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You MUST Hold Your Winning Trades To Target. Here’s why…

I want to start by asking a question;

If your strategy delivered at just below +10R winning setup, would you be able to let a trade of that size actually get to target? Would you have the discipline and the patience and the belief in your edge to let that trade play out? Because we all know that markets don’t move in a straight line, don’t we.

I was originally writing this out for a mentoring client, but I wanted to share it with you because I think what we’ll talk about here will really help and will really add massive value for a lot of traders out there who still might be self-sabotaging their own profitability. Which in a way, it’s a good problem to have, because if you can just remove that self-sabotage, you’re profitable.

And this is why so many of the traders who come to me and learn my strategies actually gain profitability, because in many cases, the only thing standing between them and profitability is their own actions i.e. exiting early, executing late, missing or skipping trades due to fear, mis-sizing positions, not managing risk correctly. And today, hopefully I’ll be able to help you solve those problems once and for all. And when you can do that, profitability is waiting on the other side.

So let’s get to it.

The reason I started by asking that question, “Could you hold such a large winning trade to target?” is because on the face of it, I’m sure most people would say, “Yes, no problem. Will, give me a strategy that brings in wins of that size, just below +10R, and you better believe I’ll take those trades and bank that profit”.

But let’s say that I hand you a strategy that does just that. Today, I hand over my Price Reversion strategy and you’re presented with a just below +10R trade, like we were yesterday…

Let’s say you’re risking £100 pounds per trade, and you take the trade, completely comfortable with being stopped out if necessary, and in that case, losing your maximum risk, losing -£100 pounds. So far, so good. You have a huge setup in front of you, a massive winning trade on the table. You’ve managed risk and you take the trade.

Now, if you do get to target on this trade at £100 pounds risk, with this being a 9.2R trade on paper, that’s a £920 pound win. And I know that almost all of you with the Price Reversion strategy took just that yesterday by following and more importantly, sticking to the rules.

Imagine that. That, for many people, is the mortgage paid, the car loan paid, the week’s food shopping paid for and dinner out with the wife, so we’re nice, and some money leftover made in one day by awaiting a setup and pressing a button. If you take the trade and let it get to target, of course, and this is where things get itchy for some people. So let’s say you’re just taking the trade and if we skip forward, we can see that this happens. Price starts to instantly move in your direction and you’re at +1R and £100 pounds up.

Then you’re at +3R and you’re £300 pounds up. Then you’re at +6R and you’re £600 pounds up. Would you stick with the trade with this open profit and loss staring back at you? Would you actually let the trade move towards target and actually get to target?

On the face of it, I’m sure a lot of you are going to say, “Yes, no problem. All I need now is the strategy. And I’ll happily bank the next +10R, +15R trade that comes along, especially if all I have to do is await a setup, press a button and walk away.”

But I’ve had quite a few … well, I say quite a few. I’ve had two or three messages and emails from traders today saying, “Will, I took the trade. I saw price pause and begin moving sideways. And then coming back down and I snapped.

I took +4R, +5R and have now lost out on a half more and I’ve left £300 pounds or £400 pounds on the table. And I’m annoyed at myself. I’ve done it again. I’ve self-sabotaged my own results.” And across a year, even if you only miss out on let’s say +1R or +2R per-trade across 2 months, that can have a huge negative impact.

So I’ve had the conversation with these guys today and offered a few solutions. One of which is literally taking the trade and just not checking it whatsoever until the very next morning, when we begin trading. Again, a completely mechanical stop or target approach. And I wanted to put it back to you guys. I wanted to ask you all that question…

Imagine you had this strategy yesterday. You were presented with this huge setup that offered a just below +10R trade. You have the opportunity to 10X your money, 10X your risk. The strategy literally says, “Buy here, put your stop-loss here, put your target here and just go on. Just walk away. You’re done. There’s no need for any thought, any emotion, any analysis. Just take the trade and quite frankly, go away.” Could you do that?

And it’s just like the famous trader, Jesse Livermore, says in one of his books. It’s never the thinking that brings the money. It’s the executing with edge and just sitting tight. And I’ve built all of my strategies around that thesis, around that principle, completely removing emotion, completely removing self-sabotage and so on, if you can take the trades and just again, walk away, that is.

Now, for those that do struggle with this, I wanted to offer two things that might help. So firstly, again, take the trade and close the computer. Delete your broker’s app off your phone and do not check that trade whatsoever. Stop or target only.

Secondly, take a look at your risk because this may be the issue. If you’re risking, let’s say, £100 pounds, but £300 pounds is quite a substantial amount of money to you, you’re almost always going to snap when you see that or £400 pounds or more on the screen, because again, it’s a substantial amount of money to you, and that brings emotion into the picture. And from there, everything will fall apart.

So give both of those some thought and hopefully one of those will help.

– To your success.

Will, and team.

The One Trading Psychology Tip (To Become A Profitable Trader)

Let’s explore the psychological aspect of trading because it’s an aspect that makes all the difference. It’s really important to cultivate the right mindset in order to become and remain a successful trader, and today we’ll do our best to help you get there, or stay there.

Now, as mechanical traders, we’re fortunate because mechanical trading is the only way that a human is able to trade without relying on things like emotion, best-guesses, predictions, discretion and so on. And here at WBTrading, we provide our clients with clear, concise and actionable rules to follow day in and day out to ensure consistency of performance, without relying on those aspects that hold so many traders back. But when it comes down to taking trades, whatever the strategy, whether you follow mechanical rules and have an edge over the market or whether you’re gambling and hoping for the best, there will only ever be five different types of trade we’ll ever experience; A large win, a small win, a break-even trade, a small loss or a large loss, ok.

But here’s the thing that sets the winners aside from the losers, and really take this in because it’s critical; When trading with edge, when trading a strategy that is statistically-proven to work and comes with clear rules to follow, it is virtually impossible to suffer a huge loss. Sure, you might suffer let’s say slippage on occasion or a gap, but in almost all cases, we remove those huge losses entirely. They just cannot happen. But, with edge, we allow those huge account-building wins to still take place. And by just removing those huge wins, that alone is enough to remain profitable and have an edge, because I cannot tell you how many times we’ve received Emails and messages over the years from traders who’ll get in touch and tell us; “Guys, I didn’t use a stop-loss, or I have a huge stop-loss that contains half of my account or more, and I’m currently underwater with price headed against me. What should I do?” And equally, I can’t tell you how many of these traders sadly never get back in touch ever again, after their entire account is gone.

But let’s look deeper and discuss a certain statement that we’ve likely all heard; ‘Let your winners run and cut your losses early’.  Let me cite Investopedia here, who say that; “While this advice is offered by many, it’s followed by few. This is because it’s more difficult than it may appear. Most traders tend to take gains off the table early out of fear, whilst tending to hold onto large losing positions in the hope that they will rebound. However, instead of letting profits run, some traders prefer to place a profit-target that will lock in a predetermined profit. Likewise, traders often use stop-losses that automatically enable them to exit a trade if a decline of a specified amount occurs. These few successful traders typically have gained this knowledge via education.

Now, you’ll have heard me highlight the word ‘education’ there, because proper education is the absolute key to success, it really is. I can’t emphasise that enough. Why waste the time, and lose the money to the markets, all for nothing, when successful traders are out there who can simply hand over their years of experience, saving you that time wasted and money poured down the drain and into the hands of the person who owns the trading platform you’re using? As highlighted by Investopedia, successful traders are highly knowledgeable due to having gotten educated. 

Have you heard about the disposition effect? Using Investopedia again as a reference; “Disposition effect means a type of loss aversion whereby traders hang on to their losing trades for too long, and sell their winners too early. This psychological bias, where losses loom larger than gains, can be detrimental. Letting profits run and exiting losses at a predetermined price, is the better and more rational strategy”. If you strip back what they’ve said there, they’ve pretty much said ‘put rules in-place’ haven’t they. Now, coming back to just ‘hoping’ that a large loss will turn around, one thing is for sure, we never teach our clients to use ‘hope’.

As mechanical traders, hope doesn’t play a part in what we do. We have strict, proven rules in-place that tell us exactly which market/s to trade and why, exactly where to enter and exit and pre-determined points within the markets, and so on. And I agree with Investopedia; Letting profits run and exiting losses at a predetermined point is hands-down the better and more rational way to trade, above taking your profits early and letting losses run because, as we know all too well from the Emails and messages we’ve received in the past, the latter can, and often will, almost definitely result in an entire account being destroyed. All of that money just flushed down the toilet for nothing in return but pain, frustration and embarrassment.

Don’t be that trader who puts it all at risk, who puts all of their money, their trading account, on the line without a plan, without an edge, without clear, proven rules in-place to follow because otherwise, the risk you’re taking is monumental. If as high as 85% of traders lose money, and most traders use guesses, predictions, hope, best-guesses, do the opposite of them. Get educated, trade well, with edge, and join the top 15%. It only makes sense doesn’t it.

So, to conclude, trading psychology is without a doubt a key element of profitable trading, but equally, without an edge, psychology is irrelevant. You must, as Investopedia said, allow your wins to get to your predetermined target, and your losses to be contained in a manageable predetermined stop-loss.

And as mechanical traders, we have our rules to follow that allow for this, providing us with an edge, and allowing us to steadily and surely build our accounts across the months and years, keeping us in that top 15% of profitable traders.

And if you would like to work with us, or you’d like to learn the rules behind the mechanical strategies we trade, just click here and we’ll help.

– Will (And team).

Lot Sizing Simplified

A client of ours Adam B recently asked us for advice on the differences between lots sizes offered by various brokers regarding currency translation and fees and so on and so forth, which we’re going to lay out together here to hopefully solve the problem for both Adam and for you, too.

Understanding lot sizes is crucial because it plays a really important part in risk management, which is the foundation of successful trading. When it comes to risk management, it’s all about making sure that we correctly size each trade that we take, each position that we open, to ensure we’re not trading too big of a size relative to our treating accounts balance.

Let’s start by defining the three available lot sizes; Standard, micro i.e. 1000, 10,000 and 100,000 “units” within each. And for those of you who don’t quite know this yet a lot is a unit which measures a transaction amount.

So when an order is placed on your trading platform, these orders are placed in lots, okay.

Regarding actual market-price on the other hand, if we take foreign exchange as our example here, the change in the currency value relative to another currency is measured in pips, which is a very, very small percentage of a unit of a currencies’ value.

Broadly speaking, you need to trade large amounts of a particular currency in order to see any significant profits or loss. As again, the pips-movements is a very, very small percentage of a unit of a currency’s value And as the market moves, the pip-value will also move to either up or down depending on your trade position.

So how do we determine the best lot size to trade? Well, as a helping hand, we’ve actually taken the time to prepare an Excel spreadsheet for you that you can use to determine the right lot size for you, your account size and so on. And before we go any further, I do just need to thank our team member Azri for actually building this for us. Both this piece of writing, and the spreadsheet itself too.

Download the sheet here.

Inside the sheet, all you’ve got to do is change the variable highlighted in yellow and your ideal position size will be automatically calculated for you. With the sheet in hand, you will know exactly how much you’re about to risk before you enter any future trade. And this is an example of really great risk management principles.

Next let’s briefly go through the differences between a micro lot, a mini lot, and a standard lot.

So firstly, a micro lot, which is the smallest tradable lot available via most brokers is a lot of 1000 units of your accounts’ funding currency. If your account is funded in let’s say US dollars for example, this means that a micro lot is $ 1,000 worth of the base currency that you actually want to trade.

So if you are trading a dollar-based foreign exchange pair in this case, one pip would be equal to 10 cents. Micro-lots are a great way for beginners to keep risk to a minimum while just practicing their trading. And it’s also highly recommended for new traders to stick with those, to trade using micro lots, instead of let’s say a demo account so that they can actually feel the sense of emotion that comes with trading live, and this is also known as having skin in the game.

Next before micro lots, there were mini-lots and mini-lots are 10,000 units of your accounts funding currency. So if you are using say a dollar-based account and trading a dollar-based currency pair, each pip in your trade will be worth about $ 1.

And if you are a beginner and you want to start trading using mini-lots though, make sure that you are well capitalised. It’s recommended that you start with, I would say a minimum of let’s say $ 2,000 to start trading these mini-lots due to their sizing.

So while $ 1 per-pip might seem like a small amount, the market could well move say 50 pips, 100 pips plus in a single day, sometimes in a single hour. And if the market is moving against you, that can add up to a $ 100 loss, which would mean that your account is gone just like that.

And finally, a standard lot is a 100,000 unit-lots. So that’s a $ 100,000 equity position, if you are trading in dollars. Trading with this size of position will generally means that your account-balance will typically fluctuate by roughly $ 10 for each single pip that the market moves.

For a trader that has, let’s say $ 2,000 in their account, usually the minimum required to trade a standard lot, that means that a 20-pip move can make a 10% dent in your account balance, either positive or negative.

Most retail traders with smaller accounts don’t trade standard lots. Most traders that you come across are going to be trading either mini-lots or even micro-lots. And it might not feel glamorous, but keeping your lot size within reason within relative to your account size will help you preserve your trading capital to continue trading for the longterm.

And at this stage, I’d just like to share an analogy with you about lots sizes…

Picture this; You’re about to go sailing in the Pacific ocean and you have a choice between a small wooden boat, a fishing charter, or a cruise ship. Given your budget, you can only afford a small wooden boat.

What happens if you still go out, and still go ahead and sail in the Pacific ocean using this small wooden boat? Well, a quick change in the tide or a quick changing weather could easily capsize your boat and, poof, you’re toast. You’re gone. You’ve sank faster than a 100 until an anchor, right?

But having said that a better decision with only a small wooden boat will be to avoid the Pacific ocean and instead fish in a much smaller river to give you the best chances of survival and successfully pulling fish out of the water, much like we pull dough out of the markets.

My point is this; Start small, grow slowly and steadily, and prosper over the long-term.

I hope that analogy helps you to understand that it’s all about balance, and depending on your trading account balance, that will inform the decisions that you actually make and which lots you actually trade.

I hope that helps.

– To your success.

Will (and team).

Understanding The Many Different Market Types

It’s Will, and today I wanted to share a post to help you understand a very important aspect of trading, that being understanding the various products or asset classes, also known as markets, that are available for you to trade.

When it comes to trading, one popular first question to ask when you meet a trader is; Which products, or markets, do you trade? And why?

There are so many out there, from currency markets to stock indexes which are a favourite of mine to trade using our Price Reversion strategy, through to stocks, bonds, and so on. And in this Email,  our aim is to educate you on some of the most important of these, along with helping you to understand how we can make dough trading or investing in them.

Firstly, we have stocks and shares.

Stocks and shares are issued by companies that are listed on stock exchanges. The most popular stocks at this current moment in my opinion being Apple, Tesla, Google and so on, which are listed on the New York Stock Exchange over in the United States. In the United Kingdom, companies like Vodafone and Barclays are popular while in Australia companies like BHP Group and Rio Tinto take the cake.

When we buy stocks, we essentially buy an ownership in the company, on either a short-term or a long-term basis depending on the strategy you’re using. The obvious benefit to buying shares is that the shares can rise in value over time and we can then sell them, booking-in a gain.

The other benefit is that shares can pay us dividends, so not only can you bank a winning trade, you actually also get paid just for being ‘in’ the trade, too. Pretty cool right. Let me explain how this works; When the company makes profits, they in many cases choose to distribute a portion of the profits to its shareholders, which if you’ve bought the stock and are currently in a position, means you receive some of that profit. 

On the flip side, the risks are of course that the share price can fall, which means there could potentially be a capital loss for us when we sell the shares. In the worst-case scenario, we could lose everything if the company goes into bankruptcy, like what happened during the 2008 financial crisis when Lehman Brothers for example went into liquidation.

The shareholders lost everything.

So it’s not all sunshine and roses. As always, there are risks to consider and none of us know whether a market will go up or down on any one day, week or month. This is why trading with a statistical edge is critical.

Without an edge, you’re as good as risking your hard-earned money by just guessing, which is why we trade mechanical strategies using strict rules, built around statistical proof, to make sure that the trades we’re taking are accurate and will generate profits over the long-term.

Secondly, we have stocks indices, or ‘stock indexes’ as they’re otherwise known. An example of a stock index would be the DAX. The DAX is a German stock index in which the top thirty blue-chip German stocks are bundled up together into one tradeable market-price.

Let’s say that a large German company is hit with bad news tomorrow, this may bring the price of the DAX index down, because one of the stocks inside it has taken some kind of hit. That’s how it works. Again, having a strategy in-place to apply to these markets is critical, and I actually originally built our Price Reversion strategy for use on this market, along with other stock indexes. 

Many DAX constituents are large multinational companies with global operations all around the world such as Deutsche Bank, Volkswagen, BMW and Adidas. Similar to stocks, an index can rise in value over time and can also fall in value over time. The risk for the index to fall to zero however is a very small one because the index is made up of thirty high-value blue chip companies and, dare I say it, it would be almost impossible for all thirty blue chip companies to go into bankruptcy at the same time!

We can also gain exposure to a stock index over time by investing in an index fund. Here at WBTrading, we encourage investments in index funds due to their safety, and their long-term ‘slow and steady’ nature. In fact a great video on the topic of index funds is already on our YouTube channel, entitled ‘What is an index fund’.

Next, let’s talk about the foreign currency markets.

The foreign currency markets – Also referred to as ‘forex’ or ‘FX’ is by far the largest financial markets in the world. According to the Bank of International Settlements, BIS, trading in forex averages $6.6 trillion in trading-volume per day. It’ll also be helpful to let you know the three most liquid trading pairs in the world, those being the Euro-Dollar pair, the Dollar-Yen pair and the Pound-Dollar pair.

Now, one of the benefits of trading in the forex markets is that they’re open 24 hours a day, allowing us to trade any time of the day or night, which means there’s limitless opportunities for traders all around the world regardless of their time zone. And by trading our strategies using our mechanical rules as one example, you’d have the opportunity to pull money out of the markets right around the clock, no matter your location or your time-zone.

Which brings me on to another subject, see…

Due to the size of the forex markets, you’ll find yourself competing against the big boys. In this case, the central banks, the investment banks, the hedge funds and other professional forex traders. Without knowledge, without a statistically-proven edge, and without proper risk management, there is absolutely no doubt that a retail trader will fail.

Here at WBTrading, our aim is to properly-educate retail traders and literally provide them with professionally-built, ready-to-trade strategy rules that provide that ‘edge’ over the market that is needed, and we also teach risk management in detail to equip new or struggling traders before they dive in and begin trading, meaning they’re ready to make money from the off, from day one. 

We believe knowledge is power hence we advocate traders to equip themselves with knowledge and never just “go in blind” as you will no doubt lose your money to the traders out there who are trading with edge. 

Next, let’s also cover the commodities markets. A common commodity that people trade is gold. Gold is seen as a safe-haven because it has acted as a store of value, maintaining it’s purchasing power for thousands of years. History has proved that over time, the value of gold remains constant while the prices of everything else tend to go up, in-line with inflation of course.

Gold typically performs well during let’s say a market down-turn or a financial crisis. As such, gold is a very useful asset-class that offers superior diversification to an investor’s portfolio, helping to withstand volatility over the long term.

Finally, and I’m sure you’ll agree with me here, but it would be an injustice for us to leave out the most recently popular asset class; Crypto-currencies. One example being Bitcoi. Bitcoi was first invented in 2008 by a person called Satoshi Nakamoto, and if you don’t already know what it is, it’s a decentralised digital currency, with no central bank in the world responsible for administering the currency.

Nowadays, bitcoin is accepted as a payment method allowing people to pay for services or goods using them, and throughout the last year or so, the Bitcoin price has increased remarkably, currently trading at close to 60,000 per-coin.

But Bitcoin isn’t the only cryptocurrency out there; Investors can also buy other cryptocurrencies that could potentially be the next Bitcoin so-to-speak, and there are cheaper alternatives such as Doge-coin or Lite-coin as two examples.

Importantly, investing in cryptocurrencies can also aid what’s called ‘portfolio diversification’ meaning you aren’t just trading one single market or one single sector, which often sets professional traders aside from others.

Right, that’s all for today and we really hope this Email gave you some perspective one the functions of the different asset-classes out there, along with how they can help to grow your wealth by both allocating funds to, and allowing you to trade, in various areas of the financial markets with the ultimate aim of achieving portfolio diversification.

Again, similar to trading, investing is all about withstanding the test of time and thinking long-term. And only the best, only those with a proven edge over the markets, survive. And if you aren’t yet trading with edge, and that’s leading to the fear and frustration, we can help.

Just click here and we’l help you gain an edge right now, immediately.

– To your success.

Will.

This Trading Mindset ‘Hack’ Made Me Thousands

Have you ever felt scared to take a trade? Or even scared to perhaps fund an account, because of fear of blowing yet another one? Or maybe you’ve been scared to work with a mentor or to buy a trading course or programme because deep down, you just don’t feel like this is really possible? That trading is really doable? That you can actually do this for a career, as a sustainable living, right?

If so, I’m here to tell you two things today. Firstly, if you are feeling any of those types of fear you’re not alone, many people face them. And secondly, those fears are irrational. They aren’t true. Let me give you an example;

If you said ‘yes’ when I asked have you ever been scared to take a trade, that’s an irrational fear and it’s caused by having a gap within your mental-model, built on what you believe to be about to happen, because of a lack of knowledge and preparation, along with not correctly processing your current situation. Wow, that was a complex mouthful wasn’t it. Let me explain, let’s break this down together.

If you are scared to take a trade, that likely means one of two things.

One, you don’t have a proven edge over the market backed up by statistics, because if you did, you could simply look back on the data, confirm that you have an edge, and that there’s no need to worry, and then take the trade. Or two, you haven’t mentally detached from the money you’re trading with. Or both, right.

So, which is it?

Well, let’s say it’s the latter, let’s say you have a newly funded £1,000 account, you have a statistical edge over the market, but you’re worried about losing money. Again, you’re not alone, no-one wants to lose money do they. But, here’s where the ‘mindset hack’ that I have for you today comes in…

Whenever any worry of this kind comes up in the future, there’s one clear, proven way around it. To completely get rid of it. And it’s this: Ask yourself; ‘If I emptied this account, would I die? Would life end? Would I be left homeless, on the streets, searching for food and shelter?”. Likely, the answer is no isn’t it. I could be wrong and if I am I apologise, but for most people watching this video, on a computer at home, with an internet connection, if you were to blow your account, you would still have a home, you’d still have clothes and food and at least some money, wouldn’t you. You can lose the money and still survive, still live to make more money in the future eventually, right. It isn’t literally the last bit of money in existence on earth, is it. You can make more in the future somehow.

See, by envisioning failure and just rationally explaining the possible outcome/s, the fear is gone. It’s removed. Now, you can take that trade with confidence because you’ve realised, if it fails, so be it. If it wins, then great. Either way, one single trade is meaningless isn’t it. But even the entire account, if you blow it, so be it. If you grow it, then great. There’s a positive whatever happens because you either win, or you learn. There is no losing really.

Again, whatever it is, whether it’s a £1000 account, or it’s a programme or a course, or it’s a mentor you want to hire, will investing that money and possibly not growing kill you? No, but could it completely change your life? Yes, absolutely, so just going for it is a no-brainer, because if we use the investing in a programme as an example, it’s almost like taking a trade with ‘x’ downside, the price, and unlimited upside. Unlimited future gains and progress and learning and success.

Or if we use the taking a trade as an example, there are only two outcomes: You either win and you grow, or you learn and you grow. There’s no real downside to fear, and we can all find ways to make more money in the future if we have to can’t we. Money’s everywhere, money’s abundant.

Again, by envisioning failure, you can move past it. It gets rid of the “should I or shouldn’t I” that is holding you back. And when that irrational fear is removed, the only way is up. The only way is growing, learning, building, moving forwards. So, whatever is holding you back; If you’re scared to take trades because you fear the losses, if you’re scared about funding another account, If you’re scared to invest in a programme or a course or a mentor, then envision failure. And you’ll see that the downside is either small or even non-existent, and the upside is either small, large, or absolutely huge, life-changing. And let that logic remove the fear so that you can go for it and get on with growing, get on with succeeding, with winning.

Life’s too short for fear, especially irrational fear, so go for it, win, build, succeed, and when you’re at the top of your game, drop me a comment on this video saying thank you. That’s all I ask.

So, what to do next; Firstly, list out your irrational fears, use the above hack, and get them solved by mapping out the true logic behind them by envisioning failure and realising, failing wouldn’t even be that bad. Then, commit, and go and conquer the goal. And if you aren’t yet trading with edge, and that’s leading to the fear and frustration, we can help. Head over to our website, and you’ll find more info on how we can help over there on the ‘Need My Help’ tab.

I hope that’s added value for you, and from me and the team here at WBTrading, trade with edge, with consistency and we look forward to having you back here on the channel soon.

– WBTrading Team.