We previous parts in this series we have now gone over how to look at evidence, how to manage the trade, how to eye off trends, how to assess psychology and now finally we are coming to crunch game. You should now have a very good idea of the process of how traders stick to there strategy and how they can be profitable as well.
Like I have mentioned before if you are still having trouble do not worry, this is a process that takes time and not everyone is going put it all together like making a cup of instant coffee.. Like all processes it takes time, in fact for most traders it takes many many many years, so do not be hard on yourself.
What a lot of traders find the hardest though goes back to the belief system. Do you actually think your strategy works or do you actually know your strategy works. Trader A maybe trading the same strategy as trader B however trader B maybe losing money. How, you may ask? Well it is because trader A knows trading is a process and has done his or her back testing. Trader A excepts loss when wrong and trader A has a good mental perspective of the market and has control of there own emotions. Trader B finds it harder because they simple find it hard to except loss, they do not follow the process properly. They take losses that they should not, they generally take profits to early or they imbalance the process by not taking profits at all and basically being too greedy.
You see, trading overall is a balance, sometimes we need to take profits, sometimes we need to hold and other times we need to just take a break even or a loss. Now that you are familiar with movements of the market and structure overall from this series though you should have an idea what to look out for in your trades in order to get the most from them with also letting them run.
Video Below – Creating the Belief System in Trading
So in order to create the belief system that trader A knows we need to step back a moment, spend some due diligence, have some patience. Spend time testing our strategy over many years. Test what strategy you use, find out for once if it really is profitable. Follow the process, that way you change from thinking a strategy works to knowing if a strategy works. There is nothing more satisfying than looking at numbers and knowing. It changes the complete process of the business, because now you have EVIDENCE.. That evidence is your belief to trade it for real.
Now in order to do this back testing there are two programs I recommend:
Simple Forex Tester
Affordable, easy to use program that allows you to do good back testing in MT4. The only aspect to bare in mind with this program is making sure your broker provides lots of time for history. Every broker mt4 is different in how far they allow you to look back depending on time frame so bare that in mind, however the affordability is awesome with this application.
Update – I currently do not recommend Simple Forex Tester due to it not working properly on many latest MT4 platforms. This happened recently with the many MT4 updates this year. Currently waiting on a reply from creator of application yet no response so far. Hopefully the creator gets his program fixed in future to be compliant with modern MT4.
For those looking for a solution still, Forex Tester 2 as described below is a product that has been available for many years. It works well and is still the number one recommended back testing program out there.
Forex Tester 2
Forex Tester 2 is a better program than Simple Forex Tester because it has less boundaries on time in back testing, you can literally test a strategy on any time frame over 10 years with this program. While on one hand it may cost more but as an investment in yourself as a trader the value is exceptional. Also the support with this program is really good. Many professional traders use this program.
$199 Dollars – For more information or to purchase.
Overall, both programs are good and both build the belief system needed in order to be a believer rather than a thinker. This is key.
Thanks for watching, stay tuned for part 6 of Price Action Traders Mindset..
Update – To get access to the Breakeven indicator as mentioned in the video above click here.