How to Ride the Big Waves In The Forex Market

 

Hello and welcome to another edition of the bulls and the bears. This week we want to learn how to ride the big waves in the forex market. I’m not referring to those monster waves surfers ride on in the Atlantic. Riding the big waves is my subtle way of referring to spotting the big moves that occur on the forex market. Those huge moves are the type every trader can profit from, assuming your instincts for spotting these gargantuan moves are as sharp as a butcher’ knife.

Profiting from these monstrous waves don’t happen like Black Jack. You must think big when looking for these big waves. If you think these big waves are get rich quick 5 minute scalps, sorry, you are on the wrong blog. I’m talking about long term waves that drag on for weeks(sometimes months) and help you make significant profits from your trades.You must develop the mindset that you are going to strike while it’s hot with these big waves. That you are not going to settle for breadcrumbs and make a quick exit out of fear that your trading position is about to take a massive hit. Instead you will sit back and allow your trade to play pick up the profits.. This mindset is not a remote control button you just hit it. you will have to develop it over time.

So! Are you ready to make massive profits from these huge waves and ditch the breadcrumbs? Here are a few tips on how to catch the waves

Develop The Mindset of Holding A Trade

If you want to ride these monster waves you have to develop the mindset of holding a trade for weeks and months. You have to tell yourself” I’m going to ride this trend for all its worth. I’m not chickening out.” The key here is summed up in one word:PATIENCE! You must be willing to wait for as long as the wave is scheduled to last until it runs out of steam. I’m talking about digging into reserves that you never realized you had. Not the 5 minute or 10 minute daily patience that we exhibit everyday.

Let’s go down memory lane to the days when you were demo trading. You use to hold trades for days, weeks, months without blinking an eyelid. In fact You were busy with your day job you weren’t worried about whether your trade was going to crash or not. And when you did check on your account you discovered your profits were piling up significantly. You were probably like “Wow! I hope I can make this type of money when I switch live.

Do you know why you didn’t care?Because you weren’t using real money on your demo account. Since demo accounts hold virtual cash you didn’t feel the pressure of a live trade. You could afford to make money and lose money. It was more like trial and error for you.

However, the tension level goes up a notch when you create a live account. Instead of getting less involved with your trades you are getting more involved with your trades.To the point where you are having second thoughts about entering trades.Even worse you are jumping in and out of trades like a cat burglar and making all kinds of trading mistakes Consequently, you ended up missing out on the big waves. Even worse you lose a truckload of money as well.

What I’m trying to illustrate here is that the psychology of holding a trade on a live account is completely different from that of a demo account. In fact, it’s downright tricky. If you want to prosper on a live trading account, then you have to replicate the same ‘do nothing’ behaviour you exhibited when you were trading on your demo account. Yea I know you’re thinking “Look man, this is live money. I can’t sit and do nothing.” But the truth of the matter is you are going to have to absolutely nothing if you want to catch the big waves. Just go out and smell the roses while the profits pile up.

Now let’s take a look at an illustration of a huge wave

High-Probability-Trading-1024x462

Ladies and gentlemen, I present to you a huge wave via the GBP/USD pair. As you can see this baby has been stretching for months. First we have the bears pulling a humongous 4000 pip move. Next the bulls take over respond with a crazy 3300 pip wave of their own and son and so forth.

You can only profit from such huge waves if you hold your nerve and ride these waves. It’s no use settling for breadcrumbs out of fear that your trading position will take a huge hit.You have to go for the entire cake when you trade on the market. You don’t want to be jumping in and out of trades(Who does that?) Just settle for one huge trade that runs for months and which will fetch you a huge profit. All you have to do is to set and forget and go to the beach while the market does the heavy work. You don’t need to sweat it at all.

Do Absolutely Nothing

Yes do absolutely NOTHING! You need to understand that forex trading is a true test of patience and mental strength. Let’ consider two questions. First,if the market does a sudden U-TURN against your trading position How would you react? On the flip side if your trade is racking up a handsome profit but your position has suffered that dreaded tsunami hit, how’re you going to react? Again I know it’s hard for you to stomach my suggestion but DO ABSOLUTELY NOTHING!

Some of you are probably thing “What the heck is this guy talking about?” You see, you can’t afford to let fear take your mind and body hostage when you trade. Closing out a potentially profitable trade for a small loss before your stop loss absorbs a hit is a classic example of what I’m talking about. You’re not allowing your trade to play out , and in so doing , you end up taking a forced stop loss.

Now exiting a profitable trading too soon can be just as deadly to your own prosperity and your peace of mind. If you have already established when you are going to take profit and head for the exits, please stick to that strategy. You will not be doing yourself any favors by pulling the trigger too soon. Just apply some logic and objectivity by laying out your entry and exit strategy before you make your trade entry. It will profit you handsomely in the long run instead of you being under the influence of Russian roulette. To make matter worse, you put your hard earned cash in harm’s way/

Let’s take look at examples of doing absolutely nothing

Image result for pin bar sell signal

Ladies and gentlemen, here is another example of a long term bearish pin bar opportunity. via the GBP/USD pair. As you can see the long term trend is in one piece with the resistance levels holding the fort at
1.2950 and 1.3100. and the support keeping shape at
1.2820 and 1.2660.

Now the red circle suggests the bears are about launch a massive reversal. downhill. It means price is preparing to attack at 1.2820 and 1.2660. When such a scenario show up you either sell short at market price or wait until price gathers strength and then make your move. If this were live, you’d have made your move at 1.2820 and 1.2660. . Now see what patience and mental fortitude can do for your state of mind?Not to mention your trading balance?

Let’s look at another example of keeping your nerve while the opportunities reveal themselves.

Inside-Day-Example.

This is another example of a significant wave through the EUR/USD pair. Keep your eyes on the”Sell Here” signal on the red bearish inside bar signal just above the huge red triangle at 1.3320. The gren arrow suggests the bears successful breach of the support level at 1.3320. Do you see the two previous pinbar breakout attempts that didnt work? Luckily the third inside bar breach attempt turned out to be the charm

See what the power of doing nothing can bring? Now had you jumped out of the trade you would have missed out of a rack of profits enough made your head spin. Whoever said patience is a virtue knew exactly what he was talking about. The same holds for riding huge waves waves in the forex market.

 

That’s a wrap for ”How to ride the huge Waves In The Forex Market”. The moral of the story is give your trades a chance to make you huge profits rather than you exiting early with breadcrumbs. You should decide ahead of time how much money you can afford to part company with before entering your trade. If you jump ship too soon before your stop loss get hit, you miss out on a lot of money.

Sure you can jump ship early to avoid full blooded stop loss- type losses. But when the opportunity to make a handsome profit presents itself, don’t jump too soon or else you’ll leave a lot of money on the table. For more information on catching the big waves, look up How to Spot High Probability Trades and Don’t Jet Out Of A Good Trade Too Soon.

Next time we’ll look at how to avoid exiting a trade early. I know I promised that today. This time I promise it’s coming on. Til next time take care.

Looking To Join The Forex Trade Gravy Train? 

If you’ve stumbled in here looking to join the forex trade gravy train, here is what you need to do . First,  look up  Why Forex Trade Is So Popular.  Next, you learn  the fundamentals of forex trading by reading  Forex Trading Basics – Top To Bottom Part I  and Forex Trading Basics – Top to Bottom Part II .Next, you need to learn how to read candlestick patterns. They are the main feature of price action analysis. And you need to know what these patterns are telling you. To be able to do that read the following on Fundamentals of Reading Candlestick Patterns, Single Candlestick Patterns,  Dual Candlestick Patterns, and Triple Candlestick Patterns .    Also You Need To Know Ten Of These Candlestick Patterns . And finally If you want to give your trading skills an edge by relying on pure price action trading/analysis,  instead of fancy forex robots and fancy indicators, get started with What is Price Action Trading? 

Looking to get a leg up on price action analysis,?you need to learn How to Identify Support and Resistance Levels.  And if you want to learn how to interpret trading zones, read up on Identifying Dynamic Support and Resistance Levels. Finally you should know  How To Read Candlestick Patterns using Support and Resistance Levels.

However, if you only want to trade once a month and watch your entry rack up huge profits over a stretch  of several weeks, consult  How to Spot High Probability Trades.  And if you  are  still not sure about  price action trading, find out   Why Price Action Trading Still Rocks . Dont let me stop you from reading the other posts as well. But the  suggested posts above are the most important posts to get  you started.

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Then  subscribe to my mailing list and I’ll send my blog posts direct to your inbox. It wont cost you a penny.

Free Download

If you want to know everything there is to  know about price action trading,   Download for free The Ultimate Guide To Price Action Trading by Rayner Teo. This brilliant ebook will change your life. It sure did mine.

Opening Of Live  Forex Trading Account

If you’re looking to open a live trading account sign up with EasyMarkets.

But if you want to get a feel for the platform first  and practice your trading strategies before going live, open a free demo account with EasyMarkets

If you want to more information about easyMarkets before opening a live or demo account Watch This Video on EasyMarkets

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After Entering A Forex Trade….What Next ?

 

Hi and A Happy New Year to you. Welcome to the New Year’s edition of the bulls versus the bears. The question we are going to ask this New Year is “After Entering A Forex Trade….What Next ??” This the most important forex trade management  question you are ever going to ask yourself.Why? Because failing to answer this question could be the difference between you being a prosperous forex trader and you hitting downright poverty.

When you master price action trading like the back of your hand, you need to learn how to manage your trades once they go live. You cannot afford to ignore this most important part of the trading process. Failure to follow this part of forex protocol could cause your account to blow up into smithereens. You may find what you believe is a price action setup made in heaven. But then that perfect setup could turn into  hell real quick  if you don’t manage it properly. So what we’re going to do is learn a few valuable tips on what precautions  to take  after entering a forex trade.

The first tip is:

Averaging In 

By Averaging in you are using your profit from your first trade to pay for the next trade. The neat thing about Averaging In  is that  it allows you to trade without fear. The danger here is you risk being stopped out  at breakeven point. Averaging In works perfectly in strong trends. But you ABSOLUTELY DO NOT want to push your luck averaging in during trading ranges or slow markets. You’ll end up shedding a lot of tears. Just sit back and wait for the price action setup to form at a key level once the market has pulled back. A classic example would  be your initial trading position moving in your direction and  then pulling back  50% back to your original entry . This pull back then results in a pin bar being formed at a key level. The pin bar formation would be the perfect  place to average in to add to your trading position.

Please DO NOT add to your trading  position just for the sake of it. You must have a price action reason for doing that. Let’s see the Average In technique in action.

Ladies and Gentlemen, This the Averaging In technique  action courtesy of the EUR/USD pair. As you can see the EUR/USD pair is being sold 1.4450with a mini lot. As you can see the trading position locks in on a 100 pip profit. But then the big players   turn around to form a fakey setup at  your initial trading  – position something rookie traders easily fall for. When that happens you add a second mini-lot armed with a 50 pip stop loss. You then slide your stop loss to the first stop to lock in a  50 pip profit. Now  if your second  trading position does a U-turn and smashes your 50 pip stop loss, your first position stops you out for a 50 pip profit and helps  you land at breakeven.

You’re probably saying to yourself”Hmmm.. This is a great way to add to a trading position that is moving in your favor.” But, you may end up at breakeven point, and still lose all your money. At the same you could make twice as much money as well. In others words Averaging  In  can be a  a double-edged sword if you allow it to.. Let me sound off with a warning though.You NEVER, I repeat, NEVER add to your second trading position without adjusting your stop loss on the first trading position. The whole idea behind Averaging in is that you move your average entry price close  to the market price. If you make your price double, and don’t put a trail on your stop loss, you will cause a tsunami-size hole in your forex trading account.

Speaking of Trailing Stops, how about

A Few Trailing Stop Techniques.

First is:

The 50% Trail Technique

One popular trailing   technique is the 50% trail technique .  Basically you are trailing your stop up to 50% of  the distance between your trade entry and the latest high/low as the trade moves in your direction. Of course as the market  moves in your favor the profits start rolling in. The 50%  trail technique gives your trading position more room to roll in the profits. But let me sound a little warning though! You could also lose all your money if your trade U-turns and slips below the 50% level and stops you out into the stratosphere. Let’s  look at an illustration of the 50% level trail stop technique

Take profit halfway

Ladies and gentlemen, here is the 50% trail technique in action. As you can see price has moved halfway in your direction. And when that happens you just  lock in your pro Like I hinted earlier, the price  can make a dramatic U-turn, go beyond the 50% mark and stop you out. So keep your eyes and ears on the alert for that possibility. And by the way, it pays to move your stop loss to break-even point once price hits your take profit.

You can also look out for support and resistance levels in the event that your take profit gets tapped by the price. At support and resistance don’t just concentrate on the 50% stop trail. Look out for a confluence of factors such as price confirmation signals and the 50% stop trail.

If you want to learn how to use trailing stops and other market orders look up Forex Trading Basics Top ToBottom -Part II. You’d be better served looking up .  Part I also.

Another   trailing stop technique you could use is:

Moving Averages

Another popular stop loss technique is through the use of moving averages.  I’m sure some  of you are like”Yeah we’ve heard of moving averages.” Well  for those who don’t know, , moving averages strike out previous prices within a specific time frame  and are nicely displayed in a straight line on your price chart. They are useful for identifying hot trends, and kicking out unnecessary noise on the charts.  I’m not going to get into detail on moving averages  for purposes of the subject  at hand. But if you want to know the workings of moving averages look up my two part series We’Re Moving Averages Part I and Part II.

So how do we use a trail stop with  moving averages?Well, basically you can do it three ways:

  • You can pick the trend you want to take a ride with
  • Use the appropriate moving average
  • Head for the exit when price moves beyond the trailing stop.

You can use the moving average three ways. You can go short term, long term, and mid -term. If you want to go short term, you can cruise with a 20 day  EMA(Exponential Moving Average).  If you want to go to medium term, take a ride with the 50 day EMA. But if you want to go long term and rack up the profits for months , jump on the 200 day EMA. let’s take a look at each of these three moving averages starting with the 20 day EMA

Ladies and gentlemen, here is what a trailing stop of the 20 EMA looks  like.20 EMA represents 20 days of price action within a particular month. And the red line represents ts the strong uptrend during those 20 days, As you can see, the 20 EMA captures the uptrend  very nicely in the way it aligns itself with the bulls(uptrend). Now once  price closes  below the 20 EMA just make your exit gracefully. Or else your account will  be feeling a tsunami that day. Now let’s take a look at the 50 EMA.

Ladies and gentleman here is the 50 EMA representation on the chart. the 50 EMA represents 50 days of trading on the charts. The nice line straddling along the charts represents the strong bullish trend.  You can place your trailing stop and make your graceful exit once the price goes beyond the 50 EMA barrier.

Finally let’s take a look at putting a trailing stop  using the 200 EMA

Ladies and gentlemen here is an illustration of a trailing stop in action via the 200 EMA using the EUR/USA. pair.   In case you’ve forgotten, 200 EMA represents 200 days of price action from November all the way up to September.  The red line reflects the price action from November all the way up to September  And the red circle represents the stop loss, As you can see the price has closed below the 200 EMA.  Now would be the perfect time to make your exit while the exit door is still open with your profits still in one piece.

The 200 EMA is perfect if you want to go long term. You could make  a lot of moolah (money) using this strategy. By the way,you don’t need to stare at your screen all 200 days. Same goes for the 20 EMA and 50 EMA. You’d go totally insane doing that. Just set and forget and let the market do the heavy lifting for you.

That’s a wrap for ”After Entering A Forex Trade….What Next ?”. This is the most important question you ‘re ever going to ask.And it could be the difference between prosperity and extreme poverty. Yo do not want to just enter a trade and just hope that some silver bullet racks up the profits.  Forex trading strategies  such those that  we’ve just discussed will almost certainly help you safeguard your trades. Next time we’ll discuss how not to exit trades too early.

So til  next time take care.

Looking To Join The Forex Trade Gravy Train? 

If you’ve stumbled in here looking to join the forex trade gravy train, here is what you need to do . First,  look up  Why Forex Trade Is So Popular.  Next, you learn  the fundamentals of forex trading by reading  Forex Trading Basics – Top To Bottom Part I  and Forex Trading Basics – Top to Bottom Part II .

Next, you need to learn how to read candlestick patterns. They are the main feature of price action analysis. And you need to know what these patterns are telling you. To be able to do that read the following on Fundamentals of Reading Candlestick Patterns, Single Candlestick Patterns,  Dual Candlestick Patterns, and Triple Candlestick Patterns .    Also You Need To Know Ten Of These Candlestick Patterns .

And finally If you want to give your trading skills an edge by relying on pure price action trading/analysis,  instead of fancy forex robots and fancy indicators, get started with What is Price Action Trading? 

Looking to get a leg up on price action analysis,?you need to learn How to Identify Support and Resistance Levels.  And if you want to learn how to interpret trading zones, read up on Identifying Dynamic Support and Resistance Levels. Finally you should know  How To Read Candlestick Patterns using Support and Resistance Levels.

However, if you only want to trade once a month and watch your entry rack up huge profits over a stretch  of several weeks, consult  How to Spot High Probability Trades.  And if you  are  still not sure about  price action trading, find out   Why Price Action Trading Still Rocks . Dont let me stop you from reading the other posts as well. But the  suggested posts above are the most important posts to get  you started.

Wanna Subscribe to My Mailing List?

Then  subscribe to my mailing list and I’ll send my blog posts direct to your inbox. It wont cost you a penny.

Free Download

if you want to know everything there is to  know about price action trading,   Download for free The Ultimate Guide To Price Action Trading by Rayner Teo. This brilliant ebook will change your life. It sure did mine.

Opening Of Live  Forex Trading Account

If you’re looking to open a live trading account sign up with EasyMarkets.

But if you want to get a feel for the platform first  and practice your trading strategies before going live, open a free demo account with EasyMarkets

If you want to more information about easyMarkets before opening a live or demo account Watch This Video on EasyMarkets