Part One
Hello All
My name is Simon and I am going to share with you a wealth of information I have gleaned over the years I have traded. I joined this forum back in 2008 mainly for a free news service, and wasn't really all that interested in using the forums. Its time in my evolution as a trader to really share and try and make the process of FX trading easier for those less skilled and experienced.
Some information about me
I have been trading in a diverse range of markets including FX for about 30 years now, when I started we used to look at End of day charts for the stock market, so a long time and the world has definitely changed some in that time. I have been seriously trading FX for approximately 12 years now so I would say I am reasonably proficient at it. I certainly make a large portion of my living from it and like all traders I have been through the whole gamut of systems, indicators, and whatever else can be dreamed up to try and make money from it.
My Methods
Where to begin, over the years there has been so many ways to trade I have lost count of the "methods" I have used so I would rather tell you about how I arrive at my trades and this should make far more sense.
For the past several years I have been a naked chart trader. I don't use any aids or hindrances as I like to call them on my charts at all. Let me make this point very clear every indicator is lagging so by the time the indicator provides enough evidence for you to go in its too late you missed it or at least the better part of the trade. The only way I know how to trade Forex is by using price and the signals that price gives you, now I know what your thinking reading this yeah yeah everyone says that of course you read price, but do you really read it, the amount of traders I have met that say they are a price action traders and are not is truly staggering, they have not the first idea how to interpret a chart, can they find a pattern, but how do they know that pattern is high probability, this is what I am going to share with you.
Let me put this out there if you are doing what the herd or books are telling you in terms of analysis then your wrong, if you are following the herd because they are telling you a level or a trade then you are wrong, you only need to follow the few with enough money to make a difference, move when they move sit when they sit. The best skill you will posses as a trader is patience i can't stress this enough.
When a big bank makes a move everyone knows it cause the balance between buyers and sellers shifts and the chart reflects a big move up or down, ask yourself this question:
Q - What do you think the bank that made trade wants to happen next.
A - They know the herd (retail traders) will jump in cause that pushes the price in the direction they want or more importantly it gives the bank enough market liquidity to get out of the trade with a profit.
So who's the smart one is this scenario, certainly not retail, don't believe me take any 1 hour chart look for a big move and then see what happens next, either price keeps going as retail piles in but with less force and the bank liquidates their position and takes profit, or it starts to retrace as the bank who made the initial move completely gets out of it and soaks up all excess liquidity. I 'll admit this is a simplistic example but that's essentially what happens.
Let me also put this out there that 99% of the action you see on an average chart is useless to you as a trader, its just there to show you the balance in the market where buyers meet sellers and vice versa, range bound markets are what we see most of the time. Can you make real money from this action without real risk I personally don't think so, we need the imbalance in the market to really put our trades where they can be most the effective and the most profitable.
Lets get Started
As I have said earlier I don't have one particular method that I use in fact I have several that I adapt depending on what price is offering, some are better than others, some days you get burned other days you kill it but the most important skills you have as a trader are these in no particular order:
1. Patience
2. Reading Charts
3. Money Management
Now lets deal with them one at a time:
1. Patience
I dont need to write a short story on this all traders know what I mean here stop trading cause your bored, you don't need to trade everyday, you only need trade when the market presents a opportunity otherwise its like an ex girlfriend ignore it as it never ends well. Trade only when you think there is a better than average chance of making money.
2. Reading Charts
Most traders dont know how to read a price chart, most traders would think a bunch of candles trending upwards with a 20SMA confirmation is a buy signal or stacks of volume means an opportunity, all completely wrong and shortly when I get to charts we will look at some examples.
3. Money Management
Let me ask you this when you go to put a trade on at what part of this process do you think about stop loss, if you said its the last thing you do then we need to talk, if you said its the first thing I do then I congratulate you, when I look at a price level I consider where I can get out before most things as you can really only decide on the rest when you know where you need to get out, again more on this later in charts.
So who notices something about these 3 skills, that's right you control all of them, for the most part the FX market is it own beast, and you will never have control of it, but these 3 skills you can practice and own, the mastery of these skills is what will separate you from the many failed traders.
That is the end of part one - part two shortly.
Simon
Hello All
My name is Simon and I am going to share with you a wealth of information I have gleaned over the years I have traded. I joined this forum back in 2008 mainly for a free news service, and wasn't really all that interested in using the forums. Its time in my evolution as a trader to really share and try and make the process of FX trading easier for those less skilled and experienced.
Some information about me
I have been trading in a diverse range of markets including FX for about 30 years now, when I started we used to look at End of day charts for the stock market, so a long time and the world has definitely changed some in that time. I have been seriously trading FX for approximately 12 years now so I would say I am reasonably proficient at it. I certainly make a large portion of my living from it and like all traders I have been through the whole gamut of systems, indicators, and whatever else can be dreamed up to try and make money from it.
My Methods
Where to begin, over the years there has been so many ways to trade I have lost count of the "methods" I have used so I would rather tell you about how I arrive at my trades and this should make far more sense.
For the past several years I have been a naked chart trader. I don't use any aids or hindrances as I like to call them on my charts at all. Let me make this point very clear every indicator is lagging so by the time the indicator provides enough evidence for you to go in its too late you missed it or at least the better part of the trade. The only way I know how to trade Forex is by using price and the signals that price gives you, now I know what your thinking reading this yeah yeah everyone says that of course you read price, but do you really read it, the amount of traders I have met that say they are a price action traders and are not is truly staggering, they have not the first idea how to interpret a chart, can they find a pattern, but how do they know that pattern is high probability, this is what I am going to share with you.
Let me put this out there if you are doing what the herd or books are telling you in terms of analysis then your wrong, if you are following the herd because they are telling you a level or a trade then you are wrong, you only need to follow the few with enough money to make a difference, move when they move sit when they sit. The best skill you will posses as a trader is patience i can't stress this enough.
When a big bank makes a move everyone knows it cause the balance between buyers and sellers shifts and the chart reflects a big move up or down, ask yourself this question:
Q - What do you think the bank that made trade wants to happen next.
A - They know the herd (retail traders) will jump in cause that pushes the price in the direction they want or more importantly it gives the bank enough market liquidity to get out of the trade with a profit.
So who's the smart one is this scenario, certainly not retail, don't believe me take any 1 hour chart look for a big move and then see what happens next, either price keeps going as retail piles in but with less force and the bank liquidates their position and takes profit, or it starts to retrace as the bank who made the initial move completely gets out of it and soaks up all excess liquidity. I 'll admit this is a simplistic example but that's essentially what happens.
Let me also put this out there that 99% of the action you see on an average chart is useless to you as a trader, its just there to show you the balance in the market where buyers meet sellers and vice versa, range bound markets are what we see most of the time. Can you make real money from this action without real risk I personally don't think so, we need the imbalance in the market to really put our trades where they can be most the effective and the most profitable.
Lets get Started
As I have said earlier I don't have one particular method that I use in fact I have several that I adapt depending on what price is offering, some are better than others, some days you get burned other days you kill it but the most important skills you have as a trader are these in no particular order:
1. Patience
2. Reading Charts
3. Money Management
Now lets deal with them one at a time:
1. Patience
I dont need to write a short story on this all traders know what I mean here stop trading cause your bored, you don't need to trade everyday, you only need trade when the market presents a opportunity otherwise its like an ex girlfriend ignore it as it never ends well. Trade only when you think there is a better than average chance of making money.
2. Reading Charts
Most traders dont know how to read a price chart, most traders would think a bunch of candles trending upwards with a 20SMA confirmation is a buy signal or stacks of volume means an opportunity, all completely wrong and shortly when I get to charts we will look at some examples.
3. Money Management
Let me ask you this when you go to put a trade on at what part of this process do you think about stop loss, if you said its the last thing you do then we need to talk, if you said its the first thing I do then I congratulate you, when I look at a price level I consider where I can get out before most things as you can really only decide on the rest when you know where you need to get out, again more on this later in charts.
So who notices something about these 3 skills, that's right you control all of them, for the most part the FX market is it own beast, and you will never have control of it, but these 3 skills you can practice and own, the mastery of these skills is what will separate you from the many failed traders.
That is the end of part one - part two shortly.
Simon
99% of Traders fail, so don't follow the herd