Why You’re Not Picking Winning Trades and 5 Simple Steps to Fix It
Do you need help picking winning trades? If you do, continue reading this lesson because I have laid out a simple 5-step to plan to get you on the track to improving your trading performance.
It’s important that you approach these five steps with the following key facts in mind:
Even IF you’re following your trading strategy with the discipline of a professional athlete and the patience of a crocodile lying in wait for its next meal, you will still have losing trades sometimes. This is simply part of trading, but that doesn’t need to ‘scare’ you or cause concern. It simply means you need to accept it and make a money management plan to contain your losses under a dollar level you are comfortable with.
That said, let’s get on with the business of improving your trading by learning how to pick winning trades….
Step 1 – Declutter your charts, focus only on the price action
OK, first things first, you really need to remove all the ‘crap’ on your charts. If you are new to price action trading and specifically to my ‘version’ of price action trading, you need to listen up…
Having indicators all over your charts is simply never going to help you. I know it seems like they will help, because you’ve probably read about different systems that use them from various ‘gurus’ on the internet. But, trust me, I’ve been there and I’ve done that, with indicators, and I’m telling you they are nothing but a distraction and an unnecessary variable. If you want more information on why I feel this way, read my article on why indicators will destroy your account.
The main point is that the first step to picking winning price action trades is start with clean, indicator-free charts. This will give you the clearest and thus best view of the charts. To learn how I set up my charts see this Metatrader 4 tutorial.
Step 2 – Change your approach from high-quantity to high-quality
The next thing you need to do is change your thinking about trading. You need to take a sniper trading approach, which essentially means that you understand why waiting for high-quality trades is the best route to take. It means you understand why trading with high frequency is simply futile and counter-productive.
Picking winning trades requires discipline and patience, two things that are in scarce supply in most peoples’ minds as they try to trade. It seems to be human nature to want to trade a lot, but that is not how you pick winning trades or trade profitably. Sure, if you trade a lot, you will hit some winners, but you’re also going to hit a lot of unnecessary losing trades which will overtake your winners and leave your trading account in the red.
Your goal is to be a TRADER not a GAMBLER. If you want to be a gambler, go to the casino and lose your money, at least that’s a little bit of fun, more so than losing it at home on your computer in my opinion.
If you want to be a trader, you’re going to have to put in some effort by taking the time to actually learn how to trade, drafting a trading plan and a making a mental and physical commitment to consistently follow that plan. This is how you trade with skill and separate yourself from the majority of ‘sheep’ who lose their money in the markets. You want to be in the top 10% of traders, not in the bottom 90% who tend to lose money over time.
Step 3 – Stop looking at time frames under the 1 hour
OK, so you now have your charts cleared out and set up clean and you have your trading mindset in order (I hope). Good then, let’s move on…
The next thing you need to do, which also may require another mental ‘shift’ of accepting reality on your part, is to simply commit to never, ever, ever looking at any time frame under the 1 hour again, for the rest of your time on Earth.
Now, you may be thinking I’m joking, but I’m deadly serious about this. I never look at any time frame under the 1 hour because I have long since figured out that it only hurts my trading and opens my mind up to the possibility of being sucked into a low-probability trade. I don’t know about you, but I like my money and I want to preserve trading capital as much as I can. Meaning, I don’t want to open up my money to unnecessary risks in the market because trading is already risky enough.
To learn more details on the advantages of trading higher time frames and why I don’t trade short time frames, please see the following to articles:
Why trading daily charts will improve your trading results
Daily chart time frames are the ‘Holy Grail’ of trading
Step 4 – Learn to master one signal at a time
In keeping with the theme of high-quality but fewer trades, it’s critical that you really make a serious effort at trading less frequently. The best way I can tell you to train yourself to trade less that will help you pick winners easily, is to simply focus on one trading strategy at a time.
If you take the time to really become ‘intimately’ familiar with one price action setup / pattern at a time, you will learn exactly what that setup looks like and when it’s present in the market, and this will make you a more skilled price action trader. Eventually, you will almost instantly be able to determine if that signal is present on the charts or not. This will bring you a high level of skill, confidence and mastery of the charts that you cannot achieve any other way.
If you want to pick winning trades, concentrating on one signal / pattern at a time with laser-like focus is the best chance you have. It’s the way I did it and I believe the way you should too.
Step 5 – Make sure you actually have a trading strategy
Finally, this last step may seem obvious, but it needs to be repeated because of its importance and because I see so many traders who are risking their hard-earned money in the markets without actually knowing what they are doing.
It should go without saying that you have to actually learn how to trade properly before you can hope to pick winners. But, trading seems to be one of the only professions where people seem to believe they can ‘skirt’ the traditional process of learning before being able to do it well. Think about it, you would not expect to fly an airplane or practice medicine before being trained in those professions, so why would you think you can make money as a trader if you haven’t yet learned how to actually trade properly? Start your trading career off on the right track by getting a trading education that teaches you how to trade properly, because that will give you the best chance of picking winning trades.
Good trading, Nial Fuller
17 Comments Leave a Comment
Thanks prof for another wonderful article.i fully agree with you.What I have done is to remove all other timeframes from my toolbar and am only left with Daily,Weekly and Montly timeframes.This safeguards me from the temptation of trading lower timeframes,For me I cant as yet use the 4hr timeframe profitably
Thanks,I now Understand bettet.
What a good article. Thank you
Thank you Nial. Much appreciated.
Thanks a lot Guru, you always change my mindset about forex trading.
great article. Nial you are a genius of trading. forever my mentor.
I absolutely agree with Nial on the time frame below 1 hour… They are full of too much noise and always tend to sucker me in to lose money… Ever since I’ve started looking at the higher time frames my trades have definitely been much better…
As always your insights are greatly appreciated
More than insight from the professor. This is heart to heart to other traders.
Thank you Nial Fuller.
haha! I like your comment about never ever looking at a timeframe under 1hr ever again for my entire time on earth!! Made me giggle! It’s like your standing over my shoulder pointing out everything I’m doing wrong! Thanks again for your words of wisdom.
Fantastic as usual.
I completely agree with what you said.
Hi Nail this is wonderful article thanks so much
Thanks am grateful Mr Nial my mentor
Thanks sir. #EDL
Hi Nial, your trading insights are great. I personally had to delete the 15 minute time frame from my toolbar, because it makes you veer off focus while trading, the trend isn’t visible on anything lower than the 1hr chart. Thanks for another great post.
This is really reasuring, that you repeat the same principles over and over again. It came to my mind: “If I do everything properly, just like Nial teaches, I will have profits eventually”.
Thank you very much.
Proper layout of all principles of trading successfully… Keep inspiring us Nial.
Marvelous Nial!! You are an Angel sent by God for Traders. Recently I tried 15M TF for my updated strategy and was happy earning ‘x’ amount on first day. Next day lost heavily ‘2x’ amount on same strategy and 15M. So I swear by your words ” never, ever, ever looking at any time frame under the 1 hour again” for any strategy. Today I shifted to daily TF after yesterday’s disaster and immediately I’m into profits now. Thanks a lot Nial! You are a Lighthouse in these difficult sea waters of trading. May God Bless You always!! May all your wishes come true!!