Why managing expectations in trading is vital 🫣

Howzit Pip Surfers! Our objective is to help you get

smarter about your trading in 5-minute reads.

What’s on the agenda today:

• Why are managing expectations important and what do we mean by this🌊

• A quick fundamental outlook of all the juicy economic events from the past couple of weeks 📝

Why managing expectations is so important ⚔️

We have all been there; tell me if any of these sound familiar, you start with trading and have hopes of making your first 100K in 6 months or you think a trade will go all the way to your massive TP of 250 pips so you don’t take partials along the way but you ride or die this trade.
We have all been there. It’s natural to be optimistic instead of realistic for most, especially in today’s culture of ‘try this’ and you can make 10K a day in your first 6 months….. bull…

There are two types of over-inflated expectations that people come into the markets with which I highlighted above, so let’s cover these in more detail and how you can overcome these.

Firstly, the idea of thinking that trading is quick money at the beginning is an illusion created by very good marketers to lure people in and make them believe this fallacy they have created. Trading is all about compounding capital; we like to call compounding the 8th wonder of the world. It is powerful but this takes time in the beginning and you need to accumulate the skill of trading, thinking the beginner’s luck will last is a way to make you financially bankrupt…. been there. Once you grasp that trading is a long game and it is not ever about a single trade, but rather about the result of taking 100 trades to prove your edge and hence make you money, this is where success can be found. This also removes that emotional attachment to any given trade, and the less emotional and more objective we can be the better our results will be.

Secondly, there is the expectation of trades going longer and having larger take profits than they actually will. Now I am not saying trades do not go to 250 pip take profit as yes some totally do! But, not always, and almost certainly not when you are counter-trading off of weaker levels and against fundamentals. Prior to a trade taking place, you should always create some sort of expectancy out of the trade. So what would this entail? Firstly, think of the worst-case scenario that could happen and then place your stop loss according to this. Why do I say worst case first? This allows us to to investigate if there may be a better entry area to place a trade, perhaps your original stop loss is now your new entry. How do you define where your take profits should be? Well, this is controversial and is entirely dependent on your strategy and the timeframe the trade was taken on, let me know if you would like me to cover this in a future post by replying YES.

Some key takeaways:

• Be more realistic with take profit targets

• One trade does not define you as a trader, look at 100 trades to get an understanding

• Have you thought of the worst-case scenario?

Pip’s fundamental outlook

These past couple of weeks have been crazy with fundamentals, so we are here to give you the run down and how this impacts the markets; ergo how this can impact your trading in July.

In June, fundamentals looked as if they were leaning toward disinflation. This was seen by the results of PPI and CPI. What does this mean? Essentially since the US market is fixated right now on the rate cuts and in our previous article we spoke in more detail on this. We can now see that disinflation is taking place and this aligns with rate cuts happening sooner rather than later.

Going into July if we see these in particular going in the path of disinflation, we can begin to assume the rate cuts are coming in hot!

We recently saw GDP increase year on year by 0.1%, this is also bolstering the market at the moment keeping it near all-time highs. Though GDP is a very important figure the market right now is more focused on the rate cuts.

In short, pay attention to the inflation figures more than you normally would 🙂