My Mistakes and Building A Trading Strategy (part 4)
February 22, 2012 10:30 AM EST
This is part 4 of my story which does have a happy ending; I learned to be an independent, knowledgeable trader using my own system.
I make good trades and make more successful trades and failures and I am still trading with my original investment and continue to move my profits to my retirement fund. All in all, I am now a good trader but most of all I am a successful trader.
This is GBP/JPY around the 6th Jun 2007. Tell me how you can make money on a 15 min chart like this. I've added the 5 & 13 MAs, as these seem popular MAs to use, from what I read.
Is there a trend you can trade? You might have thought it was down. You might have been trying to scratch a few pips on shorts.
What was I doing on the 6th June?
I was waiting for the retracement (shown in blue box) to finish. I had a buy order placed above the point where price had started heading down, and simply waited for price to resume its main trend, which was up.
Did I make money? You bet I did. Did I have to be patient? You bet I did. Did I only have to pay the spread once from that point to the next point of resistance (the 2nd blue box)? You bet I did.
In fact I had 3 trades set around the 1st box all closed for a total of around 2000 pips.
Those patterns are known as Pin Bars, and, if chosen at the right time, can be deadly. They, alone, are worth the time it takes to that you can understand how to play them.
I appreciate I've picked a good example, but the principle applies to all my trading now. Why would I want to change it? More importantly, why wouldn't you want to change from what you do now, if it isn't working, to what I'm doing?
It doesn't matter what system you use, or what indicators you have on screen, just get to see what's happening on the Daily charts and only trade that way.
Just in case...
Attn Newbie's Learn Forex Trading: 3 Simple Tips for Setting the Stage
You know what they say; trading Forex is 80% mental and that only 5% of all currency traders make money consistently. If this is so, then we are all in an extremely competitive environment. This means that when we trade, we must always be on our "A" game, our peak performance period. Here are 3 simple tips to prepare you each day for the competitive playing field that is the Forex market:
Before we turn on the computer and look at the currency pairs, it is imperative that we have had adequate rest. Proper sleep allows us to recharge our batteries and extend our period of maximum focus. Sometimes we all wake up and things are just not in balance. Issues outside of our trading environment or our physical conditions, or lack thereof, are ruling the roost. This is when all successful online Forex traders pull out their Ultimate Weapon of Successful Currency Trading.
We simple don't trade the Forex!
Use this time to review, read or play golf! It's all about probabilities, and the probability of success in Forex trading multiplies when we are at our best.
2. PLAN and REVIEW
Forex Trading is a business and should be treated accordingly. In the business of trading currencies we all should have a plan, a business trading plan. This plan should consist of 2 components: A Mission Statement which should explain your personal "Why?" Why are you trading Forex? Your mission statement must be compelling enough to overcome the inevitable challenges all online Forex traders face. The second component is your Forex trading plan. The component of the overall plan covers the execution of Forex trading. Your Forex plan should cover the what, how, when and risk components of your currency trading. Before each Forex trading session review your entire plan and trade it! Make this a habit. Another trick of successful Forex traders is after losing some focus during the trading period, take a break and before returning refocus by reviewing your plan.
You must sharpen your mental saw before each and every Forex trading session. There are a variety of methods for helping you relax and focus. You can listen to your favorite music, meditate in a quiet place, and recite positive wealth building affirmations, or listening to a Confidence for Traders CD. When it comes to developing a mental edge, play every ace. The correct method is the one that works for you!
After all of your preparation you still find yourself not on top of your game you can once again consider the ultimate weapon of great online Forex traders. Walk away! You do not have to trade the Forex today. Preparing for your trading session is all about placing yourself is the best position possible to take advantage of the myriad of opportunities that makes the Forex market great. When you incorporate mental preparations into your daily Forex trading ritual you have set the stage for handling whatever the currency market can throw at you with confidence, determination and clarity. Remember, above all the hype, strategies and methodologies lies common sense.
Use it and you too will find success, because it's always the little things that make all the difference in the world!