Work Smarter Not Harder

I have said it before and I will say it again you cannot work harder or force progress to get more performance out of your strategy. If you try to work harder and force things you just fail more and dig yourself a deeper hole.

I know it sounds counter intuitive or even crazy to hear that too much market analysis can lead to over trading or analysis paralysis. But you would be surprised at how many traders struggle with this area in their trading. It is an inherent psychological trap that keeps many traders from ever reaching or achieving any real consistent success.

See humans have an innate need to feel in control of their life and of their surroundings, it is an evolutionary trait that has allowed our species to perpetuate its existence and ultimately arrive at our current modern-day level of civilization. Unfortunately for the aspiring market professional, this genetic trait of all human beings works against those trying to succeed at trading. In fact, most of our normal intuition of wanting to work harder or spend more time studying and researching for a project for work or school are instincts that are not beneficial to success in trading the markets.

Now there is absolutely nothing wrong with a little hard work, in fact in the real world I encourage it. But the issue with trying to apply the concept of hard work to trading is that beyond discipline, observation, patience and an ability to analysis and read charts, there really is no benefit to spending more time analyzing the same charts your already on top of or analyzing more economic news reports. At the end of the day we have no control over price movement and trying to further analyze economic data or trying to come up with an overly complicated method is essentially just a meaningless attempt to control something that simply cannot be controlled.

Thus, the main cause of trading failure begins with the traders psychological need to control their surroundings and when this emotional state meets the uncontrollable world of trading it almost always results in a loss of capital. To elaborate further this problem works to compound itself creating a ripple effect because once a trader loses a few trades he or she begins to get angry and starts revenge trading in an attempt to “get back” at the market. Once this process has begun it is very difficult to stop because it makes logical sense if things are not working out to put more time in and do more work to get better results. The difficult truth of the matter is that, after you have found a system that fits your trading style and you have reached a certain degree of technical and fundamental understanding, any further research or system “tweaking” beyond that point will only cripple you.

So how do we overcome this trading demon that has benefited us in the real world but has no place in our trading strategies. It is quite simple, if your trading edge is present then you execute your edge and do not involve yourself further in the process unless you have previously defined the action in your trading plan. In other words “Just set it and forget it”. When you decide to mess with or tweak your trade once you have already entered the market it almost always starts an emotional roller coaster that leads to moving your stop-loss further from your entry or getting rid of it entirely, moving your profit target further out, increasing your position size or over-trading. These actions almost always result in a loss of capital, because they were not objectively thought out, but were influenced by an emotional reaction that was caused by trying to control the uncontrollable.

Trading is more about timing than anything else. Timing is everything, you have to move to the markets rhythm.  What that means is don’t fight the market take what it gives you when it decides to give it to you. Now how you react when the opportunity presents itself is paramount.  Which brings us back to timing, are you entering the market at the right time, are you exiting your positions at the right time etc. Everything else in between are just extra thoughts and emotions that get in the way of your initial plan. Remember you cannot control the market but you can control yourself. In order to get more performance out of your strategy you must follow your trading plan. You must be rigid in your rules but flexible in your expectations.

Now onto the fun stuff. As you heard in my last newsletter Euro Swissy is about to get busy. If we look at the chart below it is apparent that we have a clearing bar from the Bulls after about 6 months of consolidation no that is not a typo yes 6 months of consolidation. This is such a big deal I have decided to shed light on this pair again. As traders it is our job to find out where the big money institutions are investing their money and follow suit. Since I have already established a long-term Bullish bias for you on this pair, this is a great opportunity to go to your time-frame find a good entry and stop-loss and  “just set it and forget it”. If you follow the strategy in my last newsletter and execute properly you should be able to pull at least 700 pips from this position. Stay Tuned!