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FXstreet Trading Strategies

This is a discussion on FXstreet Trading Strategies within the Forex Trading forums, part of the Trading Forum category; The Forex 'Experience' Following a very successful and productive few weeks of teaching at the Online Trading Academy campus in ...

          
   
  1. #1
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    FXstreet Trading Strategies

    The Forex 'Experience'

    Following a very successful and productive few weeks of teaching at the Online Trading Academy campus in Philadelphia, I am sitting here waiting to board my plane home to London, killing some time doing a little research on a new project I have just started working on. While doing my work, I came across a currency trading website which was detailing the various advantages of entering into the Global Forex markets and was also explaining why it is “easier to make money” in the FX Markets than it is in other financial arenas such as Equities, Futures and Options. As a multiple asset trader and teacher myself, I decided to carry on reading the information on the site out of curiosity, leading eventually to my inspiration for writing this particular article.

    Moving forward through the website I was not all that surprised by the “Golden Nuggets” of information which were being provided. Search pretty much any website in the world or read any book on how to trade the currency markets and you will generally find similar variations of the same tips and tricks to use across the board. Now don’t get me wrong, I really do not have any issue with this at all. I do think it is great that somebody who is new to the markets can search on the web or pick up a book on the subject before going any further with it. This would be a useful exercise in explaining some of the aspects of what is involved in trading FX and would give anyone at the beginner level, a basic idea if it is an activity which they may of may not wish to pursue any further. However, I would suggest that if you really want to know the fine details of trading, then it is best to go ask a trader right? Let’s be honest if you wanted to get the most accurate idea of what a day in the life of a doctor is like, then really it would make most sense to go and ask a doctor about it. That’s why we here at Online Trading Academy hold the 3-Day Market Timing Classes across the world, so as to give people a solid insight into trading and investing to achieve short-term income and long-term wealth.

    What always surprises me the most about the generic information found on websites and in the trading books, is typically just how generic it actually is and also how misleading it can be as well. While there are many facts about the FX markets that happen to be true, this does not automatically mean that it is information that will prove to be useful in the quest to attain consistency in the markets. One of my earlier mentors in trading once told me to be cautious of anything which comes for free. When I asked him what he meant by this, he simply replied that in his humble experience he found that anything really worth having always had a price. That price could be financial, time-based or maybe a mixture of both. Whatever way I looked at it he said, you always have to pay to play the game. I must admit that his lesson was not one of the clearest I had been given back then, yet over time its deeper message became apparent to me on many different levels.

    As you may have guessed, I was one of those people who always believed in education and would happily seek the knowledge of others, no matter the costs but I also realized that the more time I spent going through my plan being consistent in my actions and learning from the mistakes I made as a trader, that I gained the most valuable lessons and education of all: experience. My personal definition of “experience” is this: “Experience is nothing more than making bad choices, surviving them and learning a lesson about how to avoid making that same bad choice again.” Others may put this in a very different way than me and of course that is just fine. This is the way I see it and I have found it to be a most empowering way to deal with my experiences in life. So what does this all have to do with the FX website I was looking at earlier in my day then? Let’s go a little deeper into it.

    There are without doubt certain characteristics of the global currency markets, which give this asset class it’s distinct “uniqueness” over other markets, which in turn have their own “uniqueness” over others too. However, just because someone tells you that it is easier to make money in the FX markets on a random website, does no make it true. Sure I read about how Trends in the FX pairs run longer than other markets, making it easier for traders to get involved in the big moves. I also hear about how cheap it is to get into the world of FX and how tight spreads make it great for day trading opportunities. I also hear about how we all get the economic news at the same time, thus creating a far more level playing field for news-based trading. Another thing I heard about, was how the volatility of the currency markets made it the ideal asset class for breakout style trading too. The list goes on an on. Go search the Internet for yourself and check out the multitude of websites who are saying these factors make FX trading the easiest way to get into the markets and make money. Before you do that though, I ask you to not take this information at face value and approach it from a totally logical and objective perspective instead.

    In life you can choose to take someone’s word for something and go do it their way, or respect their opinion, take it into account and go find out first hand, thus gaining vital experience for yourself along the way. This is why as an instructor, I shed the light of my experience on these dynamics of the FX markets with my students in class, showing them a way to go out there in a safe, low-risk fashion and get that all important experience for themselves. The Online Trading Academy Core Strategy is unique in its simple rules-based approach and allows us to see the market for what it really is, no matter what other factors may or may not be true about how the world of FX really works. The strategy recognizes one fundamental and undeniable fact and that is that it is the Institutions and Banks who dominate the market with orders to buy and sell currency which easily absorb the orders and actions of the retail trading public. When you understand that these institutional orders are what create imbalances between the willing buyers and the willing sellers, resulting in actual Demand and Supply falling out of equilibrium, then and only then, do we get movements in price.

    This simple and straightforward principle is independent of things like economic news reports, trends and spreads and when we learn to recognize what the imbalances look like on a price chart, then and only then do we get to the true moving parts of the market and gain real worthwhile experience.

    As traders, we must focus on what is real in the markets and not simply go by what we feel or what we are told to be true. For sure there may be some of you reading this right now and asking the question of why you should take my word for it either? I say that is good. I am glad you are thinking this way. Don’t take my word for granted. Stay objective and have a great trading week.

    Sam Evans


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    Who is the Fattest Kid on our Forex Market Playground?

    Hello traders! This week’s article will try to explain a bit about relative strength between individual currencies, help you choose which pair to trade, and suggest a couple of rules for your trading plan.

    In the Online Trading Academy Forex classes that I teach, obviously the topic of charts comes up, along with which currency is getting stronger vs. another when looking at the chart. An easy (and somewhat politically incorrect) way of remembering how the charts work is to think about a teeter totter or see-saw from our childhood playgrounds.

    When looking at that teeter totter from the side, if the right side is pointing up, the kid on the left side of the teeter totter is fatter than the kid on the right side. In the currency market, the base (currency on the left) is getting stronger than the quote (currency on the right). If the teeter totter is pointing down, the kid on the right side of the teeter totter is fatter than the kid on the left, which in forex means the quote is strengthening vs. the base currency.



    One technique shown in class is how to compare individual currencies by looking at several different pairs that have the currency in it. With the US dollar, we have the US dollar index which can give us an idea how strong or weak our US dollar is. But if you want to judge the British Pound for example, one technique is to look at the GBP vs. several different currencies to gauge the GBP strength. Chart the EURGBP, GBPJPY, GBPCAD, GBPAUD, GBPCHF, etc. If the GBP is on the fat kid’s side of the teeter totter on most of the charts, you can assume that the GBP is relatively strong vs. most currencies, which might mean you would look for long trades of the GBP.

    Another way to use our fat kid on the teeter totter playground analogy is when choosing an individual pair to trade. Say, for example, your trading plan allows you to enter one trade at a time. You are looking at the EURUSD pair and the GBPUSD pair, but are unable to choose which pair to trade. Which one should make you the most pips? My suggestion is to figure out who is the fattest kid (strongest currency) on the playground and who is the skinniest kid (weakest currency.) In the following three charts we are having a teeter totter contest, with each kid being paired up one at a time vs. the other kids.



    In the first chart, the EURUSD, who is the fatter kid? If you answered the EUR, you are correct! Give the EUR one point. In the middle chart, the GBPUSD, who is the fatter kid? If you answered GBP, you are correct, give the GBP one point. In the third chart, the EURGBP, who is the fatter kid? If you answered GBP, you are correct! Give the GBP another point. So what is the final tally? GBP 2, EUR 1, USD 0. On our imaginary playground, the GBP is the fattest kid (strongest currency) and the USD is the skinniest kid (weakest currency.) So the trade that should make the most pips is the GBPUSD.

    Before we get too much further in this week’s newsletter, I do want to mention the lines drawn on the charts. I was using the trend line tool to draw in the lines, but to you experienced traders out there you know the trend lines weren’t drawn as tradable trend lines, just as teeter totter examples! So please, no angry emails about drawing trend lines wrong!

    Another note about using this technique to judge relative strength. In the Online Trading Academy core strategy, we teach to buy in quality demand zones and sell in quality supply zones, trading in the direction of the larger time frame trend. When using the recommended three time frames (large time frame for trend, medium time frame for zones, small time frame for entry), which of your time frames should you use to compare the relative strength of your currencies? If you said the large time frame, give yourself a point!

    As promised, our last topic is a couple of potential rules for your trading plan. If you’ve been reading our newsletters for months, been to class, watched our online classes (the Extended Learning Track), you have been exposed to the concept of the trading plan. I hope you have one written out! If you have never been to one of our classes, a trading plan is a set of self-determined rules that you will follow to hopefully make some pips in this market. If you have no plan, your chance of success is severely limited. A few things that need to be in your plan are risk management rules, trading strategies, how you will continue your learning process, etc.

    My first suggested rule is geared primarily to new traders. The rule is stated as “I will enter only one position at a time. When my stop loss is at break even or better on this first trade, I can then enter a second position. A third position will only be entered when the stop on the second position is at break even or better.” A second rule could be that you have no more than three forex positions on at one time for your first 30-60 days of trading. The main reason for this is that new traders often get stressed out when trying to manage multiple positions. Why add unnecessary stress to your trading career?

    I hope these techniques will help you make a few more pips in the forex market, so until next time.



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    The Retirement Lie — Part 4

    In this fourth and final episode on The Retirement Lie, our guest host Scott Welsh begins with answering a comment from Brian. Then Scott and Jason the producer run the numbers to demonstrate a few possibilities for a nearby retirement, as well as a far off one. Scott discusses fear and what we could potentially achieve, depending on our risk tolerance. This series is now complete and has spanned from Episodes 243 to 246. Your regular host, Rob Booker, will return on Monday for Episode 247. But we’ve been grateful to have The Coach as our guest host for the past two weeks. Thanks, Scott! And thanks for listening to The Traders Podcast.





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    The Practicalities of Bollinger Bands

    This week I’ve had the pleasure of teaching the Professional Futures trader class in my hometown of London. As usual it’s been a productive time, working with the students and getting to grips at a more advanced level with the core strategy used by Online Trading Academy which recognizes institutional supply and demand levels low risk and high reward trading opportunities. We have just completed the fourth day of five where a small part of the curriculum focuses on the practical uses of technical indicators of a more conventional variety, as well as detailing the benefits of trading currency futures.

    As you know from reading my articles, I’m not a huge fan of traditional technical tools like moving averages, oscillators, and trend lines and the main reason for this is simply because all technical indicators lag behind the actual price itself, giving you a late signal each and every time. On the other hand, the beauty of learning to understand true price action by using a simple rule-based foundation strategy, is that as an objective trader, you can get close to truly recognizing how the biggest banks and institutions make money in financial markets. And who would want to follow them? They understand like we do that price is basically the only leading indicator in existence and when a market speculator gets the right education and support in understanding how to read major imbalances between the willing buyers and sellers in the marketplace, they will finally see consistency in their results.

    The simple fact is that hitting your goals in today’s markets, is much more easily achievable when you can learn to identify major market moves and turns in advance of them happening. Obviously with this in mind the majority of our classroom based curriculum and our online extended learning track programs also known as the XLT, focus purely on learning our patented core strategy first and foremost. However, as I was teaching today to my students, once a student has a solid grasp on the essentials of the foundation strategy, we can then choose to employ the use of certain technical indicators in the decision making process but only as a support tool and not a decision making tool. Today we spent a decent amount of time working with one of the most famous of all of the indicators, the Bollinger Bands and I thought it would be useful to share a snippet from the class in this article.

    When placed on a price chart, the Bollinger Bands look like this:



    The indicator is best described as a predictive volatility tool based on the current price action. The middle blue line that you can see on the example above is nothing more than a 20 period moving average. This represents the mean which as we know Price tends to revert to on numerous occasions and spends most of its time there throughout the trading day. The upper band and the lower band represent +2 Standard Deviations from the mean and -2 Standard Deviations from the mean respectively. In a nutshell the upper band and lower band could be said to be measurements of overbought and oversold market conditions and act like a prediction for where we could expect prices to rally and fall to based on the current mean, the moving average. When I’m teaching in class I like to describe the bands are something like a predictive price container.

    Essentially they give us a heads up of where prices could go to and come from. One of the biggest mistakes that traders make when using Bollinger Bands, is when they blindly buy oversold signals and sell overbought signals when the price pierces the upper or lower bands. Just like any other oscillator, markets can go overbought, oversold and stay that way for quite some time. The worst thing to happen is when you keep selling overbought conditions as the trend is still going up or vice versa when buying oversold signals when the trend is falling. Make no mistake, this can happen quite easily if you don’t know what you’re doing when using Bollinger Bands as well. If we learn to avoid blindly buying and selling because of the bands, then we can allow ourselves to use the indicator in a practical sense by combining it with a simple Price based strategy. I like to use the bands as a filter and scanning tool for moving through various trading opportunities. For example, if we look at the above example again we consider price is currently sitting at the mean, suggesting to us that now is not a great time to be getting into a trade as we’re stuck in the middle of nowhere, offering us a poor risk to reward scenario. With nothing more than a quick look at the chart, I can move on and go and find another opportunity that looks more suitable. Let’s take a look at a scenario which is much more appealing:



    The above chart is a great example of where Bollinger Bands can be really useful. In this instance we do have the typical overbought piercing of the upper band, suggesting to us that the market is at an extreme in relation to its average price. However, we also triggered a quality area of supply where we would’ve been happy to take a low risk and high potential reward shorting opportunity. Unfortunately the trade has already triggered but I wanted to show you an example of something where the bands are really worth using.

    In my own trading I use the bands as a powerful filtering tool to find quality levels of supply and demand for trades. As I look at all the asset classes from Forex, Equities, Futures and Options, it can take some time to get through all those markets and this is where the bands become invaluable. Using a powerful scanning tool, I can quickly find market extremes at the bands and then all I need to do on the markets that qualify, is to find areas of imbalance which respect my odds enhancers and the risk to reward ratios I’m looking for. I would never use a Bollinger band overbought or oversold signal alone to take a trade as this is far too conventional and relies on nothing more than a signal without a true heads up of price itself. If we’re willing to put the time and effort in though, the Bollinger bands as well as many other conventional technical tools can be powerful additions to a solid and simple rules based strategy which is based on the only leading indicator of all: Price. I hope you found this useful as an alternative way of looking at indicators.


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    Good Traders Do These Two Things Very Well

    Hello traders! This week I’d like to explain a little bit about what profitable traders all have in common and then discuss the differences, because the differences are what makes trading difficult!

    So right out of the gate I’m going to give you the Holy Grail in trading that all successful traders have in common. If you’ve done more than twenty minutes of searching around the internet or read a book or magazine article about trading, you are probably aware of the phrase, “Cut your losses and let your winners run.” The often funny yet nearly always frustrating thing for new traders is the fact that this phrase is amazingly simple, yet putting it into action is seemingly difficult. Why is cutting your losses so difficult? Many new traders believe that professional traders don’t take losses, that every trade makes money. That is absolutely not the case! The good traders I know take losses every week. Not necessarily every day, but certainly every week! (This applies to the somewhat active traders I know. Longer term traders might not exit any trade for several weeks, thereby not taking losses every week.) One question that I ask in the Online Trading Academy classes that I teach is “How many bad trades does it take to blow up your account?” The answer is one. One bad trade that you let keep going against you without taking the small loss can wipe out your trading account. Is that bad trade THIS trade? Since we never know for sure, we must always take the small loss if price goes the wrong direction on our trade.

    Since many new traders believe that taking losses is doing it “wrong,” their mindset must be changed to accept the fact that small losses is merely a part of doing business. So what about the other part of the Holy Grail phrase, “Let your winners run?” This is definitely easier said than done! Many new traders are too quick to take their profits, as they don’t want to let a winning trade turn into a losing trade. I understand the thought process, but I want to try and change your opinion on taking quick, small profits. As mentioned, it only takes one bad trade to blow up your account. How many GOOD trades does it take to DOUBLE your account? The answer is also one! If you take your profits very quickly, when you are in the money a handful of pips, you will never have one trade double your account. But if you can get in the habit of letting at least part of your winning trades keep running (scaling out of a portion of your position to lock in profits), this could be the trade that doubles your account.

    There are several ways we teach traders to manage winning trades. One way is a close below a trendline in uptrends, or a close above a trendline in a downtrends. The main problem with this technique it that very often the market will pause, yet not retrace – commonly called basing or consolidating. While the market is basing, oftentimes the trendline is broken, but the market hasn’t actually moved against you.

    To get past this shortcoming of trendlines, a moving average is often used. A moving average will “flatten out” as your currency pair is basing, often keeping you in a trade for longer than the trendline technique would.

    My personal favorite technique is what we call a technical stop, which has been mentioned and explained in previous articles here. In my opinion this technique will make you the most money over time vs. the other, somewhat arbitrary lines or moving averages.
    So that has been a brief explanation of what successful traders have in common. What do we do differently? Ah, that is where the dizzying array of choices in trading comes into play. I, for one, am glad there are so many ways/choices in how to trade. If there was only ONE way to trade to make money, everyone would know it by now and there wouldn’t be any money in trading anymore! Because there are so many way to make money, obviously we believe there is still plenty of money to be made doing it.

    In addition to our Core Strategy using supply and demand zones, many of our instructors use different classical technical analysis techniques as odds enhancers for specific zones on the charts. If you’ve read these newsletters for a while, you may have noticed that instructor X likes Bollinger Bands, instructor Y likes moving averages, and instructor Z likes Fibonacci retracement percentages. It is up to you as the individual trader to experiment with the different tools to find one that makes sense to you and your trading style.

    I would like to offer a word of caution. When adding these extra tools to your charts, start with only one. Try it for 30 demo trades. If it is making you more money than you otherwise would, keep using it! If you are making the same or less money, get rid of it. DO NOT keep adding indicators and oscillators attempting to find that one combination that will work for you every time – it doesn’t exist. Only keep them on your charts if you are more profitable, not less.

    By adopting the habits of successful traders, you can certainly learn to make money in the markets. Take your small losses, learn how to let your winning trades keep running, and (perhaps) adopt an indicator or oscillator to help with your supply and demand zones. Be disciplined about following our simple rules, because there is absolutely room for more profitable traders in the world!


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    Trading Trendline

    Hello traders! In this week’s newsletter, I’d like to show you a couple of techniques to use trend lines to help you determine the strength or weakness of a trend. As you have probably noticed from reading our weekly Lessons from the Pros newsletters, our core strategy includes going long in up trends at high quality demand zones, and going short in downtrends in high quality supply zones. A few significant stumbling blocks that new traders encounter is defining the trend that they are in, if that trend still has room to run, or if the trend is getting ready to end. While no trend definition technique is truly infallible, proper use of trend lines can help keep you on the right side of the charts. So let’s define our trends first.

    An uptrend is a series of higher lows and higher highs-a trend line is most commonly drawn connecting the higher lows. As we learned in grade school, it takes two points to draw a line, but in a trading, that isn’t enough. We like to have at least three touches of the trend line to confirm that the line is valid. As far as I am concerned, the more touches of that trend line the better! A downtrend is defined as a series of lower highs and lower lows, with the trend line drawn connecting the lower highs.



    One thing to note about the technique illustrated above: I drew my trend lines through a few candle wicks and tails, but not through any candlestick BODIES. Because the spot forex market is a decentralized marketplace, and not every brokerage firm displays the exact same prices especially at volatile turning points in the market, my plan allows me to draw in this fashion.

    Some traders will insist that you may never draw through any part of a candlestick. My rule works for me, so I will continue to use it!In any particular move in the market, there are two opposing forces at work – buyers and sellers, demand and supply.

    This should be a bit obvious to any reader of our newsletters! But there is also a competition between different groups of buyers, and different groups of sellers. Some are more aggressive than others, some even bordering on the foolishly aggressive.

    To illustrate this point, we will look at trend lines now representing different parts of an uptrend.In the following chart, I’ve drawn in three trend lines, first the blue, then red, then pink. Each line is getting progressively steeper indicating increasing momentum in this trend.



    One very important point about these steeper trend lines is the faster a pair goes one direction, once the trend reverses the move is usually very fast as well! Who do you think is still buying this currency pair at the fourth or fifth touch of that trend line?

    Whoever they are, they have been chasing a trend and missed the good entry many, many candles ago! The phrase “irrational exuberance” famously uttered by Alan Greenspan a few years back, could be used to describe the buyers high up on this steepest trend line. As the trend lines get steeper, these competing buyers are becoming more and more aggressive. I would prefer to find another pair to trade, than to buy high up on this curve.

    By the way, in the spot Forex market, this three trend line technique indicating a too-strong trend is also applicable to downtrends. For brevity’s sake, a chart was not included. One more hint about these three steeper trend lines: don’t try to be the hero who sells the very top of the market. If a very strong uptrend is still valid, I would prefer to wait for that steepest trend line to break before trying to short this pair.

    There is no Hall of Fame for shorting at the highest point, but there is a poor house for people who keep trying to pick the top! (Or buy the bottom, for that matter!)So, if three trend lines can indicate a trend that is going one direction too fast, can they also indicate when a trend has sufficiently slowed to change my bias from long to short (or short to long)? Glad you asked, and the answer is yes. On the following chart I drew in three flatter trend lines, each having at least three touches making them valid lines.

    As they get flatter, that is indicating a weakening uptrend here.



    When the third flatter trend line finally does break, I am no longer looking for long trades but focusing on shorting opportunities. As in the previous example, I’m not trying to be the first trader to be short here! When the first (blue) trend line breaks, that doesn’t necessarily mean we are in a downtrend, just that the uptrend is losing a bit of momentum.If you choose to employ these trend line techniques to your trade plan, please make sure you are using them in conjunction with our core strategy of buying in demand and selling in supply.

    Keep your losses small and let your winners run!

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    Principals of Trading

    In this video we cover the very foundations of trading. Too many new traders focus just on the system, in this video we introduce you to some of the key concepts that will determine whether you are successful or not.




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    The 5 Stages Of Forex Consistency

    It’s been a busy few weeks to say the least, as I sit here writing this article from the comfort of my own home in London following a fantastic two weeks of teaching and working with some fantastic students at the Online Trading Academy Los Angeles campus.

    Having received an invitation to come and visit the campus in LA from my good friend and the general manager at the center Mike Green, I taught the Professional Trader and the Professional Forex Trader classes back to back.

    While this was somewhat of a marathon for me as I’m not used to teaching that much, I wanted to make the most of the time as it’s not often I get to travel to the West Coast of America. I worked with a fantastic bunch of students many of whom joined me for both classes.

    Over that two-week period we really got into the depths of what it takes to be consistent in today’s markets.In fact the experience in LA is what prompted me to the idea of this week’s article. You see, the professional Trader class is probably the most important class that we teach in the Academy because it details all of the rules and dynamics that make up our patented rule-based core strategy.

    Students are taught how to recognize institutional levels of supply and demand in the markets and how to trade the entries and exits with precision and strict risk management. Having taken that class, students then move on to a leveraged asset class of their choice, typically Futures, FX, Options or for many, all of them.

    Once a student gets to the stage of the leveraged asset class, they are now comfortable in drawing supply and demand zones and they have worked out the fundamental details of their trading plan with their education counsellor.

    In these follow-up classes, we get to go through the characteristics of the individual asset classes and also spend a lot more time on a subject of trading which my regular readers will know I’m exceptionally passionate about and that is the mastery of the mental and psychological game. In my second week at the LA campus during the FX class, we spent a considerable amount of time working on this subject which inspired me to share with you the five key areas of psychology which my colleagues and I believe need to be mastered in order to become proficient and consistent in trading today’s markets.

    I’m going to list these out for you individually and give my thoughts on why I feel they are key areas of consideration for any trader hoping to make money speculating in the currency markets. I hope you find these insights useful.



    1 – Discipline

    Discipline is without doubt the foundation of everything, not just in trading but in life as well. A person lacking discipline will always struggle to achieve their goals no matter what they are and will be stumped time and time again by frustration and disappointment if they’re not aware of where the true problem lays.

    There are things you have to do when you’re a trader which can sometimes make you feel uncomfortable, like waiting for a set up when the market is moving and you feel like you’re missing out on an opportunity or putting in a stop loss only to see it get hit and then the price turn in the direction you thought it was going to go anyway and you’re left with nothing.

    These are two of many scenarios which can really grate on a market speculator. But remember, without waiting for the right setups and getting out of a trade when we are wrong, we will never ever have the tools or be in the position to be profitable in the long term.

    Trading is really about creating good habits and the tough thing about good habits is that they are often hard to develop and painful at first even though they reward us in the long term. One cool little trick that I do to help develop the students’ discipline is to get them to do something which feels a little bit uncomfortable every single day.

    This may mean getting up a little earlier now and then or watching less TV or reading more. Everybody is different but by doing something that doesn’t feel natural you are going to train yourself mentally to do the things that you know you must do when you are trading. Develop discipline and you will develop as a trader.

    2 – Integrity

    When I talk about integrity with a new student sometimes they get a little bit confused and wonder what I mean by it.

    The simplest way I can describe integrity is by repeating to you something that was told to me when I was a student.

    When I asked my first instructor what made a successful trader standout amongst the rest he replied, “A successful trader knows the rules and follows them every single time. A novice trader knows they should have rules and maybe even knows what these rules are but never follows them consistently.” Again, this is something we do in real life.

    There are things we know we should be doing but we put them off or we bury our head in the sand and pretend it doesn’t really matter.

    Everything always catches up to you in the end and if you don’t show a high degree of integrity and make every single effort you can to follow your rules and your trade plan, what are you really saying about your expectations of your results as a trader?
    Write your rules, plan your trade and follow them is all I ask.

    3 – Diligence

    Diligence is more about the “housekeeping” we have to do as a trader. In the early stages of a traders career, it is vital to make sure that you’re crossing all of the “t’s” and dotting all of the “i’s” and paying special attention to the level of detail you’re applying to your plan and your subsequent trades which you take.

    It can be easy to take our eye off the ball from time to time and everybody can be forgiven for making the odd mistake here and there.
    However, it is your job to remain focused and take care of your work and your processes throughout your whole trading experience.

    You and you alone are solely responsible for your trading results, therefore requiring you to pay attention to all the details at hand and to make sure that not only do you develop your plan, take trades from your plan and follow your rules but you also follow this up with keeping a solid track record of all of your trading activity. Nobody can do this for you.

    4 – Patience

    Probably one of the toughest things for a trader to learn is patience. Just think about the verb “to trade.”

    It alone suggests a very active profession doesn’t it?
    Yet the irony is that actual trading is often one of the most passive things we could ever do for a career.

    Most of my time is spent waiting for price to come to my area of demand to buy or my zone of supply to sell.
    Needy traders typically think that the more you click buttons the more money will make and if you just sit down and watch the charts and wait for the price to come to you, you’ll never ever make any money.

    In fact I used to think that myself until I soon realized that I wasn’t following any rules and was just clicking buttons when I felt like it.

    There aren’t any real secrets to successful trading but I can tell you this: if you don’t wait for price to come to the optimal entry points, you will never achieve the greatest rewards with the lowest risks and the highest probabilities.

    Our core strategy follows what institutions do. Institutions wait for the best prices to get in and the best prices to get out. Sure my friends, that requires patience and I’m also well aware of the old saying that patience pays in the long run. Let time do its work and your plan will do the rest for you.

    5 – Hard Work

    Finally we come to the last piece of the puzzle, often the part that many people don’t really want to apply and that is hard, work plain and simple.

    Profitable traders are an elite group of individuals who have learned through solid education and experience what it takes to make money in the currency markets.

    Many other people out there think there’s some big secret to trading and investing, when the truth of it is that the big secret is that there is no secret at all.

    I remember a good friend of mine once saying about how people always said he was lucky in his business deals and transactions. I said to him, “How does that make you feel when people say you got lucky?” His response was, “You know Sam, I kind of agree with them. I’ve noticed myself over the years that the harder I work the luckier I seem to get.” We all like the idea of trading, I mean who wouldn’t?

    But most don’t really like the reality and the hard work that is required to get you where you want to get.

    This is just like any other business or venture out there. If you want to rise above everybody else and do the things that most other people only dream about you have to go the extra mile in both your education, your mind-set, and of course good old-fashioned hard work. Invest the time in yourself and in time others will want to invest in you.


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  9. #9
    Member FinanceGlossy's Avatar
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    Newton's Law Applied to Trading Profits

    Newton’s first law of motion states that every object in a state of motion tends to remain in that state of motion unless an external force is applied to it. For trading, the two “forces” are supply and demand.

    While I often discuss the forces in articles, another key piece that I have wrote about the past two weeks is identifying price levels in a market where there is a major lack of supply and demand (force).

    At Online Trading Academy, we call this “profit zone” but it’s the same thing.It is important to find price levels where there is a major supply and demand imbalance as that is where prices turn. However, it is equally important to find price levels where there is very little demand or supply (force) as these are areas where price will move through with ease.

    Let’s look at a recent example from last week’s Extended Learning Track Live Trading session to illustrate this point.

    XLT Live Trading: 6/11/14 – S&P Trade, the Setup



    Notice the chart above. During a live trading session with our Director of Instructor Development, Chuck Fulkerson, he identified a price level where supply exceeded demand, where financial institutions were selling the S&P.

    This level scored out as a 9 according to our rule based Odds Enhancers and one of the most important reasons was the “profit zone.” The setup was to sell short if and when price rallied back to that supply level. In that case, someone would be buying after a rally in price, into a price level where supply exceeded demand, near QQQ larger time frame supply, and so on. We are more than willing to sell to that novice buyer. The risk is low, reward high, and the odds are stacked in our favor as the seller. Next, we would have to wait to see if anyone thought the S&P was worth buying at that price.

    XLT Live Trading: 6/11/14 – S&P Trade, The Result



    Later in the day, price rallied back to the supply (the force), allowing banks and OTA students to sell short to buyers who thought the S&P was worth buying at that level. Price then turned lower and kept falling because there was NO FORCE (demand) to stop it. The lack of force was evident prior to entering the trade and this information is a must in my opinion. Identifying the lack of force is just as important as identifying the force. The nice part is that once you completely understand this concept, there is nothing else to consider when predicting market turns and market moves. This is the key to short term trading for income and long term trading for wealth.

    Hope this was helpful, have a great day.


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  10. #10
    Member FinanceGlossy's Avatar
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    Support and Resistance Trading & Chart Video

    Support and Resistance Trading

    Support and Resistance is one of the most important tools a trader has to identify trading opportunities. In this video we show you how to identify these levels on your charts and how to go about using them to profit.




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