My goal here is to show traders a more consistent, reliable way of trading the Currency Market using Price Action on the Daily & 4 Hour Charts. You will see a more practical, realistic way of trading that is in sync with the major market movements, independent of;
Lagging Statistical Indicators;
Contradictory Economic News;
Volatile, Stressful Lower Time Frames;
Statistical Indicators are the most widely used tools in trading, but most are based on past price data. This makes them lagging in nature and inaccurate when providing entry signals. Short-term economic data are also used to support technical-based trading, but most are often quite volatile and lead to erratic, short-lived reactions. Since the major economic factors that actually lead to strong currency movements will be reflected on the Larger Time Frames, using these signals for market direction will always be the better decision for traders.
HIGH FAILURE RATE OF TRADERS
The reality of Forex Trading is that the vast majority of persons lose money. Since most tend to be Day Traders, using the smaller time frames for their trading, the high failure rate is at least highly correlated with this way of trading, if not the cause of it.
Most persons that were exposed to the market for the first time are likely to have headed straight for the smaller time frames in an attempt to capture small, but quick pips. This is what the Trading, Marketing and Brokerage Companies promote since the more frequently their clients trade, the more money there is for them, regardless of how profitable Day Trading actually is. If we were in charge of these companies, wouldn’t we do the same?
This isn’t to say that there aren’t successful Day traders, but there are several bad habits that are forced upon them by the volatile nature of the Smaller Time frames and daily currency movements that makes it highly unlikely:
• Indecision about the size of stop losses and pip targets;
• Constantly switching from currency to currency to decide on which to trade in the very short trading day;
• Anxiously waiting on a target to be hit;
• Indecision as to whether to monitor a trade or leave it until it is closed;
• The pressure to meet daily or weekly pip targets/monetary goals;
• Resisting or falling to the temptation of violating a trade plan in order to meet these targets;
• Trying to stay objective while wanting to take ´revenge´ on the market for a loss ;
• Getting more emotional, irritable and anxious than you normally are;
• Feeling trapped like a mouse in a maze, with the cheese nowhere to be found;
Another reason relates to the promoted approach to Currency Trading that comes from the prevalent culture in today’s society;
• Everything must be done NOW OR ELSE SOMEONE HAS TO PAY! Am I right?
Trading is just a click away and with the ability to see several pips of movement happening right in front of us everyday, it is very tempting to want to trade when we want to. But desire is one thing and reality is another.
Feeding our emotions on a regular basis when it comes to money is a recipe for disaster; using Discipline, Patience and Self-control along with High Probability, Stable Trades are the pillars for financial success over the LONG-TERM.
SWING/ WEEKLY RANGE TRADING
This is what the Swing Trading on the Larger Time Frames offer. You can identify a setup, trade it, then leave it until the target is hit a few days later. No need to micro manage your trade. You only need to take a cursory glance at these time frames relative to the smaller charts to appreciate the stability and consistency in their movements.
When this is combined with Price Action, which identifies high probability candlestick patterns without the use of lagging Statistical Indicators, trading becomes a lot simpler. There is also no need to follow the news since most of it is volatile and contradictory and are usually reflected in the signals given on the larger time frames.
I used to Day Trade and failed at miserably, no matter how often I tried different approaches. It was only after several years of losing money that I actually started to look at the higher time frames and started to be profitable. The advantages of the larger time frame approach to trading generally and my method of trading specifically, include;
• High Probability Trade Setups that Require Less Trading;
• Predictable times for entry using the Daily and 4 Hour Charts;
• Clear Candlestick Patterns that start and end Trends;
• 100- 200 Pip Trades such as those executed during the Financial Crisis and European Debt Crisis and that have already beaten the BarclayHedge Top 10 Traders this year;
• Practical, Unemotional ways to avoid checking trades;
• Pre-determined exit rules based on each trade setup;
• Weekly & Monthly Ranges not seen in any other strategy;
• A Proven set of parameters built on 10 years of trading and analysis of market patterns;
Look at these two examples that reflect the stress and indecision that a Day Trader goes through compared to that for a Swing Trader.
In the first case, the Day Trader would be faced with the indecision about where to exit and how many pips to capture following an interest rate decision by the Reserve Bank of New Zealand earlier this year-
NZD CAD - 30 MINUTE CHART
NZD CAD - DAILY CHART
The Swing Trader would simply have identified the setup and signal and waited on the Pre-determined target to be hit a few days later - independent of the rate decision.
Even during the European Sovereign Debt Crisis when volatility and market indecision was at its peak;
EURO JPY - 1 HOUR CHART
EURO JPY - DAILY CHART
Sometimes I got lucky, as in this case, the 200 Pip Target was hit the next day. But all this took place while I was watching an all day Marathon of my favourite TV series at the time, Bones.
PERSONAL TRADING HISTORY
This followed years of trading both the smaller and larger time frames at the same time but after losing money with the latest day trading method, finally took decision to stick to larger charts. It was only when I used the larger times frames that I actually made money, but was too impatient to stick to it given the temptation of the shorter time frames and so did not devote enough time to establishing the rules. Now that I have done so, no turning back.
I have rules in place to determine market direction, entry and stop losses as well as the type of targets to aim for depending on the setup. I have narrowed down the best Candlestick signals that give the highest probability of success and have also detailed how/why the market does what it does- from trending to consolidation and back. All of this has been put in my Trading Manual.
TRADING RESULTS
Although I will show the results and the basic reasons behind my trades, the actual details needed to execute them will only be understood by those who already use my manual for their trading. After completing this manual recently, I have now resumed live trading that will add to the results of the trades executed earlier this year (see below).
Follow my Trades and see a consistent way of trading for Long-Run Wealth.
DRFXTrading
