Master The Method

Theres many ways to skin a cat and with all the fancy whiz bang indicators these days multiplied by the currencies and different timeframes there are so many different options/styles on how to trade. This is where I believe most people get lost. They hear someone on twitter or a blog post some winning trades and maybe that individual is using a 7, 31 and 79 moving average (I just used numbers from my birthday but hey who knows maybe they are the holy grail....lol) or someone else is using the MACD with different settings and so the aspiring trader thinks this person has the answer or the SECRET. Well the truth really is that the only difference between the successful trader and the unsuccessful one is that the successful one has mastered their method/strategy. The successful trader has defined their edge and know what they are looking for and when it happens they strike. The reality is from my experience all strategies work some of the time and it is your job as the trader to figure out how to make the strategy work most of the time. This may mean sitting doing hours of testing and finding the nuances to the method but in the long run it will be worth it.
Once you understand what defines a high odds setup then just hunt them. This may mean sitting there for days waiting for a setup to form and if you struggle with this its not methods/strategies or setups you need to work on its you PATIENCE! Ive heard WMD aka Will Hunting ask a very valid question which is "Whats the minimum number of trader to take a day?" Think about it for a second and if your answer is greater than 0 this could be where you are getting in trouble. If you trade on timeframes like the M15 or higher I do not believe you can get really high odds setups every day or at least this is the way that I see the charts anyway.
Ive noticed common patterns/setups occur on the chart regularly but they dont occur every day so when the pattern/setup happens then I know what to do and this is what Im hunting.
Remember the key to successful trading is "MASTERING THE TRADE NOT BEING A JACK OF ALL TRADES"

J

Learning When NOT to Trade.......

We spend so much time trying to identify high odds setups and trades that we sometimes may end up looking for something that just isnt there or see what we want to see and only once you have been stopped out and looked back on the trade and thought "why the hell did I even open a trade there?"
Whilst yes we must develop our skills on when to trade we must also have an eye for when the markets arent doing much for us and sit on our hands, read a book or watch Masterchef (this show makes me hungry).
I posted a chart above where looking at the current price action is of no interest to me as the way Im looking at it its currently in the middle of a range and the odds of it going up are no better than it going down. I dont like these odds so I would rather sit aside than gamble on a trade trying to hope that I can score a few pips.
Its a hard thing to learn in trading to sit on your hands and trust me I still have troubles with this but if you can identify when NOT to trade and then have a clearly defined edge and trade that only when it provides its signals you are on your way to consistency.
Remember something that is very important that I think soooo many people including myself sometimes forget: Trading is not like anything else you have done in your life/career and is not like a job. Dont think because you sit in front of the markets for 5, 6 or 10 hours a day you have to be paid for that effort today.
If you're after a job that pays you an hourly rate go get it but I think you will struggle to get that from trading FX.

J

Plan For Profit

Plan your trade and trade your plan. A common saying we have all heard. But do you really do it?

Theres 2 parts to this comment:

1st - Plan your trade: I believe the difference between winning and losing traders is a winning trader takes a more professional approach by planning out and really analysing their trades and all possible outcomes whereas the losing trader just pulls the trigger like  they have a machine gun and unlimited supply of bullets (Im pretty sure we have all been guilty of that at one time or another).  Which if you had an endless supply of bullets (cash) I dont think you would be trading. From my own personal experience I tend to find the less trades I take, the longer time there is between my plan for a trade and execution of the trade the higher my win rate and profit tends to be. Of course there are many different styles of trading and personally I prefer to have a high win ratio and good R:R so obviously these setups dont occur everyday which means I generally have time to plan out a trade but I know of guys that would rather trade more often maybe sacrifice a bit of the R:R and are still very profitable. This is where you have to know you personality and what would suits you better.

2nd - Trade your plan: So often we are so focused on entries that when we nail the entry we dont know what to do. We close the trade out too early because we have been stopped out a couple times this week or we get too greedy and hope this trade is the one that runs for 1000 pips and somewhere along the way we get stopped at break even or worse a loss. This is why we should plan up front before we pull the trigger what our method is going to be on how to manage the trade. I use varying methods depending on the type of trade I take but my most common will be either scaling out 1/2 to cover stop or scaling out 1/3 and in both scenarios I generally let it run unless its a counter trend scalp which I would have a hard fixed target. This also is where the discipline comes in because if you truly have planned out your trade which could be a phenomenal plan but suddenly you get 1 hourly bar close in the direction against you which you didnt expect and you suddenly rush to get out (speaking from experience). So once you have a well laid out plan follow it.

So all in all what Ive just discussed is actually quite basic, nothing new to trading and your probably thinking "Man everyone knows this blah blah blah" but I truly ask you:
Are you a profitable trader and if the answer is no are you doing points 1 and 2 above or are you machine gunning away like Arnorld Schwarzenegger in Commando?

J

Trading is all about exceptions

There are many lessons that need to be learnt to become a successful trader along with all skills but when it comes to lessons I believe as a discretionary trader you have to learn the exception to every rule and when it comes to trading it has many exceptions. Pretty much every rule I can think of will have an exception and this is why we must learn them and this can only come through time and experience. This is not really something that can be taught and from my experience, even if you are taught it you must live it for yourself to validate it and make it your own experience.
This is why analysis of every trade is CRUCIAL. What did you learn from that trade winner or loser. Winning trades have common elements as do losing so what are they? If you take a trade and lose find out why so it doesnt happen again. If you cant find a reason then look harder and dont only look at the charts remember trading is a psychological game so maybe check whats going on between your ears ;)
Then once you learn these document them and start creating your rules or your rules of exceptions. Unless you have a photographic memory I highly suggest keeping a pen and paper by your side and when you learn something new document it. I really wish I had done this from the 1st day I started trading. I can only imagine how many books would be filled by now..haha! Then of course make sure you review and implement these exceptions.
The main point is make mistakes or as I have heard people say "fail faster" as there is nothing wrong with making mistakes or failing if we learn something from it so we dont do it again. Think about it for a second if you are making mistakes and these are costing you money what should happen when you stop making the mistakes? This is also why in the early days practising on a demo or small account is probably a safe bet rather than blowing your account before you have the chance to even learn the rules of the game.

How I trade

Seeing as its the start of the month and quarter Im gonna sit on my hands today and see how the market wants to play out for the coming month.
Ive decided to blog about how I trade. Im a discretionary price action trader. What you see on the pic above is pretty much what you get. Im not interested in indicators like bollinger bands, macd and moving averages. Dont get me wrong in my past I have used and played around with these indicators but for some reason I always come back to pure price. I like things to be clean and simple.
I do use things like trend lines, horizontal lines and sometimes fibo's.
When I say Im a price action trader it doesnt mean that I look for pin bars or candle formations though they can sometimes support my idea but rather I mark key areas where I expect buyers or sellers to come back into play. I generally always try to think continuation as it suits my personality better as I rather be right more often and take trades with good risk vs reward but this also means taking less trades which is what Im still learning to master and thats where I also think this blog will come in handy.
As WMD always says if price is going up it can go higher and if its going down it can go lower and when its going up think "where can I buy" and when going down think "where can I sell". I really think this way of thinking can keep you out of a lot of trouble and generally keep you on the right side of the move. I know when I changed my way of thinking to looking for continuation more often it had an immediate impact on my trading. I didnt realise how often I was actually fighting price and trying to pick tops and bottoms. I have never ever heard anyone say picking tops and bottoms is a profitable way to trade. Dont get me wrong most people including myself love to do it but in the long run I think you get yourself in more trouble than its worth and that because you are always on the wrong side of the move trying to play counter trend.
If your interested in learning how to trade price action there really is only one place and that at  http://www.wmd4x.com/  and you can also get some great info from http://www.forexfactory.com/showthread.php?t=206723

J