Saturday, February 19, 2011

How Top Traders Think

“You cannot be a successful trader if you are not willing to have both profits and losses… "It’s like only wanting to breathe in and not wanting to breathe out." Both are a significant part of the trading process... The other half of the equation is also important (and equally puzzling). You can’t put too much importance in gains. People who value profits too highly, tend to take them quickly. Why? Because if they don’t take them, they are afraid they will get away.– Dr. Van K. Tharp


It’s true that if you continue to work hard on the market, you’d eventually achieve constant survival that you dream of.

Last week, my GBPJPYUSDCAD Hedging strategy experienced some tolerable drawdown – something that would be recovered soon. In addition, I saw about 7 gap trading setups on Monday and I traded accordingly. On Friday, I closed all open positions with roughly 500-pip profit. Yes my clients’ appetite is being whetted in advanced, since they’re ready to become beneficiaries of this effective trading methodology.

Last week, I was again invited by another former trainee of mine. As a financial expert, he served in the federal civil service for 35 years. After retirement, he dabbled into agriculture without expert knowledge – only to lose a lot of money. Can you now see that trading isn’t the only business that entails serious challenges? However, he was lucky enough to have started Forex training on the right path. He practiced rigorously for almost 3 years before deciding to play the market with real money.

When I saw the account he was managing, I was amazed. He’d made over 2600 pips in 4 months! I saw 500+ pips as open profits and they increased to almost 700 pips before I left. I was extremely glad that he’d stuck to the risk management parameters I recommended to him. He was able to survive December and January as well, plus he suffered occasional drawdowns which were recovered eventually. If you feel that 26% returns in 4 months are a small profit, then it’s high time you did something else.

He and the engineer I visited earlier had something in common. This thing would soon be revealed to my clients. Yes my trainees and clients are the direct beneficiaries of my trading methodologies.

How Top Traders Think

Top traders believe in their trading systems (systems that have positive expectancy) and their own ability to remain calm whatever happens on the market. They know that trading is a game of probabilities.

They know that all trading strategies in the world would have periods of losses each, and therefore survival is all about limiting your risk and giving away as little portion of a trading portfolio as possible. Whenever a strategy experiences a drawdown, they know it’s just part of the game – for the strategy would recover in due course. It’s only a matter of time. They know that they don’t need to expect every trade they take to win: what they need to do is trading according to their entry criteria and managing each trade according to their predefined rules. They don’t ignore a trading signal merely out of fear, nor do they increase their risk because of overconfidence. Their main goal is to be more effective in trading, not struggling to force out higher hit rates.

Dr. Van, quoted above, says further: “Most people… want to be right all the time. They want to make money on every trade. Yet that will not happen because losses are a part of the trading process. When you understand the relationship, however, you can come to terms with losses and make them okay. A natural part of the trading process is to have a point at which you must unload a position or trade at a loss in order to preserve your capital. Those losses will happen to most people about half of the time or more. And you must make them okay or neutral. If a loss is not okay, you will not take it. When you’re not willing to take a loss, it usually gets a little bigger. When it rains, it pours. As a result, it becomes even harder to take—much more painful. If you didn’t take it the first time, as it becomes bigger you will be even less likely to take it. What’s likely to happen? It probably will become even bigger. The cycle typically continues until the loss becomes so big that you have to take it. This typically occurs when you get a margin call from your broker.”

For certain people, it may take many years to develop a normal trading mindset; for others, they speed up their personal evolution as traders and survive their learning curve more quickly than imagined. If you can cultivate the kind of the mindset discussed here, you’ll soon see the seed of trading genius germinating within you. The team here at is doing everything in their capacity to help you become the best trader you can be. You’ll do yourself a great favor by capitalizing on the services they offer.

NB: An article about effective gap trading in Forex is coming soon. Plus my article next Sunday would discuss the power of correlation.

Please let me end this article with another quote from Joe Ross:

Accurately gauge your trading skills and trade accordingly. If you're a master trader, then it's important to trust your instincts. But if you are a novice trader, it's prudent to be a little more cautious. Don't trade beyond your skill level. Realize that you may not have the experience to trust your instincts unconditionally. Trading takes experience and practice, and until you reach the status of a master trader, manage your risk, take it easy, and hone your trading skills.” – Joe Ross

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC


Yahoo! Messenger ID: saazalmu

Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:

Get my Forex trading signals at:

And my past articles are also available at:

NB: There is risk of loss in trading, but it is possible to be a successful trader.

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