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Good afternoon all. I hope you've been doing your homework and everything is soaking in well.
I notice that there is demand for more more more of this stuff and it will come, I promise.
There is a distinct reasoning behind my taking it slowly on here.
As someone quite rightly pointed out, 'patience' is key in this game and this is one of the topics I am going to cover today.
Those who want to rush into the biggest financial market on the planet WILL - I repeat, WILL get burnt, along with 95-97% of all other wannabee traders.
I've done it, the people that taught me have done it and we've all blown a few accounts up in our time.
the reason I write this is because you don't have to experience the hardship and mental torment as I have if you follow these lessons carefully, diligently and professionally.
It's not like having five pounds each way on the grand national this, it really isn't. It actually does matter, no matter how much cash you have in the bank, if you want to succeed and have the financial freedom you have always dreamed of.
So without further delay lets first begin to talk about money-management.
Money management is all about controlling your risk and minimising your losses whilst maximising profits.
It's a long-winded subject so I will try my best to hit the essential points.
You UK based guys who can spread-bet can simply divide your bank into 2000 equal parts and then use that as your per-pip-stake.
So if you start with 1000 pounds you must play with 50p a pip until you have 1200, where you'd increase stake size to 60p, 2000GBP allows your stake to increase to 1 pound and so on.
this way, regardless of how big or small your stake is you are always guaranteed to be risking a certain % of your total bank.
If your stops are always 50 pips away then you are always risking just 2.5% of your bank.
As for those not so fortunate to be blessed with spread-betting then you need to weigh-up how much one lot is then work out lot size accordingly.
So, one lot is usually $10 a pip.
based on that we know that 0.1 lot is approximately $1 a pip.
For every $2000 profit made you can increase your lot size by 0.1 in the same manner as before.
A $1000 account divided by 2000 is 50 cents a pip. Knowing that 0.1 lot is $1 a pip you would need to stake 0.05 lots if that is possible and increase 0.05 for every $1000 profits made.
By following these easy instructions you are giving yourself every chance to make a lot of money quite quickly by compounding profits consistently without every increasing risk and this is a very important factor.
whether 10 lots or 0.1 lot it's always the same % of risk and this is how you should think.
This is what gives you peace of mind as a trader and helps alleviate the pain experienced by some when seeing the account -$7800 on just one trade.
I recently went long on GBPJPY at 142.10 just to see it go 145.00 then falling back to 136.00.
Had I looked at my account with pound signs on my mind I would have closed the trade having been some 600 pips down (long-term-book)
but because I knew that my overall risk in this market was only 2% I didn't care if it went wrong. I could make the same mistake time and time again and still not blow my account.
Now GBPJPY is back up to 147.00 and I am back in profit some 500 pips !
Imagine playing $500 a pip. Pretty scary for a newbie hey?
However, imagine playing with just 1 cent a pip. you really wouldn't care if it went tits-up would you?
Again, this is the attitude to have. It's all about %'s
Think like this and you will succeed.
This brings me on to the next part of the lesson, psychology.
As humans we have many feelings but the main ones associated with trading are fear and greed.
There are others, but these are the two I want to focus on.
Fear stems from not knowing the outcome of a given event. like a journey into the unknown.
I could walk out in the road and be hit by a car, a plane could crash through my house or I might get caught up in some yardie gang-war crossfire whilst on holiday in Jamaica but am I going to bury myself in a concrete bunker for the rest of my days or stand up and crack-on with this thing they call 'life' ?
Exactly, the future is unknown but we try to convince ourselves that everything will be alright.
This is what you need to do with this strategy and any strategy.
If you are unsure then don't trade but if you like the set-up then risk your 2.5% and just throw one on. It can only go 3 ways, so even the worst technical analyst in the world will get it right 33% of the time.
If his losing trades are only 50pips but his winners go 500pips he will ALWAYS win in the long-run!
If you are scared to trade then you are not ready. Keep your money in a bank account until you feel confident enough on a demo account then take it easy on a live account with small stakes but with the same detatchment of feeling.
Greed is like being blind sometimes with this. We can see a pivot point as resistance, we can see a moving average as resistance, we can see a previous high as resistance yet we still hold the long position.
Why is that?
We want more is the simple answer.
How many of us have turned a winner into a loser, then taken a revenge trade, lost on that too and then become a compulsive gambler until we have done every last penny in our account?
Most of us who started young I would guess.
The way to get around this is to scale out of trades, reducing exposure in the market but maximising potential returns with the last portions of the posisition.
It begins with closing all the trade with 20 pips just to see it go another 300.
That leads us to believe that every trade will go 300, which is not the case.
Simply take out 50% of the position at a support or resistance target level.
Move your stop loss (covered in next lesson) closer to your entry and run it a bit further to the next support or resistance level where you can close another 30%.
This means you have locked in profit with 80% of your initial stake.
Now put your stop to breakeven plus 10 pips and run the remainder until it reaches the next support of resistance level and keep moving your stop loss until it finally gets hit.
Yes, maybe this is being a bit greedy, but it's also being very shrewd and an important factor of keeping a calm head.
Try not to get too excited about your winning trades whilst remaining positive about losers. No one wins every time!
Learn how to meditate and do some yoga. It will help you keep a level head.
Will improve your patience & discipline and will reduce your greed and fear.
Overall you will take these new learnt skills into every other aspect of your life.
Tomorrow we'll talk about stop-losses, then we'll get to the good stuff, the types of set-ups and trades to look out for and finally targets/exits.
Please bear with me. I am doing all I can and WILL make you a successful trader.
Remember, the Lord never helped those who couldn't help themselves ! lol
__________________ I'm now sending trading notes out twice a day with videos too. Have a look HERE.
There's one set at 6:30 UK time for London and one at 12:00 for U.S session, plus I will send a summary video after each session
What are the daily ema and sma how many hour do they count for a day ?
best regards
The daily ema and sma are moving averages, exponential & simple.
These are calculated over the last 20 or 50 periods, which in this case is days.
Since we don't use a daily chart these are calculated differently on a 60m chart.
A daily 20 would be 20 (period) x 24 (hours in a day) = 480ema
A daily 50 would be 50 (period) x 24 (hours in a day) = 1200sma
I hope this helps.
I will be back shortly with a lesson on stop-losses.
__________________ I'm now sending trading notes out twice a day with videos too. Have a look HERE.
There's one set at 6:30 UK time for London and one at 12:00 for U.S session, plus I will send a summary video after each session
Stops are an important part of trading. They allow you to minimize your losses on occasion when a trade goes against you and help keep the majority of your bank (and marbles) intact!
Peace of mind, as discussed in the previous lesson, is paramount when trying to make money from these markets and therefore preserving your capital is key.
One major fault many make is putting stops too close and consistently taking 10-20 pip hits, which WILL eventually diminish your account and can be sould destroying to you as a trader, so it's imperative you get them right.
If you can't afford the stop then don't take the trade! It's that easy.
For me personally I like to use the 50sma as my stop level and you would do well to follow this example.
Remember how I spoke about moving averages stacked in correct order?
Well, if you are going long with the 5m entry system then your 1m 20ema should be above your 5m 20ema which should be above your 15m 20ema which, in turn, should be above the 15m 50sma.
For short term trades this is a good place to start.
On a 60m chart you could follow the same example using the 60m 50sma for short/medium term or beyond the big thick 4hr 50sma for longer-term positions.
In that order please take 2 minutes to examine the 3 snapshots demonstrating this.
In the first shot we see the long term traders approach, trailling the stop beyond the 4hr 50sma on a 60m chart.
In the second we see the medium term traders approach, trailling the stop beyond the 60m 50sma. Again on a 60m chart.
In the third we see the short-term approach, trailling the stop beyond the 15m 50sma.
This does not work at all times but it's a good place to start for beginners. Back test this until you are blue in the face. Get your stops wrong and it could cost you your pants!!
__________________ I'm now sending trading notes out twice a day with videos too. Have a look HERE.
There's one set at 6:30 UK time for London and one at 12:00 for U.S session, plus I will send a summary video after each session
i was reading your posts on this and it looks great! i looked at the school of pimpology and you had mentioned that if we wanted a breakdown of the strategy to email you. im new at this forum and dont really know how to navigate it very well so i was wondering if you could email it to me at deadpoet1979@gmail.com??? that would be great!! looking forward to what you have next!
Hi there!
This is my first post in here, and I've chosen this thread to do it...
I want to thank you for every word in this and your other threads, you're great.
But i wanted to ask you a thing... haven't you skip the 4th lesson about the currencies to watch? in the index you've made at the beginning of this thread you had written something about it.
Anyway, thanks for everythink.
But i wanted to ask you a thing... haven't you skip the 4th lesson about the currencies to watch? in the index you've made at the beginning of this thread you had written something about it.
Hi,
Welcome to the thread.
I covered the pairs to watch in the correlation lesson instead.
You only need to trade 5 or 6 pairs to make this work.
GBPUSD EURUSD USDJPY GBPJPY EURJPY (EURGBP optional)
GBPUSD & EURUSD you trade alone, as you would USDJPY.
GBPJPY & EURJPY you trade whilst keeping an eye on USDJPY & GBPUSD (for GBPJPY) and whilst keeping an eye on USDJPY & EURUSD (for EURJPY)
EURGBP you can trade whilst keeping an eye on GBPUSD & EURUSD.
I hope this helps
Types of trade we look at will be up next. this is where things get exciting. Just give me an hour to get it typed up. I will need to add approximately 10 snapshots too, so get your brains in gear. We are almost ready!!
__________________ I'm now sending trading notes out twice a day with videos too. Have a look HERE.
There's one set at 6:30 UK time for London and one at 12:00 for U.S session, plus I will send a summary video after each session
Linear Mode
