In this video:
00:37 Fascinating insights of New Zealand Prime Minister
02:00 +4.7% risk to reward on 4 hourly charts
02:42 Few things to learn from that risk to reward
04:20 NZD’s been the strongest currency performer
Well I’ve just got home after having lunch with the Prime Minister. It’s a true story and I’ll tell you about it right now.
Hi, Andrew Mitchem here, the Forex Trading Coach, today is Friday the 26th of April.
Lunch meeting Mr John Key, the New Zealand Prime Minister
That’s right, I’m buzzing at you, I’ve just had lunch with the New Zealand Prime Minister. It wasn’t just me, there was a group of business owners, local owners, and I was invited to attend and to have lunch with the Right Honourable John Key, who is our New Zealand Prime Minister. A brilliant person to listen to, a fantastic speaker, a brilliant mind when it comes to numbers.
Talking a lot about governments overseas, about the world economy, budget deficits and where he sees the whole shift in power in the world and in the whole global economic situation over the next sort of 10 to 20 years. Really fascinating insight of how the whole political spectrum operates and talking about Obama and Cameron and other people that he’s in regular contact with.
So really, really enjoyed it; great opportunity.
It’s not every day you get to sit and have lunch with your own Prime Minister or any Prime Minister for that fact. So, I’m on a bit of a high right now because I’m a real fan of John Key. Incidentally, he used to be a currency trader, a Forex trader over in New York and also in London; has made all his money out of Forex trading. So I suppose he’s a bit of a connection there and another incident of what, the thing that attracts me to him as a person.
But as you can tell, I’m buzzing so that was that.
High Reward:Risk Trades
On to the trades themselves this week, I’ve since sent through some videos that you may have seen some valuable insights into risk to reward. I call it reward to risk because I’m always looking at how much reward I get for how much risk I get.
I sent through a video last Friday of a GBP/JPY trade that I took on the 4-hourly chart that had a 4.7 risk to reward or reward to risk. So in other words, I made 4.7 amount of whatever it is I was risking. So let’s say if I was risking 1% of that trade, I would’ve made +4.7% return on that trade. I actually risk ½% so I made +2.35%. And then yesterday, I sent through another example of a trade, also on the 4-hourly chart on the GBP/CAD and that had about a +3.6%, I think it was, sorry a 3.6 reward to risk or for ½% risk on the trade, means I had a +1.8% return.
So a few things to learn from that. Risk to reward, obviously it’s crucial, it’s critical when you’re trading actually. It’s so important it’s not funny. You really need to be looking for these trades that give you several times reward of the risk you’re placing on that trade. What that means is you can be wrong more often than not if you, you know, if your success rate’s not high and still make really good money. And that’s what I find with the 4-hourly charts and the daily charts.
Daily and 4 Hourly Charts Trades get you away from watching charts all day
So they not only have the advantage of not being tied to this thing, you don’t need to be tied to your screen all day long. Like if you add it up, I probably don’t watch charts for an hour absolute tops during the day, absolute tops – an hour. And still do really well from it, so you don’t need to be watching charts all day, you don’t need to be scalping 1 minute and 5 minute charts all day and night. It’s just, you can do that if you want but it’s not necessary and you really don’t need to have to do that in order to make good money. And I think that’s one of the areas where a lot of us, especially newer traders, go.
They go wrong.
They think they need to go down and be scalping all the time, collecting all these pips and frightened to go out the door in case they miss a movement.
Well forget it.
Trade Less and make More
Trade less, enjoy your trading more, have less stress and make more money. So to me it makes logical sense doing that. So that risk to reward it also helps control your emotions as well.
The New Zealand Dollar Strength
This week we’ve seen a pretty mixed week in terms of the currencies, not a lot really happening in terms of overall strength or weakness consistently throughout the week. Overall I suppose you could say the NZD’s been the strongest performer at that. And also we could well have seen the bottom in gold and silver, hard to tell right now but it’s certainly been some good strong bullish movements back up in both gold and silver this week after the huge crash we had a couple of weeks ago.
So that’s all for now, I’m off to buzz a bit more about meeting the Prime Minister and look forward to talking to you this time next week.