Want to make money trading forex? Look to price action

To be really sincere, making pips in forex is subjective to just one indicator; Price action. I really see no need clustering the charts with so many indicators that we really don’t follow probably as a result of price action at that particular time. Remember, we are emotional traders, right?

Making money trading the forex market is probably less feasible if we don’t device a means of understanding the signals that price action tell us.

Now, lets site an example.

Trading the GBP/USD, lets assume the pair begins to rally with GBP gaining ground and probably you are long the pair. You get excited, you are gaining and suddenly if you look well enough, you notice the strength in the GBP lagging but your indicators still confirm the trend, so instead of taking your profits at that time, you probably leave the trade open and suddenly before your very eyes and even before you could say “Jack” the tide changes, with you licking your burnt finger, meanwhile the obedient indicators just follow suite at that last minute change. Poor you..

Now, you might say, what does he mean by this? Following our indicators are probably the best options, but what is safer is looking at the price action at the moment in conjunction with those indicators.

In my chart, I have a SMA100, I have tested and seen that when prices breaks through it (upwards or downwards) there is always a rally but having looked closely at price action, I have come to the conclusions that it is not always so. So many times prices have broken  through, only for the reverse to be the case.

Want to make money trading forex? Be attentive to price action! I cannot but repeat this again and again. I have also said this several times, in other to be at the right trend and early enough say 70% of the time, learn to consult longer time frames. It earns you more. Success to you out there.

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forex trading: The benefits of Pivot point in taking profit

I have always found it rather mysterious how mathematics takes its course in our day to day living especially when it relates to money making. Be it in the field of sciences and engineering, banking and investments and also in the course of trading the forex market.

A very simple tool like the plotting of pivot, support and resistance points in an uptrend or downtrend serves as a vital tool in profit taking especially when you have traded a particular currency pair like the GBPUSD.

In the currency market, we can always plot our daily pivots, or in a case where a trend is established as an uptrend or downtrend plot our weekly and monthly pivots. These helps in telling us where we can expect to take profit at the end of the week or month depending on how the pair trends or the strength of the trend.

It should be noted however that trends persist because we have millions of emotional traders all around the world that are looking to increase their equity and these traders rely on the economic news in particular from various countries to place their trades.

In plotting pivot point for this purpose, simply point your cursor on the daily chart on your meta trader, this gives the High, Low and Close for the previous day’s trading, add these up and divide by 3.

Mathematically: Pivot Point=H+L+C/3

Support1= 2*PP – High                          Resistance1=2*PP – Low

Support2=PP – (High – Low)                  Resistance2=PP + (High – Low)

Now, sometimes your pivot or support might be too far for the price action on the currency pair to get to probably as a result of no strong data(fundamental) for its up swing or down swing( ie in an uptrend or downtrend). In this case, you simply do a little calculation. Take for instance, the pair breaks through the pivot point but can’t get to the first support level, then add the pivot point to the support and divide by two. Use that as your temporary take profit point. You can also look to other time frames apart from the one you trade with. It usually speaks for itself. I suggest using SMA100.

For further information on this and how to maximize pivots for extra gains drop a mail.

You can also write an Expert Advisor (EA) that will plot this pivot on your chart which will update daily using your meta trader metaquotes language editor.

Use this in line with your trading system and you will be consistently successful.

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What Markets Are Suited For a Particular Temperament

To a large extent, it is worth mentioning that the markets basically plays lip service to no one no matter ones status, temperament blend etc.

So we may now ask, how does my temperament affect the way I trade? The sanguaine is likely to be an unserious person and this hampers his/her trading deccisions.

The choleric is likely to be one who thinks price should just go where it is going and the constant fluctuations of price may tend to rile his anger and ensure unsteady indecisions, hence losses.

The melancholy on his own becomes too analytical for the market that before he comes to a point of decision taking, the market has already played itself out.

The phlegmatic becomes so unperturbed in his trading that he allows his losses to run the mile race.

So how should these blend with their trades?

The base word in trading is discipline to follow. It may be a system, a plan or a pattern but one requires the discipline to follow through. The equity market is filled with pattern of trades that does not require analysis at all or all that. It just requires you acting like a robot. The best part of it is being able to minimize risk and then looking for profits. Basically, there are no markets suited for a particular temperament,, be it the stocks, options, futures, forex, oil and so on. All these market have their own proportionate amount of risk and these risks come without warning so you definitely have to be prepared for it.

A word of caution though, Learn the trade, then trade the risk otherwise the trade learns you and you definitely become the risk.

 

It does not take a genius to trade these markets successfully but it does take a little discipline to follow patterns guided by your strict money management technique that will overtime make you confident in whatever trade you place and in whatever markets you finally decide to join.

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What you need to know about currency trends

I have always stated that the sole aim of trading is profit, yes with your blend of temperament. That is true to no small measure. You also need to know when not to over trade especially when you are on the loosing streak side. To better explain this, I will illustrate using the Gbp/Usd pair and using todays trade so far.

You will need to pay attention to this very well as it makes the difference in your profit and loss trades.

Now look at the two(2) charts of gbp/usd on 5mins and 1hr time frames and pay attention. Also check your 4 hrs time frame too

Now look at the 1hr chart, even if you don’t know how to trade, the trade setup tells us definitely to sell the gbp/usd(technical), backed up by bennanke testimony(fundamental). Now incase you are at a doubt when to sell, then look at the 5mins.

 

 

When the stochastics hits above the 80 peripheral and the macd is now tending negative, then your sell condition is in place. Place your stoploss on the higher high candle stick and you can use a trailing of say 50pips to pick enough pips and go take care of other things. You could set your profit to 120pips, if you are not greedy or 200pips for the greedy ones like me.

You could also pick extra pips on the 5mins chart by ensuring you place your buy when the first sell signal is seen in a down market. Confirm this with the 1min chart.

I will like to drop my tech stuff for now till later.

All the best in your trades.

The advantages of moving averages and bollinger bands in take profit

Learning to trade the forex market is no small job. It is a job that professionals go through all sorts of education and experiences to be able to manage billions and trillions of portfolio funds. Therefore, learning on this profession does not have an end.

The basics of fundamental and techical analysis, therefore cannot be over-emphasized. I will want to discuss the advantages of moving averages and bollinger bands in take profits.

In trading the forex market, emphasis has to be laid on larger time frames, especially when the resistance or support of lower time frames has been broken.

Now, when you plot a bollinger band say 62 band on your chart, enable it on all time frames, you will find out that its resistance and support levels vary for each time frame, hence a break on a larger time frame indicates more pips in the making.

I use a simple moving average (100). A break of this on the 15 minutes chart upwards or downwards may cause a pip rise or drop of over 100, but when this happens on the 1 hour chart, the pips may triple or quadruple.

When there is a break of the 100 SMA on the 15 minutes chart, look to the 1 hour chart, a break of this signifies that the trend has gradually changed from a downtrend to an uptrend even if temporary. It usually results in massive pip gain. However, during the uptrend or downtrend, this moving average or bollinger band, on the larger time frame can be a point for initial profit take. This is because at these point, the market usually takes back some of its gains.

When a currency pair is struggling to break a particular price point, say on the 15 minutes chart, look to the larger time frame because it may have hit a bollinger or moving average of a larger time frame. When this happens, the price retreats initially, then makes another come back.

A break above that resistance or support level is a confirmation of the next rally.

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trading forex profitably without stoploss

I know this might really sound bizarre, how can I trade the forex “volatile!!!” market without the use of my stop loss?

As a forex trader for some months now, three months precisely, having traded the currency market and seen lots of draw down and seen some profitable trades also, having applied my emotions to trading, used stop loss and the rest, i have come to the conclusion that to trade forex effectively, you really need to minimize the use of stop loss.

Have you ever entered a trade and you are so conscious of not turning your trade to a lose trade and then as a result of that when your trade gains some few pips, you quickly move your stop loss to break even position and the before you realize what is happening, you get caught on your stop loss with little or nothing to show for the hard work you put at that time in trading?

So how then do you trade profitably without the use of your stop loss?

Now this piece is not to say you shouldn’t use your stop loss at all, but to be more profitable trading the currency market, you need to minimize its use. Listed below are some of the things I do to ensure I make profitable trades.

1. Believe in your self and in the trading you do as a business to succeed.

2. Ensure to use leading indicators in your charts as these tell you before hand that the trend is about to change.

3. Always look at price actions after confirming with your leading indicators, because most times they talk to us but only we don’t listen or see and we finally get our fingers burnt.

4. Use your stop loss only when you need to be away briefly from your trade. Remember, a shrewd business person keeps everything in place for the success of the business whether around or not.

5. How large is your equity? I sound this as a warning always. Ensure you use strict money management technique. This ensures you last long trading the forex market.

6. The sole aim of trading the currency market is to make gain, right? Wrong!!! Trading the forex market involves a whole new discovery of yourself. It implores you to look deep within in other to discover the real you. How you trade the market depicts how you really are.

7. To be constantly profitable without the use of stop loss, take note that price actions are constantly fluctuating and these fluctuations are caused by millions of emotional traders round the globe trading the forex market who places their long or short trades based on emotions and news from the countries of the currency pairs traded. So what do I mean by this? Now except for news expectations and how favorable the news came out to the currency pair traded, always look to buy in the oversold region of your chart and look to sell in the overbought region of your chart and you would not require to always protect your trades with stop loss.

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Forex trading: The beauty in standing aside

In my few months of trading, I had always made it a habit of trading daily and sometimes due to the anxiety involved in trading had made some silly mistakes that had cost me several losses in pips(up to 100’s) and this had not really gone well with me but the truth of the matter is that there is always another profitable day.

Today, I had the eagerness to trade the market with the expectations of Interest rates of two powerful nations(GBP & EUR) and the data from the USA. With all the spikes in currencies especially of the GBPUSD I decided to chill out on the side line especially after the aftermath of yesterdays trade.

Alas! to my greatest suprise with the ISM non Manufacturing data hitting the market, I saw a drop of more than 200 pips right in front of me Gosh!!! What a waste of good trading opportunity I thought.

The fact is this, with all these drops and the initial ranging of the GBP before the release of its interest rate so many had placed trades and gotten their fingers burnt in the process losing as much pips which could be worth thousands in dollars so whats the big deal you’d say, Its much better you chill at the side line when you are not sure how the market will trend in the long run rather than losing the pips you’ve worked hard at to accumulate.

A little tip here, yes i need to whisper it so that not everyone gets this clue. It is better you had a sneak at the monthly time frame of the currency pair you trade and if you require a software that will help you plot your daily, weekly and monthly time frames just say the word and I may get you the indicator so that you can always know what to expect no matter what anyone tell you.

Note of Warning: Its always for the good of those you’re stressing yourself to impress trading the currency market that you’re alive and feeling comfortable than worrying over losses in pips that might keep you thinking all night. Good luck as you hit that button next time to place that trade.

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How to minimise loses trading forex

Having just exited the market now 03092008, it is pertinent that you know how to minimize your loses trading the forex market. For one i was short the GBPUSD pair at about 8.45AM meta trader time and that is 6.45 GMT. I placed my trade short @1.7740 and when it rallied up a bit @1.7762, I also placed a pending sell stop order @1.7735, this pair came down to 1.7666 a whooping 239 pips in all but do you know what happened later? Actually, you might think i was foolish, I personally thought i was foolish later because at that point my indicator said to take profit but i wanted the trade to hit the next support that was @1.7650 how foolish i was not following the chart but my emotions and i never did use a stop loss. The trade finally rallied with the GBPUSD climbing up to 1.7817 a massive over 200 pips loss later. You can imagine going from pure profits to extreme loses. The next step would have been to close the trade and lick my wounds but it is at this point you have to employ discretionary trade. I made lots of mistakes trying to gain back my losses but what actually saw me through was my ability not to take an emotional action at the heat of the scene. This paid off as i finally was able to take 83 pips out of the market.

Note: I still applied emotional trading or I would have gone out with a total of 151 pips.

The forex market responds to risk takers and those that are able to hold their fort even when they’ve made mistakes.

BE QUICK IN YOUR DECISIONS BUT BE A DISCRETIONARY TRADER AND YOU’LL LEARN TO BE SUCCESSFUL TRADING THE FOREX MARKET.

Points to note:

Ensure you pick a pair and understand how they behave towards each other.

Ensure you have a trading system you can trust your hard earned cash with.

Learn to take emotions out of your trades.

Be discretionary in trading.

Believe in yourself and your trading system.

When you have to take your profits do and try not to be greedy.

If you’ve learnt something from this and you require some other trading tips then you can contact me on  forex2pavillion@gmail.com or call +2348054233909, +2348029074194 or +17388021.

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