How To Be Part Of Big Moves In The Forex Market.

How often do you see big moves in the market like we have seen recently, but you never find yourself profiting much from them? How often do you close a trade out prematurely just because it’s gone against you a bit and you ‘freaked out’ because you thought it would result in a bigger loss?

Making ‘fast money’ and building a small account into a large one, aren’t things that just ‘happen’ to successful traders. As any consistently profitable trader will admit, it takes a consistent conscious effort to hit big winners in the market. The inevitable retracements and ‘whip saws’ that hit a market are events that shake out most amateur and inexperienced traders. The mental discipline required to simply ‘do nothing’ after you enter a trade, and instead let the market do the ‘work’, is something that not many traders possess. It’s not acquired overnight, but it is something that you can develop and grow over time.

Here are some tips on how you can give yourself a better shot at catching big moves in the market…

The psychology of holding a trade.

A simple fact of trading is that if you want to make a lot of money, you’ve got to have the mental fortitude to hold trades for longer than you might be comfortable with. The irony of trading is that to make money ‘fast’ and build your account up, you’ve got to have patience, and to be clear, I’m not talking about your average daily-life type of ‘patience’. What I’m talking about here is an iron-clad, bullet-proof, bad-ass type of patience that 90 to 95% of the world’s population simply doesn’t possess.

Think about this for a minute…

Most traders do very well on a demo account before they go live. Think back to when you were on demo, or maybe you’re on demo right now. I’m willing to bet you’re holding trades for a few days or a few weeks even, and you’re not interfering with them very much. Maybe you’ve even entered a demo trade and not checked it for a week because you were too busy at work, then when you did check it again you were up 20 or 30%, this is not uncommon.

On a demo account, traders tend to be less-involved with their trades because they simply don’t care that much since there’s no real money on the line. The end result is that they stick with their original trade idea most of the time. This is the main reason why people tend to do very well on a demo account.

Thus, traders often do very well on demo for the reasons just discussed, then they get all psyched up to start trading live and open a live account. However, what happens most of the time, is that traders become far more involved with their live trading account, simply because there’s now something at stake; real money. This over-involvement leads to the trader changing their mind on trades, jumping in and out of the market with high frequency, second-guessing themselves, and a whole host of other trading mistakes. The end result is that they don’t catch any big moves in the market, and they will eventually probably lose money.

The point is this; the psychology of holding a trade is a very tricky thing. To succeed on a live account, you need to do what you did on demo; which is basically just “less”. It’s hard to achieve, since real money is on the line, but if you really want to catch big moves in the market and make big money, you’re going to have figure out a way to ‘sit on your hands’ more often when trading a live account.

The power of ‘doing nothing’

Trading might be the world’s most rigorous test of one’s mental discipline and strength. In the face of a trade that’s moving against you and in negative territory, how will you react? Conversely, in the face of a trade that is up a nice profit, but has not yet hit your target, how will you react? The most difficult thing to do in each of these situations is also the most profitable thing to do over the long-run; NOTHING.

Closing out a trade for a small loss, before it hits your stop loss, is an example of letting fear control you, and doing so directly limits your profit potential because you’re not giving the trade proper time to play out and you’re also voluntarily taking a loss.

Closing out a profitable trade too soon can also be detrimental to your overall trading success. If you have pre-defined your profit target or profit taking / exit strategy before entering the trade, you will only be doing yourself a disservice most of the time by not sticking with that exit strategy.

Remember: Anything you predefine, before entering a trade, is going to be more logical and objective, and thus profitable over the long-run, than any decision you make whilst in a live trade, under the influence of your hard-earned money being at risk.

The POWER of simply sitting on your hands and doing absolutely nothing whilst in a live trade, cannot be over-stated. Your true power and advantage as a retail trader, lies in your ability to remain patient and in control of your behavior in the market.

Here are some tips to help you stick with your original call / trade which will help you catch bigger moves in the market:

• Don’t look at low time frame charts because even small / meaningless daily chart retraces will make you nervous and shake you out if you’re fixated on them on small time frames.

• Learn to trust your trade and trust your gut. If you don’t learn trust to your trade decisions and see them through, you will never make consistent money over the long-run in the market.

• Don’t over complicate your trading. Trade a simple method like price action trading method and stick to a simple trade management plan, which can be as simple as ‘set and forget’.

• Closing trades early guarantees a loss, don’t ever guarantee yourself a loss in the market unless you really have to! Stick with your original call most of the time unless the price action is clearly changing against your original position. About 90% of the time the best decision is to simply let the market do the ‘work’ and let the trade play out with little to no involvement on your part.

Catching big moves in the market, building your trading account from a small one into a big one and becoming a successful long-term trader are all things that can only happen if you are willing to simply ‘do nothing’ most of the time as your trades play out. So, you need to ask yourself, are you ready to ‘do nothing’, or are you going to over-complicate your trading, over-involve yourself in it and lose money and time as a result?

WHAT SPREAD IS IN FOREX.

BID/ASK -SPREAD

All Forex quotes include a two-way price, the bid and ask. The bid is always lower than the

ask price.

The bid is the price in which the dealer is willing to buy the base currency in exchange for

the quote currency. This means the bid is the price at which you (as the trader) will sell.

The ask is the price at which the dealer will sell the base currency in exchange for the

quote currency. This means the ask is the price at which you will buy.

The difference between the bid and the ask price is popularly known as the spread.

Let's take a look at an example of a price quote taken from a

trading platform:

On this GBP/USD quote, the bid price is 1.7445 and the ask price

is 1.7449. Look at how this broker makes it so easy for you to

trade away your money.

If you want to sell GBP, you click "Sell" and you will sell pounds

at 1.7445. If you want to buy GBP, you click "Buy" and you will

buy pounds at 1.7449.

In the following examples, we're going to use fundamental analysis to help us decide

whether to buy or sell a specific currency pair. If you always fell asleep during your

economics class or just flat out skipped economics class, don’t worry! We will cover

fundamental analysis in a later lesson. For right now, try to pretend you know what’s

going on…

EUR/USD

In this example Euro is the base currency and thus the “basis” for the buy/sell.

If you believe that the US economy will continue to weaken, which is bad for the US dollar,

you would execute a BUY EUR/USD order. By doing so you have bought euros in the

expectation that they will rise versus the US dollar.

If you believe that the US economy is strong and the euro will weaken against the US

dollar you would execute a SELL EUR/USD order. By doing so you have sold Euros in the

expectation that they will fall versus the US dollar.

USD/JPY

In this example the US dollar is the base currency and thus the “basis” for the buy/sell.

If you think that the Japanese government is going to weaken the Yen in order to help its

export industry, you would execute a BUY USD/JPY order. By doing so you have bought

U.S dollars in the expectation that they will rise versus the Japanese yen.

If you believe that Japanese investors are pulling money out of U.S. financial markets and

converting all their U.S. dollars back to Yen, and this will hurt the US dollar, you would

execute a SELL USD/JPY order. By doing so you have sold U.S dollars in the expectation

that they will depreciate against the Japanese yen.

GBP/USD

In this example the GBP is the base currency and thus the “basis” for the buy/sell.

If you think the British economy will continue to do better than the United States in terms

of economic growth, you would execute a BUY GBP/USD order. By doing so you have

bought pounds in the expectation that they will rise versus the US dollar.

If you believe the British's economy is slowing while the United State's economy remains

strong like bull, you would execute a SELL GBP/USD order. By doing so you have sold

pounds in the expectation that they will depreciate against the US dollar.

USD/CHF

In this example the USD is the base currency and thus the “basis” for the buy/sell.

If you think the Swiss franc is overvalued, you would execute a BUY USD/CHF order. By

doing so you have bought US dollars in the expectation that they will appreciate versus

the Swiss Franc.

If you believe that the US housing market bubble burst will hurt future economic growth,

which will weaken the dollar, you would execute a SELL USD/CHF order. By doing so you

have sold US dollars in the expectation that they will depreciate against the Swiss franc.

Weekly Forex Market Outlook- December 29th - January 2nd, 2015

EURUSD – Euro/dollar bears still in control
The EURUSD fell modestly lower last week in what was a pretty quiet trading week due to the Christmas Holiday. This week will also likely be relatively quiet due to the New Years Holiday on Thursday. However, our recent bearish bias remains and any strength whilst under the key resistance at 1.2570 is still seen as a potential selling opportunity in order to rejoin the downtrend from value.


GBPUSD – Sterling/dollar weakness persists
The GBPUSD is pretty similar to the EURUSD right now. Price is still in a clear downtrend and whilst it’s contained under the key resistance level at 1.5785, we will watch for price action selling opportunities to rejoin the downtrend from value.


AUDUSD – Aussie/dollar downtrend approaching support
The AUDUSD monthly chart shows us a longer-term view of this current downtrend and we can see price is quickly approaching a key support level near 0.8050. Given the magnitude of the current downtrend we are currently only interested in selling opportunities but it’s certainly possible price stages a modest rally off this support. If that happens, we will look to sell the rally from resistance on the daily or 4 hour chart to rejoin the downtrend from value.

USDJPY – Dollar/yen uptrend continues
The USDJPY had a solid run higher over the last seven days after finding support down near 115.50 and bouncing aggressively from that level. In the near-term, our bias is still bullish and we view that 115.50 support as a key level to watch, and whilst price is above that level we will look for price action buy signals on any weakness.

SPEND LESS TIME TRADING AND MORE TIME LIVING

Anyone who spends more than a few weeks trading the market, knows that it can be very addictive. Whether you’re a loser or a winner, the great Wall St. ‘casino’ will lure you in, and keep you in.

For those of us who trade Forex, it’s even worse because the market runs 24/7, much like a casino with no clocks on the walls and no windows, it just keeps going and going, providing a never-ending stream of temptation.

Even the most intelligent people are susceptible to the markets great lure; the constant flashing of prices, the constant short-term moves on five minute charts and the constant rush of adrenalin that trading provides can be nearly impossible to ignore.

The key to conquering the addiction of trading, is to avoid placing a trade when there’s no reason to do so, and also to avoid fiddling with the trades you do take. Both entering a trade that deviates from your trading strategy, and watching an open trade just because you’re in it, is FINANCIAL SUICIDE. You know you do both of these things all the time, so if you care about yourself, your future and anybody else close to you, then LISTEN UP COWBOY.

I won’t fill this lesson with points about trading addiction and gambling, instead I will provide ways to avoid becoming addicted and to help you break a trading addiction / obsession that is likely destroying your trading account right now…

GET A FREAKING LIFE…

Sounds harsh I know, but if you’ve read any of my other trading articles, you know I’m a straight shooter and I don’t sugar-coat anything. For the sake of your well-being, your family’s well-being and your finances, you need to simply GET A LIFE.

What I mean by that is, STOP getting your ‘kicks’ from staring at the flashing price quotes on your trading platform all day and night. Not only is this simply a waste of time, it’s also causing you to trade improperly, develop poor trading habits, and lose money.

Accept that you have no control over the market, and let it do its thing. You only have control over yourself as you trade, and the best way you can help your chances of trading success is by removing yourself from your trading platform most of the time.

You need to develop a trading routine and not deviate from it. Check the markets each day a couple times, especially at the end of the trading day, run through your trading plan / checklist and if no trade is clearly present, then walk away until your next scheduled market analysis time. Don’t sit there for hours trying to ‘force’ a trade setup out of the market! This is insanity, addiction, and it’s how you WILL blow out your trading account!

You need to have hobbies and interests outside of trading, have an active social life. These things will help you as a trader because they will divert your attention away from the charts and the markets, which is only going to lessen your chances of becoming a trading addict and blowing out your trading account. Remember, you don’t need to trade high frequency to make a lot of money in the market.

Do SOMETHING. Anything.

If you’re lazy, bored or whatever, just do something, ANYTHING, heck, you can even invent something to do. Watch 5 movies in a row, go and play lawn bowls, play golf for the first time, kick a soccer ball with the kid, go shopping for 2 hours, and buy a $1 item.

Your goal should be to distract yourself from the markets, for this is really the best ‘trade management’ technique. Start viewing time away from your trading screens as a very valuable part of your overall trading routine and trading plan. It doesn’t matter what you do, just devise a way to keep yourself away from your trading platform so that you don’t over-trade or screw up good trades you may have entered from being too involved.

Don’t fiddle with your trades, especially in public

STOP fiddling with your trades, especially when you’re away from your computer. Don’t look at them when you’re at work or out doing something in public. Don’t get the mobile trading addiction where you wake up at night to look at your trades on your phone or get stuck checking them no matter what you’re doing or want time of day it is. Get real and take a look at yourself and what you’re doing, it obviously isn’t helping you make money!

To the average outside spectator, someone checking their phone all the time, whether they’re out at a restaurant, at work or laying at home in bed, would see like a full-fledged gambling addict. Just because you’re trading the markets doesn’t mean you don’t have a gambling addiction, it’s basically exactly the same as a gambling addiction if you’re fiddling with your trades all the time. So, if you want to make money, you need to stop.

The same goes for fiddling with your trades once they are live; don’t do it! Find other things to do, other ways to get your entertainment. Again, it’s OK to check on your trades once or twice a day, but sitting there for hours staring at them is only going to cause you to make a stupid trading mistake that will result in lost money and lost time.

‘Trade-aholic’ is a real condition

Have you seen those idiots who play poker machines all day? If you trade in and out of the market frequently, you may as well join them because you’re basically doing the same thing. Don’t become one, don’t put yourself above gamblers just because you’re trading with the WALL st top dogs now, don’t kid yourself.

Don’t just sit around reading articles and saying ‘hey that’s me’ … you need to actually take action here.
Don’t delay another day, get the ship back on track and don’t look back, make the change, be one of the smart ones, don’t be a statistic, don’t be sucker, you owe it to yourself!

The first thing you need to do if you recognize any of the above behaviour is to simply TAKE A BREAK and write down a list of everything you’re going to change…write a diary to yourself daily.

Nothing in my courses, and nothing I teach you about trading strategies will save you here, this is all on you, you’re in control and this is the one battle you can win 100%, you know the hand before its played, you know the outcome, so if you can see the future, why not do something with that knowledge? Act now, and avoid being one of the statistics.

WHAT IS YOUR PREPARATION FOR THE UPCOMING YEAR?.

The year ahead of us is well pregnant with lots of trading opportunities that will definitely make us to experience financial elevation if we can sit down in the now to really reveal our past trading results in order to see our trading strengths and weakness. We improve on our strengths and try as much as possible to overcome our weaknesses. Secondly, this is the best time that each and everyone of us as traders has to us to make adequate planning for next year and get set to kick off in the beginning of the new year. Remember, noting of great value does not carry a cost.

THE DANGER OF TRADING FOREX DURING HOLIDAY PERIOD.

The forex market is always open for trading activities 24/5 but that does not mean that a trader will just be trading anytime and anyday within those trading period especially during holidays. So, as wise trader, you have to stay away from the market during such time as the movement of the market can be very deceptive because of the minimal number of participants in the foreign exchange market then.