rates, then it’s very likely that it will affect the value of the British Pound.  These announcements (or at least the prospect of such announcements) are referred to as‘fundamental analysis‘.

Technical Analysis

Technical analysis is the study of price movement.  Most traders that prefer technical analysis will argue that there is no need for fundamental analysis because the ‘fundamentals’ are already reflected in the price of that particular market and therefore, it’s already reflected in the price chart.

In the U.S., as the day of the Fed meeting grows closer and the economists voice their opinions as to what the Fed is likely to do, to a certain extent the value of the U.S. Dollar will be affected.  Then, when the announcement is finally made, the market for the dollar will react accordingly.  If the prospect was for lower interest rates and the value of the Dollar goes down before the Fed meeting and the announcement turns out that rates are to remain unchanged, any losses in the Dollar will suddenly be reversed.  But all of this is already reflected in the price chart.  By looking at charts, you can identify trends and patterns which can help you find good trading opportunities.

Because most currencies have a tendency to trend for weeks or even months at a time, spotting a trend and trading in the direction of that trend can be very rewarding.  Technical analysis can help you identify these trends in their earliest stages.

When trading in the Forex markets, both types of analysis are just as important.  Although technical analysis may have certain advantages, there’s nothing like knowing that a government has just raised (or lowered) its interest rates.

Most of today’s technical indicators were developed as recent as the 1970’s by such people as Gerald Appel, Larry Williams and Welles Wilder just to name a few.

Data Providers

There are many different providers of Forex data and price charts.  Some can be found free on the internet, but we prefer a more professional approach.  While it is not out goal to endorse any particular data provider, the charts in this book have been provided by TradeStation Securities.

Price Charts

Through the years, traders have used different ways of plotting price movements on charts.  Here are a few:

Bar Charts – By far the most popular and widely used

Line Charts – Very useful for looking at the overall trend of a market

Candlestick Charts – Similar to bar charts, but more graphical

Point and Figure Charts – These are not very popular today

Bar Charts

Most traders prefer bar charts, but in the 24-hour Forex markets, bar charts are not quite as meaningful as they might be in other markets.  In markets that close at the end of the day and remain closed overnight, a ‘daily’ bar chart represents what happened in that market during the course of a ‘normal business day’.  The first trade of the day (the open price) is designated on the bar as a horizontal line extending slightly to the left of the bar.  The last trade of the day (or the settlement price) is designated by a horizontal line extending slightly to the right of the bar.

But in the Forex markets, trading is continuous from the open on Sunday night to the close of trading on Friday night.  Thus, the open and close of each day are a little less meaningful.

On a weekly basis, however, the open and close are very meaningful.  At the end of trading on Friday, the closing price represents the market value that traders are comfortable with for the next few days.  Similarly, on Sunday night, the open price represents a true continuation of that market and there are many times when the Sunday night open is somewhat different from the Friday night close.  This difference in price can be seen on bar charts as a ‘price gap’.

Line Charts

A line chart is constructed by connecting the closing prices of each bar.

Line charts are best used with indicators such as moving averages and oscillators.

Candlestick Charts

Candlestick charts show the same information as a bar chart, but in a more graphic format.

Here’s a closer look at the same chart:

The price range in a candlestick chart is the same as in a bar chart.  The real difference lies in the area between the open and close prices.  In a Candlestick chart, the area is enclosed and is referred to as the ‘body’.  Traditionally, if the body in the middle is filled or colored in (black in the chart above), it indicates that the price closed lower than where it opened.  Thus, with Candlestick charts, it’s very easy to see the negative bars in the chart vs. the positive bars.  In this chart, the price is obviously in an uptrend.  When the price is moving up, most of the bars will be hollow or unfilled (white in this chart).

When the body of a Candlestick bar is long as compared to most of the other bars in the chart, it indicates that there was intense buying or selling pressure.  Similarly, short bodies imply that there was very little direction to the market that day.

Here are a few advantages of using candlestick charts:

Candlesticks are easy to interpret, and are a good place for a beginner to start learning chart analysis.

Candlesticks are good at identifying marketing turning points.

Candlestick patterns have names for various formations such as Doji, Shooting Star, Hanging Man, etc.  These names help to describe what the pattern means and the affect it may have on future prices.

5 Dead-Simple but Effective Forex Secrets for Triple digit Anual Gains

Do you want to make triple digit gains? Then these simple forex tips will help you if you’re a novice or an experienced trader. There simple but many of them don’t conform to majority opinion, don’t let that worry you though, the vast majority of traders lose. Here are your forex tips.

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1. Trade Less to Make more

You can trade less than once a month and make triple digit gains – trading frequency has no bearing on how much money you make. In forex trading you get rewarded for being right with your trading signal – NOT the effort you put in. People who day trade and scalp for example simply trade low odds trades, pile up transaction costs and get nowhere, don’t make this mistake. Only trade high odds trades and be patient.

2. Trade High Odds breakouts

Most major moves start from new lows or highs so trade breakouts that are considered valid by the market. This means numerous tests, in different time frames and if possible wide apart. We have covered breakout trading in our other articles so look them up, for more information on this timeless way to trade and catch the big trends.

3. Don’t Diversify

This is simply a way to dilute your profit potential. Why add in some low odds trades to diversify a high odds trade? – It doesn’t make sense. All you will do is make smaller gains. Concentrate on one high odds trade at a time.

4. Load Up The Trade

I often hear traders say you should only risk 2% per trade but this for most forex traders means you won’t make big gains. Why? Because your account is too small. Consider this – if you have a $1,000 to trade 2% of that, you risk $20.00 unleveraged. You won’t make much on that, as you will probably have your stop to close. To make money you need to take calculated risks at the right time.

If you’re confident risk more 10 – 20% and make your money work for you. Your better off to be patient and trade one big high odds trades, than lots of smaller risks on low odds trades where your almost certain to lose. If you want to make money, you need to take a risk – just make sure you risk it at the right time.

5. Don’t Lock in to quickly

This goes with the above tip. Most traders are so concerned about restricting risk they actually create it, by moving their stop to soon and getting stopped out by random volatility. Don’t do the same with your forex strategy, give the market room to breathe and take short term losses in open equity and keep your eyes on the bigger prize. The big trends last for weeks, months or even years, milk them for as much as you can.

You may say the above strategy is high risk – but risk is not just related to how much you risk, it’s related to your chances of success. Most traders think if they take a small risk that’s great – but its not so great if your odds on to lose. The above forex trading tips are for the trader who knows that to make money you need to risk it. There is a big difference though, between taking calculated risks at the right time and simply being rash.

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5 Dead Simple Secrets to Keep You Consistently Profitable in Your Forex Trading

I want to share with you some trading tips designed specifically for the determined forex traders. This is a great market to make good money, but you need to keep things simple, so you can keep things profitable.

1. The first tip I could give you is focus on building a routine. Having a routine is the key to success. After a routine is acquired, absolutely no mental thought needs to be expended to do it. When you brush your teeth, you don’t think about it. You just do it because it’s a routine. When you’re forced to think of new strategies and what you need to do today and all that stuff, it wears you down.

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It is a mental hill you have to climb and really leaves you unmotivated. Having a routine where you have most of your day as a routine, you don’t have to think, you just go do it. When you get to the point where you just do things and you make money, you’re ahead of everyone else. Now you can use your mental muscles on tweaking your routine to make you even more money.

2. The next tip I’ll give is with regards to when you trade. When do you think the best time for you to trade? When most people are or When few people are? I bet most of you would say when few people are, but this is wrong. This is probably one of the few situations where following the crowd is the best way to making money. The reason is that during the times where few people are trading, there are usually big banks trading.

Big banks make big trades and these trades greatly effect the currency which can cause them to move in the opposite direction than you anticipated. All that skill you learned anticipating the direction of a currency goes out the window because you’re at the mercy of a big trader. If you look at the time everyone is trading, there is so much volume that market forces are in control. So when a big bank makes a big trade, it doesn’t really have an effect because there is so many other trades going on.

3. My last piece of advice is to get the tools required for your business. You wouldn’t see a carpenter without a nail gun and hammer, so you shouldn’t be a forex trader with out software like Forex Killer. Most traders aren’t confident enough to leave money in the market while they goto bed. Software will automatically watch the currency and trade it so you don’t lose money and trade it, so you make a good profit. Forex Killer has other added benefits such as searching currency graphs for trends that you can use to make profit.

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Three New Trading Strategies For You

We have 3 new trading strategies for you. Hope you can really benefit for them.

Here they are…

1 Min Forex Scalping Trading System

Forex Trend Follower System

Early Bird Forex Pattern Strategy

Have a great trading day.

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Lesson: Calculating Trade Size

The next area that needs attention is position size. That is, we need to talk about how much we are willing to trade with when we buy or sell a currency pair. With a %R and stops that fit the trade there actually isn’t a set trade size that we will be using. Instead we will be calculating the trade size based on the numbers we came up with in the previous two chapters. Some traders take the point of view that simply setting stops is enough to manage risk.

They predetermine how much they are willing to trade based on a percentage of their initial account and set their stops when they trade. This idea is
really only managing your risk in part, and it isn’t enough.

Calculating a proper trade size will ensure that the work we have done this far means something. When we are on a losing streak and our balance is
lower we will be trading less, and as your account grows you will trade more. This is very important to both maximize profits and manage your losses.
In this case, there isn’t a lot to say, so let’s just dive right in!

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*Information you need before hand

When calculating your trade size there are a few pieces of information you need ahead of time. We need to know our %R and we need to know the stop level ahead of time. For the purposes of example let’s look at an example

The example is 1 Hour USD/CAN chart with the Automatic Trade Range indicator added. The current ATR is 0.0035, so if we were to enter this trade
we would be using a (0.0035*2 = 0.0070) 70 pip stop.

The final piece of information that we need is a $ value for 1 pip when trading one lot. I purposely chose the USD/CAN currency pair to demonstrate how to calculate this.

If you always trade the EUR/USD pair or the GBP/USD pair then you needn’t make this calculation since a pip will always be worth $1 for mini-lots and $10 for full lots.

To calculate a per-pip value for the USD/CAN pair, here’s the formula:

(1 pip with proper decimal placement/exchange rate) * lot size = pip value

So in this case we get:
(0.0001/1.1550) * 10,000 = $0.8658 per pip for a
mini lot or

(0.0001/1.1550) * 100,000 =$8.6580 for a full
lot.

In other words for every lot of USD/CAN currency we trade. If it moves one pip we are earning or loosing if the trade goes against you $8.6580

That’s all for today.

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Trading Psychology – Stage 1. Blissful Unawareness.

Trading Psychology – Stage 1. Blissful Unawareness. by Reality Trader

As we mentioned in the previous article, first stage is usually the one where a newer trader doesn’t acknowledge the role of psyhcology in his trading. It happens out of ignorance or arrogance.

In a former case (ignorance) it’s simply lack of knowledge and mistaken notion that one can trade succeffully if given “right” system or indicator or tip or whatever causes one to enter and exit his/her positions. It usually takes a while before a trader starts seeing how his mindset influences his trading and how his personal traits shine through his trading decisions. It comes as a surprize realization that different traders will get different results while trying to apply the same system. It is counter-intuitive, isn’t it?

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In a latter case (arrogance), a trader shows some kind of denial – it’s “not me” attitude, thinking that goes along the lines “maybe it’s a problem for some but I am in control of myself,” “this stuff is for weak-minded” etc. Needless to say, it’s rarely the case… and even more importantly, it’s not so much about weak vs. strong mind as it is about influence one’s personality has over one’s trading.

In any case, the important thing at this stage is to come to appreciate this aspect of trading. It happens when one sees how much truth there is in saying “everyone gets what they want out of market” (Ed Seykota I think?) Again, seems counter-intuitive, right? After all, don’t we all want to succeed, to make winning trades, to make money? Sure… but it’s not about what our conscious mind wants, it’s about what our inner core dictates, and that is not always easy to realize and control.*

Simple example to illustrate the idea: do you know people who repeat certain behavior patterns harmful to themselves? Getting themselves into relationships with the types that make them miserable, over and over again? Repeating the same mistakes in their interaction with others, obviously not learning from the past? I bet you do (although you personally never act like this, right?) So, why do we do it even though we see (or could see if we looked) that these behavioral patterns hurt us? Because those patterns are not just some easy to break habits; rather they are a part of our personality, of who we are, and it takes much more than simple decision not to do that anymore to change our ways. Pretty much the same thing happens in trading – we know what not to do yet we continue doing it.

As soon as one realizes all this, the first stage is completed. The role of psychology in trading is acknowledged, denial is over – and this forms the foundation for a change.

*My favorite example of this phenomenon is the Russian movie Stalker. The plot line briefly: there is a certain machine granting wishes (stalkers in the movie are the people who take clients to it through the many dangerous traps). The machine grants wishes alright but there is catch: it’s not a wish that you stand in front of the machine and announce that will be granted… it’s a wish that constitutes your essence, your core, your deep desire – and it’s not necessary the one you realize and announce to yourself and to the world. Pretty much what happens in trading and pretty much what the author of that saying (everyone gets what they want in trading) meant.

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About the Author

RealityTrader, lead by seasoned trader Vadym Graifer, is dedicated to provide traders with a solid understanding on how the market functions and how to implement time-proven techniques in a step-by-step and consistent manner.

Vadym is the author of Techniques of Tape Reading (McGraw Hill 2003), How to Scalp Any Market (2005),Master Profit Plan (Trafford, 2005) and A Taoist Trader (2010). Vadym is a frequent featured speaker at International Trader’s Expos, private seminars and Financial Forum Conferences.

Realitytrader provides a community where traders can refine their trading skills with helpful hints and tips from those that trade the market everyday in a safe, affordable and non-threatening environment.

RealityTrader is dedicated and committed to teach you everything about this evolving market. Evolve with us, not after us.

How Many Psychiatrists Does It Take To Change A Light Bulb?

How Many Psychiatrists Does It Take To Change A Light Bulb? by Janice Dorn, M.D., Ph.D.

All serious daring starts from within…Harriett Beecher Stowe

Sometimes, it takes a lot longer to get anywhere near the truth.  In this case, it took nearly one month of phone calls and e-mails.It all started with a phone call.

Jerry (not his real name) phoned me and talked non-stop for nearly 30 minutes about how much he knew about trading and how great his plan was.

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Things that make one go …..Hmmmm? No one calls to tell me how well they are doing.People call for help, and I couldn’t hear any cry for help from Jerry.

“Jerry, why are you calling me?If you want help from me, please send me your trading plan and trading journal and then let’s see? Please stop talking and send me the stuff? Do you want my help?Then I implore you to stop talking and listen for two minutes.”

After some nervous laughter and vague commitment, the call ended, and the e-mail saga began.

Jerry had spent over 3,000 hours watching one particular currency market. He claimed to know that market “better than anyone else.” He added that there was no reason to keep records because almost every trade that set up according to his plan was a successful trade. Moreover, since he spent so much time watching this market, he had a “gut” feel for how it was going to move. He compared his “results” with those of some of the best-known traders working today, and said that if I overlaid his plan against theirs, his would be at least as good and probably better.

“Good Lord, Jerry! Please tell me what is REALLY going on?You know everything about this market.You reject every suggestion. You don’t need my help, and you certainly don’t need to brag to me about what a great trader you are.”

That comment set in motion a deluge of mails, including a new twist. Jerry was now sending me phone numbers to reach him during the day and in the evening, including when he was at family gatherings and vacations.None of this made sense, but the urgency from him was so compelling that there had to be more—much more-that I was not seeing.

“Jerry, please.  I think we have gone as far as we can go here.You are doing well, you know everything, and you won’t listen to guidance. You don’t need me.”

Then it happened.At long last—the truth began to dribble out.

Whenever you have eliminated the impossible, whatever remains, however improbable, must be the truth…Arthur Conan Doyle

Despite thousands of hours watching this one market and all of his “fabulous signals,” he had never made a trade in real time with real money-not once. As soon as he saw one, he did something to distract himself. These avoidant activities included looking away, walking around outside, answering e-mail, washing the dishes, eating, calling someone on the phone or just sitting there in a “frozen” state. He described in intricate detail the rush of emotions that went through him when he saw a trade setting up. The feelings ranged from euphoria to mild anxiety, then sheer panic because he felt he would have to “pull the trigger” and actually make a real trade.

He was completely frustrated with his inability to make even one trade and sat in disgust as all the “great trades moved in my favor without me.” He described himself as being “locked up” and “paranoid to the max.” The only way to relieve the tension he felt when there was a “perfect” signal was to let the trade pass and then sit there and wait for another one to “set up.” As the next trade began to form, the emotional roller-coaster started again. This process repeated itself until he just gave up and walked away. He described the situation as “all messed up.”

“Well that’s progress, Jerry.At least you admit that you are in sheer unadulterated rat brain hell. So what do you think would help you?”

The more I questioned him, the more combative and angry he became.He started watching this particular market at around 2:30 AM EST, and there were at least three to four “profitable” trades generated during that time. I offered to be with him on the phone in the early hours of the morning when his fabulous trades were setting up. I suggested that we watch together so that I might be able to help him overcome his fear and anxieties —and actually take a trade. Total resistance.He refused.No one could help him because he knew everything.

“Jerry, we have come to the end of the line here.I wish you every success, but please stop writing and calling me? I cannot help you because you do not want to help yourself.It all starts and ends with you, Jerry.How many psychiatrists does it take it change a light bulb?  One.But the light bulb must want to change.”

Jerry refused all help. He wanted to avoid making real trades. He wanted and needed to feel both doing and not doing the same thing over and over again.Sadly, Jerry was allowing himself to be driven insane.   Jerry was on his way to getting a TV reality show:Rat Brain Gone Wild!

He needed to experience the rush of the feelings that came from thinking about but not doing anything .He wanted to boast to everyone about his great system and how many awesome signals he was spotting. He was compelled to compare his method to some of the greatest in the world. He did not, however, want to trade. He wanted to pretend to trade and then use every avenue to convince himself that he was a great trader without ever making or losing one penny as a trader. He wanted to talk the talk but not walk the walk.

It makes no difference how good your trading system is on paper. What matters is putting that system to the test in real time with real money. What counts is the ability to put years of study and thousands of hours of practice into actual trades. Win or lose, trading is about taking risks; it’s about feeling the emotions, going with them and through them, then using the rational brain to make a trade. It’s about falling down and getting up again and again.

Great traders have courage and take personal responsibility for their action or inaction. Great traders walk their talk. Great traders actually trade!

Speaking of trading-our new real-time trading service has been up and rocking since Monday.Check it out if you really want to trade!

History, despite its wrenching pain, cannot be unlived; but, if faced with courage, need not be lived again…Maya Angelou

Thanks and Good Trading!

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About the Author

Janice Dorn, M.D. Ph.D. is a trader and trading psychiatrist. She has written extensively on all aspects of trader psychology, longevity and wellness.

Additionally, she coaches her fellow traders. Dr. Dorn also posts at her website: http://www.thetradingdoctor.com

The Skinny On Self-Sabotage

The Skinny On Self-Sabotage by Janice Dorn, M.D., Ph.D.

No profession requires more hard work, intelligence, patience and mental discipline than successful speculation…Robert Rhea (The Dow Theory)

Back in the day when I first started to trade, I was shocked silly when people talked about losses!  Say what?  LOSSES??

I remember looking at some sites that I now know were transparent– and theyalways listed losing and winning positions. I didn’t like the idea of taking loses, so I fell for the hype that I was getting from ruthless promoters who only talked about their wins (conveniently forgetting to mention their losses.)  I could not accept that a trading method would have losses built into it. It was the same as telling me that six out of every ten of my patients would die within a short period of time. Because of my perfectionism and brain bias against losing trades, I struggled for a long time to make money in the markets and ended up with more losers than winners.

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Was I self-sabotaging?   Yes. It is estimated that some 50% of all traders have a subconscious desire to lose.  This is a remarkable figure, but I see it over and over again in many traders—including my former self.  (I didn’t know how incompetent and self-defeating I really was until I finally found a great coach to help me)

In some ways, it was worse than self-sabotage.  I was attempting to use the same type of thinking that brought me success as a medical doctor (trying to heal everyone and make it all better) to making money in the markets.  I kept hurting myself by losing more money.  Perfectionism is the enemy of good trading.

Those of you who have traded for even a short time know that there are no guarantees. No one wins 100% of the time; rather, we are always dealing with risk and reward. In our live trading service at http://www.thetradingdoctor.com, we scan constantly to find trades with high probability risk/reward parameters. Once you truly embrace the reality that there is no reward without risk, you are on the road to becoming a successful trader.

There are two major psychological aspects of the risk/reward concept. Although they may appear to be similar in nature, they are not. The first involves doing things correctly. This means making a trading plan and following it with total discipline. As easy as this seems, this is where traders struggle the most because it takes work like keeping a   written trading journal as an honest inventory of your thoughts, feelings and actions during the trading day. Not keeping a trading journal is similar to a businessman who does not keep up the books for his business. How long do you think such a business will survive?

The second aspect of the risk/reward concept is avoiding mistakes. We are all human and make mistakes, but there is an upside to this. You benefit from studying your mistakes and then doing everything possible not to repeat them again. This is how we grow and develop — both as traders and in life.

We learn through our mistakes–often more so than by doing things correctly. It is through making mistakes and accepting them with rigorous honesty that we accumulate regret. This regret is a form of personal responsibility that then drives us to make a firm commitment to never repeat that mistake again.

The two practical principles that help anticipate and mitigate making mistakes are self-discipline and personal responsibility.  They are related!

Personal responsibility plays a significant role in trading success. This is because you have choices and you are responsible for your thoughts, feelings and actions in the markets. You make and accept the decision to enter or leave a trade. If you don’t, it’s like jumping out of an airplane with a defective parachute, hoping that it will start working before you hit ground. Don’t be like the mediocre swimmer heading into shark-infested waters because you sees a lifeguard on the beach and believes that you will be rescued if needed. In the markets, you are your own parachute and your own lifeguard. No one is going to save you but you! The power of personal responsibility in trading cannot be taken lightly and should be a bedrock belief. Personal responsibility is achieved through diligent practice and self-reflection and incorporated into your trading plan. The basic questions to ask are:

• Has anything changed from my original trading plan?
• Has the technical pattern (or company profile—if trading on fundamentals) changed from the time I entered the trade?
• Has my initial price objective changed?
• Has my stop been hit?

These four questions should be written at the top of every page in your trading journal because they remind you that you are responsible for every aspect of your trade. If the answer to any of these questions is “Yes,” then it is your responsibility to manage the trade.

As you can see, personal responsibility is the foundation for self-discipline. Thinking about losing or winning requires discipline. By adopting the practice of focusing daily on your trading journal and the four questions above, you manifest discipline. Analyzing your daily trading journal is the best way to spot mistakes and see where you have acted impulsively, impatiently or allowed your rat brain to take over. Taking personal responsibility for any mistakes and then being disciplined enough to avoid making them again is among the quickest way to achieve lasting trading success and to stop hurting yourself.

Order marches with weighty and measured strides. Disorder is always in a hurry…Napoleon Bonaparte

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About the Author

Janice Dorn, M.D. Ph.D. is a trader and trading psychiatrist. She has written extensively on all aspects of trader psychology, longevity and wellness.

Additionally, she coaches her fellow traders. Dr. Dorn also posts at her website: http://www.thetradingdoctor.com

Personality Type and Trading: (Part 7)

Personality Type and Trading: (Part 7) by Van K. Tharp, Ph.D.

So far in our continuing series on Personality Type and Trading we have covered a lot of ground. We have examined all of the various aspects of the Myers-Briggs personality profile and elements of these profiles related to trading.

In our last leg of the discussion we will begin with the Four Temperaments.

Psychologists David Keirsey and Marilyn Bates believe that an important basis of personality are four key temperaments. Looking from a mythological stand point, these correspond to the characteristics that Zeus told his gods to help man adopt. Dionysus was to teach man joy. Epimetheus was to give man a sense of duty, while Prometheus was to give man science. And, finally, Apollo was to give man the spirit of the gods.

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Dionysian Temperament: The Dionysian Temperament occurs in those people for whom sensation (S) and Perception (P) are dominant. These SP people (ISTPs, ESTPs, ISFPs, and ESFPs) comprise about 38% of the population.

SPs tend to gravitate toward trading because they have a strong need for freedom and independence. They don’t want obligations or to be tied down in any way. The ideal life is to do what he wants to do when he wants to do it. Action is the key for these people and they tend to be impulsive. Actually, they want to be impulsive because that gives them their free spirit and sense of aliveness.

People with this type of temperament work best in crises and they even will create a crisis just to make things more interesting. You can imagine what happens when this type of behavior is brought into the trading arena.

The Myers-Brigg’s personality types for which we have little data include all four SP categories. In fact, although SPs constitute 38% of the population, they only represent about 8.3% of our sample. Why? First, I suspect that SPs do not last long as traders and those that have enough money to last for a while are not that interested in self-knowledge, just the action of being in the market. Thus, SPs will tend to gravitate toward very short-term systems in which the odds are definitely against them, but they are still willing to take their chances because that’s where the action is. In fact, the SP probably could not do well with a longer term orientation, because that would just not fit his impulsive nature.

People with SP temperaments are good with tools. Thus, I would expect them to have the potential to work well with computers and thus do fairly well in that aspect of trading.

Record how comfortable you feel with the SP temperament by picking the most appropriate number below.

1            2            3            4            5            6            7

Although I do not recommend that one apply an SP temperament to trading, unless you want to forget about profits and just enjoy the action, the SP temperament is an excellent one to bring to many aspects of living. To develop more of this trait, I would suggest that you practice being much more spontaneous in what you do with your life. For example, pick one day each week in which you do everything just for the fun of doing it.

The Epimethean Temperament: The Epimethean Temperament occurs in people for whom the sensation (S) and judgement (J) qualities dominate. These SJs (ISFJs, ESFJs, ISTJs, and ESTJs) also constitute about 38% of the population. These people are dominated by a sense of duty. They exist primarily to be useful to the social units to which they belong.

Epimetheus was the husband of Pandora, who let all manner of ills escape onto mankind—old age, sickness, insanity, vice, and passion—when she opened her famous box. Yet Epimetheus, although forced to endure the result of his wife’s actions, steadfastly stood by her and remained devoted to her.

The SJ personality has a strong need to belong. But he must be the giver, not the receiver. He must earn his belongingness. As a result, I would not expect SJs to be that happy in the lonely world of trading unless they had a major social system for support (i.e., strong family support). However, the SJ might be quite content in an institutional trading situation.

However, the SJ personality is constantly seeking out what he is “supposed to do” to belong. They typically do well in school, because the rules are quite obvious. However, in the trading arena the “supposed to do” rules are not that obvious. In fact, if you ask enough people they will probably give you advice that is the exact opposite of what will produce trading success. Indeed, our sample of SJ traders produced below-average trading results. Nevertheless, the SJ usually has a very strong work ethic, which could help him overcome a lot of difficulties.

The SJ will shine in one of the ten tasks of trading—mental rehearsal. Why? The SJ is likely to envision all sorts of disasters and constantly be trying to figure out how to overcome them. Indeed, his personal motto is usually to be prepared. Unfortunately, much of his idea of being prepared involves following traditions (e.g., the “I go by the book” motto) and this also may not breed success in the marketplace.

Record how comfortable you feel with the SJ temperament by picking the most appropriate number below.

1            2            3            4            5            6            7

To develop SJ skills, develop a total disaster control plan for your trading. Think of anything and everything that could go wrong in your trading. And, if your list does not include at least 100 items, then you need to continue until you have that many. Once you have your list, then come up with three ways to either circumvent each disaster or to overcome it if it does happen.

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Best Forex traders worldwide, give you advice for FREE to buy or sell. ZuluTrade converts this advice to a live trade in your broker account automatically, again for FREE! Unique service, I have already opened an account!

http://moonlightforex1.zulutrade.com

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About the Author

Dr. Van K. Tharp is the founder and president of the Van Tharp Institute and stands out as an international leader among professional trading coaches and consultants. Helping others become the best trader or investor that they can be has been Tharp’s mission since 1982.

Tharp collected more than 5,000 successful trading profiles in a 10-year study of individual traders and investors, including many of the top traders and investors in the world. From these studies he developed a model for successful trading and investing that other people can adopt and learn. He also developed The Investment Psychology Inventory Profile to help people better understand their strengths and weaknesses in relation to trading or investing and has produced a number of home study courses.

His unique learning strategies and techniques for producing great traders are some of the most effective in the field. Over the years Tharp has helped people overcome problems in areas of system development and trading psychology and success-related issues such as self-sabotage.

Tharp, who now lives in North Carolina, received his Ph.D. in psychology from the University of Oklahoma Health Science Center in 1975. He is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP.

He is the author of three books, Safe Strategies for Financial Freedom with co-authors Steve Sjuggerud and D.R. Barton, Trade Your Way to Financial Freedom, and Financial Freedom Through Electronic Day Trading.

Outside of trading, Tharp has a strong interest in spiritual studies, is an avid stamp and art collector and is a big supporter of the Green Bay Packers. He is also a movie buff, loves going to theatrical productions and shows and is a big fan of music and dancing (everything from ballroom to the disco dance floor).

He has a son, Robert, from his first marriage and has been married to Kala for 12 years. Her niece, Nanthini, from Malaysia lives with them and is like a daughter who they are putting through college.