Talking about trends Part 2

If you have not read Part 1, I'd strongly suggest to read part 1 (click here), is this is a continuation of the first part.

We have already established that the financial markets are fractal by nature. Now let is elaborate on this by looking at some live charts.

EUR vs JPY m5

This is the 5 minute chart of EUR vs JPY. We have a shift of trend on on this timeframe. Prevoiusly price was making higher highs and higher lows and all the sudden price broke the previous low and made a strong move down. Some may say this is a down trend. Let's have a look at the 1 minute chart.

EUR vs JPY m1

This is the 1 minute chart of EUR vs JPY. We have two timeframes showing a lower low and possibly a lower high.

We already know that we cannot really talk about trends without specifying the timeframe. The assumption of a bearish trend in development may be true on the lower timeframes seen above. But what about the higher timeframe such as H4 or Daily?

EUR vs JPY H4

This is the H4 chart of EUR vs JPY. What we thought might be a trend on H4 may only be a reaction on the higher timeframe. 

EUR vs JPY D1

This is the daily chart of EUR vs JPY. Price is making higher highs and higher lows.

While we assume a bearish trend on the smaller timeframe, the higher timeframe shows us a bullish trend. Some traders who were lucky to take the trade from lower prices might have gotten out because they got scared by looking at the smaller timeframes. This is not wrong. This is one way to manage the trade. It is one form of risk- and money management (clicke here for more about risk- and money management). 

The trend on the daily did not get invalidated, so I must assume the trend continues. And I can keep my position open and still keep an eye for warning signs on a smaller timeframe such as H4. The story is told on H4, that's why I maintain a part of my position. And now I am scratching on a new aspect that I want to talk about in "Talking a little bit about risk management". (If you have not read my article "Talking a little bit about risk management part 1" click here).

I hope you enjoy reading my articles. If you have any questions of would like to give me feedback, please leave them in the comments section below.

Happy trading,

Oezy

Talking about Trends part 1

Today I want to talk about trends. We all did hear the famous line “The trend is your friend.” Well, this line is so true. But this simple sentence leads to a lot of confusion. So let’s delve into this matter.

But let me confuse you a little bit more. I promise I will clean up the mess. What is a trend? Some see three bullish candles in a row and call it a trend. Then there are traders who put a Moving Average on the chart and say if price is above that line, the trend is bullish and below that line for bearish. Then there are trades that look at an oscillator and say if price is above the 0-line, the trend is bullish and below the 0-line for bearish. I am not going to say this is wrong, as there are many different ways to approach a trade. But I want to state, that there is a lot of information missing in this approach. Others talk about higher highs and higher lows, which is about the classic definition of a trend. While I tend to agree with the latter one, there is still information missing. Talking about trend requires more than saying “the trend is bullish” or “the trend is bearish”.

Let’s talk about fractals. The markets are fractal by nature. And I am not talking about the Bill Williams Fractal Indicator. Not yet that is. So what are fractals? Did anyone of you ask yourself this question? Now we are getting into Chaos Theory. No worries, I am not going to lecture you about the theory of complex systems. When we think of Chaos we have a picture in mind where there is no order at all. Most of us do not know that Chaos is a higher form of order (complex and dynamic). We are already talking about fractals. Fractals are self repeating patterns. While each single pattern looks the same, each single pattern is individual. Snowflakes are very a very good example to describe the fractal nature. Each individual snowflake looks like the other. But in detail they are all unique. And this applies to the financial markets as well. I can post any chart and hide the timeframe. No one would be able to tell what timeframe it is. This is the fractal nature of the markets. And now we are getting closer to talk about trends.

Above I gave a classic definition of trends. We are looking for a series of higher highs and higher lows for a bullish trend. A bearish trend therefore would come with a series of lower lows and lower highs. But since markets are fractal by nature, we need to define the timeframe. Let me give you a fictive example where we are looking at the daily timeframe and we see a series of higher highs and higher lows; hence we have a bullish trend on the daily timeframe. But this may merely be a pullback on the weekly timeframe, where we have a series of lower lows and lower highs. Or a series of same level highs and same level lows, which would define a ranging market.

Let me illustrate this with some charts. I will not go into details at this time as that would take too much time and space. For now we’ll take a general view of the market flow.

USD vs CAD H4

This is the 4 Hour chart of USD vs CAD showing us a series of higher highs and higher lows. This is bullish.

USD vs CAD D1

This is the daily chart of USD vs CAD showing us a series of lower lows and lower highs. This is bearish.

USD vs CAD W1

This is the weekly chart of USD vs CAD showing us a series of higher highs and higher lows. Recently we are seeing a potential shift of trend (more about this in a later post).

USD vs CAD M1

This is the monthly chart of USD vs CAD showing us a series of higher highs and higher lows. This is bullish.

As you can see by the charts, it is not suffice to say the trend is bullish. We need to refer to the trend on a specific timeframe. The charts clearly show that a pullback on one timeframe can be a trend on another timeframe. And this goes on and on. We have a bullish trend on the monthly timeframe while the daily is bearish. The weekly already formed a lower low and a lower high, which is basically bearish but the monthly is in a bullish trend.

I will get deeper in the topic of trends in future posts. I hope you enjoyed this article and found value in reading it. If you have any questions and feedback/suggestions please leave them in the comments section below.

Happy trading,

TT

Talking a litle bit about Risk management Part 1

Recent conversation made me want to talk about risk management. At this point I need to address that risk management comes with money management (for more about this see here). But today I want to focus on risk management alone. 

There are many forms of risk management. Let me briefly describe what risk management is. Risk management is the process to identify (and in many cases the “attempt” to control) threats to a company or to assets of a company. While big companies have (more or less strict) regulations about risk management, we retail traders do not have any regulations on risk management. Let me now transfer this to the retail trader.

Risk management basically covers the decision process where to exit a position (if the decision is in favour of taking the respective position). Stops are a tool to help close a position. There are different forms of stops, such as hard stops, trailing stops, and mental stops. Each of them have their very own advantages and disadvantages. Traders who use mental stops are afraid that the broker (market maker) will influence the price to trigger their stops. If there is no stop, the market maker won’t be able to trigger their stops. Hence their trade is safe from getting hunted, while those traders that use hard stops can become victim of this practice of stop hunting. (Click here for more about stop hunting)

Keeping a mental stop however requires guts of steel. Traders who use mental stops need to have a strong mind, because humans are fast in changing their minds. The factor fear and greed make us do things that we would not do under normal conditions. Have you ever looked at a chart and then asked yourself “How could I have done this?” or “Why in the world did I exit the trade here?”

If you ask me how I manage risk, the answer is simple. I never take a position without a stop. I know very well, that there are many professionals making a big chunk of money by hunting stops. But I rather get stopped out than give the market a chance to take more of my money. I just have to locate the levels and be patient. There is no guarantee in trading. We will all have losses. We just need to be wise with our stops. My stops are always technical. There is no minimum or maximum distance requirement for my trades. If my money management allows me to take the trade and use the technical sound stop, I take the trade. If not, I wait for the next opportunity.

There are traders who like to keep their stops very close to their entries. This is a sound strategy. The downside of this strategy is the chance of getting stopped out. But this should not bother you at all, as you did decide before your entry that you do not want to be part of the move if price reaches a certain level. There should not be hard feelings about getting stopped out. (read also the following articles Do you mind a losing trade?, Ist ein Verlust-Trade schlecht?)

I like to incorporate market structure in my decision process. My stops always depend on the type of trade and the type of entry. Intraday trades are managed differently, while swing and or position trades are managed differently. Intraday trades follow a tailing stop, while swing and position trades are closed manually after having put the stop to breakeven. It is essential that you know before you enter what type of trade you are planning to trade.

I hope you enjoy my post. If you have any questions or suggestions please leave them in the comments section below.

Happy trading,

TT

Taking a closer look at Pinbars Part 1

Pinbars are about the most popular word known to maybe every trader in the world. While the Pinbar refers to the Bar Chart, they have the same meaning for Candlesticks.

Pinbars are a very powerful setup, yet so strongly missunderstood. Pinbars are very good signals, yet not all Pinbars are worth to be traded. You can trade all Pinbars, but not all Pinbars are profitable. One of the reasons why Pinbars (Hammers and/or Shooting Star Candles) are strongly misunderstood is they are easy to spot. A Pinbar does not look like the average candle. The shape of the Pinbar gives it a special meaning. It’s just like the colour red. Among all other colours, red is the one colour that catches attention immediately. But it is still a colour.

Now, since we are able to spot Pinbars so easily, our minds give Pinbars a stronger meaning. But Pinbars are just random candles, just like any other candles and candle formations. You can trade every pinbar successfully, but not all Pinbars are going to be profitable.

Let me highlight this with the charts below.

and

As you can see, not all Pinbars are profitable to trade. Yes, I have cherry picked the Pinbars. There are more that I could have picked that only went a small distance in the anticipated direction and resumed back the original path. 

Now don’t get me wrong. I like Pinbars a lot. Pinbars are about one of my most favourite signals. But I don’t trade every Pinbar. The most important point in trading is not the candlestick, but the location of the candlestick signal. If the location is not right, the Pinbar has no meaning. No meaning at all. It may still yield some profit. But that would not be attributed to the power of the Pinbar, but merely to the power of luck.

Now let me discuss why the Pinbar is such a powerful candlestick formation. It is seen easily on the chart. We want that. We do not want to be the only person who sees the setup. And this is valid for all candlestick patterns. We want the whole world to see the candlestick setup. The logic is simple, right?

And the Pinbar is such a candlestick pattern that is very easily seen on the chart. Together with the right location and you can trade Pinbars only and you’ll be a profitable trader.

There is a lot more to talk about Pinbars. I will talk more about Pinbars in future articles.

If you have any questions, please leave them in the comments section below.

Happy trading,

TT

The Aftermath - The Emotional Killer

Today I want to share my thoughts about how our mind likes to fool us. It does not happen on purpose, but it does happen. And it is very natural to happen.

The aftermath is a natural (let me call it) phenomenon. We see something happened on the chart and feel we missed the obvious trading decision. Either we see the obvious entry we didn't take, or we see the obvious exit we didn't take. Or we are in a trade and did close the trade only to see after some time that the exit was pre mature and we should have stayed in the trade. Sometimes news scare us out, sometimes it is our emotions that get the best of us. Now that we closed the trade we took a small profit but the profit could have been much better if we had stayed.

This kind of aftermath is never going to serve you well. Why(?) you may wonder, since this shows us possibilties how we can improve. But the main point that is missing in the chain of thought is, we are trading on the right edge of the chart. Not on the left side, where we can see what has happened.

We all are great traders on the left side of the chart. After the facts things are so obvious that it seems like the chart was/is screaming at us. And this kind of aftermath is not going to do us good. We will keep doubting our decisions. We will not close a trade when it is time to close, because we feel the trade is going to go in our direction, because last time it did exactly this.

Now let me be clear. We do need the past. We look to the left to evaluate the current situation to generate potential future profit. But if we fall to the trap and start trading hindsight, we are doomed to fail. We are doomed to repeat the same pattern of doubting our decisions.

Hindsight is important, to understand market structure and the characteristic of the asset you are analysing. We do our backtests using past performance of the asset. As long we know this is hindsight trading and we only do this to understand the very characteristic behaviour of the asset, it is healthy. But once we let our mind fool us, we are surely going to go through a lot of emotional pain. This emotional pain in turn is going to make us take bad trading decisions (either by taking trades pre maturely or by hesitating when we have the right time to take the trade). This is a sure way for a vicious circle of pain and drawdown.

There will never be a certain trade. We as traders have to understand that we are acting in uncertainty. Once we understand this, we understand that we work with probabilities. And now the aftermath is not going to hurt us. If we decide to close a trade, because price it is at a level where there is a high probability of a reaction, then closing the trade may be the right decision (depending on your money- and risk management methodology). If the asset continues in the original direction lets sasy 100 pips, then this should not cause us to think, "I should not have closed the trade" or "Now I am missing 100 Pips." The trade got closed because of the probability of a reaction at that level. It could have reversed and left us with no profit at all or worse with a loss.

Doing this kind of aftermath, we will never be right. It is a battle we will never be able to win. Because everything we do will be wrong. Why take the battle then in the first place. Imagine if we had not closed the trade and price did retrace. Then we'd think "I should have closed the trade and taken the profit". You see, this kind of aftermath is not going to serve us well.

Thank you for reading. If you have any questions please leave them in the comments section below.

Happy trading,
TT

A very lucrative money making maneuvre - stop hunting

Hunting stops is a very lucrative money making maneuvre in more just one sense.

Lets look at the red arrow in the below chart. Before the candle closed, we have a break above a previous high. Breakout traders love to see highs taken out and position themselves. Either a pip or a bigger buffer above the high. Or depending on the timeframe e.g. 5 min chart with a close above. The close serves as a confirmation of a successful break. As you can see, price did move quite some distance above the previous high. And on lower timeframes this looks even more promissing. But then price reverses. There are many differnet type of longs in at this point. Those who missed the longs at lower prices that jump in, Breakout traders, and those that already have been long at lower prices. Some of those traders that took the break of the previous high get scared and close their position. These scared traders add fuel to the bears. There will be also some that expect a pullback to the broken high. But as you can see price moves below the high. And here most of the breakout traders and those that were long form lower levels either close their longs or they get stopped out, as their stops are regularly below the swing high that got broken (support).

Now the H4 candle closed as a big Shooting Star / Pinbar. The level is sound. A Shooting star at resistance. There is a fakey (a breakout that failed). There will be many traders that look to short this asset now. The eager ones take the short with the close of the Shooting Star. Others will wait for the break of the Pinbar. And then there are those that trade the smaller timeframes. I personally like such pinbars and would also get tempted to trade this. So am not blaming those that take the short. Fortunately the low never gets pierced so those wating for a break are lucky. The supposed short setup, which is at the same time a fakey (a fake breakout) is a trap for those that short. Most traders who have been long from lower prices get scared and exit their trades, which is not to be blamed. But price continues to move higher. And now short stops get taken out. Eventually the high of the pinbar gets breached, but price retraces again. Those that think now is the time to make some pips jump on board and take the long trades and we have another stop hunt. We have a Bearish Engulfing Pattern. 

This is the reason why we do not want to be the early bird. There are predators waiting for their bait. Let others be the bait.

Lets look at the second (green arrow). Below is the same chart again to make reading easier.

We have a big pinbar. I don't like the location of the Pinbar (Hammer) as it is not at the bottom. But the formation is the same. The interesting point I would like to draw your attention to is, look at how far the low of the pin went. I takes out the previous low (swing low). At the beginning of the H4 Pinbar price was moving up. To some traders this looks like the early stage of a bullish trend (higher high and higher low). To others, this is a pullback of the bigger bearish move from 17,75. At the open of the Pinbar, price is also testing a resistance level. As price moves lower, we have those traders that think this is a bullish market, that get scared. So they close their open longs for small profits or and we have those bullish traders that get stopped out as they have their stops below the former higher. In addition to these bullish traders that are in a loss, there are those traders that see the end of the pullback (of the bearish move) and take their short trades. Either on lower timeframes with the violation of the lows (we have a bullish trend on the m5 timeframe up to the start of the pinbar) or those that have pending shorts at the resistance level as they trade the level. Price moves nicely south and takes out the lows. There are many stop orders below that low. All those stops get triggered and then the market moves up without any of these traders that got engaged already. 

At this point it is very difficult to tell what will happen next. Price is testing again the low with another rejection candle (but big body). We may see price move back up. But I kinda doubt that. What I am certain off is, I am not going to swim with the shark and risk my Butt getting bitten.

I also marked some candle lows with a red rectangle at the left of the chart. We have Pinbars and Rejection Bars. The stops of the long traders got triggered. This is also a stop hunt. Carl taught us a nice way to avoid this situation. If the long traders had waited for the FFB, they would not have been victims of stop hunters. There is no way to avoid all losses. Everybody will lose. There is no way to avoid getting stop hunted. This is the very reason why we have to be patient and evaluate our trades as price moves. They key word is patience. Be able to adapt to chaning environments. and by all means: DO NOT GET GREEDY

Don't have the profit in your eyes, but always the risk that comes with the trade. Risk is the only thing we have can influence. 

Thank you for reading, If you have any questions please put them in the comments section below.

Happy trading,

TT

Risk Management and money management are not the same

Today I want to talk about risk management and money management

Many confuse risk management with money management and think both are the same. I don't blame them for confusing both as both limit the position size. But risk managment is more than position sizing. And money management cannot be reduced to position sizing either. Both are an integral part of trading and complement each other. Let me try to demonstrate this.

Before we take a trade, we need to identify the risk that is involved with the trade. That is a must. Only after evaluating the risk and upon deciding in favour of the trade, next we decide, based on our risk and money mangement rules, how big the position size should be. This last sentance demonstrates that risk- and money management can not be seperated.

While my risk management rule may suggest the trade is good to take, my money management may disagree. One of the reasons may be that I already have open positions and the max amount for open positions is already reached.

Or my risk management is not in favour of the trade, even though my money management rule would allow me to take the trade. The risk involved with this new trade may be within my risk and money management parameters (the stop placements allows the trade). And I have more than enough free margin. However, I already have an open positon with the same asset. Or I have an open position that is correlated with this asset. The correlation may be positive or negative, it increases the risk this way or the other. One translates to increasing the risk on the asset, the other means taking a trade counter the open position. Both result in increased risk, which my risk management rule does not allow.

Risk- and money management are mostly considered at the beginning of a trade (risk- and money management are mostly considered for entires). But risk- and money management are important throughout the lifespan of a trade. An open trade is always a risk. The risk is only eliminated upon closing the trade. Some may agrue that we have stops. True! Stops are there to protect us. But there still is slippage. Without really knowing when and where to get out, our trades are vulnerable. Getting out of a trade also involves risk- and moneymangement. Ideally we get a multiple of the initial risk back from our trades. One of our exit management may be to take partial profits at 2r or close the whole trade at 3r, because experience shows that the asset tends to move back once the trade yielded 3r. I am sure many of us have made the experience that as soon you have 200 or 300 pips profit, the market makes a reversal. You possibly would have been alble to squeeze more out, but by rule of thumb anytime your trades reaches 300 pips profit there is a reversal. So you may use this information and have hard take profit at 300 pips profit.

As you can see, risk management and money management are more than just words. While both complemet each other, they are not the same.

Thank you for reading. If you have anything to add or any questions please leave them in the comments section below.

Happy trading,
TT

Emotions - Good or Bad? Part II

If you have not read the first part of the Article, you might want to do so. The first part is here.

It is key to unerstand emotions and to understand where they stem from. Understanding your emotions will help you trade better. It will help you in your decision makeing process. Losing a trade is not bad. Many of us have been taught that losing is bad. And this tought is most times transferred to trading and we think that losing is bad. In trading, however it is not necessarily bad if you lost a trade or two. There is a post about this subject. You'll find it here (in english) or here (in german).
The first and most important step to learn from mistakes is to realize one did mistakes. Only than you are able to make a change.

Now that we understand the importance of our emotions, we can take the next step. It is easy to say emotions are important when it comes to trading. Everyone knows this. But again, this is a general statement. Let me narrow down to how and why emotions are important.

Mentally and to some degree also physically our mind and our body is designed to keep us safe. That is the very reason, why pain or loss hurt us more compared to having a gain. We established that already in my previous post (here). The degree of pain we feel is stronger than the degree of joy we feel. This makes as afraid of taking a trade. And this makes us scared if the trade we took goes against us. How many times have you decided to sit on the sidelines only to see your analysis was correct and the asset did move several hundred pips in your direction? Then we decide to take the trade no matter how much we are afraid. We take the trade, because it worked well. But many times at this stage, we fail to realize that the setup may not have been as good and we end up losing the trade. And we get afraid again. First we were afraid, then we were greedy. The key point to realize is that the market does what it does. Just because a setup was working before, does not mean it has to work the next time again. We are surrounded by uncertainty. If we do not understand this, we will always fall back to old habits of being scared and greedy. Our emotions will dictate our actions.

How do I deal with this? Again, this is a personal developement. What I do may not work for you. My approach may be totally different to yours.
I let go.

There is always a reason why I take a trade. Meaning, there is always a technical reason to take the trade. As long the reason is valid, there is no reason to get out. I need a reason to get in. And I need a reason to get out. If I take a trade and it closes red - meaning it is a losing trade- it is a losing trade. The trade failed. I had a reason to get in, but it didn't work out. I don't take it personal. A losing tade does not mean that I failed. It just means that this time the setup failed. It happens. I don't take a losing trade personal. But I try to identifiy if my analyis was fraudlent. Was I impatient? Did I force the trade? Did I disregard signs of warnings? If the answer is yes to at least one of the questions, then I try to incorporate this information in my decision making process for the next trade.

I know the market does not dislike me. Nor does the market like me. The market is not a beast I need to fight. The market does not even know me nor does it even care about me. My job is to understand what the market displays on the screen. My job is to understand the special character of the asset. And than I need to trade accordingly. When I say character, I make the market appear as a person or a living being. (This alone can be a topic for itself) The market is not a living being. Each asset has its own characteristic moves. For example GBP pairs are moving more volatile compared to lets say EUR vs USD. Knowing this will help me to narrow down my fear, when the trade goes against me. This information will help me narrow down my fear of giving back pips after it moved in my favour. This information may help me deal more rational with my greed when I am in e.g. 50 pips profit and the asset I trade has an average move of 70 pips a day. I may decide to close the trade on a sign of a reversal instead of hoping for more. Or I may pass a setup because the asset already moved 70 pips in the setup direction and the asset has an average move of 70 pips a day or 100 pips a day. Fear and greed are emotions all of us have to deal with on a personal basis.

I know I have no control over the market. The only thing I may control is my reaction to what the market shows me. And my emotions may influence my actions. If I really have a bad feeling about a trade, I get out. I take what I have (be it profit or loss). In doubt stay out. Or in doubt, get out. I do not shed a tear if the trade goes in my direction after I got out. I look at the chart and try to identify what gave me stomach ache. Maybe my bad feelings comes from a valid reversal setup that makes my doubt the validity of the trade I took. Sometimes we identify a setup and we take the trade, but the trade goes against us. And this is true for our exits as well. We will never know what the market will do next. We will never have a 100% accurate analysis. This is why I trade what I see. If I see the asset making a characteristic behaviour I take appropiate acction. Even it it costs me pips.
There is not what if. The only thing that counts is - What is. 

I do not need certainty. I will never have certainty.

Hope you enjoyed reading this article. If you have any questions, please leave them in the comments section below.

Happy trading,
TT

Emotions - Good or Bad?

Recently I had a conversation about fear and greed. I was asked how I get over it. This is an interesting question everybody is looking to get an answer for. Yet this question is very general. First of all, we have to really know what we want to ask. We need to know what it is we are seeking the answer for. If we do not know what we want, we end up asking general questions. And as a consequence, we get general quick and dirty answers. "Do not trade based on emotions." It is easy to say "Don't be greedy!" or " Don't let the market scare you out!"

Emotions are a big topic. And all we find are short and quick answers, which every trader has heard at least a dozen times. The first time I got involved with trading, I kept reading this very same thing over and over in every book. It was like a mantra. 'Don't trade based on emotions!' We as traders think that emotions are a bad thing and we need to be completely emotion free. Many books teach to get rid of emotions. Find a mechanical trading system. Well, ideally a trader has the ability to be emotionless (when it comes to taking a position). But we forget we are humans. Emotions are a part of us. And they will always be a part of us. So logical conclusion would be to quit trading, right?

Well, no! I do not want to quit trading, because I am a human.

I was asked about my approach. I personally think we need to understand what emotions are. Where do they come from. Why do we have them. The emotion "Fear" is a safety mechanism. The emotion "Fear" keeps us safe. Fear is the very emotion that made and still makes surviving possible (this was in the past, it still is in present, and most probably will be the case in future). If our ancestors did not have this very emotion, we most probably would not be here as humans. The fear of getting burned makes us treat fire with respect. The fear of getting bitten makes us scared of petting with a Tiger, a Lion or maybe with an Aligator (that is if we are not Crocodile Dundee). I have a friend who is afraid of small dogs and cats. If we know why we have feelings and where they stem from, we may be better equipped in dealing with our emotions.

I personally think the understanding of emotions is a better way to deal with emotions when trading as opposed to ignoring our emotions. It is important to know that the fear of a loss is stronger than the sadness of losing. The degree of emotional pain of losing is stronger compared to the degree of emotional joy when you are winning. Now what does this tell us? Fear and losing have a stronger impact on us than happiness and winning. This is a bad combination (for trading) if you ask me. but taking evolution into perspective, this is the very recipe to survive the threats and dangers in the jungle. This is the result of millions of years of evolution.

Do not get me wrong. I do not say trade based on emotions. Emotions are a bad guide when it comes to trading. I don't say let emotions take control. 'En contraire mon frere'. Know about the feelings. Know how feelings can influence you. Learn to identify the emotions and only after you identified your emotion, deal acordingly with the emotion. I can't tell you how to do that. This is a very personal development. But I can share with you how I approach this.

I let go.

A trade is a trade. I do not give a single trade much value. I am happy if I hit the homerun. but I do not let the happiness become euphoria. Once I identify this is happening, I step back. I am able to do this, because I know there will will be many trades ahead. I know by heart I cannot win all trades. And I also know by heart that I cannot lose all trades.

Do I get sad if I lose? I wish I could say no. I do get sad.
Do I get carried away on a loss? Not at all. Because there are more trades to come.

I am not rushing after the fast pips. I do not need to trade every move. I do not chase a trade. I used to chase my trades. I kept repeating the same mistakes. And eventually I did realize that I was repeating the same thing over and over but expecting different results. And I beleive this is key to understanding the own self and make a change.

This is a big topic and there is much more to write. This topic could easily fill a book. I hope this article is helpful and you enjoyed reading it. There is more to come in a later part.
You'll find part II here.

Hope you enjoyed reading this article. If you have any questions please leave them in the comments section below.

Happy trading,
TT

To Think or not to Think

While the title may cause some confustion, it is chosen on purpose. Trading is an endeavor that requires an appropiate set of thinking. And here we are. "I think therefore I am" (Rene Descartes).

Going through my old posts, I decided to highlight how important psychology is.
I did start this Blog in June. My first post was made June 1 2016. That was a wednesday. At the end of the week I made my first post for the section "Setups for the week ahead". You can find it here.

If you scroll down to the very last chart you will find the chart below



At that time I did identify a clear cut bearish signal right on top of support. You might be asking yourselves now what my point is. We never know what the market is going to do next. Some may think "Price did move a lot and is due for a pullback". Or "Now is the time for the market to reverse" and they start thinking they can outsmart the market, because the market has to reverse. But if we fall into that thinking, we are prone to start trading what we think.

Do not trade what you think. Trade what you see!!!

The market can go much further than we could imagine. See below!



Now some may argue that price was due to move south because of BREXIT. Well, that my be true. But at the time of the analyis the majority was sure that there will be no BREXIT. My point is, after the facts, everybody knows why price moved the way it moved. But we as traders are not interested in why. But we are interested in what is currently happening. That was a 3.000 Pips move.

Trade what you see, not what you think!

Happy Trading,
TT

Back to Business

After a long time off, I am back home and slowly catching up with trading. This process of catching up can be tricky as my mind will tell me that I know what I am doing. The danger is I will feel too confident and rush into trades. So this whole week was dedicated to chart analysis and reading up on my posts I did so far.

I am happy to be back.    Trading is my business!    And I am getting ready to continue this business.

My main focus at the moment is to understand.
To understand among many other things:

• Starting with the basics
• What are my Price Action Signals
• What timeframes am I looking at
• Interdependence of the different timeframes
• Market structure (meaning of it)
• Most importantly
• Understand market structure.
• What has happened
• What are important levels 
• Where are the important levels
• What did price do at the important levels
• How did price react at these levels

All the above is going to help me identify high probability trades. All this is going to serve me to take only trades with higher probability. The markets are random at any given time. But there is a pattern. And it is my job to utilize these patterns. I am a technical trader. I utilze fundamental analyis and sentimental analysis in my trading. The combination of all these help me to identifiy chances and quantify the associated risks.

Happy trading,

TT

Ich werde dich sehr vermissen

Am Samstag früh hat mein Cousin seine Augen für immer geschlossen und ist seine letzte Reise angetreten. Er war nicht nur ein Cousin, er war mein Bruder, mein bester Freund. Sein Begräbnis war gestern. Ruhe in Frieden, mein geliebter Cousin.
Mögest du dich im Paradies wieder finden und Gott deiner Seele gnädig sein.
Makanin cennet olsun. Allah rahmet eylesin.

Glücklicherweise muss ich mich nicht um die offene Position kümmern. Diese ist bereits auf Breakeven gesetzt. Es kann wohl möglich sein, dass ich in meiner jetzigen Situation keine profunde Analyse durchführen kann, auch wenn ich der Meinung bin, dass ich noch wohl durchdachte Analysen vornehmen kann. Es ist durchaus Möglich, dass sich der Verlust auf mich auf eine mir unbekannte Weise auswirkt. Die Zeit wird es zeigen. Ich werde weiterhin versuchen diesen Blog aufrecht zu erhalten. Dies war und ist für mich ein sehr aufregendes Projekt.
Ich weiß, ich bin Zurzeit mein einziger follower ;)

Dieser Blog ist eh für mich. Und dies bietet mir die Möglichkeit mich abzulenken (glaube ich zumindest).

TT

I will miss you a great deal

Saturday morning my cousin, my best friend, and my brother all in one closed his eyes for ever. He started his very last journey. He was not only my cousin, he was my brother, my best friend. Yesterday was his funeral. Rest in peace, my beloved cousin.
Makamin cennet olsun. Allah rahmet eylesin.

Fortunately I have only one position to take care off. And it is at breakeven. I may not be in the right state of mind to perform profound analysis. Even though I think I can do great analysis, The loss may influence me in a way I cannot know. I will try to keep the blog still runnin. This is a project I was and still am very excited about. I know I am my onw follower for the time being ;)

This blog is for me anyway. So this may help  me to stay focused. And it will keep my mind occupied I guess.

TT

Ist ein Verlulst-Trade schlecht?

Die Frage scheint im ersten Moment trivial. Nimm dir aber einen Moment und denk mal darüber nach.

Was haben alle verlorenen Trades gemeinsam? Alle Verlust-Trades weisen einen Verlust auf. Aber nicht alle Verlierer (trades mit negativem Profit) sind gleich. Ein Trade mit negativem Profit ist ein Trade mit negativem Profit. Kurz gesagt, ein Verlierer ist ein Verlierer. Ein Verlierer ist nichts negatives. Ich kann schließlich den Markt nicht kontrollieren. Ich wäge das Risiko eines vermeintlichen Engagements ab. Im Anschluss entscheide ich mich, ob ich das Risiko, das mit dem Trade verbunden ist, eingehen mag. Entscheide ich mich nun für das Engagement, so muss ich das damit verbundene Risiko akzeptieren. Rege ich mich nun auf, wenn dieses Engagement ein Verlierer wird, so bedeutet dies, dass ich mir des Risikos eines Fehltrades nicht bewusst war. Dies würde bedeuten, dass ich nicht wirklich weiß was ich tue. Ohne ein Risiko gibt es auch keine Chance. Risiken und Chancen sind je eine Seite der gleichen Medaille  

Psychologisch ist der Grad des Schmerzes verursacht durch einen Verlust intensiver als der Grad der Freude über einen Gewinner. Dies ist das Resultat der Evolution. Wenn man mal darüber nachdenkt ist das nicht schlecht. Ich begrüße das Risiko. Risiken bringen Chancen mit sich. Das heißt nun nicht, dass ich jedes Risiko sofort umarme und jegliche risikoreichen Aktivitäten bzw. Engagements nachgehe. Ich wäge das Risiko mit der gebührenden Sorgfalt ab. Ergibt sich nun doch ein Verlierer, wird dieser abgehackt. Das gleiche gilt für Gewinner. Der einzelne Trade hat keine wirkliche Bedeutung, egal ob Verlierer oder Gewinner. Das heißt nicht, dass ich mich nicht über einen 1.000 Pip Profit freuen würde. Ich würde über beide Ohren strahlen. Aber eigentlich kommt es nicht auf das einzelne Engagement an, sondern auf die Gesamtheit der Engagements. Liege ich mit all meinen Trades auf der Gewinner-Seite, so strahle ich ebenfalls über beide Ohren.

Do you mind losing a trade?

The question posed may sound trvial at first glance. But give it a try and think about it.

What have all losses in common? Losses all have the same outcome. But not all losses are the same. A losing trade is a losing trade. There is no harm in it. I have no control over the market. I weigh the risk involved with the supposed trade. Then I decide whether I want to take the risk or not. If my decision is in favour of the trade, then I have to accept the risk involved. If I get angry that I got a loser, then something is off with my trading idea. It would mean, I didn’t fully understand what I was doing. There is no chance without risk involved. And every risk comes with a chance. Risk and chance, each are one side of the same coin.

Mentally / psychologically the degree of pain caused by a loss is stronger than the degree of pleasure caused by a win. That’s the result of millions of years of evolution. But if you think about it, risk is not bad. I embrace risk. Risk gives me the opportunity to gain. But that does not mean I jump on any risky activity and take every risk possible. I weigh the risk and decide after I did my due diligence whether I want to take it or not. If the engagement fails, it failed. Same like a winner. I don’t put much emphasis on a single winner. That doesn’t mean I won’t be happy if I had a 1.000 Pip trade. I’d be smiling from one ear to the other. But in effect, it is just one trade. One single trade is not important. This goes for the winning and for the losing trade. Overall the profit should be greater than the loss. That will put a smile on my face just as big as the 1.000 pip run.