After The Storm... Sharing My Experience

I've not started a thread before, but I have learned so much over the years of trading that I thought it was my duty to share my experiences and as a result my techniques for avoiding being burned by the charts and more importantly how to stay in credit and keep your sanity!

This is mainly aimed at newcomers, so apologies if experienced traders find this of no benefit, but I remember when I started off how much I needed someone to show me the ropes, so this is my take on that.

Before I begin - this is NOT an advert or trying to sell you something. I've been online long enough to spot when people post something as a marketing opportunity or sell you the 'most amazing indicator you will ever need, for $97' and so on and so forth. This is just a little bit of me giving something back in the hope it spares people some of the stress and nightmares I landed in through a lack of experience and putting my faith in something that was in fact just quicksand. All of the indicators I use now are free, so as a preliminary warning, keep your cash in your pocket!

I will touch upon indicators and strategy, but also the psychology of trading, which for me was just as important.

So let's begin....

Attribute ONE - Patience.

Forex is a great way to make money and also a fabulous way to bankrupt yourself. Let's face it, all you have to do is enter a trade, wait, and then extract your cash. Couldn't be simpler could it? So why does it go wrong so many times?

The market operates outside your influence and your decision making. There is no amount of hoping, or "It should move this way" or "But my indicator says" that will change the fact that you are not in control of it. Your job is to follow it and join in. Patience is the key.

Today (7th Sept 2018) has been a prime example. Trading the EURUSD I sat and watched (in the UK) from 7.30AM when I stared at the computer and I thought to myself "This is already in motion, there's a steady climb which may well continue, but for now I'm going to have coffee and watch." So I did just that. I won't go into the strategy yet as that detracts from this first point - patience.
The chart did indeed climb, but FOREX never moves in one direction forever, so I waited it out in case entering long would see my entry go in just at the point at which things started to point the opposite way. By this time I had waited about three hours, but to me three hours of watching is better than three hours of "Oh no, it's going the other way and here comes my Stop Loss".
Eventually by the second cup of tea various signs started to appear and after confirmation of a change in direction I entered. Using a trailing stop EA I knew that once I was a certain amount in credit I was protected from any kind of loss, so the best feeling in the world followed - I could RELAX.

As it turned out I came out of the trade at the Pivot Point, but could have stayed all the way down to the Day Low and taken about 400 pips as I write this. Maybe a lesson in patience not greed on my part!

The key to this wasn't just knowing when to enter, but also WAITING for that point.
There is no rush to make money in FOREX, there is always another day, another opportunity. Each day brings fresh movements and new chances to make money. Don't think you have to do it all right now, this hour, this day. Getting it right is just as much about waiting as it is action.

So keep calm and wait for that opportunity - if in doubt try again tomorrow.

A good read. Patience separates successful traders from gamblers...it may seem a cliche but when it helps grow the size of an account it no longer seems so. Would love to hear more from you...the thread looks promising in helping to impart some very useful knowledge to traders...new and experienced..and those in-between.

Good info..Really exciting

Attribute TWO - (Correct) Indicator Choice.

The dreaded indicators!

Hands up those who spend hours each day looking for 'the one'. The magic indicator which does everything and works 100% of the time on its own.
Some are free, some cost a few dollars and some are the price of a meal for a family of 6 at a posh restaurant. Are any of them going to do what you want? No, of course not. There is no single indicator that will show you 100% successful trades 100% of the time.

There seems to be a belief that because FOREX trading is about simply knowing when the chart goes up or down there must be a 'magic arrow' that knows when this will happen and direct us towards being millionaires.
If this was the case then this indicator would make its creator a multi-millionaire and they would have no need to sell it. Why waste time marketing something to sell for comparitively little when you can just trade with it and become a millionaire? Hopefully you can see where this is going.

Like most things in life, indicators are good/bad, useful/useless. Finding the right ones is a nightmare when you start out so here are a few things I have discovered that might help:

1. Keep it simple
There is no point at all in having a chart with 40 indicators on it, drawing waves and lines and bars and flowers and trees (maybe not the last bit) all over it so that your mind cannot distinguish what is going on. Sure, all the indicators say something, but what? "You have a mess" most likely.
What we are looking for with an indicator is a signal to tell us that something has changed from how it was previously - when up might change to down. There is no way of 'knowing' this but we can spot trends, averages and make observations on price and so on. I have seen some templates with so many bands of colours and waves and lines that you would get a headache after 10 minutes rather than be able to trade with it all day.
Look for indicators that give you a value, then something to confirm that once or twice then stick to that. Your eyesight will thank you as well as your brain.

2. Stick to it.
No indicator will work 100% and it is tempting to try something, fail, then throw it all away and look for a new system. If you do this you will quickly discover that in 6 months of trading you have tried 12 systems and you are still looking. Every system has its merits and every system has its failings. You will not find one that works perfectly and you will not find one that doesn't allow you to enter a wrong trade. This is life!
It reminds me of football transfers (over here in England) when a team starts to lose immediately "we need new players!" and the old ones are sold (and then thrive somewhere else) and new ones come in who appear to make a difference but then end up being sold as well. Sometimes the team needs a change of thinking not a change or player. If what you have has worked in the past then have a look at what you are doing with it and learn more about how to get the best out of it.

3. Don't anticipate it.
The indicator may well look like it is 'about to do something!' - but it is only possibly about to do something, nothing is certain.
"Look at those levels! Any minute now it will..." will it? How do you know?
Anyone who has used stochastics will know that getting an alert on a certain timeframe does not guarantee anything, and seeing "overbought" light up makes many traders just jump right in. "It will go back down really soon!!" Right? Wrong! I have seen "overbought" continue up for hours and wipe people out.
When following your chart it is easy to get anxious - talking about patience - you have been looking for hours and not entered a trade at all. "I'll enter now, it's almost there..."
Keep your trigger finger away until you have a definite signal and confirmation. Don't think you can second guess it just because it looks like it might be heading that way.

4. Repainting.
This could be a huge conversation but let's keep it simple. Be very careful of viewing an indicator on historic charts. It might look like something is very successful - "look! it got every trade right!" - of course it did, it painted the indicator after the event.
Repainting indicators are not useless but they can mislead if you are not careful. It may detect something is happening, but not a definitive move, just a hint we are going somewhere. Take it as just that and not a signal to avoid staring back over hours when something first appeared and crying as your account wipes out.

5. See what everyone else uses most.
This forum is a great place to share ideas and on every thread people post indicators and templates that work for them. Look for common settings and indicators. If you see 10 threads and one indicator appears on them all then it's a fairly good chance that used correctly that indicator is giving something. You probably won't find many people using the "amazing wins every time for $97" indicator... Also look for those with simple settings and simple views. An indicator used by many people that looks plain and simple will help you more than one that looks like 5 pots of paint have been thrown at the screen.

6. Use your brain.
A little used function sometimes in trading. If you can clearly see that something is wrong then do not blindly follow what your indicator is telling you. Think of when news breaks. Sometimes this causes arrows to point in the direction the news has taken it, only to retrace wildly the other way when the world has realised that the news wasn't so catastrophic after all and the previous trend continues for days leaving your arrow looking lonely and a little bit stupid. Use your clear mind, read the forums, see what other people are discussing about the anomoly, and don't rush in.


I will get round to which indicators I prefer to use in time, but I didn't want anyone just scouring for the holy grail as often happens. This thread is designed to be a help to those who are in a position I once found myself in.

Great post Clockers. You have a way with words and you teach well.

THREE - Emotions.

This should be the shortest post really - keep emotions out of it!

However we all know that this certainly isn't the case when we start our trading adventure. What do we experience when we start trading FOREX the first time?

Excitement, fear, exhilaration, wonder, dread, panic!

All of the above...

As it has been said before, trading needs to be about being calm and level headed, about making decisions based on the facts in front of you. It is so easy to enter a trade emotionally, either because you need money and you decided to dive in regardless of the facts, or because you just lost money and you NEED to get it back immediately.
I have seen traders dive in to try and correct a trade that has gone the wrong way, quickly gamble on a bigger lot going in the opposite direction and then have the market reverse again. Chasing a buck is really easy trap to fall into but it is derived from panic thinking. There is always tomorrow.
Watch your balance go into the minus figures and then the dreaded margin lights up red letting you know DANGER DANGER! Feel sick? Angry? Anxious?

Emotion needs to stay in the parts of your life where it is needed, for relationships and other heart driven activities. Forex trading isn't one of those.

I touched on patience at the beginning, but in order to control your emotional involvement in a trade it is vital to employ a money management solution that works for you.



FOUR - Money Management.

This is the technique for looking after your bank account so your heart rate and anxiety don't have to.

I don't consider Forex to be out and out gambling, but the old saying of "Don't gamble more than you can lose" certainly holds true.
Carefully considering your financial options is sensible in any walk of life but in trading it is even more important. You cannot just throw good money after bad and try to get back what you lost in some 'all or nothing' desperate bid to correct what the universe owes you. This is the road to a blown account.

The figures I use are newbie micro lot amounts - somewhere everyone should start if like me you began this journey with next to nothing. Find a broker with micro lots and low spreads and a pair that keeps a tight spread like EURUSD.

Do some simple maths. Start with £250 and risk 2% (£5). Can you afford this? Probably. Gain 2% and you have £255, lose it and you have £245.
A 2% gain day on day would give you over £300 capital after 10 days and with £300 your 2% now becomes £6. Each gain will increase your capital and the amount that your 2% will yield.

Day Capital
1 £250.00
2 £255.00
3 £260.10
4 £265.30
5 £270.61
6 £276.02
7 £281.54
8 £287.17
9 £292.91
10 £298.77
11 £304.75

Have a fairly high success rate and the 2% starts to seriously add up until within 6 months you could be earning the same from trading as you would in a minimum wage job - certainly here in the UK. 2% day on day after about 128 days will increase your 2% to about £60, the same as after tax pay from a basic job.
Ok, that is best case scenario, with enough wins each day to add up to 2%, but something that IS possible. You can then leave the capital balance and withdraw your wages every day!

Day Capital 2% Per Day
125 £2,913.14 £57.12
126 £2,971.40 £58.26
127 £3,030.83 £59.43
128 £3,091.45 £60.62

Let's go the other way. Lose 2%. £245 now to trade with but rememeber, there is no revenge, no anger, no panic. We decided on a percentage and we stick to it. Win lose or draw. Now there is no way that you should lose 10 days in a row and not change what you are doing. Something is wrong with your technique and it's time to go back to the demo account and re-think what you are doing.
When you come back to your account you will have £204 and a 2% stake of £4.09. You are still in the game and live to fight another day. And here's the thing. Sticking to a percentage risk and win, and you will be back to where you started in ten days.

Imagine how this could have gone. You lose almost £50 and think "I should be winning, let's go for a big one and get that £50 back now"
A couple of hours later when you explain to your wife that the £250 you put into Forex has now gone, you will be grateful for the chance to have ten days to put the money back where it was.

By all means if you are trading well and the position is moving positively for you then stay in that trade - just protect your profit with a moving stop and enjoy the relaxed feeling. But NEVER chase a loss and try and force it back to where you were. Think about having the chance to get your account back or being in the situation where you lost it all. Losing is never pleasurable but it is part of Forex - EVERYONE LOSES! Nobody in the history of trading gets it right all the time.

We should be doing this because we enjoy it, not because it causes us stress. It is a chance to make money without the morning commute and the boss you can't stand. It's a way of making cash while you sit and drink your morning coffee and read the news.

It is how you deal with loss that will define you as a trader. Manage it. Keep it affordable. Live to fight another day!