By Peter Lim ,CFP
I had the tremendous pleasure to interview a well known professional trader and trading coach in Australia some time ago. This professional trader had a colorful background. He had been the National Blackjack champion, and had authored two best sellers on dynamic analysis of time and price in trading commodities and futures. So I was looking forward to grilling him to learn of his secrets of trading success.
When I asked him when did he became a profitable trader, I was very surprised when he replied that he became profitable from day one of his actual trading! I thought that was excellent, because most traders would have taken some time to become consistently profitable, or have to struggle through periods of gains and losses before being consistently profitable.
Prodded further, I discovered two main things that contributed to his sterling success as a trader.
Firstly, he revealed that he spent time to study his trading setups, and would concentrate on trading certain price patterns that recur consistently. To do this, he researched the profitably of these chart patterns from the risk-reward ratios of each occurrence in the past using a strategy builder software. In that way, he could know how each chart pattern performed, what chart pattern that would occur consistently across the same financial vehicle or currency pair, and would be profitable enough for him to trade. He built up confidence in each chart pattern that he was trading, and could take the confidence directly into the real trading environment.
Secondly, he revealed that he would use the barest of technical indicators, and traded mostly using time and price. This involved a computation of price levels, fibonacci price retracements from peaks and rebounds from bottoms, and a corresponding computation of the time pressure points. Time pressure points are the points where price clusters will form to suggest a probable change in trend. It is at these points that he would place a lot of attention to, watching the outbreak from a price pattern, which would be the place where he would enter or exit a trade.
As I recounted this interview with him, I realised that one prominent factor contributed greatly to his success.
It was his insistence to test every price pattern and strategy out on his strategy builder software, and to practise the trade on a trade simulator until he had mastered each price pattern that he had selected for trading. He would do this until he was convinced of the profitablity of the price pattern.
If you are an active trader, I cannot over emphasise the importance of adopting this technique of testing each trading strategy with a strategy builder software and then to practise trading the pattern in a trade simulator or at least a demo account with live data.
While being familar with the individual trade pattern, merely going through this process hones the reflexes, so that you can readily jump on to a trade that has just begun to show promise.
So whether you are trading forex, stocks and shares, commodities and futures, or mutual funds, you can take a tip from this professional trader – to hone your reflexes with a trade simulator and to test the trading strategies out with a strategy builder software to ensure your future success.
About the Author: Are you struggling from your massive losses in trading the forex market? Discover how you can achieve consistent profits using a price action technique revealed by a professional trader and receive special bonuses of a Trade Simulator and Forex Strategy Builder to hone the trading reflexes into a powerful Forex Trading Machine by visiting the author’s blog
1forex-trading.blogspot.com
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