Which Mouse Are You?

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Which Mouse Are You?

by Guest Columnist, Kenneth Reid, Ph.D

Hi… this is Dr. Kenneth Reid from HawkeyeMindset.com

Like tennis, trading is a game of errors. In other words, our success is generally self-limited. The fewer errors we make, the better our outcome.

If your trading method has a potential 60-70% win rate, but on 2 out of 10 trades you execute poorly, it will be difficult to make money as a trader.

So it pays to strive for perfection in those elements that are under our control, since randomness plays such a large role overall.

One of the most common issues traders face is a collection of behaviors I call the “First Mouse Syndrome.”

Moneytrap First Mice“First Mice” get whacked when they go for the cheese.

One reason is that First Mice tend to be excitable and they enter trades too early. It could be from greed, fear of missing out or just plain impulsiveness. Impulsiveness is usually driven by an over-reliance on intuition and an under-utilization of a technical method.

Premature entries lead to taking “heat” because the market has not yet developed internal coherence. The more push-back we experience, the more defensive we get. This leads to micromanaging trades and tightening mental stops.

Unfortunately, this almost always works against the trend trader. The key to trend trading is to give the market sufficient room to breathe once a trend is established.

The Hawkeye Trend and Stops indicator is designed to do precisely this. However, with the three speed settings, you have some discretion in how you apply this indicator. Because first mice prefer to get in early, they will typically set Hawkeye Trend to ‘Aggressive.’

If you find that you are getting stopped out of good trades, you may be experiencing the stop hunting games that typically occur in futures and forex near key support and resistance levels. These games trap and punish First Mice.

The irony is that responsible First Mice stop themselves out willingly because they have been taught to manage risk with relatively tight stops. They want to “keep losses small and let winners run.” But 1 wrong + 1 right = Zero (a breakeven trader, at best.)

If you are getting stopped out and then find that the market often reverses and goes your original way, it may help you to think like The Second Mouse.

The Second Mouse gets the cheese by simply waiting for First Mice to be stopped out before taking action.

First mice tend to get stopped out when the first pullback fails. For example, if they shorted, the market quickly makes a new high and stops them out. . . and then the downtrend resumes.

If they went long, the market makes a new low and stops them out. . . and then the uptrend resumes.

This process creates the common ABC countertrend patterns that occur within trends. If your stop is too tight you will get stopped out on the A-leg of the ABC. If this is happening for you, consider adjusting Hawkeye Trend and Stops to the Conservative setting.

Moreover, it’s usually not a good idea to use mental stops to manage positions in a trend. Chances are you will react to random noise, micromanage your trade and choke it off.

You can watch a free video that discusses the First Mouse Syndrome by following the link below. It’s the latest video in the Hawkeye Mindset Mastermind Breakthrough program, which gives you highly practical weekly videos on trading psychology. Check out HawkeyeMindset.com for more information.

Download the free video sample here:

Hawkeye Mindset Mastermind Breakthrough Video Series – First Mouse Syndrome

 


 

To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Good trading,

Randy Lindsey
Hawkeye Traders, LLC

Why Trading More Produces Less

Greetings Hawkeye traders, this is Dr. Kenneth Reid from HawkeyeMindset.com We all want to improve our trading. What’s the best way to accomplish that?

It’s not a question of working harder. There are no lazy traders. In fact, we have the opposite problem: screen time seems to increase way beyond what we originally expected. (Just ask your wife/partner.)

Unfortunately, screen time isn’t directly correlated with an improvement in our bottom-lines. Why not?

Like any profession, trading well depends on a proper mindset and the execution of specific skills. . . skills that need to be practiced.

Raw screen time doesn’t necessarily build these skills. . . or any skills, for that matter. In fact, excessive screen time can tire you out, zone you out. . . and keep you from developing the real-time skills you need.

It’s a paradox: trading too much is the most common trader problem that’s not even recognized as a problem. Check out this comment from the owner of a popular futures prop shop:

“Our average profitable trader is active less than 3 hours a day. Our average struggling trader logs more than 6 hours a day.”

And I know traders who are in front of their screens 12 hours a day or more!

Sure. . . it’s natural to try harder when you are not getting the results you expect. And it’s natural to expect your results to be proportional to your effort. And in some fields of endeavor these expectations are correct.

But trading isn’t one of them. Here’s why.

The typical struggling trader operates with an idiosyncratic mix of biases, goals, predictions, snap judgments, impulses and intuitions combined with an equally eclectic set of technical tools.

Although you may swear loyalty to a particular method, such as Hawkeye, when push comes to shove in live trading, many traders quietly change the game.

In this ad hoc situation, the number of unique discretionary combinations available to enter, manage and exit any one trade… probably runs into the thousands.

When the pressure is on, consistency becomes elusive. So elusive that our results can be much worse than chance. Seriously. It will seem like you are missing virtually all the good trades and taking virtually all the bad trades!

I know it sounds impossible, but I hear about this often and I’ve experienced it myself. It causes traders to profoundly mistrust themselves and feel almost cursed.

The good news is that the solution is within everyone’s reach.

Good trading relies on a small group of attitudes and abilities that are the opposite of the idiosyncratic mix we have, by default, in our heads.

Good trading is:

  1. Unbiased,
  2. process orientated,
  3. well-planned,
  4. disciplined, and sometimes
  5. counterintuitive.

This is the mindset needed to trade successfully. We call it the Hawkeye Mindset. (This is how Randy trades, right?) Without it, you are subject to your own random discretionary ideas, impulses and behavior.

Mindset is crucial, but it’s not enough. We also have to master the specific skills regarding entering, managing and exiting trades. Mindset needs to be practiced. . . and so do the skills.

But frankly, most traders never actually practice. . . they just analyze and trade.

Either they feel they don’t have time to practice, they don’t think practice is important, or they think trading itself is practice. But it’s not.

Truly effective practice has three essential ingredients:

  1. It’s specific,
  2. it’s measurable, and
  3. it’s progressive. . . which means the challenge increases incrementally over time.

I call this “Conscious Practice.” Conscious practice creates hundreds of small breakthroughs, which generate measurable macro improvement. (And they generate dopamine, too. . . so you will enjoy practicing.)

This isn’t just a theory. . . this is the training method that resulted in 90 new records at the 2016 Rio Olympics.

And if you start applying it, you can break through your own limits and set new performance records on a regular basis.

So here’s a quick quiz:

Conscious Practice is ____________, ______________, and ____________ .

Ready to start?

Step 1: Pick a specific attitude or skill you want to get better at. Get very specific.

Step 2: Set measurable goals and track your progress using market replay or practice in a live market in Simulation mode.

Step 3: As you make progress, progressively raise your criteria for success.

Key Point: This recommendation may shock you. . . if you are not yet profitable. . . spend 90% of your time practicing conscious skill development in Simulation Mode. . . and 10% trading live. As you notice your mindset and skills improving, gradually increase the proportion of live trading.

If you are ready to start your own program of conscious practice, download the free video below, which is part of the low-cost Hawkeye Mastermind coaching program available on HawkeyeMindset.com

Hawkeye Mindset Mastermind – Does Practice Make Perfect?
 


To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Randy Lindsey
Hawkeye Traders, LLC

Mindset of a Successful Trader

It doesn’t matter the amount of money you have, it doesn’t matter if you are a great technical analyst, and also it doesn’t matter your depth of knowledge in trading; if you don’t have the right trading mindset, you may never become a successful trader.

The type of mindset you have will determine if you are going to succeed or fail. Some traders understand the importance of having a great psychology in trading, but most just ignore it and see it as something they will work on later. This is a huge mistake.

If you are trading with a wrong mindset, it is not about the money you have in risk capital or how much you have mastered your strategy, you can still fail. No amount of money or strategies can make you successful if you do not have the right mindset about trading.

Below are some important trader mindsets you need to understand if you want to achieve lasting success in the market…

Money and mindset
The truth is that risking money during trading influences your mindset. One important factor to consider in maintaining and achieving the right trading mindset is to carefully manage your risk when placing any trade. When you risk more than what you can handle emotionally, this may affect all other part of your trading, which may lead to you having a wrong mindset immediately the trade starts. You may become over emotional and anxious, which is not good for the business. The best approach is to begin with a small amounts with your first live trading. You have to ‘test the waters’ so as to know your risk spot where your emotion is not too high.

Expectations are key
Most people usually come into the business with high and unrealistic expectations on different things. They are not realistic about how long it will take them to properly learn trading, how long to become consistent and successful, and how frequently they are going to win trades. Starting something with a load of unimaginable expectations, you are simply getting ready for emotional pain.

You have to relinquish every emotional attachment to trading. And also minimizing your risk, just as we have discussed before, can be achieved by not setting too high expectations about your trades.

Simple is better
As humans, we always have the tendency to make simple things complicated, we make things harder than they really should be. This is very true when it comes to trading. Having a messy and complicated trading strategy is the number one thing that can negatively influence your mindset. It is very important that you stay calm and clear your head when trading, and for this to be possible, you need a simple trading strategy, especially one using volume and price action.

Summary
Therefore, building a foundation with a simple but very effective trading strategy is the first step to achieving a proper trading mindset. Next, with a balanced money management approach and with properly managed expectations, consistency and discipline, you will be on the way to developing the right trading mindset, and therefore, consistent trading success.

At Hawkeye Traders, we not only equip you with world-class indicators, and with strategies and training that help you on your trading journey, but we also train you on the proper mindset. We have a whole website dedicated to developing a successful mindset: http://www.hawkeyemindset.com/mastermind/

 


To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Randy Lindsey
Hawkeye Traders, LLC

7 Secret Tips Successful Traders Practice

What separates successful traders from the rest of the pack? Why is it that only a mere 5% really make it in trading? How did these traders do it? While all successful traders have their proven trading strategies and systems to call and manage their trades, they know there is one more important thing to do: focus on improving themselves.

Successful trader

Because the trader is the ultimate resource that can act to produce the desired trading results, he or she must ensure this resource is primed and efficient to perform its best at trading. As such, successful traders pay great attention to the points listed below which elucidate how they go about their trading business.

Treat Trading Like A Business

Top traders know that trading is a serious business and they accord it such importance by considering key factors that affect all businesses. From a trading perspective, these factors include: writing a detailed trading plan; starting out with an appropriate trading account size; knowing the various costs of trading; sustaining and growing the account; and acquiring the right trading knowledge, skills, software and equipment.

Keep The Ego In Check

Trading mistakes can arise from emotional responses directly linked to one’s ego. A trader that needs to be right will let the ego prevail and inflict ruin to his/her account, always trying to will the market which he/she denies cannot be controlled. Being egoistic also means not acknowledging one’s trading mistakes and therefore not learning from them. For example, the ego will egg the trader on to hold a losing trade instead of taking the correct action of cutting loss at the appropriate time.

Be Disciplined In Every Trade

The item that directly affects your bottom line is trading discipline. The serious trader follows his/her trading plan to the letter, and adheres to it as much as humanly possible (Note: even successful traders make mistakes). Trading discipline includes protecting trading capital and sensibly allocating risk per trade; only taking trades that satisfy risk/reward parameters and set up correctly; staying on the sidelines at all other times and not forcing a trade; cutting losses quickly via pre-determined stop loss levels; letting a good trade ride but protecting a winner from turning into a loser. In essence, being disciplined allows the successful trader to show profits consistently and rein in losses should any trading period turn out to be a rough ride.

Protect Trading Capital

The serious trader treats his/her trading money very seriously. It is what enables trading to be done. Additionally, it is also the objective of trading: make winning trades to grow the money. Thus, the successful trader will guard his/her capital zealously, ensuring that risk per trade is controlled so that losers only erode the account, not chew a hole in it. This assures the trader that his/her business can continue, today, tomorrow and into the future.

Don’t Marry Your Trades

The serious trader knows that a single trade does not determine his/her trading success. He/she is fully aware that any trade could result in a loss. Therefore a conscious act of removing any emotional attachment to every trade is essential. While staying disciplined entails waiting for the good trade entries, this wait and eventual trade entry do not compel the successful trader to think that he/she must be right in taking that trade. As such, should the market go against the trader and he/she sees prices approaching the stop loss level, the trader fully accepts that losing is a real possibility and does not rationalize further. The novice trader, in contrast, will often be tempted to move the stop loss further out so as to let the trade have “more room”. Such a trader feels the need to be right and doesn’t know how to walk away from a loser.

Be Realistic, Practical And Persevere

Being realistic is what separates the men from the boys when it comes to trading. The successful trader does not have a get-rich-quick mentality and knows it is hard work; thus he/she treats trading as a business and has the mental fortitude to stay in the game for as long as it takes. Perseverance is a key asset. The trading discipline imposed in the trading plan reinforces this. It results in a personal belief that it is possible to succeed in trading. The serious trader knows he/she is psychologically guided by his upbringing, attitudes and experiences regarding money and success. He is also practical by admitting these limitations and works to break free from such self-defeating barriers. Pursuing the right education from other successful traders are good solutions to the problem.

Know Yourself And Let Others Help You

The successful trader knows his/her strengths and weaknesses when it comes to trading. They are not shy to ask for help. While knowing there is no shortcut to success, the trader often pursues education from the best mentors to acquire the right knowledge and skills essential to becoming successful at trading. As part of the trading plan, the serious trader keeps a trading journal and reviews this daily to learn from past mistakes and internalize winning trade executions.  Also, a mentor can use the trade journal to help the trader make specific and personal improvements.

You may need the help of a trading coach.  Let Hawkeye Traders help you get back on the path to consistently profitable trading. Contact us today at [email protected] and ask about our Trader Coaching Program. You’ll be glad you did.

Trade safe!


Learn more about volume and volume spread analysis. See more examples and live trade setups as well in the next free LIVE Hawkeye Demonstration Room. It is held every Wednesday and is open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Randy Lindsey
Hawkeye Traders, LLC

Defining Risk in Your Trading

Hello everybody, this is Marcus Toombs from Hawkeye Tomahawke FX

Do you know exactly how much you risk each time you place a trade?

In his recent article ‘The Commitment Secret’, Dr. Kenneth Reid challenged us to commit to an ongoing process of self-improvement and today, to that end, I’d like to consider trade risk.

Do you clearly define the point at which you will exit a trade if it goes against you?

If we trade without defining the point at which we will exit that trade, then it is not possible to calculate the financial risk of that trade and consequently we are then risking our entire account, which would not only be extremely bad for our pocket but would also cause us a great deal of emotional pain and psychological damage.

In this scenario, at what point would we exit the trade and by then how big will that loss be?

Do you clearly define how much of your account you will risk on each trade?

If I enter a trade with the same lot size for each currency pair then I am not defining my risk because each currency pair has a different cost per pip. For example, one standard lot on the EURGBP is around $12.80 per pip whereas one standard lot on the GBPAUD is around $7.50 per pip, so the risk on the two trades is not the same with an equal lot size.

Why should we define the risk on each trade?

If we consider how we bet on a horse race then the answer is quite simple.

The odds are calculated on the probability of a horse winning and we use those odds to define our trade parameters. So, for example, if the odds are 10:1 and I bet $1, then a win would return my $1 stake and $10 in profit. However, if my horse does not win then the bookie keeps my $1 bet. In this scenario, I fully understand that I will lose $1 if my horse does not win and I have considered it a worthwhile trade as I have the chance to make $10 by risking $1.

Now, if the bookie couldn’t tell me how much I will lose if the horse fails to win, but that it might be all the money in my account (which, incidentally, he holds for me in his own bank account) would I then take a bet on that horse? I certainly wouldn’t – but yet, surprisingly, many traders do.

What are the benefits of defining and accepting the risks on each trade?

How about I say you can be the bookie (to define the trade odds) and then also the customer to take that trade? Well, that is just what we do when we trade.
So, for example, I could set a stop loss at -50 Pips and take profit at +100 pips (1:2 risk to reward) and then risk $100 on the trade. If the trade stops out I lose $100 but if the trade is a winner I will gain $200.

But just remember, as the bookie or as the customer, I have no way to determine or influence the outcome of the race, I am just defining my trade parameters and must accept the outcome.

The skill in trading is then to find high probability trades and to pre-determine the exit, which is the subject for another day.

How do we determine the risk in the Hawkeye Tomahawke FX room?

Hawkeye Tomahawke Chart

In the Tomahawke room we use a trade execution tool to place our trades quickly, as we are trading the shorter time charts.

This tool makes us place a stop in the charts so that we think about and determine the point at which we would no longer want to be in that trade, should it go against us. In the settings, we also pre-determine how much of our account we wish to risk on each trade. (I normally risk ½ percent on each trade).

When we take a trade the software then automatically calculates the lot size given the number of pips to the stop and the total value we are risking on that trade. So, for example, if we are risking $100 on a trade with a 10 pip stop then we will be risking $10 per pip and the software will calculate that as a lot size and enter the trade. Should the stop be hit we will lose $100 and no more and we accept this as our defined risk.

I hope this article helps you to think about risk in your trades and how to become a better trader.

If you would like to find out more about the Hawkeye Tomahawke FX room please visit us at https://www.hawkeyetraders.com/tomahawke-forex-trade-room/


To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Good trading,

Randy Lindsey
Hawkeye Traders, LLC

Multitasking

by Guest Columnist, Kenneth Reid, Ph.D

Hi… this is Dr. Kenneth Reid from HawkeyeMindset.com This week I’d like to discuss “Multitasking.”

Traders multitask to reduce anxiety and for neuro-stimulation. There’s an upside and a downside to this habit. Let’s take a look at how all this works and I’ll provide a link that will help you change this habit (or any habit) in just 5 minutes a day.

ANXIETY REDUCTION
Traders subscribe to news feeds and guru blogs or chat rooms to help explain and predict market movement. We naturally want to know “why” the market did X and not Y, and what it is likely to do next, because knowledge (even pseudo-knowledge) lessens anxiety.

The question then becomes: “Although you may feel better, how does that ‘knowledge’ actually affect your trading?”

Often theories and predictions work against us, because they are so subjective. If we have a theory about something it can be difficult to see the objective truth… if the truth doesn’t accord with our theory. And that disconnect can get us on the wrong side of the market.

For example, if you think the market ‘should’ go up, you will probably miss the entry for the short sale.

NEUROSTIM
Multitasking also provides neuro-stimulation, the universal antidote to boredom.

Some traders get bored almost immediately… and they absolutely hate it. For them, multitasking is like an ADD drug, because information, engagement, hyperfocus and risk are stimulants that induce a state of pleasant concentration and mild euphoria. It’s a dopamine high.

Consequently, multitasking for ‘neurostim’ can easily slide into trading addiction. Like a slot machine player, these traders are trading to trade. I’ve seen this addictive behavior in doctors and dentists who trade between patient visits or while a patient is getting prepped or numb.

I coached an anesthesiologist who traded in the hallway between operations, and a surgeon who traded forex from his hospital office. Both were losing money. The distraught wife of the anesthesiologist told me he had already burned through his kids’ college fund.

Trading addiction is also a risk for those who work from a home office. One client, a father of three, worked at home for a Fortune 500 company. He preferred to trade, so he did just enough corporate work to avoid drawing attention to himself. Although he was depleting his savings, he prioritized trading over his day job because he believed he was “on the verge of greatness.”

This particular (delusional) belief is common in male traders with Adult ADD or a trading addiction. They can’t see the self-deception, although spouses recognize it quite early… and it scares them.

NEXT STEPS
Reading about multitasking, or any other trader issue, is useful, but it’s not sufficient to actually change a sub-optimal trading behavior. You will forget about it in 5 minutes and go back to trading the way you always have. Nothing will really change.

However, if you are interested in reaching your full potential as a trader as quickly as possible then get on the fast track… join our new Mastermind Breakthrough program at Hawkeyemindset.com.

You get a weekly experiential video that will empower you to eliminate bad trading habits and install good ones in just 5 minutes a day. 50 videos a year on 50 practical topics essential for trading mastery. It’s the easiest way for traders to increase discipline and improve your trading on a daily basis.

The Mastermind Breakthrough videos are based on the same principles and techniques used by Olympic coaches and trainers for Navy Seals. Results have been phenomenal… and if you can afford Netflix, you can afford this service.

Go to www.hawkeyemindset.com/mastermind to find out more.


To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Good trading,

Randy Lindsey
Hawkeye Traders, LLC

The Commitment Secret

by Guest Columnist, Kenneth Reid, Ph.D

Hi… this is Dr. Kenneth Reid from HawkeyeMindset.com

Every trader I’ve ever met or coached has been 100% committed to trading. When I ask…“When do you plan on retiring from trading?” I always get the same answer: “Never!”

But what are most traders really committed to?

Based on hundreds of coaching interviews, most aspiring traders are committed to various Outcomes… such as winning, making money, becoming wealthy, being right, figuring it all out.

While we all want these things, a commitment to Outcome, per se, can actually work against the aspiring trader. That’s the sticky paradox of trading for a living.

Over the years, I’ve noticed that there comes a time in every trader’s development when he or she needs to make a different type of commitment in order to achieve their full potential. Otherwise they stay permanently stuck at whatever level they are on.

To better understand this, I’d like you to listen to some words about commitment that continue to inspire me. They were written by a Scottish explorer and mountaineer who survived imprisonment in POW camps during WWII.

He didn’t just “face” challenges that befell him, he sought them out. He assumed risk. And in doing so, he learned a secret that literally saved his life. I think it’s something we all need to learn because trading is dangerous, too.

You can watch a free 3-minute video version of this article and hear his famous words here

(This article will have more impact/value if you listen to that video.)

So today I’m going to challenge all aspiring Hawkeye traders to make a commitment…not to an Outcome… but to an ongoing Process of self-improvement. What would you be improving exactly? Your ability to skillfully and effectively assume risk.

Having this ability gets us into “The Zone,” the sweet spot that lies between being foolhardy on the one hand, and risk averse on the other. As I mentioned in a previous article, another name for this mental-emotional state is ‘flow.’

And the happy paradox is that if we make a commitment to continuous self-improvement, we seem to encounter serendipitous support for achieving all our goals. This isn’t magical thinking…it’s the essence of mastery.

Next week I’ll discuss a way for Hawkeye traders to transform your commitment into highly practical action steps. Stay tuned.


To learn more about volume and volume spread analysis, and to see more examples and live trade setups be sure to join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday. Open to all. Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Good trading,

Randy Lindsey
Hawkeye Traders, LLC