Forex Strategies

The Forex market offers a wide world of opportunities to traders new and experienced alike. The market moves 24 hours a day, and traders have massive flexibility as to how they can enter, manage, or work with positions.

It’s unfortunate, but trading profitably with any level of consistency often takes time and effort for a trader to develop their approach. Along the way are many hurdles and perhaps even more unfortunately, quite a few of those hurdles can be self-imposed.

It’s not abnormal for a trader to become ‘their own worst enemy.’ And once a trader has begun that downward spiral of self-doubt coupled with eroding confidence, winning trades may seem like they can allude for eternity.

This is trading stress, and it’s an inevitable part of the game. But for traders to find the long-term success we spoke of above, precautions must be made to ensure that this trap of self-doubt does not snare another victim.

What follows are three of the most prominent ways that traders can reduce trading stress, allowing them to focus on what matters most.

Trust the Trading Plan

Do you have a trading plan? If not, you certainly should. This is advice that is similar to: ‘Eat your vegetables,’ or ‘get 8 hours of sleep per night,’ that we all know we should follow in interests of our long-term success, but for whatever reason we might find it difficult to actually do.



Regardless of your background or experience level, you should have a trading plan. This functions like a trader’s ‘Constitution’ that defines how, why, and where you will be operating.

You can write down your rules in your trading plan, such as “I will not allow one ‘idea (or trade)’ to take away more than 2% of my trading capital.”

This way, when you violate your own rules - you know for a fact that you did something that you hadn’t planned or wanted to do. You’ve violated your own constitution, and you know it.

Once you have a well written trading plan, you can simply follow and trust that the plan will work. We’ve provided a guide for creating a trading plan in the article, The Trader’s Plan, and this can certainly provide the framework to enhancing, or starting your own personal ‘trading constitution.’
Keep the Bigger Picture in Mind

One thing we teach heavily at DailyFX Education is something that a large number of our traders already know: That you cannot tell the future.

I know that this sounds overly-simplistic, but this defines the conundrum that many new traders face. You cannot tell the future, yet - as a trader - your job is to risk your own money on future price movements that may or may not happen. We spoke about this in the recently released Forex video



and we expanded upon the concept in the article Why Human Nature Works Against You as a Trader.

As human beings, we often equate success with ‘being right.’ And when trading, we often suffer from a degree of myopia, in which we want to try to see each and every trade to profitability.

This often means that when we have a losing trade, we hold on in the hope that prices move back in our direction so that we can close this out as a winner. We’re often displaying greed in these scenarios, when in fact we should be displaying fear.

Or, if we get a small gain in a trade, we often close it out quickly for the fear of price moving against us - becoming a loss. This is when we should be displaying greed, not fear; and default human nature often gives us the exact opposite of what we need.

This is what we found was The Number One Mistake that Forex Traders Make.

But if you take a step back, you’ll probably realize that any one trade isn’t going to make your career, or have a large impact on your quality of life; at least it shouldn’t, and if it does, you are risking far too much on just one idea or hypothesis. Any one trade should be but one of a thousand insignificant trades that you place in your career.

If you have a particularly bad day, don’t shy away from taking the rest of the afternoon off, or going for a run, or whatever you have to do to take a step back. Markets will be here tomorrow, and there is no such thing as an opportunity that is too good to pass up when trading.

Remember - Trading opportunities are infinite, trading capital is not.

Employ ‘Set it and Forget it’ Logic

One of the big reasons that traders gravitate towards markets is that the potential to make money with a small amount of time is extremely attractive. In most jobs, one is paid a wage for a set amount of hours worked, and that’s all that there is. In trading, you can define your own income, and you can work considerably less than everyone else in something that can be so fun to do.

But, along the journey of learning to trade, the point of working less often becomes obscured by the fact that trading is not easy. Many traders often pick up the idea that they need to manage each and every trade as if it were a surgical operation.

As long as the first two principals are followed, this is absolutely not the case, and this sense of micro-management may even be doing you a disfavor. Just like we mentioned previously, traders often gain a sense of myopia when managing positions. This could allow traders to hold on to losers for far too long, or to cut winners far too short. This is exactly why this premise was named

-- Written by James Stanley

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Article Summary: Markets rarely if ever move in a straight line as a trend unfolds. However, when they are trending you’ll often find a reprieve of price as profits are taken or as opposing forces try and take on the current trend. Thankfully for trend traders, trends often maintain their path so you can look at those short reprieves in price to re-establish a position or add to already successful trade.

“Trend following is an exercise in observing and responding to the ever-present moment of now.”
– Ed Seykota

The last two weeks have been seen some major moves in the major currencies. The reasons for these big moves have been due to the news coming across the wires from Central Banks. When moves like these take place, it’s often a great time to consider a trend entry. Before we dig into some real examples, it may be helpful to understand how to trade a trend correction.

Understanding Trend Corrections

When looking at a chart that is trending, you’ll often notice that a currency or other financial instrument moves in a stair step or jig saw manner. This non-linear nature of the markets should be seen from angle of how you can take advantage and trade.

Learn Forex: The Non-Linear Nature of Trends with Corrections



When you notice markets moving against the greater trend, you have one main task as a trader. You need to work on identifying the finishing point and where the trend may likely resume so you can enter back in the direction of the overall trend. While this is no easy task, the payoff is often worth the effort.

Identifying a Trend Correction’s End

There are many tools you can use to identify the ending point of a trend correction however none of them are right 100% of the time. A favorite of many traders would likely be a Fibonacci retracement number, trendline bounce, or price pattern playing out. As you can imagine, it’s great when these combine together and the trend resumes.

Learn Forex: Strong Trends Often Stop Correcting at the Fibonacci 38.2% Level



Learn Forex: Strong Trends Can Also Stop It’s Correction on a Trendline Bounce



Learn Forex: Price Patterns Can Help You Gauge When A Correction Has Played Its Course



After The Correction Has Been Identified

Once you have found a strong trend correcting and that correction is potentially ending, you have two more steps. The first step is to determine where you would like to enter into the trade. After you’ve decided where to enter a trade, you need to make sure you have a favorable risk to reward ratio.

Learn Forex: Find an Entry Back Into the Direction of the Original Trend



As you can see above, the entry has two key elements. The first element is that you’re looking to enter when the correction with an entry order. This is because an entry order waits for you to enter until the trend has likely played out and price is appearing to continue with the trend. The entry also allows you to stay away from the trade if the trend has broken and moves the other way.

Closing thoughts

Traders often decide to pull the trigger and enter back into the direction of the original trend when a breakout occurs with the new trend. Once in the trade in the direction of the trend you’re only edge is risk management through risk to reward ratios. We recommend that at the very least, you not risk more than you’re looking to make on your trade.

Happy Trading!
--Written by Tyler Yell, Trading Instructor

Article Summary: The GBPNZD has declined over 1194 pips in the last month. As the pair retraces, learn to trade market swings with the CCI indicator.

Trend traders in the Forex market look to identify market direction prior to entering into a trade. However, price rarely moves in one singular direction, so this task can be more difficult than it seems. For savvy traders, these counter trend moves, can often allow entries into an established market at a better price. Today we will review trading these market swings and learn how to identify an entry when momentum swings back into the direction of the primary trend.

Below we can see an example of the GBPNZD 8Hour chart trending lower over the last month. Even though price has declined as much as 1194 pips, notice how it has not been a one way directional move. Along the way there have been many opportunities to find new selling opportunities as the market provides a short term rally. So how can we better identify these chances to trade?

Learn Forex – GBPNZD Trend


To time our entry into a trade, a technical indicator such as an oscillator is often used. When a market is in a downtrend, traders can wait for an indicator to become overbought. Overbought describes a scenario where the market may be overvalued causing an indicator to reach its upper bounds. Below we can see the Commodity Chanel Index, (CCI) which is very similar to other oscillators, such as RSI, or Stochastics.

Pictured below, we can see that above the +100 value is considered overbought while below the -100 value is considered oversold.The key is to timing new our entries on the GBPNZD will when momentum returns to the downside. This means traders should wait for the indicator to close back under +100 while momentum resumes moving lower. With this in mind, now let’s return to our GBPNZD graph.

Learn Forex –CCI Overbought / Oversold



Below we again can see our GBPNZDY8Hour chart previously mentioned, but this time we have included the CCI indicator. You will notice that there have been a total of four opportunities to sell the pair as momentum returned lower. The key is to time your entry as CCI moves back below +100 indicating the conclusion of our short term rally with momentum returning to the markets longer standing trend. As with any strategy, managing risk is a high priority. One way to manage risk is to place a stoporder over the previous swing high. This way in the event that our downtrend is concluded we can exit any positions to sell at their first convenience.

Learn Forex –GBPNZD CCI Entries



---Written by Walker England, Trading Instructor

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Trading is a business of strict rules and flexible expectations. The strict rules will help you avoid succumbing to the two major fears mentioned earlier. Having flexible expectations can help you not get fixated on a trade having to reach a specific price target so that if the fundamental news changes that is supporting your trade or price breaks a major level against your trade you can get out and protect your trading capital.

Do Not Give Up What You’ve Already Fought For

Ichimoku is a great indicator and trend trading system to help you trade with the path of least resistance. However, as a trader of your own capital, you have to be on guard for identifying corrections on the trend you’re trading so that you can see when a correction no longer holds. Put simply, when a correction no longer holds, the trend that Ichimoku helped you identify, is becoming suspect and it may be best to adjust your stops or get out of the trade until the waters begin to settle again.

In 1935, Gerald Loeb wrote the trading classic, The Battle for Investment Survival, which states protecting your capital by accepting losses is the most important investment device to insure your safety. In trading, this means that you should be on guard for a changing landscape and not fear the market turning against you. When trading with Ichimoku which develops along with the trend, many traders will adjust their stops with recent correction extremes or to an important part of Ichimoku like that base line or cloud.

Ichimoku Weekly Trade: Buy EURUSD
When Lagging Line Breaks Through Critical Resistance



Ichimoku Trade: Buy EURUSD If Lagging Line Breaks above the Cloud And Price Remains Too
Entry: 1.3075 (Price where Lagging Line Would Break Through Cloud)
Stop: 1.2975 (Support near top of the Cloud)
Limit: 1.3450 (Near Weekly R2 on Classic Pivot)

If this is your first reading of the Ichimoku report, here is a recap of the rules for a buy trade:
-Price is above the Kumo Cloud
-The trigger line (black line on my chart) is above the base line (baby blue line) or has crossed above
-Lagging line is above price action from 26 periods ago (this is the trigger we’re looking for)
-Kumo ahead of price is bullish and rising (displayed as a blue cloud).
Last week was rocked on Wednesday, when the Bernanke said that the FOMC has virtually zero intention of raising rates in the near future. This has led to speculation of a further round of easing or at least some dollar weakness. This is a major shift because before the FOMC announcement on last Wednesday, the given trade was to buy US Dollar against anything but once again a central bank has changed the landscape of the Foreign Exchange market.
Happy Trading!
--Written by Tyler Yell, Trading Instructor

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Article Summary: Would you like a simple tool based on recent price extremes to help you see the environment that you could help you prepare your daily trading plan? If so, the pivot range is a great tool that can show you hidden support and resistance, daily directional bias, and help you time great entries in the direction of the trend. This article will break down what this tool does and how to use it.

“The difference between successful traders and not-so-successful traders is what they do with the price data they all have, how fast they process the data, and then how they apply of execute that knowledge. Pivot points can give you the edge as fast as you can calculate the data.” John Person

Pivot points are a crucial part of any trading play. In a sense, they help you keep your head straight when volatility is high. This is done through the objective levels based on the high low and close of the prior session you’re trading to calculate this critical levels.

Learn Forex: Pivots As Seen On A Hourly EURUSD Chart



Taking Pivots a Step Further

As you can see, the daily pivots placed on the EURUSD chart provide objective levels for you to focus on if you’re trading the pair. Simply put, in a weak market, price will be trading below the pivot level and depending on the weakness; price can travel through multiple level of supports as price hits lower lows. In a strong market, price will be trading above the pivot level and depending on the strength; price can travel through multiple levels of resistance. In a mixed market, your opportunity will likely be found by price bouncing around the pivot and fading temporary moves.

The key point to focus on is where price is in relation to the pivot. When price is trending higher and trading above the pivot, we should be looking to buy dips and exit on strength near the resistance levels. When price is trending lower and trading below the pivot we should be looking to enter sell trades on temporary lifts in price while targeting levels of support if price resumes lower.

Pivot Range Intro

A relatively new concept is the Pivot Range which was introduced in the book, The Logical Trader by Mark Fisher. Fisher introduced some very good trading concepts but the Pivot Range has stuck with many traders because of how the range allows trader to focus on key price points before a continuation move. The range itself is meant to be a neutral point that helps you determine a directional bias so that you can focus on buy entries when price is above the range or sell entries when price is below the range.

LEARN FOREX: Pivot Range Bounces Show Trend Continuation Entry Points



PIVOT RANGE CALCULATION

The reason why pivots are so helpful is that they are built off the most extreme prices of the prior session. The pivot range goes one step further to define the relationship of the high and low from the prior session to the current pivot. Therefore, beyond the traditional calculation for pivots, you can additionally calculate the High + Low / 2 of the most recent session you’re focusing on to get the bottom of the range. The top of the range is received by calculating the Pivot - Bottom of Pivot Range + Pivot.

Therefore, if you’re using a daily pivot, your range would be built around yesterday’s high + low / 2. These levels will now act as addition key areas of support and resistance to help steer your trading decisions. If price ever breaks through the pivot range, your bias for the next move should change as price in relation to the pivot should determine how you’re viewing the market as price is the most important indicator.

Free Indicator With The Calculation

Lucky for you, the calculation is available for free on an open source developer’s site.

Entry Triggers

You now know that the pivot range is an extra level of important price levels that can help you understand the price bias for the day. You also know that bounces off the range to the upside are signs of strength whereas bounces off the range to the downside are signs of weakness. When price gets near the pivot range, the most helpful price action is a candle wick bouncing off the range showing that price was rejected near that level giving you a further confirmation to enter in the direction of the current move.

LEARN FOREX: Candle Wicks Near The Range Help Confirm Entries



Closing Thoughts

The importance of the pivots and the pivot range concept is because the majority of traders in the market are focusing on those key levels and thanks to recent memory of the recent price action, this can lead to a valuable self-fulfilling prophesy. When trading the pivot range, you can place your stop opposite the range of the direction you’re trading. This means that if you’re selling a currency pair, the stop can be on the top side of the range or if you’re buying, a stop can be placed on the bottom side of range.
Happy Trading!
--Written by Tyler Yell, Trading Instructor

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Article Summary: Is the EURCAD trend coming to an end? Learn to identify market turns with MACD Divergence.

MACD has many uses, and is considered to be one of the most widely used market tools in trading. While most traders traditionally use MACD line crossovers for market entries, this momentum oscillator can also be used to identify market reversals. Today we will review market divergence and how it can be traded using MACD.

Find the Trend

Before we can spot a reversal or divergence, we need to identify a strong trend. The EURNZD 8Hour chart is an excellent example of an uptrend. Moving 749 pips over 6 weeks the EURNZD steadily climbed to higher highs to its peak at 1.3815. From this point, the currency pairs has declined over 386 pips leaving traders to wonder if a reversal may be in play.

To find out, let see how MACD compares with our price action.

Learn Forex – EURNZD 8Hour Trend



Spot Divergence

Now we are ready to identify divergence on our chart! The next step is to add MACD to our chart and look to identify if price is separating from the direction of our indicator. In an uptrend like the EURCAD, traders will reasonably be expecting MACD to move higher as price surges to higher highs. Below we can see the separation of the indicator from price. While the EURCAD is forming higher highs, MACD is seen making a series of Lower highs.

An easy way to identify divergence is to simply draw a trendline on your chart. In an uptrend, since we are comparing previous highs, we will need to connect the highs of price along with the highs on MACD. It is important that we draw these lines from a common beginning point as to ensure that we are comparing the same points on our graph. If these two lines are moving apart (diverging) in separate directions, the momentum of our current trend may be concluding.

Learn Forex – EURGBP 1Hour Entries



Trade Divergence

Now that divergence is identified, traders may begin looking for trades in the direction of the new trend. One of the easiest ways is to again refer to MACD and trade a crossover to pinpoint a turn in price in the newly identified direction. Or if a trader seeks added confirmation, a breakout strategy may be employed. If price declines to a lower low this would be another symbolic move by price action signaling a new market direction.

Lastly traders should always consider risk. In the event that price turns to higher highs back in the direction of previous momentum, divergence traders should look to exit the market.

---Written by Walker England, Trading Instructor

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Article Summary: Each Forex trade is placed by selecting the number of lots you would like to control. What many beginner (and some intermediate) traders don’t understand, is that the size of your position depends as much on the currency pair being traded as it does the amount of lots selected.
There is a common misconception out there with new Forex traders; that trade size is only dependent on the amount of lots that the trader selects. These misinformed traders believe that whether they are trading 10k GBP/USD, 10k EUR/JPY, or 10k AUD/CHF that they are trading the exact same size on each position. This is simply not true. To understand the true size of your positions, you have to consider the notional value of the position created.

Consider the following examples to understand how this works:
Let’s say we were bullish the NZD/USD and decided to buy 10k @ 0.7850. How much actual currency did we purchase? What does trading 10k actually mean? We need to look closer at the actual transaction to see how the trade breaks down.



The graphic above shows that when we Buy 10k NZD/USD, we are buying 10,000 New Zealand Dollars and selling an equivalent amount of US Dollars. By looking at the quote, we know we had to sell 7,850 USD to purchase the 10,000 NZD. This means the notional trade size is $7,850 worth of currency.
Now let’s take a look at a different pair. Let’s say we were bullish the GBP/USD and bought a 10k lot at 1.5100. How much actual currency did we purchase now? You can see how the trade is much bigger than the previous 10k NZD/USD trade.



When we Buy 10k GBP/USD, we are buying £10,000 and selling an equivalent amount of US Dollars. By looking at the quote, we know we had to sell $15,100 to purchase the £10,000. This means the notional trade size is $15,100 worth of currency. This is far different than the 10k NZD/USD.

Why Does This Matter?

This is an important lesson to understand because it can make a big difference in how you manage your overall account. For example, if you wanted to spread your money out evenly across multiple positions on multiple pairs, you would not want to simply trade the same lot size, you would want to take into account the notional trade size you are taking on.



So instead of placing 100k trades on GBP/USD, USD/JPY to spread your money evenly, you might consider 66k GBPUSD, 77k EURUSD and 100k USDJPY to spread your trades based on the notional trade size ($99.6k worth of GBP, $100.1k worth of EUR, and $100k worth of JPY at the time this article was written).

(As a side note, this is also why margin requirements vary from pair to pair. You’ll find that the margin requirements are higher for pairs that have a higher notional value.)



What Now?

Now that you understand the notional value of your trades, you can select smarter trade sizes. Maybe your GBP positions are too large. Maybe your NZD positions are too small. Either way, you should now have a greater understanding in how currency pairs partially determine the size of your positions and not simply the number of lots.

---Written by Rob Pasche

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Article Summary: Finding a great trading system is only half the battle. The other half is developing the discipline and patience to only take the most favorable trades according to your systems so you’re not chasing price action. Today you’ll learn how Ichimoku allows trends to stabilize before you enter so that you’re not entering a trade right before it corrects against you.

“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”
– Ed Seykota, Legendary Trend Trader

Most traders want to have a strategy that brings consistent results. However, if you speak to many traders, the one thing that is missing in their trading is consistency. This is shown by a great month followed by a poor month or a trader not feeling like she is getting a footing with her strategy.

Learn Forex: If you chased this GBPUSD move, you may have been on the wrong side of a correction



Naturally, a lot of traders love the 24-hour nature of Forex trading and the big moves that news bring to this around-the-clock market. The problem with news events is that a big move doesn’t necessarily equal a high-probability opportunity and more often than not, you may find yourself in a rough position if you’re chasing a price move after it takes place only to have yourself holding a trade as it retraces against you. What this means is that you need a system or discipline to wait for the highest probability moves or in other words, you need to develop patience.

Developing Patience

The best analysis in the world won’t provide you the benefit you seek if you don’t have the discipline or patience to wait for the best set-ups. The problem that a lot of traders run into is that they would rather feel the action of being in a trade than wait for a great set-up that aligns with their strategy which is costly. Another problem that traders run into is not having a form of analysis that allows them to see when an appropriate time to enter a trade is present, even if the trend is clear.

Learn Forex: Ichimoku’s Cloud & Lagging Line Can Help You See Good Times to Enter



One reason for Ichimoku’s popularity is the indicator’s ability to display the trend and opportunities of when to enter the trend. With Ichimoku’s multiple aspects for entering a trade, you’re encouraged to avoid counter trend moves with the cloud and wait for the confirmations of the trend with the lagging line and moving averages. This may mean that you miss out on some pips, but from my experience, trading is a game of determining which few set-ups are worth risking your trading capital on as opposed to giving everything that appears as a set-up access to your precious capital.

Ichimoku helps you find quality trades even if the quantity of total trades diminishes.

Ichimoku Weekly Trade: Sell EURJPY if Lagging Line Breaks Through the Cloud’s Support



Ichimoku Trade: Sell EURJPY Based on Lagging Line Breaking Below Cloud
Stop: 1.3250 (Resistance with Top of Cloud)
Limit: 1.5900 (Profit Target Based on Retracement toward Prior Low)

If this is your first reading of the Ichimoku report, here is a recap of the traditional rules for a sell trade:
-Full Candle Bodies below the Kumo Cloud
-The trigger line (black) is below the base line (light blue) or is crossing below
-Lagging line is below price action from 26 periods ago – this is our trigger.
-Kumo ahead of price is bearish and falling (red cloud = bearish Kumo)
-Entry price is not more than 300 pips away from base line as it will likely whip back to the line if we enter on an extended move.

Ichimoku is a great tool to help you see when a trend is reversing based on when price and the lagging line break through the clod. On the chart above, the EURJPY trend has shifted from a great buy trade to a potential reversal that we hope to catch with this trade. Outside of Ichimoku, there is a price pattern call Bearish Three Drives that is always developing on this pair. However, trend reversals as displayed with Ichimoku are a riskier trade so it’s best to keep your stops rather tight in case the analysis is wrong.

Learn Forex: Bearish Three Drives Patterns is A Price Channel Running Out Of Steam



Because of the technical set-up and recent price action showing a trendline break on the EURJPY, we’re happy to consider this trade with the stop above the cloud.

Happy Trading!


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Article Summary: Every trader should start with a practice trading account but many traders hold on to the practice trading account for longer than they should hoping it will bring them painlessly into the world of successful trading. Here is a breakdown of what you should expect and not expect from a practice trading account.

“The game taught me the game. And it didn’t spare me the rod while teaching.”
-Jesse Livermore

Traders are correct to start their trading career with a practice account. It seems like a perfect way to ensure yourself zero pain on your way to trading success. However, if you talk to a seasoned trader, they will soon tell you that the only similarity in their experience with a demo account and a live account is that the buttons were the same.

From the angle of what it takes to succeed, it is important to understand that we support a practice account for the following reasons:



1. Allows You To See How Price Action Develops Around News Announcements
Many new traders are impressed by two things when first introduced to trading forex. The first is that without leverage, Forex moves relatively little when compared to other asset classes like stocks or commodities. However, when leverage is introduced on the other hand, you’ll likely be impressed with how much your capital can fluctuate when major news announcements like interest rate decision or employment claims are released.

2. Allows you To understand how to use the platform appropriately
Among the key reasons to use a practice account first is to get you comfortable with how the platform works. The last place you want to be when trying to learn how to close out a live trade is when a market is correcting against your position. If you need to know how to use a trading platform, you’re always welcome to join us for our daily trading platform walkthroughs.

3. Allows you to see how trade size can affect your overall profitability
One facet of building a trading strategy that is studied meticulously by professional but is sadly ignored by beginners is trade size. When you’re on a demo you can get a feel for the average daily move of your preferred currency pair as well as how a specific trade size will affect your account equity in a positive or negative manner. Controlling trade size is similar to controlling speed in a car and just like you wouldn’t drive a car without breaks you should learn the trade size that fits you best.

3 Limitations of a Practice Account

1. You won’t develop the healthy fear necessary for sustained successful trading
One of the worse traits a trader can have is ego that leads them to believe they can do no wrong. A common trading proverb states that, ‘there are bold traders and there are old traders but there are few old, bold traders.’ Many traders who have been around for a while have learned to be strict in their rules that decide when to exit a trade and at the same time become rather loose in their expectations as to what the market will do tomorrow because of the healthy fear that many seasoned traders have of the market.

2. You may get overconfident from only closing out big trades at a profit
Demo traders often feel like they’ve stumbled upon the easiest profession in the world because of the large trades building up their $50,000 practice account. However, they may be holding extremely large losing trades that they would not be able to float on a live account with their own trading capital. A live trading account with your own trading capital alone can help you see when the trend may be correcting so you can exit now and possible enter at a more favorable price.

Learn Forex: Recent EURJPY Corrections in an Uptrend



3. You will not see how you truly act when your money is on the line
The ability to cut your losses short and let your profits run is akin to being told to eat better and exercise. While it is the truth, it is often far more difficult in practice than in description. Trading is no different in that you must methodically work to figure out when is a good time to leave the trade, even at a loss, for you to make the progress your seek in your live trading.

Closing Thoughts

Trading a live account helps you clearly see the need for discipline and risk management like never before. Often on a demo account, discipline seems unnecessary and placing stops seems like something that was designed to prevent from making you rich whereas a live trader knows these two aspects are just as important if not more so than a strategy that allows you to decide when to enter and when to exit a trade. A great quote to leave you with comes from Peter Borish who once mentioned that traders need to have “discipline before vision” so that regardless of your belief in the next big move of the JPY, US Dollar, or Euro you have the discipline that is often developed and cemented in a live account that can help you realistically reach your trading goals such as setting stops and limiting risk. Naturally, until you can withdraw demo profits, our mission is to assist you towards your live trading goals.

Happy Trading, whether that be practice or live!

--Written by Tyler Yell, Trading Instructor

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Article Summary: Traders should look at Forex trading as a business. Learn to track and record your progress by creating a trading journal.

Trading a live Forex account has many parallels to owning an operating a business. Just as in business, traders should expect streaks of profits and losses. The key to long term success however, ultimately will fall in the analysis of these cycles. This way a trader can maximize their successes while working to reducing their periods of balance draw downs.

One of the easiest ways to track your trading is to keep a journal. Just as a business owner tracks inventory, a trader should also keep up with their closed positions. While keeping a journal may be difficult at first, recording your trades can help answer some critical questions about your trading techniques. To begin let’s look at an example of a sample journal.



While everyone may record different data in their journal, there are some important details that we should consider tracking. Above you will find a sample journal ledger with potential information that may become useful upon review. At minimum I would suggest at least tracking the currency pair, open/close prices, along with a trades p/l (profit and loss). Remember the more data that you keep the easier it will be to assess your past trades at a later date.

Also, be sure to include space to add notes in your journal. Traders using multiple entry techniques will want to track things such as chart time frames, indicators used, market conditions (range, trend, breakout) and any other information that factors into a trading decision.



While keeping a trading journal, it will become important to familiarize yourself with running reports. Traders using the FXCM Trading Station will find the report function at the top of the trading platform. After clicking the report tab pictured above, you will see a popup menu that will allow you to customize your report parameters. You can select to run a statement for a custom period or all the way through the life of your account (Since Open).

The last parameter to select is the format drop down menu. This menu allows you to select how the report will be displayed on your computer. The FXCM Trading Station allowsreports to be run in HTML (web), XLS (Spreadsheet), or PDF (document) formats depending on your preference. Once all of your settings are set to your liking, click the “Run report” button on the bottom of the menu. When your report has been created, you can then begin running your analysis and studying your trading progress.

---Written by Walker England, Trading Instructor


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