Understanding the Depth of the Trading Challenge

Traders most often fail because they are seduced by the simplicity of the trading proposition and consumed by the Arcade environment (order management systems & supporting charting applications and tools) before they develop understanding for the work that needs to be done, why they need to do it, and how best to support their efforts.

The volume and rate of information driving price movement results in highly inconsistent market behavior requiring a fundamental decision-making process that keeps things simple. Successful traders have learned how to become certain of market state, confident in their strategy, and committed to waiting for market alignment. These three (3) focus points give the clear sense of purpose needed to make sure we are not seduced by the simplicity of the trading proposition or consumed by the temptations of the Arcade Environment. We become certain, confident, and committed by knowing the work that needs to be done, why we need to do it, and how best to support our efforts.

Successful traders have the humility to respect the complexities of futures trading. Here are steps you can take towards developing a more complete understanding for the depth of the trading challenge.

(*) identify your trader profile, acknowledge it, and detail why it places you in the best position to succeed. Make sure you understand the difference between fundamental, algo, and technical profiles.

(*) Develop a clear understanding for what Latency is and how it may affect construction and execution of your trading plan.

(*) set realistic expectations for your development and performance. Make sure to consider how your aptitude and desire will support your efforts.

(*) Understand that successful traders anticipate price movement. In other words they develop awareness for when the bid or offer is now their edge.

(*) Know the difference between managing performance and managing capital risk. Hint - performance risk is managed by embracing beliefs and assimilating behaviors that best support development of market awareness and sensitivity for execution.

(*) Acknowledge your Blind Spots. Each of us has three of them. Two relate directly to trading. The first is created by the difference between what we believe we know and the actual depth of our knowledge. The second is created by the difference between how we perceive our behavior and the reality of our conduct. Either of these Blind Spots can be fatal for a trader.

(*) Focus on developing a Future Vision mind set. Successful traders have developed a thought process allowing them to see further out on the horizon than others to anticipate and respond to opportunity and adversity created by the dynamics driving price movement.

Most of all remember trading will always be an art form. Successful traders have developed the self-trust to think independently. This provides them with the strong external focus needed to tap into their creativity and imagination to best anticipate and respond to price movement. They only sit down to trade when they are certain of market state, confident in their strategy, and committed to waiting for market alignment. If you are willing to figure out the work that needs to be done, why you need to do it, and how best to support your efforts then it is reasonable to expect trading success.

AUD/USD

Final trade of the month.

EUR/USD

+40 on short, -12 on long for EUR/USD during bernanke's moves.

EUR/USD

EU day trade from 1.3436 for a reasonable day trade.

EUR/JPY

A simple fibo move, +27. To learn how to draw a fibonacci retracement, click here

Understanding Dual Candlestick Patterns

Dual Candlestick Patterns

Engulfing Candles

The bullish engulfing pattern is a two candlestick pattern that signals a strong up move may be coming. It happens when a bearish candle is immediately followed by a larger bullish candle. This candle pattern is called 'engulfing' because the real body of the later candle completely covers the real body of the previous candle. When these reversal patterns are found at significant support/resistance levels, you can be 70% - 80% sure that prices are going to bounce off the support/resistance levels and move in the opposite direction.

As you can see in the bullish engulfing reversal pattern, the real body of the bull candle shows strong upward momentum as it completely covers the high and low of the bear candle. This is an indication of the weakness of sellers in the market, as the buyers completely overwhelm them. Effectively, the buyers are flexing their muscles and that there could be a strong up move after a recent downtrend or a period of consolidation.

On the other hand, the bearish engulfing pattern is the opposite of the bullish pattern. This type of pattern occurs when bullish candle is immediately followed by a bearish candle that completely "engulfs" it. This means that sellers overpowered the buyers and that a strong move down could happen.

When these candle patterns are found at a significant support/resistance level, chances are high that prices will move in the direction of the second (later) candle.

When market prices drop down to an established support level, chances are high that the buyers in the market will come in and attempt to push prices back up again. However, this is not always the case, as prices do break below support levels every now and then.

Sometimes, the buyers are simply too weak to prevent the market price from falling below a support level. However, when we see the bullish engulfing pattern form at such a critical price level, it's an early indication that the buyers have come in strong and are likely to soon overwhelm the sellers. That's how we know that prices may to shoot up soon after we see a bullish engulfing pattern at an established support level.

The Piercing Line

The Piercing Line Pattern is a bullish candlestick reversal pattern, similar to the Bullish Engulfing Pattern. The piercing line pattern occurs in a downtrend and is comprised of two candlesticks. The first candlestick in the pattern is a long black candle, that is accompanied with high volume. The next candlestick makes a lower low, but then rallies to close above the midpoint of the first candlestick, but not above the open of that candle. This snap back rally is called a kirikomi, or cutback.

The piercing line is one of the first signs that a potential bullish reversal is in play. Traders should wait for the high of the first candlestick in the pattern to be exceeded prior to taking a long position. Stops can conversely be placed below the low of the first candlestick of the formation. The more the second candle or kirikomi closes above the mid-point of the first candlestick, the greater the odds of a successful piercing line reversal pattern.

The Bullish Engulfing and Piercing Line patterns indicate that prices are likely to bounce off a support level.

The Dark Cloud Cover

The dark cloud cover candlestick pattern is one of the double candlestick patterns (i.e. it consists of two individual candlesticks), and it is a bearish pattern.

The bearish dark cloud cover candlestick consists of an upward candlestick (e.g. a green or white candlestick), followed by a downward candlestick (e.g. a black or red candlestick) that opens above the close of the previous candlestick (i.e. a gap up), and closes below the middle of the previous candlestick.

The bearish dark cloud cover pattern can occur in a number of different contexts (e.g. at the beginning of a trend, during a trend, at the end of a trend, etc.), but it is most relevant when it occurs during a significant upward trend. The bearish dark cloud cover can be used as an indication of the end of an upward trend, and therefore can be used as both a trade entry and a trade exit pattern (i.e. an exit from a long trade, and/or an entry into a short trade). Note that if the second candlestick does not close below the middle of the first candlestick, that a different (and bullish) pattern is created instead.

Generally, you should be careful when prices are heading towards prominent support/resistance levels. Try to enter into a trade only when both candlestick analysis and the support/resistance levels complement each other.

For example, if you see a large bullish marubozu candle hit a very strong resistance level, don't enter into a Buy trade... it's not a good idea to do that! Likewise, if you see a bullish engulfing pattern form on a resistance level, don't enter into a trade either! When prices are nearing a strong resistance level, it's a better idea to wait for a loss of upward momentum and a bearish engulfing pattern to form before you consider entering a Sell trade.

Tweezer Bottoms and Tops

The tweezers are dual candlestick reversal patterns. This type of candlestick pattern could usually be spotted after an extended up trend or downtrend, indicating that a reversal will soon occur.

Notice how the candlestick formation looks just like a pair of tweezers!

The most effective tweezers have the following characteristics:

The first candle is the same as the overall trend. If price is moving up, then the first candle should be bullish.

The second candle is opposite the overall trend. If price is moving up, then the second candle should be bearish.

The shadows of the candles should be of equal length. Tweezer tops should have the same highs, while tweezer bottoms should have the same lows.

Triple Candlestick Patterns

Evening and Morning Stars

The morning star and the evening star are triple candlestick patterns that you can usually find at the end of a trend. They are reversal patterns that can be recognized through these three characteristics:

The first stick is a bullish candle, which is part of a recent uptrend.

The second candle has a small body, indicating that there could be some indecision in the market. This candle can be either bullish or bearish.

The third candle acts as a confirmation that a reversal is in place, as the candle closes beyond the midpoint of the first candle.

Three White Soldiers and Black Crows

The three white soldiers pattern is formed when three long bullish candles follow a downtrend, signaling a reversal has occurred. This type of candlestick pattern is considered as one of the most potent in-yo-face bullish signals, especially when it occurs after an extended downtrend and a short period of consolidation.

The first of the three soldiers is called the reversal candle. It either ends the downtrend or implies that the period of consolidation that followed the downtrend is over.

For the pattern to be considered valid, the second candle should be bigger than the previous candle's body. Also, the second candle should close near its high, leaving a small or non-existent upper wick.

For the three white soldiers pattern to be completed, the last candle should be at least the same size as the second candle and have a small or no shadow.

The three black crows candlestick pattern is just the opposite of the three white soldiers. It is formed when three bearish candles follow a strong uptrend, indicating that a reversal is in the works.

The second candle's body should be bigger than the first candle and should close at or very near its low. Finally, the third candle should be the same size or larger than the second candle's body with a very short or no lower shadow.

Tips on Choosing the Best Binary Options Broker

The world of finance and trading is fast paced and can be very confusing to the untrained person. Whilst trading in Binary Options is one of the simplest methods it can still be confusing if you don't understand what you are doing. One way of getting round this is to choose a good broker who can help you through the process.

Choosing the right broker is a difficult task. There are so many of them and each offers a different level of service. So how do you go about choosing the right broker for your needs? Most, if not all Binary Options trading is carried out over the internet so this is the place to start.

A simple search on the internet will bring up lists of hundreds of different brokers. The first thing to look at is the web interface each broker is using. It should be simple, easy to understand and user-friendly. If you can't navigate around a particular broker's site then don't use them. You could wind up losing money rather than making it.

After you've narrowed down your choice of brokers you should start to look at what security and privacy they have in place. They are dealing with your money after all and should have the most secure measures and firewalls in place to protect your money and your personal information from hackers and identity thieves.

The next thing you should look at is what level of support does the broker offer? You should be able to contact your broker easily, via telephone, email and live chat. And you should be able to get up to date information from them regarding on-going trades. If you can't or they can't explain to you what is happening in easy to understand language then don't use them.

Minimum deposit and trade levels and maximum pay-outs are an important factor in choosing a good broker. Some brokers offer no minimum deposits so obviously these would be good brokers to look at, especially if you are not intending to invest large sums. Maximum pay-outs are important. Look for a broker that offers a minimum of 75% to 90% pay-out and also look at those who offer a rebate on trade losses. Some will offer between 5% and 15% rebate if your trade loses.

Take a look at what payment options they offer. A broker is no good to you if they only accept credit card payments and you don't have one. Look for one that offers a range of methods like PayPal, bank transfer, debit and credit card, etc. In conjunction with this look for one that has a variety of withdrawal methods available. Again, it's no good if they only a withdrawal method of paying into PayPal if you don't have an account.

There are many things to look for in a good broker, these are some of the more important options you should consider. A good broker works for you, not against you and is in the business of making money, both for you and for themselves.

EUR/USD

A small 20 pip short just at the consumer confidence data time.

AUD/USD

Caught the low on AU for a 23 pips bounce trade.

EUR/JPY

Earlier EJ trade for +32 pips.

EUR/USD

Earlier long from 1.3420 zone to 1.3456 on EU.

EUR/USD

Bounce from a group of supports.

EUR/USD

First short EU on the day.

USD/CHF

UCHF correlation trade for +20.

All You Need To Know About Instant FX Profits

Instant FX Profits is a recorded version of a Forex training workshop conducted by Kishore M in Singapore. The workshop comprises of seven modules, covering from the basics of Forex trading, such as introduction to currencies and money management principles to the more technical aspects, including technical indicators and trading strategies.

Although these are recorded videos from a live training workshop, they are pleasantly clear and watching them in full screen does make you feel like you're attending the live session.

Kishore M is an Ex-Hedge Fund manager that has over 10 years experience in the Forex, Stock, Commodities and Derivatives market. Kishore is also the best-selling author of "Retire Rich Trading" and has conducted various financial seminars in many countries around the world. He has also contributed articles to various magazines and newspapers as well as being featured in major business channels.

The following is an overview of what is being taught in each module in the workshop.

In Module 1, Kishore teaches the very foundation of trading the Forex market. This includes introducing the various currency codes being used, the major currency pairs and crosses, the special characteristics of various currencies, including the factors that may influence their movements and the expected range of their daily movements, the difference between base currency and quote currency, and the spreads of those currencies. In addition, Kishore also discusses pips, which stands for percentage in point, including how to calculate their values in a trade.

Kishore then covers the concepts of making profits in both uptrend and downtrend markets and an explanation on the various trading orders such as market order, limit order, stop order, one-cancels-the-other (OCO) and trailing stop orders. Kishore also touches some aspects of Fundamental Analysis focusing on major economic indicators such as Gross Domestic Product (GDP), Production Price Index, Consumer Price Index and Employment Cost Index. He then covers the Global Economic Calendar and Daily Economic Reports as well as the announcements made by the Central banks.

In Module 2, Kishore teaches the Technical Analysis of Forex trading. Firstly, he covers the basics of candlestick charts, explaining how candlesticks should be interpreted by looking at the open, close, high and low prices, and also introduces some useful candlestick patterns, including doji, twin tower (tweezer), topping and bottoming tail. Next, he explains the various time frames in which the currencies can be traded and the target profit and stop loss levels to be set for each time frame. The lesson that then follows is one of the most important, i.e. how to identify the trends of the market using trendlines and the various reversal and continuation patterns. In this section, Kishore provides a comprehensive list of these patterns, including Bullish Triangle, Bearish Triangle, Ascending Triangle, Descending Triangle, Bull Pennant, Bear Pennant, Falling Wedge, Rising Wedge, Double Top/Bottom, Triple Top/Bottom and Shoulder Head Shoulder.

In the last section of the module, Kishore teaches the various technical indicators that will later be incorporated into the trading strategies. This includes Moving Average (MA), MACD, Stochastic, CCI, RSI, Bollinger Bands, Parabolic SAR, ADX and Demarker Indicator.

Module 3 and 4 are the modules that most students will be looking forward to. It is the Spot FX Trading Strategies. In Module 3, Kishore teaches six trading strategies, each of which is suitable for different time frames and currency pairs. The strategies are Instant Pip, Pip Maximizer, Pip Retracement, Pip Breakout Explosive Profit, Pip Quantum Profit, and Pip Divergence. In Module 4, Kishore teaches two other strategies for news releases, i.e. Non Farm Payroll and Federal Open Market Committee (FOMC). Although the Non Farm Payroll is released on the first Friday of each month and the FOMC meeting is held eight times in a year, the profit potential on these trades can be significant, as the price can move hundreds of pips when these news are released. Each of these eight strategies is being explained in great detail with illustrative examples. A separate pdf manual is also included dictating the step by step execution of the strategies.

In Module 5, Kishore does a recap on all the lessons that have been taught from Module 1 to 4 above, and also conducted a short Q&A session with the students with particular emphasis on the trading strategies This is really useful as a refresher, given the amount of detail being learned in the first 4 modules, before proceeding to learn even more in the following modules.

In Module 6, Kishore teaches more technical contents, including how to draw trendlines using fractals, how to use Fibonacci ratios to find levels of support and resistance and a comprehensive lesson on pivots, including how to calculate pivot points and some useful pivot strategies to be used along with Fibonacci Levels and Parabolic SAR. The module then continues with Kishore introducing a different topic, i.e. Forex Futures. Note that everything he has taught from Module 1 till now is Spot Forex. The main difference between Forex Futures and Spot Forex is the time when the trading price is determined and when the physical exchange of the currency pair takes place. With Forex Futures, the price is determined when the contract is signed and the currency pair is exchanged on the delivery date, which is usually some time in the future. In Spot Forex, the price is also determined at the point of trade, but the physical exchange of the currency pair takes place right at the point of trade or within a short period of time thereafter. This topic could be too technical for some students, but it's an additional topic for those who wish to trade futures.

Module 7 is divided into two parts. In part 1, Kishore covers the strategies for trading the US Dollar Index and the related RYSBX and RYWBX. He then introduces the concept of "hedging" when trading Spot Forex by using a force open. Hedging is particularly useful when the market is very volatile such that the stop losses can get triggered frequently, leaving us with lots of loss trades. A force open allows us to enter the opposite side of a trade without closing the initial trade so that losses are minimized. The module then continues with another different topic by Kishore, i.e. Forex Options. This again can be technical and uninteresting as most students will be focusing on trading Spot Forex. But it's another additional topic which could be useful and can be added to one's knowledge base of trading. As usual, Kishore provides a comprehensive lesson, covering the advantages of trading options over the cash currency market, the different types of options including one touch option, no touch option, digital option, double one touch option and double no touch option, and the strategies for trading these options.

The last section on this part of the module is about Money and Equity Management. Here, Kishore explains the amount of capital that should be invested in each trade and how the trade sizes would change with different account sizes. He then gives a comprehensive guidance on managing your trades, including dealing with losses, planning entry and exit points, managing your emotions during a trade, and developing a realistic trading plan to achieve your desired goals.

In part 2 of Module 7 which is the final module, Kishore gives a practical guidance on using the MetaTrader 4 platform to analyze and enter trades. This includes setting up the charts, placing the different types of orders, inserting the various indicators and adjusting their settings and parameters, and all the other operational matters. He then teaches the use of his personally designed indicators (see the bonus section below) and does live trades with the students, showing execution of the different strategies he has taught. Kishore also introduces some brokers that students can use for both demo and live accounts, and shows a live step-by-step process of registering for an account together with tips on how to get an account approved quickly.

The entire course as described above from Module 1 to 7 is captured in over 12 hours of videos which can be easily accessed on the members area upon logging in. Although some of the topics being covered are quite technical, Kishore has done a great job in his delivery by using layman and simple terms. I do believe that even people with zero knowledge or experience in Forex trading should have no problem following the principles being taught, and more importantly, the step by step approach to executing the trading strategies. There is no option being provided to download the videos, but one can simply use a browser plugin to download them.

In addition, the lessons are also supported by pdf files, acting as manuals and guidances for easy reference. There are over 20 pdf files from the Complete Course Manual to the Strategies slides and technical indicators printshots right up to the Candlesticks Charting manual and MetaTrader Operation Handbook. To complete the list, there is also the MP3 version of the entire course for those who want to listen to Kishore's teachings, rather than watching the videos. Lastly, there are 7 more videos under the "Jumpstart" section in which Kishore provides an overview of the Forex basics and six of his trading strategies. These "jumpstart" videos are intended to provide a quick introduction to students such that they can apply those principles and strategies immediately.

That's just the main course contents. Now, let's look at the bonus contents. Although Kishore included these as bonus items, they actually form an essential part of the trading process, such that they critically supplement the process of putting the lessons learned into practice. Read on below about these bonuses to understand what I mean.

Bonus #1: Chart profiles

These are the chart profiles for MetaTrader 4 for each of the strategies taught by Kishore. For example, the Instant Pip strategy uses Bollinger Bands, Parabolic SAR, Stochastic, CCI, RSI, ADX and MACD. Instead of setting up the charts with these indicators and adjusting their parameters, simply put the downloaded chart profiles into the program folder and the preset charts can be loaded up. Even the colors of the charts are identical to those used by Kishore! These are extremely useful as students do not have to worry about making the wrong settings to the charts, but instead can focus on applying the strategies immediately.

Bonus #2: Trading Indicators

All members of Instant FX Profits are provided a range of indicators for the MetaTrader 4 platform that are designed to support the execution of the strategies taught by Kishore. In total, there are 13 indicators that can be used as trading tools or simply as guidance to enhance the execution of the trading strategies. These indicators are:

Buy/Sell Indicator
Extension Indicator
Scanner Indicator and Template
Instant Pip Profit Strategy Scanner
Pip Maximizer Strategy Scanner
Pip Breakout Explosive Profit Strategy Scanner
Retracement Strategy Scanner
Inner AutoTrendlines
Outer AutoTrendlines
Channel Indicator
Pivot Indicator
Sliding Lines
Candlestick Countdown timer

Each indicator has its purpose and Kishore has provided an explanation on how to use them in the main course (part 2 of Module 7 as mentioned above). My personal favorites are the Strategy scanners which will "scan" all charts for trading opportunities according to the chosen strategy. For example, the Pip Maximizer strategy applies when the price cuts through two Moving Averages. When this happens, the Pip Maximizer Strategy Scanner will lid up in green for a buy opportunity and red for a sell opportunity. This way, I do not miss any trading opportunity and do not have to monitor the movement on the charts all the time. However, the scanner does not give a sound alert, which means we would have to watch the computer screen for a trade signal. Perhaps, Kishore should update these indicators in the future to include a sound alert.

Bonus #3: Graduate Gathering 2009 & 2010

The Graduate Gathering is an annual event held in Singapore, in which Kishore's former students will participate to share their knowledge and experiences in trading the Forex market. In these video recordings, there are a total of 5 very successful students (they are Mona Mohd, Afida Aman, Bellum Tan - CEO of Rich Dad Asia, Raj and Dominic Silva) who all have amazing trading records, each with their own way of interpreting and trading the market, sharing exactly how they enter and exit trades. Although different in views, they all have one thing in common, i.e. they are using the same principles and strategies taught by Kishore. These videos are extremely useful as we are able to see how that same knowledge that we have learned in the course above (Module 1 to 7) is put to practice. I actually learned a few very effective trading tips from Mona and Bellum and incorporated them into my trading plan for better trading results.

Bonus #4: Tutorial from Lucas and Conrad

According to Kishore, Lucas and Conrad are two of his top trainers in Forex trading and Kishore was right. In these videos, Lucas and Conrad give a comprehensive and detailed tutorial on four of the strategies taught by Kishore, i.e. Instant Pip, Pip Maximizer, Pip Retracement and Pip Breakout Explosive Profit. A pdf manual is also included for every strategy being covered.

Note that Lucas and Conrad provided separate tutorial sessions, i.e. a tutorial session by Lucas on the four strategies and another tutorial session by Conrad on the same four strategies. To some, these may be tiring as we would have learned these strategies from Kishore in the main module. However, I personally find this interesting and useful as having the same strategies being taught by different tutors gives me a better understanding of their execution.

Bonus #5: Mona Live Trading Video

In these videos, again we have the opportunity to learn from Mona who is actually a very good teacher! In the Graduate Gathering, Mona gave a brief explanation on how she uses the Instant Pip and Pip Maximizer strategies. In this Live trading session, she focuses exclusively on Pip Maximizer and shares a trading plan that is extremely easy to follow, yet profitable to the participants. Ironically, her 9 year-old daughter has been following this plan and has made over $40,000 in three months! I have personally tried this on a demo and it really works. But in order to make serious money, you need to have a bigger account balance.

Bonus #6: Daily Alerts

In this section, Kishore provides a commentary on the market conditions and gives a trading alert (where applicable) based on his strategies. There is also information on the Dollar Index Future, RYSBX and RYWBX shares, the CRB Index, Oil and Gold. Personally, I only refer to these alerts as a check, as I can already identify trading opportunities on the charts together with the strategy scanners. These alerts are provided on a daily basis and can be downloaded in Microsoft Word format.

Other bonuses

In addition to the six bonuses above, there are also the Chatroom and Online Charting Website to be accessed by students. The Chatroom is a useful medium for Instant FX Profits students to discuss their trading activities and can also be used to ask any questions related to Forex trading. The Online Charting Website is a site that provides Forex news, currency forecasts, economic calendar, Forex charts and many other essential information that are useful for trading.

There are also more videos of other events such as the Forex Championship, in which the winner shares his method of trading the market and other useful tips, and also tutorial videos on six of Kishore's strategies in the Chinese language.

Finally, there is a list of recommended brokers with links to open both demo and live accounts with them, and some having trading credit bonuses as well.

There is also an "Update" section where Kishore will provide the updated materials for this course. At the time of this writing, I have five updates added to the list, i.e. Updates for candlestick patterns, fractals, FOMC strategy, candlestick charts course and Instant Pip strategy. Other than these, the main course is also updated as Kishore conducts these workshops every year. In fact, there are two versions of the main course in my membership area, i.e. the 2010 and 2011 versions. The information provided above about the 7 modules is from the 2011 version.

At the time of this writing, I have been using this trading system for 9 months. Here is my trading routine. I only use the Instant Pip and Pip Maximizer strategies as they suit me well. With Instant Pip strategy, I can make an average of 4 trades per day on the EUR/USD M30 charts with profit of approximately 15 pips per trade. With Pip Maximizer, you don't get trades everyday. On average, I make 3 trades per week with an average of 70 pips per trade on the EUR/JPY H1 charts. That's a total of approximately 2,000 pips a month. As I start with a measly $1,000, I only enter one mini contract per trade. This gives me around $2,000 per month. Following the advice of Mona in the Graduate Gathering event, we do not have to strive for more pips. Instead, we just have to increase our contract size. For instance, by increasing my trade size from one mini contract to two, I would have been making $4,000 a month and so on.

With a realistic target, I am able to trade more confidently but I have also been testing and practicing these strategies on a demo account for almost 4 months, making hundreds of trades, before moving on to a live account. I have found that the key to success in Forex trading is to have patience, consistency and persistence. By sticking to a proven trading system for a long time such that you are really comfortable with the way it operates, you will eventually see the results unfold.

3 Simple Methods for Exiting Your Trading Position With Maximum Profits

If you're having trouble deciding whether scale in, scale out, or going all in all out, I think first question to ask is "do the #s make sense?"

A Quick Story With a Fellow Trader

I was having a conversation this week with a fellow trader and we were talking about the feasibility of a strategy that risks 2 to make 1. That is, your reward is less than your risk. While I was somewhat intrigued, the first thing that I thought of was the challenge of overcoming a draw down, or string of losers.

As an independent trader, I feel the edge lies in the ability to get in and out of the markets 'unnoticed.' Riding a trend or the meat of the move is the way I approach the markets. So that lead our discussion to risk/reward, what do the #s say?

Does Scalping Work?

While scalping (a few ticks/pips) can be a profitable strategy for big firms with co-located servers, it's not my method of choice. Holding out for a big profit target, well that allows for 1 winner to make up for a bunch of small losers, but waiting for that home run can be tiresome, and when the opportunity presents itself, it can be advantageous to want to take a small profit to "lock in gains." (Yes, you can go broke taking a profit).

What About Trail Stops?

That brings me to the trail stop approach, entering a position an incrementally tightening your stop as the trade works in your favor. I find this works well if you can have the self-control to not tighten the stop too quickly at the onset of the trade. Wait for the trade to get away from your entry price before tightening and then don't trail too close.

So What Should a 1 Contract Trader Do?

From my experience when trading a 1 lot, and having to go all in all out, setting a profit target 3-4 x your stop size and trailing your stop to that target is extremely effective.

Strategies for Trading Multiple Contracts

When increasing to 3 contracts then the options for scaling begin to factor in. I prefer to take a small profit (scalp) on 1 contract, set a target of 3x my stop price on the 2nd contract, and trail the third contract until I am taken out.

This reduces the risk at the onset of the trade, as a high percentage of trades (whether they work to a bigger profit target out or not) tend to give at least a small bounce. I use this same method for larger lot size as well, small profit target, 3:1 profit target, trail stop.

Everyone enjoy their weekend, and when you have some time perhaps share your method.

Options Trading Strategies - Helping You Achieve Your Financial Goals

Being bothered and troubled by societal dilemmas and social as well as economic and political issues, you fear experiencing difficulty on your future finances. Since many countries are facing economic crisis and instability, more and more individuals are becoming interested in trying some new ventures: investments and trades. With this desire and effort to obtain financial stability and freedom, many people nowadays consider those available options trading strategies over the web to help them out.

Considering these strategies for trading options may be a good start as people, newbies and experts on investments and trading all maximize the use of the web to gather and share information and other details on investment and trading. Whether such may be a new trend, functional, operational, conceptual or theoretical ones, anyone can still find such useful and helpful. Knowing other people's experiences and insights as to how you can make this option trading efforts and ventures work may seem to jumpstart your career in this industry.

Finding options trading strategies over the web is beneficial. Some online forums and web communities allow newbies and other netizens to have such access on these online groups and pages. Through their posts and updates, you can actually get access to these inputs for free - having a very few clicks as well. Indeed, this could be a better and a more convenient way to have access to useful and concrete inputs.

Some members and subscribers of these online sites and pages also post some webinars or the so-called seminars and conferences happening online powered by innovative software and applications. You can have yourself registers to these workshops and discussions related to investment and trading basics and essentials. Through such interactive and high-end media, you could be able to communicate with other individuals around the globe and such contacts, links and connections may really be healthy and useful. Virtual friends and business partners - fellow investors and traders are considered to be reliable and dependable first-hand sources who can certainly hand you some options trading strategies in no time.

Everybody wants financial stability and security in the future. It may take some time before one can achieve this dream towards financial freedom. But all are also willing and able to invest, patiently wait for long-term investments and trades, and the like. All these individuals want to obtain such objectives and goals at their own pace, time and convenience. And with that, all those who are interested to venture into investments and trading are encouraged to take a few steps ahead the others to fast track their way to financial security in time.

So, what are you waiting for? Find the most effective and reliable options trading strategies today and be amazed with its benefits, gains and positive outcomes. Though such ventures and endeavors may involve risks and losses, you should not worry as many experienced and expert investors and traders are willing to lend a hand. There should be no worries and fear when all you have to do is to find what is best for you and your funds. Get those options trading strategies today and welcome profitable outcome. Good luck!

USD/JPY

A nice way to end this week with a Usd/Jpy Trade.

AUSTRALIAN DOLLAR

Caught a long at the retracement entry of 1.0705.

Exposing a Trader's Blind Spot - The Most Overlooked and Critical Aspect of Trading

Traders know that position sizing is important, but because it requires some math calculations and some extra effort many traders simply use a fixed trade quantity for all trades. Why would you trade the same 100 share trade quantity for both a $20 and a $150 stock? That is not smart position sizing. Why would you trade a fixed number of shares for both a 5 minute chart and a 60 minute chart? That is not intelligent risk management. This lazy man's approach to position sizing, which negatively impacts your risk management, doesn't make sense! In fact, it is sheer foolishness and a good way to waste money in your trading account. Read on to learn how to do position sizing and risk management correctly.

Why position sizing is so vital is summed up by Perry J. Kaufman in his book, New Trading Systems and Methods; "A trading system alone will not insure success without proper risk control beginning with individual trades... therefore the size of the position, the markets to trade, and when to increase or decrease leverage becomes important for financial survival." As Mr. Kaufman points out, risk management via proper position sizing done on a trade by trade basis is vital to your trading account survival. Since we know that a fixed trade quantity is the worst model possible, let's look at something that is viable.

The "fixed risk amount and volatility" position sizing model is good and fairly simple to implement. First, figure your fixed risk amount. In this article our example uses stocks but everything we cover applies to Forex and futures trading too. Let's use a trading account balance of $30,000 multiplied by 1% of the account balance which equals $300 for your "fixed risk amount" on each trade. The reason it is called a "fixed risk amount" is because you use $300 to your stop loss price on every trade you make. Second, to establish the volatility aspect, you will use either ATR (average true range) or Range (high minus low). Take some multiple of this range, like 2 or 3, and that becomes your stop loss price. The distance from your entry price to this range multiple stop loss price is your volatility buffer to keep you in the trade yet give the symbol enough wiggle room to not get stopped out of a good trade entry. Although it requires some effort this is a good position sizing method, but there's something even better. Read on.

For the most advanced position sizing model we recommend using a "fixed risk amount" divided by the "real trade risk amount." Basically we are replacing the generic "volatility" risk amount calculation used in the first model with the "real trade risk amount" to create the best money management position sizing method possible.

We already covered the "fixed risk amount" calculation in the first model, so we will use the same $300 "fixed risk amount" for this advanced model. But now instead of a generic volatility calculated risk amount we are going to calculate your "real trade risk amount." What do we mean by your "real trade risk amount?"

Let's look at an example using a long trade entry set-up to illustrate the "real trade risk amount." First we decide where both the entry price and the stop loss price should be. That distance from the entry price minus the stop loss price is the "real trade risk amount" per share.

The "fixed risk amount and volatility," which was our first model, calculated a volatility based stop loss risk amount; but for this advanced model, we recommend using real time fractal support and resistance to determine where to position the stop loss price. For this long trade example you'll look for the last down fractal, which is defined as where the price was going down for several bars then turned around and went back up for several bars. This down fractal represents the most recent price support (where price actually reversed directions), so let's use this price minus a few extra ticks as our trade stop loss price. In other words, if you are going to make this long proposed trade you want the price to remain above that last down fractal price which represents support. Otherwise if price drops below this support you don't want to be holding a long trade.

Now to calculate the "real trade risk amount," subtract the proposed entry price minus your last down fractal price minus a few extra ticks. To put this advanced model calculation all together take the $300 "fixed trade risk amount" and divide by your "real trade risk amount" per share to give the specific trade quantity for each specific trade. This advanced model calculates the maximum possible shares you can trade on each individual trade.

This advanced position sizing model is far superior to most other forms of position sizing. If you are daunted by the math or the extra time and effort this will take, you'll want to look for computerized tools that can automatically do this math for you and make your trade risk management very simple.

The best and most consistent traders have strong risk management skills. Be a wise trader and intelligent risk manager with your trading account. Make use of this advanced "fixed risk amount" divided by the "real trade risk amount" position sizing method to maximize your trading profits on each individual trade.

EUR/USD

Firstly traded the breakout for +15 pips, and next banked on the US session highs to support, however we closed too early on the 1.3276 entry trade.

EUR/USD

EUR/USD held a plethora of resistances to give a decent pullback day trade.

Do You Have the Guts for Investing?

Do you want to make money by investing but panic when something small happens? So many people feel that they are ready to start investing a lot of their money way too soon when they are not even ready to stomach small losses. The next problem is, when people start receiving losses and selling on the spot, they easily become discouraged and eventually quit investing altogether. That is quite sad because because investing correctly can bring many positive things to your life. If you are investing properly, you really could make money by investing. When getting into any type of investing situation, you need to be mentally prepared and have a really good plan that you can stick with.

If you have a good plan while investing, you will have more confidence and you wont run at the first sign of danger. For instance, if you are in the stock market, your stock WILL go down eventually. This does not mean panic and get scared. If you think the stock will rise, you need to trust your instincts. Remember to plan out every move you make and follow through!

Some tips to deal with stress:

1. Be in charge of your actions!

If you do something that you believe in, follow through with your actions! Don't just fall through on your plan right in the middle of it all!

2. Don't overload your brain with information!

If you are going to invest, you need to have clear thoughts. Don't let your brain fill up with useless information that you think is actually valuable. Think straight and concentrate!

3. Be organized!

Make sure you have everything organized when you start investing. Your brain wont feel like exploding if you have everything in its place.

4. Be happy with small gains!

When you invest, you really shouldn't expect huge amounts of profit very quickly. It could happen but if it doesn't at least you wont feel discouraged. To make money by investing, be happy to make any profit at all, at least in the beginning!

5. Know your risk and return!

When you start, you should know exactly what your risk and return would be. You will have to calculate certain situations a little bit but once you know what the risk is, you will probably feel a little bit safer when going in. Also be sure to know how much you can make on your investment, because if the risk far exceeds your gain, then you may want to rethink the investment in the first place.

GBP/USD

Daily trendline broke on sharp move.

Same TL got retested and price moved lower again.

AUD/USD

Our AUD trade for today.

GBP/USD

 GBP/USD trading this US session.

GBP/USD

Reasoning of the latest GBP/USD long from 1.5822.

5 Benefits Of Long Term Trading

Together short period and extended term trading can be productive trading plans yet; long duration trading has many significant benefits. These comprise the result of compounding, the chance to gain from dividends, decrease of the effect of price variations, the power to make adjustments in a more timely manner; less time spent watching stocks.

1. Compounding

Time can be investor's foremost mates since it delivers compounding time to work its magic. Compounding is the statistical method where interest on your funds in turn gains interest and is supplemented to your principal.

2. Dividends

Keeping a stock to take benefit of pay outs from dividends is other ways to raise the worth of an investment. Several companies offer the capacity to reinvest dividends with extra share purchases thereby growing the overall cost of your asset. Moreover, dividends are more an image of an industry overall business planning and success than volatile cost fluctuations established on market emotions.

3. Lessening Of The Effect Of Price Movements

In the long-run investment, the persons are less influenced by brief term volatility. The market inclines to address all elements that keep varying in the brief term. So an individual concerned in long-run investment or trading will not be influenced as much by brief term instability due to elements such as liquidity, fancy of a specific sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been influenced due to some other elements (in the brief term) will provide better than average incomes.

Long-run investors, especially those who invest in a varied portfolio, can ride out down markets without dramatically affecting his or her capacity to reach their objectives.

4. Making Adjustments

It is very likely that you may perhaps obtain a constant profit over a long term. The truth is that there will be periods when your assets gain less and other times when you make a lot of money in short period. There could also be eras when you lose funds in brief period, but as you are in quality stocks and have a long aspect of investment you will gain decent profits over an era of time.

There are always periods when several stocks do not fulfill, and it is the smart choice to pull out of a venture. With a long-run attitude established on quality stocks, it is simpler to take judgements to change in a more timely fashion without the pressure that plays with short period and day-trading strategies chasing variable changes.

5. Less Time Used up Watching Stocks

Unlike day trading that can need continuous supervising of stocks during the day to capitalize on intraday volatility, long duration dealing can be carried out efficiently employing a weekly monitoring system. This advent is most often far less stressful than observing values constantly daily.

AUD/USD

20 pips AU day trade on a holiday move.

Taking Charge of Your Trading

I came across an article someone had written not too long ago that basically said that it is impossible to make money Day Trading. I felt bad for this person because for him he is telling the truth.

Back in the 90's when day trading gained popularity, many people have told me that you simply had to buy something and you were inevitably going to make money. And, of course, most at that time felt that the party would never end.

Real estate was also a big party that was supposedly never going to end - I heard some of the 'experts' say, in 2004, that Real Estate was where you had to be all the time. It was THE ONE KEY to wealth. We are all human, and can get caught up in 'sure things' and 'bandwagon' theory..

There is no "Get Rich Quick" when it comes to the markets.

It was not hard in the late 1990's and early 2000's to get into the mortgage business or in real estate and make great money. Nor was it hard to get into the day trading business and make great money. But things change, and you have to be smart enough to realize that there is a natural ebb and flow in life.

There is a constant influx of news, blogs, videos, and other media of people being negative or explaining why they think something won't work. But the one thing that you must realize is that you have a CHOICE as to what to watch and more importantly, what to believe.

If you believe something to your core, then it is true for you. It doesn't matter what someone else says or believes. If you believe strongly that something is impossible, then no matter what evidence is given to you to the contrary, you will act and behave in a way that supports your belief - and that something will remain impossible for you.

So, if you realize this, why would you let someone else's article, blog or the news get you down or affect you?

Because it's easy to go into autopilot and allow it to suck you in. Self awareness is the first step to FREEDOM, and really the hardest step for most.

Do not let someone else tell you what you can or cannot do. You ultimately decide what you believe, but you can easily get 'sucked in' to beliefs that are not useful to you.

I'm simply sharing what I've come to believe based on rational thought and years of experience that I think can be of great use to others. If nothing else, my hope is that you will take inventory of your beliefs and your goals and see if your beliefs are aligned with your goals. If not, I want you to realize that you can change them.

Don't allow others to influence you in a negative way - decide for yourself what you can do and set out to do it.

It's a lot more comfortable (and most people do this) to just say that your beliefs are 'right' just as they are and to hold on to them and look down on others who don't share those beliefs. Some people will even kill others who don't share their beliefs. It's pretty powerful how beliefs can move people.

Being Chart Ready “All the Time”

   Forget the news, remember the chart. The chart already knows the news is coming. You can/should never predict the market moves because you can never be too sure as to how the news would affect the price movement. 


    I absolutely stick to the above words of wisdom, however if I have to modify it a little, “Don’t entirely forget the news (at least you should know at what time the scheduled data is coming out, so that you can adjust or close your open trades, to avoid possible spikes), but you’ve to only trade your chart”. The latter part of the paragraph is damn right though. You just don’t know when the news is priced in, and when its not and you can mostly not predict which way the news is going to affect price (unless it’s a Central Bank Intervention, or a significant deviation from the expected to the actual interest rate announcement)

   If you see hundreds of charts, posted on this blog in the past few months, or thousands of them posted on the twitter for the past 4 years, you would have noticed that I don’t use much indicators.  I have never been an indicator enthusiast because they are merely derivatives of price. My approach has been, “Why on earth should I study derivatives of price when I must trade price itself?” If you have a different opinion to me and have been time and again doing well over the years, well then your achievements speak for themselves. In the business of currency trading (or for that matter, trading any market), everybody must discover their own niche that works for them.

   I sometimes observe traders (when I go in general trading chat rooms) doing all sorts of fundamental calculation which baffles me to the max, as to how they can use that information to decide on a buy/sell decision and their stop losses. May be there is a way, and I am certainly not a hater of fundamental trading, but I think retail traders like you and me have to rely on your charts more than anything else, and the charts need to be prepared “all the time”. 

   Traders don't realise the importance of preparation and planning. Your routine at the start of the trading day should be to stay unruffled, attentive and chart ready for action which is the ultimate goal towards being prepared. Plot your fibs, mark the previous day’s highs and lows, and don’t just stay obsessed with Eur/Usd.

   Technical analysis is a skill that improves with experience and study. Always be a student and keep learning. - John Murphy

   If you have the willingness to be a good trader and make a living out of it, leave all those bad habits like trying to decide a trade on news, stop trying insane correlations that don’t even exist (and you think it’s a correlation), and just live your life on charts and can I say it once more? Stop being impulsive and trade only when there is a technical opportunity. You will be amazed how your decision making gets better with time.

“Charts know everything” (well almost) :)

The Truth About Your Trading Experiences

A major key to success as a Trader and Investor lies in your mind. Actually, it lies in your ability to use your mind optimally and creatively.

Please remember - there is NOTHING WRONG WITH YOU. You don't need to change YOU. What you most likely need to change is the "software" that you are running in your mind. When we are born we do not get a user's manual on how best to use our mental abilities. So we learn by soaking up what we see and hear around us as we grow up. And often times what we learn is not conducive to being a successful trader and investor.

One of the key mental approaches is to "Welcome Every Experience." Welcome every experience that comes to you. It may be an expectation, or it may be a surprise. It may be 'good', or it may be 'bad' based on your first assessment of it. It may involve someone getting hurt, someone getting promoted, a tragedy, a triumph, a windfall, a bankruptcy, an 'aha' moment....anything. The most useful way to approach experiences we receive (which are mostly experiences we can't control as they are outside of us) is to welcome them and learn from them. Realize that they are exactly what we need in that moment, at that point in our lives. And since we don't have a time machine, once something has happened, there's no changing it.

So, what am I talking about? I'm talking about trading losses. I'm talking about trading wins. I'm talking about violations of your plan. I'm talking about following your plan. Trying to take "revenge" on the market. I'm pretty much talking about all of the various experiences you can have from moment to moment during the trading day. The point is that whatever you do or experience in a given day on a given trade is exactly what you need. Welcome it.

Thank it for coming because it is feedback - pointing out things that you need to change. It is often indicating that the changes you are making are getting you closer to or farther from your goals.

Either way, it's pointing in the RIGHT direction....no matter how GOOD or BAD it seems at the moment. Take this approach, and you will be unstoppable. Experiences that would otherwise reduce the mentally undisciplined trader to tears or an emotional basket-case, you will use to your advantage. You will use it as a stepping stone towards your goals.

Pause and think for a second with me. Can you see the person who, no matter what happens, WELCOMES the experience, finds a lesson in it and uses it as a stepping stone rather than a roadblock? I think you will agree - that person will be UNSTOPPABLE if they consistently think this way.

Realize that no matter how hard things get or how bad things seem, you can CHOOSE take the approach of "I welcome this experience and it's pointing me in the right direction to my goals". If you do this and continue to do this and don't give up, then you will move more effectively and efficiently to your trading and investing goals.

Options Trading Strategies - Trying Online Support Sessions and Tutorials

Many individuals nowadays settle for several ways to maximize their earnings and increase the value of their hard-earned money. In their efforts to come up with fresh and new ideas on business, trade, commerce and investments, their interests lie in various means as to how they can find the most effective and reliable options trading strategies. Such is believed to be utilized in their new ventures. Thus, since they are just beginners, they don't have enough resources to fund their need for support, learning and development. With that, they would surely resort to multiple free online services and support groups.

Initially, there is nothing wrong in taking this technique as an alternative that could really help you out. The only thing that you need to be certain is that you only get what is right, reliable and practical. You can get a guarantee of this by having some background check as to the web page's or the website's credibility, reliability and authenticity. Information, ideas and details that are shared must be either based on facts, data and verified documents or some real-life experiences. If such is gained and received, you surely can make use of those things and try to have these strategies work for you and your funds.

These online groups and communities include blogs, forums and web pages that are monitored and authored by option traders and investors themselves.

To start with, here is an overview on stock options - your first few steps to more useful and practical options trading strategies.

Stock Options 101

Stock option trading provides experienced and advanced investors with much more opportunities to potentially make and fulfill rewarding returns. Thus, stock options may also involve risks and some losses; therefore, a rigid research and a good and thorough understanding of what options really is and how does this work will help you minimize risk and maximize your profits as an option trader and as a beginning investor.

Technically, options on stocks and stock indexes are derivative instruments. Needless to say, stock investors may use stock options to hedge against a price decline, to lock in a future purchase price, or to speculate on the future price of a stock. It is also emphasized that such stock options are essentially considered as contracts that allow such party to purchase or sell a specified and stated number of shares of a stock at a particular price. The price at which the shares may be purchased or sold is known as the strike or exercise price. The right to exercise lasts for a stated period of time, which may be months or years, until the expiration date. If not exercised on or before the expiration date, the option expires.

Experts include in their lecture on stock options that options are classified in two forms: calls and puts. A call option gives the option purchaser the right (but not the obligation) to buy 100 shares of the underlying stock at the strike price from the date of purchase until the expiration date. Whereas, a put option gives the option purchaser the right (but not the obligation) to sell 100 shares of the underlying stock at the strike price from the date of purchase until the expiration date.

AUD/USD

After a 100 pip move from the 1.08 top on AU, we went for this golden fib retracement long at 1.0692 for a day trade, and were successful.

GBP/USD

Our short GBP/USD trade.

GBP/USD

2nd GBP/USD trade for the day.

EUR/USD UPDATE

We caught the top of the bounce and sold EUR/USD at 1.3154.

Why TradeRush 60 Second Binary Options Offer You Even Faster Profits

Since the introduction of binary options brokers like TradeRush have been looking to develop the range of traded options available. The introduction of sixty second binary options by this provides a natural enhancement to options trading. With the same high payouts for an 'in the money' expiry as regular hourly options, you can now build your profits even faster.

Binary options are an all or nothing investment that can be used to trade a range of financial assets. They work by allowing you to purchase a contract based on where you think the price of an asset will move. Your 'strike' price is the level that you enter the market at and your option will be based on whether you think the asset price will move above or below this level by the expiry time set. If you think the market will go up then you place a 'Call Option'. If you think the market will head down then you place a 'Put Option'.

For your prediction you receive an agreed payout from the binary broker. This is normally in excess of 80% with the exact return dependent upon the broker you use. You receive this agreed payout irrespective of how far above or below the price finishes at the time of option expiry. All that you need is for the market to finish just one tick in your favour and you bank the full agreed profit.

Binary options have proved popular with trades with one of their key attractions being the ability to build up trading profits fast. Most options are set to expire on the hour although end of day options are also common. While these short option contracts allow you to make fast profits the introduction of 60 second binaries from TradeRush allows you to now make your profits even faster.

With 60 second expiries the same 'Call' and 'Put' option trades exist. However rather than having to wait an hour or more for your option to expire, you can now predict where the market will move and receive your payout in just sixty seconds. And you can earn up to 175% payouts on each and every trade!

This provides a great chance to make high profits over a very short period of time. However you will need to have a good strategy to make the most of this opportunity.

The natural strategy to play here is to wait for a strong trend to appear in the market. A prime time for this is just after news has been released. You should then open your sixty second options in the direction of the trend. With a good strong move you should be able to capture several good trades across the duration of the trend allowing you to net a fast profit of up to 175% profit in TradeRush account for each trade!

EUR/USD

EU held the 50% fib for a bounce trade.

AUD/JPY

Our most recent AJ trade.

USD/CAD

   +71 done. USD spiked huge on every other pair, but was late on USD/CAD, as Crude Oil (mostly inverse of usd/cad) was spiking up.
   As I've always emphasized that fundamentals only further clear the technical picture, and if you're a strong chartist, then trust yourself.

The above charts explains as to why I gave this call to Charting Today subscribers.

Usd/Cad

Usd/Cad gave a decent buy, as due to the middle east tensions, and oil spike, the pair reacted late.

EUR/USD

Our recent long from 1.3146 for a small scalp trade, partially closed, rest still running with stop at entry.

AUD/USD

AUD/USD, first trade of the day was a +18 pip trade off this trendline.

AUD/USD

Earlier in the day, we told our subscribers to short AUD. Experience told us that this gap should most certainly be filled very soon. So we are done at +70.

Above is the chart we sent to subscribers hours ago.

EUR/USD update

In the previous blog entry, we mentioned that "1.3240 is huge, if market has to sell back down" and that's exactly what happened.

EUR/USD

1.3240 is huge, if market has to sell back down.