Monthly Archives: August 2010

Reversal Signals: Inside Bars

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I still have the problem of forex trading by emotion. Eventhough I already decided that I will follow my own trading strategy. My emotions still get the best of me. And because of that, I fail to recognize signals that will lead to profit. Here are some signals that I’ve been waiting all day, yet failed to take them because I’m too focused on trading too much and not waiting for the perfect setup.

Reversal Signal # 1: Inside bar

An inside bar formed after a trend can only signal a reverse of the trend. BUT, if an inside bar was formed and the confirming (next bar) failed, then the trend will continue.

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Reversal Signal # 2: Reversal Bar (Pinbar Reversal Equivalent)

This doesn’t look like the traditional reversal pin bar right? But its actually a reversal pin bar when you look into longer charts. The bars that formed that are almost identical in height signifies that bulls and bears where reversed but 2 bars apart. The confirmation signal should give you a go if you should enter. In which I failed.

I also think that the doji after the confirmation bar makes it even stronger. When it means that the bulls failed to take over the market. Hence, the bears won the trend.

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I’m a little frustrated with today’s trade. I seem to be a little distracted and focused on making money instead of waiting for the setup to present itself.

Polishing My Trading Style

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Been trading demo and live money for weeks and trying to come up with my own trading style. Been focusing on just 1 currency pair and with one time frame (15 minutes).

For the first few days that been trading, my funds are diminishing everyday, trying to bang my head on the wall why do I lose trade? I came up of the idea to make everything simple. Watch out for just 1 setup and wait.

Knowing that setup and pattern will get you acquainted with it. Making you recognize the pattern anywhere on the chart and recognize it when it is forming. You get to know one setup and pattern really well, try to learn another pattern until you build up your trading pattern vocabulary.

Indicators

I did a lot of indicators in the beginning. But the I didn’t like it that much. The reason for that is because all indicators are lagging. Meaning, they only indicate what already happened and try to assess what will. But still, things already happened, the ideal scenario would be – you to know things will happen before they happen, not after. All indicators lag behind.

That leaves me with nothing more than a blank slate of just candlestick charts. How can trade with just candlesticks? The answer is, price action. I’ve been amazed by how price action can well determine what’s happening in the market. It even tells you what the news tells you. Price action is a technical analysis that shows fundamentals very clearly.

Did I Profit?

I’m proud to say, after lots of weeks practice and money lost. I am beginning to feel that I learned and I am improving. I traded with small volumes last Friday night before market closes and it got me 40+ profit twice. And this time, I know it is not just by mere luck.

I’m still way behind my trading goal. But I know I’m seeing the light. I know I’m on the right track. And I won’t stop until I reach that goal. To anyone who reads this blog for forex trading tips. I think that the most important thing to know first when trading is to never give up. Developing your own style of trading by just trading by yourself, without the help of other people’s advice. We develop our own style when put into lots of pressure, emotions, greed and diminishing red font on your capital funds.

It is pressure that turns a lump of coal into diamonds.

P.S. I have a friend trading with me next week and we decided to record our trade in video. Stay tuned. :)

Forex Trading Small First Before You Go Big

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People are greedy. That’s a fact. But its the emotion that keeps us wanting more and always wanting to have the things we want. Makes us think of ways on how to get it. Don’t fear greed. Make use of it. Master it.

Most newbie traders, me and my friend, talked about the profits in trading. One of us will argue that to have great profits you need to have large amounts of pips in a winning trade. Ok. Fair enough. More pips = more profits.

Think about this, you have $1M in your account as capital. And your target profit in terms of pips is in the 200+ pip range. Sounds like a lot money to be made when you get that 200+ pip. But think of the risk you will get and also the time before you get to profit. In forex trading, there are fluctuations, can you stay calm when your account displays -100pip because of its initial retracement? Can you still decide if the trend is against you or its just a retracement? Remember, earning that kind of pip will require you to hold the trade from 1 hr to 1 day. Can you handle the pressure?

I say, pip size doesn’t matter. How much you risk in each trade matters. Playing with small profit pips will reduce risk. And also, having a profit target that’s small will minimize risk. Smaller pips means, shorter time inside a trade which means lesser risk, less pressure from greed or fear.

Pip size doesn’t matter, volume does. Increase your volume once you got the thing going. Increase more to profit more, while still maintaining the same pip per trade profit. And always remember, don’t overtrade. Take a time out. Every businessman needs his vacation once in a while.

Good luck!