Forex Advice Archives

Safe to go Back into the forex Markets Yet ?

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Hi, This is an update to the post earlier in the week advising my LMT Forex Followers not to trade until the current market turmoil settles down. My advice, nay insistance ! is continue to stay away. As you can clearly see in todays 4 hour Forex Chart of the aud ( I could have used loads of similar examples) price is shooting up and down within the same candle).

The wise trader simply walks away and lives to fight another day.

There is clearly no trend at the moment. These “spikes” are tearing through fx traders stop losses and will wipe out 1000′s of accounts of those who continue to trade through this extremely difficult (usually short) period of time.

The profits we have had with the LMT in the last month have been nothing less than spectacular. I have been trading Forex for over 5 years now and the current market conditions do not come along very often (thankfully).

The LMT is a trend following system that works great when there is a trend. We actually need this weeks big moves because when they settle down a new trend will start and we can catch it near the beginning and ride it a long way for BIG , low risk Profits.

The secret to successful forex trading is knowing when to stay out of the markets.I strongly recommend you leave them alone until this sorts itself out.

The beauty of forex trading is you can make money when the markets are going up or down, but not when they are going sideways.

In the current chaos and uncertainty let the gamblers fight it out amongst themselves. We the intelligent, shrewd traders will stroll back in and sweep up once the dust has settled. I keep telling you that we can get rich in forex, but slowly.

So what is going on and what started all this ?

Most of the the currencies that we are trading have just enjoyed 4 to 6 months of steady, trending movement. Had we been trading with the LMT since the turn of the year we would have made a lot of money by now. It will return, and very soon, don’t worry. Markets always trend longer term.

It is quiet normal after a period of sustained movement for the markets to stop for a “breather” whilst traders decide where the prices are going to go next. The same principle rules the stock market.

Added to this there has been a lot of fundamental news this last week or so. Gbp negative news for example, followed by $ negative. The market is now trying to decide whose economy is in the biggest mess ! Lots of pairs look as though they might be rolling over (think of an aircraft carrier turning around – a long and painfully slow manoeuver).

Lots of pairs are still on the verge of changing direction or resuming their current trend. Some are trending down on the 4 hour chart and up on the daily. The reason for this is that the trend is based upon the next time frame above. Therefore the daily chart is based on the weekly which takes ages to change.

Take a look at the following example of cable (gbp/$) on the 4 hour and daily charts respectively. The Gbp is clearly in a down trend on the 4 hour charts. Price has hit the top trend line on a number of occasions and similarly the bottom.

cable is clearly in a down trend on the 4 hour chart

cable is clearly in a down trend on the 4 hour chart

The more experienced trader could try to trade even these markets by simply selling near the top of the trend with a stop just the other size of the trend line. Vice versa for a buy from the bottom line. The problem is the size of some of the spikes will just wipe out the trade. Notice the shapes of some of the candles that have rejected.

Now look at the same currency pair on the daily chart;

cable on fx daily chart is clearly in an uptrend

cable on fx daily chart is clearly in an uptrend

 

 

 

 

 

 

 

 

 
What is extremely interesting to me is where price is now. The arrow is pointing to where the 4 hour and the daily trend lines meet. This area is critical. If price starts to go back up from here we could be at the bottom of  a major move upwards for 100′s of pips (possibly a 1000 to the top trend line).

The other option is that if price was to break & close below here we could be looking at a major change of direction. Either way there are a lots of pips to come. Don’t be hasty.Spend the next few days reading and learning as much
as you can. I will let you know when i think its safe to get back in.

This weekend I will provide you with detailed analysis of all the pairs. Where they are now and where I calculate they are going to go next.

To all our success, marc

If you would like to know more about the LMT Forex Formula Click the link Below. Those who join the LMT (low maintenace forex trading system) from this site receive regular free updates, support and advice

Risk Reward in Forex

Comments (11)

The secret to becoming a successful forex trader is the ability to maximise your gains and minimise your losses. This is easier said than done ! In my 1st month trading forex I won 65% of the trades and yet I somehow managed to lose money !

Obviously my losses were bigger than my wins, a common problem for the new forex trader. The solution was to look more closely at my fx trading style. I was getting out of trades too early and my losses were too high.

Conventional wisdom says that you should not enter a trade unless your potential gain is at least double your potential loss. Thus, your risk/ reward ratio is 1:2. Seems easy enough, but how can the new trader determine what is the potential gain in a trade ?

I use a combination of indicators and logic. Unfortunately there are a myriad of different things we need to consider and these can also vary depending on the time-frame we are trading.

The following are just a few that we might want to consider if we were looking to day trade on smaller time charts (15 minute/ 1 hour) with a 50 pip stop;

1) Average daily range. If the gbp has moved 180 pips so far today and the average daily range is 200 pips, then I would not take the trade if I was expecting price to extend beyond that limit. There are always exceptional days in forex when the movement can be double, but the % likelihood says that 200 is more likely. Therefore to risk 50 pips to win 20 is a no go.

2) If your potential trade is only 30 pips away from previous strong support or resistance, this could be a trend line, a double top/double bottom. A strong psychological level, perhaps $1.50 to the gbp.

3) Equally, fibonacci lines are often areas that price will bounce off, as are pivot points and bollinger bands.

4) Counter trend. More conservative traders will only trade with the trend. Your potential trade has lots of reasons to enter, but the trend is in the opposite direction.

5) Personally I never take a trade if price is near to lots of emas on different time-frames that it has to break; especially the 200 ema. This also depends on the direction of the emas. For example, if I was looking to long a pair and the 200ema was pointing down or even flat I would not take the trade.

However, if price has hit the ema a few times and the ema has now turned up I would be more likely to consider the trade.

In the following example I show you lots of reasons why I would consider buying gbp/usd, but more importantly why I would NOT enter the trade;

Lots of reasons in this chart to NOT enter a trade

Lots of reasons in this chart to NOT enter a long trade

Reasons to consider why we WOULD take the long trade.

Imagine we are watching the chart in real-time on the green candle;

  1. Price has moved more than the average daily range, but as price is retracing there is a potential gain of  100+ pips back to the 1.5330 area.
  2. Price has almost double bottomed off yesterdays low and psychological area of 1.5100
  3. The 5/8 emas have crossed up and price has broken and closed above the 21 and 34 emas.
  4. If it confirmed a break above the 200ema and the 50% fib I would take the trade (assuming that there is nothing major in the way on other time frames).

Reasons NOT to take the long trade;

Again imagine we are at the illustrated green candle.

  1. My stop would need to be 70 pips away (below 78.6% fib) and yet price is unlikely to break the 200ema/50% area. Risk 70 pips, potential gain 0. (If price broke and closed above the 200ema and the fib I would take the trade. Put my stop in 1.5160 area. This would give me a risk of approx 50 pips for potential gain 120).
  2. Price has spiked but failed to break the 200 ema.
  3. Price has respected fib levels earlier in the day. It stopped 4 times at resistance on 61.8% fib and has now stopped – to the pip – at the 50% fib. Some days price seems to stop at every fib level.
  4. The trend for the day is down. Often price will pullback to the 50% fib area and then continue back down.
  5. All the emas are pointing down.
  6. The bollinger bands have closed through the candle (think of a door being slammed in its face:)

The flip side of this is that the 6+ reasons above to not enter a long (buy) here are perfect reasons
why we should SHORT here !

  1. Our stop loss need only be 10 pips the other side of the 50% fib and price has already moved 100 pips lower today. Thus our risk reward is 10 to gain 100 pips. Incredible risk reward that does come along quite often. The difficulty here for the novice trader is that as price is going up and everyone seems to be buying, a new trader would be scared to go against the herd.
  2. Price frequently reverses at a 50% fib level
  3. All the reasons above for not taking a long !

Result of the short trade

Price stayed nelow the 200, 55 and 34 ema for 100 pip gain

Price stayed below the 200, 55 and 34 ema for 100 pip gain

Here is a great example of a trade that I predicted on twitter in february of this year. This is on the daily jpy/usd.

Price has broken and closed above the 55ema for the 1st time in 6 months

Price has broken and closed above the 55ema for the 1st time in 6 months

  1. Price twice broke the 34 ema in this 6 month period, but on both occasions bounced back off the 55 ema. Thus the 55ema can be said to have been in control of price on this pair. Finally price broke above the 55ema and notice how the 34 and 55 emas are rolling over from a steeply downward trend to a potential upwards move.
  2. The great thing for me with this trade is that in my mind when price breaks the 55ema its next stop is the 200 ema (top arrow) which was 600 pips away.
  3. Risk reward was brilliant. My stop only needed to be some 60 pips just below the 55ema. Hey it held price down for 6 months, no reason to think it would not be equally difficult to break back down: resistance becomes support.

So what happened ?

Price stopped to the pip atn the 200ema on the DAILY chart !

Price stopped to the pip at the 200ema on the DAILY chart !

Many cynics think that technical trading is just mumbo jumbo ( I used to think the same), but this move was logical and predicatable for me. Also note how price struggled for the following 10 days or so at this 200 ema area.

Unfortunately, despite my brilliant prediction ! I only managed about 250 of the potential 600 pips as I moved my stop too near (twice), but that is a different story.

I hope this gives you insight as to what to look for when taking a trade and the importance of having a risk reward ratio of at least 1:2.

if you have any questions re this article please post them here on the blog


5 Phases of a Forex Trader

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The 5 Phases of a Forex Trader

Great article posted on hub pages by a fellow trader

Step One: Unconscious Incompetence.

This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you’ve heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy – after all, how hard can it be? Price either moves up or down – what’s the big secret to that then – let’s get cracking!

Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven’t got the first clue about what you’re trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again… and again, and again.

You may have initial success, and that’s even worse – cos it tells your brain that this really is simple and you start to risk more money.

You try to turn around your losses by doubling up every time you trade. Sometimes you’ll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.

This step can last for a week or two of trading but the market is usually swift and you move onto the next stage.

Step Two – Conscious Incompetence

Step two is where you realize that there is more work involved in trading and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader – you don’t have the skills or the insight to turn a regular profit.

You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine. and begin your search for the holy grail. During this time you will be a system nomad – you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you’ll be ecstatic that this is the one that will make all the difference.

You will test out automated systems on Metatrader, you’ll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your ‘magic system’ starts today. You’ll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you’ll find yourself chasing losing trades and even adding to them because you are so sure you are right.

You’ll get on forums and live chat rooms and see other traders making pips and you want to know why it’s not you – you’ll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You’ll then reach the point where you think all the ones who are calling pips after pips are liars – they can’t be making that amount because you’ve studied and you don’t make that, you know as much as they do and they must be lying. But they’re in there day after day and their account just grows whilst yours falls.

You will be like a teenager – the traders that make money will freely give you advice but you’re stubborn and think that you know best – you take no notice and overtrade your account even though everyone says you are mad to – but you know better. You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else – they don’t work for you either.

You might even approach a ‘guru’ like Rob Booker or someone on a chat board who promises to make you into a trader(usually for a fee of course). Whether the guru is good or not you won’t win because there is no replacement for screen time and you still think you know best.

This step can last ages and ages – in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration.

Around 60% of new traders die out in the first 3 months – they give up and this is good – think about it – if trading was easy we would all be millionaires. another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does.

What may surprise you is that of the remaining 20% all of them will last around 3 years – and they will think they are safe in the water – but even at 3 years only a further 5-10% will continue and go on to actually make money consistently.

By the way – they are real figures, not just some I’ve picked out of my head – so when you get to 3 years in the game don’t think its plain sailing from there.

I’ve had many people argue with me about these timescales – funny enough none of them have been trading for more than 3 years – if you think you know better then ask on a board for someone who’s been trading 5 years and ask them how long it takes to become fully 100% proficient. Sure I guess there will be exceptions to the rule – but I haven’t met any yet.

Eventually you do begin to come out of this phase. You’ve probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times but now its in your blood

One day – in a split second moment you will enter stage 3.

Step 3 – The Eureka Moment

Towards the end of stage two you begin to realize that it’s not the system that is making the difference. You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.

The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.

Because of this revelation you stop taking any notice of what anyone thinks – what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading

You start to work just one system that you mould to your own way of trading, you’re starting to get happy and you define your risk threshold.

You start to take every trade that your ‘edge’ shows has a good probability of winning with. When the trade turns bad you don’t get angry because you know in your head that as you couldn’t possibly predict it, it isn’t your fault – as soon as you realize that the trade is bad you close it. The next trade or the one after it or the one after that will have higher odds of success because you know your system works.

You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not make a poor system.

You have realized in an instant that the trading game is about one thing – consistency of your ‘edge’ and your discipline to take all the trades no matter what as you know the probabilities stack in your favor.

You learn about proper money management and leverage – risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren’t ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.

Step 4 – Conscious Competence

You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it looses and when you’re on a loser you close it swiftly with little pain to your account

You are now at a point where you break even most of the time – day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips – generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.

You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you’ve given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.

This lasts about 6 months

Step Five – Unconscious Competence

Now we’re cooking – just like driving a car, every day you get in your seat and trade – you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesn’t make you any more excited that getting 1 pips.

You see the newbie’s in the forum shouting ‘go dollar go’ as if they are urging on a horse to win in the grand national and you see yourself – but many years ago now.

This is trading utopia – you have mastered your emotions and you are now a trader with a rapidly growing account.

You’re a star in the trading chat room and people listen to what you say. You recognize yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they’re teenagers – some of them will get to where you are – some will do it fast and others will be slower – literally dozens and dozens will never get past stage two, but a few will.

Trading is no longer exciting – in fact it’s probably boring you to bits – like everything in life when you get good at it or do it for your job – it gets boring – you’re doing your job and that’s that.

Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all.

All the time you are honing your methods to extract the maximum profit from the market without increasing risk. Your method of trading doesn’t change – it just gets better – you now have what women call ‘intuition’

You can now say with your head held high “I’m a currency trader” but to be honest you don’t even bother telling anyone – it’s a job like any other.

I hope you’ve enjoyed reading this journey into a traders mind and that hopefully you’ve identified with some points in here.

Remember that only 5% will actually make it – but the reason for that isn’t ability, its staying power and the ability to change your perceptions and paradigms as new information comes available.

The losers are those who wanted to ‘get rich quick’ but approached the market and within 6 months put on a pair of blinders so they couldn’t see the obvious – a kind of “this is the way I see it and that’s that” scenario – refusing to assimilate new information that changes that perception.

I’m happy to tell you that the reason I started trading was because of the “get rich quick” mindset. Just that now I see it as “get rich slow.”’

If you’re thinking about giving up I have one piece of advice for you….

Ask yourself the question “how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it?

Take care and good trading to you all.Jared 4xmentor@gmail.com

Great Forex advice

Comments (4)

Another great post from a member of the “club”! David has posted this in response to Ernies earlier question. I have posted here again as this is too good to get lost elsewhere. Great advice for anyone new to forex. I have seen less information in e-books that I have bought.

Ernie, Your questions and dilemmas are common amongst Forex newcomers . and not so new as well.

Forex is an exciting and (could be) rewarding financially -
One of the aspect it lacks is – camaraderie ! But – Forex is a lonely job – there are few traders who will share their ‘Secerets’ and ‘System’ with you .

There are few ‘winners’ in this trade (Some say ’90% lose money in Forex)
Some compare it to a ‘Casino’ betting.
The REAL successful traders have no incentive to share it with anyone. The others – either built web-sites or sell signals , or just wander in the darkness.

Marc is one of the few I`ve seen so far – who opened his heart and notebook and is willing to teach you ! Follow him ! (Twitter too)

I wanted to contribute a bit of my limited experience with Forex trading.
To make it easier to follow here are some of my trading lessons:

1) ‘Nobody knows what the market will do ‘

You could listen to advice – but always remember this #1 .

The signal sellers , the fancy web sites that promise you miracles – better print and post this rule. The FX market is so huge, so involved , and so morphing – makes it next to impossible to predict.

( I’ve seen the Dollar plunge 10% in value in 15 minutes when a small Cessna was flying directly on a collision course toward the White House’ shortly after 9/11 . Turned out to be a lost flying student and his instructors.
Usatoday.com/news/Washington/2002/06/19/white-house-evacuation.htm)

There are exceptions, and like any profession or ‘trade’ – you will have to ‘spend the time and ; money’ to find them.

If anyone tells you (And it goes for life in general too )
“It will be easy and you don’t have to learn”  Click on ‘Delete’ !

2) You can’t take ‘PIPS’ to the grocery store

PIPS are just numbers.
In some trades a PIP worth $10 , some equal $9 each , and some are $15
If you trade a ‘Mini’ contract your PIP is a mere $1 …….
So will you sell everything and just trade for 15 PIPs a day ? You Don’t !

The focus on PIPS is misleading .
You have to measure your results in Dollars ! And sense.
(or what ever currency you had opened your trader account with).

In Large accounts – a mere 10 PIPS can represent Thousands of $$ !
PIPS don’t take into account the ‘Spread’ the ‘Interest’ and other charges and fees brokers will charge you on your way to ‘The cashier ‘.

3) Demo trade for as long as it take to establish a winning system !
If you feel comfortable after 30 days of Demo trade – you are lucky .
I recommend NOT to put a time limit on developing and perfecting a weather proof system ( Easier said than done )
And even than …take small steps ( Like feeling the water temperature) .

4) The key is ‘Money Management’ !

Managing risk is studied in the best of business schools.
It is a subject by itself – and I’ll expand on it by special request.
What makes the difference between ‘Trading’ and ‘Gambling’ is money management !.
And ‘Capital preservation’ !

In Forex this issues takes on added importance since there are 50% chances the market will change course at ANY GIVEN moment.
The few times I had suffered huge losses were when I took ‘too big a leverage; of my position – and suffered a ‘Margin Call’ ( Guess I wasn’t ‘Too big to fail’ back than ……) But I learned my lesson.

5) Fear and  Greed are good helpers – if you harness them !
We are all humans (well…Most of us are)  and utilizing our emotions is what makes us superior to machines, (Albeit the narrowing gap…..)

Fear – Holds you to carefully trade while assessing all risks.
Greed – Brings you here in the first place and keep you going for more.
Think of it as Hot and Cold water. If you utilize only one, you may get burnt , or freeze,but if you find the right balance – you are on your way to the promised land !

6) Let the market work for you !  Not the other way.

I used to chase the market ‘Not to miss on a trade’ that looked so promising. ‘What a rally…. what a ‘Stampede’. I used to get so excited…especially during economic news ( Usually 8.30Am EST ).

Nowadays I only use ‘Entry orders’ where it is more likely my position will bear fruits.

It`s a bit like chasing a fish in the ocean – the chances for me to catch it – are slim to none – the fish is faster , slippery, and can change his swimming direction with a fraction of a second – you will lose your breath and remain hungry.

But – if you” learn to set your ‘traps’ wisely – in advance – the fish is more likely to fall for your baits.

I ‘Clip’ most of my ‘profits’ at around 8 AM EST ……why ?  The fish took the bait overnight and I had my harvest ready in the morning.

I find that many a times – I do BETTER and earn MORE when I am AWAY  from the screen , Tinker-less , trade less and Emotional-Less ( Like Marc’s walks on the beach…..) than when I bite my nails looking how the market chips away off at my ‘profit’……

7) You didn’t earn anything – until you take your $$ out of the broker’s acct.
Remember that you had paid in with your hardest earned money . The money sits there at the Broker’s account To serve as collateral for your trade

Don’t let it pile up too high – YOU have to pay yourself – Like Payroll – when the heap gets higher – or you did nothing – Having your gains on ‘Paper’ only means little. Reward yourself – Even symbolically -once you Cushioned your account. I also set up an anount

8) Most  info and tools are free.

The ‘Retail’ part of Forex experienced a huge push in recent years . Millions of us are now on line trading.
The competition between dealers ( another separate subject ) is to your advantage. There is a glut of knowledge. Mostly free !
Books – Check first with your library…most books are boring and re hash what old info. After you read and LIKED the book – than think of buying it.

There are some useful forums ( ForexFactory.com ,DailyFx.com many more like these , don’t forget your salt grains !) You can really find good stuff on line .

I strongly recommend working with a ‘Mentor’ ! – someone with experience that will help you separate the chaff from the wheat , help you avoid pitfalls, and shorten your discovery path.

It is hard to find them – the good one are busy – and the bad ….are just that.
Try join a ‘Meetup’ group in your area. It is important to ‘press flash’ ‘see faces’ and bounce idea of a common board. ( Go to www.meetups.com)

I’ll break here on a ‘to be continued later’ promise  – as not to overwhelm you with too much info. Or blind you with science.

Best of luck ! And you’ll need it !!!

David

Great forex question

Comments (9)

This is a great forex question that was posted yesterday by Ernie . This covers many of the basic problems that all forex traders face  (no matter how experienced they may be.)  I have posted the question & my response here so that it doesn’t get missed as you wander around the site.

“Hi, Marc. Great work on the site, please keep it up. Some questions for you.I haven’t quite developed a trading system of my own yet. I mostly follow recommendations from various news sources and do what I can on my own, and let some EA robots create some minor profits on the side. Over the past couple of weeks, I finally graduated to trading with a standard lot and I’ve made a few small pips here and there, but I’m beginning to notice a pattern in my trading… I’m starting to be able to *see* where a pair is going without any solid trading system, but I wait too long to get in and miss some major profits. And when I do get in, I’ve missed the boat and the trade goes against me. I bet you I’ve missed, at the very least, $10K(US) in profit over the past two weeks. I guess this is a bit like asking you to explain the meaning of life, where there’s really no answer, but how does one learn to get into a trade at the right time and not wait too long? Does it really all come down to a good trading system? Is it being able to trust your gut instincts? It’s frustrating to look back at trades I intended to make but didn’t out of fear or 10% uncertainty and see the potential for a $2K trade here or a $3K trade there just gone.

I *have* learned to take profit when I have it. Learning to overcome greed was a big lesson, and a hard one at that, but I guess what I’d really like ot learn is how to overcome fear and uncertainty. Any suggestions?

My response.

Hi Ernie, thanks for the great question. You are not alone ! We have all been there & some of us still find ourselves going through periods when we face similar emotions & challenges.

  1. You point out that you are now starting to get a “feel” for your pairs. This is true & why I strongly recommend that people new to forex should concentrate on just a few pairs to start with. Each pair has its own characteristics & if you specialise on just a few, gbp/$ & euro/$ you really do start to notice how they are likely to behave.I would also recommend having the chf chart on screen for confirmation. The chf is going in the opposite direction (correlation) to the euro 80%+ of the time.
  2. Although you are now getting the “feel” for what is going to happen next you are unable/too slow to enter the trade. Yes you do need to find a system or some sign that tells you to enter. Then you have to “pull the trigger.”
  3. The problem is either you are not confident enough (in which case demo trade so you can confirm that you feel able to rely on the signal) or the problem could be the biggest ones in forex, fear & greed.
  4. Fear & greed are what motivate & yet are the worst problems for ALL forex traders. Fear of losing & greed – staying in or staking more than you should.You mention that you have gone onto trading full lots, even though you are not yet fully confident with your system.The easy solution is to trade part/micro lots.If you trade say 10% of a standard lot size then the amounts that you are dealing with are so small that if you lose they aren’t going to hurt you & therefore you wont be scared & thus, no fear.

    The flip side is that if you make 100 pips you will then be thinking if only i had been in full size i would have made $$$$,  so you got rid of the fear, but then the greed kicks in !

    You can make or lose a lot of money in forex, the trick is to try & do it slowly. 1st learn a few pairs & make pips. set a pip (not money)target for the week/month.

  5. You mention missing $2/3000 potential profits on trades. I suspect that you are simply aiming too high, dare i say “greed” is rearing its ugly head.The reason most people lose at forex is that they try to get rich quick. Aiming for the big wins will wipe you out. I have been there, done that got the t shirt !
  6. Unless you are trading with a very large account, ie $100.000 therefore risking 3% ($3k) maximum of your bank to win minimum $3000. There is no way you should be looking at $2/3k trades until you are 100% confidant with your trading.

As I point out in this article
http://forex-fxtrader.com/compound-forex-profits.html you only need to earn 15 pips a day to turn $1000 into $1.000.000 in 2 years.  With a starting risk of $50 per trade – hence the million dollar challenge idea.

If you start this way you should have no fear. If you can’t afford to lose $50 you shouldn’t be trading forex in the 1st place !

Finally, if you are struggling with where to enter trades take a look at what i was looking for yesterday. http://tiny.cc/D5oUG.

Basically I was looking for break outs of an over night range/ breaks of support & resistance. Bounces off/rejections at 200 emas and or trend lines.

This weeks 150 pip gain on euro/gbp was simply a break of a trend line that acted as support on the daily chart. Take a look its so obvious, this was SCREAMING out for a trade. Either it was going to go back up again or break down.

http://www.forex-fxtrader.com/forex-trade-example-from-daily-chart.html

Phew. Very long reply, but I hope this helps, marc

Forex News trading (& why I Don’t)

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Scalping & News trading & why you shouldn’t.

News trading was my next step along the path to enlightenment, NOT. Every day in forex there are news releases, National Banks eg (Bank of England Interest rates decision), governments release unemployment details. Any of these can cause a major shift in the value of a currency in seconds.


Some experienced traders do make money trading the forex news. If you are new to forex then I strongly recommend that you leave it well alone. Personally I still avoid it.

To me it is forex at its silliest. You will soon learn that forex is completely & utterly illogical. Trying to dive in the time of a news announcement is fraught with danger. In my opinion,  news trading the forex market is simply gambling.

The price can move rapidly against you in seconds. You bet that as the news was good for a particular economy that the currency would go up. Logical right ? With forex NO!

For example: News comes out saying that unemployment has fallen dramatically in the U.S.A which should be good news for the american economy. You bet that the $ will go up. Suddenly the price of the american dollar collapses – I have seen it happen time & time again.

You just lost a chunk of money & then the experts will come out with some rubbish to justify the move. Really, I suspect that they are more interested in justifying their jobs !


Non Farm Payrolls (NFP) & Why you should avoid it like the plague

News trading was the best way I ever found to lose money in forex. Particularly USA unemployment news, which comes out the 1st friday of the month. It is known in forex jargon as Nfp (non farm payrolls). I never trade this now & rarely trade fridays in general.


This is the most volatile, regular event in the forex calendar. The morning trading before NFP is usually stagnant, with hardly any movement. Then up to an hour before the price can start to go haywire, certainly in the 15 minutes before the news (13.30 gMT). I will explain in greater detail in the course.


I also experimented with scalping (getting in and out of trades quickly for small gains) again a waste of time as well being very stressful. 100 small winners can be wiped out by 2 or 3 losses.

There is an easier way, Check out the Forex Mentor Pro day trading system. Members are reporting gains of 4/5/600 pips profit in their 1st week !!



Forex Advice

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Forex Advice If you are new to forex and thinking of giving this “make loads of money working only 10 minutes a day” investment thing a try, then listen up.


Forex is NOT investing. It is gambling.


There are ways to win at it but it is risky and you can literally lose your shirt, your house, your wife & your dog in an amazingly short period of time, if you don’t know what you are doing.

Anyone tells you differently is trying to sell you something.

The forex market is not easy. It is inhabited by the largest financial institutions in the world & these sharks, who make up 98% 0f the forex market are looking for a constant supply of small fry (You & me) to feed upon. If you do not know what you are doing you will not last 5 minutes.

Fact: 95% of newbies will lose money currency trading.

To further complicate matters forex has a language all of its own. Fibonacci, emas, macd, divergence, head & shoulders patterns to name but a few.

The hardest thing that I found as a beginner was that there is so much information available, especially on-line, that it is very easy to rapidly become lost in the maze of complex terminology, systems, trading platforms etc. I know because I have been there. Suddenly you hear of another “must have” robot or system and off you go at a tangent. Another week wasted & another $100 down the drain.

If you follow my Free Course you will have enough basic knowledge to trade forex profitably:

http://www.forex-fxtrader.com/Free-forex-training.html

Best advice for a forex newbie ? Don’t do it !

95% of all Forex traders (probably 99% of newbies) lose money. I know I did. Take up knitting , anything but forex !


You still here ?

Good. You might just make it. If you are going to stop at the 1st sign of trouble then you will be one of the 95% who fail. It took me more than 3 years of trying & losing before I cracked the code of how to make money on forex.


The most important piece of forex advice


Okay, you are still thinking of giving this forex thing a try or at least looking into it. Then this next piece of advice IS serious.

Do not start with real money until you have at least a basic grasp of what forex is about.

All the major brokers have trading platforms that you can download for free* and they will give you a demo account where you can make trades in real time, BUT without risking a penny.

I know people who demo traded forex for over a year before they put real money on the table.

The problem is that most of us are in a rush and want to make loads of money quickly – I speak from experience, I went from a demo account to live within a few weeks. I also went from +$10k to – $10k within 18 months. I could afford it BUT eventually I had to stop, other wise I would have had been in trouble.

The most important thing in forex that I realised is that you can get rich, but a little more slowly.


* You can download a free copy of our recommended trading software platform (metatrader) here http://www.alpari.co.uk/ .


If you registered for the $million challenge you should have received a copy of my template to add to metatrader. If not,  send me an email. Contact Us.
Put “metatrader template” & I will send you a copy of my basic chart set ups.

This means that you can download and simply attach to your trading platform. This will save you hours of work & also means that you see what I am seeing & the course will be easier to follow. I promise not to spam you.

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