Month 1, Day 1 - 36-month forex trading challenge - Edison, Pit Bull, and more.

And we're off! Month 1, Day 1 of the 36-month forex trading challenge.

I was awake at about 4am – I find it hard to sleep sometimes when my mind is racing, and it was this morning.

I'm feeling a combination of excitement mixed with trepidation. The only thing standing between me and success is me. What I let into my mind and the actions that result, will make or break this challenge.

This challenge is about much more than money. It's about creativity and self-esteem. Money gives you choices, but it won't always bring you happiness. You don't have to look far to read stories about the mega-rich, many of whom appear to be miserable as hell.

I'm a creative soul at heart and the market is an opportunity for me to create something from scratch. My own unique assessment of conditions, and my own individual system for taking advantage of the multitude of opportunities that always exist. It's actually less about trade selection and more about trade deselection – as I learnt from May and June's performance, if I can just stay out of the bad trades I'll do very well indeed. With my proprietary filters now in play, conditions must line up almost perfectly for me to get in.

Back to self-esteem. If money was the answer all of the millionaires would be happy. As Harvey Specter states in one of my favourite TV shows Suits:

'Money's just about keeping score'. 

But keeping score of what?

Well in Harvey's world it's winning – in my (trading) world too, winning is a measure of success and of how accurately (and consistently) I can read the markets, and control my own behaviour.

With success comes self-esteem, and with trading, given the need to control one's own emotions it's also a passage to self-mastery. Emotional intelligence is something that's gained in popularity in recent years and has crept into the minds of the majority. Defined as the capacity to be aware of, control, and express one's emotions' I believe it to be the true prize in life.

Trading is all about emotional intelligence, and I hope by the end of this journey I will not only have made my fortune, but be a much better person too.

After waking up at 4am, the 6am start was more difficult today. I started recording content for my YouTube channel quite literally as I got out of bed. I also remembered Jason's words to me: 'Your discipline determines the balance of your account'.

It's a big undertaking to commit to a three-year project, which will comprise c.800 blog posts and c.150 YouTube videos to document the complete journey – the ups and downs – everything. What's more, documented with complete transparency. I won't just be sharing the good times – the bad times will be documented too in all their technicolour glory.

This journey is also about legacy. As I write this in my office, I can hear my two sons playing next door. They're both under eight, so too young for the markets, but I hope that one day they'll take an interest. This fully documented journey will be available to them, and as they say, one of the best and quickest ways to learn anything is to follow the experiences of those who have gone before. In the world we live in now, we are where we are because of the hard work and individual journeys' of those who have gone before. When you switch on a light today remember Thomas Edison's 10,000 failed attempts, and his famous quotes:

'I have not failed, I've just found 10,000 ways that won't work.'

'Many of life's failures are people who did not realise how close they were to success when they gave up.'

This is how I feel about the markets. Success in the markets does not come easy – it's a process of trial and error, a process of self-discovery and an incredible journey. Too often we are fixated on the destination and miss all of the wonders we encounter along the way. Trading is about being in the moment.

Overnight, a number of the currency pairs I watch have gapped. Essentially from Friday's 10pm close and Sunday's open there was a jump, which appears on the charts as white space. Trading gaps is not part of my trading approach, but watching the reaction afterwards can be a clue as to what may come next.

This morning at 6am I took my first trade of the challenge. This was a trade I was in last week, but closed out ahead of the weekend at a small loss to ensure a clean and transparent start to the challenge.

AUDUSD gapped up on the Sunday open then sold off hard, closing with a YX signal on the 2am candle.

What's interesting is that on the daily chart, despite opening above the established range. Sellers quickly pushed price back to within the range. According to my rules, the range is still in play unless price closes above the dotted black line on the daily chart.

This was a sell signal that met all of my criteria for a RANGE trade.

Making this first trade was more nerve-wracking than usual. I so badly want my first trade to be a winner, but you honestly never know, as anything can happen in the markets. This trade could be a winner or a loser and either is ok, providing I followed my rules to the letter.

As I've said before and I'm sure I will say many times more, trading is never a game of certainty – it's a game of probability. You never know when the winners are going to show up, but when they do you want to be there to take advantage, which is why capital preservation is always my number one priority. When I lose, I don't want to lose too much, but when I win, I want to win big.

[See earlier blog post: The only trading strategy you'll ever need.]

In my opinion, one of the best books on trading and a must read for any aspiring trader is Pit Bull by Marty Schwartz. I've read it twice and have recommended it countless times.

Somewhere in the book Marty talks about his winners and losers, and that he'd often win-lose, win-lose, win-lose, effectively breaking even over a period of time. However, now and again a few big winners would come along, which would make his year. The discipline of following his system and capital preservation up until that point meant he was there to capitalise.

For more on Marty and his unique perspective on trading the markets I'd recommend these two videos, which you can find on YouTube:

A Market Wizard Speaks: Marty Schwartz at Amherst College, Spring 2013.

MrTopStep "Unplugged" - Featuring Marty "The Pit Bull" Schwartz.

Marty has had a huge influence on my trading approach and in future blog posts I'll mention other books I've read by other traders that have also helped me formulate my trading approach.

Indeed, in video 2 above, Marty describes himself as a 'synthesiser' – he takes different approaches, blends them together and sees what works.

After all, there's nothing new in the markets – the markets are a result of the collective psychology of the many diverse players. People don't tend to change, and as a result the markets don't change much either.


*********

Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw

[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]

Comments