We are not talking about M&Ms (although they are tasty!), but we are discussing about the 4Ms of trading. You need to truly understand these if you want to be a consistently profitable FCPO FKLI or Forex trader. These are: Market, Method, Money and Myself. To give you an idea how these 4Ms impacts yourself and your trading performance, take a look at the diagram below:

Once you mastered them, you will definitely take your trading performance to the next level. Let's us discuss each element.

4Ms of Trading #1: Market 

To be specific, market trend. You must know what is the current market trend of the instrument you are trading. Yes, there are thousands of futures and stocks in the world and there are a lot of Forex pairs. However, they all definitely either be in one of these 3 market conditions: uptrend, downtrend or range bound. That's it. There are only 3 types of trend in this world.  

By acknowledging this, you will save a lot of hassle and time. Next, you need to identify the current market trend right now, before you execute any trades. So if you are a trend trader, you should stay aside if the market is in a range bound/sideways trend. There is no point for you to trade in tight range bound trend when you are trying to capture a strong 30pt or 300 pip move. You should only trade when the market making a series of new highs or lows.  

On the other hand, if you are a range bound trader, you should only find trading opportunities after the market had form a series of range bound movements. You have to patiently wait on the sidelines if the market is in a strong uptrend or downtrend. This is because 

Therefore, you can avoid a lot of stress and unnecessary losses if you only trade on the market trends that your trading style allowed. So have you identified the your market?   

4Ms of Trading #2: Method

The second M of trading you need to know is Method. A good trading method should be objective and leave no room for any other subjectivity or explanation. Therefore, your trading method must able to clearly answers these 3 questions:

1. When and what price to enter?,
2. What price to take profit?, and
3. What price to cut loss?

A trading method that entirely follows on news or rumors is not a good one. It is impossible for you to quantify these news into numbers which you can know where to enter, cut loss and take profit. Besides that, you cant measure whether what kind of good news is good enough to buy. 

In contrasts, by reading price, a trader can objectively identify the current market trend, and thus can plan ahead what price to enter, cut loss and take profit. Therefore, by creating a method that also involves price, a trader can avoid trading like a headless chicken and drown in huge sea of losses. We discuss these and help students create objective and profitable methods in our Intensive Futures Program. 

4Ms of Trading #3: Money / Risk

This is M is probably the most important in your trading career: Money. To be specific: money risk. Trading involves risks. So if you do not manage your risks well, risks will take over and manage your life. That is a scary thought. 

So how do you manage risk? It's easy. First you need to know how much money you are comfortable losing per trade. If risking $500 per trade causes you to lose sleep at night or stressed then you need to lower down the amount. Lower it until you reaches an amount that you say: "it's just X amount per trade, I'm comfortable risking that for potential profit."

Secondly, you need to ensure each losing trade does not burn a big hole into your trading account. What does that even mean? Example: if you have a $10,000 trading account and you are risking $1,000 per trade, you are putting a big risk to your money. It only takes 10 consecutive losing trades to burn away all your money. In contrasts, if you are risking $250 per trade on a $10,000 trading account, you are taking healthy amount of risk. Any losing trade will not have a big impact to your trading account.  

Lastly, if $250 per trade is the maximum amount you are comfortable, then set a stop loss order and consistently follow this rule. Frequently changing or delaying your cut loss will not minimize risks. You will be trading on emotions and hence your trading results will be all over the place. All these years of trading experience, having a consistent risk management helps me keep my losses small and easily recoverable. I just need a few good winning trade to achieve a good net profit.

To master 4Ms of Futures Trading : Intensive Futures Program

 

4Ms of Trading #4: Myself

Lastly, we need to understand ourselves, when it comes to trading. This is because, at the end of the day, we are the ones who will execute the trades and managing our risks. Therefore we have to be disciplined in planning our trades and trading our plans. Besides that, we also need to consistently follow our cut loss rules and always be ready to act on it if the market tells us to cut loss. No matter how good our trading strategy and cut loss rules on paper, it all means nothing if we do not have the discipline to execute it.

Furthermore, if we know we are prone to revenge trading after a losing trade, then it best for us to take a short break and come back the next day. By doing so, you are able to prevent yourself from emotional trading and losing further unnecessary money. In addition, some traders realized that they will not be able to focus and on the right trading mindset. A quick remedy for this is to have a simple meditation or mind relaxation before the market opens. By practicing self awareness, keep our emotions in check and mind fresh. Thus we are also doing a part to become a successful trader. 

Conclusion

Becoming a consistently profitable trader is not only about having an indicator that tells you what may happens next. It is also involves the 4Ms of trading: Market, Method, Money and Myself. We further cover the 4Ms of trading in detail in our Intensive Futures Program.

It can take years of screen time. Today's lesson is something that you will either learn from our Trainer David Lee or that you will learn the hard and expensive way. Given enough time, the market will always teach you every lesson you need. BUT you need to ask yourself: "Do I have enough money and mental toughness to stick around long enough to learn the hard and expensive way?"  

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