Pay The Trader

Knight Traders
Pay The Trader Session
 • Learn
1.

2. • Practice

3. • Implement
Who is a trader?
 A Forex trader is somebody who buys and sells currencies in the global foreign
exchange market. Forex traders can be full-time professional traders who
earn a living trading forex or part-time investors dabbling in forex for a side-
income.

 A foreign exchange trader spends his time reviewing the various factors that
affect national economies and forex price charts and uses that information to
determine if a currency is over-valued or under-valued relative to another
currency. If the trader finds a currency that is undervalued, he/she will buy it
with the hopes of selling it later at a better exchange rate
Types of traders
 There are 6 main types of forex traders: day traders, scalpers, swing
traders, position traders, algorithmic traders and event-driven traders.
 Day traders finish their operations in a day without overnight runs.
They also execute frequent trades on an intraday timeframe. While their
routine will not be as fast-paced as a scalper’s, day traders will similarly close
all positions before the end of the trading day, so as not to hold any
overnight..
 To be successful as a day trader, you’ll need to be ready to adapt to quick
changes in price, as well as be cognizant of techniques important to this style
of trading
 Scalpers benefit from small movements and make multiple trades throughout
the day. They are short-term traders focusing on holding positions for
timeframes as small as a few seconds to a few minutes. This involves trading
frequently throughout the day, with the intention of achieving small gains at
the busiest (most liquid) times.
 These live life in the fast lane. Continuously faced with processing new
information and reacting to rapid market changes, you’ll ideally be
observant, instinctive and quick-witted – but stoical under pressure.
 Swing traders hold on to their trades for days or weeks, and they focus on the
charts or take up forex market analysis for a few hours a day to make their
trading decisions. Swing traders hold onto trades for longer than a single day, and
up to perhaps a couple of weeks. Over this short timeframe, swing traders will
typically favor technical analysis over fundamentals, although they should still be
attuned to the news events that can trigger volatility.
 This trader type is less frantic than scalpers and day traders, so extreme
alertness is less of a requirement, but you’ll still requires a strong eye for detail
when it comes to chart analysis

 Position traders hold trades for longer periods of time, from several weeks to
years. As the longest holding period among trading styles, position traders are
less interested in an asset’s short-term price fluctuations and more concerned,
naturally, with the performance over more sustained timeframes.
 As a forex position trader, you will require patience as your money will often be
locked up for long time periods. Particularly with longer-term trades, a thorough
knowledge of fundamental factors is beneficial, so advanced analytical skills will
serve you well.
 Algorithmic traders rely on computer programs to place trades for them at
the best possible prices. Traders can use defined instructions, or high-
frequency trading algorithms, to either code the programs themselves or
purchase existing products.
 This type of trading suits people who are comfortable with using technology
and want to apply it in their forex career. Given the nature of the programs,
algorithmic traders will also have a keen eye for the technical charts.
 Event-driven traders look to fundamental analysis over technical charts to
inform their decisions. They’ll seek to benefit from spikes caused by political
or economic events, such as Non-Farm Payroll data, GDP, employment figures
and elections.
 This type of trading will suit a person who likes to keep up with world news,
and who will understand how events can impact markets. Inquisitive, curious
and forward-thinking, you will be skilled at processing new information and
predicting how global and localized events may play out.
The Pillars Of Trading.
 Risk Management. Proper risk-management strategy is necessary to protect traders
from catastrophic losses. This means determining your risk appetite, knowing your risk-
reward ratio on every trade, and taking steps to protect yourself from a long-tail risk or
black swan event.
 Edge. A trading edge is a technique, observation or approach that creates a cash
advantage over other market players. It doesn't have to be elaborate to fulfill its
purpose; anything that adds a few points to the winning side of an equation builds an
edge that lasts a lifetime.
 Discipline. In more technical terms, proper discipline involves having and sticking to a
trading plan. Create a schedule for your trading and know what signals will help to
decide to enter or exit a trade. Ensure that you apply proper risk management by
sticking to your stop loss and take profit orders.
 Consistency. Trading consistently means approaching each trade in a logical, well-
prepared, and decisive manner. Striving for consistency should be the main objective,
especially for novice traders. Trading profitably is a matter of probabilities.
An Egoistic trader
1. After a big loss Doesn't want to give up, Thinks tomorrow he will beat the
market.
2. Trades without a plan.
3.Wants to be always right.
4. Chasing the get-rich-quick mentality.
5. Go hard or go home mentality. That may work sometimes but sooner or later,
you'll have no home.
6. At the end of the day ,trading is a game of probability; nothing is 100%.
An egoistic trader doesn't accept this uncertainty.
7. No risk and trade management.
A Disciplined trader
 A trader's psychology is important because it directly impacts the decision-making
process, performance, and overall success of the individual or entity in the financial
markets.
You know that you are a disciplined trader when you understand and
implement the following:

 Emotions Influence Decision-Making: Trading psychology recognizes that emotional

biases can influence your decision-making process. Understanding and managing these
emotions are essential for you to make rational and objective trading decisions.

 Discipline and Consistency: In following your trading plan, risk management strategy,
and sticking to your predetermined rules. This will help you develop and maintain the
necessary discipline to avoid impulsive actions driven by emotions.
 Managing Risk: Effective risk management is a critical aspect of trading.
Trading psychology enables you to manage risk by controlling emotions,
setting appropriate stop-loss levels, and maintaining proper position sizing. By
managing risk effectively, you will protect your capital and enhance long-term
profitability.
 Handling Losses and Drawdowns: Losses are an inevitable part of trading.
Trading psychology assists you in dealing with losses and drawdowns by
minimizing the emotional impact and preventing impulsive actions driven by
the fear of further losses. It encourages you to learn from losses and maintain
the appropriate investment time horizon.

 Long-Term Sustainability: Trading psychology fosters a mindset focused on

consistency. It helps you develop realistic expectations, avoid impulsive
behavior, and maintain a balanced approach to trading. This sustainable
mindset is crucial for your long-term success and avoiding pitfalls of excessive
risk-taking.
Key Points
 Trading takes discipline & self control. You cannot be a successful trader with
an ego. The important component to a great trader: admitting when you are
wrong/ taking a loss . Another: controlling impulses and emotions .Drop ego
and emotions.
 The market will bring even the most successful trader to their knees with a
big ego. Stay humble to thrive.
 Successful traders don't have egos. At some point, every trader has to decide
if they want to be right or profitable .When I see a trader with an ego I know
they haven't decided to be profitable yet.
 Show me a trader who has trouble controlling their losses, and I'll show you a
trader with an ego problem.
 The objective isn't to understand every move in the market. It's to place
probabilistic bets that have asymmetric risk-reward.
 Your job isn't to make money. Your job is to follow your plan. Making money is
a by-product of following your plan. However, if your plan isn't based on an
edge that's proven over time, you'll lose money anyway. A good trading plan
defines when you should get into the market.
 A great trading plan defines when you should stay out. The first is learned
through education. The second is instilled through experience.