Hello everyone, I have been a member of Forex Factory for a few years now, not posting much but reading a lot and spending 100X as much time staring at charts and running backtests. I'm not rich, I've blown one or two forex accounts in my time and I still need to hold down a day-job, which isn't in front of a computer (thank God). But the Forex market has still always facinated me. I've been thought a few lessons by the market and I'd first like to share those with you:
[Frink's Lessons]
1. Never trade against the prevailing trend on the higher timeframe(s)
I learned this tip from a guy called Jacko here on FF and it has at least saved me from blowing another account, it may have even made me a few pips. To me it makes perfect sense I mean it's common sense right? I still don't understand why so many people spend all their time (and money?) trying to be clever and predicting the next "reversal". My mind boggles. Maybe they have a vested interest in the trend changing because it's their native currency that's going south, but even in these cases it still makes little sense to me. It's still like trying to defeat all the world's armies with a pistol.
When you trade with the trend, you can relax much more easily. Even if the trade moves against you by a few pips and you're tempted to cut your losses you can still flick up to the higher timeframes and take solace in the fact that the long-term trend is in your favor. Really good traders know this. They know that the "counter-trends" seen on the lower timeframes are really just periods of successful traders taking their profits combined with chicken-shit traders cutting their "losses" combined with idiot traders betting against the trend.
I think I've stressed this enough. Never trade against the established trend on the higher timeframes. This means if the higher timeframe bars are generally going up, you buy. All your orders should be BUYS. All of them. That means none of them should be "sells". Seriously if you can achieve this I guarantee you'll never blow out another account again. And if you never have, you never will!
2. Set yourself a daily target
This should be self-explanitory. Set yourself a daily target, either in pips, or in currency. Don't risk too much though because remember tomorrow is another day. Let's say your daily target is $100 a day, and you happen to take a "lucky" trade early in the morning and hey presto, You're up $220 before you've finished your first cup of coffee. This means you close that trade and stop trading for the rest of the day. Got it? Yeah. You switch off your computer and turn on the TV, go to sleep, go out for a walk, whatever. Point is your work is done for the day and you should be happy. Be glad you don't have to stare at a screen for the next 7 hours looking for that perfect "entry". It's done already! Before some people have even started their work day your's is already over! HAPPY DAYS!
On the other hand if you're not so lucky and you find yourself down $220 before 9AM because of some idiotic trade you put on without thinking... Then you ***MUST*** spend the next 7 hours in front of the computer trying to figure out what went wrong, and also trying to recover that loss though NOT by betting against the trend of the higher timeframe(s), although this seems so easy. I don't care how blue in the face you get. Imagine you're a car salesman and you've just crashed a $100000 lamburginhi. Well that's what you've just done. Trust me, You can reverse a car but you can't un-crash one. You need to pick up the pieces, take the hit, learn, maybe even take a break. My point is FOREX is a job. Like football, it's one of the few jobs in the world where you have to CONSISTENTLY IMPROVE. You can never be "good enough". You need to take responsibility for your losses and take the shit. And gamblers get killed.
And they are my 2 lessons.
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Starting Monday morning (28 May 2012) I'm going to be posting my trades here and my general opinion of the market. At the moment I'm just trading EURUSD and my outlook is bearish. Thing is all the bulls have run out of money. The euro is on life-support but the machine is going to be unplugged soon. I can see it hitting 1.21 (or lower) within the next 7 days. Of course I could be wrong.
Ok that's enough of me. Good pips to all!
[edit] ... Some musical inspiration
[Frink's Lessons]
1. Never trade against the prevailing trend on the higher timeframe(s)
I learned this tip from a guy called Jacko here on FF and it has at least saved me from blowing another account, it may have even made me a few pips. To me it makes perfect sense I mean it's common sense right? I still don't understand why so many people spend all their time (and money?) trying to be clever and predicting the next "reversal". My mind boggles. Maybe they have a vested interest in the trend changing because it's their native currency that's going south, but even in these cases it still makes little sense to me. It's still like trying to defeat all the world's armies with a pistol.
When you trade with the trend, you can relax much more easily. Even if the trade moves against you by a few pips and you're tempted to cut your losses you can still flick up to the higher timeframes and take solace in the fact that the long-term trend is in your favor. Really good traders know this. They know that the "counter-trends" seen on the lower timeframes are really just periods of successful traders taking their profits combined with chicken-shit traders cutting their "losses" combined with idiot traders betting against the trend.
I think I've stressed this enough. Never trade against the established trend on the higher timeframes. This means if the higher timeframe bars are generally going up, you buy. All your orders should be BUYS. All of them. That means none of them should be "sells". Seriously if you can achieve this I guarantee you'll never blow out another account again. And if you never have, you never will!
2. Set yourself a daily target
This should be self-explanitory. Set yourself a daily target, either in pips, or in currency. Don't risk too much though because remember tomorrow is another day. Let's say your daily target is $100 a day, and you happen to take a "lucky" trade early in the morning and hey presto, You're up $220 before you've finished your first cup of coffee. This means you close that trade and stop trading for the rest of the day. Got it? Yeah. You switch off your computer and turn on the TV, go to sleep, go out for a walk, whatever. Point is your work is done for the day and you should be happy. Be glad you don't have to stare at a screen for the next 7 hours looking for that perfect "entry". It's done already! Before some people have even started their work day your's is already over! HAPPY DAYS!
On the other hand if you're not so lucky and you find yourself down $220 before 9AM because of some idiotic trade you put on without thinking... Then you ***MUST*** spend the next 7 hours in front of the computer trying to figure out what went wrong, and also trying to recover that loss though NOT by betting against the trend of the higher timeframe(s), although this seems so easy. I don't care how blue in the face you get. Imagine you're a car salesman and you've just crashed a $100000 lamburginhi. Well that's what you've just done. Trust me, You can reverse a car but you can't un-crash one. You need to pick up the pieces, take the hit, learn, maybe even take a break. My point is FOREX is a job. Like football, it's one of the few jobs in the world where you have to CONSISTENTLY IMPROVE. You can never be "good enough". You need to take responsibility for your losses and take the shit. And gamblers get killed.
And they are my 2 lessons.
--------------------------------------------------------------------------
Starting Monday morning (28 May 2012) I'm going to be posting my trades here and my general opinion of the market. At the moment I'm just trading EURUSD and my outlook is bearish. Thing is all the bulls have run out of money. The euro is on life-support but the machine is going to be unplugged soon. I can see it hitting 1.21 (or lower) within the next 7 days. Of course I could be wrong.
Ok that's enough of me. Good pips to all!
[edit]
Inserted Video
