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The 3 M’s are: MIND METHOD MONEY MIND This part of Trading is most important. It deals with Psychology. When one enters Trading business, he/she has some beliefs about the environment, about markets. They have to understand the importance of Discipline, How people think, how greed and fear affects investors. There are sub-parts to this Individual psychology of traders: You have to understand how to control Fear and Greed. How you should take rational decisions and not fall pray to your emotions while trading. Mass psychology of the markets: You also have to understand how mass psychology works. Why most of the people do what they do. The rules for maintaining personal discipline: You also have to understand the importance of Self Discipline, why you must be always consistent with your trading. You must never violate your rules. Because in long run your discipline in one thing which will make you most money, not your knowledge or your skills. METHOD This is the part which deals with your knowledge about market, technical analysis, and other tools which you can use to make Entry and Exit from any trade. This part is perceived to be the most important aspect and most of the people run after these a lot, but these are the least important part of your trading. Let us see part of this. Technical indicators : These deals with the tools available for making decisions , for example , MACD , RSI , Stochastics , OBV and other 200 weird words . The best chart patterns: Then you must know different types of patterns, which gives some idea about future action and how masses are thinking, some examples can be double top, Head and shoulder pattern etc . Developing a trading system: Then finally after you are done with knowledge part, you should build up your trading system .What is trading system? It’s your rules for buying, selling, booking profits and cutting losses. MONEY Now this part is an amazing one and my favorite. What this determines is how will you manage your money, it decides how much money will put in market at any given time, and how much loss will you take maximum on any given trade. How much will be your maximum loss on any one trade, things like that. Basically this part decides how long can you in the game of trading if things would go wrong. This part is extremely important. Without proper money management no can survive for long in Trading. Let’s see some basic and widely accepted views. - The 2% Rule for individual traders: These rule days that on any given trade your loss should not exceed 2% of total capital. So if you have Rs 1, 00,000, first time your loss should not be more than 2,000. This rule makes sure that even if you make long series of loosing trades, still you are in the game. Even if you make 10 consecutive losing trades, your overall loss will be 18.3%, though this will be rare, still you take care of this situation. The 6% Rules for every trading account: This rule says that your monthly loss should not cross more than 6% in a month. Sometimes when you trade it may happen that there is some problem with your analysis or some issue between you and market which cannot be explained, you keep trying to win, but don’t succeed, that time you have a great urge to revenge trade and get your money back. The best thing at that time is to stop and get some rest, go for vacation and come back with fresh mind. This rule will make sure that if your chemistry with market doesn’t fit, you stop after losing 6% of your capital. You can choose your own percentage amount. I would like to choose 12% for me. it all depends on your risk appetite and stubbornness You might be interested in money management example Essential record keeping for success: This part says that you should always keep all the information regarding each trade. Buy price , sell price , date of purchase , how many days you carried , Reason for buy , reason of sell , what you learned from the trade , chart at the time of buying , charts at the time of selling etc . Why do you do this? Record keeping makes sure that any day you can go back to your records and see what kind of mistakes you have done, why some trades failed, why you succeeded in some trades? You can get lots of information from your records, you need to analyze your performance over days/months/years . It’s extremely important , after a series of trades when you look back to your records , you may be able to find out some pattern , some particular aspect or mistake which you do with each loosing trade and hence can take corrective measures . So, finally we are done with 3 M’s of successful trading. If we talk about how much percentage a trader should give to these 3 M’s should be Mind: 60% Money: 30% Method: 10% It’s totally opposite of what people perceive it to be, general people think that having all market knowledge and technical analysis is most important. Nothing is far from truth, it won’t be too ambitious to say that you can make money in market by simple coin toss if you have sound money management Techniques and Great control over yourself; you need to cut your losers short without any emotion and let your profits run till they can by sitting tight and doing nothing.

3 PILLARS OF PROFITABLE TRADING Lately I have been getting asked many similar questions regarding trading success. I don’t really like to repeat myself if there is no need, so I decided to write a short article to explain is a solid base for success in trading Forex and Futures. In order to achieve trading success, there are 3 main areas of focus. They are all of equal importance and must not be separated from each other. I will cover these in more detail below. These areas are: 1. Trading strategy or method 2. Discipline 3. Psychology Contrary to what is being taught about psychology importance in trading up to 90%, the other 2 concepts are as equally important. If a trader has got only 2 out of 3, then the results are either consequent losses or a break even. Let me explain why. If a trader uses a method that doesn’t really work, or works with only temporary success, no matter how hard he tries the results will remain the same. It’s said that you have to stay with a method for a certain period of time to make it yours. I strongly recommend not to switch methods or trading strategy more often then once in 6 months if you want to be a successful trader. However, this option also has its disadvantages. If you stick with the wrong trading strategy, you could spend years with no results. What I mean by “the wrong strategy” is the one that is too subjective and almost no one can trade it successfully. Let’s put it in to plain English, ‘the wrong strategy’ is the one that fails 60-90% of the time. While considering a trading strategy to learn, you need to understand that all successful traders are very mechanical in their trading approach. They do the same thing every day. It can get boring sometimes. Therefore, when you choose a strategy to learn, you need to answer this question: “Is there any chance you can become mechanical with this particular strategy?” This means the fewer variables to consider while making a decision, the easier it is to understand and apply. I want to add few more words about picking the wrong trading method. There are too many mentors selling strategies that they never trade. They are called ‘scam artists’. They sound very professional when they talk about trading and their systems, but that’s because they are good salesmen. In reality, there would be no difference between them selling you their strategy for day trading, or a pack of fantastic knives. I need to mention a pitfall for those who have just discovered the world of trading. Most forex beginners fall into the trap of listening to advisors or financial experts and make their decision accordingly. But here is the sad truth. The Brightest analysts cannot trade their own analysis. There is a huge difference in being a good analyst and being a profitable trader. Why is that??? It’s because profitable/professional traders posses a set of skills that are crucial for being profitable in forex. Among these would be a successful trader mindset, a proven method, absolute discipline and hours of screen time. Analysts don’t have that. They are paid for talking. If they knew how to trade their own analysis they would trade it and make more money then they are making now. So when choosing a trading strategy or a forex coach, you need to be concerned about real evidence of his knowledge and skills. The best option would be to see him in action. Rarely would you see any scam artist trade live with his automated software nor trading his method in front of a live audience. Professional traders have nothing to hide; they have winners and losers. Other important questions to ask yourself when choosing a trading method would be is it applicable to different market conditions, does it work in real time or only hindsight and are the stop losses offered by the method realistic? If someone tells you that your stop should be 100 pips in day trading then that should alert you that something’s not right. Trading discipline is as equally important as trading psychology. When you have a flaw in discipline you are guaranteed to fail. But what do I mean by that? Trading discipline covers these questions: - Can you take trades every time your method tells you to do so? - Do you skip trades because deep inside you have a fear of losing another trade? - If you have your daily profit target, are you able to turn off your screen and walk away when you’ve reached it? If you don’t have a daily profit target how do you know when to leave the screen? - Do you have any revenge trading habits? - And last but not least, are you able to trade with full accordance with your trading method or is your current method a combination of gut feel and some knowledge from classes you attended? Now when you have answered all these questions, you know what you need to work on to get better in your trading discipline. Write the answers down, highlight them and then stick them on your monitor. This will be a reminder for you every time you fail in following your rules. You can only grade yourself 100% on discipline if you have automated trading habits to the extent when you don’t think about it anymore and you are ok to consciously skip trades that don’t meet your entry criteria. It takes time to get absolutely disciplined, but takes much less time compared to getting your trading psychology right. Talking of trading psychology I don’t want to repeat what you know from other sources. However, I need to mention that proper psychological attitude can’t be formed if the other two aspects I talked about haven’t been mastered. You can’t develop a winning mind set if you fail in having a successful trading strategy or being somewhat disciplined. Successful trading psychology consists of a successful mind set, the ability to resist stress, the ability to withstand tough periods in your trading and taking full responsibility for your trading results. Building a successful trader takes time, for some it takes years. Some never get to that point. One of the main reasons why traders fail in becoming successful is an improper expectation of the industry as a whole and the inability to withstand financial and domestic pressure in the long run. This influences the process of forming a winner’s attitude and leads to the desire of wanting results here and now. There is no magic in trading and no trading systems that are 90% accurate. Miracles don’t happen here. The path to success is long and hard, but when you get there it is totally different compared to where you are now in trading. You will enjoy it and even get bored with making money. You can take a short cut by finding a good mentor, but you can also do it on your own. The only difference is the time that you will spend on your journey to success. After reading this article you should be able to see and evaluate your current trading against the 3 pillars of profitable trading that I have mentioned. It should be easy for you to identify what part you need to work on. If you score only 2 out of 3 it still won’t work. You need to score 3 out 3 to get different results from what you are getting now. Remember, the Forex market is the only place where everyone has an equal chance for success disregarding your background, education, social status and your past achievements. pipbanker

The purpose of this posting is as follows: a) demonstrate our use of Chaos Hunter as we apply it to an intra-day scalping strategy for the ES; b) generate interest and possibly gain support from other forum members; c) collaboration with the objective of designing a better predictive algorithms; better money management & risk rules. Notes: d) BEFORE YOU LOAD THE ELD files, please view the screen shots for the ELD Files. If you have Functions with the same names, importing the file may lead to over-writing. e) Before you try to demo the strategy, please open the Strategy txt file and read our notes. f) We encourage forum members to trade this strategy only in simulation mode. Loading instructions: g) Import functions. The Locked function is the Haar Wavelet and it will expire on 12/25/10 rendering itself and the strategy unusable. {If we collaborate, we're happy to extend this time frame or we may elect to give you the indicator.} h) Cut and Paste the strategy into a new strategy. Please use NWA_ES_R3.(Thanks) i) From the screen shots, please follow the setup with particular attention to the DATE RANGE for the data set. The date range is important because variables are initialized in the strategy by a start bar. First bar = 09/26/2010 18:05 EST. We hope you enjoy the strategy; we'll endeavor to post more in the future. We would appreciate your comments and questions. RANGER & ZACHARYDW00 NWA_ES_R3.zip