Wednesday, 23 February 2011

What gets in the Way of CP

After having mentored/trained a lot of people in the last year plus, I have a reasonable idea of what slows or prevents people getting to CP. I'll talk about a few of them today and some more in other posts.

Most of these CP blockers are inter-related and are rooted in the fear of losing money as their common denominator.

The problem manifests itself as the trader not being able to identify a good trading picture in real time and/or either can't pull the trigger, or worse, pulls it too late when the trade is "sure". Lots of reasons for this including:
  • not enough specifics in the trading plan or no written trading plan
  • not enough back testing, so there is no confidence in the trading picture
  • not enough SIM trading to develop muscle memory resulting in not recognising the trading picture in real time as it unfolds.
  • not enough trading capital. The solution is to trade small - even mini FX lots so that any loss has no real financial impact
  • has to make trading profits to pay daily bills. The solution to this is to trade part time and keep your day job, trading markets that are active during your non job time zone.
Solving these issues will speed up CP at a surprising rate of knots. (That's Brit speak for speedy)

Today's ES RTH was a trade that has to be done, but is often difficult to do. If I take away the knife catching components of the trade and rely on my tested TP I can buy these types of trades. The second trade was very predictable and was more the bread and butter that I rely on every day.

1 comment:

  1. Hi Tom,
    I totally agree with your view of "afraid to lose money" statement. I had a +13 trade and then two small losers that took me to break even on the day...Then these 2 setups came into view and I didn't take them from lack of confidence.