5 Proven Steps To Doing Really Well In Trading

Have you ever wondered what it takes to do really well in trading or what necessary steps you need to do? I keep receiving these questions quite often. So let me give you my five proven steps. I've been doing really well with them in my own trading, so I believe they can help you too.

Step #1: Questions 
You may or may not like it, but successful trading is about the ability to come up with new, fresh ideas. Fortunately, it's not as difficult as it sounds. All you need to do is to keep asking this question: "What happens if... ?" What happens if I buy when the RSI indicator is overbought instead of oversold? What happens if I start moving my stop-loss according to my moving average? By asking the "What happens if... ?" question constantly, you start to move forward really fast and I can guarantee you some of your ideas will be sooner or later really big winners.

Step #2: Robustness testing 
Most strategies are crap. That's the fact. But how do you know which ones aren't? You can always find it out through extensive robustness testing. What does it mean? In my case it mainly means three things: A) A good strategy can easily adjust to changing market conditions. An extensive walk-forward testing is needed at this stage. B) A good strategy performs reasonably well in other markets. C) A good strategy has been developed only on a part of all your historical data and performs well on the rest. To be very honest with you, about 95% of all my strategies never pass my robustness testing criteria, but when they do, it's time to move to the next step.

Step #3: Portfolio 
One strategy will help you learn, but a portfolio of strategies will help you grow. You don't need to have a big portfolio at the beginning, but even three strategies are much better than just a single one. Remember, if you want a smooth equity and a steady income from your trading as soon as possible, the only way is through diversification and portfolio. Very few people are aware of this and even fewer spend significant time by modeling different portfolios. I personally spend a lot of time trying to find out the best way to combine my strategies together to make a really good portfolio.

Step #4: Position sizing 
Let me ask you a question: Do you want to make it big or do you want to stay small? Because if you want to make it really big, then you need to start seriously thinking about position sizing. This topic can be pretty complex, but it can be also extremely rewarding. So, where do you start? I highly suggest reading Van Tharp's book "The Definitive Guide to Position Sizing." You will learn a lot. Personally, it has moved my trading to a whole new level.

Step #5: Persistence 
Listen, it can be done. It doesn't matter what education you have, how old you are, or even how confident you feel at this moment. I've seen many people succeed. I've seen traders making it from zero to quite a nice living, and that's why I believe that you can do it too. Yes, it does take some time, effort and learning, but once you're finally there, it's all worth it. So, stay persistent and mainly never give up, and that's really all.

Happy Trading!

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Nonfarm Payrolls Preview: NFP can't save the not-so-mighty dollar

Another week is almost over, with the EUR/USD pair having flirted with 1.1900 for the first time in over two years and the greenback mixed across the board, but still weak. The American currency only gained these last few days against currencies that eased on self-weakness, as the negative sentiment towards the greenback remains intact. If anything, chances of a rate hike in the US have decreased further on dovish comments from Fed's officers, while political jitters keep coming as President Trump seems unable to focus beyond the Obamacare repeal bill and North Korea, still struggling to form a reliable team around him.

Traders have one more milestone to surpass this week that is, the US monthly employment report, to be release this Friday. The country is expected to have added 183K new jobs in July, after June's positive surprise of 222K. The 4.4% unemployment rate is still expected to drop to 4.3%, while average hourly earnings are expected to be up 0.3% monthly basis, and by 2.4% on the annualized figure, this last, slightly below previous 2.5%.

The ADP survey released on Wednesday showed that the private sectors added 178,000 new jobs last month, just below forecasts for of 185,000, while June reading was upwardly revised to 191,000 from an initial estimate of 158,000, neutralizing the slightly negative headline, and somehow anticipating a solid US employment report, but would it matter?

There's has been long since the US Nonfarm Payroll report triggered interesting market movements, except in the case of big disappointments, quite logical given the ongoing distrust in dollar's future. And that will be the case for this Friday: the NFP report will only be relevant if it's a big miss.

All components will be relevant, but jobs' creation and wages will take center stage, as slow wage growth will maintain inflation subdued, and with poor inflation, there are no rate hikes in the Fed's book.

EUR/USD levels to watch

There is one reason why a strong report can trigger a downward move in the EUR/USD pair: the market can take it as a reason to take profits out of the table ahead of the weekend. Yet after the dust settles, probably early next week, the common currency could resume its advance.

The EUR/USD pair stands a handful of pips below its yearly high, up for a third consecutive week, and pretty much advancing since mid April, resulting in overbought conditions in daily and weekly charts, another reason why a pullback can't be dismissed. At the same time, there´s no sign of upward exhaustion, which means that the rally can extend on a lousy report.

The weekly chart shows that the price is now above its 200 SMA, the first time since July 2014, while technical indicators maintain their upward slopes within overbought territory. In the daily chart, the RSI indicator keeps heading higher around 75, while the Momentum indicator consolidates near its recent record highs, as all of the moving averages head north far below the current level, all of which supports more gains ahead.

Beyond 1.1910, the next resistance comes at 1.1950, followed by the critical 1.2000 threshold, where the market can also rush to take profits out of the table. To the downside, 1.1830 is the immediate support, with a more relevant one at 1.1785. Below this last, the corrective movement can extend down to 1.1715, August 2015 high, without affecting the dominant bullish trend.