Forex Trading Strategies

Come With Me on a Forex Trading Journey

Most of what you need to know to trade Forex like a professional can be found on this website, for FREE. If I’ve done my job right the Smart Money Forex Trading Course should be the only place you need to go to learn your way around the dangerous, yet profitable world of Forex trading. It’s not a classic, by any means, but it cuts out the theory and gets to the heart of practical trading, but remember, it’s not the last step on your journey.  You’ll need many hour of computer screen time and practice, practice and more practice.

Everything that is required to trade Forex successfully is within these pages. The only missing ingredient is the trader`s commitment, motivation, and above all, the desire to be successful. I can assist with everything else, but the last part required to complete the puzzle is up to each individual to find. Learning to trade Forex is much like learning karate. If you don’t start out with good instruction you will develop bad habits that will take much longer to correct. If you’ve already had bad instruction, then you’ll need to persevere in order to correct those bad habits.

Teaching is my second love next to trading. I love the teaching. Every time I teach I learn something new and it reinforces the belief that I have in my own trading. Since there is so much bad information out there for potential traders (which is often repeated until it becomes accepted wisdom), I feel lucky to have found a methodology that I know works. I’ve been exposed to some amazing teachers/mentors throughout my life and I believe those teachers have been very influential in helping to shape me as a person. It would be fulfilling for me to have a similar impact on people and watch their lives change for the better as successful Forex traders.

The Business Benefits of Trading The Markets

I found this article a couple of years ago. My apologies for not mentioning the author because I did not get his or her name…

Trading Forex or futures is a business.  To my mind, it is the best business in the world – for a great many reasons!  It has a very high profit potential against a very low overhead.  Risk can be tremendously reduced by taking only high probability trades and using stops.  In fact, Forex/futures trading is a relatively low-risk business when approached with the right attitude and the right planning. (Trading psychology and a Trading Plan).

Trading is eclectic.  I can pick and choose which market to be in, I can choose when to be in it, and generally under what circumstances my entry will be.  If Crude Oil is making money, I can make money in it too.  If I want to trade the GBPUSD because it is moving, I can do.  Any trending market is making money for someone, so I can have a piece of the action too.  I can be a bull or a bear as the mood suits me.  I can be a happy bull or bear if I’m going with the trend.

I earn my living in what is almost a “free” marketplace.  I can live by my wits, and reap the fruit of my labor. I have no customer problems: no customer relations, no customer complaints.  No customer theft, no customers returning anything. There are no employee problems other than myself.  No unions to contend with, no negotiations, no strikes.  No employee benefit plans other than what I give to myself.  No employees stealing from me.  No collective bargaining, and no stockholders.

There are no merchandising costs, no damaged goods, no vandalism, no service calls, no repairs to make and no guarantees to honor. I don’t have to advertise, and I have no marketing headaches.  There is almost always a buyer if I want to sell, and almost always a seller if I want to buy.  No purchasing and procurement problems, and no salesmen making mistakes.

There are no manufacturing problems, no production schedules to meet, no shipping, no receiving, and no product liability. I don’t have storage problems either.  No warehouse, no spoilage, no items to discontinue or mark down.  No bills of lading, no freight or freight damage, no trucks to load or to unload. I’m free of invoicing, accounts payable, payroll, inventories, accounts receivable, billing, dunning, bad checks, and bad debts.

There are no salesmen who call on me, although occasionally a broker salesman will call on the telephone offering brokerage services.  As soon as I tell them that I am a professional trader doing quite nicely in the market with my current broker they quickly excuse themselves and hang up.  This only reinforces my perception of them as wolves waiting to tear apart some poor unsuspecting suck…whoops…prospect.

I have no competition.  What?  How can that be?  Yet it’s true.  I have only to deal with someone who is of a different opinion than I am.  We settle our difference of opinion with money.  If I’m right, then he pays up, if I’m wrong, I pay up.  We resolve our difference of opinion in polite and courteous fashion, by putting our money on the line according to the rules.  We don’t know each other.  The exchange or broker acts as the neutral party.

The person on the other side of my trade can’t cut prices as a competitor can.  He can’t offer better service, he can’t scoop me in the marketplace with a new innovation on an existing product or get one-up on me with an entirely new product.  He can’t steal my customer lists, because I don’t have any.  He can’t lure away my best salesman either. He can’t even plant a spy to discover my trade secrets, because I don’t have any to hide, and because he doesn’t know who I am.  He can’t seduce my top research scientist, and I can never be the victim of a hostile take-over.  I never worry about corporate spies.

Now I ask myself, “Self, where else can you find a business like this?” The answer is an overwhelming “nowhere”!  It’s the most perfect business in the world!

You’ve Got a Great Forex Trading System. So Why Are You Losing?

You’ve got a great trading system, so why are you losing?

You’ve done your homework. This included hours and hours of practice, demo trading and back-testing your system. You’ve done it by the book.  No seat of the pants or impulse trading for you!

Now you’re confident and it’s time to put your money to work.

You’ve had a nice cup of tea and your first trade set up arrives. Confidence is high and you make the trade. First loss. Not a problem. You understood before you started that successful traders both win and lose and “losing is part of the trading plan”. You’ve also heard more than once that successful traders don’t win on every trade. It is not the loss that counts but how you bounce back from the loss.

Moving on and still confident you make the next trade and again it loses. This losing trade hurts a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren’t stopped out.

You double check and yes you placed the stop where your trading plan told you to place it.  You kind of had a feeling that the early weakness in the market was just profit taking from the previous day’s trading, but you’re trading a system and you must stick to it. Wounded, but resilient, you realize there is always tomorrow.

After a good night’s sleep and a few mouse clicks, your new daily trades are in front of you. Hey, this one looks good! It carries a little bit more risk than yesterday’s trades did, but look at that profit potential! With a smiling face, you execute the trade.

The trade begins well and starts in profit and you’re feeling good. You’ve moved your stop to breakeven, just like your system said.  A surprise piece of news comes out from our friend Bernanke, the market reverses and blows through your stop – an “unexpected” loss. Is something wrong with the system? Has the overall market “personality” changed, affecting your system to the core, rendering all your back-testing irrelevant? Your confidence is eroding and begins to turn to doubt.

You decide to “monitor” rather than put money down on the next trade… I mean, isn’t it wise to make sure the system gets back on track before you throw good money after bad?  Isn’t that what a conservative trader does?  So you watch the trade.

It’s a winner!

In your head, you beat yourself up a little because you know that when you started trading live, you made an agreement with yourself to take the first 15 trades no matter what and now you’ve missed out on a big winner that would have gotten you back to even.

Has this ever happened to anyone else reading this post?  Of course it has.  So what’s happening here?

What’s happening is that you are out of control. Your emotions are ruling your trading. The above scenario plays out in every trader from time to time and that includes pros as well as novices.

The winning trader senses what is happening and nips it in the bud. The winning trader spend time every day, working on the discipline of trading and this includes the ability to take your setups without question every time.

There are many more losing traders than winning traders and it’s seldom about the trading system. In my career, I’ve come across at least 20 price action systems that I consider first class and yet I know for a fact that most traders that have traded these systems have lost.

Why? Because they were not in control of their emotions.

Are you?

Risk and Money Management in Forex Trading

This is the most overlooked aspect of trading by new traders. Ignore this topic at your own risk because failure to follow good money management principles will bust your account no matter how good a trader you are. Good money management keeps us in the game when most novices are knocked out.

Many traders see the trades but don’t manage their money very well and ultimately they lose all their equity. This is a big topic and I can only scratch the surface of it in this article.

With anything in life worth doing comes the risk of failure. The trick is to know how to minimize this risk to an acceptable level, whilst giving yourself every chance of reaching your goals.

I can’t overstate the point that money management is the key to becoming a wealthy Forex trader. The Forex market is dominated by ill-informed and undisciplined people who thrown their money away week after week.

Fortunately for you, the Smart Money Forex Trading Course will teach you money management techniques that literally make it impossible to lose all your money.  And did I mention it’s free?!

Forex Trading: Is The Holy Grail Syndrome Real?

What is the “Holy Grail?”

Traders lose a lot of time and money chasing it around, looking for the next best system, trying to find this magical holy grail. They try this Forex trading system or that Forex strategy for a week and then they read another eBook and change systems again. Traders look for holy grails.

They don’t understand how counter-productive this is. They believe there is a secret that, once discovered, will provide a simple, fail-safe answer to all their trading questions. That, of course, is nonsense. This kind of thinking will just hold you back. Success takes hard work!

Once you find a Forex trading strategy that makes sense and works for other people give it a proper chance to work for you.  Forward test it on demo and follow ALL the rules exactly as taught.  You must do this to begin with before you stamp your own personality on it.

Holy Grail Syndrome sufferers look for something that will give them a signal to trade rather than learning how to trade. They look for magic systems (advertised everywhere) that will make money for them every day. They look for automated trading robots to make money for them “while they sleep” and other such nonsense.

They have unrealistic expectations and want to make millions with a starting capital of just $100. They are fodder for the professional “gurus” who will just take their money. Please don’t be one of these Holy Grail seekers; learn how to trade.

Forex trading is a profession and like any profession it can be learned with hard work, time and dedication. This business could change your life if you take it seriously and be professional. Amateur traders turn into professional traders when they stop looking for the “next great technical indicator or system” and start controlling their risk on each trade.

My suggestion is that you swap your TV time for trading time for the next three months. Once you taste success (financial and emotional), you will find it easy to devote the time and energy necessary to reach your trading goals.

A Trading Plan is Necessary for Successful Forex Trading

“Quitters never win and winners never quit.” – Vince Lombardi

Wrong!  There is a difference between good quitting and bad quitting.

Good quitting is used by winners to abandon their losing tactics quickly. This is quitting within a plan, such as the stop loss in a trade, or taking a system off-line if its performance falls outside expected parameters. It is also quitting before you invest too much time and too many resources, such as abandoning a system that does not win.

Reassessing your goals and purpose, and then quitting the things that are not supporting your mission is good quitting.

Bad quitting is reactionary or panic quitting. It is selling your position when the pain is too great, such as panicking because you did not have an exit plan or did not stick to the plan you had. It is quitting when the going gets tough because you never completed a plan for your trading.

Society trains us to equate quitting with failure. In reality quitting is failure only if you are quitting the path to success. Quitting unrewarding efforts is the key to focusing your energy and achieving your goals.

Forex trading is a simple and enjoyable way to make money if we are prepared to follow some basic rules. Most traders, unfortunately, don’t follow any rules and thus they lose. They can see the chart patterns, they have a good idea of when to get into and out of a trade but they don’t follow a set of trading rules called a trading plan. Forex trading is a business and a business needs a good business plan in order to survive. Not having a trading plan or a least not having the discipline to follow a trading plan is the main reason people are unsuccessful in this business.