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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 7 March 2007 Table of Contents (1) Quote on Success (2) Interview - Grace Cheng from Singapore (3) MetaStock Programming Workshop - Singapore (9 and 10 March) (4) Asia Trader and Investor Convention - Kuala Lumpur (17 and 18 March 2007) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ RSS Feed Stay up to date with all that is happening at Trading Plan, by subscribing to our 'Trading Blog' (no email address necessary). I am continually adding content and every update of this site is announced here, including minor content updates, page additions, and product releases. So stay plugged in by subscribing to this site's RSS feed. Copy and paste the address below into your RSS reader to receive the Trading Plan RSS feed... http://www.trading-plan.com/Trading-Plan.xml Not sure what RSS is? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Previous Issues Only just joined the mailing list? That's OK - you can read all of the previous issues of the Trading-Plan ezine. Visit http://www.trading-plan.com/ezines_previous.html to access the archive. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Filtering software may prevent you from receiving Trading-Plancommunication, including my ezines. To ensure that you never missan e-mail from me, please follow these tips... http://www.trading-plan.com/whitelisting.html ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Online Trading Forum Do you want to learn from the experiences of others in a friendly online trading forum? I now frequent and contribute to the online trading forum called Stock Meeting Place. Membership is easy and free. You can come along and ask any trading question in one of the numerous sections of the forum and receive a helpful response from one of the many members (approximately 2000). This forum is the only place online where you will also find Daryl Guppy, the well known trader and author. Remember, there is no such thing as a silly question so visit, sign up and ask a question. Visit http://www.trading-plan.com/trading_forum.html for more information. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -- 1 -- Quote on Success “Success in almost any field depends more on energy and drive than it does on intelligence.” Sloan Wilson (1920 - 2003) -- 2 -- Interview - Grace Cheng from Singapore * Background Info / Introduction * Q. Can you please start by making a few comments about yourself to include your trading style and what products you trade, your experience in years, and what other things of a trading nature take your time on a regular basis (e.g. writing trading books/contributing to forums/coaching/speaking engagements)? I have been trading the spot forex market full-time for 4 years now. As a full-time trader, much of my time is spent trying to outwit the other players in the market. I write about my views and analysis of the forex market on my daily forex blog at www.gracecheng.com. Besides trading and monitoring the market, I also try to dedicate some time to answering emails from people who have signed up for the PowerFX Course through my website. I occasionally write for trading and investment magazines, and am also a regular writer for Investopedia – an online financial portal. Sometimes I also get asked to give seminars on trading/investment. In the past few months, I have dedicated a huge chunk of my “spare” time to writing my first book - “The 7 Winning Strategies for Trading Forex”, which is due for publication in mid-2007. Q. It is fair to say that most people are initially attracted to trading by money. Is this what initially attracted you or was it something else? What initially attracted me to trading was the prospect of becoming financially independent without having to work for others. So I guess that, yes, it does boil down to the money factor. Besides that, I also find the goal of trading well and profitably very challenging. Q. How would you describe a couple of your biggest mistakes in your early trading days? One of my biggest mistakes was definitely setting unreasonably tight stops for my trades. At that time, I thought it was better to lose “small” amounts than bigger amounts. That view was extremely myopic because instead of giving the currency pair some breathing space, I was suffocating its movement, and thus jeopardising the probability of success of my trades. Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well? I've always been a self-motivated kind of person, and I always try to accomplish whatever I have challenged myself to do. Knowing that others have succeeded in this field only strengthens my desire to do so likewise, albeit in a totally different environment. * Trading Plan * Q. We could spend days comparing technical and fundamental analysis, and many traders tend to favour one and dismiss the other – do you prefer one over the other? Do you use a combination of both? Briefly, why? The currency market is largely driven by fundamentals relating to economic growth and monetary policies of major world economies, as well as those relating to commodity prices, socio-political issues etc. People who trade forex using just technical analysis can end up on the wrong side of the market many times because they do not take into consideration what institutional players and investors might be thinking about with regards to certain fundamental issues. At the same time traders who only use fundamental analysis can end up on the wrong side of the market. This mainly happens when the market is being moved by major stops or entry orders being triggered. Because of all this, I not only employ technical and fundamental analysis in my trading, I also use sentiment analysis which helps me gauge the current market sentiment. This sentiment can give advance “clues” as to where major players are positioned and if they would get out in a hurry when they feel they are wrong. Q. Do you have written trading plan detailing your approach? How would you describe it (e.g. long/short, detailed/broad, complete/work in progress)? My trading plan is fairly extensive and could probably be compiled into a book. Even though it has all my do's and don't's, it will always be a “work in progress”. Sometimes I have some new points to add, and sometimes I change what I have written before. The forex market evolves with time, so I think that as a trader I should also evolve and adapt my trading approach to the changing markets. A trading plan is very important, and I think it is just as important to keep it updated with changing markets. Q. Many traders acknowledge that having a trading plan is a key to success – it is essential. Yet, most people don’t know where to start to begin writing one, even though they understand the basics of trading. What would be your advice to someone stuck in this situation? My advice would be to learn from other traders who can teach you how to put together your own personalized trading plan. * Trading Mindset * Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? I used to be very ecstatic whenever I booked some big profits, or very despondent whenever I had losses. The emotions I felt would be extreme, going from high to low, or from low to high. I didn't like feeling like that because that had a direct negative impact on my trading mindset, and those emotions clouded my logical thinking. I knew that I would have to master my emotions by rewiring the way I thought about every trade. The way I go about this is to not being too concerned about the outcome of every single trade, instead, I focus on a series of trades over a 2-week to 1-month period. Q. Isabelle, 36 is a mother of two children and stays at home with them during the day. Her husband works full time and his salary meets all their financial obligations comfortably. Isabelle arranges an appointment with you to discuss trading – she has never traded before but knows you can help her get started with some initial guidance. What will be the 3 most important things you tell her in the appointment? 1. Trading is not a get-rich-quick scheme. This is something I always emphasize to aspiring traders, even though “Make $15,000 a month with just 15 minutes a day” would create more interest among gullible people, it just doesn't work that way. And although Isabelle in this example has her financial needs met by her husband, I would still want to make that clear to her so that she starts off with her feet on the ground, and not with the idea of a pie in the sky. 2. Willingness to devote time and effort to learning. She must be able to dedicate some time to learning the ropes without distractions from her children. This will boil down to good time management. 3. Perseverance and discipline are crucial to one's trading performance. Q. Jack, 58 is a very successful business owner who wants to start trading as he slowly moves into retirement and away from work. He has arranged a similar appointment to Isabelle – would your advice to him be identical to Isabelle’s or different? Since Jack is moving into retirement, and would heavily rely on his savings for his retirement, I would be more concerned about how much trading capital he can put up that he can afford to lose, such that losing all that capital will have no negative impact on his retirement plans and lifestyle. In his case, I would still give him the same advice as I would give to Isabelle, and I would also emphasize to him the importance of money management. It is very important to remember that most new traders lose a good portion of their trading capital. And to be successful, a trader has to make sure never to “bet the farm” on their trades. Q. Is trading as difficult as many people appear to make it seem? Trading is not easy, but it is a skill which can be picked up with enough time and effort. Not many people go on to trade successfully due to lack of knowledge and real-time practise (demo trading is the best way to start without risking real money) and the lack of control over their own emotions. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. 1. Ability to persevere in the toughest of times - Traders who become successful are successful because they did not give up, and do not give up. 2. Exercising strict discipline - Successful traders trade according to their trading plan. If their trading plan tells them not to enter the market under such and such circumstances, they stay out and resist the temptation to trade. Even if they are tempted to trade larger lots due to greed, they adhere to the money management rules in their trading plan. They may later revise the trading plan if they see the market is changing, but they don't trade on the spur of the moment. 3. Humility - Successful traders learn from their mistakes, and are aware that learning never stops. They are also not afraid to learn from others and admit they don't know everything. 4. Self-responsibility - Successful traders make their own trading decisions, and blame no one else for their losses. They are wholly responsible for their success as well. They do not trade on tips or black-box signals; they do their own research and trade only on what they are confident with. 5. Patience - This is one of the most underrated virtues. Good trading opportunities do not come by every single day; successful traders are willing to wait out for a high-probability trade, and stay away from the market when conditions are choppy or highly uncertain. Q. Trading can be a very solitary existence – especially in the early days when you are learning, and often feel as though you have no idea what you are doing. Do you find trading a lonely experience? Does this sit well with you? If not, how do you deal with the loneliness? I agree that most people find trading to be a lonely endeavour because it is hard to find someone else to relate your experiences especially in the same field. Fortunately for me, my husband Pedro also shares the same passion for trading. So many traders have written to me saying that they would like to meet and discuss forex on the internet, but do not know of any good place for that. This gave me the idea to start a Forex Forum at www.forexvibes.com where aspiring, new and experienced traders can congregate to discuss like-minded topics, and form a strong support network. Q. Ideally, we would like to be emotionless when we trade – we would certainly make more sound trading decisions more often. How do you control your emotions when assessing potential trading opportunities or open positions? Do you get very emotional at times? My best weapon against emotional trading is my habit of documenting potential trades and writing the reasons for those trades. Sometimes, I may be emotionally tempted to open a certain position just because the profit potential seems to be larger than usual, but when I write down the reasons for the trade, and see that they go against my trading principles, then I will cross that trade out. With open positions, I don't let emotions interfere with whether I should take my profits earlier than planned or whether I should prematurely close out my positions before they get stopped out. Whatever I decide to do must be supported by logical reasoning. The longer I am in this trading business, the less emotional I get when trading. Q. If you experience a large profitable trade, do you reward yourself in any way? It can be tempting to want to use that profit for something, but I try not to dwell on the success or loss of any one trade because it can be quite insignificant in the overall scheme of things. Q. To finish off, if you were to start trading all over again now, what would you do differently to what you did originally? When I first started trading, there were extremely limited resources of information and help relating to forex trading as it was and still is a relatively new area for retail traders. Consistent profitability only arrived once I learnt all the possible ways of losing in the forex market. Luckily for me, all of the losses that were chalked up during the learning and experimental phase were from a demo account, so no actual dollar losses took place. Back then, if I could, I would take up a comprehensive course about forex trading to fast-track my learning stage and depth. I would still have started trading first with a demo account before progressing to a real account. About Grace: Grace Cheng lives in Singapore and is a full time forex trader. Please visit her website at http://www.gracecheng.com -- 3 -- MetaStock Programming Workshop - Singapore (9 and 10 March) I will be conducting a MetaStock Programming Workshop on the evening of Friday 9th March and all day Saturday 10th March in Singapore. The Explorer is arguably the most powerful tool within MetaStock. The reason being, it allows us to perform in-depth explorations, scanning thousands of securities, to identify those securities that exhibit pre-defined criteria. This could involve anything from finding securities that have hit their 6 month high to those whose stochastic oscillator has moved above the 20 line, or both. It’s completely up to you. More than that, The Explorer then becomes a multi-purpose analysis tool. That is, we can use it to search, sort, and rank the information gathered. In the past, to achieve all this would be almost impossible, but now once we learn how, MetaStock can change the way we identify trading opportunities. It is the Explorer that sets MetaStock apart from most charting software. Not only can it scan for certain criteria, MetaStock can also use specific indicators to track your exits once in the trade. This is very special aid as it assists you in on the more important trading decisions you make – when to exit. Further, the powerful expert advisor can be programmed to calculate your position sizing, stop losses and all components of your risk management processes. It is unfortunate that many MetaStock users are not aware of the true power of the software and struggle to use it to its full potential. It is a great tool that can greatly assist the trader in a number of different key areas. Bookings and further details are available by contacting Dickson Yap on +65 9788 8141 or by email at dicksonyap@dpr-intl.com -- 4 -- Asia Trader and Investor Convention - Kuala Lumpur (17 and 18 March 2007) I will be presenting two 30 minute seminars at the Asia Trader and Investor Convention, to be held in Kuala Lumpur, Malaysia on 17 and 18 March 2007. My topic will be Developing your Trading Plan. Further details are available by visiting http://www.theatic.net/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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