How to simplify your trading and stay consistent

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Simplify Your Trading

Back when John Belushi and Dan Aykroyd were regulars on Saturday Night Live (SNL), a younger and wilder Steve Martin frequently joined that outrageous cast during guest-appearances. A relatively new face in comedy, Steve Martin fitted in perfectly. I remember some absolutely hilarious SNL moments from those days.

One particular skit that Steve Martin did stands out in my mind. It was called, ?How to be a millionaire and not pay taxes.? Standing all alone on stage wearing his trademark white suit and black tie, Steve Martin looked into the camera and carried on like a cheesy investment guru trying to rustle up clients with a ploy that went something like this:

?Yes, you too can be a millionaire and not pay taxes. How, you ask? First, get a million dollars. Then, when the IRS asks why you didn?t pay taxes, simply say, ?I forgot.

My retelling of the skit does not do it any justice but I think we can draw a correlation between the source of comedy from that skit and the way many people approach trading.

It?s safe to say that virtually all traders have the ambition, desire and drive to make money trading, even a million dollars. But like Steve Martin?s comedy sketch, the most crucial element is missing: HOW to make a million dollars trading?

No, I?m not going to promise that ?You, too, could make a million dollars trading and not pay taxes?. But I am going to share with you some very basic elements of trading that will help skew the chances for success in your favor.

At its very core, the art/science of trading can be broken down into three key components:

  • A set of High Probability Indicators that generate High Probability Trades
  • Consistent execution of your trades
  • Successful management of those trades

High Probability Indicators (HPI?s)
HPIs are simply a set of indicators or chart formations (or a combination of the two) that, when they manifest in a predetermined way, allow you to predict, with a greater of accuracy than not, the direction of the market over some period of time or that the market will meet a particular price objective. A High Probability Indicator generates a High Probability Trade.

Most successful traders I know keep it simple and have two or three High Probability Indicators. I use three specific chart formations and have given each of them a name. For example, when I see a “tight range extension higher” (TRE-H) manifest itself on a daily bar chart, I can predict, with greater accuracy than not, that the market will take out that day?s low before it takes out that day?s high over the next several trading sessions. I build my High Probability Trade around that indicator and that set of assumptions. I determine my entry point, my stop-loss exit point, my profit exit point for one half of the position and then my profit exit point for the remainder of the position. It is with the remaining half of my profitable position where I employ less mechanical strategies and become more intuitive, relying on my 20 years of trading experience to maximize the profit potential of the trade.

Consistently execute your trades
If you have a set of two or three back-tested High Probability Indicators that have proven to predict price direction with a greater than 65% (70% + would be better) degree of accuracy, then the only thing left to do is execute those trades and manage them successfully. But this is where the system breaks down. This is where the emotional/mental side of trading derails a perfectly good trading system. Maybe a string of losses keeps you from pulling the lever when the next HPI manifests itself and you know the rest of the story. The trade moves in your direction then you either watch it achieve your price objective and then stew in remorse and anger because you missed out on the trade or, you chase it and get in too late skewing the risk/reward ratios against you. The position gets stopped out and the loss is exaggerated because you got in too late.

Successfully manage your trades
Perhaps you?ve got a winner on your hands where you are short multiple contracts. You think the position has ?home run? written all over it, but you can?t perfectly explain why. Your rules dictate that you get out of your position at a particular price point. Part of you wants to cover the full position to lock in a nice profit. The other part of you wants to let it all ride. Being obedient to your rules, you cover your full position at the prescribed level and sure enough, within two days, the market breaks hard. The market never rallied high enough to the point that your original buy stop would have been filled. You experience the frustration of ?I shoulda-woulda-coulda stayed short?.

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So how can a trader who already has the first component of the trading equation (a set of proven High Probability Indicators) go about putting behind them the emotion that derails their ability to execute their trades? How can a trader successfully tap into their intuitive side to allow themself to maximize a position?s profits while also being prevented from jeopardizing their account?

One way is to SIMPLIFY the process.

SIMPLIFY
When we follow a standardized process for trade execution, we help negate the impact that emotions can have on that process. And when we create a set of rules within which is a subset of rules that allow for less mechanical, more intuitive management of our trades, we can potentially realize additional profits from those intangible insights into market direction without over-exposing our account to risk. Here is how it works:

S ? Scan your charts for HPIs. Create a ?Watch List? to help manage your inventory of trading opportunities.

I ? Identify a high probability set up.

M ? Map out the trade?s entry point, stop-loss exit point, and profit exit point.

P ? Pull the trigger. By systematizing the process as we are talking about here, the anxiety associated with executing a trade is greatly reduced. Instead of focusing on whatever issues keep you from pulling the trigger, your focus is on following a procedure, a set of instructions. Mapping out and understanding exactly what our risk is also reduces the anxiety of entering a trade.

L ? Let the market do its thing. It?s not very often that you won?t have to take some heat on a trade. It?s a great feeling when a trade goes in your favor immediately and stays that way. But that?s the exception and not the rule. As a good friend of mine would say, ?Let it breathe!?

I ? Isolate your feelings, emotions, and inclinations to tinker with the trade. The best way to do this is let go of the mouse and pick up a pen. Journal your thoughts to explore and understand why you are wrestling with the urge to adjust your pre-established parameters for the trade.

F ? Focus on your rules for managing the trade both mechanically and intuitively. I have established strict rules for when I will allow myself to manage a trade intuitively. First, one-half of my position must meet my first profit target and be filled. If I feel the position has continued potential beyond that point, I allow myself to be risk no more than the profit banked from the first half of the trade. This is very important: when allowing myself to trade less mechanically, my risk never exceeds break-even on the entire trade.

Let me give you a recent example:

  • Based upon a HPT that my HPIs generated, I sold 4 Canadian Dollar futures at 9530.
  • I placed an order to buy 2 CAZ9 at 9455 OCO 9601 stop.
  • I placed a separate order to buy 2 CAZ9 at 9601 stop.
  • I was filled on my order to buy 2 at 9455 for a $1,500 gain.
  • I left the stop in place on the remaining 2 contracts. I felt strongly that there was further downside potential, but could not point to any one of my three High Probability Indicators to support my feeling. My rules gave me permission to be flexible at this point since I had locked in some gains. I could risk up to break-even on the trade.
  • After covering one half of my position, the market made it as high as 9569, which never really threatened my 9601 buy stop, and then fell sharply.
  • I converted my buy stop at 9601 to a trailing stop and was filled at 9420 on the remaining 2 contracts for a profit of $2,200, which was 35 points better than my first exit point. By giving myself permission to be flexible and intuitive within a structured set of rules, I was able to pull an extra $700 dollars out of the trade.

Y ? You. That?s right. You. No matter how mechanical we try to make it, each trade carries with it some level of stress. So take some time for you. Walk away from your trading station after you?ve exited your trade, even if it?s only for a minute. Take a few deep breaths and allow the last trade to get put behind you and begin to prepare for the next.

Anyone who promises that you will make a million dollars trading should be taken with as much seriousness as Steve Martin doing stand-up comedy. But as we break the trading process down to its three core components of (1) a set of high probability trades, (2) the consistent execution of those trades and (3) successfully managing your trades, we can better see how to improve our profit potential. By adhering to a system for trade implementation, like SIMPLIFY, you can reduce trading anxiety while at the same time allow for flexibility in managing your trades, thereby allowing you the opportunity to developing and profit from your intuitive side.

Oh, and don?t forget to pay your taxes.

Bill Provenzano can be contacted at Upside Breakout

How to Simplify Your Life and Reduce Stress

Streamline and simplify your life to improve your health

Kristin Lee / Getty Images

Today, people tend to work longer hours, their children have more activities and we generally have more packed schedules than our previous generations did. This can be exciting and enriching, but it can also lead to feelings of constant stress and chaos.

If you’re looking for ideas on how to simplify life, you’re not alone; the concept of ‘voluntary simplicity’ has been gaining popularity since the 1990s because so many people have felt the same.

Here are some of the main ways you can reduce stress while still engaging in your favorite activities.

Clear Clutter

Many overwhelmed people live in cluttered homes. But, house clutter is both an effect and a cause of stress. A 2020 study showed that having visual clutter, like having stacks of books or piles of clothes around, triggered the sections of the brain related to stress. Clutter can bring a general feeling of uneasiness and can literally drain your energy, but getting rid of it is difficult for people with busy schedules. One strategy to simplify life by clearing clutter is to take 15 or 30 minutes each night to tackle one pile at a time, de-cluttering your house space by space. Another strategy is to take several hours one weekend and just be done with it. Either way, you’ll remove a subtle but significant energy drain from your life and replace it with the feelings of relaxation that come from having your home be a haven from stress. Keeping it organized and clutter-free can make your home a safe, stress-free place to relax and unwind.

Cut Out Negative Relationships

You may already be aware of the value of solid, supportive relationships in your life, such as the friend who picks you up when your down, celebrates with you when you’re happy and shares events your life as they happen. You may not be as aware of the effects of conflicted relationships, like the critical, unpredictable or competitive friend. It turns out that these “toxic friendships” actually drain us more than purely negative relationships. This is because we don’t always have strong defenses against the people who are sometimes nice to us, so we can get taken off-guard. If you’re wondering how to simplify life, save yourself grief, frustration and drama if you take an honest look at the relationships in your life and decide which are worth maintaining and which should be let go.

Automate What You Can

Getting some of the daily, weekly and monthly work of your life into an automated system can help simplify life and relieve stress in two ways: You don’t have to take time to do the work and you don’t have to clutter your mind by remembering to do the work. Making little changes that take steps out of your daily routine like setting up automatic timers to water your plants or turn off your lights, signing up for automatic bill pay options or getting off junk mail lists can be an easy way to simplify life. By putting in a little initial work, you can then forget about it.

Live Within Your Means

To say that money can’t buy happiness is cliché. We all pretty much know this, and research has supported it as well. Many people carry large amounts of debt, leading to worries about making payments, credit scores and bill collectors. The key to avoiding this type of financial stress is simple, but not always easy: Live within your means. This can be a difficult change at first, but one that will bring great rewards, and can significantly lower your stress levels if you’re not living within your means already.

Learn To Say No

Many of us don’t treat our time as valuable; we over-commit to requests from work, school, and friends, leaving us with no downtime on our own. While most of us have busy schedules these days, it’s important to schedule time for exercise, hobbies and other stress relievers, as well as time for our relationships. One way to find this time is to get better at saying no to time demands that aren’t serving you. After you trade some of your more taxing obligations with some more self-nurturing ones, you should see a lasting change in your stress level, and find yourself living a more simplified life.

4 Ways To Simplify Your Life Right Now

“Truth is ever to be found in the simplicity, and not in the multiplicity and confusion of things.” — Isaac Newton

In a period of information overload, there’s never been a better time to simplify life.

The raging struggle of modern existence can lead to inner turmoil if we’re unaware.

The key to living an inspired life is to simplify it. To gain clarity on what’s important, let go of unnecessary conditions and tune into what you value most. Most people chase material possessions believing they’ll be happy, only to realise it makes matters worse.

The more clutter in your life, the less capable you are of knowing what’s important since you are distracted by insignificant issues that vie for your attention. Naturally, you react to what is taking place before you instead of what’s essential.

Health, relationships, family and living my purpose are central aspects to my life nowadays. It’s taken an entire lifetime to reach this point, yet it’s well worth it. That which brings you joy and happiness require the least effort.

I’m drawn to the quote by Henry David Thoreau who said: “As you simplify your life, the laws of the universe will be simpler; solitude will not be solitude, poverty will not be poverty, nor weakness weakness.”

The Law of Least Effort functions according to the principle of simplicity. Given that we evolve from nature, it makes sense to adopt this way of being.

The following are four points to simply life right away. Apply them gradually and don’t be discouraged if you don’t see results at first. It requires patience and persistence for something of value to yield results.

Akin to a plant, the initial stages begin with the seed sprouting beneath the soil, invisible to the naked eye. Yet, with nurturing and time, it grows into a healthy plant and so too with your habits.

1. Surround Yourself With Remarkable People

“Our life is frittered away by detail… simplify, simplify.” — Henry David Thoreau

These include: friends, family, romantic partners, co-workers and those who offer you support and encouragement. Significant people are those who encourage your personal growth.

They are your humble ambassadors in times of need and won’t desert you through crisis. The company of such people leads to simplified living because your needs are met through close connections.

Great people inspire and strengthen you, not drain your energy. Energy vampires rob you of your vital force, so be aware them. They want to gain something and are unwilling to offer anything in return. Steer away from them, they will deprive you of your long term happiness.

2. Let Go Of What No Longer Serves You

“Truth is something which can’t be told in a few words. Those who simplify the universe only reduce the expansion of its meaning.” — Anais Nin

Letting go of what no longer serves you is essential to simplifying life because you free yourself from what consumes your energy. This includes: people, things, places, relationships, travel, behaviours or habits. If it doesn’t bring you joy, remove it from your life or distance yourself from it.

However, don’t fill the void with something else, simply allow it time to recede, so you have less to focus on. In doing so, you free up mental and emotional resources for more important matters.

Create a space for something wonderful to appear and trust it will take its place, since Nature abhors a vacuum.

3. Focus On Experiences, Not Things

“I think people want very much to simplify their lives enough so that they can control the things that make it possible to sleep at night.” — Twyla Tharp

The lie that happiness comes from material possessions is one many fall victim to. Sure, it might offer happiness for a short while, although once it wears off you yearn for something more.

Newspapers are filled with stories of people who inherit millions of dollars, only to find themselves more miserable than before.

This is not due to money per se, rather the stress associated with managing large sums of money. Accumulating material objects amplifies insecurities already present in a person.

Focus on experiences and surrounding yourself with friends and loved ones. Travel more, perform random acts of kindness, do charity work if that appeals to you.

The key is to find fulfilling experiences that embody who you are. For example, I enjoy creative hobbies and feel lively when engaged in these endeavours. Find time for these activities and you’ll be happy and content.

4. Be In Tune With Your Nature

“Reduce the complexity of life by eliminating the needless wants of life, and the labors of life reduce themselves.” — Edwin Way Teale

When you’re in tune with your nature, you connect to your source. I’m not talking about religion or spirituality, yet something greater. You are the expression of universal energy in all her glory.

Everything from your thoughts to your body reflects the infinite powers of universal intelligence. Stay connected to your source and you’ll feel the aliveness of the universe permeate through you.

How do you stay in tune with your nature? Here are steps to consider:

  • Be kind and compassionate to yourself and others
  • Think empowering thoughts
  • Live a healthy life
  • Eat whole food close to its original state
  • Balance your giving and receiving
  • Create fulfilling relationships
  • Be of value in your local community
  • Respect Mother Nature
  • Be of service to others
  • Be at peace with yourself
  • Think globally, act locally

We’re on the verge of a new way of life, uniting spirit and matter to become conscious creators of our destiny. The old paradigm is gradually falling away to make way for the new.

This isn’t about a new world order, for it’s much simpler than that. It’s an expanding of consciousness and fading of primitive thinking, once dictated by our primal urges.

The changes herald a new way of perceiving the world via our sixth sense. People are harnessing their intuition to make sense of the world around them.

Be willing to upgrade your model of reality to coincide with the change. Remove preconceived ideas about how life should play out since these concepts keep you trapped in the past.

Simplifying life brings immense joy because we need little to make us happy. Economic studies in Australia by Deakin University suggest households on a gross income of $100,000k per annum are no happier at this threshold.

In the US, the figure is $75k, which confirms we needn’t accumulate vast amounts of wealth to be happy.

Mother Nature is more intelligent than we give her credit for. She provides us with the inner wisdom to make sense of our lives, yet we’re controlled by our impulses instead of focusing on what’s meaningful.

Don’t succumb to the out-there model that suggests your inner needs originate from outside circumstances.

Make a vow to simplify life and reduce your impact on the environment. Reduce your waste and non-renewable resources.

Strive to live a clean and uncluttered existence.

The reward is a conscious life imbued with simplicity, instead of what you believe will make you happy.

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