Table of Contents

Who am I

What I learned from Working in a Dealing Desk

Why Traders Lose Money

My Comments Upon Strategies

Risk Management

Successful Cases

Exercises

Final Word
 Who am I?
My name is Tony, and I am an independent trader, editor on pipbear.com website and a personal risk
manager for FX traders around the world. My strong conviction is that there are no secret strategies or
advisors that make you become rich on the financial markets within one month.

If what I have today can be called success, the path to it was long and thorny. Financial education, many
lost deposits on Forex, last money lost on Futures, a 3-year pause from trading, epic comeback with 10
months no-loss period and the employment as a risk manager in a dealing desk – this is not a full list of
what I passed through on this path.

Today, I love my job as a personal risk manager since this makes people happier by saving their money
on losses and in this eBook, I will tell you how you can apply simple risk management tricks to improve
your own performance on the financial markets.
 What I Learned from Working in a Dealing Desk
We are not talking about Wall Street companies with 100-200 traders employed. In general, dealing
desk is usually a small offline community of traders who work together in a common office. There are
two main advantages of such form of cooperation:

1. Synergy of skills
Traders share experience, views on the market, encourage and support each other in tough
moments.
2. Additional tools to increase the effectiveness of a whole team
Hiring a professional risk manager that will cut losses when traders get tilted is the most popular
option in dealing desks.

Risk manager is not just a robot that manually closes trading positions and switches off the trading
platform when someone gets tilted. I would say that the head of dealing is more of a psychotherapist - a
wise father that can calm down an angry kid and give a helping hand when needed.

Surprisingly, I came to a conclusion that trading is not actually that hard when you get the right mental
state and right attitude. It is still an extremely difficult activity where only a few achieve success, but
still, when you have a lighter, you have more chances to find an exit in a dark room.

I need to say that I have nothing against the casinos and gambling if a player understands the risk and
does not have a bad habit of getting addicted to it. A mature person can do whatever he wants with his
money and if he wants to bet everything he has on zero, why not?

The impression of trading as a business that requires risk management has both pros and cons, and this
is the last thing I want to deliver before moving the main part of my eBook. I want to underline the
disadvantages of long-term trading under strict risk-management.

1. Trading is not that fun anymore.

The romantic part has gone. You can make the parallel with relationships – at first, hormones are driving
you crazy, the sleep is gone. But after a couple of years, it becomes a kind of a routine. A delightful
routine, but still, there is not much new. From time to time, you may discover new edges, but overall,
everything will be pretty much the same. You will always keep in heart those feelings when you opened
your first trade, just like you remember your first date.

2. Trading is quite boring.

Again, when a process becomes a routine, even big profits do not bring that much joy. This is why
financial markets are more eligible for calm and prudent people, who are able to take emotions under
control and improve from day to day.

3. Trading can bring you millions, and this feeling will not allow you to quit easily.

Believe it or not, it is true. When you realize how it works, when your strategy is showing stable results,
great promises suddenly occur. Even if your current deposit is low, you can make stable money on
financial markets with high liquidity – money is never a problem. This fact can turn into a big problem
for traders who think about ending a trader’s career after a long period of losses. The idea of finding an
ordinary job after breathing the air of freedom during trading looks disgusting.

4. Trading can bring you depression.

If you have at least 1-2 years of day trading experience, you might have an idea of what I am talking about.
Many people ruined their lives in the financial markets, and still, there are so many new traders that try
to climb on this hill - natural selection as it is. We watch all these YouTube videos, we read all these books,
and our brain draws fascinating pictures of luxurious life, where we press BUY and SELL buttons to earn a
couple of thousands before going to the beach. When we read about Jesse Livermore, we remember just
the fact that we earned millions, not that he committed suicide at the end of his life and this is sad.

So What Next?
The best thing that I love about this industry is passion. When I met traders who just started, there is so
much fire in their eyes, that I feel warm from it. Now I know exactly why they say:

Everything is possible with the right attitude. My key to profitable trading is called
RISK MANAGEMENT.

I do not sell any information – there is enough of it on the internet and in this eBook in particular. The
main problem is that people often cannot implement and execute these simple things correctly, and
here is where personal mentoring works perfectly.
 Why Traders Lose Money
It is no longer a secret that 99.9% of traders lose their first deposit, which makes FX brokers’ business
amazing. Of course, even a very talented trader is not acquiring all the required skills in one day. But
let’s try to think about what makes the success on financial markets. Here is my answer:

• Ability to work with information (analytical mindset),

• Emotional control,
• Trading Strategy (a list of rules to open, close, and manage the trade).

All these skills are possible to improve, and I think there will be separate videos about this on my
YouTube channel. But for now, let’s talk about the trading strategies, which is the most interesting part
for traders.

I’ve seen so much different options on how to build a trading strategy. What I learned from the traders I
worked with is:

There is no one-winning strategy (aka Holy Grail) that allows people to make money.

The financial world is so different and provides so many opportunities. The only obstacle is that an
ordinary person does not have enough knowledge to see these opportunities. Anyway, almost 100%
traders start with linear derivatives, where you try to Buy on Lows and Sell on Highs to get a speculative
profit.

Each beginner starts his path with processing tons of information about strategies and trading
approaches. Before I move to my favorite part, which is risk management, I want to save your time and
give my view on the several types of trading strategies that I would not recommend you to consider.

News Trading
Whenever I start testing a new trading strategy, the first question I ask to myself is:

Where is My Edge? Does this allow me to do better than other market participants?

In other words – my trading method should give me an opportunity to beat my opponents on the other
end. Beginner traders sometimes think that this is between them and the abstract market they intend to
trick. The truth is that there is no abstract market. Stock Exchange and ECN are just the marketplaces
where thousands of market participants come together to buy and sell securities.

So, before trying to make money on news trading, I would raise the following questions:

1. Are You Smarter Than Others?

Hedge funds, proprietary trading firms, banks, and many smaller market participants have specific
analytical departments that monitor fundamental background. Do you think you are smarter than
them?

2. Are You Faster Than Others?

Alright, I am not that good at fundamental analysis, but maybe I do not need to! I will wait for the news
release and make money on the increasing volatility. I can even put two pending orders in different
directions, so I earn wherever markets exist. All I need is just the huge one-sided movement.

Seriously?

You trade via a broker, which means you are already at least 3 times slower than those who have direct
access to the market. I did not even mention the HFT algorithms that open positions in a few
milliseconds after tracking a fast price movement. We are living in a technological era, let’s be realistic.

3. Are You Well-Informed?

Even if you have access to the Bloomberg platform and have time to monitor ALL the news that is
coming out during the day, do you think this is enough to understand everything that is going on in the
market? Which news is fake, which are already indicated in the price and which are unexpected so you
can move the price up or down? This is another question to think about.

Indicator Trading
I will not talk much about using indicators to analyze the market; I will move to the conclusion that I
came to after many years in the market.

Volatility.

When we say that markets are changing and that is the reason why some strategies have stopped
generating profits - what we often mean is the changing volatility. You can open the trading platform
and compare the EUR/USD or GBP/USD chart from 2018 and, let’s say, 2010 with the ATR (average true
range) Indicator.

The state of the market can change in a week, in a month or stay the same for years. Brexit, global
catastrophes, new trading technologies, can change everything very quickly. This will make one strategy
losing and another – profitable.

Constantly changing volatility is what makes historical indicator analysis non-indicative.

Please note that this is just my opinion based on my own trading experience. You may not agree with
this, and I appreciate your view on the market.

Candlestick Patterns
The main trick with candlestick patterns is the timeframe. Imagine that you see a Pin Bar on D1 chart.
Pin Bar is supposed to be the reversal signal. Take this day and open in M1, M5 or M15 timeframe. You
can find a completely different picture there. Pip bar on D1 chart that gave you a signal to open a Short
might have a Double Bottom inside of it on a lower TF, which on the contrary tells you to open Long.

That is why I would never use candlestick patterns as the primary method of analyzing the market state.
However, candlestick patterns can perfectly complement your trading strategy and work as a filter.
 Risk Management
Let me remind you of the main idea that I am trying to deliver in this eBook.

There is no Holy Grail that allows traders to make money in the market. A lot of
strategies are able to make a short time profit with the right approach to risk
management.

In the main part of this eBook, I will explain how I work with traders during the private mentorship
sessions. One session lasts for 2 weeks, and we always go through the following steps:

• Define existing problems – what do we need to improve.

• Define the reasons for existing problems.
• Formulate trading rules into a straight algorithm
• Analyze the trading results of past times
• Force Trader to keep a Trader’s Journal
• Define the execution rate (how accurate is trader executing his trading rules)
• Make amendments
• Repeat

Let me explain why I don’t just ask traders to limit the risk on trade by 1% and daily risk by 3%.

Let's say a trader has a $10,000 starting account balance, which is already super optimistic (the average
account on Forex is around $500, as far as I know). How much does this trader want to earn per month?
Maybe $2000, on average.

Do you think it should be easy to make 20% monthly, taking the 1% risk per trade on the same
instruments where hedge funds and professional investors operate at the same time by aiming to make
20% per year?

Another example - Let’s say a beginner comes to the market with a $100,000 deposit. He has a
prospecting offline business but almost no practical experience in trading securities. Would you
recommend him to trade with 1% risk on a trading loss? Does he really need to lose $1000 on each loss
trade on the stage of learning and building the trading strategy? No, it will be wiser to start with a
minimum lot and climb up slowly until he gains confidence.

For me, it’s clear that traders should not take someone’s money management, or risk management
strategy, without the feeling that it fits them. Everything should rely upon the strategy, experience and
self-control skills.

You can trade the minimum lot size until the profit curve rises. The main problem here is to explain this
to a trader that wants to raise his capital right here and right now.

However, what if you do not have anyone to control you and trade on your own?

I would recommend starting with these 5 questions:

1. Do I have the SL and TP order (set in the platform or on your mind) in each trade?
2. Do I trade the same size in each trade?
3. Does the maximum drawdown of my current strategy exceed 15%?
4. Do I have more profitable trades than loss trades?
 5. Do I earn more on the average profit trade than the average loss trade?

If you answered YES on all five questions, I would say you are in a comfort zone. Your strategy should
generate profit, otherwise, you need to find what is going wrong. If you answered NO to any of these
questions, the next step would be to understand:

• Why?
• How does this affect my trading results and what happens when I change it?
• Can I change it?

This is already enough to make your strategy work, but to concretize, I will give few real cases that I
worked out during the personal mentorship sessions.

Case 1: From –19% to +12% monthly profit

Introductory information:

• Trader was trying to scalp 6 currencies at the same time on a minimum lot size. That was the
only reason why the loss was just 19% and not more.
• Average amount of trades per day: 80
• Equity: $800
• Average Execution Score: 3/10

What we did
This was one of the few exceptions when I insisted on changing the trading strategy completely. We
spoke a bit about patterns and techniques that traders were trying before and chose one of them. The
timeframe was changed to h1/h4. Amount of trades reduced from 80 to 3, which was the hardest thing
to accept by a trader. Together with proper execution, traders managed to make a profit in the first
month already, which surprised me a lot. However, I love such surprises.

Case 2: From –37% to +5% monthly profit

Introductory information:

• Trader was using four price-action strategies at the same time (4 patterns + oscillators).
• Average amount of trades per day: 20
• Equity: $7600
• Average Execution Score: 3/10

What we did
In such cases, execution is the primary problem that has to be solved. I have analyzed the four strategies
traders showed me, and we chose one for the mentorship session. On the first week, with the help of a
trader’s journal, we reduced the number of trades from 20 to 4-5 and increased the execution score
from 3 to 7.

You might say that a 5% profit is not much. Maybe, but the confidence that you gain after the first
profitable month in your career is worthless.

Case 3: From 5% to +18% monthly profit

 • Trader was using the Fibonacci strategy together with candlestick formations.
• Average amount of traders per day: 4
• Equity: $59,200
• Average Execution Score: 6/10

What we did
A trader was doing great before he wrote me a message, but still, we found that his execution was not
perfect. After the testing period, we slightly changed the strategy - the timeframe and instruments he
was working on - and applied a few filters to improve his risk management parameters. The average
execution score improved from 6 to 8, which was enough to get 10% more profit in the first month
already.

Of course, you might be suspicious right now. Maybe these cases are real, maybe not. I cannot prove
anything here, likewise, am I trying to convince you. The only thing that you can do here is to find the
logic behind my words, take something that can work individually for you and try to implement it.

To make this process easier, I will give few more “tricks” that are exercises for traders to improve the
soft skills that I was explaining earlier. Yes, even in such a sphere as trading on the financial markets, you
can still do simple exercises to increase your performance. The process of learning how to play a guitar,
drive a car or trade currencies is the pretty much the same: theory + practice.
 Risk Management Exercises
These are a few exercises that you can try to improve faster:

1. Make LONG trades only for a couple of days. See what happens. After this, try the same method
again by making Short trades only.
2. Try to open just one trade per day. Wait for the best signal possible and do a one-accurate shot.
3. Try to make 10 pips per day. 1 loss trade = finish for the rest of the day. The idea is the same –
make one accurate shot.
4. Trade until the first loss trade and close the platform for the rest of the day.
5. Trade a day on the live account and a day on the demo account, then repeat this method.
Alternate trading with real and virtual money during the week, see how your execution score
improves.

Final Word
It’s totally true that trading is not that fun as before when you spend many years near the trading
platform. Even Coaching or giving public speeches for beginners do not give fresh breath.

There is something that makes this game interesting again. After I spent so much time exploring the
market, I finally started exploring myself. How accurate can I actually be? Can I get rid of stupid mistakes
that take my profit away? Can the strict following of my risk-management rules be my edge that makes
me better than others?

This is a game that I am playing right now. Join it and get on the boat!

Best Wishes

Tony Pipbear – Trader and Risk Manager