Another +6.55% this week – Get the Basics Right & Trade Well
In this video:
00:36 – Travelling and Trading – Focusing on the Basics
01:18 – Another +6.55% gain this week
01:45 – Trading the Basics well leads to good trades
03:04 – Trading from the right hand side of the chart
04:05 – Control your risk
04:53 – Don’t count Pips
05:25 – Reward:Risk is important
06:01 – The importance of getting the foundations right
I’m going to explain why I believe it is so important that you need to get the fundamental basics correct in order to be a good trader. Let’s talk about that and more right now.
Hey, forex traders, Andrew Mitchem here, The Forex Trading Coach video and podcast number 330.
You’ll notice I’m wearing a jumper, a sweater back here in New Zealand in the middle of winter after three weeks over in Europe.
Travelling and Trading – Focusing on the Basics
If you’ve been following me over the last three or four weeks, you’d have been noticing that I’ve been overseas travelling around, and I’ve been really focusing on the basics.
In that time, I’ve been trading just the monthly, weekly and daily charts and nothing else. You would have seen that we’ve made some exceptional gains, including last week, which was my first week back at home. We had made with only a quarter percent risk per trade, 12.79%. That’s all trades that were posted on our membership site. Realistically, although I called it a 30-minute-a-day trip, most of the time, it was 10 minutes a day.
Another +6.55% gain this week
Just this week, it’s now Friday, I still have some open trades open that are at 0.9% so almost a 1% gain on open trades that are open just today, but this week already, we’ve had closed trades of another 6.55%, again, just using monthly, weekly, daily charts and a breakout strategy that we use once a week. Again, 10, 20 minutes once a day and that’s it.
Trading the Basics well leads to good trades
Not only did I want to share with you those results, which I believe are very outstanding and excellent results. Also, to let you know of course, they were on their membership site, but the thing is, the important thing is, yes, the results are wonderful, but it’s more important to understand that we do this by trading the basics, the fundamental basics. I don’t mean fundamental as in news announcements and worrying about what’s happening politically around the world. I don’t mean that fundamental. I mean fundamental basics as in getting everything correct, the basics, the building blocks, the foundations of trading.
You must remember that we’ve been doing this for a long, long time, and so it’s a bit like riding a bicycle. After a while, it becomes almost like second nature. However, we don’t deviate from the basics with our trading and that we have a strategy that we know and we understand and that’s very low time consuming for us to trade. It’s very easy to identify a trade and go, yes, it’s a trade or no, it’s not. That’s what I mean by the basics. You’ve got to have an understanding of price action if you want to become a technical trader. We use candle shapes, candle patterns, and it’s very easy to look at your charts but in real time.
Trading from the right hand side of the chart
It’s no good having a strategy or a system that you can make a fortune for or from it, but with hindsight, after you see what’s already happened. You’ve got to be able to do it from the right hand side of the chart. You’d hear me talking … You would have heard me talking about that many, many, many times about the profitable trader is the one that can trade from the right hand side of the chart and decide what’s happening. You don’t need to also sit there glued to your screens all day long watching line A cross over line B and all those things. That’s just not good trading in my opinion.
You need to be able to wait for the close of a candle, see a set up and, yes, it’s a trade or no, it’s not, but it still comes back to basics a little bit further. Once you’ve identified that, where is your stop loss going? Where is your profit target going? We have that as set levels that we use on our trades that is all in relation to the current movement and volatility of the market and the currency pair at that time.
Control your risk
It’s also important that you control your risk. Those trade results that I’ve mentioned have been taking place with only a quarter of 1% risk per trade so 0.25% of our account, very, very low risk. That means as an example, a $10,000 account, we’re risking only $25 on each individual trade. When we place our daily trades, we’re risking $50 but we split it into two positions, $25 each per $10,000, very, very, very low risk. You put those two together, I’ve got them in front of me here, it’s 12.79 and 6.55. That’s around 18, 19.5% or something like that in the last five weeks but with very low risk. That’s the important things there.
Don’t count Pips
It’s also important that we don’t worry about the number of pips we’ve made. I just never talk about how many pips were made because it’s irrelevant. It does not matter. I cannot go and buy something from the local shop with pips. If I’ve made 19% in the last five weeks on a $10,000 account, let’s say, I know that’s $1,900 and I can go and spend that. You see the difference there. Of course, that’s with that low risk, but you can of course risk high if you wanted to.
Reward:Risk is important
Leading on from that, reward to risk is another crucial part of trading. I’m just repeating what I’ve repeated for 10, 11 years on these videos and podcasts. It’s nothing new, but it’s important that you put all this together and consistently achieve this high reward to risk trades. It’s no good in having a 90% win rate if your one losing trade loses more than your previous nine winning trades. That’s pointless. You have to have high reward to risk, controlled low risk. Trade ends up being profitable. It’s a very highly profitable trade. All those things put together.
The importance of getting the foundations right
The reason I wanted to come back to that is because the last three weeks when I was in Europe and the last couple of weeks since I’ve home, it’s reiterated the importance of that, get back to basics philosophy because it also shows and the results are there to prove it that if you do have the basic foundations within your trading, the results are there. Don’t forget that July and August are traditionally very hard months to trade because of the northern hemisphere, some holiday season. We’ve done this in what traditionally has been quite a difficult time. Don’t forget, if you think about the world right now and politically and the events that are happening, a lot of turmoil going on, yet we still achieve these results with low risk.
That’s what I mean, come back to basics. Put all this together. Be consistent with your trading. Almost been boring with your trading. It doesn’t sound flashy. It doesn’t sound all razzmatazz and flash cars driving around and sitting on a beach like you see unfortunately 99% of all forex websites out there. The reality is that we are here at home doing the real trading, and for those weeks while I was away, you could see all those trades there.
I hope that helps. A little bit different this week, but very, very important nonetheless to get the basics right. Build those foundations up just like you would if you’re doing anything else. If you want to do anything else correctly, that is.
If you’d like our help, you know where to find us. We’re at the forextradingcoach.com, and I’ll see you this time next week. Bye for now.