Module 7 Trading Skills required to become a good DIAD Trader. By now you will have downloaded the Double in a Day EA, gone through the course once and you may have already started trading.
You may have realised that The Double in a Day strategy requires slightly different skill sets to conventional trading. There are a few things that Double in a Day Forex traders will find different to normal forex trading. Let’s look at some of the trader behaviour changes often required and trading tips.
Be open to change
If you are going the evaluate and judge the Double in a Day technique based your own past beliefs of Forex trading you are not going to be open for change and you will continuously be uncomfortable about the approach and try to steer it back to what you believe will work.
Let go of the pressure to find the right direction
One of the pressures of Forex trading is that there is always a drive to be right and to make perfect decisions. This is an almost impossible task in this random and volatile market. Those that have a high success rate, generally use no or very big stops and high risks. Many other traders go into a “paralysis from analysis” state and don’t trade for the fear of being wrong.
One of the aims of the Double in a Day Forex trading technique is to create great risk/reward ratios. Risk reward ratios of between 1:8 and 1:16 are not uncommon when using the Double in a Day technique. For the 1:16 risk/return ratio it means that you can have 15 losses and only 1 success in like transactions and still break-even. Surely that must create some form of relief to many traders direction and success orientated traders.
Learn to be a loser
To follow on from the discussion above, it is likely that you may have more losers than winners when trading the Double in a Day technique. Some people cannot deal with having losers very well psychologically. You need to get over it and reprogram your mind to accept losses.
It is important to not be overly selective when testing the Double in a Day strategy – rather over trade and enter many more trades than you normally do. During the development phase some testers were running 28 versions of the Double in a Day strategy at the same time.
Learn a new Forex trading skill.
When we start trading Forex 90% of the training is on how to get the entry and direction right. When trading the Double in a Day technique direction is not number one anymore. THE ABILITY TO IDENTIFY POTENTIAL VOLATILE MOVES is number one. What is the use of getting the direction 100% right and the trend is all of 15 pips. You need volatility. VOLATILITY IS KING. You need to identify situations when the market is ready to make big moves. In general these situations develop when the market consolidates excessively, immediately after an unexpected volume spike, near important announcements, when major horizontal and non-horizontal support and resistance is around, near market openings and closes etc. So change your outlook on trading – become a professional big bang volatile trade anticipator. Modules 4 to 5 give you ideas on this aspect:
Learn to create feasible Forex trading strategies that give good risk/reward ratios
This is a particular skill that you need to develop to trade the Double in a Day system. The main aim of the Double in a Day system is to create strategies with low risk entries that produce high return results. So you need to become the master of the Strategy Generator function of the EA. You need to have margins of safety that allow the price reasonable space to move and targets that are reachable. An Excel spreadsheet has been created for you to experiment with various settings. Creating good risk/return ratios and good safety margins is a skill that could turn you into a great Forex trader.
Modules 2 and 3 will give you ideas on this. Remember to download the Excel strategy model which will save you a lot of time searching for strategies.
Let the market tell you how to trade it
Don’t force your will on the market. It is not interested in you and isn’t listening. Rather follow the market. If you do that, you don’t need to worry about the direction. If you have identified a potential volatile situation and the market breaks up, Buy and if it breaks down, sell. It makes the market easier to follow. The easiest is to straddle the market around a consolidation. So what if you are whipsawed – you are trading with a say 1:12 risk/return ratio – you can afford it.
You can even straddle a bounce off support and resistance. Now, there are many other ways of following the market other than straddling it, but the point is – once you have found potential big bang areas don’t try to get to clever – just follow the market behaviour. Sometimes the simple trendline violations or bounces do the job of finding entries very effectively.
Please note that the objective of the Double in A day EA and course is to help you use the EA effectively. It is not a Forex trading course that is going to turn you into a complete Forex trader or entry expert overnight.
Finding entries, stops and targets
The Double in a Day technique is a technique that manages risk and compounds gains. Determining the direction and way of trading is left to the trader. Many entry techniques are suggested but it is up to the trader to decide which currencies to use, which time frames to use, how to enter and how to determine targets. In general Trendline and other support and resistance breakout or bounce techniques in potential volatile environments are recommended. If you currently have favourite techniques, then use them. If not, you may have to experiment with the techniques in the course to find one you like. You should be able to learn a lot from the published successful trades and I would suggest that you study those and ask any questions you may have.
Reverse Engineering: If you are still stuck let the EA trade continuously using a 1 top-up, a smaller trend and a good risk return ratio settings. What will happen is that you will experience many losing trades and some winning trades. Make a note on the charts where and when the winning trades have occurred. Then look at which trading signals, levels of support and resistance and indicators would have got you into those deals. By doing this with many currencies at the same time you can find more winning trades. 15 minute to 1 hour charts can work well for this.
I hope this gives you an idea of what emphasis you need to place on the various trading activities when trading the Double in a Day technique.
Other Double in a Day pages
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