If asked to describe financial markets to someone who's never heard of them, you'd use terms like chaotic, random, volatile, unpredictable, wild, and never constant.
As a serious trader, your first step is to chunk down until you have a framework that brings order to your trading. Think of it like a playing field in sports. Within the field of play is when you can trade, and out-of-bounds is when you don't trade. But it's not only about being in the field of play. In team sports, players have unique roles and only engage in certain cases. Trading is no different.
A trading playbook refers to a catalogue of strategies deployed in certain cases. And as a result, they produce positive results over the long-term. It means they make money over x number of trades despite in trading where nothing is 100%. Traders refer to this as edge. When the market presents an opportunity to combine several playbook trades simultaneously, it can be satisfying and rewarding.
We're in the odds business, but confidence plays a role in everything we do, including trading. Has your trading confidence taken a hit? How would you feel knowing you are stacking known positive expectancy trades on top of each other? You'd feel full of confidence and not hesitate to act on your trade. Right? Hence why, the best traders swear by a trading playbook.
Your only tasks when live trading are:
-
Recognise when the market behaviour matches a playbook trade.
-
Execute the trade.
You're going to see a recent short and long trade. But before that, it's important to understand why there are always reports of high failure percentage of traders outside of professional trading. It's because these traders don't have an edge. i.e. no catalogue of trades that produce positive results over the long term. It takes years of knowledge and forward testing to evolve a trading playbook. If you go it alone, you'll likely never get there.
But the good scoop is you have a choice. You can learn playbook trades when you trade at a professional trading firm or work with a mentor who can teach you their extensive playbook. It's a legitimate shortcut to developing profitable trading. If you love trading, but poor results and little progress are painful, either option will get you past this.
Now, the examples are shared to show you:
-
Order and form can exist in what is an otherwise chaotic and random environment.
-
You can play the game on your terms, building your trust and confidence in trading.
-
It's how serious traders can operate a trading business that has long-term positive performance.
The short trade is taken when four playbook trades occur at the same time.
The long trade is taken when three playbook trades occur at the same time.
Forex and derivatives trading is a highly competitive and often extremely fast-paced environment. It only rewards individuals who attain the required level of skill and expertise to compete. Past performance is not indicative of future results. There is a substantial risk of loss to unskilled and inexperienced players. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent
Editors’ Picks
EUR/USD treads water near 1.1800 ahead of ECB rate decision
EUR/USD is keeping its range at around 1.1800 in the European trading hours on Thursday. The pair awaits the European Central Bank interest rate decision for fresh impetus after the Eurozone inflation declined well below the central bank's 2% target.
GBP/USD flirts with two-week lows near 1.3570
GBP/USD adds to Wednesday’s pullback and recedes to the area of two-week troughs well south of the 1.3600 level on Thursday. The firmer tone in the Greenback and the dovish hold from the BoE keep the British Pound on the defensive for now.
Japanese Yen hangs near two-week low vs. firmer USD; USD/JPY bulls target 157.00 breakout
The Japanese Yen extends its sideways consolidative price move against a broadly firmer US Dollar and currently trades near a two-week low, touched earlier this Thursday. Investors remain worried about Japan's financial health on the back of Prime Minister Sanae Takaichi's expansionary fiscal plans. This, along with political uncertainty ahead of the snap election on February 8, has been another bearish development for the JPY and contributes to its relative underperformance.
Editors’ Picks
ECB keeps its interest rates unchnaged, as largely expected – LIVE
The ECB held its Deposit Facility Rate steady at 2.00% on Thursday, in line with broad market expectations. Following the decision, EUR/USD remains slightly on the back foot, hovering around the 1.1800 region as investors now turn their focus to Christine Lagarde’s live press conference for further policy cues.
GBP/USD flirts with two-week lows near 1.3570
GBP/USD adds to Wednesday’s pullback and recedes to the area of two-week troughs well south of the 1.3600 level on Thursday. The firmer tone in the Greenback and the dovish hold from the BoE keep the British Pound on the defensive for now.
Gold resumes the decline, still below $5,000 post-ECB
Gold partially reverses its recent two-day rebound, facing fresh downside impulse and always below the key $5,000 mark per troy ounce. The stronger US Dollar continues to weigh on the precious metal, while declining US Treasury yields are expected to limit the decline somehow.
Bitcoin slips below $70,000 as falling knife scenario in play
Bitcoin (BTC) price dips below $70,000 on Thursday, having corrected nearly 20% for this year. Market momentum turned extremely bearish, with technical indicators pointing to further downside toward the next key support at $65,000.
The AI mirror just turned on tech and nobody likes the reflection
Tech just got hit with a different kind of selloff. Not the usual rates tantrum, not a recession whisper, not even an earnings miss in the classic sense. This was the market staring into an AI mirror and recoiling at its reflection.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.