A Newbie Journey To Financial Freedom

PROFIT TAKING

There are many answers to your question many of which depend on your trading personality and style of trading.

If you are trading basic PASR, you take profit when SR is reached.

If you are Swing Trading, you take profit when the Primary Trend changes.

If you are a Trend Trader, you take profit on EW projections or supply and demand or when you feel PRICE is over extended and ready for a pull back to the Strat Shadow or when outside forces (Central Banks) interfere or when your Little People get the better of you or when your Trailing Stop gets taken out if you have set one.

If you are a scalper, you set your profit based on the ATR of the pair your are trading.

Reasonable Target Price? How long is a piece of string? What is reasonable to you may, and probably will not, be reasonable to me. This also depends on the volatility of the pair you are trading. Expecting a 500 pip target from a pair which only swings 100 pips is not reasonable.
If you are in a trade and you don't know where to close or take profit then your trading strategy is upside down. Your Trading Plan MUST identify your EXIT as soon as you determine your entry. Also, if you fail to Plan, then you PLAN to FAIL.
More important than anything else, we are concerned with HOW MUCH WE CAN LOSE on a trade rather than how much we win. Our #1 Rule is Preservation of Capital - we MUST control our losses.

from Strat #Post 20252

23th WEEK TRADING PLAN (NO PLAN, NO TRADE)

Group 1:
1- EUR/JPY
2- EUR/CAD
3- EUR/AUD
4- USD/CAD
5- GBP/USD

Break Even

Break Even is mostly used by Amateurs and those who don't understand its function but mostly by those who don't really know what they are doing and how it fits in with their PLAN. This results from not knowing what, which and how you are trading a particular strategy.

For example, if you are scalping, where your profit is only a few pips, you need, and must, go to Break Even as soon as you have enough profit to cover the spread and any commissions.

In Basic PASR, the only time I would move my initial Stop Loss to Break Even is when PRICE has successfully closed above/below minor "wobble zones".

In Swing PASR, and especially PASR Trend Trading, we mange our RISK as declared in our irreversible PLAN so that we allow PRICE room to BREATHE.

The teachings of PASR allow students to UNDERSTAND that PRICE moves in ""steps"" rather than straight lines. In Swing PASR these are bigger ""steps"" than in Basic PASR. In PASR Trend Trading, the "steps" are even bigger and more often than not are some derivative of a swing.

So, the ""trick"" is NOT moving your Stop Loss to Break Even as soon as possible and is just the opposite - UNDERSTAND what strategy you are trading and let PASR determine your Break Even if there is a need for one.

The "trick", if there is one, is letting PRICE BREATHE in your chosen trading strategy.

Finally, from Post 1 of my "old" original thread:
We are NOT Amateurs. Amateurs manage money by taking RISK. PROFESSIONALS manage RISK by taking money.

from Strat #Post 5304

RISK
Risk isn't just about setting 1% stop loss beneath or above a swing or candle.
Risk is also about handling time, handling drawdown, handling smaller profits than anticipated, closing trades early, closing trades late, leveraging over correlated pairs, swap rates, weekends, news...... Confidence, Fear, Greed, Failure, Success.
Managing a small trade into a big trade all depends on working out the road map and then being prepared for that map to be ripped up and spat back at me by the market just when I thought I'd taken the right route.
For me risk is all about doing this again and again and again...

from BeyondTheSea #Post 5323

CONVICTION

trading is NOT micro-surgery, quite the opposite.
You must build a CONVICTION about the INTENTION of the BIG BOYS about where they want to take price. Once you have CONFIDENCE that your read is correct, you take a position but then, you stand by it.
Trading is very similar to life in that sense. Daily wobbles shouldn't destroy your personal CONVICTIONS, unless your CONVICTIONS are not solid enough.
The more I learn about trading, the more I learn about myself

from darko2010 #Post 5307

EURJPY

26th WEEK TRADING PLAN (NO PLAN, NO TRADE)
Group 1:
1- EUR/JPY
2- EUR/CAD
3- EUR/AUD
4- USD/CAD
5- GBP/USD

CONFIDENCE

USDJPY
Because the last week candle is BUEB, didn't have the CONFIDENCE to hold the SHORT position.

CADJPY
Because the entry is close to the bottom of WCC, didn't have the CONFIDENCE to hold the SHORT position

MISTAKE

GBPUSD
What mistake did I do?

HOW MUCH YOU CAN LOSS

The first thing, after identifying a trade MUST ALWAYS BE - WHAT IS MY RISK? Remember my earlier posts about millionaire and professional traders? The ONLY thing they care about is how much they can LOSE. Amateurs and all other traders think just the opposite - how much can they make.
When professionals PLAN THE TRADE, the very first thing that goes down on their sheet of paper is HOW MUCH WILL I LOSE? Their whole plan is predicated around LOSING. If they are not comfortable with the amount they WILL LOSE, they will either reduce their positions (lower $ per pip) or NOT TAKE THE TRADE. They don't concern themselves with winning because they are successful traders, know it's all about probability, and will come out winners in the end (total number of trades).

When they are comfortable with HOW MUCH THEY WILL LOSE, they go ahead and place the trade. This IMMEDIATELY takes all decisions and emotions away from you on this trade leaving you with a STRESS FREE TRADE. You then TRADE THE PLAN by letting the market either (i) take you out (stop loss hit) or (ii) put you in profit. Once in profit, your plan should tell you when to take profits, go to break even etc. It may not have hard numbers but just something like take profit at 50 pips on the first contract, bring rest to break even at 100 pips or take profits at first S&R, second S&R etc.

If you feel the need to interfere with your Plan then you have not planned it correctly. Once in a trade with a plan - just let it go and do it's thing! If you plan it correctly, those demons, goblins, voices inside your head, man in the mirror no longer have a base on which to trick you on.

So back to this trade. If you had a sell stop in place below the 97.52 support line, say 97.42, did you measure your RISK? Where did your SL go on such a move? If you did it correctly, your SL should have gone ABOVE THE SWING HIGH at say 99.23. That is a 181 pip SL! That is HUGE!

Would you have been prepared to LOSE 181 pips? That is the FIRST question you should have asked yourself. If not, then either adjust your $/pip or do not take the trade.

Now for those who are going to tell me they dropped down to H4 to identify a smaller SL, then at that point, they were no longer trading the Daily. You cannot trade a time frame with a shorter time frame's S&R. There are 6 H4 price bars within one Daily price bar and if you set a SL from H4 then it would be hit within that Daily price bar.

If we managed our trade correctly, we should have taken profit when it hit support again at around 96.20, so we did make 132 pips. For those who do the Risk to Reward ratio, this was lousy.

Now that huge down bar was not the normal range for this pair and we should expect the elastic band theory to take place after it completed. If you are not familiar with the elstic band theory, take the elastic waist band in your under pants or knickers and pull it out as far as it will go. Then let it go! This is also true for the distance price is away from the 20 - the further it is away, the more likely the elastic will pull it back.

That being the case and since we all know what to do when price hits support, it provided another magic trade PROVIDING you knew where to put your SL. If you did know where to put your SL then you are back at the beginning of this post because it is another HUGE SL

You will NEVER make serious money at this UNTIL you turn your logic upside down, forget about profit and CONCENTRATE on HOW MUCH YOU CAN LOSE.

I promise you with 100% certainty that if you do this, you will turn your trading career around BIG TIME!

from Strat #Post 482

BOND CANDLES

With regard to shooting stars at the end of an uptrend and hammers at the end of a downtrend, they will jump out at you if they are the real thing. What is happening now is that you are “searching” for them and trying to make every bar look like one.

Now that you have dipped your toes in the water, go back and re- read all about them again. It is a known and proven fact that our subconscious learns from repetition so the more times you read it, the more you will learn and understand. Pay special attention to position or location. These type of candles mean different things in different positions in a chart and sometimes mean nothing at all.

While you are doing that, think about what the market is doing when it produces a “real” hammer or shooting star. Think about what it is trying to tell you. I’m not going to tell you that yet as I want you to study and work it out for yourself.

Then, when you see what looks like a hammer or shooting star, remember Bond. Ask yourself if it meets ALL the criteria, “is it really a hammer/shooting star?”.

Before anyone posts that they took trades and were successful on what appeared to be these type of bars but were not really (look a likes), then yes, it does happen. They also fail, and fail pretty bad as well. It all comes down to your risk tolerance. I want to encourage you to only trade “classic” price reversal bars as these are the safest ones with the lowest risk.

Are they perfect? No, nothing in trading is perfect. There have been classic reversal bars which have failed also but not with the same frequency as “look a likes”. Why do they fail? There are many reasons I suppose but what I always think is that after the classic reversal bar closed and gave us our set up bar, something in the market changed between the close of our set up bar and the new bar printing making price continue with the prior trend.

There are also several ways to trade the price reversal bar but I’m only going to discuss the safest and lowest risk (for me). After you see the price reversal bar and thought of Bond, this then becomes your “set up” bar. If it really is a hammer (don’t get fooled like Bond did!), enter a buy stop order about 10 pips above the high of the hammer. The amount of pips above the high will depend not only on the pair but on the current volatility of price action. (Below the low on a shooting star). If it is not a reversal, your stop order should be far enough away so that you are not filled. However, it will not stop you getting filled if the brokers and MMs go on a Stop Run.

Another thing is not to worry or beat yourself up if you miss one. There is always another one being set up somewhere.

So, think like Bond from now on and remember that everything is not always as it seems.

from Strat #Post 543

a Bond candle is something it is not and is trying to “fool” you.
It can be a correctly proportioned candle but nowhere near S&R or, it can be an incorrectly proportioned candle at S&R or any combination of both.

from Strat #Post 4483

I know there are other threads describing perfect shapes, locations etc., for price reversal bars, especially the hammer and shooting star but if you continue to look for perfection, you will never find it.

In your quest for perfection you will overlook what are reliable price reversal bars. Don't believe me? Look back in your Daily and Weekly charts at the end of trends and you will see them in all shapes and sizes.

So, lets not over analyse what isn't there. If it is a price reversal bar, it will stand out without you even looking for it. Yes it has to be at the end of the trend AND bouncing off support/resistance with maybe confluence of something else thrown in BUT when it looks right, you will find more often than not, that it is right and all these things are there already.

As I quickly glanced at my charts this morning, I saw lots of things including a price reversal bar on USDCAD - I didn't LOOK for it - I just saw it.

I still have not got over the fact that my quick 30 second glance at a chart is more accurate than when I do a full blown analysis.

Never, ever forget that we are dealing in Probabilities. Just because we have identified it as a price reversal bar does not mean it WILL be a price reversal bar - the market is controlled by the emotions of human beings (remember Dr. Joe?) and they sometimes do non logical things.

All we can do is protect ourselves by correct placement of trade entry and SL.

from Strat #Post 831

PLAN THE TRADE & TRADE THE PLAN
We must be very careful not to over analyse and over think. I love nothing more but to look at charts and think through every possible scenario, but for what? It doesn't get you anywhere.

The last thing we should be doing is bringing a M5, M15, H1 mentality to trading the Daily time frame. The beauty about trading the Daily time frame is that you plan your trade, put the trade on and let it work itself out, in other words trade the plan.

Planning the trade only requires a 2 or 3 minute study of each pair after 5pm NY time each day then placing our stop/limit orders and then - living your life.

You do not need to sit and watch the one eyed monster all day, you do not need to interfere with your plan, you do not need to do anything further until 5pm NY time next day.

The absolute worst thing for anyone trading the Daily to do is watch what happens on a shorter time frame or watch the Daily candle DURING trading hours. We don't care what goes on within that Daily candle - all we are concerned with after 5pm NY time is where the candle closes and where it's been.

This gives us the best of both worlds - financial freedom

Now, instead of thinking what USDCHF should or shoudn't do or why a pair did what it did, just look at what the market is telling you. Use what the market is telling you to your advantage.

The market is not doing anything, it is waiting. What is it waiting for? I have absolutely no idea except I know that when it gets it, it will MOVE.

We must always be aware of what moves this market - it is not us tadpoles - the market is moved by the big players - the banks, the institutions, the trading houses, the Market Makers - when it's quiet like this, they too are waiting for their "bosses" - world banks, government banks who in turn are waiting for decisions from economic and government financial specialists.

We must think LIKE the big boys - don't think against them. We need to let them reveal their intentions and ride on their coat tails. Remember when Dr. Joe visited CME - all he saw was the floor traders just FOLLOWING the market - when it went up, they bought - when it went down, they sold. It really IS that simple.

The point I'm trying to make is don't let your new found technical skills stand in the way or blind fold your common sense. A common sense trader will always outperform a technical trader.

from Strat #Post 1029

COMMON SENSE IN TRADING

We look at our charts and we do our analysis. When do we know our analysis is complete? It is the same question an artist asks himself when painting a picture.

We sometimes get so wrapped up in analysis that it over rides what we use it for in the first place. I used to enjoy the analysis more than I enjoyed the trading UNTIL I realised that it didn't make me any money.

ANALYSIS IS NOT TRADING

Analysis should only be used for decision making. When you have arrived at a decision, your analysis is done. The second you go back and review your analysis, you will question your analysis and any confidence you had in putting on that trade has just flown out of the window.

If you have come from Indicator Land, you know what I mean. I still see systems and methods with indicators up the ying yang saying and wait for this to confirm, while this shows this, while at the same time this is below this, and this is pointing up, and this must have crossed before this has gone below etc., etc. By the time you have done all that, your head is so messed up, you have forgotten your kid's name!

Analysis is not trading. It only gets you to a certain place.

Trading and trade management is where the money is made.

Analysis does not allow you to forecast or predict or filter or reject. It is just statistical theory. Performing additional or extra or more or further analysis does not get you any further than your initial analysis and does NOT increase your chances of a profitable trade. Based on my earlier over analytical work, I can safely say that LESS is MORE!

Probability of profit in trading has NO RELATIONSHIP to the amount of analysis. Quality of analysis, yes, but NOT quantity. Therefore, no profit will ever increase with additional analysis. Conversely, no probability of loss will ever be decreased by performing additional layers of analysis.

Once in a trade, there are only 2 actions you can make to increase your profitability in trading. They are as old as trading itself and you will have read them many times:

CUT YOUR LOSSES

Your plan should identify your SL but just in case you decide to over ride it (are you reading, Dan?) - cut your losses as soon as possible

LET YOUR PROFITS RUN

Governing, dominating and over ruling these 2 actions are EMOTIONS.

We always ignore the training we need in trading psychology in our quest for profits.

I repeat what I posted earlier - profitable trading is 10% method, 90% psychology. Ignore the psychological side and it will tear you up. If you haven't experienced it yet, it is waiting around the corner for you - it is always there, waiting for you, no-one can hide, it WILL find you out!

I won't say anymore on it as Nicola is going to kindly share her experiences with it.

If you have read and understood my posts, you will have read that I said my flash analysis of USDCAD was more accurate than my detailed analytical over kill. You should also have read that Baba G, our Professional trader and Money Manager, makes his decisions and trades just by LOOKING - not a chance of over analysis from him!

What has this to do with common sense - EVERYTHING

Our common sense, "our gut feeling" is the best decision maker we have.

Look at Baba G, common sense told him to pull out of his CADJPY trade and he is a PROFESSIONAL TRADER & MONEY MANAGER.

If it feels right - it is RIGHT

If it feels wrong - it is WRONG

When we are choosing our lifetime partner and soul mate - do we analyse? do we over analyse? Hell NO, we see it, we like it and JUST DO IT!

Trading is no different

TRADING IS SIMPLE - IT IS TRADERS THAT MAKE IT COMPLICATED

LESS IS MORE

from Strat #Post 1086

1. 5785 PASR and VOLATILITY
2. 5795 EURJPY Analysis Strat
3. 5802 forex trades PAIRS and NOT a single currency
4. 5841 AUDUSD Analysis Samson
5. 5868 NZDUSD Analysis Strat

PASR A QUICK SUMMARY
I have 28 charts open on a Profile but I only really focus on the "movers and shakers" - those pairs which are volatile and have high ATR(10) pip count. I want my margin used up on those pairs which have the highest probability of moving.

My daily routine starts with, and revolves around the BIG PICTURE analysis on the BIG BOSS.

I check the Big Boss at the end of each month and especially the end of each Quarter and get a "feel" for where the Big Boys are taking PRICE. This is recorded for each pair. I always check when the Big Boss PRICE is approaching, or near or at Big Boss support or resistance.

At the end of each week, I check where PRICE is with regard to support and resistance AND where and how it is moving with respect to the Big Boss. I check for Weekly Control Candles AND which SWING the Boss PRICE is in.

Each day, I have "a good idea" which pairs should be moving and focus on them. I also check other high ATR (10) pairs in case they are moving. I check if the Worker is in harmony with the Boss. I decide whether a trade is basic PASR or trend trade.

When I get to my laptop each morning around 6am - 6:30am Pacific Standard Time, I already have a "good idea" (from the above) which pairs will be trending on M5 so I check my M5 Profile. I look for London and New York to have created a trend that I can trade the pull backs on since being on PST, most of the trends are already fizzling out. I also focus on the highest volatile pairs on M5.

It is much more involved than this but you should get a good idea from this to create your own style and routine.

from Strat #Post 371

SET STOPLOSS

Tight stops will be the death of you. Scale in small and build your position with a wide stop.

from Samson #Post 5931

Personally I like to set an amount I'm happy to lose on a trade and don't just get in once and set a hard stop. If price action starts to look like I was wrong I get out manually and take the loss.
If you find you are getting stopped out a lot and price then moves in your direction, set the stops a bit bigger and enter with a smaller lot size. You can always add on to the trade when price goes your way.
If you are new to trading or new to PASR you are not going to get in perfectly each time. Hell I don't get in perfectly and I've been on the path for many, many months now. I have a long way to go too.
Trade small, let price breathe and see how price reacts and moves around the shadow. You can only do that if you allow price room and don't get stopped out all the time.
Price will consolidate and spike up and down while the big boys are moving it around and you need to allow that space in your trading.

from Samson #Post 5938

1. 5817 Supply and Demand
2. 5902 Price Action and Structure
3. 5982 Textbook BASIC PASR TRADE and COMMON SENSE Trade

1. 6013, 6017 BASIC PASR TRADE (EURUSD)

Any tips on maximizing profits while keeping the risk manageable? I am talking about capturing 100 to 300 worth of pip move, for swing trading positions.

Lately, I have been scaling out of winning positions to reduce risk. But I feel it is also severely undermining potential profits.

Very good thread btw.

Hi, AlastorFate

As I am not a professional trader, my suggestion maybe wrong.

My suggestion is:

1. Cut the WRONG trade QUICKLY.
2. Scale in small position with a wide stop. So if you are wrong, you would loss less.
3. Add on to the trade on lower TF when price goes your way in order to capture the big money.
4. Keep your mind open and flexible.

just my own opinion

thanks for your question

regards