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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

Apply The 3 M’s Of Trading To Improve Your Results

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By in Forex Trading Articles by Nial Fuller Last updated on | 12 Comments

3msThe 3 M’s of trading: Mind, Money and Method, maybe you have heard of them, maybe not. Either way, in today’s lesson you are going to learn what they mean and why successful trading requires them.

Note: The 3 M’s was not my idea, rather it came from a book called Come into My Trading Room by Alexander Elder. However, I want to show you how I use the 3 M’s and how it applies to my personal trading approach.

All three of the M’s are equally important, and you can think of them as the three pillars of trading and the backbone of your trading business plan. Without one of them, your trading foundation will not hold, and you will not succeed. You need all three of them working together to make money as trader…

Mind

The Mind part of the 3 M’s essentially means developing psychological ‘rules’ that will keep you calm amidst the noise and constant temptation of the markets. Everything begins (or ends) with your trading mindset.

You cannot make money over a period of consecutive months if you are not in the proper trading mindset. There are many things that go into achieving the proper trading mindset and I have written about this topic extensively. However, if there is one over-arching theme that you need to understand in regard to your trading mindset, it is self-control.

Most of trading can be boiled down to your ability or inability to control yourself in the face of the near constant temptation to trade, because most of the time, doing so means you will inflict harm on yourself.

As a trader, speculating in the markets, an endeavor that is obviously very risky, it is up to you to control yourself, and this ability starts with the mental understanding of what you are doing, what is possible and what you are risking.

My suggestion is that you think more about the fact that it’s very easy to lose money trading, rather than the fact that you MIGHT hit a big winner on any given trade. It’s about understanding and accepting risk and then behaving in-line with this acceptance. Which means basically that you shouldn’t be trading a lot because high-probability trading opportunities are not nearly as common as many traders think they are (or trade as if they are).

Money

The Money part of the 3 M’s refers to money management, of course. This encompasses both risk and reward; how do you manage risk and how do you manage your profits / rewards?

Getting your money management down is heavily dependent on having the proper trading mindset, as well as having a firm understanding of what money management actually means. Here is what it means in a nutshell:

  • You always think about risk before reward.
  • You know what your per trade risk amount is and you never exceed that amount. This should be a dollar mount that you are mentally and financially able to safely lose on any given trade.
  • You understand how to place stop losses properly and how to manage your position sizes.
  • You have a clear understanding of how to place profit targets and an overall strategy for exiting trades.
  • You understand how to calculate the risk reward on a trade and this also means you know sometimes a trade won’t be worth taking if the risk reward doesn’t make sense.

Money management can be thought of as the ‘glue’ the 3 M’s, because it really holds everything together. If you do not have properly money management, your mindset is going to quickly get out of whack. Also, your method will become irrelevant almost, if you do not manage your money correctly. So, if you want to make everything much, much easier on yourself, focus on managing your money, especially your risk, the most. Understand that capital preservation is really the key to money management. Capital preservation means managing your trading capital so that you are not using too much of it on any one trade and that you are not using it too frequently. Essentially, you want to only use your trading capital when a very obvious / high-probability trade comes along, because then you have more capital to use on better trades. Don’t blow your trading capital by over-trading.

Method

The Method part of the 3 M’s is how you trade the market. What is your approach or method to analyzing prices and making decisions about when to trade and when not to? You must have an effective trading method, but what is an “effective trading method” and how do you know if yours is or not?

The simplest way to judge whether or not your trading method is effective, is to demo trade it for a couple of months and see what kind of results you are getting. One caveat here however; make sure you are ACTUALLY following the method as it was taught to you and not over-trading (trading when no signal is present).

Now, there are many different trading strategies and methods out there. Ultimately, you have to find one that is A) effective and that B) you personally enjoy and that works well with your personality and schedule.

Personally, I am a huge proponent (duh) of price action trading. My trading method is price action and it is the only method I trade and teach to my students. If you have been following my blog for any length of time, you should know a little bit about how I trade with price action, if you don’t, click here. I have written many articles on why I prefer price action over any other method, but in case you missed them, are a few for you to check out:

Beginners Guide To Price Action Trading

Learning Price Action Is The Key To Trading Success

Why Price Action Trading Will Improve Your Trading

4 Facts About Price Action Trading You Need To Know

The ultimate resource on how I trade price action is my advanced price action trading course. Within in my trading course, you will not only learn about my Method, but you will also learn how I manage the Mind and Money aspects that are so very important to a trader as well. You will learn how to build your own trading plan with the building blocks being the 3 M’s, to get started, click here.

Don’t hesitate to email me with any questions or concerns you may have, and remember to leave a comment below.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. Dmitriy September 16, 2019 at 1:57 pm

    Thanks a lot, Nial!
    That was a truly beautiful lesson!

    Reply
  2. Sunday September 14, 2019 at 9:53 pm

    what to know more about risk management
    if I want to risk 1$ on a pair what will be my lot size and pip value to set as a Stop loss

    Reply
  3. Zinnur June 2, 2019 at 4:34 am

    Important lesson. Thanks

    Reply
  4. Благодарность October 30, 2018 at 3:47 am

    Magnificent article

    Reply
  5. Rahmat February 26, 2018 at 7:36 pm

    Almost every articles content and language from Nial are really giving positive effects including this one.
    So thank you Nial.

    Reply
  6. Olawa February 18, 2018 at 1:01 am

    Nial is my preferred Forex mentor anyday

    Reply
  7. DERRICK February 16, 2018 at 12:54 am

    all i can say is thank you so much

    Reply
  8. Tha Mathabzo Zulu February 15, 2018 at 8:15 pm

    Thank Nial

    Reply
  9. Duncan February 15, 2018 at 6:29 pm

    Thanks Nial;

    This was a great post which actually helped me rephrase my thoughts after my losses.

    I am still not very profitable at this stage but every time I lose, I look back to see what I could have done better and learn to minimize my losses maybe exit at a small profit rather than a loss!!

    However; after having read this, I also now appreciate the fact that losses are a part of it as well and I feel less discouraged before taking the next trade than before. Things sometimes are easier said than done – true – but after reading these guidelines, I learn a lot and appreciate it heaps. I am learning a lot and the best part of it is that I am enjoying it.

    Thanks for spending the time to post such valuable guidance!

    Duncan

    Reply
  10. Peter Miller February 15, 2018 at 2:46 pm

    Another good lesson. As they say ” life is what you make it “and that goes for trading also, think before you act and know that never one day (or life is ) is the same as the last one, so treat as Nial says each trade as a new beginning. Thanks .

    Reply
  11. rudra February 15, 2018 at 6:24 am

    good one sir

    Reply
  12. Khesiwe February 15, 2018 at 2:14 am

    Excellent article pactice makes perfect I’m going to practice every advice in this article thanks Nial

    Reply
  13. Winston Roy Longbottom February 15, 2018 at 12:01 am

    Thanks Nial, I for one admit that I was influenced by previous success and could not see the next trade through that; I was brought back to reality with some quick losses, however I puuled my thoughts together and looked at my next trade with confidence and considered every possible angle before taking it and I am now back on track. This article has since reassured me of that fact and I must disregard any previous trade before attempting the next. Your articles help keep sanity in the trading game and also leads to further success. Many Thanks. Winston

    Reply
  14. farzad February 14, 2018 at 8:50 pm

    Every word in this article is like gold…

    Thanks AGAIN Nial.

    Reply
  15. Olamide February 14, 2018 at 2:03 am

    Thanks Nial. That’s reminds me of a trade some years ago before I quit trading. I bought EUR/USD on $0.05 lots with $20 risk and i made a profit of $183 on that trade so that winning recency bias got into my head and I felt overconfident, then i went ahead to trade $0.10 lots on my next two trades and I lost both. That’s how I gave back the profit I made from that EUR/USD to the market. Fear start to catch me then I reduce my lots to $0.01 which definitely reduced my profit that I would have make on some trade. Though I just came back to the market since two or three years ago that I quit but am still using demo account to test my trading strategies before trying to come back live. Thanks once more.

    Reply
  16. Wandera Moses February 13, 2018 at 8:50 pm

    Nial thx for this one also. i have improved alot in trading just by reading your articles. thx alot

    Reply
  17. ampurirag February 13, 2018 at 6:09 pm

    Excellent and timely. Thanks Nial.

    Reply
  18. Seiso February 13, 2018 at 1:44 pm

    Typical of Nial’s mail’s. I am not in anyway surprised to find this post hitting the nail on the head as it does and so timely as well. I always find Nial’s post as informing, factual and educating like this one. Thanks to Nial, from now I am no longer going to be enslaved to my last trade’s results.

    Reply
  19. Colin February 13, 2018 at 10:31 am

    Thanks for the trading insight. Particularly about training our brains to behave properly.

    Reply
  20. Hettie van der Vyver February 13, 2018 at 5:12 am

    this makes sense!!

    Reply
  21. Thoko February 13, 2018 at 5:09 am

    Well I am a true novice,I have not started trading yet. If I understand well briefly you say if one is a trader one must bury the past.That is my motto
    So I feel l Iam going to do well.

    Reply
  22. Wasantha February 13, 2018 at 4:45 am

    This article explains what happened when I first started trading forex. After reading many of Nial,s writings on the subject of trading I feel that I am expanded in my knowledge and confident about my trading decisions.I really appreciate Nial,s works,

    Reply
  23. kris February 13, 2018 at 2:59 am

    i noticed today after one loosing trade that it can’t reflect, the other running trades .
    After that i checked my emails and i saw your email as first .I have read it and then it was like you would heard what i sayd before It was simmilar to :

    If you just lost, it has no bearing on the fact that your next trade might be a winner.
    If you just won, it has no bearing on the fact that your next trade might be a loser.

    thank you for your work .
    traders mindset ..

    have a nice day.

    Reply

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