If you want to make money with Forex, then follow this thread. If you want to be a bad ass trader, then follow this thread.
First off, I want to address a couple of things. I guess you could call them pet peeves of mine. I’ve recently read some of the posts from the blog posters on this site about how they did in 2015. I didn’t see any of them make a decent profit over the past 6 months. In fact, they would have been better off putting their money in something safe that makes 3-5% a year interest. There R:R was poor and the amount of trades entered was poor. I felt like i was looking over an account of a scared trader who was unwilling to pull the trigger on a trade. This thread will be the opposite.
The second thing is that their are a number of crap threads on here. Maryo charts posts pictures and his profit with no explanation of what his strategy is or how he even enters/exits trades. Its basically a worthless thread. There is another worthless thread on here too where they are posting entry points for trades with nothing on how to exit the trade or where to put a stop loss. They are just trying to get you to go to their website. They are absolute crap. This thread will be different.
This new year I will be trading two ways. One swing trading strategy that holds trades usually between 2-5 days and uses price action. There are actually a number of great price action threads on BabyPips forums that I recommend you read if you are not familiar with price action. This strategy uses a minimum R:R of 1:2 and usually the R:R will be more like 1:3 or 1:4. Furthermore, the risk is going to be 3% per trade to start. You should expect around 2-5 trades per month with this strategy on average. This is the foundation of the strategy. Setups will be shown as I enter.
The second strategy is a news trading strategy that trades the news events that are rated “high” by dailyfx. This strategy is honestly not completely developed yet, but will be profitable from the beginning. This strategy will produce a number of trades each week. Depending on my work schedule and when I can be in front of my computer for these trades will ultimately determine how many trades I enter each month with this strategy. This strategy will be difficult for me to post prior to entering due to the nature of the trade, but I will post my trades after to show you how I made profit on them so that you will be able to do the same.
So if your ready to make money in 2016 and be the bad ass on the block, follow this thread. Setups coming soon.
with the second strategy, understanding your point that you won’t be able to post prior, would you mind detailing rationale afterwards… i.e. why you took the specific trades. Im still getting to grips with fundamental analysis and looking forward to this.
First potential trade of the year: NZD/USD short. Will go over why in a number of posts
This picture shows the overall picture from the Daily chart. Long term downtrend with recent pullback over the past few months. Always trade with the trend. A case could be made this pair is trending up since September, but in this instance I am trading off of the long term trend.
Support/Resistance lines: Price is right at a diagonal resistance line that I have drawn that dates all the way back to middle of 2014. Price bounced off it once in May 2015 and I am hoping price does so again here. I believe this is strengthened by the horizontal resistance line (the grey line) being there as well. I really do like when both diagonal and horizontal support/resistance lines meet. I also have Fib levels on the chart. I like when we are right at a nice Fib level like .5. In this case, we are between the .382 and .5
Price action: You got to have the entry signal at the support/resistance line to enter. A 2 bar reversal formed this past week right at the area of resistance. 2 bar reversal also formed at this horizontal resistance line back in October and price went down from there. There is a lot more price action here on this chart. Such as a long term bearish flag formation. But in order to trade this, price would need to break to the downside of the upward trending channel I have drawn. So we aren’t there yet as far as trading this price action, but if I enter this trade that will play into exit points (explained later)
Here we have a better view of what is going on. Look at the last 3 candles on the chart. We have a 2 bar reversal in the grey resistance area and then the last candle. Yes, price has actually gone through the diagonal resistance line drawn, but I feel like there has to be a tiny bit of lee way on support/resistance lines that are drawn dating back to the middle of 2014. So I’m considering this to be right at that diagonal resistance line as well.
Other things to notice. Price is in an upward trending channel dating back to September. Price is in an uptrend since November 18th. These things come into play for exiting the trade.
Entering the trade. There are a number of different ways to enter this trade. It depends on how risky you want to be. Normally, I would of already been in this trade because I really do like the diagonal and horizontal resistance lines together with the 2 bar reversal. But I was not trading last week because of holiday season.
How I would have entered the trade if it was a normal trading week. Pay attention to last 3 candles. You have a blue candle that enters the grey resistance area. Then you have a red candle. These two candles form your 2 bar reversal. The bottom of the red candle is at approximately .6835; the top of the red candle is at about .6865; the top of the blue candle is about .6880;
So the stop loss would be a couple pips above the blue candle. Lets just say .6885; And at the close of the red reversal candle, price is at .6835 as noted above. That is 50 pips difference. So if I entered right there, my SL is 50 pips. But the way I like to trade this, is to wait for price to go up just a little before entering. So what I do is pick an entry point half way up the red candle. Like I stated in the previous paragraph, the red candle is about 30 pips wide, so we will say half way is 15 pips. My short entry would occur at .6850, hoping price retraces back up a little prior to going down. As you can see in this picture looking at the very last candle, price did exactly that. It actually almost reached the top of the red candle and has now gone back down. What this does for you? It turns your stop loss into only 35 pips, rather than 50 pips. Remember, I am risking 3%. So if my stop loss is 50 pips, then it takes a loss of 50 pips to lose 3% of the account. If I go in the positive 50 pips, then I have gained 3%. But with the 35 pip stop loss, I now only need 35 pips profit for my 3%. When you are trying to take a couple hundred pips profit, the difference between 35 and 50 can be big. For instance, I gain 200 pips risking 3% with a 50 pip stop loss. That means each 50 pips is 3% and therefore 200 pips is 12% gain. It is a risk:reward of 1:4. At a 35 pip stop loss, this risk:reward is now 1: 5.5 or so. This would be around 16-17% profit.
That strategy is obviously a little riskier because price could just continue up and you get stopped out. A safer way (and the way this trade will have to be entered since I did not enter last week) would be to enter a 5-10 pips below that bearish red candle (2nd to last candle). That way you confirm that price is still going down. So price is closed right now at .6827, so if it opens right there maybe I enter right at .6825. Stop loss is still above the blue candle at .6885 (so 60 pip stop loss). Can still get a good R:R here. Because the first profit target where I might take some profit off the table is when price reaches the upward trending channel line which will be somewhere around .6650 or so. So that is 175 pips or so. So around a 1:3 RR. Or depending on what price does at that line (like if it just breaks through; this would confirm that bearish flag pattern I talked about before), then I would be looking to take profit all the way down at around .6300. That would be huge profits.
An even safer entry here is to enter below that upward trend line I have drawn that starts about November 18th. So the entry would be short at around .6800. This would confirm that price broke through that recent uptrend going on over the past month. This would make the SL about 85 pips and the R:R would not be as good obviously.
So there you have it. Lots of rambling but hopefully that makes sense. The key points…
#1: trade with the long term trend #2: make sure price is at an area of resistance or support #3: make sure price action forms at that resistance/support
How you enter is based on your risk profile. There are a number of different ways. I look for ways to make my R:R as high as possible. This trade has the potential to be in the 1:10 range.
I will look at where price is at the open of the markets and will post my entry
i really like ur thread so far. I like your trading style, its the first i see on this site that is targeted on more then holding onto trades for 15 minutes. i aswell like your layout, you skip useless MACD and other oscilators indicators ets and focus solely on price patterns and volume.
The news from last 2 weeks go into your favour as FED started a rise of interest rates the dolar value should (should) increase. but, we all know markets arent aways reasonabe and not always follow the logic of the underying economy.
There are 50 more reasons why the NZD should be vaued higher then it is right now, but putting them all up is monkey business atm, here the focus is soely on charts.
Your own argumentation sounds logical but there are two things id like to add if you dont mind. The line is broken, a line that has a span which is longer then one year in 80% cases does not survive the third bump, if it does then it does very clearly (usually before it touches the line it goes down and never actually touches it), this one is crossed allready. What i see in the last 3 days is a retest of the line (and the line has not been broken as ill show you on the Shanghai/Hongkong actuall prices of first of january, they dont have new year as we do so first of january is a normal trading day there)
Besides that, pro traders (especialy the big guys, funds and superinvestors) have a 3-consecutive-close-rule. If a prices closes 3 days in row above a trend ine, the trend line is considered to be broken. Then the big guys come in and invest their waterfalls of money.
The second thing i see is that theres a several month long reversal head and shoulders bottom formed. A big thing which is beeing confirmed by the volume.
I am new to this forum, athough i know babypips.com since 6 years i never posted, only read, and i dont want to sound like a negative ass clown, but i think a contra view of yours might be interesting.
Based solely on the charts You provided i would bet that its going to go up, not sure if the actual touch of the line is the real retest of the line or if it will trend a few days sidewards, test the line again and then go up. But my bet is that it is going up immediately next monday. On your charts You will see a gap, the gap comes from the shanghai/hongkong session in which it aready went up by 0.002 showing a very fat marubozu with absolutely no shades. This gap will form a new interesting formation (abandoned baby bottom) for You which you will see on monday and it maybe will change ur trade preferences towards a long position. In the charts you provided it is already showing a inverted hammer which is a bullish formation. if it (against my preferences) on monday goes down, it will show at the end of the day a concealing baby swallow which is aswell bullish. Im no friend of basind anaylisis solely on cande stick formations but considering the other 3 points i brought in it is a suportive point aswell which maybe helps, but as i said, basing analysis solely on candlestick patterns is not a good idea.
I dont trade forex, never did and never in my life will trade it, i trade other things, but i really like to see how Your bet will end.
If You want to go short try it at 0.6863 but i would immediately go long on this pair with a stop loss on 0.6750.
If the pair starts trending sideward for a while then i would watch out the (+1 year long) trendine and try to place a long position above it but as close as possible to 0.6758.
After reading your post, I will have to rethink this entry. The entry on this trade was pending what my charts looked like when the market opened for the week. Also, I hadn’t heard the 3rd bump % before or the 3 days above trend line theory. Very interesting and useful information. And based on the chart you showed with that last green bar, I agree with you and don’t really like the price action for a short at the moment anymore as it does appear that trend line is now holding as support. I think any short on this pair now would need to be at a lower level which confirms a drop (somewhere below .6800), but at that point the R:R is poor. So actually the next short I would be considering is a breakout of the upward channel that formed over the past few months. I do see a couple possible long positions. One would be if price trends sideways now for a couple days and then forms a pinbar on that upward trend line that started on November 18th. Or a breakout play at around .6900. The pinbar play would be the better of the two if it plays out.
And as far as the fundamentals, I am not a pro on these. I try to incorporate fundamentals into my trade to the best of my ability. But I do need improvement. It definitely helps to have fundamentals backing your technical analysis. Where do you look for your information on fundamentals? I usually try to look at websites such as dailyfx and forexcrunch. You know of anything better to improve my fundamentals?
i did not mean to get you off Your trade, with my post/input. At the stage the pair is right now, both can be true, your theory and mine. we simply dont know which one is true but we will see within the next week.
Regarding fundamentals, well, id suggest you to completey ignore all fundamentals in your entire analysis. Out of several reasons:
As far as ive seen babypips.com is focusing on teaching people more the daytrader approach.
In the daytrading approach fundamentals dont count - fundamentals are facts that dont change over night.
Fundamentas are very important if You want to initiate positions which last months or years as thats the speed in which fundamentals are changing. The change very rarely, the dont change over night.
A company wont run good just because the farm-pay-rolls is 0,01% higher then last week (especialy regarding this fundamental which i have read in this forum few times, i dont understand why people give any value to it as: farm production in USA accounts only for 1,3% of the total GDP of USA, a increase of 0,1% of wages in the farm sector has a total effect of 0,001% on the general economy of USA, and even then, the impact of 0,001% still has to be evaluated if its good or bad in terms of competitiveness of USA farm roducts world wide against European farm products etc. etc. etc.) it is a never ending story and the outcome of news impact on the underlying economy - thus on its stocks and forex - is unpredictable.
You will never, never, never ever know as much as the big guys. The news you know they know before you, and even if they dont know before You, they know the impact looking and gossiping with their friends in the stile of: hey Rob, hows Your 250 billion dollar fund going this year? Rob: good bro, i made 11% in 8 months. Hey rob, what do you think about the QE program that will be announced next week from the ECB? - Im not sure, they give hints theyll increase it but noone knows how much. most of my friends think its going to be increased to 100billion a month from 60 bilion a month. So the prices are aready in the stocks etc. I for myself, am watching the sideines at the moment, if they realy increase it to 100b/month ill go in with 25billion - fourth of my fund if they go anything beow 90bill a month ill go short with first 5 bill then increase the shorts step by step to 25 bill. Thanks rob, sounds like a good plan, well see what the news will bring, im rather shure Super-Mario will deliver but ill wait for the outcome.
See the difference? those guys aswell dont know what the news will be but, they manage funds that are unimaginable for a day trader. Thos two just agreed onto an action regarding the news, which you dont know about. It is no insider trade, but it is something that kills you. Because when they see the news theyl both go in with huge sums, sums that actually move the market very quickly and gives a huge ammount of votality.
If you still want to get into the fundamentas thing then try this approach:
the trick is to see where the big guys are heading to. I do that simply in the way of not trading on big news days. i wait the next day or at least few hours after the release to see whats happening.
U rather want a secure 1000 pip gaind then an unsecure gamble of 100 pips on a news release.
How to keep track of fundamentals:
Thats much easier then you think trust me. Just never read news, no forums, no online broker news relases, no opinions of other people where the market will go, do not search for the news!
When you start searching for fundamental news you will ony end up finding unimportant news that barely move the market or that barely have any infuence on the fundamental state.
There are only 2 sources for the real fundamental news that can move markets and that give insight of what the players are thingking. Financial times, press realeases of the white house or government actions.
The financia times is the market itself and its thoughts (and other reputabe news papers) it gives direction what the people are thinking in general. the government is the other big factor (you can count FED into it aswell) that gives direction into which way the overall fundamentals are heading.
Examples: swiss had a refendum a year ago if they should nail the centra bank of switzerland to its gold standard promise/contract. As the swiss central bank has a gold standard anchored into its constituion that it has to keep certain ammounts of gold in reserve to back up the frank - but in the crisis years of 2008-2013 it did not stick to it in order to buy EURO to keep the frank lower and thus the economy competitive compared to the Eurozone which is surrounding switzerland. If the people woud have voted yes the bank would have had to buy TONS of gold in order to fullfill what the people are asking for (switzerland democtraty is bit different from USA-democraty).
The impact on the gold price and the swiss frank you can immagine on the day and the days after the vote.
What happened in this case i wont elaborate, its old news you can look up on google and will tell u what happened.
But its a perfect case where the market is not beeing moved by economy, standard and numbers but by politics, fear, hope and power.
the way to keep track of fundamentals is simple, skip them all, except the one that litteraly JUMP you in the face. The ones that newspapers and politics are talking about over days and weeks, those ones are the important fundamental news and changes that you need to consider. As those things are the game changers that change and keep changes of fundamentals for months, years, decades. Fundamenta anylisis is much harder then technical, as in order to understand a economy, share or whatever, you have to watch the fundamentals for years, and you have to keep them in mind for years without putting to much focus on them. You have to have a memory brain that remembers a lot of useless facts that in return once the trigger fals gives a great big picture and a deep inside view. and you must keep track at least for a year just to understand what the important fundamentals for the economy are (the movers, like oil combined with politics for dubai and OPEC meetings compared to production targets to lower prices in order to let us shelf oil economy go broke or reduce the budget of a neibouring country that depends on Oil only in order to put political pressure - Irak Iran vs Saudi Arabia <-biggest oil producer on the world which is fighting for power over Irak and Iran putting pressure on the two countries by destroying the only healthy industry [Oil] in those two countries. USA a big allie of Saudi Arabia playing the same game by forcing them to keep their prduction high in order to devestate the Russian Oil industry and putting the country into a recession as we see since a year in the numbers and the degrading of the rouble by 150%)
The fundamentals for the new zealand dollar are simple, as new zealand is a mini economy compared to the Eurozone and USA. It only has like what, 5 milion people. the main economics are clear, not much energetica, it has to import its power resources (which dropped a lot last year) it does not export much resources, so its economy is not dependant on high oil, copper, alumium, gold price ike Russians or arabic(dubai) venezuela etc economies, in fact the low prices of comodities are a boost for the new zealand economy. The central bank of new zeaand started a reduce of the interest rate from end of 2014 (thats where your chart shows the peak and the beginning of Your current trand line, the long one) and that reduction has stopped at 2.5%, where it aswell was at the peak of the crisis in 2009-12, so the big players are sure they wont go below 2,5% interest rate (well see in february if im right and the 2.5% stay) so they are pumping in money into the currency as they are pricing in the expectation that the interest rate will stay on 2.5%.
etc etc etc. we could go on like this (regarding your preferences if the economy is good or bad) forever. in the end its only important what the market thinks, the psychology.
I see a pricing in of the februar interest rate decition for the NZD where the big guys now are buying in the expectATION that the interest rate wil stay the same (i think it will go up a bit but thats my view) and this is a self fulfiling prophecy style price change. Big guys start investing, other big guys see upwards movement, they follow, small guys see movement they follow, very smal guys see lines, they try to go contra and get burned.
In general i wouldnt trade too much NZD as it is a very small currency and easy to manipulate compared to EURO, Dollar, Yen.
Great analysis. And I appreciate your posts. So I just recently looked at my charts today and I did not see that gap up on NZD/USD. I was expecting price to be starting higher since seeing your chart with that last green candle hmmmm. That confuses me. It looked like price started today for me right where it ended last week, so I may have actually still considered a short possibly on the pair, but unfortunately by the time I looked at the charts, price had already shot down as you can see in the chart I’ve posted. The R:R is no good at this point. With the 3% risk, price would have already reached 3% profit if I had been able to put my entry in and I would have moved my stop loss to BE. I was not expecting price to move so quickly once the markets opened and thought I would have a few hours before anything happened. O well. Hopefully (for the sake of not missing a trade that could have produced an R:R in the range of 1:5 or even better) price will come back up and form a nice daily pinbar that can produce a long trade. We will see have to see.
This is a breakout play from the downward channel. I am hoping for some retracement up to trigger an entry and produce an acceptable R:R. If I entered below the big red candle, the R:R would be poor. This entry may be canceled depending on what this next daily candle looks like. Will update my position as things happen.
Wow, what a thread so far! I’ve learnt a lot already. Thanks for your contributions so far Pipdawkter and TURBONero.
I’ve decided to start the new year with a strategy of S/R levels and PA, and despite us using a different method to find the S/R levels, I think we’re coming to the same sort of decisions.
Here was my thought process on the GBP/USD:
Larger time frame down trend.
6 month low S/R line touched and retraced up to previous resistance turned support from last down-swing.
Retracement finished with a giant pin bar and a lower high, confirming the larger time frame down trend.
Once price moves to the 6 month S/R again, I’ll move my stop loss to break even and see if the S/R is broken, because if it does get broken the price might freefall quite a bit.
Fundamentals (high impact according to ForexFactory Calendar) :
The US Manufacturing PMI report is forecast to be positive and it’s due in a few hours. If forecasts are correct then it will strengthen the USD against the GBP causing a further drop.
The UK Construction PMI report is due tomorrow morning but that is also forecast as positive, so we may see a second test of the 6 month S/R line overnight then a massive rejection in the morning. IF the forecast is correct.
It currently looks like the big fish in London have decided that they already know what the report is going to look like, and are heavily shorting the cable now so they can have ten pints of beer over lunch.
pipdawkter it seems you might be asleep, hopefully you wake up in a mountain of pips
edit:
I moved my stop loss to the break even point and a ‘magic’ number ending in an 80, about 30 pips above the current price. I’m not sure if this is going to be a bad idea as the report may generate a bit of a whipsaw and I’ll get stop hunted… really not sure what to here. Don’t want to turn this winner into a loser though, or is that just my greed talking? pipdawkter/TURBONero your input here would be greatly valued.
Im affraid i can not help you much with Your trading style or your stop loss/take profit at the moment but and in general as it seems im pretty not good the last few days in guessing the direction as pipdawkter showed me (i was wrong - he was right, at least at the moment). but i can at least tell you some of my thoughts onto the price action.
You entered in a very volatile period and a bit alte already. It is 90% sure that it will drop further, about the direction your (in my point of views) pretty right, but your late entry will make it a hard ride, as the votality is high, you have high ups and downs, no steady movement. its a bit of phaze of hope and desperation within few hours. If you are ready to withstand the nervous times then you should set your stop-loss losely and willingly be ready to take bigger losses then anticipated, if not then you should set your stop-loss as usuall but then it is very likely you get kicked out at the wrong moment.
In general the trend is down, it is in the late phaze and can turn around any second or continue down (90% continue down) but you should watch out at 1,4577 as this is the lowest low from april 2014. At lowest lows it tends to go back a bit before continuing down. It is always a blind guess how much (or if) it will go up from that previous low (it can just aswell shoot through) but if it goes up it is very likely that even days after you initiated your trade it will hit the mark where you initiated the trade.
Onto the daytrader approach youre right, you found a good spot to enter, it looks very much like the new support/resistance line is holding.
Yup, so the trade was triggered over night and is in some profit right now.
I usually consider moving my stop loss to break even once my pips in profit is equal to my stop loss. So for this trade my stop loss is around 70 pips (risk of 3%) and therefore if I get to 70 pips profit I will consider it. You got to give your trade some room to move and moving your stop loss to break even right after getting a little bit of profit will get you stopped out often and you will miss big profit. It has happened to me in the past. Even if I move my stop loss to break even when I get to +70 pips, there is still some risk of being stopped out and then having price turn down again and missing out on profit. I will probably try to wait until +140 pips in profit before moving stop loss.
I placed the entry 12 hours ago. At that time I thought price was going to go down far enough that it was worth a trade and I was willing to lose 3% of my account if I was wrong. My mindset is not changed at this point just because the trade is in a little bit of profit. Meaning, I’m not moving my stop loss to break even to make sure I avoid losses, because I feel this would have the potential to prevent me from getting profits
trade looks good if youre still in it id hold for longer, as close as possible to the 1,4577 (if youre nerves can withstand some ups and downs). and take some profits there (m opinion) and then wait a bit to see if it continues down or makes a turn, in general if it makes a turn i would not initiate any long positions as then youd go strongly against the trend. to go long against a trend it takes more support then one line.
In general you entered in a dangerous situation, things like what happened today (that it goes up fast then climbes back slow) are usually clear signst that something has changed, the psychology of people. The bulls had a strong try to put it up, the bears came back and putted it down (slower then the bulls up), now its important to set a clear sign that the bears are still stronger, in form of putting the price much lower then todays opening. if they dont manage to put the price much lower then by tomorrow we could (as i said, could) see a comeback of the bulls. But all that will only be clear at todays end and tomorrows beginning, at the moment it looks very profitable to be short on the pair.
you cant really rely on a six months low in a one hour chart. It can still make dances around it like around a limbo stick, go up of it a bit down etc etc. in general if its a 6 months low it needs a day or two to be confirmed to be some sort of resistance/support, but even then a trend line is weigted more then a six months low. In general the lows that are historic, like ten years low, or 5 years low are much more stable to function as a point for any analysis.
In general im more towards longer positioning, no daytrading, hold onto positions for days weeks so my stop losses r much more loose then a day traders one.
What id do if i were in the trade exactly under your terms is id simply stick to my usual stop loss which is higher then the entree you have - till at least tomorrow. tomorrow id move the stop loss to 0 so that if it goes against me i dont loose. Before i enter any trade i always ask myself “is it something you can stick to for days or do you want to make a few points till the end of the day?” if i see only points till the end of the day i dont enter the trade at all.
The big profits come after you hold onto a trade for longer. December 28th i entered dow jones on short, 3 days later i was 900 points/pips (with pyramiding) in plus, today im plus 1950 points. so one day made me more profit then 3 days in a row. the first 3 days i kept my stop loss still at minus, now my stop loss is on +1000 points, so the dow (i have 3 positions on it right now) can still go 300 points against my direction and im still in it. why loose 300 points u ask? well 300 points are nothing when you consider that if the dow falls another 1000 points id make 3000 points/pips. Thats a risk/reward ratio of 10, considering that im already in a win (counting my initial stop loss) in a ration of 1:5. So when you take the initial trade with the initial stop loss i had a stop loss of 150 points, now im plus of 1900 points, thats 1:12 actual stage, if i loose 300 points its still 1:6,667. if it goes in my direction a few more points i end up 1:20 or 1:30 etc. so loosing a few points but having the possibility to earn 1000-2000-3000 points makes it worth while a lot.
Especially when you consider that the hardest work is done when you enter the trade, to enter it it takes balls, to stick to it it takes patient. the nervocity is gone as soon as you have earned a few hundret points, then all you need to do is wait wait wait, the worst that can happen to you is that you dont earn 30.000 but 15.000,but its still a earn, the best what can happen is that u dont earn 15.000 but 75.000.
so in my eyes sitting in the trade is better then to constantly look for new opportunities where your chance is 50/50 to be right or wrong and even when your right u only earn some pips/points.
Thank you so much for your reply, those are the exact words I needed to hear to help me grow and develop as a trader. I’ve still got some bad habits to break, namely losing my nerves after I’ve entered the trade. I guess I’m still playing around trying to make a quick few pips here and there when really I need to focus on long term profitability and, like you said, be patient.
I’m currently trying to teach myself about macro-economics to better understand the market, and hopefully on day become a longer term trader. Do you have any educational resource recommendations or books that have helped you advance so much?
if you really want to understand how big traders think and how they manage to stick to long lasting very profitable trades without getting their nerves lost then read this book, its very old, but trust me, what counted for stock 100 years ago is still the best things you can learn. in todays forums and online sites (- bucket shops - ull find out what it means while reading the book) you can not get much helpfull stuff, you get 90% people who have no clue but love to explain things wrong, but the guys who know how to usually keep quiet about it. i dont say i know how to trade, and i dont share the way im trading, stop losses etc, but i can give you my sources then you can develope your own trading stile and techniques.
This is one of my sources:
Jesse Livermore - Reminiscences of a Stock Operator
Lovermore was the guy who developed Pivot Points and the math behind it, the nice lines we use in todays trading which are generated by computer. At his peak he had 400 million $ on his accounts - and considering it was all his own money (not from funds or government investing in funds) its very impressive, especially when you consider that 400 million in 1935 is the equivalent of 50 billion today.
In this book you wont find many hints about technical analysis, but it is a great guideline to understand your own psychology.
In the end it doesnt matter if you know tehniques or have fast information to win in stocks (forex aswell i guess) the only thing that count is yourself, your behavious and your abilities. keep calm and start pipping the big pips.
It took me one year of hard work to finaly learn how to not take profits at 1:1, 1:2, 1:3 ratio or even 1:10 ratio, but to pyramide, go for a risk like, risk 200 points at initiation of trade and stick to it till u reached 2.000 points or even more (with pyramiding you can do 2000 points with low risk in few days, just like i explained above 1950 from xmas till now with a lot of holidays in between). Now i take profits only when i ask myself “hmm if you were not in this trade allready, would you enter a counterposition - meaning: do you think it turned?” if i say no i stay in, if i say yes i leave it and pretty much simultaniously start a contra position (leave a long position and a minute later initiate a short position).
