Final live trade of the week/month

Final live trade of the week/month. I explain how I manage my trades once I have entered a position. I do not agree with the 'set and forget' mentality when it comes to intraday trading

Live Trade 30th July - 5 Minute Timeframe - Always stick to your trading plan/rules

Sticking to your trading plan is key to success. When people get emotional, they make mistakes and take risks which result in losses. Here's a live FTSE trade taken after a losing trade

Overtrading

Overtrading is something which every trader has been guilty of at some point in their trading journey. For me, I came to trading with a naivety that I think is prevalent in most new traders. People come with high expectations, usually pumped up by the notion of a ‘get rich quick’ ideology and information they’ve garnered from films like Wolf of Wall Street.

It’s difficult to become accustomed to trading. It is unlike any other career and it goes against everything we are taught from a very young age. In school you’re told to keep your head down and work hard, study long hours and do extra-curriculum work if you want to be the best. In work you’re expected to stay long hours, or if it’s a manual labour job, work until you drop.

Essentially, the more difficult it is, the better your chances for success.

 

This is impossible to replicate in trading. Sure you can study charts, learn about every indicator, have great fundamental knowledge, and know the top fifty trading systems that exist. But beyond that, when you sit down at your computer, you cannot work harder or put in more physical effort to progress.

The reason I overtraded in the beginning is that I thought that was what I should be doing. I needed to catch every move, read every candle correctly and wring as much money from the markets as possible (in reality it was the market wringing money from my account!)

It may surprise you to learn how often you should be entering a trade. I’ll give you a few examples that tally with my experience and knowledge of other traders:

Trading on the 5 minute timeframe, which is what I trade mostly – one or two trades per day maximum. Quite often there is only one setup. There are also lots of days in the year where I have zero trade setups.

Trading on the 1 hour timeframe and over all Forex pairs – 2 or 3 trades per week on average. Sometimes less.

Trading on the 4 hour timeframe and Daily timeframe – one trade per week. A busy week would be three trades entered.

Now reading that is easy and you may think you ‘get it’. But the real world situation is that you will have very long periods of inaction. This goes against that inbuilt notion of ‘work harder, progress faster’. It is something you must get used to if you want to succeed in your trading venture.

You sit and you wait. Let the market come to you. Wait for your setup, your perfect setup that will stand a high chance of success.

I think of it as akin to the frog that eats flies. It does not chase the fly around a field, hopping and flicking its tongue in a desperate attempt to ‘earn’ its meal by working harder and chasing that sucker down. If it did this it would fail. It would expend all of its energy (think trading account) and it would eventually die (blown account). So what does it do instead? It sits and it waits. It takes a long time, sure, but the frog understands that if it waits, eventually a fly (trade setup) will align perfectly and it can strike.

Well, I never thought I would compare trading to the life of a frog, but there you have it!

I hope you’ve had a great trading week!

FTSE Review from 28th July and Trade Results

Here is the first FTSE Review video - From the 28th July. I outline what I'm looking at in the morning and identify potential strong zones in the market for the day. At 4:30pm (Market Close) I add to the video, showing how I used these zones on the 5 minute timeframe to trade. Note my expectation of an inside day and also how well my zones worked. The market is always telling you what to do if you know where to look

Wednesday Quote Hour

How to Design a Simple Trading Plan/System for use in Trading Forex and Indices

Learn how to design a simple trading plan. I explain the stages step-by-step as well as showing you how to do it on the charts

Be the Tortoise and not the Hare when trading Forex and Indices

Remember the story of the tortoise and the hare? One was fast but careless, the other slow and consistent; One was exciting to watch, the other boring; One was cocky, the other quietly determined. And who won the race in the end? The slower, boring tortoise.

So have I changed tact and resorted to telling Children’s Tales? Or how does this relate to trading?

Well, it’s a very important lesson to understand when it comes to trading. Like the saying goes – ‘small daily improvements are the key to staggering long-term results.’  Little by little, baby-step by baby-step and before you know it you’re standing at the top of your mountain looking back and wondering how the hell you got there.

A lot of people come to trading driven by the wrong emotion – greed. They see fast money, millions by the minute, a few clicks here and a few moving averages there and you’re living in a penthouse with your Bugatti in the underground car-park.

This is a dangerous way to approach the markets. You will end up attracting disaster and wipe out your account – the exact opposite of what you wanted. You’ll be pulled into thinking that every trade you take will be ‘the big one,’ and you’ll be disappointed when it isn’t. Worse than that, you’ll begin to chase the market, hold positions for too long and let them run against you, become enraged when you take a losing position and revenge trade. Yes, all that good stuff is based around the little monster of greed.

You don’t need the home runs. Yes, they happen on occasion, but they will never be your bread and butter. It’s the consistency that does it, the ability to use your edge in the market perfectly, without getting dragged into it emotionally.

Quick note here – I, along with everyone else trying to help you with your trading admonish emotional trading. However, unlike everyone else, I’ll tell you a secret…it never goes away. Never. We are all emotional creatures. Even the best traders I know have confided in me that they get nervous when they enter a trade, their mind chirps up with uncertainty and they think it will be a loser. As soon as the position moves against them a little bit they lean forward, annoyed that they have gotten it wrong even before the trade has completed!

So you’re not alone. We all get nervous and emotional. But the key is to learn to ignore the emotion, to feel the fear and do it anyway. As long as you can see the raw data of the charts and not become influenced by the annoying little voices of the mind, then you’re on the right path.

And aim to be consistent, not a superstar. Let’s take an average position size of 1% per trade. And let’s say you can become consistent enough to end each day up 1% (this would be exceptional). Now let’s say you work 50 weeks of the year at trading. That’s 250% in one year!

Note that there was no need for a trade making you 10% in one day. But by aiming to be consistent and following your plan, trades like that WILL happen as well. Because when the market makes a move like that, probabilities are on your side that you will be in a position to catch such a move.

I have a rule whereby if I have two successful trades before lunch, I’m done for the day. I brought this in because I noticed that if I had a successful morning, I became almost cocky. I would take imperfect trades, telling myself it was ok because I had a cushion of profit to work with. After a loss I’d get frustrated and chase the market. After another loss I’d be furious that all my hard work had been for nothing. After another loss…you get the picture.

So now I aim to be consistent. Two successful trades and I’m done. It’s currently 8:40 am. I’ve had a pre-market FTSE trade and a trade at the 8am open, both of which were successful. I want to keep trading – I love trading, it’s my passion as well as my job – but I wont. Because I know how big those baby steps are when you add them all together.

I hope you all have a great trading week!

Live Trade Aud/Usd Forex pair, 5 minute timeframe

Live trade on the Aud/Usd Forex pair, 5 minute timeframe. This is the other market I trade intraday. It's from Monday rather than today because, quite simply, it has been such a great trading week that I'm taking today off :-) Happy Trading

Live Trade 23rd July

Don't trade your opinion of the market, always trade what the market is telling you. The market is never wrong. FTSE Live Trade 23rd July

How to Build Discipline in trading Forex and Indices and Conquer Emotional Trading

One of the best ways to build discipline is also one of the easiest ways. If you struggle with revenge trading, overtrading, chasing the market or any of the other myriads of crazy actions that you just cant seem to curb, then this will help.

Now you’re all expecting some mythical strategy involving chimes, meditation, a vegan diet and connecting to your inner peace.  So when I tell you to start a simple trading diary, you’re probably wondering what I’m talking about? A diary? I’m losing money here, getting trapped in emotional trading. I need something more than a trading diary.

But it works. A simple trading diary. Each day, after ALL trades, you note down the trade in your diary – I find hand writing is more beneficial than typing into a computer. You explain your trade – namely, why you took it. You explain your exit. And then you rate your trade from 1 to 5, 5 being a perfect trade.

There’s a little catch though – your trade can be a loser and still rate a perfect 5. Because you’re rating yourself in this diary. It’s an evaluation of YOUR performance, specifically did you stick to your trading rules or not? If you revenge traded or if you tried to chase a trend, you write that down in the diary. You berate yourself and you rate it as a suitable failure. Moved your stop or didn’t take your exit and instead watched the market turn against you? Rate it appropriately.

Why does this help? Because there’s a problem in trading and that is that there are no rules. It’s just you and your trading platform. You can do whatever you like. Sure it hurts when you lose money but at the time that doesn’t enter your head. Instead you worry about making the money back or not missing this one, ultimate trade even though there’s no entry signal.

The diary makes you accountable to someone. It makes you accountable to yourself, and trust me, there is no harsher critic. Once you start writing it down and evaluating your trades, you’ll find that before long you want to avoid writing in the bad trades. But you must keep doing it. Tear yourself apart in those entries. And what happens? You’ll find yourself pausing before taking those silly trades in the future. A new voice will speak up in your mind and say ‘hey, wait a second, are you SURE you want to be documenting this trade after it’s done?’

The bad trades will begin to slip away. I use this method and it works because I follow it to the letter. Instead of fearing missing trades I began to fear writing about bad trades. Because I could see the stupidity, right there on the page. And so I found myself pausing before each entry, evaluating, sifting out the emotional trades.

But remember, you’re evaluating yourself, not the results of the trade. If after the trade you did everything you were supposed to and it lost, give yourself a perfect 5. You can’t control the market or probabilities. But you can control yourself.

I’m in a trade right now. My trading diary is always on my mind (it’s actually on the desk next to me!) I’m accountable to myself and I definitely don’t want to face that criticism!

Happy Trading and I hope you’re having a great week.

Making Money Whilst Still Lying in Bed - Live FTSE Trade 22nd July

Is there really a better way to make money than lying in bed and entering a trade before the market even opens? I can't think of one!

Wednesday Quote Hour

How to Take a Top Down View of the Market in Forex and Indices

Here I explain how I take a top down view of the market when trading Intraday. It includes the usage of Pivot Points to identify the strongest zones to trade from, as well as a little tip to identify what size move you should be looking for on each market

Blowing your account in Forex and Indices

It happens. I don't know a single successful trader who hasn't blown at least one account. It's usually two or three accounts. And it's tough. Really tough.

I can still remember blowing my account. I had worked so hard and given countless hours to studying charts and building my knowledge. I knew what I was doing, I understood how to trade. And it happened nonetheless.

I was sitting at my desk. The only sounds I could hear were the whir of the fan on my computer and an even louder whooshing sound that enveloped my mind. I had been sucked in by the market - by something I have now come to know as 'Trading Tunnel Vision' (TTV).

What is TTV? It's when your emotions overpower you, your fear and your greed, your anger and your determination for revenge. Everything else seems to disappear and it's just the chart in front of you, going against your every move, as though some grandmaster chess player is on the other end of the chart, toying with you.

I had clicked Buy, I had clicked Sell, I had adjusted stops and I had chased trades. It happened so quickly. In a matter of hours. TTV had sucked me in and when it spat me out again I was a wreck (as was my trading account!)

The worst part of it all, is that when you sit back and realise what has just happened, you cant believe your own stupidity. You KNOW what you were doing was wrong. You UNDERSTAND that the way you just traded is a recipe for disaster. And yet you did it all the same. TTV got you. You feel worthless and totally dejected.

This is the truth of blowing your account. It is a viscous experience and, sadly, it is also a necessary one.

What next? Well, for most, that's it. They walk away from trading, or they are forced away from it because they have literally lost everything.

For me? Yes I felt like quitting - I was devastated. I felt useless, like a failure. But did I quit? No. I went away and I licked my wounds and then I came back. I spent hours a day honing my knowledge and my skill. Every time I fell, I got back up again. I was forced to trade very small lots, because my account was threadbare. I worked on myself, as well as my methods. I developed a way to overcome TTV - yes, I'll show you how I did it in my psychology video series - and I forced myself to keep moving. Because you can do it. Yes, YOU. 95% do not succeed. But what about the 5% who do? Are they superhuman? Better than you? Smarter than you? Of course not. So, what do they have?

Persistence.

 Anyone who is great at anything is that way because they persevered when everyone else quit.

Keep chipping away at your trade. Continue to learn. Do not allow yourself  to give up. Do you remember that guy who started at the same time as Buffett and quit when he blew his account? No? Neither does anyone else.

Have a great trading week!

How to MISS a trade like a champ!

Yes, I miss trades! Every trader does it. The KEY is never to chase the market!

Are Demo accounts useful when learning to trade Forex and Indices?

My answer to this question is probably going to be somewhat controversial. It's a 'yes', in that a demo account can be useful, but also with a sprinkling of 'no', for good measure... Quite a lot of the 'no' garnish, as a matter of fact.

Demo accounts are useful, especially if you're a complete novice. It gives you the ability to learn the charts and to get used to your trading platform. You can study and develop an understanding of what is going on. Everything can seem so confusing when you first start and it's not a good idea to just slap your money on the table and start trading.

I think a good analogy would be to compare a demo account to training wheels on a bike. You wouldn't just sit your kid on a bike and send them off into the street because you know they would fall and potentially injure themselves. They may also be somewhat frightened of the bike, uncertain of it because it is something so new and alien to them. Training wheels allow them to get comfortable on the bike in a safe, controlled way.

Learning to trade is the same as learning anything new. You begin on the outside, uncertain and with little practical knowledge. It can seem very daunting. It's nice to ease yourself in, to learn the ropes and build some confidence. Use a demo account as you read books and watch videos. Load indicators onto the chart and begin to understand what they are telling you. Pick out support and resistance areas and then watch and see if they are respected. Enter demo trades.

All sounds great, right? So where's the heavy dose of 'no', I hear you ask?

Well, trading is not like riding a bike. And it's not like sitting in a flight simulator learning how to fly a plane. It's very different and let me explain why: To compare it to riding a bike or learning to fly a plane you would need a little qualifier - once your training is done, you're still going to fall off your bike or crash your plane...repeatedly. Over and over again you will watch, helpless as everything goes wrong.

Trading is probabilities. You will have loss - aka falling from your bike - and you will have it over and over again. A demo account does not prepare you for this. Sure, you might THINK that it does, but believe me, it doesn't. Watching fictional money disappear from a demo account as you suffer a losing streak is easy. It's not real! It's not your money. And no matter what you think, you can't condition your mind to react in the same way.

I remember I watched a documentary which followed aspiring traders. There was a woman on it who had turned a £150,000 demo account into £1.5 million. She was confident she knew exactly what she was doing. She took her families savings of £6,000 and opened a real account. She began to trade.

At this point I knew what was going to happen. I wanted to scream through the TV that she should stop. One month later her account was below £4,000. She was paralysed by fear. Which way do you think the account went after that?

So yes, demo accounts have their use. But you wont leave a demo account as a master trader. It just wont happen. It takes time and, unfortunately, money, to develop your skill. The good news is that it's the same for everyone. I don't know a professional trader who hasn't made every mistake in the book and also blown at least one account.

I still remember blowing my first account (this after I was CERTAIN that I knew exactly what I was doing). Want to hear how that happened and how I felt through it all? Well, I'll delve into my trading diary on Monday and post it up for you.

Happy Trading (because it IS worth it)

Live trade from Wed 15th July

Wednesday Quote Hour

How to let your profits run in Forex and Indices

In this video I show you how to let your profits run. It is the same method that I use and is highly effective. I also outline the limitations of the method, something other traders don't show you!

Let Your Profits Run and Cut Your Losses Early...What Does it Mean??

Let your profits run and cut your losses early. It’s muttered between traders and written in books. I imagine Wall Street gurus huddled in leather chairs, sipping single malts and discussing it. It sounds very simple; it sounds sensible. But what the heck does it mean?

Let’s start with the whole notion of cutting your losses early. Again, something that caused me a lot of confusion when I first started trading. It brings up the idea that I should be some sort of sage, staring into a crystal ball for early warning signs that the market momentum is getting ready to turn against me. But of course, that’s not what it is, and like most ‘Trading Advice’, it’s simply packaged and explained wrong (although if you do have one of those crystal balls, please email me so I can follow your trade setups!)

Cutting your losses should really read – Have a stop planned in the market before you enter a trade. You should always have a stop set out. In fact, your stop should be considered before your take-profit, in my opinion. It should be somewhere sensible that also limits your risk as much as possible. And then? Simple - You DO NOT alter your stop. Under no circumstances do you increase your stop because you’re sure your trade is right and the market just needs a little more wriggle room. The only adjustment to your stop should be to make it smaller as the trade moves in your favour, never to increase it.

This is more important than almost anything in trading. If you have predetermined risk you can manage your account, you can protect your capital. That is what is meant by cutting your losses early – not allowing them to decimate your account. I know a trader – actually, he no longer trades because he blew his account – who once held a position moving against him for so long that his final loss was over £40,000. He kept moving his stop. As the loss grew, so did his fear of taking the hit. He was sure if he just waited a little longer the market would correct. It was bound to, right?

It sounds crazy. You’re probably laughing in your head and thinking, ‘what an idiot that guy must have been.’ But this is normal. Remember, most people fail at trading. They let emotion and ego run their trades. They don’t last long. The market will not allow you ‘wriggle’ room.

And what about letting your profits run? Again, it sounds easy. If you’re in a winning position, let it run, squeeze as much profit from the markets as you can. Your winners need to cover your losers and also make you enough money for trading to be viable. But emotions, the key word that I keep repeating and which you are growing sick of hearing about. Emotion. Emotion. Emotion.

You’re up 100 pips on a trade. The market is still pointing in favour of your trade. But here comes a retracement. Or is it actually a complete change of direction? +80. You should really take the profit, no sense letting it drain away. +60. You’ve waited too long, how stupid. It’s mostly gone, all of that hard earned profit. +40. You close the position.

It’s difficult (unless you have that crystal ball). The markets are unpredictable. A system that lets your profits run will suffer a lot of lost profits on a lot of trades. But that type of system is designed to catch the big moves. It wants to search out the trending days and take as much profit from them as possible. You aren’t looking for 10 pips here, 20 pips there. You want the big moves that will make a difference to your capital. The problem is that all of those lost profits mean that you start adjusting your plan, trying to catch the small moves because letting the profits run just isn’t working. And because of that, you miss the big move!

How is it done? Well, I like to combine the two systems. The 10 pips here, 20 pips there, WITH the 100 pips. Have my cake and eat it, if you will. How do I do this? I close my position out in stages. First stage is where I think the market is going to show me support or resistance. Second stage is when it TELLS me it has met support or resistance and is reacting to it strongly. I use a Moving Average for this second part. It removes the emotion. I just watch for the signal to exit. When I get it, I’m out. Nice and simple. I’ll show you how to do it in the next video. I’ll be uploading it tomorrow.

Happy Trading.

Live Trade - Another live trade to outline the importance of thinking about your stops

A final Live Trade video to end the week. Again outlining the importance of thinking about your stops and letting the market show you what to do. Have a great weekend!

Live trade from Wednesday 8th July - This shows the importance of well thought out stops

Should you 'Trade the News' in Forex and Indices?

To trade the news or not to trade the news? There are lots of traders who avoid major news releases like the plague, and there are those who look for them as reasons to open a position in the market.

One thing’s for certain, you either come down in the ‘trade the news’ camp, or you’re in the ‘avoid’ camp.

What about me? Well, I have read about lots of people who trade the news successfully. I’ve actually watched a documentary where beginner traders were being taught to do just that. The markets can spark up with a ton of volatility during a major news release – think Nonfarm Payroll and Interest Rate Decision – and for those on the correct side of the market, the gains can be huge.

However, my experience and opinion comes down heavily in the ‘avoid’ camp.  I am often at my desk when a news release is issued and I often watch the markets most likely to be influenced by the release. The markets can make major swings. I was actually in a position on the AUD/USD once, sitting in a nice bit of profit before a news release came out. I decided to stick with the position but move my stop to entry so that the trade would be risk free. This was back when I first started, before I had really come face to face with slippage.

You can guess what happened, right? The market instantly turned against me. It plummeted through my stop and on my screen I watched the numbers drop, minus ten, minus twenty, minus thirty, fourty, fifty.

But my stop was in place. I was protected, right? The computer was just taking a while to catch up. Wrong. Slippage during a major news release can be enormous. I was exited from the position at -80 pips.  I was +15 before the news release and my stop had been at breakeven.

It was a hefty loss and one I don’t ever want to repeat.

Yes, there are people who trade the news. The problem for me is that trading the news becomes something akin to a white-knuckle ride. You hover over the mouse and you click buy or sell the second you see the results of the release. If you’re wrong you need to click to exit within milliseconds or watch the market tank against you. Adrenaline pumps, the hairs on your arms rise…

This doesn’t sound like trading. Not at all. Not the way a professional does it. Not the way someone who understands you trade with a mind on what you could LOSE, not what you could win, if you want to stay in the game long term. Trading the news comes dangerously close to gambling, rather than relying on probabilities and your edge, and I don’t want to gamble with my money. How could it be any other way? Unless you have insider information, you do not know the result of the release until it is announced. So you’re relying on either your best guess or the quickness of your fingers on the mouse and your brokers ability to execute your decision.

Remember the Swiss Franc drama, when they abandoned their Euro cap? It was unexpected and the markets went into overdrive. Some of the currency pairs moved four thousand points! Brokers had to chase people for money because lots of accounts suddenly found themselves wiped out in a matter of seconds. I read an article about a teacher in Britain who had set an order at £100 per point, with expectation of the news release sending the market a particular way. When he checked his account after he finished work he was sitting in the negative somewhere around £240,000. So he now owed the broker that money. Account gone. In debt to the tune of a good sized family home.

What the hell was he doing gambling (note the choice of word, it certainly wasn’t trading) with £100 a point? He shouldn’t have been. It was greed.

So I will never recommend trading the news. It amours itself to the lexicon that I have learned to avoid when trading – words like gambling, excitement, greed, and fast money.

Me? I close positions if I know important news releases are about to happen. I don’t risk the money on the hope that it will go my way. I look at the hugely successful investors, the hedge fund managers and people like Buffet, and I ask myself – ‘Do I think they would ever sit at their computer with their finger hovering over the mouse, ready to click at the instant news is released, hoping for huge moves in their favour?’

The answer is pretty obvious.

Live FTSE trade using a piercing pattern to enter

Here's a live trade from the beginning of the week. I go over my reasoning for the trade. The video also demonstrates a piercing pattern as a signal, one of the main candlestick patterns I look for 

Wednesday is 'Inspirational Quote Day'. These words ring very true

Learn about Risk/Reward and how it should be used in trading Forex and Indices

Learn about Risk/Reward and how it should be used in trading.

Is trading Forex and Indices difficult?

Is trading Forex and Indices difficult? I’m asked this question frequently. And I think that if someone is going to answer that question, then a little background information is in order. I mean, if I’ve lived the life of a pampered Saudi Prince, what right do I have to weigh the difficulty of trading as a career? I’m sure it’s more difficult that being flown around on a private jet everywhere, but that isn’t what you’re asking, is it?

So, background – I like to believe that I know what hard work is. In my previous life I would often work 100+ hours per week. My longest single shift was 44 hours straight with four 15 minute breaks. That was in the building industry. Worst experience? I was working such long hours, with so little time between shifts, that my body wasn’t getting enough rest and my work boots didn’t get the time to adequately dry…I developed trench foot (yuck, right!)

So yeah, I like to think I know what hard work is.

And is trading difficult? Would I say sitting in a comfortable chair, pressing a button to go long or short in the market is more difficult than all of that?

The simple answer? You bet your ass it is!

Trading is by far the most difficult practice I have ever undertaken and I know this to be true for pretty much everyone who enters into the arena.

Why is it so difficult? Because there are no rules. And it attacks your mind on a full frontal attack, cavalry charging right after the cannons have cleared the way.

The learning curve is steep. You will read over and over again that 95% of traders fail. That means they quit or, more likely, they run out of equity. 95% is an enormous failure rate. 

You can be sucked into the screen, into something I’ve come to term as ‘Tunnel Vision’ (more about this and how to combat it in future posts). This is a place where all sense leaves you. You will revenge trade. You will buy high and sell low. You will become enraged. Greed and fear will take over. You will become upset. You will watch your account dwindle and when you sit back at the end of it all you wont know how it happened.

A normal career has a training period. University. Apprenticeships. Whatever it may be. With trading it can last for years. You may never pass into the realm of becoming consistently profitable. But you WILL lose money in that training period, that is for certain. And that is very difficult to handle.

People come to the markets expecting to master it in a month or two. It wont happen. These ‘specialist’ four week training programmes that promise you profitability wont work. Because it’s not the ‘system’ that makes the trader. It’s the mentality and the psychology. And that takes time and practice.

So why do it? Why go through all of that?

I can answer that easily. The first reason to pop into my mind happened only last week. My father messaged me asking if I wanted to go to the cinema with him to see Terminator (I know, we’re suckers for action films!) I didn’t need to think about the response. It was yes. I closed my laptop without concern and I went to meet him. There was no boss to answer to. There was no worry about missing a trade. There was no feeling of guilt.

Trading can give you complete freedom. And if you’re not working for the freedom to do the things that you want, when you want to, then what exactly are you working for?