Fundamentals + sentiment + order levels rationale

Quoting PipMaxzz

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Ram, I follow similar strategy too and learning slowly after blowing up my account a few times. Here is my analysis for today: With bad retail sales and consumer sentiment, coupled with near-election where rate hike decision may not be taken and hence USD is now weak. JPY is stronger with Japanese not aggressive enough on easing economy. GBP is bearish, but beaten up badly recently, so is sideways. Good EU economic data today With bad US data, people sell USD and run to safe haven currency like JPY or to gold. Net result is: USD/JPY: V.Bearish GBP/JPY:...

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Quoting Ramadas

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After today and my forgetting of retail sales I learned: In trading one must be laser focused and disciplined, there is no place for laziness, sloppiness, and taking things lightly. I lost 2 weeks worth profit today, but hopefully I learned this.

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Quoting PipMaxzz

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Oh...that's sad! Don't worry, stick to your plans and focus on important news with SL, you would be fine. All the best! {quote}

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This writing process is getting more addictive than I care to share, but here's another one about daily planning. Many of the questions I receive regularly can all be solved by incorporating this into your routine. So without and further adieu...
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If there was ever a turning point in my career where I went from mediocrity to consistent profits, it was when I started putting together a daily plan on a regular basis. The exercise takes about a half hour to an hour, and when I say that things started to turn around, I mean things really started to turn around. I went from ups and downs, more losers than winners, etc, to winning every day, and having the ability to fall peacefully asleep every night and knowing that I was better than 98% of other people that take this up for a living.
Daily Planning:
Lack of proper daily planning is a massive hindrance on any trader. Even now, if I don’t do this daily exercise, I find myself completely lost if attempting to trade, and usually don’t end up trading at all because I’m so unsure of what to expect. The commentaries you see on the website every day are just me speaking out my daily thoughts, but I always have a good handle on general price direction and what the safer trades are to take. The other ones, I rarely take, and if I do, use smaller position size. Planning seems like such an easy thing to do because it is, but ask any number of newer traders how much time they really spend each day looking across markets and the reality kicks in as to how many of them are completely uninformed.
Lets assume for a second that there are two basic traders: the constant loser and the constant winner. Here’s my take on what happens every day in their trading lives:
The Constant Loser:
1. Trader sits down at the computer, turns it on, opens up trading platform
2. The moment he open the charts, sees that stochastics are heavily oversold on one timeframe
3. Trader buys the pair with more than comfortable leverage, seeing how heavily oversold conditions are
4. The pair keeps dropping, stop loss gets lowered
5. Trader gets anxious, doesn’t want to lose money, pounds on walls and heart rate increases
6. The pair keeps dropping, stop loss gets lowered
7. Trader looks for clues, doesn’t find any….starts digging through his trading system arsenal for an answer, heart rate keeps increasing
8. The pair keeps dropping, stop loss gets lowered
9. Trader can’t take it anymore, pulling out hair, kicking and screaming, cursing himself out
10. Trader closes the position for a massive loss
11. Pair turns the moment the trade is closed and goes in the favor of the trader
The Constant Winner:
1. Trader sits down at the computer, turns it on, opens up market news and research
2. Digs through data, research, opinions on macro economic conditions affecting the pairs planned to trade for the day, as well as other markets that will affect those pairs
3. Makes conclusive decisions (forecasts) of the pairs planned on being traded based on intermarket cash flows, current trends, market hype fads and potential deviations from any of these
4. Write down these conclusions with references as to why they will occur
5. Opens trading platform
6. Mark up key possible turning points based on raw technical levels using no indicators (major areas of support and resistance, including Fibonacci levels and diagonal trend lines) across multiple timeframes – he is well informed that these areas are noted my the majority of traders in the market
7. Makes a plan about how to trade these levels in conjunction with projected fundamental forecasts and writes it down
8. Sets price alerts on pairs he is trading at key levels, while monitoring price action throughout session for any new levels that are created
9. Sees that price is hitting a resistance level the trader designated, he sells
10. Price moves against the trader 20 pips
11. Trader questions the unexpected move, but doesn’t panic as he is well aware that there is very high probability of the trade being successful based on the information he has gathered
12. Price comes back, and hard. Falls 100 pips in an hour and profit target reached.
13. Price turns against the trader the moment the profit target is hit and position is closed
Misconceptions:
I think one of the largest problems with this business is the way in which it is advertised. If I went through every Forex or Day Trading advertisement on the internet, I bet I could find about 75% of them referencing big profits or how easy it is to trade. This is what gets most traders to start trading in the first place, and the idea that its so easy gets embedded in their subconscious. They don’t think they need to do any more work than what they put in already in order to turn $10k into $10mm.
That’s the notion, but it of course has the reverse affect on traders. Most traders simply aren’t prepared and have no idea what to expect.
Another massive problem is that too much emphasis is put on only trading technicals. My confidence level shoots through the roof if I know that I’m trading in line with intermarket cash flows and have a very good understanding of where price will head and why. Fear goes away and I can let trades do as I intend them to do.
I get many questions from traders asking me how I know if a level is safe to trade, or how I know there is going to be a breakout on a level. The answer to this question is simple: if its in line with my daily plan, and I agree that it would be a safe to take the trade based on all of the information I have gathered for the day.
Measure Twice, Cut Once:
If there’s one major piece of advice I have, its to simply be prepared. This and this alone is going to save you thousands in the long run and a lot of time that would normally be wasted on making up for poor decisions. A half hour to an hour each day isn’t long at all and the benefits to reap from it are only limited to your time on this planet. Trade smart, be informed and do your homework.
My father did a lot of carpentry work and one of the things I used to hear him say all the time was “measure twice, cut once”. You can’t build a house without a blueprint, and you can’t expect to trade profitably without the proper planning.