Emotional control is a skill that can make a big difference to your life. Keeping keep calm under pressure is undoubtedly a competence that allows us to obtain the best outcome in every circumstance, especially when it comes trading.

There are several studies that confirm that the vast majority of professionals and successful people enjoy rigid control over their emotions and are also able to stay calm in the face of adverse and unexpected situations.

One of the most interesting recent discoveries is that stress can negatively influence our capacity to control our emotions. This is because prolonged exposure to stressors can produce a form of degeneration of the area of the brain that manages self-control.

Given that stress can be an obstacle to successful trading and a negative influence on the quality of your results, hearing some valuable advice on how to keep your stress levels under control can definitely improve your overall approach to trading in financial markets.

But stress is not necessarily always a negative influence. In fact studies have revealed that although prolonged exposure to stressors is the true cause of deficiency in our capabilities, intermittent stress episodes can actually be beneficial. This is especially true for the part of our brains that deals with memory and emotional control.

This is probably because sporadic episodes of stress are, in a sense, a kind of warning signal to the brain, telling it to react in an optimal manner. Much of this depends on how we have evolved as humans over time.

While this may be true, the benefits of having a number of tricks up your sleeve for reducing your stress levels cannot be underestimated. Besides looking after your emotional health, stress reduction strategies can be useful tool when it comes to trading.

Let’s take a look at some of the strategies and approaches employed by top performers, both in the sporting arena as well by successful professionals in business and other careers. In short, we want to find out how different stress management approaches successful people use can be applied to trading.

1

It might seem trivial, but appreciating what you have rather than what you could have could be the first important step towards reducing the negative impact of stress. In today’s society, much of the stress we feel comes from a frustrating sense of inadequacy; the constant search for economic improvement; the desire to have what others have, and so on.

When it comes to trading, it’s important to retain a realistic outlook. Much of the advertising in this area, unfortunately, promises clients rapid gains 24/7 and a quickly elevated social status. A few simple clicks of the mouse are immediately converted into luxurious villas and luxury cars.

This kind of advertising does nothing but increase the ‘stress of performance’ and drive the aspiring trader to lose control of their business and their account. With pressure to secure immediate gains, users tend to flit through several trading systems without really getting to grips with any of them and without ever understanding what’s really important in trading.

2

Furthermore, it might be useful to stop thinking about what could have happened if you had made a different decision. Once a road has been taken, perhaps after careful consideration, it makes little sense to look back with rose tinted spectacles or sterile critique.

How many times do we have regrets when a trade went badly because in the run-up we were unsure whether it was the right choice? A trading system must be designed to minimize, if not entirely eliminate, this kind of situation. Losses (or costs) are an integral part of trading; they cannot be avoided, but we can control them by employing a strong risk management policy and by using a trading system that narrows the field for doubt and which limits the different kinds of interpretations that can be made.

3

Although it might seem strange, the way you think directly influences your personality and emotional state. When it comes to dealing with life events, having a positive attitude, for example, might actually be an effective trick for self improvement. This doesn’t mean pretending that all is well, but rather maintaining a positive approach towards the negative events that befall us.

Obviously this doesn’t just mean hoping that the trade you entered into will turn profitable. Trading is not a matter of hope, nor desire; it ‘s a matter of statistics, mental approach and rigor; a mixture of ingredients that represent the pillars of any successful business transaction.

4

After all these tips, the one that follows is perhaps one of the most important. Being ‘available’ 24 hours a day, 7 days a week, is a huge source of stress. And yet, being available for anything, at any time and at short notice, is something which modern society seems determined to demand of us. Take smartphones: they follow us everywhere and allow friends, colleagues and bosses to call or text us at any time of the day or night.

All this is especially true when it comes to trading. Being profitable doesn’t necessarily mean standing in front of graphics for hours. Indeed, this approach is usually counterproductive and risks fueling stress and negative experiences.

However, taking a few quiet moments for yourself away from the trading screen is a deadly weapon in fighting stress and an important step towards self improvement. At the end of the day, life doesn’t just involve constantly doing things. It would be far too simplistic.

5

Some other practical advice? One tip is to reduce intake of stimulants such as caffeine, which stimulates the production of adrenaline, a hormone that is released in large quantities, particularly when you are in danger. While certainly useful when being chased by a bear, in normal situations adrenaline only serves to further disrupt our state of calm.

What might happen if your trading decisions were dictated by a moment of impulse? Many traders have been ruined this way. Trading should be uneventful and should only involve minimal emotional output.

6

And what about sleep? Though overlooked by many people, it is one of those precious moments when body and mind are revitalized. Sleeping too little (or too much) is really a bad habit. There is no precise number of hours that you should sleep (we are all different), but at the very least you should aim to get enough sleep to wake up refreshed and ready for the new day.

So, avoid going to bed too late, especially if you have to wake up early in the morning. Sleep is free, but its benefits in terms of emotional health are truly exceptional.

What’s more, the potential damage and errors you could commit during a trading session as a result of not being fully awake due to lack of sleep are clearly evident.

At this point there is already considerable food for thought, but successful people also give us some other advice for developing emotional control.

7

For example, it is important to drastically reduce thoughts about the past and about previous negative issues you might have had. You no longer have the ability to impact them and there’s nothing you can do to change them. Continuing to think about situations that haven’t brought us happiness does nothing but strengthen these negative feelings and worsen our emotional state.

For example, thinking about the accounts you might have lost in the past is generally futile. This type of thinking only becomes useful when you do it in an intelligent way: investigating the reasons why things happened the way they did, in order to improve your trading style.

8

Then there are a whole series of events that periodically occur and over which we do not actually have any control. Throughout all these events having the right approach becomes a priority, without going to extremes. How many times during a day, for example, do we repeat to ourselves: “Everything is going wrong today” or “today nothing will be OK”? This is where an immediate change of perspective is needed.

The above sentences and are strongly limiting and not supported by any rationale or logic. Traffic, a faulty component in your car, a blackout while working at your computer: these are all examples of stressful situations, none of which are under our direct control.

A typical example in trading is this: you enter a trade and the price immediately moves in the opposite direction. It seems as if the market is spying on you in order to make your trade go sour. But the market doesn’t care about you or I; it does exactly what it wants for itself. So our trading system must be rational and well defined.

9

Then, perhaps unexpectedly, successful people also pay great attention to their breath. Yes, breath is another vital element, which is often overlooked. In a moment of stress, there’s no better way to regain your calm than to take a few minutes for yourself, be silent and listen to the sound of your breathing.

Breathing properly is the lifeblood for your mind and for your own emotional health. A simple trick might be to count from 20 to 1, completing a complete breath (inhaling and exhaling) on each count. It may seem a trivial and unnecessary exercise but it may surprise you to see how effective it can be during a trading session.

10

The last piece advice to be taken from successful people surrounds being able to manage those situations of stress or pressure, which we find ourselves unable to cope with. In these cases you can turn to a trusted person who can help you. To recognize your weakness and to understand when you can’t go it alone is a sign of great maturity and control.

Everyone has someone at work, in their family, or their circle of friends and acquaintances, whom he or she can trust and to vent to when things don’t seem to be going the way you want. You should never be ashamed or afraid to show your emotional state; a chat with the right person might put you back on track immediately.

In short, these are some of the techniques that successful people use. Improving the relationship with yourself, your emotional health, your self-control: these are key factors in life in general. And, considering that psychology is a key element of trading, in this field too they are undoubtedly factors that can make the difference between a losing, frustrated trader and a profitable, joyful one.

There are probably very few who will read this, who haven’t heard many stories about entrepreneurs, actors, musicians, the rich, the famous – or not, who have built empires, gained fame or success from the ground up, beginning with little or nothing. Each will have an amazing story to tell which will inspire and provide the determination for we mere mortals, to pursue our goals.

Such biographies, whilst valuable additions to our education are not necessarily available when they are most needed – in the heat of battle. Mid-crisis, we don’t necessarily have time and often not the presence of mind, to jump on the PC and google an inspirational story.

These success stories are heavily scrutinised and extrapolated to produce ‘how to replicate the author’s journey’ formulae. On reading these ‘recommendations’, for me there is always a void. The analyses manage to skirt around but never hit the mark, the heart of the solution!

The message is usually the same: yes determination is paramount to success, as is hunger, focus and perserverance. All these messages permeate through but always, there is something missing.

Is it that they are lacking heart, strength or true grit?

Nope, they are all present – they are missing the ZERO!

Not to be confused with “they are missing nothing”, the Zero is common to each success story I have ever heard. So what is it?

Well, it’s a definite TIME – Time Zero – that time where each of our story tellers had absolutely nothing in their life ……………………….ALMOST!

The ZERO is the time when nothing superfluous is blocking your mind and you can concentrate on the really important things in your life. Removing the clutter of unimportant entities restricting your progress frees you to focus your energy, concentration, determination and perserverance on productivity. As in all things, nature does it best – consider the tree with a damaged limb……..the tree’s energy is diverted to the “crash site” where it spends lots of time and resources attempting to repair the wound. This action impedes the natural growth process, the tree fails to flourish and it looks quite ‘sick’. Once it has decided that the limb can’t be saved however, the life juices cease to flow to that part of the tree, allowing the core system to function as it was designed – the tree ‘smiles’ by flowering and returning to full health……there is no more leakage – you are focused completely on important things. Internal dissonance disappears and happiness levels hit new heights – a movement of creation like no other. We become aware of the power we possess, our strength of creativity and emotions. We are both in place and in power.

So, I have to lose everything?

No, not so radical as to discard the wife and kids, resign from work, dump the house and car then throw your clothes in the middle of the street!

The Zero of which we speak is NOT the cosmic void, but the stripping of all unnecessary materialism, divesting oneself of those customs and traditions that society dictates we adopt so as to appear ‘normal’! Relax, it doesn’t mean we have to trade in our souls, the fibre that makes us who we are, nor indeed the clothes on our backs. Rather, we need to lose the masks that disguise our true being and the superstructures that focus our life blood on the ‘wounds’, rather than inner health. As with our tree, we need only to sacrifice the ‘damage’ – not start all over again from ground zero.

Most of us will experience difficult periods in our lives – some unimaginably so. It’s true that the difficulty of ‘dismissing the broken pieces’ increases but the healthy core is most definitely ‘a keeper’! Whatever circumstances have misshapen our lives, we began life as a winner -- THE single sperm cell that overcame millions of competitors to begin the miracle that is the unadulterated human body. Whatever life sucking parasites have attached themselves, you the host, remain intact and still in possession of the potential that surpasses all imagination. Action is what’s required and if you’ve made it this far into this article, you have already taken the first step. Isn’t it worth the journey if it results in enabling more time to spend with the family we love, the leisure time we miss, the things that fulfil us and make us happy?

We know it dwells deep inside us and the Surfing the Pips creed dictates that our external selves must connect with our innermost being, in order for us to realise our potential as successful individuals.

Great in theory right? But what about in practice?

As often happens, we must act on two levels, one internal and one external. Two planes operating quite separately but definitely dependant; one on the other. For practical purposes however, this distinction can help us:

Outside Plan

It’s neither rocket science, nor new but the first step in healing is to prepare a simple list. You know, the things that you would take to the dessert island and could not do without: people, activities, water, food, bedding. Be serious and put some thought into the list; would your life be intolerable if you had to live without the three televisions? Each of us will have a few similar items on our lists but outside those similarities, there will be differences. If there’s a rule of thumb, 100 items on your list is far too many (continue culling) and most minimalists will arrive at around 20. If you have to carry those items, which load would you prefer?

Outside of the minimalist 20, most lists will be full of ‘useless’ items, material and emotional ‘baggage’.

In compiling the list, some will discover they can actually do without a car or their artwork, others their favourite meal or those that are single may well discover the five bedroom, triple garage mansion on 2acres is a little over the top for their needs. What about the clothes you haven’t worn for 2 yrs.? Do we really need to harbour the enmity we feel for those who may have wronged us or the burden of guilt we feel for some small wrong we committed ourselves? All these ‘things’ and emotions are holding us prisoner and we are empowered to free ourselves.

The declutter process

The material items on our list are by far the easier to dismiss but what do we do with them? There will most often be better options than simply throwing them out with the rubbish. Clothing and most material items can be sold at flea markets or better still given to charities who redistribute them to the needy.

The actual process may seem overwhelming but remember “the journey of a thousand miles began with a single step” and it is normally the hardest to negotiate. You simply must begin but not tomorrow, next week or the first of the month or “when you get the time”. Is it not folly to believe that the time we don’t have today will become available to us tomorrow or next month? Yes, UNLESS we change our habits and routines, the notion is ludicrous.

As in every process of our lives, once you have begun, the task becomes easier, then comfortable and usually right through to enjoyable or rewarding. The important, no ESSENTIAL thing is that you stop procrastinating and BEGIN – perhaps with the easiest or for some, going right to the top (the hardest) is a good starting point. Like all lifestyles, there will be times when we sneak a few burdensome items back into our lives but with the process we now have in place, they won’t last long so don’t stress.

Internal Plan

We have arrived at ‘Trader Island’ – do we want to be here, do we need to be here?

It is entirely possible that you believed that the most practical and immediate way for you to change your current predicament can be monetary gain via trading. You may find however, that trading in this phase of your life is exactly what you DON’T need or want. If that be the case, just like all the other ‘baggage’ items – cut it loose before the ‘symptoms’ become obvious. Devote your time to those “Top 20” items that you truly need in your life.

Like any other ‘time wasters’, if trading is not an IMPORTANT ITEM on your list, your will not be able to tune it in to your inner being. We can all recognise things we have done in our lives against our ‘gut feeling’ have ended poorly – right? The inner self screams and we must listen or pay the price.

Is it so difficult to understand then, that you must REALLY want to trade to succeed at it…, that you must understand any method that you choose both externally and internally, not just the execution rules but the philosophy under which they were created……., that you must be comfortable and at ease with it………live it as any item left on your list?

The Surfing the Pips Method of Trading has been created on exactly that basis. Every superfluous, diseased item has been discarded – ONLY the important equipment remains on the list. Those precious things that take little of our time yet deliver on multiple levels, allow inner harmony and complement the other items on our list, not detract from or compete with them.

Anything superfluous left on YOUR list?

Traders, brokers and banks all over the world went into a panic on Thursday 15/01, after the Swiss Central Bank moved interbank rates to a negative level (-0,75%) and announced that the Maginot Line would no longer defend the Euro against the Swiss Franc at the rate of 1.2 Swiss Francs per Euro. The Swiss Central Bank decided to collapse the value of the Euro to a minimum of 0.85 and allow it to move around the playing field. These decisions by the Swiss Central Bank were like a real earthquake which involved the Forex currency as a whole, causing losses amounting to around one billion dollars. These losses increase by the hour. January 15th will be remembered as Black Thursday.

We failed.

We failed three times, because after what happened on January 15, 2015, many traders lost money and reset accounts. These traders could not see any more money because their broker failed. We failed, because we did not convince you or explain to you well enough how to protect your capital.

Frankly, we shouldn’t give a damn, because here in SurfingThePips nobody has invested anything. In fact, the week is over, we have made a profit as usual, but we feel a little guilty anyway.

We failed, because we have not quite convinced traders not to trade illiquid markets!

You know that in SurfingThePips we do not trade the Swiss franc, and you also know the reasons for this very well. We like to trade on highly liquid markets. The Swiss franc never has been a highly liquid market. Illiquid markets have a problem: they carry an implicit risk; a risk that is hidden, ignored by most.

That is just a fly, a gust of wind, the beating of wings to create a “disaster”. The proof is what happened on January 15th. The SBN – Swiss Central Bank (which is not exactly a fly), had already done something historically significant in December. It was also unprecedented. The interests at Interbank became negative, -0.25 %.

This constituted a critical alarm bell that should have alerted any trader. There were also many brokers who, even in previous months (see Dukascopy October 13, 2014 ), understood the situation, asking its customers for more margins or to suspend trading on the CHF.

A real trader knows that when there are events, situations, already lived, trading is nice and profitable.  In fact, a trader makes operations based on patterns of the market, or situations that are repeated frequently and that lead to certain results. A negative rate is not a usual situation. Unless you want to make bets on it, it is a situation that should be avoided .

For these reasons, we pay compliments to those who have earned money even in this situation. But we would like to ask them, have you calculated all of the risks? Do you know that these types of market spikes hunting stops are on the agenda? Do you know that in the absence of liquidity there may be an enlargement of spreads that can halt to a stop even if you’re right? How many times can you do well?

We failed, because we have not quite convinced traders to have a low risk and accurate management.

Events such as those of January 15^th show how risk management and accurate low risk is essential to survive almost unpredictable events. When we are told that we risk too little and perform low compared to others, we always talk about the long term. Now the proof is in front of everyone’s eyes!

There are many who have lost everything, entire capital gains of years. A single event. An event as “rare” as the tsunami in Japan, the oil crisis, the Ruble crisis, the American housing bubble, The failure of Argentina, the failure of Lehman Brothers, the exit of Greece from Europe(?).

Rare events…bullshit! They are more frequent than is perceived, the facts speak for themselves! Events affecting financial markets, including currency. A true method also considers these events and implements a range of protections that would never allow anyone’s business to be greatly affected by these events. Do not be conceited, but act with the wisdom of a family man. Do not be the fire that burns beautifully and turns off permanently. Be slow but inexorable, be like water that digs the hardest rock drop by drop.

We have failed at adequately informing you of how Brokers work.

How many brokers will fail in the next few days, because of unpredictable losses? Alpari, one of the most famous brokers, declared insolvency, but you do not worry, your funds are safe, since your account is segregated. FXCM, publicly traded on the New York Stock Exchanges (the shares lost 90 % on its opening on Wall Street on January 16^th , 2015) is one of the brokers that many sites advised, because it is reliable. Instead, we at SurfingThePips have never recommended it, even privately (because of the multiple fines that have been received by the control American financial NFA). FXCM suffered a loss of 227 million nominal dollars (although it could still recover debts from customers). Even in this case, since the customers’ accounts are segregated, should failure and default occur, the customers’ money will be safe and all customers will review their deposits. Hoping that there are no skeletons in the closet. We can’t know if there are any and we hope that there are none. What amazes us is the ease with which industry experts addressing the topic of brokers, never bother to investigate what really happens behind the scenes of each financial company.

Think about whether certain things can happen to brokers who are more or less popular and famous, such as those mentioned above. What can happen to many other brokers located in nations that are more or less well- identified , without supervisory bodies and that are efficient without segregated accounts obligation. Unbridled marketing  blinds everyone, professionals and non-professionals, as they have the desire to make money , even at the expense of the right strength and long-term prospects .

Unbridled marketing, high leverage, superficial risk management, the broker , its exhibitions and its customers , leave no escape to neither the trader nor the broker.

We will be tough. If you have lost money, you’ve deserved it.

Many respected colleagues will probably tell you that you can earn money with these situations, they have earned money. The more the market moves, the more opportunities there are. We have always told you the truth, and we want to keep telling you the truth. First you have to think of the opportunities to protect you from the risks, just so you avoid hurting yourself . You have to figure it out right away, NOW! Selling a few more courses and bragging are not important. But make sure to make yourself fully aware and independent in your analysis and operation, without shackles around your head.

You were rough, you have not followed wise advice, you were blinded by easy money and you had to learn your lesson! This is the pure reality! Trading is a serious business, not a game, it is not fun; it is a means to an awareness of your own shortcomings and it can make you achieve wealth, but it should be dealt with seriousness, with precision, with dedication,with caution, with patience. Even the activity of coaches is a serious business. A coach should not only transmit knowledge, but must help their student to think, to take responsibility and learn from their mistakes. Do we have to become harsher with you?

We feel a little guilty, because we could not do enough for all of you and for all those who do not know us. Our mission is important, because it brings balance in choice and accountability without superficiality, but we need your help in order to improve, we need your support, your advice, your doubts , questions and criticisms. Only then can we reach more people and save them from approximate and little noticed trading, that always leads to inevitable ruin.

We promise to improve and make sure that each of you learns the lesson without necessarily losing money. In exchange, we humbly ask you to have faith in our recommendations and verify their robustness yourself. As mad,as bad, as you might seem, continue to endure shocks of all kinds year after year.

Swiss Franc we don’t give a damn, but we do give a damn about you!

To the next wave

Surfing The Pips Staff

We are blessed in the 21^st Century to have at our fingertips via the internet, precious gems that one stumbles across or are brought to our attention. The latter was the case with an article I read just now on Linkedin: http://tinyurl.com/LINK-IN-art

It was written by Dr. Travis Bradberry – the award-winning co-author of the #1 bestselling book, Emotional Intelligence 2.0. The article dealt with Stress and how it, if managed properly, can be man’s 2^nd best friend. Please don’t get me wrong, sustained Stress is a big killer but it seems that minimal exposure is a good thing.

This assertion grabbed my attention and I immediately recognised a correlation with quite a few personal experiences and many more observed examples of where extraordinary behaviour may indeed be credited to stress.

When related to Subspecies Homo Sapiens, the Oxford Dictionary would have us believe that stress is, in fact: “A state of mental or emotional strain or tension resulting from adverse or demanding circumstances”.

A kind of ‘light bulb’ moment struck me like a bolt from the blue…….. “adverse or demanding” leapt off the electronic page and whispered in my ear. It told me that adverse was self-descriptive but demanding…..now that had a resounding ring to it.

In my own experiences, lie a number of times in my life where I have been subjected to demanding circumstances but very few that I could describe as adverse. Especially if I accept this meaning of the word: “preventing success or development; harmful; unfavourable.” Those couple of times that could be described as such are accompanied by a sense of impotence or hopelessness and indeed, high stress. The ‘demanding’ version on the other hand, I relate to the orders my mother/father would bark at me as a child: “you’re not going to the park until you’ve cleaned your room”……etc. …….or the deadlines imposed upon me to complete tasks in my life as a Television Producer.

Both instances would stress me greatly but there was a logical way out of the situation and I was able to overcome the stress by a) cleaning my room and b) using my skills and working through the procedures I knew worked and would deliver the goods on time.

Consider a top athlete who, when competing against the best opponents the world has to offer, is under enormous mental stress with adrenalin levels are redlining. There would not be one who would tell you they don’t use that stress to their advantage, converting it into enough energy to get the job done.

So that suggests to me that stress can indeed have its benefits. Going back to the article – Dr Bradberry references “some startling research summaries that explore the havoc stress can wreak on one’s physical and mental health (such as the Yale study, which found that prolonged stress causes degeneration in the area of the brain responsible for self-control). The tricky thing about stress (and the anxiety that comes with it) is that it’s an absolutely necessary emotion. Our brains are wired such that it’s difficult to take action until we feel at least some level of this emotional state. In fact, performance peaks under the heightened activation that comes with moderate levels of stress. As long as the stress isn’t prolonged, it’s harmless.”

In fact (if that study is to be believed), we absolutely need stress in our lives!

The purpose of Dr Bradberry’s article was to highlight how stress can be successfully harnessed and used to good effect, citing how ‘top performers’ control the stress they are under. He quoted findings by a fellow doctor that led to the conclusion that “intermittent stressful events are probably what keeps the brain more alert, and you perform better when you are alert. For animals, intermittent stress is the bulk of what they experience, in the form of physical threats in their immediate environment. Long ago, this was also the case for humans. As the human brain evolved and increased in complexity, we’ve developed the ability to worry and perseverate on events, which creates frequent experiences of prolonged stress.

Besides increasing your risk of heart disease, depression, and obesity, stress decreases your cognitive performance. Fortunately, though, unless a lion is chasing you, the bulk of your stress is subjective and under your control. Top performers have well-honed coping strategies that they employ under stressful circumstances. This lowers their stress levels regardless of what’s happening in their environment, ensuring that the stress they experience is intermittent and not prolonged.

The article then went on to list the ten methods (as noted by Dr Bradberry) used by top performers to reduce or use stress. Would you like to know what they are? Ok, here’s today’s TOP TEN – Surfing the Pips style.

They Appreciate What They Have

Too often I have seen traders and wannabe traders chopping and changing strategies in search of the holy grail of trading. The successful trader, is the one who has found a system that gives him consistent returns and suits his lifestyle and demeanour. He appreciates the returns the market gives him.

They Avoid Asking “What If?”

What if I had only left that trade in the market, I would have killed it! What if I had risked more money on that winner? What if I had only closed the order when it was in profit, rather than having my stops hit! Sticking to the trading system rather than hypothesising – keeps stress under control.

They Stay Positive

No matter who you are or what system you use to trade, the market will ALWAYS test your resolve. Target just missed here, slipped a pip there, didn’t exit when I should have. Rolling with the punches is your best response to such ‘disappointments’. There’ll be another wave tomorrow and you’ll be on it.

They Disconnect

Much is made of the ‘24hr Currency Market’ – what a scam. Those who sit glued to a market that moves fractions of a pip per hour WILL go crazy. ALL good traders spend as little time in front of charts as possible. There’s a whole lot more to life than watching candles.

They Limit Their Caffeine Intake

As with any addictive substance, the body reacts to the presence (and absence) of drugs. In caffeine’s case, enhanced adrenalin levels can cause bad trading decisions (I’m pumped and bullet proof)!

They Sleep

A real no brainer this one – sleep deprivation is a known form of torture. It is far wiser to go to bed when tiredness sets in, than add to the stress the body is already under by waiting for a setup that may not come. The market will be there again tomorrow, when a stress free body will make far clearer trading decisions.

They Squash Negative Self-Talk

The inevitability of taking some losing trades is never a pleasant thing. A few in succession, can often lead to doubt and negativity in your system and/or yourself. Taking the time to recognise that ‘the demons’ have been triggered and having a method to short circuit that response will eliminate the stress that comes with it.

They Reframe Their Perspective

Most traders will go through a ‘quiet’ trading period and will find all manner of ‘good’ reasons why that is the case…….the Broker’s robbing me, fundamentals are messing with my strategy etc., etc. No matter the reason, it is what it is. Stressing over circumstances beyond your control is ludicrous and WILL affect you. Accept that the market is King and move on.

They Breathe

We have probably all been told at some stage in our lives that when the pressure cooker overheats, we need to count to ten and take a deep breath. It’s no ‘wives tale’ but rather, a sound medical practice that allows the pressure to release. Sounds simple but you’ve heard of the K.I.S.S principle – right?

They Use Their Support System

Superman was one of my favourites as a child (ok teenager…….young adult….) but the reality is, he’s a cartoon character and none of us, no matter how good we think we are, can achieve our goals without assistance. In trading, your mentor or trading support group is invaluable to get you back on track when it all gets too much.

Is it not as I said – a little gem? If you’re reading this, you know what I mean when I say the stress of trading can be a game changer for many people. Don’t you think that today’s TOP TEN is worth trying to adapt into your life? I can absolutely guarantee that reducing or controlling the stress component of your trading will have a profound effect on your success rate.

The next wave………….

When the ‘final curtain’ falls on the world as we know it, the records will show that somewhere between the first half of the 20th Century and script’s end, a great catastrophe took place. After reading the following article, you will discover that when mankind forgot how to communicate with themselves, the film’s final act was written……………

It would be wonderful to be a fly on the wall when that occurs, if only to hear the speculation as to what caused the “clever” animal to lose the plot.
If you accept that we as a species, are on/have taken the wrong path….what do you think diverted us from our course to eternal happiness? Was it a seismic collision, perhaps a cosmic disturbance, giving women the vote, 9/11? My own perception is that we have adopted an obsession with……..well, THINGS!
If we are honest with ourselves the Technology Revolution has created just as many issues, as it has solved…..maybe more! Top of the ‘negatives’ would have to be that most people are endowed with a PC, a laptop, a tablet and a smart phone. All of which are designed to make us ‘Socially connected”. Don’t get me wrong – that is AMAZING! But….it is also incredibly destructive, if misused! Is that not the same with everything in life? It’s an interesting topic…..yes?

It seems these days, that whenever our eyes are open, they are on ‘things’, rather than people, family, friends…..ourselves! Whilst we are concentrating our energies on external entities, what’s happening inside us? To be perfectly frank – not much at all because we cannot be in two places at one time – we are not relying on our inbuilt resources to perform day to day functions and like the mantra says: Use it, or lose it!

People were created to be loved…………..Things were created to be used
The reason the world is in chaos is because Things are being loved and People are being used.

To read the complete article click here Hollywood Indicator

Of the many wannabe traders I have seen pass through various seminars and even training courses, through to live trading sessions, it’s true that the vast majority have professional trading as their goal. Let me tell you- that can sometimes be fool’s gold.

Just as not everyone is suited to be Prime Minister or Governor, so it is true that not all individuals have what it takes to become full time traders. Indeed the ‘Traders scrap heap’ is littered with those who sought and in some cases achieved, the goal of exchanging their previous boring lives for that of excitement and prestige, as a Pro Trader.

In most cases, the harsh reality of the journey in today’s world, is that massive sacrifices have had to be made – certainly financially but also from a health and well-being perspective. The stress of having to perform in order to produce a return on a more than likely substantial investment in both time and cash through blown accounts can and has often, resulted in a less than happy family environment. If the family’s still around after maybe a decade of slogging away on the bottom rung of a trading institution’s ladder, declining health as the result of alcohol/substance abuse is likely to be an unwelcome ‘replacement’ partner.

The Out of Balance Realisation of the Dream

The issue of course is the short sighted approach to their transformation from keen and eager wannabes to those who ‘can’. They are taught and greedily feast on the information that is Long on trading techniques but Short on teaching life skills.

Why are we not likely to exchange our $60 cheque for someone else’s $10, when we seem to accept working under stressful conditions for six days and receive only one day per week to ‘get to know’ our family. Even then, there are lawns to be mown, gardens to tend, house and vehicle maintenance, TV, Facebook. The inequity of spending six days fulfilling others expectations under unhealthy, stressful conditions is simply ludicrous. But the real tragedy, is that family and friends get less and less attention and once solid, lifelong relationships, breakdown.

As trite as this may sound, it’s true that becoming a successful Trader in Financial Markets isn’t easy but to become a ‘life’ trader is by far the more difficult proposition.

There can be no question that the most precious commodity in life is time and NOT money –NO? Consider that on average, each individual will have 84 yrs on this earth. Then consider that money is an infinite resource – USA continue to print it whenever it suits them! Can you add to your life expectancy? Perhaps a couple of years by improved health and lifestyle choices but certainly not indefinitely (many have tried). In excess of four trillion dollars is paper traded on the forex market every day yet what is its value? Perceived is the answer because it is relevant only to how much is in circulation at a given time. Time on the other hand cannot be re-printed or created and therefore has far greater value to us, yet we choose to trade it off for something which is only a perception!

Not everyone is ready to return to the jungle of course so until something other than money is acceptable for the exchange of goods and services, we need to have some in our lives but we do need to understand what is REALLY important.

The REAL you – Pro Trader or Beach Trader?

The Pro Trader has committed his time to the pursuit of making money. The Beach Trader has opted for time recovery. It’s true that money CAN buy you time (mainly other peoples) but without a clear objective towards freeing up your own time, 84 may well become 74 and you’ll be the proud owner of the best looking tombstone in the cemetery and the loneliest, unloved kids who lost their parent, years ago.

Releasing yourself from the ‘time shackles’ is a quest achievable only if it becomes a habit or routine event. The forming of that habit enables more and more free time as you become more skilled at it. The notion of creating more and more money to trade it for time in the future is a mouse’s wheel that few get off and is the habit that must be changed. The right balance between financial growth and time enjoyment is the elusive key.

But the kids can’t go without

As parents we all strive to give our children what we believe they want. These days it’s Ipads, Smart Phones, Xboxes and the like which all do what? Consume their time and teach them little. Staying inside the mouse wheel to produce the money to buy these consumer items teaches our children ONLY how to buy these mostly useless ‘things’. What if we were to teach them that they are far more valuable than any piece of technology, by spending time with them. We don’t need to be Freud to understand that our Children will act as we do. If we want them to work their insides out to accumulate as much monetary wealth as possible, whilst ignoring their emotional wellbeing and health – we simply need to stay inside the mouse’s wheel.

The Trader from the Beach

The REAL trader does not live a life of stress – he/she is relaxed and content. As individuals, we each have our ‘beaches’ – places or even people or items of clothing that have a calming or peaceful effect on us.

To get the ‘beach trader’ mentality started, we simply need to visit the ‘beach’ more often. You can begin the process right now! Give the wife or a mate a call and organise something at a favourite spot. Walk out into the garden and ‘smell the roses’, find your old high school sweater and wrap it around you as you walk to the park. Pop down to the actual beach and meditate or hey, grab a ball and throw it with your son or daughter! Just 10 mins tody, then again tomorrow soon builds to thirty and then an hour until in a couple of years – you spend a great chunk of your day ‘at the beach’! Your serenity will increase to new levels, your health will improve, your work and trading will benefit greatly and yes, your bank account will love you for it! Once your ‘beaches’ have been identified the ‘beaches’ of your life and apportioned them significant importance, your business dealings (including trading) will be far less demanding and less stressful to undertake. Absolutely everything revolves around your ‘beaches’. They are the cornerstone of your mental and physical health, your source of energy to tackle and conquer any project – including forex trading.

Your trading MUST be such that it does not take you away from the beaches – in fact, it must be a method of trading that gives you time to go to the beach and therefore requires minimal time to execute. In considering the trading strategy you are to adopt, consider the time you have to devote to trading, do not try to shape your life to trading, the reverse works best and allows you maximum ‘beach time’. Your method of trading must not compel you to a life where you only worry about the markets. It must allow you free time to effectively maintain your everyday life. You mustn’t kid yourself that a ‘chart watching’ method will not affect your life. It is you who ultimately will create and use your method, so you need to take a long look in the mirror and place solid lines in the sand that should never be crossed.

These lines must speak not only of time, but also of your capital. Your trading capital must never adversely affect the ability to visit your beaches. In other words “do not trade with money you cannot afford to lose” Remember well – your beaches ensure the peaceful life and sustenance to you and your family!

Keep your stress levels at bay.

Stress is created only if there is a problem somewhere! A problem is an opportunity that allows you to exercise your ability to solve it. Problem solving carries a beautiful reward – it makes you happy! It also makes you realise that the stress it caused you, was a waste of energy. Keeping stress under control can be achieved by limiting your exposure to it. HOW? Never risk too much capital because if you lose it – pressure builds for your next trade; don’t be involved in too many positions at the same time – in unforeseen circumstances, you will be called upon to make discretionary calls on the run yet not be skilled enough to deal with them, placing yourself completely at the mercy of the market; please always plan ahead, your stop loss and take profit, not knowing how much you can win or lose you will also create uncertainty, leading to stress.

If you do feel stressed, practice meditation, breathe, take a ride, do exercises, but especially identify the source of stress and make decisions in order to remove it. If you can solve it fantastic but if not, try to accept it for what it is:

“God, grant me the serenity to accept the things I cannot change,

The courage to change the things I can,

And the wisdom to know the difference.”

Summarizing the Rules:

1- Identify your beaches and Make them protected heritage

2-Create a way of life to free up time

3-Create a trading method within your life and not disconnected from or that has control over your life

4- Create strict rules taking into account the three sacred factors: TIME, MONEY, and STRESS.

5- Remain calm, smile and embrace your freedom of choice

Hello Surfers,

Today I’d like to share my thoughts regarding a big potential scandal involving the Forex Market.

I’m talking about the Bloomberg article here:

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.

It relates to traders of the 4 big boys ( Deutsche Bank, Citigroup, Barcalys e UBS) manipulating some Forex small markets.  I repeat, small.

This is one of the reasons why we maintain the same mantra: Do Not Trade Small Crosses.

Just focus on the BIG ONES, or better still, the biggest: EURUSD.

Why?

Because of the “Liquidity Chain” as I call it:

1. The bigger a market is the more money is invested
2. The more money invested, the more difficult manipulation becomes
3. The more difficult manipulation, the “cleaner” & therefore reliable, the charts will be.
4. The cleaner the charts – the easier to make money!

Do not fall into the brokers “Candy Store” trap. Simply – trade one market on an Intraday Strategy with small stop losses (less than 50 pips).

Because we only trade our Swing&Relax Strategy using bigger stop losses on a 4 hour chart, we can still safely trade GBPJPY and EURJPY without fear of manipulation

You can read the entire Bloomberg article here.

Davide Franceschini | Chief Trader

Hello Surfers,

yesterday, the beautiful Italian online newspaper “The Post”,  published an illuminating photo gallery about traders.

The photos you can see in this link, are the exact opposite of our trading strategy. The gallery shows us men / women defeats, sacrificial victims of emotions. Humans disheartened, crushed, they seems more hooligans in the stadium than traders. In the words of the Buddha, the string of the violin does not sound good if it is too loose or too tight, it must be in the middle to produce the right harmony. With the right voltage. Stable. Still.

We at SurfingThePips.com look with compassion towards these slaves of modern capitalism schizophrenic, conscious of our diversity. For us, trading, has to be just a tool to enjoy life, the real one. These traders are clearly in a trance, they always look at the price, they look for salvation from the outside, not the inside. We look at the price  for only 5 minutes every half hour. We know that this is the key to profitability. These pics seems to be taken inside a betting agency, they are the exact evil for us. These people appear not in control, they seem under the influence of drugs.

Hey yes, some recent articles on newspapers seem to confirm that. The Guardian says that the crisis of 2008 and the subsequent micro-crises are largely due to cocaine assumption by traders. This does not surprise me at all. Cocaine is the drug of our times. it is a powder people take to improve performances. There are drugs to “trip” and drugs to be “more here”. The problem is that we are always talking about drugs. Things that mess up with our brain and it ends up being the exact opposite. These people are totally in the grip of anxiety, with an inflated ego and obtusely full of themselves, until the effect ends and you find yourself with the harsh reality before their eyes. The failure.

We are different. I always say to the students of our Forex Trading Courses. Never beat yourself  for a loss, but at the same time, do not ever cheer for a gain! Important. You have to be always in the middle. Only in this way  will you be sure to be YOU in control and not emotions and external energies. Learn to become like the lion. Sleeping … apparently. When you see the prey you wake up with all the determination in the world to make it yours, otherwise you remain impassive, almost dormant.

Only in this way you will get financial freedom.

Davide Franceschini | Chief Trader

It took a great deal of research, heartache, financial loss, anguish, determination, soul searching, depression, elation and damned hard work to discover what I believe to be the three main ingredients to enable long term success in trading the Forex Market.

by GEOFF PYNE | Certified SurfingThePips.com Trader

Potentially, the farthest thing from George Michael’s mind as he penned the lyrics to his now famous song, was the Currency Market and how to trade it. The very catchy chorus line is now very much a part of my trading mantra.

Now before you start thinking……well hang on a minute, there has to be a little bit more to this game than simply entering the market on a “wing and a prayer”, as the saying goes and you’d be dead right. That’s not the kind of Faith I’m suggesting.

One dictionary definition of the noun “Faith” is: Complete trust or confidence in someone or something.

Now, that’s the kind of Faith I’M talking about – but Faith in who, or what? Well, TWO people and one main thing really. Each with its own challenges. Each taking a considerable period of time to develop. Each not being acquired without EFFORT……..lots of EFFORT and each, when discovered, providing an immense sense of achievement and indeed enlightenment. Yes, just like the headlights of your car being switched on when it’s dark – the road becomes suddenly visible and far easier to negotiate than without the illumination.

Let me list these 3 key ingredients for you……….

FAITH #1 – an undeniable key ingredient to trading FX is a reliable system or trading strategy. In my day we used road maps to guide us through unfamiliar territory – these days it’s all about GPS units but the analogy is totally the same and as powerful an illustration as I can provide. Would you REALLY attempt to drive in a city you’d never visited? How on earth are you going to arrive at your destination? Even if you managed to bumble your way, how much more petrol/gas would you consume in making the unsure, frustrating and infuriating journey. Imagine further, that your wife/husband was beside you. What do you think your relationship would be like after the third or fourth time you got lost – OUCH! So, let’s use the TOM TOM – OK!

Decision made – which GPS device do we get? There’s hundreds of them……some get you to the destination effortlessly and last forever. Some aren’t too sure at times (ever heard “Recalculating”) exactly where you are, along your journey. Yet others work perfectly until a new road or diversion is put in place and then…….well – lost again! Fair to say it’s a topic for another time but essentially, it needs to be a device in which you can have FAITH!

So, FAITH #1 is definitely in the strategy you choose. What that means is no matter what the market does or how it behaves, you MUST be able to trust the charts. There’s absolutely no point in having a strategy in which you don’t have complete FAITH because without doubt, you will attempt to bend it to fit your shape. Like all good relationships, the time to discover if it’s a good “fit” is prior to commitment! Again, that’s a whole other topic but extremely important to understand.

FAITH #2 – Now you’re equipped with the right Strategy (the road map) – you need to have complete confidence in the Driver – yes, that person you see in the bathroom mirror every day. Oh – you think you already do – FANTASTIC, move to FAITH #3 – if however, you are like most people, you probably have little doubts that whisper inside you when the pressure’s on. Your journey to success in FX will provide you with ample opportunity to test Faith #2 and it’s no coincidence that the successful trader has overcome the little doubts that will be an everyday companion for most of your “apprenticeship”. I’ll briefly explore a couple of examples of those niggling doubts that can really cause a trader (not only novices) much grief:

The “dreadful doubts” for me, began with (not surprisingly) a series of financial losses. I’d heard & seen enough paraphernalia on the topic of FX (mainly from those with a vested interest in my money) to conclude that most of it was hype bordering on outright lies and in many cases – absolutely; unsubstantiated, indeed unable to be substantiated, fraudulent claims. Yet even with this awareness the good old “what if it’s NOT false claims” question kept niggling at my emotions. It’s no mystery at all then, to doubt my decision to firstly be seduced by the hype, but to actually have paid a substantial amount of cash to an educator, only to discover my trading account was dwindling before my eyes. The faith I have in myself to have chosen this journey comes under extreme scrutiny around this time! I really stood at a crossroad when this occurred and did some soul searching – “do I cut my losses here and write the entire 12 months and thousands of dollars off as a learning experience? – Can I really explain to my wife that I need more understanding than she had already given because I “know it can work – just need a little more time and money”.  Do I really believe that it can turn around? What if it just soaks up more time and money discovering that the whole thing is a scam (like most of my friends and family, accountant and financial adviser warned)?

So a Faith #2 rebuilding program began with me ceasing to trade and retracing the education step by step, researching different strategies, talking to as many people who were, or who had attempted, to trade for profit. As I discovered what was essential and what was garbage, my Faith #2 began to re-establish and I was able to recommence trading with a whole new outlook.

There’s no way I could have found the way back, without both #1 AND #2 locked into my psyche, both are inter dependant and essential ingredients of my trading strategy.

What then of FAITH #3 – Trusting Yourself to apply #1 & #2.

Hang on – didn’t we just deal with trusting the guy/gal in the mirror? Yes, we did but that doesn’t mean HE/SHE’s safe to let loose trading the World’s biggest market!

There’s absolutely no point in having a great strategy and the confidence in your judgement and self-esteem, if you can’t trust yourself to trade the strategy to the letter! What do I mean by that?

The strategy I trade (as all should) has certain, non-negotiable principles/rules. Unless the system you use is a scam, there will be very good reasons why the strategies architect put these in place. Usually they will be built around reliability and past performance but ultimately exist to ensure long term profitability. Unless you are a thrill seeker and much more comfortable driving F1 race cars in the arcade, this is great news. Someone has tested and re-tested an entire method of trading, probably over many years and is prepared to share that with those wise enough to follow. Now it’s true that I advocate adapting an existing strategy to your own personality, time constraints etc. What I don’t advocate however, is trying to re-invent the wheel. This is the crucial part of Faith #3.

I don’t ever expect to be made aware of an FX trading strategy that ALWAYS WINS. This despite many emails, web adverts etc. trying to convince me otherwise. Once realised, this belief allows you to accept the inevitable will happen – LOSSES WILL OCCUR. Instead of blaming the strategy, the wise trader asks these questions: a) Did the strategy fail? b) Did the market act strangely? c) Did I do something wrong?

The answer in the early days of your career will more often be c). Until you understand it, b) will also occasionally “throw a spanner in the works”. If it’s not a scam, a) will be the answer far less frequently than the others. The challenge of Faith #3 then, is believing that if Faith #1 & #2 are in place, can the face in the mirror be relied upon NOT to try and change the rules.

The strategy may call for you NOT to enter the market on Monday UNLESS a Dragon Fly Doji appears on GBP/JPY at Midday. At 1030, the best Dragon Fly Doji you’ve ever seen appears on your GBP/JPY Chart and you figure it’s an early new week present – load up the order, enter the trade which immediately goes against you for a loss. You know what happens next of course – a Gravestone Doji appears bang on Midday and you (bend the rules) for a 2^nd time believing the setup is close to what’s required and you couldn’t possibly be that unlucky twice running!!

Oh dear – the reality is that you can’t be trusted to trade the strategy because you a) weren’t patient enough to wait for Midday and b) believed near enough was good enough as a candle pattern. If this scenario rings any bells for you……welcome to the “can’t be trusted Club”……..MOST successful traders have long term memberships!

Don’t despair – it’s not a terminal trait but it’s very common. As with most bad habits…….some soul searching and therapy will cure the condition and the Holy Alliance…….FAITH, FAITH, FAITH is restored.

GEOFF PYNE | Certified SurfingThePips.com Trader