This is a trader question from email.

Bruce asks:
I’ve been trading in demo accounts to get started and am getting ready to start a real account with trading capital. In the past I have made some mistakes which have lost all my demo capital.

I’d like to start with a small account, using real money and grow it. How can I work a small account into a larger account?

Bruce.

Neal responds:
In a demo account you will probably be taking more significant risks. You will be testing new ideas, taking some bad trades, and experimenting. sometimes you’ll take trades with excessive risk. Any of those can erase your account, whether it’s a demo account or real money.

Don’t rush to a live account, because there are many lessons to be learned without risking actual cash. When you do trade a live account, you will be trading with a drastically different mindset, so there will be some adjustment and a new learning curve.

With a live account, trading real cash, you will have to learn to take smaller trades, with less risk, to trade more cautiously.

To build a small account, you will probably have to take smaller profits, have close stops, and avoid those long-shot big winners that you may have tried in your demo account. Try this in your demo account first. If you are consistently making smaller proftis and keeping risk under control, you could be ready to move to a live trading account.

Once you have developed confidence in a demo account, you will know when you are ready to use actual trading capital. If you are unsure, then you are not ready to make the move. Evaluate your confidence level before making the switch. The insecurities and fears you have will not be any less when real money is on the line. When you make the switch, trade conservatively for some time, that’s what it takes to survive.

The biggest difference between trading a demo account and a live account, is how you react to stress. It’s all in your mind, your comfort, your confidence. Developing that confidence through practical experience in a demo account is a great way to start. If you can remain calm and make good decisions while risking real money, you’ll make the transition smoothly.

-Neal. (FibMaster’s Fibonacci Trading Course)

This post was inspired by an email I received from a struggling trader yesterday. She was asking about what is missing, why she is struggling to find consistency.

Trading can become very emotional. Before the trade, there is fear of entering a position. During the trade there is the fear of risk and the natural drive to take profits after the trade clears break-even. There is also greed, sometimes a winning trade looks too good, so the trader does not want to exit.

How can a trader work towards consistent performance, towards profits? The answer is to be disciplined. Discipline is one of the most important skills to have.

It takes discipline to define a trading plan, and to stick to it. Discipline is required to stick you your best setups, to enter and exit when you should, and to control your risk exposure.

Discipline is key to long-term trading success, to profits, and key to survival. If a trader doesn’t follow rules, trade optimally, then the trader will eventually fail. The next time you make “bad” trades, resolve to be more deliberate, and more disciplined.

It’s not easy! Discipline does not come naturally, it takes repetition to for good habits. Every time you sit down to trade, consider whether you are being disciplined. Review your strategy, confirm that your risk is acceptable, that your trade setups meet your requirements, that you are not exiting or entering trades emotionally.

It takes constant work. No-one is perfect. Every time you fail to trade your plan, stop for a while, focus on discipline.

-Neal “FibMaster” Hughes.

This is a trader question from the Fibonacci Trading Forum.

What causes me the most difficulty?
Confidence/ Trust in the Fiblevels/ Analysis Paralysis. I recently pulled the trigger on a $500 profit even though it wasn’t near any Fiblevels because it was a solid positive profit. While I believe any gain is positive, and I’m happy with the profit I made – if I don’t trust the Fiblevels then what’s the point!

Neal responds:
Some traders have a strong urge to exit when there is any profit. This limits your opportunity, we are supposed to let our profits run!

I may misunderstand you, but it seems that you are nervous once you are in a trade. At that point you are really depending on momentum and trend to continue. That is where your confidence should be, in the likelihood of a move continuing. At that point you should be more focused on your belief that the move continues, than the Fibonacci levels. Let’s discuss this in a live Fibonacci Trading Forum webinar soon.

-Neal

This is a trader question from the Fibonacci Trading Forum.

What part of my trading do I need to improve?
Analysis, Entry & Exit – I think that about covers every aspect of trading.

Neal responds:
Entry and exit are just the start, how about managing the trade, you know-adding to a losing position? LOL
-Neal

This is a trader question from the Fibonacci Trading Forum.

Justin says:
I need to develop trust – once I do the analysis, find an entry point and make the trade – I don’t trust the levels I’ve come up with and pull the trigger to exit right when it starts to go against me.

Neal responds:
It seems that you do not trust your entries? Or are you nervous about taking a loss?

There are two issues that come to mind… The first is the distrust of your triggers. The second is the question of how much room you should allow a trade to go against you, before it continues to your profit exit.

Traders who distrust their triggers should study past trades, and keep a log of current trades. Work to determine whether the trigger has a positive result over time. If you had not distrusted the trigger, and allowed the trade to continue, would it have been profitable? How many times would it be profitable vs unprofitable? Perform this analysis on historical charts, and current ones too. Calculate some statistics, and also plan a viable exit strategy on the losing trades. If you trust your ability to exit bad trades with a controllable risk, you may have less urgency to exit quickly.

On the topic of allowing a trade some room to move, we should discuss that in one of our live webinars. Since we are generally entering when a trade is moving in the right direction, we don’t want to allow too much of a move against our position, but some risk is inevitable.

-Neal

This is a trader question from the Fibonacci Trading Forum.

Justin says:
Hi Neal,

I appreciate you continuing to work to help us become better traders by helping us hone our skills. Here are the biggest things that affect my trading:

What do I struggle with the most?
Overanalyzing – I add Fiblevels on monthly, weekly, daily, 4 hour, etc to try and find the Fiblevels to ensure I don’t miss a level – Then question if the probability of the price action getting there so I slip into “analysis paralysis” and watch the trade slide right on by.

Neal responds:

Analysis Paralysis can be a real problem! If there is doubt about price reaching your profit objective, how about giving it a try, then exit if there is a trigger against your position? That way you are in the trade all the way if it gets there, and you exit with a smaller gain or loss if the trade stalls earlier. If you have enough confidence in the trigger, at least give it a chance?

Also, this issue about the minor (lesser) Fibonacci levels getting in the way, stopping your trading, we should discuss this in a live member webinar soon. This is a common error, I can help you with that.

-Neal

How to post comments to this blog.

Important: If you are going to comment, please add some value to the website.

Please Note: All low quality comments will be deleted. If you simply add some value to the original post and stay on topic with a few sentences, your comment will be approved.

For webmasters and bloggers:
Are you searching for regular ‘follow’ links to your site? This site is running Keyword Luv, Comment Luv, Do Follow and Top Commentator. You will be rewarded with backlinks if you leave Quality Comments.

Please Note: All low quality comments will be deleted. If you simply add some value to the original post and stay on topic with a few sentences, your comment will be approved.

CommentLuv inserts a link to your most recent post, when you leave a comment on our blog. It will get the latest feed from your blog or last tweet and will display it comment box. Coolness! To use:

1) Leave a high quality comment
2) Check the box “Enable Comment Luv”
3) Hit ‘Submit’

Comment Luv will then retrieve your latest post and include it at the bottom of your quality post.

KeywordLuv is a fantastic Wordpress plug-in that separates a commenters name from the keywords you want to leave to link back to your website. This is a better method to leave a more powerful anchor text. To use:

1) Enter “YourName@Your Desired Keywords” in the name field, the anchor text for the link will be “Your Desired Keywords”.

Top Commentators is a plug-in which rewards our top 10 comentators with good backlink for the quality comments.

We’re running these plug-ins which can be a tremendous help to all of us. Please be respectful and this will be a “win / win” for us all!

Best regards,
-Neal

This is a trader question from the Fibonacci Trading Forum.

Kosta says:
What part of your trading do I need to improve?
Clearly defined rules of a strategy (not a mechanical though…)
proper mindset and flexibility in analysis.

Neal responds:

This is achievable, but requires a little discipline. You can either stop trading, document your strategy, then trade your plan, or you can document your plan according to your existing trades. Every time you make a trade, document the setup, the rules, the strategy. After the trade, make any edits to refine the strategy.

You’ll need to expand beyond your trade setups for a complete trading plan, but the strategy above will get you started.

It will take some time, then you will have clearly defined your strategy, Start today!

-Neal (FOREX Fibonacci Trading)

This is a trader question from the Fibonacci Trading Forum.

Kosta says:
What do I struggle with the most?
In a micro view: when working out chart analysis, I am getting bogged down and paralyzed by too many details of Sup/Res on a lower time frames, and as I realize, it happens when you announce a chart “messy” and here comes a problem of ” sitting on my hands” when this situation mandates not trading.

Neal responds:

OK, you have identified two problems. Here are a couple of possible solutions…

The first is to keep a clear perspective of the trade setup. It may help to write down the context of the trade, the setup and the objectives (exit). That way, the lower time-frames can be seen in context, you can maintain a focus on the overall setup. Barring any major events, while the setup keeps you in the trade, the lower time-frame issues are not allowed to take you out.

The second issue of taking trades when you are not supposed to. Again, that is an issue of not following your plan. If you do not have a setup, or the markets are not trending etc, find something else to do! Maybe you need a hobby, or a girl-friend. I recommend the latter, it’s quite enjoyable, and will keep you plenty busy!

-Neal (FOREX Fibonacci Trading)

Today we had a 50 minute webinar for members of the Fibonacci Trading Forum, on the topic of “Pulling The Trigger”.

This webinar recording is packed with solutions to several other trading problems, as well as the “Pulling The Trigger” issue that many traders struggle with. The recording is available to members, for only $9.95 you can view it, and other recordings too.

Below is a free preview of the webinar, on YouTube;

FibMaster video Pulling The Trigger