Stress Free EUR/USD

Leverage is the number one killer in trading!!!!





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If you fully understand and accept the 1st post in this thread then you are 90% there.

I have had my share of loss in this market until i accepted leverage as a double edged sword which if abused will always take back whatever green pips it gives you and then some.

try this on demo, it won't cost you a dime but might bring many green pips in the future

1.Trade one currency pair

2.Determine trend preferably on H4 or higher and only enter in that direction

3.Enter only 1 lot relative to your account..example if account capital is $10,000 trade only one mini lot of $10,000 (leverage of 1:1)

4.Take profit off the table whenever you have 1-2% of your account




I can already hear the uproar over the non use of leverage :nerd:
The idea is to start with low leverage and only turn to it if the position goes against you.

Example:
If you enter 1 mini lot say long at 1.4450 on a $10,000 account and position goes against you to 1.4350 you add 1 lot to your position to make your cost 1.44 with 2:1 leverage

You can do this upto a maximum of 3-4:1
That would leave you long at say 1.4350 with a $ 40,000 position

Next is the all important stop loss..
How much loss can you accept in this trade?
At what level would you consider trend to have turned completly against you??

If your loss threshold is say 2% then that is $200 on a $ 10,000 account
In the above example you would have a 50 pip stop since you are exposed in 4 lots



The biggest lesson here is the MAXIMUM 4:1 LEVERAGE

Try it before you dismiss it, its removes ALL the stress from trading enabling you to make rational and unbiased decisions

forum is open to debate!

where next?

Out of interest what was plan-a?

I actually have a day job as an accountant for a small bank in Africa

SIGNS THAT YOU ARE OVERTRADING

1. If one chart indicator doesn't have a clear trading signal, you switch indicators until you find one that does (or looks like it does). What you're really doing in this situation is trying to find a signal that you can read enough into to justify placing a trade. The fact is, there are times when there just aren't any good trades to be had and you should be sitting on the sidelines. If you can't accept that, you'll end up making lots of trades you shouldn't.

2. You feel the urgent need to place a trade within five minutes of opening a forex chart. Just looking at the chart makes you feel you absolutely must be trading right now, and anytime you open a chart you spot some trend or indicator that you should be taking advantage of. You're a bit like the person who needs to place a bet anytime they walk by a roulette table.

3. When you're away from your forex trading platform, you feel like you're constantly missing trades. You feel intense frustration and disappointment when you see a trade you could've made but didn't. You spend a lot of time thinking about those trades you missed. Sometimes you wish you could stay awake 24 hours a day because then you wouldn't miss out on all those trades.

4. You have a trading system but you constantly make exceptions to it. You have an ever-growing list of excuses and rationalizations for why you trade outside your system:

* You'll only do it once (until next time)
* You're not risking very much
* The chart is showing the perfect trade set-up and you'll miss out on huge profits
* Look how active the market it right now! I have to trade since everyone else is.
* I'm trying out this new experimental strategy (well, then try it out on a demo system)
* This trade is actually part of my system, since I keep extending my system to include all my trades
* My system hasn't been working lately anyway
* It'll take my system at least a year to make me rich and I want to be rich next week

5. You're focused on "the one big trade" that will make up all your losses, and you're willing to make dozens of ill-advised trades just to make sure you don't miss that big one. And guess what, you discover no one trade is going to make up for all you've lost in bad trades and spread costs. At this point you might as well be buying lottery tickets.

6. You think that trading more often will make you more money. "If I can make this many trades with the 5-minute chart, imagine how many I can make with the 1-minute chart!"

My experience has been the opposite.

7. You think that anticipation, anxiety, impatience, urgency, late nights, a pounding pulse, and the rush of adrenaline are all part of trading and there's no way to trade without them. You're under the impression that you're more likely to trade well under these conditions.

8. You make trades so you can tell people about them. "Yeah, I traded the zloty at 3:00 am last night - pretty crazy, eh?" Yes, you're a brilliant, maverick currency trader, and you'll be broke in a month.

9. You have a "gut instinct" for trades that makes different, contradictory predictions every time it kicks in.

10. You can always find a way that your trade could have gone well, if you'd only done X, Y, and/or Z, and you resolve to do all of those next time. In fact, just to prove how well they'll work, you're going to trade again right now.

11. You cut short your weekend so you can trade on Sunday evening when the Asian markets are open. In fact, you find the whole weekend concept very inconvenient since you'd much rather be trading on Saturdays.

12. You have a history of being addicted to things and forex is the latest. This is no joke - there's a very real high to be gotten from trading, akin to the high from gambling or other addictive activities, and if you're especially sensitive or vulnerable to that type of response, you should be very careful about venturing into the currency markets. This is related to #7 above - many of the reactions I listed there are part of a potentially addictive physiological response, particularly for those with a predisposition in that direction.

Exhausted?

What do you mean?
What leverage are you trading on?

If say you have a $10,000 cash deposited in a mini account it allows you to control $1,000,000..That means you can enter trades up to 100:1 of your actual deposit. Do you understand that leverage concept?

What i am saying is that taking advantage of that available leverage will only kill your account faster via margin calls..Are you familiar margin calls?

My system entails entering a trade with very low leverage and adding a little bit if price goes against you.

Spot right now is 1.4670 and i have a bearish bias and $ 10,000 in my account
I could sell 2 mini lots using only $20,000 of the possible $1,000,000
That would mean i am in a 2:1 trade considering my account size
If price goes against me to 1.4770 i could sell another 2 lots to bring my entry to 1.4720 average short.

At that point i will be 4:1 of my account having used up only $40,000 out of a possible $1,000,000 that leverage has made available to me.
At this point you can put a stop loss after examining your setup and the amount you are wiling to risk on that trade

Lets say you put 100 pip SL at 1.4820 (which is extreme if your bearish bias is correct) you will be risking only 4% on a trade that could net you 8% or more if your bearish bias was correct in the first place.


Why don't you open a demo account with a broker of your choice and enter the exact trade i have placed above of shorting eu at current levels.

Update me on the trade especially if either 1.4820(SL) or 1.4520(TP) is hit

This system requires A LOT of discipline to resist the allure of leverage and i am yet to adopt it perfectly myself.

are you only trading EU?

do you add on to your winning trade?

thanks for sharing your idea. i find it very interesting

Thanks.


At the moment i am also short in au and nu but i will restrict myself to eu once i close those ( discipline issues).

Once the trade is winning i just take profit off the table and look for another setup. In the example above i maybe could close half at 1.4620 for 2% profit
and leave the other half open but move stop to say 1.4650(+70)

If your bias was correct the second lot could net a lot and with no sleepless nights since you are already in guaranteed green pip territory .

what better way to understand but to do it. so, based on your post i put the following trade on EU:

1. market sell at 1.4653
2. sell limit at 1.4753
3. both at stoploss of 1.4803
4. both at take profit of 1.4553



am i doing it correctly plan-b?

thanks

Yes, that looks like a good set up.

The only thing i might have done different considering today's PA would have been to enter a bit higher say at 1.47 or wait for it to confirm strongly below 1.4650 but entry is not really a big issue if you are using the correct trade size relative to your account size.

At the moment you are experiencing a draw down of about 50 pips which should not worry because the size is not very big when compared to your account, and you will get an even better price if we see 1.4753


My personal bias is bearish, i doubt we will see 1.4803 anytime soon but even if we do SL is part of this game..We take the pain and go back to the charts for another possible setup

And don't get tempted to interupt it by say adding at 1.47 instead of 1.4753...Now you just seat and wait, don't fight or second guess the market, if it was a right set up it will give back green at its own time

Yea, the important element here is the 1:1 leverage. this one really make a free stress EU trading

You should be nursing a average stress free short at 1.4703 by now.

Stay close especially today and tomorrow, you can take 1-2% profit off the table on half your position if we get there

THE PILLOW TEST

I would recommend that traders take the “Pillow Test” to ensure they are able to appropriately handle a losing trade. If you feel you can put your head down at night and sleep easily without worrying about the result of a particular trade, than you pass the “Pillow Test” and should be in a good position to be able to deal with a losing trade. However, if you find yourself unable to rest your head on the pillow (and especially if you are using the pillow as a suffocating device), you have probably taken on too much risk and should significantly reduce your position size to the point where you can get some sleep. Losing is a part of trading and should be embraced. If a trader can not accept being wrong sometimes, then he is more inclined to be wrong all of the time. We all have lives outside of our work and need to be able to go home to our families and friends at the end of each day knowing that we will be able to focus on what really matters.

Hi plan-b

What is your initial stop-loss? and entry rules?

Thanks,
Simon

hi plan-b

my limit order has been triggered and now is in green.

i am tempted to close it once it hit 100pips in green. regarding the first sell order, maybe i should close it once it is in some profit. some people predicts that EU is in an uptrend till the year end.

what is ur view?

I never really think about the initial stop because there is a limit order already pending..By having a pending order it goes without saying that the initial stop can only be further than the pending limit otherwise you get stopped before you even get your better price.

You can put your first stop where the final one will eventually be then change it to accomodate your addition.

Entry would depend on an individuals perception of trend after studying charts..I would suggest starting with the weekly, daily then finally using 4H to help you get the best price for your entry

Hope this helps

Yup the bullish trend is also making me jittery about my bearish bias.


Yeah you could collect the green on half your lot and move the stop to say BE or +10 on the second half.

That way the trade is profitable and you are still in it at zero risk to your capital..I am assuming your broker averages entries like mine does.