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Forex Trading Strategies – Why Can’t I Always Trade Like This?
Why Cant I Always Trade Like This?
Last Tuesday I finished my 33rd live monthly trading session for BK and I felt great. We managed to bank more than 40 pips in matter of less than 2 hours putting on successful trades wildly volatile markets. I was ecstatic that subs made money for 30th out of the 33 times that I’ve done this. But as the adrenaline wore off I glanced at my own account and immediately grew depressed. The graphical markings on my chart looked like a scene from St Valentine’s day massacre. They were riddled with red stop out dots while the green take profit marks were few and far between.
Why can’t I always trade in my own account the way I do in live trading? Here is why.
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I spend a good hour before each live trading session reviewing the latest headlines, the latest charts and the upcoming calendar event risks. I generally have a very good idea of market expectations and the principal themes that are dominating trade that day.
I never try to guess the data. In live trading I always trade after the fact once the information is released and I can analyze its implications. Generally if the data is not a major surprise that will create dislocation in price I will not trade it. In live trade trading I don’t anticipate, I react quickly because I have already thought through most of the trading scenarios.
In live trading I often trade crosses rather than the majors. My goal is always the pair the strongest currency against the weakest to give myself the highest probability of success. Thus, if I am bullish GBP after strong UK data I may actually sell EUR/GBP instead of buying GBP/USD if I feel that the euro is especially vulnerable to a sell off that day.
Ruthless Money Management
I always trade with a stop but more importantly I am obsessive about locking in profit the moment we are ahead on the trade. Generally the moment we get up 10-15 points up on the position I take off half the trade and trail the rest. This way I minimize the possibility of turning a winner into a loser.
Unlike most human beings who are horrified of being judged in public, I actually thrive on the experience. I love holding myself accountable to hundreds of people and am therefore much more dedicated to making sure that I succeed when I trade publicly than when I trade only for myself. This perhaps is the crux of the issue. When I trade live I take it very seriously. When I trade for myself I am d**king around most of the time.
However after much soul searching my conclusion may actually surprise you. To have long term success in trading I actually think you need to practice both approaches. My personal account which is often a hodgepodge of impulsive, ridiculous trades is also a tremendous font of creativity and inspiration. By allowing myself to explore everything I am unafraid to try anything and that is often how I come up with my best trading set ups. So in the end I think the only rational solution is to have two accounts. One small account where you can experiment to your heart’s content and another large account for your serious trades. Otherwise I think we are just fighting human nature.