Why Should I Learn Price Action Analysis At All?

Hello and welcome to another edition of the bulls vs the bears. So we started our price action trading journey by discovering What Price Action Trading Is. Then we Learnt How to Ace Price Action Trading. And finally we were told in no uncertain terms  Why Price Action Trading Still Rocks.

After pouring my heart out about the virtues of  price action, guess what? I hear someone asking”Why Should I Learn Price Action Analysis At All?” Well I have a simple response to your question: BECAUSE YOU HAVE TO! For the life of me I don’t understand why anybody would fall on a zillion indicators and a bunch  of websites to uncover the trading edge for that person. You make the whole price action process look like looking for needle in a haystack when  you fall back on those toys.

Look, the trading edge is right in front you. You need to use price action analysis to fish out the trading edge. Now I may sound simplistic when I say Price action analysis is simple. It truly is. It’s just you and the raw data on your screen. Just uncover the trading edge and you will reap the benefits.

Still  not convinced? Hopefully the following reasons will unfurl your doubts. 

Price Action is Squeaky Clean

Yes Price action is squeaky clean. It was not made to be cluttered with a bunch of indicators to make life complicated for you. Look, you have enough issues with a litany of confusing systems and approaches enough to make you pull your hair out.  All you have to do  remove all that chaos and deal strictly with the raw data in front of you. The trick here is making the process is simple instead of making it look like rocket science. 

Let’s  look at a few analysis scenarios to illustrate price action’s squeaky cleaniness.

Starting with:

Uptrend/Downtrend

 

Now here is what the uptrend and downtrend look like. Now if you know the make of an uptrend it starts with a higher Low(HL) and expands to a higher high(HH) as price increases. You don’t need an indicator to tell you to put in your take profit when a bullish situation forms. A similar situation develops as the bears take over during the  downward(bearish)trend. The  bearish trend starts with a lower low(LL) due to a huge surplus of sellers and then picks up to lower high(LH) as more buyers lose interest because sellers are dominating the trend. Again you don’t need an indicator to tell you to put in your sell bid.

You see how clean the price action looks in these two scenarios? Indicators would have crowded out the price action to the point of taking over all the real estate on the screen. Even worse, they’d definitely drive your urge to pull your hair out right through the roof.Who will want to  himself through all that?

Next piece of analysis is

Drawing Support and Resistance Levels

Now as you well know support  and resistance levels are key points on the charts where price has previously reacted to an event. Support and resistance levels also act as points of confluence points with so many price signals happening at the same time.

As you can see, price has broken through the support levels labelled (S). This means the profits will start rolling Whereas the resistance levels labelled (R) rejected price’s advances. This means  wait until the opportunity to 

Now how do we draw the support/resist levels? just look for the next support and resistance levels immediately below and above the current price. Next take a  look at previous price action and see of the levels makes sense or not. Repeat the process  for the next support and resistance levels. And if the process  makes sense you make your trade entry. For more information on support and resistance levels look up 

Identifying Price Signals

insidebar-breakout

.Price signals are the currency of forex trading. they reflect the presence of a price action setup on the charts. As you can see the breakout of the bulls at the line of support is a classic example of a price signal. This tells you right away that a bullish pattern has been established so it’s time to put in a trade. However, not all price signals are positive. So the best thing to do is to wait for confirmation below the price of support before you put in your trade.

Now that we’re done with the illustrations, let’s move on to the next reason for learning price action analysis which is:

Price Action Is The Lingua Franca of Forex Trading

Believe it or not, price action is the lingua franca of forex trading. By that I mean price action is the language common to all forex trading. And through price action trading  you get a peek into the trading mindset of forex traders. These trading mindsets are then played out on the price charts through the various candlestick patterns. When one person thinks now is the best time to buy, another trader believes it’s a good time to sell. 

So when more people believe it’s time to sell, the price goes up. If more  traders believe it’s time to sell. The phrase “One man’s meat is another man’s poison” becomes very prominent here. Basically data representing the mindset of the trades is staring at you in the face on the price chart. You do not need an indicator to interpret it for you.

Let’s look at a classic illustration of price action on a pin bar set up at the level of resistances

pin bar

The shaded area represents the bearish pin bar. This came about a result of the bears(sellers) pushing the price lower at the expense of the bulls(buyers). The bulls initially go on the attack resulting in the long-tailed wick. But the bears eventually get the upper hand. And when  you see such a  scenario you don’t need an indicator to tell you that that’s a signal to sell. If

And speaking of price signals

Price Action Lets You Identify Obvious Trading Signals and Persistent Trading Patterns

The neat thing about price action is that it allows you to identify clear trading signals and persistent candlestick patterns. By persistent candlestick patterns I mean trading patterns that are so prevalent over a specific time frame. These factors are so clear that with a solid trading plan, you should be able to identify  these two factors. Not to mention the fact that your trading edge will also help identify these two factors.

Let’s say you get an obvious pin bar signal at a key chart level within a clear trend. Lined up for on this level are the factors of confluence  – trend, level, confluence(Popularly known as T.L.S.). Assuming you have a risk management policy in place,  you should put your put your stop loss at the tip of the pin bar and surrounding key levels. Based on your stop loss placement you set your position size and  take profit targets. Now let’s take look at T.L.S. in action

03-Using-Pin-Bar-Price-Action-Trade-Forex-Confluence-1024x480 (1).png

This is  a classic example of T.L.S in action.. We see three buy signals along the line of support. You then place your stop loss partially at the tip of the bearish pin bar along the line of support.  And based on the stop loss you set your set take profit. As you may have noticed support all of a sudden turns into resistance. This is where the bulls run out of steam and the bears take over, creating a downtrend and  surge downhill. You then use the same strategy  you applied at the support level  -except this time you place your stop loss along the  resistance level.

You see how straight forward price action analysis is? Once you get the hang of studying  price action charts, you’ll find that price patterns and price signals keep repeating themselves. Once you are able to identify these signals and are able to use your intuition,  these patterns will be calling you a lot often. It will feel like instant telepathy.- something indicators wont be able to give you. For more information on how to trade with indicators, look  How to Trade Price Action Without The Indicators I and II.

 

That’s a wrap for “Why Should I Learn Price Action Trading At All? ” You can study every indicator known to man and end up coming back to straight up price action trading. IT’s the only analysis that makes sense. The irritating part about these indicators they take up so much real estate  they end up  crowding out the price action. That’s enough to make you pull your hair out.

Price action analysis is fairly straightforward and stress free. Why? because traders trading mentality is reflected in  the price movement on the charts.  You certainly don’t  indicators to do this analysis for you. Everything is right there in front of you on the charts.

Til next  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

 

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How To Look Into The Crystal Ball Of Your Next Forex Trade

Hello and welcome to another edition of the bulls vs the bears. This week we are going to look into how to look into the crystal ball of your next forex trade. No, we’re not learning how to be soothsayers overnight. We are going to learn how to anticipate the next trade before it happens.   To paraphrase a famous saying it’s preparation meeting opportunity.

If you want to be a successful forex trader, you need to have a plan. You can’t go in  with the attitude of “wing it and let the chips fall where they may” Based on your trading plan you anticipate on how the next trade is going to shape up . This is where preparation meeting opportunity comes in. With your trading plan in place you should have a fair idea of what the next trade is going to look like.

So basically  we are going to learn how to anticipate trades and then make our entry.

First:

Understand What The Forex Market is Doing

You need to understand what the forex market is doing. How do we do this? By identifying in advance variables such as where the key levels are, where the hottest trends are, price signals et.c. It will be in your best interest to turn this habit into a regular routine every week. Some of you may be going “But this is boring.” Well, boring is good, especially if you plan on being prosperous as a forex trader.

Once you’re able to ascertain what’s happening on the market, you should  be able to make your entry without fear or favor.  You can now focus on anticipating trades at key levels and other value areas. One you recognize a price signal forming at one of these areas, you can make your move without thinking twice about it. By price  signal we are referring to a price action signal, or even a retrace to a key level. So don’t just react to the happenings on the market. You should know way in advance of the next trade formation based on your identification of the key levels.

Now let’s see an illustration of  key areas that have already been mapped out.

Image result for forex mapping out key levels and identifying trends

Ladies and gentlemen, here is an illustration of  an old resistance level now turned into support. The old resistance is marked pink at the far left corner. Whereas the support area is labelled blue. Notice the three support areas labelled blue. It’s pretty obvious that there is an ongoing struggle between the bulls and the bears.

Price seems to be holding up quite well. And when that happens, it can only mean one thing – The bulls are about to break through and head for the hills. With that in mind you gently place your buy signal close to the tip of the bullish candle right on the support level and watch the bulls start their procession to the hills.

For more information on key levels look up Identifying Support and  Resistance levels with Price Action Analysis

Keep Your Eyes On Dynamic Zones

You need to keep an  on dynamic zones in the markets. By dynamic zones we are referring to areas where  price action is happening at the speed of light. You see the whole idea behind anticipating trades is having a plan as to how you will react when so and so happens. This approach is more professional than trading like a Las Vegas gambler. with no rhyme nor reason behind your trades. You need to trade like a sharp shooter instead of  a suicide bomber.

Now how  does one keep in tune with the dynamic zones?Well performing  weekly and daily market analysis is one way of getting  in tune with the dynamic zones. In fact it’s the only way to stay in tune with the dynamic zones and learn to anticipate high probability trading scenarios. Your marksmanship as a trader will come in real handy in this scenario.  

When you sit behind your laptop, there is no need for you to hunt for trades. By time you  turn the power button on, you should have a pretty good idea of which markets are hot right now and where to look for signals. And the best place to search for trading signals  are in areas of confluence and key levels., based on previous analysis you’ve already done. Let’s take a look at a classic example of such a scenario.

confluence

Here you have a nice looking example of the confluence scenario I just explained. Keep a close watch on the three price signals.  The first signal is at the level of support via the engulfed candles. The second signal is at the level of support. And the third signal is at the breakout point where a bullish trend forms.

The neat  thing is all three signals are unfolding at the same time. They’re coming together simultaneously. Where three such scenarios form, your crystal ball should tell you that it’s time to cash in. For more information on trading confluence areas, look up Something Called Confluence.

That’s a wrap for ”Trading Less Will Bring You More Profits.” Instead of reacting to what the forex market is doing, how about anticipating what the forex market will be doing? You can only accomplish this task by identifying the key levels, hash out a trading plan and anticipate the trades. In plain English, exercise self-control instead of allowing the forex market to control you. 

I’m going to be real honest with you. The market will not always appear on the high probability /confluence areas that you highlight on your price charts. But when it does appear you need to be ready like a marksman. This where your trading edge comes in real handy. If it’s not present on the price charts DON’T BOTHER TRADING. If you have no idea what a trading edge is look up You Need To Sharpen Your Trading Edge.

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

 

Trading Less Will Bring You More Profits

Hello and welcome to another edition of the bulls vs the bears. This week I want to throw another suggestion you:Trading less will bring you more profits. Some of you are looking at me like”This guy has lost his marbles.” News Flash! All my marbles are intact. Listen, it makes  absolutely no sense trading 40 times a month. You run the risk of slipping into an emotional roller coaster-not to mention blowing your account into smithereens. 

What am I trying to stay?  Less is more. If you show your face too many times on the charts, you’ll get breadcrumbs in return. However, if you show up every once in a while, you will surely reap in huge dividends. Of course your trading edge has to be in full effect on the market for you to reap those dividends

So what’re we going to do? We are going to take a look at three trade setups you could use starting this month. If you’re not sure which trade setups to look up, try these suggestions. You should see major improvements in your trading fortunes.

So first up:

Pin Bar Sell Signal

Image result for pin bar sell signal at resistance level

Now take a look at this juicy pin bar. sell signal along the trendline athe level of resistance. Now  this took a few weeks for this sell signal to materialize. It takes patience to to trade like this. And you need patience to make money as a trader. The last thing you want to do is to jump in and out of trades as if your pants are on fire.  When you do that you lose a lot of money. And  your emotions end up scattered all over the laptop screen.Even worse, you lose your beauty sleep. you dont want that. Do you? Just put in your sell bid below the the bearish pin bar as indicated by the red arrow.

For more information on trading look up  Pin Bar Strategy –  How to Trade it

Bullish Tailed Reversal Bar

Image result for bullish tailed reversal bar after pull back

Now as you can see this is a bullish tailed reversal bar, popularly known as the engulfed candle. As you can see this formation occurred following a brief pullback.And if you’ve noticed,  the bulls have set up a nice looking trend. This should set you up for a hefty profit. To put in your trade entry just place it above the high end if the bullish candle as indicated by the red arrow.

You don’t need to make an appearance on the market every day. So long as you  concentrate on high probability setups  such the one above, prosperity will be your portion forever. In fact,you should be able to win more than half of your trades assuming you know what you’re doing. Jut make sure you don’t risk too much and stray from your trading plan.

For more information on using candlestick patterns to identify potential market moves look up How To Read Candlestick Patterns to Identify Potential Market Moves

Finally

Inside Bar Breakout

Inside Bar higher low and lower high

Now here  is the Inside bar breakout nicely illustrated here using the EUR/USD pair.  The higher high is the the tall candle known as the mother candle  and the lower high(right infront of the higher high) known as the baby candle. Luckily for you  price breaks through resistance without  any resistance.So this should make for a cool bumper harvest.

Sometimes it makes sense to head for the exits with your cash ahead of the appearance of the resistance level. In other words it’s better safe than sorry. But you don’t to do that too often if there is an opportunity to make more money off the trade. If you miss out on that opportunity it will mean you having to compensate by winning more trades just to make money.

For more information on how to trade inside the inside bar pattern Look up Trading The Inside Bar

That’s a wrap for ”Trading Less Will Bring You More Profits.”  I’m only going  to say this.  Start using just these three trades every month and your life will never be the same. Even more important, your trading results will improve, and your you will have developed a completely different trading mindset.You will no longer experience the urge to stress yourself out with 60 trades a month.  Who does that? Give your screen a break. Go to the beach if you have to.

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

 

 

Allow The Forex Market to Hit Your Targets

Hello and Welcome to another edition of the bulls vs the bears. Today I have an important nugget of trading wisdom.and it is “Allow The Forex Market Hit Your Targets.” Now I can hear somebody saying”What do you mean by that?” Well all I am saying is allow the market to hit your stop loss or your profit target without you compulsively closing the trade yourself.  Don’t exit your trades too soon before price hits your stop loss or take profit targets. When you do that you hurt your chances of making huge profits. You are basically settling for breadcrumbs. And you end up racking up huge losses by taking up small losses

So to get started I’m going to show you a little illustration. Then I’ll show you some examples of allowing the market to hit your targets as opposed to compulsive closing your trades. I will also show you an illustration when it actually makes sense to head for the exits. I guess the question of the day is:

Why Should I Not Compulsively Close My Trade?

Because if you compulsively  close a trade that is turning against you, you end up taking a loss.You see forex trading is about making profits to offset your losing trades. Sure you are going to have losing trades.But you have don’t have to close them by force all the time. All these small losses eventually add up, and they may end up wiping out your  trading account. Now we don’t want that.Do we?

Now let’s look at a little example: Say you enter a trade on your demo account, and it goes sideways for a week. The following week it heads downwards, almost stopping you out for a loss. At this point you are staring at a huge loss. The following week, the trade makes a dramatic U-turn to shoot upwards like a space shuttle and hits your profit target. You ‘re so excited you end up screaming “BULLS EYE!”

You’re probably saying to yourself”Well,what has that got to do with anything?” Well  A LOT. You see with a demo account you are thinking logically by allowing the trade to sort itself out. You feel no reason to interfere with the trade. The last thing you want to  do is to compulsively exit a trade  that could turn out to be a humongous winner. Fortunately you allowed a losing trade to transform into a winning trade because you chose to do nothing.

What’s the moral of the story? Let the trade find its level. You need to give the trade oxygen to breathe. You’re probably saying”But I want to make money NOW!” sorry, but  you can’t control the market by remote control. Just hang tight for a few weeks while the trade tries to find its level. The question is can you stay calm this way on a live account? That’s something you will have to figure out if you want to prosper as a forex trader.

With that out of the way let’s take a look at examples of the forex market hitting your targets versus you compulsively closing your trades.

Image result for forex market hit profit target

Ladies and gentlemen here is a classic example of how to stay in the trade using the GBP/USD pair.  If you didn’t know already  this is range trading with pivot  points. The bluish circle indicates  S1(Support level) surviving a  major hit by price. By that you’d have put your stop loss just below S1.  That’s because S1 managed to hold back price.

Now a little further up you set your profit at 1.4537. And guess what, your profit target takes a positive hit. See what a little patience does for your soul?  you waited for the market to take you out of  your trade, and you ran all the way to the bank laughing and smiling. Had you bailed out of the trade  you would have left a lot of money on the table and ended up with breadcrumbs instead.

Here is a price setup  of a counter trend pin bar signal.

rewward to risk trading exit strategy

  Take a close look at the bearish pin bar at  the 48 pip target. Now just because a pin bar goes bearish doesn’t mean you should jump ship immediately. As you can see, the bear immediately changed to a bull, sparking a huge surge. Just because a countertrend appears does not mean you immediately jump ship. Just use key levels as indicators of whether to decide whether to make your exit.

So what’s the moral of the story? Don’t play Russian Roulette with your trades and avoid compulsive exits.Instead let the forex market hit your targets. If you need help with how to take profits and stop losses look up  A Few Rules on Taking Profits and How to Place Stop Losses the Right Way.

I can hear somebody asking…..

Are there Exceptions to This Rule?

Sure there are exceptions to this rule. In fact there comes a time in a man/woman’s life when you do have to exit your trade for dear life hen the tide turns against you. However the following conditions have to exist for you to run for dear life

  • Counter Trend – The formation of a reversal trend should be your queue to head for the border- FAST!
  • Pay the attention to the data on the price chart. It tells its own story… How did you close on resistance/support level? Or  moving average.These are important clues to consider when planning your exit
  • When the price signal you entered is not on the same page with the market as the market does a 360 closes  above or below the price pattern.

Now let’s look at an illustration of a trade where it really makes sense to run for dear life

An_Easy_Way_to_Exit_Trades_body_Picture_4.png, An Easy Way to Exit Trades

 

Ladies and gentlemen  I present you a high probability  trade setup using an upward channel using  the NZD/USD pair. As you can see Take Profit has been set at 300 pips at .8140 mark. whereas a stop loss has ben set at 150 pips at ,7990 mark. The key here is setting these values prior to making these entries on the market. In deciding where you are going to place your trades, you have no doubt in your mind what to do once price hits these targets. RUN FOR DEAR LIFE

This concept is fairly straight forward.Why?Because you decide on these values prior to entering the trade. Once  you decide where you in advance where you are going to place these values ,you should be in no doubt as to what to do when  price massages  your targets.

That’s a wrap for ”Allow The Forex Market to Hit Your Stop Loss/Take Profits.” As you can see, it’s possible to prosper as a forex trader by doing ABSOLUTELY NOTHING! By that I mean cutting down on playing Russian Roulette with your trades and compulsively exiting from potentially profitable trades.When you cut down on these two negative habits, you give your account a massive chance to grow.

That’s not to say you’ll never experience losses. Because the losses will come. All I’m saying is STOP TAKING THOSE COMPULSIVE LOSSES FOR NO REASON!They will slowly kill your trading account softly. And before you know it, you will have nothing left to trade with.  There are three key components you need to have in your trading makeup.They are: accurate stop loss placement, accurate reading of price data on the charts and keeping a check on those    raw emotions. Those raw emotions,in particular, could cause you crash horribly,if you don’t put a leash on them.

Some of you may be asking” How do I avoid compulsive losing?” First cut down on your risk per trade so that your emotions are not torn to shreds  when the price takes a swipe at your  stop  loss position. If it means learning stop loss placement,  and how to trade with price action by all means do that. But whatever,you do, stop taking compulsive losses just because you’re scared price is moving against your position or the market skewed sideways

 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

 

 

Do Not Exit Your Forex Trades Too Early

Hello and welcome to another edition of the bulls vs the bears. Today I have a little piece of advise for you:”Do not exit your trades too early.” Why?because exiting early could cost you a hefty pay day. So many traders exit the market for mere breadcrumbs only to watch with horror as their trades become huge bumper harvests. To be brutally honest I’ve fallen victim to this trap a few times.

Why do people fall for this trap?  It’s usually out of fear They are scared  the market will do a sudden 360 and put a tsunami-sized hit on their trading position. So they settle for breadcrumb profits or small loss. Later, they start pulling their hair in disgust as they watch profits slip through their fingers. It’s like leaving  too much money on the table.When you don’t trust your trading plan well enough, you hit the panic button every chance you get. Unfortunately we all know that hitting the panic button throws all logical thought out the window.

So we are going to look why panicky traders head for the exits  too soon. And of course we’ll look at how avoid  heading for the exits and allowing your trade room to work.

First off,  what causes traders to head for the exits too early?

Poor Trading Process and Poor Understanding of Forex Market

Some traders head for the exits too soon because of a poor trading process and poor understanding of the forex market. They are basically saying “We don’t know what the heck we’re doing.” They trade without much of a trading plan with regards to entries, exits and  what to do after they enter a trade. Even worse, they’re so attached to their trades that they do the watchman routine by staring at their laptop screens all day hunting all day for trades. How about applying the set and forget strategy and get on with life?

Even worse, they risk too much money on the trade. And when you do that,  you tend to hit the panic button even quicker than Speedy Gonzalez. In so doing,you over-leverage on your trading account which makes you more nervous and jumpy every time your trading position goes positive or negative. Whenever  the forex market makes  a move you’re like “This is it for me.” Or you feel  every little profit you make you have to take the money and run before the market turns around and devours your cash. You’ve made the forex market to be this two-headed monster;which shouldnt be the case at all.

Previous Trading Losses

Yep, previous trading losses  can impact your decision to exit your trades too early. Not only that, they reinforce  an unhealthy sense of fear you may have cultivated about the forex markets.(Remember the two headed monster?) So  two quick losses may lead you to think “Hmmm….I think I may have bitten more than I can chew with this forex trading adventure.” All of sudden you start losing faith in your trading edge. This is suicidal because your trading edge is the eyes and ears  for your trades. It tells you whether conditions are right for you to enter your trades.

It’s also important that you realize that your trading edge  covers a sample of trades. 
In other words, you have to give the trades room to operate until they run out of steam.  So letting your last trade loss affect your feelings about the forex market has no rhyme nor reason.

Terrible Trading Mindset

A terrible trading mindset will most certainly influence your habit of exiting your  trades too soon. A lot of traders come  into the trading game thinking “I’m going to  make a lot of money quick, And I’m going to quit my job in a few months.” Well news flash! Forex trading is not a get rich quick scheme. But if you want to be rich from forex trading, then you will need to change your mental approach towards forex trading.

Some of you are probably thinking ” How in the world do I do that?”  Well, psychologists say behavior  stems from mindset.Your mindset kickstarts your bad habits,and those habits you exhibit on the forex market could be the difference between prosperity and poverty. You also need to understand that forex trading is a marathon, not a sprint.You have to treat it like any other business.By that you have to start slowly and grow your  trading account. And you have to show consistency in your trades. The whole idea is to be steady and solid in your trading performance. Once you accomplish that, then your mindset changes from positive to negative . Not to mention the fact that  your profits will start rolling and  you can laugh all the way to the bank. 

Harboring Negative Thoughts

Harboring negative thoughts can also cause you to lose big on your trades. Those negative  thoughts can eat you up big time  especially when you lose trades in a row. Of course when you start losing trades, negative emotions start kicking in.Once the negative emotions kick in, then bad trading habits follow. And when the bad trading habits become permanent, you incurring more trading losses.

Even, worse,those trading losses also cause you to exit your trades at the speed of light. Then all of a sudden you’re thinking like”There is no way I can make money trading forex.I t’s just not possible.” Well,  if you are think thinking this way, you can forget about turning your trades into mega profits. Because it’s just not going to happen with you thinking this way. Often times these negative thoughts are buried in your sub-conscious which are getting in the way of you making substantial profits. Just allow your trades room to breath,and you will be laughing all the way to the bank.

Now that we’ve established  the causes of exit trades too soon, I guess our next question is 

How Do We Prevent Exiting Trades Too Early?

First thing you need to is:

Create a Trading Plan

You absolutely have to create a trading plan if you want to avoid exiting your trades too soon. Your trading plan is your war plan. You lay out your exit strategy and then stick to it regardless of  how hard the demons in your head  try to get you to do otherwise. You could also set the set and forget strategy. Instead of siting in front of your screen all day hunting for trades,you set your trades and  go and chill outside.

The market does the heavy lifting for you. You don’t need to be in front of the screen all day staring at your trades. Once you hit your profit target, the money is credited into your account. Everything is programmed for your profit success. Just go to the beach while your trades rack in the profits.

Avoid Common Early Trade Exit Situations

There are certain trade exit situations you absolutely have to avoid.  So what we’re going to do is to look at specific  situations that may affect you the trader with respect to exiting the trades. These solutions are not exactly etched in stone. Bu they should go a long way to keep you on the straight and narrow.

Situation 1

You exit a trade because you are  scared the market will turn around and drop a tsunami-sized  ton on you. 

What’s The Way Out?

You need first to get one thing straight about the forex trade.You are going to lose trades. You just need to decide on how much money you can afford to part company with. However don’t make it a habit of losing too many trades or your trading account will be in a world of hurt. probably the important thing you need to understand about trading is that you can’t be in a constant state of fear. Fear causes people to do illogical things including exiting trades a the speed o light.If that’s your trading line of thought, you could end up losing out on huge profits.

I can hear some saying”So how do I protect my losing trade?”well  you place a wide stop loss. In so doing you give your trade oxygen to breathe. I can hear another person How do I set up the wide stop loss?”Well first decide how much money you can afford to lose. Next you tweak your position size to protect your initial risk. This ways when the trade goes against you (And we hope it doesn’t happen), you can then say”I’m fine with my loss. Next trade please!”

You can also exit at breakeven to avoid a loss. But in  exiting so soon you risk leaving a  lot of money on the table. Which is why you need to leave your trade and your screen alone and let the market  do its work. forex trading comes with a risk. You just have to manage your risk properly.

Situation 2

You exit a trade for breadcrumbs well before your initial profit target

What’s The Way Out?

Get this straight.You cannot get by on breadcrumbs.You have to hit huge home runs (profits)  if you want to be a successful trader. Just because you see a 1 hr pin bar against  your trading position. You have to say to yourself”May I not fall into quick exit temptation for breadcrumbs.” If it’s a 4hr trading frame  you’re working with you should not be looking a t a 1 hr trading frame. Keep your focus on.  Stand by  your trading plan religiously and  do not panic! When you panic you don’t give your trades room to grow. Just be patient and the huge profits will come rolling in. For information on trading time frames look up Multiple Time Frame Analysis

I’m not saying breadcrumbs don’t always makes sense. There make come a time when breadcrumbs may be all you have, depending on the trade setup. But if you adopt breadcrumbs as your trading template, you end up dying a slow painful death.

Situation 3

Exiting  a trade for a partial loss without any reason at all.

What’s The Way Out?

You know you may say to yourself” Let me take a small loss now so I don’t suffer tsunami-sized loss later.” But what you don’t realize is that you kill your trading account by taking multiple small losses. The losses may look small,but they all add up later. You need to allow the market to show you through your initial stop loss whether your stop loss placement was wrong or right.

Why? Because the market is very unpredictable.And the only thing you have going for you is your trading edge which is a reflection of your initial trade. What the stop loss does is  prove that your initial trade was wrong.  What am I trying to say here? Don’t let your emotions  force you to head for the exit. Just stick to your trading plan.

Situation 4

You can’t add to winning positions fearing the market will do a 360 on you

Solution

Just take advantage of strong trends that just keep going and going with no pullbacks at all. That’s the best way to create wealth as a trader. I know you’re probably thinking”This  is too good to be true.” Well, these trends do happen. You just need to take full advantage of these phenomena,grow  your trading  account and give your head a break.

Don’t overthink the process. and don’t be scared either. These two negatives could cause you to miss out on huge money-making moves on the charts

That’s a wrap for ”Do Not Exit Your Forex Trades Too Early”.  It’s very important that you know how to properly exit trades and also how to manage these trades. Even more important let the market do the talking for you rather over-analyzing trades and spraying your ego all over the place. And please don’t even think about telling the market what to do. The forex market has a mind of its own and can pretty much decide to throw your trade in the Atlantic Ocean if it felt like doing so.

If you want to prosper as a forex trader, let go and let the forex market. The best way to employ this strategy is get out of the way and let your trading edge do the talking. Just set, forget and end enjoy life. This way you trade according to the dictates of the forex market instead of you trying to control the market.

 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

Want a little background on EasyMarkets? Watch This Video

How to Ride the Big Waves In The Forex Market

Sign Up With Easy Markets.Download for free The Ultimate Guide To Price Action Trading by Rayner Teo

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 ocean. 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 bewilling 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 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 woul 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 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.

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

Want a little background on EasyMarkets? Watch This Video

After Entering A Forex Trade….What Next ?

Sign Up With Easy Markets.Download for free The Ultimate Guide To Price Action Trading by Rayner Teo

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% lev el 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 tra[ling 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 i 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.

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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

.

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

Want a little background on EasyMarkets? Watch This Video

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.