The 5Ps!

Over time I have learnt that the best trades often occur as a consequence of the effort and attention to detail that I put into the planning stage, prior to pulling the trigger.

A great acronym for this, which can be applied to life in general, is the 5Ps or PPPPP:

Prior Preparation Prevents Poor Performance!

So before you make that impulsive trade and just jumping into the market stop and think about the 5Ps, it may just prevent you from blowing up or seriously damaging your account.  If you need help in developing into a consistently profitable trader then we can help you.

Top Trading Tip: Before taking any trade, ask yourself have you planned it out, are you following your (back tested) strategy to the letter and do you understand the risk you are taking and the potential reward you may gain?  Remember the 5Ps!

Safe trading!

Martin W

Forex-Crazy and FxTribe

How Much Time Do You Have?

Time is an important factor when learning how to trade Forex or any other financial market.  So how much time do you have to dedicate to:

• The ‘Learning to Trade’ process (each day/week/month)?
• Analysing your chosen financial market(s) when seeking potential trades?
• Managing your open trades?

What other distractions and responsibilities do you have in your life?  You may have to do a bit of rebalancing to fit everything in and even give something up or let go of negative people.

The more focussed you are and given sufficient time, the more successful you should be as a trader.

Conversely, if you have too much time, it is easy to waste it staring at your charts all day long, like watching paint dry!

It’s all about getting the balance right and worth some thought.  We’ll take a look at getting organised as a trader in a future article and what things we can use to help us be more time efficient.

Top Trading Tip:  Dedicate sufficient time to the ‘Learning to Trade’ process each week if you want to progress up the Learning Curve, however, if you find yourself just flicking through the charts and time frames, looking at the same things over and over again in a day because nothing is happening in the markets, then STOP and go find something else to do, be it seeking out new trading knowledge or a job that needs doing or go see some friends or spend some time with family.

Will You Survive?

Have you got what it takes to SURVIVE in the markets whilst learning to trade Forex?

Will you survive to trade another day?

Whilst learning to trade Forex or any other financial market there are certain things that you must do and that need to be in place, if you are to stand a chance of surviving to trade another day.  What are they?

• Don’t trade live until you have learnt your strategy inside out in a Demo account and preferably to have back tested it hundreds if not thousands of times to prove that it is, and you can be, profitable.
• When you do start trading in the Live markets make sure you start off in a Micro-account and trade cents per pip. 
• Make sure you employ strict Risk and Money Management. 
• Make sure that you do not take unplanned impulsive trades!
• Make sure that your account is sufficiently capitalised so that you only risk 1-2% Max of your account balance on any one trade and no more than 5 trades open at any one time, but preferably less.

Most people when they start to trade live will lose money and you have to persist until it all clicks and comes together and then you will start to make gains and recover the account.  Even when profitable there will be periods when nothing seems to go right, your account needs to be able to absorb these periods as well.  As well as the above, the key things which will get you through this learning process are:

• Practice, Practice, Practice!
• Determination (stick ability) and Drive (motivation) to see you through this period of initial loss making until you get to that tipping point of profitability.
• Experience counts – if you stick with it and learn from your mistakes you will get there, provided you have sufficient funds to carry on trading live.
• Vision – if you have a clear vision of what you are trying to achieve and why then this will keep you focussed through the ups and downs.
• Having a Forex Mentor should shorten this painful initial loss making period.

Top Trading Tip: Make sure you have everything in place as above and the expectancy to lose money in the first instance rather that make millions overnight and have a clear vision of why you are trying to learn to trade Forex and you may stand a good chance of succeeding as the odds against you will have been lessened significantly.  So make sure you will survive and if you need help then we can do that.

Do You Have a Trading Plan?

At a recent Forex Mastery workshop I was involved in, the topic of Trading Plans was raised and I delved into one of my folders and retrieved my rather scruffy Trading Plan.  It is hand written on one side of a plain postcard.  It was written a couple of years ago and suffices to this day. It covers:

• WHY I trade (My Vision of where I want to be in Life).
• WHAT I trade (e.g. Forex/Commodities/Indices - Spot/Futures).
• WHEN I trade the Forex markets. (e.g. The London Session)
  
• HOW I trade the Forex markets - the strategies I employ and my style of analysis.
• RISK & Money Management details that I employ.
• REWARD to me for doing well – Salary as a % of monthly profits.
• PSYCHOLOGY – my psychological trading profile and what I must do to improve on that.

That’s it in a nutshell!

I look at it every trading day and it helps keeps me focussed.

Note: A personal Trading Plan is different from individual Trade Plans, the latter being the plan of a specific trade.

If you need help with your development as a trader then you might consider a personal mentorship plan.

Top Trading Tip: Spend some quality time researching and deciding what you require in your own Trading Plan, it’s a personal thing and should be meaningful to you and help you become a more focussed and better trader.

The Best Times To Trade Forex

Although the Forex market is described as a 24 hour market when open Sunday (5pm EST) through to Friday (4pm EST), there are times in that when there is greater movement or volatility than other times, when the market tends to stagnate.

As a trader, particularly for Day and Intra-day and scalping, the periods of largest movement or range will offer the greatest potential for achieving profits and should be the time when a trader should be trading.  For a swing trader on the higher time frames this is less important.

The 3 main geographical areas which are open for trading at differing times are:

·        

• Australasia and Asia
• Europe
• America

It is when these areas overlap in their trading times that we tend to get the greatest movement in the Forex markets.

When translated into GMT we have the following overlaps:

• Asia/Europe:  7AM – 9AM GMT        (2AM-4AM EST)

• Europe/America: 1PM – 5PM GMT    (8AM-12PM EST)

 

So these are the times when we may wish to trade and focus our efforts.

Additionally, different currency pairs have different average daily ranges across the differing trading areas and time zones, so it is beneficial to know which pairs are statistically likely to have a greater range during the periods we are available to trade.

If you would like to know more about the Best Times To Trade Forex and which currency pairs to pick and really get into the detail and thus improve your knowledge and edge then download our free report and watch Sunil Mangwani's video on this subject by putting your name and email in the pop up window on the FxTribe Home page, if you don’t see it then just try it in a couple of days and it should appear.  Thanks.

Top Trading Tip: If you want to find a greater number of profitable trades, focus your trading on the hours in the day (and the relevant currency pairs) when the markets tend to make their biggest moves, i.e. when the major market overlaps occur, as these are the Best Times To Trade Forex.

What Type of Trader Are You?

What Type of Trader Are You? 

What Type of Trader Do You Want To Be?

These are key questions that every aspiring trader needs to answer.  If you are new to Forex or any other form of financial trading, then you will certainly have to do some homework before you may even be ready to answer these questions, but let’s see if we can help.

Most people when they are learning normally have a day job which restricts the times of the day when they are available to trade the markets.  If this is the case then there are probably 2 options for you to consider:

·         Swing or Position Trader - trading mainly on higher timeframes such as the 4hr and Daily charts but also the 1hr and aiming to hold positions over several days to even weeks in order to make several hundred pips or more.  This style of trading may provide you with a greater range of currency pairs to trade as the spread will be less of an issue.

      Scalping is trading on the shorter term time frames such as the 1min and 5 min charts and aiming to make 3-10 pips per trade.  So you get in, get out, and get done in the short time window that you may have available, or may open and close multiple trades in a day.  You may focus on one or 2 currency pairs which have a decent daily range and a typically low spread such as the EURUSD.

If you have more time during the day then you could be one or both of the above plus you have the third option of:

·         Day or Intra-Day Trader - trading where you would be trading on the 15min, 30 min and 1hr charts and aiming to make anything from 20 to 100 pips.  In this case spreads may be of some concern but less so than Scalping.

The point is you need a trading style (one of the above) that suits your lifestyle and then you need a strategy or strategies that suit that style of trading and then currency pairs which are also best suited to that style.

So if you are an aspiring Swing or Position Trader then higher time frame Harmonic Trading strategies fit nicely with this trading style and you have more choice over which pairs to trade.

If you are a Scalper then again Harmonic Trading strategies can be adapted to achieve this trading style but your choice of suitable currency pairs will be limited.

Lastly for Day and Intra-Day trading again Harmonic Trading strategies can be used to match this trading style and you will have a reasonable range of currency pairs to trade.

How can Harmonic Trading strategies be used for all 3 trading styles? You may ask.  Well, harmonic patterns are naturally occurring and repeating patterns in any liquid financial market on any timeframe.  You just have to have the training to know how to identify them, how to trade them to maximum advantage and how to adapt your Harmonic Trading strategies to match the chosen trading style.

Top Trading Tip:  Think long and hard about what style or type of trader you want to be.  It may be that you can adopt all 3 trading styles depending upon your available time, on any particular day, provided you have the right trading strategies (the tool box) and the right mind set and necessary focus.

LUCKY Results in Trading

One thing I have learnt the hard way is that there is hardly any chance of having LUCKY results when trading Forex.  For many people, as soon as they enter a trade then the market reverses in the opposite direction.  To be ‘LUCKY’ and get great results one may consider the following methodology:

• Firstly you have to Learn as much as you can about Forex trading

• Then you need to Understand the methods and strategies you intend to use and how and why the markets move and then you have to be able to implement your chosen strategies and methods as if they were second nature.

• Next you must Check your results and adjust and tweak everything to what suits you and to get the desired outcome.

• Once you have done all the above, then you might begin to Know what you and the markets are doing.

• This repetitive cycle of Learning, Understanding and implementing, Checking and Knowing will begin to pay dividends and Yield tangible and positive results.

So remember:   Learn/Understand & implement/Check/Know/Yields

The best way of doing all this with the aim of becoming a consistently profitable Forex Trader is to:

• Start off by trading in a Demo Account and get familiar with all the tools etc.
• Learn how to, and then Back Test all your strategies over and over again, tweaking your system, especially risk and money management, as you go.
• When you have tangible results in your chosen currency pairs and timeframes then and only then should you start trading live, and then only in a Micro-Account.
• Once you have a consistently profitable track record of trading live in a Micro-Account then you can consider upgrading your account to a Mini-Account and if you do well in that then you might consider scaling up to a Standard Account.
• I would consider a reasonable track record time for any type of account to be anything from 6 months to a year and would encourage a year because the market changes in nature throughout a trading year and thus your results may reflect that.

·         So to achieve consistently profitable Forex Trading results you need to make your own ‘luck’ by doing the above and then you should get LUCKY.

Top Trading Tip:  Make your own luck and learn how to Back Test your chosen trading strategies and methodologies, analyse the results, tweak then retest and so on, this will pay dividends when you start to trade Live.