3 Steps to Better Trading

Most new traders approach the market in the wrong way. They some how get the idea that being a trader is all about finding the right method. So they go on an expedition in search for that perfect combination of indicators, and it rarely ends well.

The truth is becoming a trader has very little to do with the system you use.

I have no real trading system. I have a trading method which is the composition of a few simple concepts. I believe a system sets out rules and limitations. A method, on the other hand, gives you the basic tools but the implementation is up to you.

The problem with trading systems is they are too rigid for a changing market so they do not work. The problem with a trading method is that you have to have the right mindset to properly implement the basic concepts of the method.

So how do you develop the right mindset?

Well I’ll tell you how I did it. I started off small. Instead of complicating trading I simplified it. From there, I was able to learn how to become consistently profitable. Here’s how I did it;

1. I Picked A Timeframe

The first step was to pick a single time frame. By this time, I had been trading Forex for about 6 months so I knew my way around the markets. I quickly learned that smaller time frame charts are hard to analyse because they are erratic and prone to random movements.

I decided to jump up to the 4 hour charts and I haven’t looked back since. I strongly believe that every trader should trade on hourly charts or above.

The point is not so much what timeframe I traded it’s the fact that I picked a single time frame, and stuck to it. To me it was all about simplifying trading so I could more efficiently learn to trade.

So looking at a single timeframe had several benefits;

  1. Allowed me to concentrate on learning one time frame, therefore removing a lot of the confusion you can have when juggling multiple time frames.
  2. Gave me less charts to look at and allowed me to concentrate more on analysing a single currency pair.
  3. Stopped me from over analysing my pair. Looking at too many time frames gave me conflicting signals.

Overall having a single time frame keeps it simple.

2. I Picked a Pair

This was exactly the same concept as picking a single timeframe. It just simplified my trading concentrating only on a single pair. When you’re a professional trader making tons of profit you can trade as many pairs as you want. However as you’re learning it’s best to concentrate on one pair. Here’s why:

  1. Each Pair is Unique: Trading a single pair allows you to learn how that pair breaths. You will know a lot about a single pair instead of knowing a little about 5 pairs.
  2. Speeds up Learning: Trading a single pair with a single time frame gives you only 1 chart to look at. This allows you to concentrate all your analysis on a single pair.

The idea behind picking a single pair to trade is a simple one. It is all about simplifying trading so you can learn to become a consistently profitable trader.

3. I Set My Targets

This was absolutely essential. I do not mean I set my targets on a per trade basis. I mean I set myself weekly and monthly targets. I have discussed in this previous article how important discipline is. As a newbie, what I needed above all else was discipline and the way I became disciplined was by setting targets.

I looked at my method and I decided it was capable of generating around 50-70 pips per trade, giving me on average two trades per week. So I set my weekly pip goal to 100 pips. When I meet my goal I stopped trading for the week.

Why was this so important?

It was important because

  1. It gave my trading structure and allowed me to plan ahead, long term.
  2. It gave me a goal to aim for instead of trading aimlessly.

That’s not all it did though. I fought against the biggest psychological pitfalls, which I discussed previously in this article, such as the tendency to overtrade and being undisciplined.

The urge to overtrade is one of the biggest problems a newbie trader faces. If you have a set target once you reach it you can relax, and take it easy for the rest of the week. It removes that pressure traders usually have to make more and more pips. It also keeps you disciplined because it gives you a structured plan that you can stick to.

Summary

If you follow these 3 steps I can guarantee you that your trading will improve immensely. It will take time but if you can stick to it you will begin to notice improvements. If you want to succeed you need to simplify your trading and you need to become disciplined. Chaos and complexity will get you nowhere.

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47 thoughts on “3 Steps to Better Trading
  1. Yes, great! I do the same thing:

    1. I only trade GBPUSD.
    2. Only daily and 1h charts for me for a trade.

    Now all I need to do is set that weekly target. I aim to make sound trades but I don’t have a pre-determined number. I will do that. Thanks!

  2. Great stuff Nick. I need to hear this over and over again. I’m a self confessed over trader.
    Working on it, need to be satisfied with a pip target when hit.Sticking to demo until I get there.
    Have made some progress as I look at the 1H and 4H charts now.:-)

  3. nice one Nick, i think it was a godsend that i found your site before i started trading real money. now that I’ve opened i live acc. i feel with your constant advice and the all the other help from members i might acually have half a chance.

    great site

  4. Man Nick kudos man, kudos

    I have faced the same problems may be every new trader faces the same problem.

    I have followed the same priciple like one time frame and one pair but at my starting times i have lost thousands of dollars because our mind is like monkey it swings from one pair to other pair.

    Again brought some money re invested then without any clarity of the mind looked for others signals. There too I lost many dollars.

    I like your word man “I fought against the biggest psychological pitfalls” if one can control his emotions that’s all everything is done.

    Nick I have just joined here .I was just confused what to post first. Nice timing to share my experiences.

    Thank you.

  5. Ooops, just what I need after a desperate day with two absolutely needless losses of -53 pips, owed to headless action (because I missed some good ones). The loss was on a demo but my anger was real.
    I was on a very good way and suddenly I lost discipline.
    Well, I will sleep it over now and tomorrow start with the NickB method again.
    Thank you, it helped!

  6. This is exactly the kind of shift I made in my attitude when I had traded for 6 months and lost more than I made. My trading results reverted from that point on straight away.

    Good advice.

  7. Thanks for the winning advice Nick

    I was a over-confident noob when I first set out. Thinking I could pick up a basic system and leverage my way to a million dollars. But after reading and learning from all the advice given I have slowed down to get my priorities straight

    Keep it coming Nick (and others), it’s always appreciated on this end

    Have a great day

  8. Thanks for the blog comment. However, I don`t really agree. Rather than looking at 1 pair only and 1 timeframe, I prefer to use the Forex Strength Meter in order to see the real relative strenghts of currencies…as Tom Yeomans said : not pairs trend, currencies do. Then you trade the strongest versus the weakest pair. This then can be very simple and not a ” system “, but rather a basic method.
    =============
    On the other hand there is of course a great educational truth in Nick´s comment, as traders do tend to pick too many timeframes, choose way too small timeframes and overtrade. So there is a psychological truth in that and I acknowledge it with respect. Good luck !

  9. Spot on Nick… I have followed the market for years but haven’t jumped in because I know on of my faults is pulling the trigger to take the small loss. I have been working on this and I am gaining more confidence with all of the insight from the traders on your blog and of course yourself… I was also guilty of tying to find that system that would do the work for me and now recognize that I must be the system or method and become a real trader. Not just a robot trying to catch a pip off the coat tails of someone else.. THANKS AGAIN…

  10. Billy B says:
    January 8th 10:50pm
    Larry as explained my problem exactly the same as is,
    it is spot on Thankyou Nick

  11. Nice reminder of the major pitfalls that most of us new traders fall into .This time,I’ll never 4get the lessons.
    Many thanks to you Nick! for all you’re doing!

  12. I’ve been trading a few years now ,quite ordinary results , I think now I will start concentrating on the 1 hr. chart as you suggest, and make decisions based on this higher time frame. Thanks for your perspective.

  13. Thanks very much I have been so confused with all the methods found in you tube and other places just cant seem to put it all together, your helping, I like to learn
    But I have this fear about actually trading GO FIGURE.

    Anyway keep it coming

    Many thanks.

    jc

  14. Great job you are doing!

    I don’t known how much thanks I will render to you.

    Infact, all the things I learned from you are great,
    compare to the money I have wasted so far from the so called
    guru over there learning a system that does not work.

    Your method has made me tons of money on this paper trading.
    Now I am ready to go live trading through your method I learned
    so far.

    I say thanks a million and keep doing good job.

    Izzi2

  15. Thanks.
    These words are indeed some of the crystals of the ones who has walked the path.
    It took me the effort and financial cost to discover these crystals too.

  16. i am also a victim of complex trading,but i want some body to tell me,i have a small account,which i know using long hour might not be ok.so nick i want your comment on this issui i raised

  17. Many thanks Nick. You have changed my whole way of looking at the FOREX market. Now, after reading some of your teachings (candles etc.), I’m learning more and feeling confident again. You have a unique method of inspiring people, I believe, and myself in particular. So I will continue following you and this website and hope to improve my trading ability much further.

  18. Very wise and beneficial however its the same one as last time please send more on actual trades taken and your thoughts before and during and after the trade setups, executions ect, ect…

    thank you.

  19. Sometimes and almost all the time I got deviated from the main purpose of my forex trading that is building profit.

    Greed is something that lure me to the Dark side, and also I always forget to set my target and exit plan.

    Thank you Nick for Sharing your simple steps to better trading.

  20. Important thing is know when to enter the market and when should get out.. Lots to learn..

  21. Good Advise Nick,

    Why not Trade only one time frame but also observe the
    movements and direction of one time frame up and one
    timeframe down charts.

    Say trade the 4 Hourly Chart but also have the Daily and
    the 15 minutes charts open to observe what the Market is
    doing?

    What do you suggest Nick?

  22. Thx Nick,

    have taken what you said to heart…lately been transfering larger times frame studies to low time frames…now I’m going see about making the 1 hr my signal area utilizing the 4hr and up S/R lines..waiting to see your usdcad posts…

    Darrell

    1. @darrell newton:

      USD/CAD? I don’t trade USD/CAD, I think you might be referring to Metalhawks blog.

  23. thanks for such a nice and concrete sharing …you have simply explained the ..success formula ….to keep the things ,…SIMPLE . :)
    i appreciate your stuff.
    regards
    azee

  24. Thank God I have found this site. Thank you Nick… I am new in Forex trading and to tell you guys, honestly I am confused with everything! I just have one question which currency pair is the best pair to trade based from your experiences? Thanks in advance!

  25. It looks like harvesting. Every single pair has its own amount of identified by system movement per week. It’s the harvest. If you mastered your skills you just can harvest simultanously few pairs. At the same time if you mastered your view you can harvest even through few systems? Then it’s probably important to remember about risks. And I wonder will it be the same result if you trading right by 2 systems in the real money. I mean if you make per week 300 pips, but another week losses will be more too. So you should kinda reduce value of 1 pip?