{"id":98239,"date":"2016-11-23T07:40:06","date_gmt":"2016-11-23T12:40:06","guid":{"rendered":"http:\/\/countingpips.com\/?p=98239"},"modified":"2016-11-16T07:40:32","modified_gmt":"2016-11-16T12:40:32","slug":"%e2%80%8blearn-how-the-4-cycles-of-a-setup-remove-fear-during-trades","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/11\/%e2%80%8blearn-how-the-4-cycles-of-a-setup-remove-fear-during-trades\/","title":{"rendered":"\u200bLearn how the 4 cycles of a setup remove fear during trades"},"content":{"rendered":"<div id=\"inves-3601572604\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">November 23, 2016<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><b>By Admiral Markets<\/b><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/okDFPpvE12ZZ4ZKMBUeM0IxNYUEIdnRWlU7pTE02ETrU1WzLKHb1v9Yw6TLu5tHvPY3TzCrcerbuFDb03Yn5RRRFjVK7qBoz5Q0jc2RxGFdsJ0ypGWI9F1MFJcFCvJgw-nb5yU-I\" alt=\"pablo (5)sdsee.png\" \/><\/p>\n<p>Dear Traders,<\/p>\n<p>All traders are familiar with the feeling of fear when trading.<\/p>\n<p>This intense feeling often overwhelms the mind and blocks our logic&#8230;<\/p>\n<p>\u2026and sends you down a spiral of bad decisions, making you freeze, panic, break rules and more.<\/p>\n<p>Everyone has their own weaknesses:<\/p><div id=\"inves-2654947597\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<ul>\n<li>some fear when entering a trade or when exiting a setup<\/li>\n<li>some are anxious when price reaches their target<\/li>\n<li>others feel uncomfortable when price nears their stop-loss, for instance.<\/li>\n<\/ul>\n<p>Both Zero to Hero course and today&#8217;s article explain how I managed to reduce and then remove fear during a live trade setup.<\/p>\n<p>The good news is that all traders can improve it.<\/p>\n<p>They just need to understand the &#8216;life cycle&#8217; of a trade setup.<\/p>\n<p><a href=\"http:\/\/www.admiralmarkets.com\/education\/zero-to-hero\" target=\"_blank\"><img decoding=\"async\" src=\"http:\/\/fxmedia.s3.amazonaws.com\/cta\/images\/zero-to-hero-2.png\" alt=\"Zero to Hero Trading Course\" \/><\/a><\/p>\n<h2>The trading life cycle explained<\/h2>\n<p>The life cycle of an open trade setup has four parts:<\/p>\n<ol>\n<li>the early start of a setup<\/li>\n<li>reducing and removing the risk<\/li>\n<li>giving space for a big win<\/li>\n<li>locking in profit.<\/li>\n<\/ol>\n<p>In my view, each cycle (or phase) of the open setup needs to be treated with a different approach.<\/p>\n<p>Sometimes using a tight trail stop is critical&#8230;<\/p>\n<p>&#8230;other times having more patient is vital.<\/p>\n<p>Knowing when to apply the right<br \/>\n<em>approach <\/em>at the right <em>time <\/em>is possible.<\/p>\n<p>However, traders should recognise the life cycle of a setup and work diligently on reducing their fear.<\/p>\n<p>Some traders prefer<br \/>\n<em>passive<\/em> trade management, which means they do not change any parameters of the setup once the trade has been entered.<\/p>\n<p>This article will prove useful even for traders like these.<\/p>\n<p>It will help you understand the market movements with clarity and familiarise you with the passive trade management rules.<\/p>\n<h2>The early start of a setup<\/h2>\n<p>Some traders encounter fear as soon as they enter a setup.<\/p>\n<p>It is the best practice<br \/>\n<em>not <\/em>to expect much from the start of your trade.<\/p>\n<p>It&#8217;s great news if the trade does go your way immediately\u2026<\/p>\n<p>&#8230;but it is important to realise that a setup usually takes time to develop.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/vOXzsUUArQpdOqb-HX1skVPyLqG9kgBwtYRs6IIyTnIzBz01Cp_BLacH5yrGVRHz_CZe10Q7WY_dmNu5TGDpwc3YIAhnJa2FbN8HhUbmuvxGmH1V-c5kZDe1qYssaxCFjS65p4Tq\" alt=\"audusd.png\" \/><\/p>\n<p>That is why I must allow myself to be patient (when just entering) and give the trade space:<\/p>\n<ol>\n<li>once I pull the trigger and enter a trade setup, I need to be confident enough to stay in a trade at least for a little while<\/li>\n<li>otherwise, a loss or small win will not be worth entering in the first place.<\/li>\n<\/ol>\n<p>You might be wondering how much patience and space do I show at the start?<\/p>\n<p>Basically, I monitor and count candlesticks.<\/p>\n<p>At the minimum, I wait 5 to 6 candles of the same time frame or 1 higher before making a trade management decision.<\/p>\n<p>At the maximum, I usually do not wait longer than 24 candles (1 day of Forex trading with 24 hourly candles).<\/p>\n<h2>Reducing and removing risk<\/h2>\n<p>Eventually, the time comes to move on.<\/p>\n<p>After that, I demand more from the setup and show less patience.<\/p>\n<p>Over time, a setup should develop into the expected direction\u2026<\/p>\n<p>&#8230;otherwise, the chances of a win do start to decline.<\/p>\n<p>Here is why:<\/p>\n<ol>\n<li>the conditions of the original setup are no longer the same<\/li>\n<li>new information is available with each candle<\/li>\n<li>the dynamics of the chart slowly change and I need to reassess whether the setup is still desired.<\/li>\n<\/ol>\n<p>Closing a trade at the very start of a setup is often due to nervousness and lack of preparation<br \/>\n<em>before <\/em>the setup occurs.<\/p>\n<p>But at one point, I deliberately become impatient and more demanding of the setup.<\/p>\n<h2><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/4E5C4eubJ7swgLW538c0FMB42ETv9FOy2VZiCLb8kdODaxSVbpDiDtoWTnSw2bEWlkl4yxiA6Eo5Mzb9D5c8Pfw6zXQEUpxgz8GC-geg15i06KrGZozZ8LsXTqCHXHvea_6BG_WE\" alt=\"audusd 2.png\" \/><\/h2>\n<p>Remember this nugget of wisdom:<\/p>\n<p>\u2026a trader who keeps<br \/>\n<em>hoping <\/em>that the market will turn and move in their direction is often applying wishful thinking.<\/p>\n<p>Eventually managing the trade is a valid option (although not a must) if a trade is just not going our way.<\/p>\n<p>Of course, if the trade is going our way, then it is also a good moment to manage the trade.<\/p>\n<p>Here is how I apply a trade management decision:<\/p>\n<ol>\n<li>when the trade is developing into my direction<br \/>\n\u2192 I reduce the risk: move trail stop-loss close to or at breakeven<\/li>\n<li>when the trade is not going well but there is place for a trail stop loss<br \/>\n\u2192 I reduce the loss: move trail stop-loss close to or at entry)<\/li>\n<li>When the trade is not going well and there is no spot for trail<br \/>\n\u2192 I take a market exit: immediate exit of the trade.<\/li>\n<\/ol>\n<p>The advantage of a trail is simple \u2013 the trade still has a chance to develop.<\/p>\n<h2>Giving space for a bigger win<\/h2>\n<p>Once the risk has been reduced, I become more patient again.<\/p>\n<p>This is the point where I give the trade more time and space \u2013 simply because I want to give the set up a chance to develop into a bigger win.<\/p>\n<p>Many traders become very conservative in their approach towards risk when a trade is in profit.<\/p>\n<p>Cutting wins short, however, and letting losses run is not what a trader wants.<\/p>\n<p>In fact, it is quite the opposite\u2026<\/p>\n<p>&#8230;and the common advice says to cut the losses short and let the winners run.<\/p>\n<p>How do traders let their winners run?<\/p>\n<p>By giving some time and space for a trade to develop once the risk has been reduced.<\/p>\n<p>For instance, I would not mind waiting for a<br \/>\n<a href=\"http:\/\/www.admiralmarkets.com\/education\/articles\/forex-analysis\/most-frequently-used-forex-chart-patterns\">chart pattern<\/a> correction like a bear flag or bull flag to complete before thinking about taking profit.<\/p>\n<h2><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/1x2XCiIfknPK53lrg4IgdGl0kPHX2w7EOEG_bTqFb4m6AnrIyCyrxeOQgvpbC8UYle7gr20c-NA3i3KtoP2gfdU-TuSfVtW-a-PLpLLY_vx5DV5cDlRAksDU1BlRKDiBJAJVdBa8\" alt=\"audusd 3.png\" \/><\/h2>\n<h2>Locking in profit<\/h2>\n<p>This patience, of course, does not last forever.<\/p>\n<p>Eventually, the trend will bend or end\u2026<\/p>\n<p>\u2026and I do not want to stay in a trade as the reversal develops.<\/p>\n<p>Letting the trade develop in a decent or big win is important, but there is a point in time where I must lock in profits.<\/p>\n<p>This mostly happens when (multiple) divergence appears and price is reaching a strong support or resistance zone where confluence is present.<\/p>\n<p>In such a case, there is no gain if my<br \/>\n<em>paper profits<\/em> slip away, so I react by:<\/p>\n<ol>\n<li>closing the trade via a take profit<\/li>\n<li>using a tighter and tighter trail stop-loss<\/li>\n<li>applying a mixture of 2 and 3.<\/li>\n<\/ol>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/SaylzrrI-2k\" width=\"640\" height=\"360\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><br \/>\n<\/iframe><\/p>\n<p>Interested in more info?<\/p>\n<p>You are most welcome to try our latest<br \/>\n<a href=\"http:\/\/www.admiralmarkets.com\/education\/zero-to-hero?id=zth-subheading\">Zero to Hero<\/a> course and the <a href=\"http:\/\/www.admiralmarkets.com\/trading-platforms\/metatrader4-se\/\">MT4 Supreme Edition<\/a>, with 100+ plus extra features such as mini charts, which make multi timeframe analysis much easier.<\/p>\n<p>Cheers and safe trading,<\/p>\n<p>Chris<\/p>\n<p><a href=\"http:\/\/www.admiralmarkets.com\/education\/zero-to-hero\" target=\"_blank\"><img decoding=\"async\" src=\"http:\/\/fxmedia.s3.amazonaws.com\/cta\/images\/zero-to-hero-1.png\" alt=\"Zero to Hero Trading Course\" \/><\/a><br \/>\n<b>Article by Admiral Markets<\/b><\/p>\n<p>Source: <a href=\"http:\/\/www.admiralmarkets.com\/analytics\/traders-blog\/learn-how-the-4-cycles-of-a-setup-remove-fear-during-trades\" target=\"_blank\">Learn how the 4 cycles of a setup remove fear during trades<\/a><\/p>\n<hr style=\"border: 1px dotted #eee;\" \/>\n<p><a href=\"http:\/\/www.admiralmarkets.com\/\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/countingpips.com\/articles-analysis\/wp-content\/uploads\/2016\/03\/AdmiralMarkets-sig-1.png\" width=\"141\" height=\"87\" align=\"left\" \/><\/a><\/p>\n<p style=\"text-align: justify;\">Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Admiral Markets Dear Traders, All traders are familiar with the feeling of fear when trading. This intense feeling often overwhelms the mind and blocks our logic&#8230; \u2026and sends you down a spiral of bad decisions, making you freeze, panic, break rules and more. Everyone has their own weaknesses: some fear when entering a trade [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-98239","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=98239"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98239\/revisions"}],"predecessor-version":[{"id":98242,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98239\/revisions\/98242"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=98239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=98239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=98239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}