Why Quitters Will Never Win
In this video:
00:31 – A true sporting story showing why you should never quit
02:05 – It shows the power of the mind – both belief and doubt
02:45 – It’s no different as a Forex trader – don’t quit if it’s something you really want to do
03:45 – Stick at it and follow the basics
04:30 – Christmas sale 12th – 16th December
I want to talk about why quitters will never win, so let’s talk about that and lots more right now.
Hi, forex traders. Andrew Mitchem here, The Forex Trading Coach. This is video and podcast number 206. I want to talk about a subject and tell you a story that happened this week. I want to talk about why quitters will never, ever win.
A true sporting story showing why you should never quit
I’m a big cricket fan, so let me start by saying if you’re in the US and you don’t know what cricket is, just imagine it’s like baseball, as an example. If you do know what cricket is, fantastic. You’ll understand the story.
This week, I went to watch New Zealand play Pakistan in Hamilton, my local cricket ground. As I mentioned, I’m a huge cricket fan, and I’m a big New Zealand cricket fan. On the last day, New Zealand needed to bowl Pakistan out to win the game, and Pakistan also had a chance of winning so there could’ve been a win to Pakistan, a win to New Zealand, or a draw. All three options were definitely on by the last day of the game. However, by the T Break, New Zealand had taken only one out of the 10 Pakistan wickets and Pakistan were on the way to potentially winning the game.
At that stage it would’ve been very, very easy for New Zealand to quit, but they didn’t. They stuck out their game plan and in a dramatic last session in the afternoon, New Zealand took the further nine wickets and won the game. It was an absolute thrilling, amazing game. Whatever sport you’re interested in, you just imagine when you have that complete reversal and that comeback from behind sort of situation. The thing was, we never ever quit. We didn’t give up, and spirits for a lot of teams at that stage, at the T Break, would’ve been quite low, I would imagine, but we kept going, kept going. All the conditions were in Pakistan’s favor, really, but we just kept going, kept at it.
It shows the power of the mind – both belief and doubt
And it shows also the power of the mind, because as soon as we took the second wicket, we then started getting even more confidence and trying even harder, and as Pakistan started to fail then the self-doubt came into it and they then crumbled and we excelled. Completely opposite to the previous five hours of play on that day.
Amazing result for New Zealand cricket, but it showed me how quitters never win. We kept at it, kept going, and in the end we won and had an outstanding victory. Exactly the same as a forex trader.
It’s no different as a Forex trader – don’t quit if it’s something you really want to do
You know, I’ve had people come to me who have been trying to trade various markets, not just forex, for 10 years. They’ve come to me and said, “Look, I need to make this work. I want to make this work, but I’ve not quit,” and this particular person who I’m thinking of is now one of my very best clients. He’s doing extremely well, but I’ve got a number of people like that and when you find the people who end up being the most successful and the most profitable, not always do they start the best and it’s a very common occurrence.
The people who jump in and go, “Yeah, I want to do this and I’m going to double my count and make a fortune.” They generally don’t make it very far because there will be something that will happen, the next shiny object or something will happen, the trades won’t work out quite so well as they planned, and those people tend to be the people who give up and quit.
Stick at it and follow the basics
However, the people that stick at it and ask questions and attend my webinars, log in to my membership site onto the forum site, ask questions again, post trades, may not always be very successful to start with but they stick at it. They don’t give up, they follow the methodology and the basic principles of what I teach. Those are the people who long-term are in almost all cases the most successful traders.
You can see the correlation there. Not always is the path easy, but the people who stick at it and trust in the system and trust in themselves and seek help, they are the ones who do the best in the end. It’s a very true story for not only the sport of cricket or trading, and in life in general.
Christmas sale 12th – 16th December
That’s the story and the message for this week. Just one final thing to let you know, between the 12th and the 16th of December I’m holding a Christmas special. Christmas sale. There are going to be three very different and unique ways of joining the course that will be available to you. If you would like to know more, all you need to do is click on the link below this video, register your interest, and I’ll be sending you some emails and also links to that sale when it starts on Monday the 12th of December.
Have a great weekend, look forward to seeing you this time next week.
#205: Sticking with the Basics is the key to success
In this video:
00:35 – Danger – We all want the instant fix – but be patient
01:15 – Most Forex traders will go through this stage
01:33 – The foundations and basics are crucial
02:35 – Live webinar with clients proved that the basics are so important
04:24 – I post daily trades and hold webinars to enforce the basics
05:09 – Wait for the high quality setups
As with most things, sticking with the basics is absolutely key to your success, and it’s no different in Forex Trading. Let’s talk about that and more right now.
Hi, Traders. Andrew Mitchem here from The Forex Trading Coach. Today is video and podcast number 205, and I want to talk about getting back to the basics, and how very, very important that is for your long-term success as a Forex Trader.
Danger – We all want the instant fix – but be patient
Now, as people, as Forex Traders, whatever it is we do, we all what that instant fix these days. No one’s patient. No one can wait. Everybody wants the answer. In trading, so many people want the get rich quick scheme. It won’t happen. Everybody’s sort of wanting to pay for an answer.
No one’s prepared to work at things, and it’s a big, big issue. We all want the shiny object. We want the next thing. We want our quick fix. If it doesn’t work, we’re onto the next thing. We scrap that. We’re on to the next forum, we’re onto the next robot, the next indicator, whatever it might be. You know what I mean, don’t you? Because, I know you know, because I’ve been there and done it myself.
Most Forex traders will go through this stage
If you’re in that learning stage as a Forex Trader, I can almost be certain that you’re doing that or going through that process right now. If you’re not, then you’re probably going to be. It’s a big danger to get into those, so if you haven’t reached that stage so far, stop what you’re doing right now, listen to this video and podcast. It’s really important.
The foundations and basics are crucial
Reasons being whatever we do in life whether it be raising a child, building a family, building a house, flying a helicopter, learning to trade Forex, whatever it is, it’s all about the basics and there’s so many aspects of life that that is so important in. Another thing that I, personally, do apart from flying is I’ve been practicing Karate for, oh, probably ten years now I think. Somewhere around about that. Karate is exactly the same. It’s all the basics. It’s repetition. It’s doing these things hundreds and thousands of times so that you get them right and any shortcut, whether it be with your grounding, your footwork. If you don’t get that right, like the foundations, the building blocks, everything else falls to pieces. You think about building a house. If you don’t get your foundations, you don’t get your groundwork, don’t get your plans, all those type of things right, the building falls to pieces. Exactly the same is Forex Trading, you have to have those basics
Live webinar with clients proved that the basics are so important
Now with that in mind, the reason why I want to bring that subject up is just yesterday, I held a live two and a half hour trading room webinar with my clients. Clients from all around the world on the webinar. I’m trading on my screens behind me here. People can view my screens, hear me talking about different trades that I’m taking. Now the market was pretty quiet during the session. I had just took two trades, and so in amongst answering questions and answers for people, I showed a lot of trades that people have been posting on my forum site. Now I have a great forum site for my clients that they can go on, and share trades, and look at trade setups, post screenshots, et cetera.
There’s been a huge number of really good trades posted over the last couple of weeks on that site, so I shared a lot of those trades on the webinar, and discussed them with my clients. Now there was a huge high correlation between the successful trades that people posted that had a lot of the basics in place, and some of the trades that people posted that didn’t work out. Now the old one was a good technical setup that just didn’t work. That’s the nature of the market. Nothing’s one hundred percent. Never has been. Never will be, but where people have posted trades that didn’t work, that failed to get to that profit target, or got stop out too soon. In most cases, the basics were not there.
If the basics are not there, and the foundation of technical analysis was not there, then in most cases the trades failed. With the trades that were profitable, the vast majority of them had some great technical setups in place, and people saw them. They waited. They were patient. They saw the trade. Took the trade, but waited for the right set up. When that right set up occurred, they took the trade and, in most of those cases, the trade was profitable.
I post daily trades and hold webinars to enforce the basics
It comes back to those basics again. Get the basics of the foundation. Whatever your trading strategy. I teach that over, and over, and over again. That’s why I post daily trades for my clients. That’s why I hold live webinars. That’s why I have the forum site. That’s why there’s lots of videos, questions, and answers, et cetera. It’s all about getting the basics right.
Sometimes when the market is not showing you very many set ups, then it can be quite hard just to say, “Well, I can’t take the trade right now. This trade’s reasonable, but it’s not really a great set up.” Then some cases, so many people want to just sort of push that trigger, they want to take that trade because they feel they should be trading.
Wait for the high quality setups
Whereas, the lesson is wait for those good high-quality set ups. When you see them, definitely take them. Don’t be scared on taking them when you see them. Have confidence in your system and faith in your trading ability and your trading strategy, but be patient and wait for those good set ups. It’s really, really important, so every time you go to trade, have a think about the set up. Is this really a perfect set up? Are all these things lining up in order? Are they showing at the same time? The confluence of events, you’ve probably heard that before.
If that is the case, it meets your criteria, it meets your reward to risk. It’s trading. The reversal trades, continuations, with a longer term trend, whatever it is you look for, if you see those things on your charts, don’t be scared to take the trade. If they’re not all showing, let the trade go, so I hope that helps. Basics are key to anything that you do. Any foundation. Any building a company. Like I said, building a building, construction, flying, Karate, raising kids, whatever it is. You do those basics right, you give yourself a high probability chance of success, so I hope that helps.
Once again, this is Andrew Mitchem, from The Forex Trading Coach. Have a great weekend. I’ll catch you this time next week.
#204: How Important Are High Reward:Risk Trades?
In this video:
00:25 – Should you aim for lots of small gains or target the homeruns?
01:05 – How do I get an 80% win rate?
01:46 – The solution is to trade higher time frame charts
02:28 – Place you stop loss for a reason
03:21 – Forget about making pips
05:00 – This shows how very important high reward:risk trades are to your trading success
06:12 – Black Friday 2016 sale
How important is it to look for high reward risk trades as a Forex trader and how does that impact your overall profit? Let’s talk about that and more right now.
Hi Forex traders, Andrew Mitchem here, the owner of the Forex Trading Coach. Today is video and podcast number 204.
Should you aim for lots of small gains or target the homeruns?
And, I want to talk about a really important subject. I’ve had an email come through here from Robert over in the US and Robert said to me, “Andrew look, I keep getting told to go for small incremental gains per day instead of hitting the home runs.” I can tell Robert’s from the US because he mentioned home runs and he said, “I apologize for not using cricket terminology.”
He said to me, “Look, I keep doing this and the problem is that where I put my stop loss, it doesn’t allow me a favorable reward to risk, so therefore I’m making lots of small gains and getting a few losing trades and of course the losing trades out do all the gains you made.”
How do I get an 80% win rate?
It’s quite a common problem. I get people who say to me, they say, “Andrew, how can I get an 80 percent win rate, a strike rate people like to call it, within my trading?” Well, why do you want to achieve an 80 or 90 percent win rate?
Yes, on paper it sounds fantastic to get all these winning trades, but the reality is, if you have a system like that, in most cases you’re going to find that if you have that one or two losing trades, especially if you get them back to back, that it wipes out all your gains that you just made and Robert was finding exactly the same problem from the advice that he was given. He said to me, “Hey Andrew, look can you give me some new advice, I suppose, or what’s your take on this? How do I overcome the problem?”
The solution is to trade higher time frame charts
To me the answer is generally to get onto the slightly long timeframe charts. I find that generally the higher the timeframe chart, the higher the reward to risk I can get off of those charts and off of those trades. There are several reasons. Spread really doesn’t pay much of a, it plays very little importance on a longer timeframe chart. Of course, if you’re taking trades all the time on five or 15 minute timeframe charts, spread can soon eat into your profits but if you were taking trades you know, like maybe one or two trades a day on a longer timeframe chart, spread really isn’t that sort of significant a factor really.
Place you stop loss for a reason
If you have a longer timeframe chart, you can generally place your stop loss for a safety level, at where it should be for a reason, not just because it’s X number of pips away. On most cases that is a very, very bad way of trading because if you pick 50 pips, as an example, 50 pips on the euro/US is completely different to 50 pips on the euro/yen or 50 pips on the euro/franc even. You get pairs that move a lot and you get pairs that move a little bit. Picking the same pip stop loss is not a great way of trading and of course different timeframes require different levels.
I like to say, let’s put your stop loss at a level that if that stop loss gets stop out, you accept you got the trade wrong, the market went against you, whatever the reason but you accept that you lose on that trade.
Forget about making pips
If you forget about making pips and make that a percentage of your account if it gets stop out, that also helps you. The important thing is to try and look for trades that have a safe level for a stop loss and also give you plenty of upside potential.
Now if I’m trading on four hour charts or six or 12 or daily or weekly, generally as I get higher timeframes then generally the reward to risk gets higher, but I like to look for trades that have a two to one reward to risk right through to some trades have up to a five to one reward to risk. Most would be between a two and a three to one reward to risk, most trades that I take, so that means that if I’m risking half of one percent of my account on any one particular trade, if I get stop out, I’ll lose half of one percent. If I have a two to one reward to risk trade, I make one percent if it hits the full profit.
If it’s a three to one, I make one and a half percent gain. If it’s a four to one reward to risk trade, I make two percent gain by risking half a percent. You can see in that case, with a four to one trade, I could lose let’s say three trades and I’d lose one and a half percent total, yet my fourth trade is a winning trade and I make two percent, so therefore I‘m net plus point five percent. That example is only with a 25 percent win rate. Now of course I like to get a higher win rate than that, but you can see in that example you‘re losing 75 percent of the time, but you’re still making money.
Yet you get people who win 75 percent of the time or higher, and they lose money.
This shows how very important high reward:risk trades are to your trading success
You can see how very, very important high reward to risk trades are. To answer your question Robert, it’s generally, a suggestion from me would be to go onto the higher timeframe charts. You see, you can’t trade a 15 minute timeframe and put a small stop on there and aim for this massive reward. Sometimes yes you will get there, but not that often because the shorter the timeframe, the more the noise, the more the up and down movement within the price.
To go and pick the absolute top or absolute bottom and have your stop loss at that perfect level and your profit target at that perfect level and get that perfect move, the shorter timeframes, it’s very hard to do that consistently. Whereas the longer timeframes you accept you’re in the trade for longer, you have news events going on, you have your trade in potentially overnight. You have all sorts of things happening within different trading sessions but because you’ve got a bigger stop loss, you give that trade and that overall longer term trend time to get to your profit target.
It’s a lot less stress involved, it’s a lot higher reward to risk, which generally means you make more money and ultimately that’s what we’re trying to do. I hope that helps answer your question there Robert.
Black Friday 2016 sale
One last final thing, this Friday I’m holding a Black Friday sale. If you’d like to get in and have access to my course at exceptionally low rate, click on the link below this video and I’ll have a link there that will take you through to the Black Friday page. It’s only a 48 hour sale.
It’s pretty much, I’ve been looking at just the US and Canadian traders because it’s, Black Friday is generally something that affects people from those countries but it’s available to anybody. Wherever you are in the world, if you’re interested in getting a great deal and having a Black Friday deal, a special way of getting on to my course at a massively discounted rate, click on the link below this video and it will be this Friday.
Have a great weekend, see you next week.
#203: How to Trade a Reversal and Retracement
In this video:
00:28 – How to tell if the market is trending, in a reversal or a retracement
00:48 – The result of the US Election
01:21 – Strength in the USD and GBP
01:50 – A reversal or a retracement?
02:35 – I use Bollinger bands to help identify where the market is trading
05:30 – Consider the Daily strength to assist your trading
08:01 – Trading from the right hand side of the chart is what makes a good trader
How can you tell if the Forex market is reversing or it’s just in a pullback or a retracement? Let’s talk about that and more right now.
Hi Forex Traders, Andrew Mitchem here from The Forex Trading Coach, this is video and podcast number 203.
How to tell if the market is trending, in a reversal or a retracement
I want to talk about a question that I’ve been emailed from Darren in the UK who said, “Hi Andrew, can you talk about whether, or how to tell whether a market is trending, it’s pulling back or it’s in a reversal or a retracement?” It’s an issue that we all face as traders.
The result of the US Election
I’m going to talk about that really shortly, but first before we get into that, I‘ll need to just talk about the US election because on last week’s video and podcast, I said, I wonder what’s going to happen? I suppose in all honesty, against all odds, Donald Trump will be very shortly the next US president, number 45 I believe. It just goes to show out there that you just cannot tell what’s going to happen because of course all the polls were suggesting Hillary Clinton was a clear winner, but reality said that it was not to be.
Strength in the USD and GBP
Right now, actually the US dollar, although it was pretty volatile when it came out, the US dollar is actually strengthening a lot and interestingly, also is the British pound. I suppose with the British and the Brexit issue. In someways there is some similarities between voting for Trump, and so it’s actually given strength to the British pound which is quite interesting. Just keep an eye on your charts and your trading, and really trade what you see on the charts.
A reversal or a retracement?
Back to the topic of today’s video and podcast, how do you tell if you’re in a reversal part of the market, or how do you tell if that trend is going to continue? Let’s say the market is moving up and you get a reversal signal, and how do you know that’s going to reverse the wrong way, or how do you tell that’s just going to pull back a little bit and then continue upwards again and of course the same for a sell trade but in reverse. Really, it’s very difficult. Right at the time of the reversal signal, it’s very difficult you don’t really know whether that’s going to be the start of a massive change in direction or that’s just going to be a slight pullback and then it continues again.
I use Bollinger bands to help identify where the market is trading
There’s a few things that I use that can help you with to find out more, and I use Bollinger bands. I love Bollinger bands, they give me a fairly good guide to what part of the chart that prices in right now. Because, if you just have price on your charts, it’s really hard unless you’re of course, you’re using support and resistance lines, and round numbers, which I use as well. Without Bollinger bands, it’s really hard to see if the market is sort of likely to reverse or likely to pullback. I’ll give you some examples. I’d love to use reversal signals when the market is … When I see reversal signals and the market is nearly upper or lower Bollinger band.
If you’ve had a lovely trend upwards, and go and look at your charts, it doesn’t matter what time frame chart. You’ve had a really good move upwards, a good strong move upwards, and you see a great reversal signal, or potentially even better. An indecision candle, and then a reversal signal all showing around the upper Bollinger band. The likelihood is that the market will then pullback. Same in reverse at the bottom Bollinger band, the price has been moving down, and down, and down. Then you get a bullish signal at the bottom Bollinger band.
Price for whatever reason, and it’s quite uncanny how it happens, seems to like to go from upwards to lower, to upwards to lower Bollinger bands. In general, it doesn’t happen all the time. When you see a reversal, let’s say at the top of a Bollinger band, and it’s a bearish sell set up. It’s a great opportunity to look at selling, and riding the market back down. You need to be mindful of a few things. If you see that happening, in theory, a reversal signal has, I suppose a slightly higher risk because you are trading against let’s say in this case, a big uptrend. You have to be mindful of a few things. This reversal signal might just be short lived, it may just be a small pullback.
If you see the pullback go to the middle Bollinger band, and then stall at that area, and then maybe you see a bullish signal, that to me is the great continuation pattern. We’ve seen the uptrend, we’ve had the pullback. Whether you’ve taken to or not, it’s pulled back and it’s now stalling and looking like it’s going to be bullish again from the middle Bollinger band. That to me is a safer trade setup, that’s what I call a continuation pattern, because you’re now trading in the overall uptrend but after we’ve had the pullback. That to me is a really good strong lower risk setup.
To answer Darren’s question, if the market, let’s say burst through that middle Bollinger band, and keeps going. The likelihood is it can’t, again, depending on previous highs and lows and round numbers et cetera, but the likelihood is, the price will then try to seek out the lower Bollinger band. That then could be … When it gets to that level, that’s the opportunity to look for bullish signals again as a reversal after the down trend.
Consider the Daily strength to assist your trading
The other thing that I personally also consider is the daily strength, and if I see clear let’s say on the British pound/US dollar, clearly is an example.
Let’s say I’m seeing lots and lots of strength in the British pound against the US dollar and the price is already at the upper Bollinger band, and I see a reversal. I’ve got to think very carefully whether I want to take that trade or not because it’s trading against my likely longer term direction. If I did take a sell trade there, and the setup was good, I’m mindful, and I’d be more inclined to monitor the trade, because it’s trading against my daily direction, my longer term biased. I could either take the trade and think, well, I’m going to be watching this trade a little bit more carefully or I ignore the trade.
If the reversal happens, great, I’m not in the market, it doesn’t matter. I’m there waiting for the market to pull, like to stop that reversal, to pullback, stall, ideally let’s stay at the middle Bollinger band and then see the goodbye bullish setup to then look to ride the market back up again. Because, in that instance, I have my daily direction, let’s say I even have my weekly direction all showing bi-trades for the British pound/US dollar. The market’s moved up, it’s become exhausted, it’s pulled back. It’s then stalled at that certain level, let’s say I have a round number in there or a daily pivot point as well or previous high, it’s balanced at that level.
Then, I then get the great opportunity to trade with my longer and my medium term direction, and right now on my shoulder time frame chart, whether it be a full out chart or one out chart, 15 whatever minute, whatever, it is you trade. You are then seeing that great opportunity to take the British pound/US dollar up again with all the safety of those longer time frame charts knowing fully well that you’re in an uptrend right now but you’ve just had a small pullback. Now I’m looking to ride it up again. In most cases, you can have a very small stock loss on those trades, and the likelihood is, you’re going to get a very high reward to risk out of that trade.
I hope that helps in terms of looking for reversals, pullbacks, et cetera over retracements. Go and have a look at your charts, look at any time frame chart, and put those Bollinger bands on. When you see those reversal signals or those stalling of a trend, and they happen around those upper or lower or middle Bollinger band, that gives you a great opportunity to know what part of the chart you’re in right now.
Trading from the right hand side of the chart is what makes a good trader
When you’re trading from the right hand side of the chart, the hardest part is knowing where you are right now. In hindsight, it’s all very, very easy of course, but you need to be able to do this in real time. That makes a difference between an average Forex trader, or a losing Forex trader, and a very, very good Forex trader.
I hope that helps. This is Andrew Mitchem from The Forex Trading Coach. I’ll look forward to bringing you more news, information, Forex trading tips this time next week.
Do You Struggle to Understand Fibonacci Levels
In this video:
00:23 – Difficulties with trading using Fibonacci levels – plus the US Election
00:56 – People struggle with using Fib levels in real time
02:11 – Big traders and banks use Fibonacci levels
02:45 – Fibs give me a great retracement entry
04:15 – No guessing with my entry and exit levels
05:05 – Drawdowns are kept to a minimum
05:54 – The US Election – Hilary or Don, who will win?
Do you have a problem understanding Fibonacci levels? If you do, listen up. I’ve got some great information and of course, news about the upcoming U.S. election, so let’s get into it.
Hi Forex traders, its Andrew Mitchem here, the owner of The Forex Trading Coach.
Difficulties with trading using Fibonacci levels – plus the US Election
In today’s video and podcast which is number 202, I want to talk about difficulties about trading with Fibonacci levels and of course, next week, we have the long anticipated and really, at this stage, who knows what the outcome’s going to be, the U.S. election, so let’s talk about the trading side of things first, and Fibonacci levels.
People struggle with using Fib levels in real time
Last week I said at the end of the video and podcast, “Drop me an email with questions that you have about your trading,” and an overwhelming majority of people, a huge number of people, wrote and said, “Andrew, can you help us with understanding Fib levels, Fibonacci levels?”
I’m not going to explain the whole “what are the Fib’s, how are they calculated?” You can find that all online elsewhere, but the big problem that I found years ago when I started trading with Fibs is that they work beautifully in hindsight, a little bit like Elliott waves, if you have tried Elliott waves. You can see them all plotted on your charts, extensions and retracements and waves, et cetera, whichever you traded, Fib levels or Elliott wave, and you can see it all in hindsight because you know exactly where to draw your levels from and to and in hindsight, absolutely wonderful, but the problem that I found, anyway, is that in real time, I just didn’t know where I was drawing levels.
Am I at a swing high now or maybe at a couple bars later I might be at a new swing high, so therefore my levels are wrong, and to me it was an absolutely nightmare. I found it real difficult. Although I like the concept, in reality and trading from the right hand side of the chart, making the decision right now as the market’s moving up and down, I found it virtually impossible to trade either of those 2 principles.
Big traders and banks use Fibonacci levels
But, as you know, if you’ve been trading for a long period of time, a huge number of technical traders in big institutions, big banks, et cetera, they use Fibonacci levels, so I was determined to try and find a better way of trading that suited me using Fib levels all those years ago, and today when I found something that worked, I still trade exactly the same way today, and that’s exactly how I help and teach my coaching clients using the way that I have discovered and found Fibonacci levels worked for me.
Fibs give me a great retracement entry
What I love about Fib levels, the way that I use them, is that they give me a fantastic retracement entry, so it means I’m buying below the current price or selling above the current price, so I’m using limit orders, buy limits or sell limits. What that does is if the price retraces to my entry level, it gives me a far greater reward to risk on my trade, rather than just jumping in straight away on the close of the candle at the market, I’m waiting … Let’s say I’m buying. Rather than jumping in up here, I’m waiting for the price to retrace to a set level using my Fibonacci levels. If the price retraces there, the market automatically fills my trade. I’m not sitting there waiting for that price to happen. It fills me at that level, so it gets me in at a better price, and then at that point, if I’m buying, I’m anticipating that after the markets pull back, it’s then going to turn around fairly shortly after I’ve taken that trade and then start heading up again.
It means that I can have relatively small stop losses and because I’ve got it at a better price than I would’ve straight away at the market, it means that my reward to risk becomes better which means that I don’t actually need to have a win rate quite so good because my reward to risk is good, so I use the Fibonacci levels and certain levels that all are covered in great detail in my coaching course that I teach to my clients and I explain every day on my daily trading suggestions, so I’m using a Fib level for an entry, I’m using it for a stop loss and I’m using it in an extension for my profit target.
No guessing with my entry and exit levels
There’s no guessing involved, then, when it comes to setting those important levels. I know my profit target is going to be at this certain extension level on all of my trades, so I’m not thinking, “Where do I put my profit target and should it be here or should it be there or I’m not quite sure.” None of that comes into it. I have set levels that are real simple and easy to place and to understand, and it is absolutely remarkable, absolutely remarkable, how often the price respects those levels that I use. It just blows me away, and of course it doesn’t happen on all trades. It would be silly to say it’s going to happen on all trades. It does not, but it’s a huge number of trades where you see the price will retrace, it will get you in and then it will turn around not long after, either right on that point or not long after.
Drawdowns are kept to a minimum
Another great thing is your drawdowns are kept very, very small on most trades because it’s remarkable how often the price does retrace once the trade gets filled, and another benefit is it can be used across all this principle that I use and trade can be used across any time frame charts. Personally I use it on the four hour charts and higher, the slightly longer time frame charts and across any currency pairs, so it really is a very simple, highly effective way of using Fibonacci levels to benefit your trading. If you’d like to know more about that, just get in touch with me and really the only true way of using that information is to jump on to my course. If you would like to know more, send me an email and I can details through to you.
The US Election – Hilary or Don, who will win?
Number 2 topic for today, of course it’s the good old U.S. election next week. Really it’s 50/50 right now who’s going to win, whether it’s Hillary or whether it’s Don. Who knows which way it’s going to be. It’s going to be quite interesting, a lot of brokers, of course are just giving you a bit of a warning to say just be careful with your trading. They’re going to sort of have a few restrictions on most trading accounts over the next couple of days, so don’t be in a hurry to sort of have too many positions open on your account probably Tuesday, Wednesday, even Thursday of next week. Just be real cautious with that news event. Because it is so close it might be one of those events, as a trader, you just sit out of the market, let the market do its thing. Yes, you could make a lot of money or you could lose a lot of money. It’s a bit like the Brexit thing. You’ve got to be real careful when you’re trading those massive news announcements.
The easiest answer for most people, when the logical answer, sensible answer, may be just to give trading a break for a few days or just be real careful and watch those trades if you have any open at that time. By this time next week we’ll know whether it’s Hillary or whether it’s Don who’s in charge.
Look forward to talking about that and more this time next week. Have a great weekend. This is Andrew Mitchem, The Forex Trading Coach.
Looking after your Investments
In this video:
00:29 – Managing your investments and retirement
01:02 – Retirement fund closes with zero gains
02:27 – 20 years of payments wasted
03:23 – Understand how to trade for yourself and look after your own future
04:30 – Made more trading FX this year than the retirement fund has made in 20 years
05:14 – Taking control of your finances
05:55 – Topics for future podcasts and videos
06:05 – US Elections approaching – be careful with your trade setups.
Should you rely on someone else to help with your long term investments in your retirement, or should you take care of that for yourself? Let’s talk about that and more right now.
Hi Forex traders, Andrew Mitchem here, the owner of The Forex Trading Coach. Today, this is video and podcast number 201.
Managing your investments and retirement
I want to talk about something that affects all of us, when you think about your investments, when you think about longer term investments, when you think about retirement, how do you manage that?
Is it something that you just handover everything to someone else and say, “You’re the experts, and I’ve got no idea what you’re doing with my money or my investments, but go and do it for me.” Are you the sort of person who wants to take control of things for yourself and really understand what’s happening, because after all, it’s your money, and your investments. Which one are you?
Retirement fund closes with zero gains
The reason I want to talk about that is because of an experience I’ve had just today. Now, I flew to Tauranga, which is a beautiful part of New Zealand, today to see a client, who’s just joined me. He’s actually doing really, really well with his trading, just starting off small, but going very well.
Through our conversation this morning, he said to me, “Andrew, I’ve got a bit of a problem.” I said, “Okay, so feel free to share it if you wish to.” He said, “I’ve been investing,” and I’m not going to tell you the companies name, but it’s a very well known retirement investment fund here in New Zealand. It’s a global company for they have an office here, and he’s been with them for 20 years, he’s been paying money as a retirement fund into this company. I’ve just written and told him, now, I don’t know the legalities with this, and it kind of doesn’t quite add up, but this is what he’s told me today. He said they’ve written to say, “You can take your money out now, but the money that you take out is only the money that you’ve put in over the last 20 years. No gains or anything like that.”
To do that, to have the privilege of taking his money out, they’re going to charge him fee to do that, like an administration fee anyway, and that’s quite a hefty fee. You think about that, money that he’s paid in.
20 years of payments wasted
After tax money that is put into this retirement fund for 20 years that he’s been working, he’s going to get exactly the same amount of money out today than what he’s put in over those 20 years. No increase in account, no gains, nothing like that. Of course, with inflation and everything else, we’re going to have what you put in, $1000, 20 years ago is not going to buy you very much today in comparison.
Effectively, for 20 years he’s put his money in, he’s paid fees, he’s done everything else, hoping that it’s going to be his sort of nest egg for retirement, It’s just not going to happen, it’s completely out of his control. By everything they said to me today, he has little choice but to just take this money out. I suppose, like you were saying, the good thing is that at least he can get his money out, but it’s not like he’s got any gains or anything like that.
Understand how to trade for yourself and look after your own future
It got me thinking, and it got me sort of talking and discussing trading and Forex with him, and said, “Look, you know, yes you’re on a small account today, but if you can understand how the market works, if you can make a percentage on that small account today, you have the ability to make that same percentage or more as your knowledge gets better, over any size trading and account. It’s not like extra work is involved, it’s not like you’re working extra amount of hours to get extra amount of money.” In most traditional jobs, the only way you’re going to get more money, if money is the object and the name of the game, is to either have a higher level job, potentially more stressful, certainly, probably a lot more hours or things like that.
The beauty is, we’ve discussed today with Forex Trading, is that it’s, the important thing for him to grasp right now, is to continue doing well like he’s doing. He’s doing a great job and making some great returns. Keep doing that, prove to himself he can do that across various market conditions, and then build up from there.
Made more trading FX this year than the retirement fund has made in 20 years
To be honest, what he’s already made so far this year, is more than that retirement fund was going to pay him in many years. Anyway, even if he remained with them and even if they honored his returns, which they haven’t done anyway.
It just got me thinking about that, and I wanted to share that with you today, because everybody is affected by this. You have a real good think about what you want to do with your retirement fund. Are you happy just to hand those funds over to some company who sort of big multi-national company. You don’t know what they’re investing in, you don’t know anything that’s really, that’s going on there. Would you want to take control of yourself, not only gain a great understanding of great market and knowledge about what’s happening around the world, and things like that.
Taking control of your finances
But also you’re taking control of what’s going to happen with your retirement and your investment, your finances.
Think of a really important part of trading that a lot of people don’t sort of grasp that importance. Everybody is out there on day one trying to make an absolutely fortune and double their account every month. It’s pointless, get an understanding of doing it properly, doing it with low risk. If you can do that, you can look after your investments, your retirement et cetera, cash flow, all the benefits of trading, just by yourself. You’ve got the knowledge that you’re doing this for yourself. Hope that helps.
Topics for future podcasts and videos
If you have any topics you’d like me to talk about on future videos and podcasts, just drop me a line, [email protected], and I’ll be more than happy to discuss those with you.
Just be aware that now we are at the end of October, leading into early November. Of course, we’ve got the US elections coming up in about a week and a half. Expect the market to be either crazily volatile, or very, very quiet, leading up to that. It could be either, who knows what is going to happen leading up into that election, and probably for a little while after.
US Elections approaching – be careful with your trade setups.
Just take things a little bit carefully, reduce your risk, look for those A grade set ups. Anything is a little bit sort of dodgy, fifty-fifty. I don’t mean dodgy like a bad set up, and anything that is not quite perfect, don’t take it, just be real careful of the market conditions for the next couple of weeks or so. Look forward to talking to you this time next week, and I’ll bring you more Forex Trading tips and information. This is Andrew Mitchem, The Forex Trading Coach. Have a great weekend, see you this time next week.