Forex Trading by experience by experience (Please learn)

This year marks my 4th year in the forex business and to be exact I know actually what works and what doesn’t but you know what recently I have been trading out of fear and do you know what happened? On more than three different occasions, i lost a lot of money.

So how come, this is because I decided the trading method i was using wasn’t fast enough and needed something that would be in and out, more like scalping. I’m not saying to scalp isn’t alright, nope, not at all but that wasn’t the type of trading I was use to and deciding to trade that way really made me ignorant of a preceding  trend and I kept buying when i was supposed to be selling, you know like some nasty expert advisors out there that is said to generate massive amount of cash and which keeps buying even when the trend is down.

Also, I failed in a most important part, keeping my account open for excessive drawdown, how do i mean you’d ask?

When you take a trade and you do not count the cost of the trade and become irrational with your funds, you are actually opening your account for a drawdown. When you embark on taking any trade without pre-planning an exit strategy, then you are risking good money for nothing.

Now the number one advice I’d like to give to anyone hoping to trade confidently is this, stick to a trading style which consist of your exit strategy cum your money management check up.

If you are deficient of this like I had been, then I’d like to advice you to turn back to demo trading or better still trade smaller lots in your account using this same strategy until you’ve become used to it and re faithed your self in your strategy.

Trading different strategies is like a man or a woman who never gets satisfied with a partner, such a person can never settle down in life. Re-trust  your strategies and stick with it come rain or sun.

Also its pertinent here that the time frame you trade here should be of utmost important and the indicators you use in taking trades. What do I mean, using a time frame like 5mins keeps you open to all the noise in the market and you may never really know when a trend is in formation thus you end up selling when the trend is just about buying or buying when the trend is all about selling. This is not to say that trading 5mins chart is bad, no not at all but this should be done when you are looking to take some gains in anticipation of a move either long or short the pairs you are trading.

I specifically had been trading the 30mins, 1hr chart and trading this cahert gives you confidence that no matter the trend you are always on time and following it without any fear of losing especially once you are already profitable. You just set your take profit and your trailing stop and can go do other things because no trade is likely going to take you out without a profit to your kitty. See the post on trading with time frame to learn how to trade with 30mins or 1hr candle.

I think I’ll drop my pen here till later. Stay conscious and play safe trading.

Happy pipful day.

How to trade with timeframes say 15mins, 30mins, 1hr, 4hr or daily.

This looks like what is causing so many of us to loose touch with our trading and make us look as if we aren’t grounded in our trading style or preference. A word of caution though. Learn how each timeframe reacts with the currency pair in play and you’ll always set your buy or sell limits at appropriate points and it would always look as if you’re planning where price should touch before going in the direction of your trend.

An information however for you is this. I say it categorically because if you check trades in years past, you’ll find its always true.  I start by analysing the 15mins.

15mins : The best timeframe for picking a trend. This timeframe always respects the bollinger band and a trending move usually starts from here. Try plotting a bollinger band(62) and see it on the 15mins chart.

In terms of candle, it is note worthy that on normal conditions a 15mins candle usually moves at least 5pips counter  move before it continues in its intending direction. In a very liquid market it can move as much as 10 to 10 pips. When it moves more than 15pips then know the trend is temporary changed in the direction of that move.

30mins:  This timeframe says a lot without really being the best. Trading the 30mins tf could constantly earn you all you desire trading if you follow the rules of its trading. It also respects the bollinger band(62) unless the currency pair is trending based on fundamentals. This totally disregards all the rules of technical trading and you’ll already be in the trade so it will always be to your advantage. In candle formation, the candle can move from 5 to 20 pips contrary direction before it continues its direction within same candle formation.

1hour: This is the father of all directions on the entire charts. It is note worthy here that when the 1hr picks on a direction, it usually rides that direction so trading the 1hr chart makes you more relaxed and you can even leave your trades and go out without being afraid if the price will eventually go against your direction.

The candle formation works like the 30mins, but 1hr candle can move up to 40pips in contrary direction before going back to its direction.  It is note worthy however that when a candle forms and the full candle formation is above 60pips, then add the low and the high, get the midpoint then subtract 10 or 20 pips from this midpoint. That’s where you place your sell limit or buylimit. No matter what, the market usually comes back to this point before it continues with its direction.

Trading 4hr and daily is a lot riskier except you are well funded and using very low leverage because you need to set your stop above 100pips and your buy sell limit could sometimes be above a 100pips. However, if you catch the move when its just starting then your entry could be as low as 20pips from the close of the previous candle.

So how do you benefit from this info.

Take a look at the recent charts on Eur/Usd for the past 2 days

 Two consecutive entries would have fetched 100pips and the 3rd one has already fetched 100pips twice today and still counting.

I don’t have to say more for now.

Have a wonderful pipful week. Make more pips.

How to avoid losing over a $1000 like I did last week

Yes! That title typifies what just happened to me friday on the Eur/Usd pair.  Sounds very funny, right?

The truth of the matter is that no matter how professional you think you are, you are always prone to losses when you break the golden rule of trading the currency market.

Find a trend and follow the trend. Sounds really ridiculous right?

How can one who claims to know a lot about forex trading be losing that type of amount?

Now do you also know that you can also make money trading counter trend?

One basic reason was this, when a market shows a kind of thrust the previous day on a particular currency pair then no matter the retracement for a bigger continuation move, don’t always expect retracement like it should normally move especially when all indication of the value of the fallen pair depicts fears for the teaming number of investors.

You see I was actually expecting a retracement of .5 0r .618 fib levels which should have held but due to the drop of the market it came to the .236  and consequently headed lower breaking below 300pips.

So what am I really getting at here?

Though we may expect what the market may do, we cannot really tell when such move may start and should be prepared in case of the unexpected. Always be over protective of your equity by taking protective stops to avoid losing more than is supposed incase of an unforseen and unexpected event. Do not be caught pants down when trading.

Now even if  I had decided to hedge the trade, probably the loss level would have been lower. This might be another case study for another day. Be prepared.

Thanks for reading