Internalizing FX trading concepts

Successful trading depends on plenty of things. Let’s take a look at a key factor, internalizing concepts. When one trades, price is in a move. When price is in a move, conditions change. Price itself is in a flow and the trader must flow along. Considering that price starts its move somewhere and end its move somewhere within a day, price has a story for the day. If price has a story, then a trader should have a narrative to flow along with the movements of price.

I strongly advise to close all positions before market close. Because the endpoint for the day can not be defined ahead and the trader is better off by thinking of a range, instead of a price level, the trader’s narrative must be kept updated as he or she is immersing in the flow of price. Narratives are based on concepts that, when applied, create the trading style of the trader. My trading style is functional trading and I am a functional trader. I have several concepts in my mind and I keep recalling and returning to those concepts while watching price movements. When I create a narrative, it has an open end, so by time the story of the day unfolds. I have thoughts about the future but while it is OK to change those, I am not to be out of tune regarding the current flow of price.

What makes a trader be out of tune with price movements? Reading and understanding concepts is not that difficult but remembering those concepts, giving them considerations, linking them together, connecting the dots while price is in a move is challenging. Think about how easy it is to do a straight punch… until your opponent is standing right in front of you, ready to do the same kind of punch or something else to you.

What I am getting at is that once you know, then understand, then link things together, you need to take things to another level and only re-reading, making notes, rigorous practice can take you to see what you need to see on the charts. Filling one’s own gaps is tedious work and becoming a professional takes time and persistence. When you do your homework, concepts and application gets engraved in your mind, you internalize everything there is to know about price movements.

To help with the process of internalization, I follow the methodology of charts and list print-outs. The charts to print out are prototypes of price movements. There are variations to those movements but they are limited in number and all variations could be drawn on the charts with the prototype. This requires the trader to do observations regarding prototype and its variations. Lists help one to remember important elements of a possible narrative. These include considerations regarding timing and patterns. I have such a list that I do not take a look at anymore. The list includes around 100 elements.

Chart prototypes and variations, elements on a list must all be internalized and one must be able to link them to current price movements, that is when the process of full internalization completes. The level of complexity is high and one should set expectations accordingly.

Ok, I only wanted to highlight that internalization is a long process that leads to the ability of narratives building by connecting the dots using the concepts that are the elements of functional trading.

Trade well,

A.