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#273: So you want to Scalp the Forex Market?

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So you want to Scalp the Forex Market?

In this weekly video:
00:24 – The high paced action of the 1 and 5 minute charts
01:20 – The reality is much different
02:18 – The spread becomes such a big part of your trade
03:30 – The Reward:Risk of Scalping is not good
02:57 – The Price can change so quickly against you
04:24 – My Suggestions to help you

So you want to be a scalper in the Forex market, do you? Let's talk about that and more right now.
Hey Forex traders, it's Andrew Mitchem here. The Forex Trading Coach video and podcast number 273.

The high paced action of the 1 and 5 minute charts

And I want to talk about the high paced action, where all the action happens in the one and five minute charts. Because that's what you need to trade if you want to be a scalper, don't you. And do you want to be a scalper? Well, that's what I get told by so many people. I had another email just this morning saying, “Hey Andrew. Please, can you teach me strategies so I can be a scalper?”

I'm going to talk about the pros and cons of scalping. And by the end of this video and podcast, you can make your own decisions. But let's talk about it. What is it? It's trading five minute charts, maybe one minute charts. And it's looking for small, incremental gains all the time. Sounds real cool. Sounds amazing, because as Forex traders, we think that we need to be sat there watching the charts all the time, taking every little pip up and down. And that's unfortunately what so many new traders think.

Look, I did the same, 15 years ago. All I wanted to do was to take little trades, watching every pip move up and down.

The reality is much different

I can promise you the reality is that, on those shorter time frame charts, the probability of you using a really high quality trade set up on that pair that you're trading at that time that you happen to be looking at your charts is quite slim. And with hindsight, with the benefit of hindsight, I can go back through on five minute charts and go, “Oh look, that was a great set up here and there's a perfect set up there.” But the chances of me being at the computer at that time, is quite slim.

So, the reality is that most people then start to force trades to happen. Because I'm sat there ready at my computer. So I'm ready, so where's the trade? And that's what most people think. The reality is that the market will show the right set ups when the market is ready. Not when you're sat there ready. And that's quite a hard thing to understand for many new traders. So therefore, what you start to do is you take trades that are not really that great a set up.

The spread becomes such a big part of your trade

Then the problem being is the spread becomes such a big part of your trade. So let's say as an example, you are wanting to take a 10 pip profit target. Now, I don't know who you pick 10 pips, but most people seem to think 10 pips is because it's an easy round number. The problem is, let's say you're trading British pounds, US dollar, and you've just paid two pips on the spread, the difference between the big and the [inaudible 00:02:32] cost of taking the trade. So now, your 10 pip profit target, is that 12 pips away? Because you've already paid two pips, so you're basically minus two. So to get to 10, you have to actually make 12. That's not quite so exciting. If you make 10 pips and you've just paid two as a spread, well haven't you just, and let's say hit the profit, haven't you just lost 20% of your total profit to the cost of the spread.

The reverse of that is the stop loss. You want a 10 pip stop loss. So, does that mean that once you've taken your trade, you're now minus two, let's say effectively, that means you're only eight pips away from the stop loss. So, there becomes another problem. So it doesn't really work in your favour.

The Reward:Risk of Scalping is not good

And that's, when you start talking reward to risk trades, you're now a one to one at very best. So that means that you actually need to make probably 60 if not 70% winning trades. And that is very, very difficult to do, especially when you bring the emotions in of almost feeling like I have to take a trade because I'm ready. So you can see all the difficulties now starting to match up.

The Price can change so quickly against you

The reality also is that it doesn't take a lot in the Forex market for a 10 pip reversal or change in direction. It could be just a spike, it could be a new announcement, it could just be simply that the market retraces against where you think it's going to go. And 10 pips just stops you time after time after time. Very, very difficult to get high win rates when you're starting to do those type of trades.

My Suggestions to help you

So, my suggestion after all of this is to look at, at least the one hour charts. Don't go any lower. Especially when you're new. It's very, very difficult to do. Look at the one hour charts as the absolutes of lowest, shortest time frame, look at the end of a candle. Don't even bother looking at the chart in the middle of a candle. If it's, say, half past or a quarter to, don't even bother. Wait until a couple minutes before the one hour chart closes, then make your analysis when you've got time. Emotions are easier to control. You can look for your profit targets and your stop losses and then place your trade, if you see a suitable set up.

So that's the way that I would go. It makes life a lot easier. Takes the stress, the emotions out of things. It takes, the cost of spread becomes a smaller factor. And the overall profitability and your enjoyment and your longevity of trading will massively increase.

So I hope that helps. Once again, this is Andrew Mitchem, The Forex Trading Coach. I'll see you this time next week with some more great trading tips and information. See you then. Bye.

Click here to download my Lot Size Calculator

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#272: Accurately calculate your position size

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Accurately calculate your position size

In this weekly video:
00:26 – Calculate your lot size easily
00:54 – Many traders misunderstand the importance of this
01:29 – Every trade has an equal and known risk
02:33 – How to calculate your risk – there are many factors
03:13 – Get my Calculator for free
04:45 – Changing your thought process

Would you like to know how to accurately calculate the position size that you need on your trade in order to keep your risk low? Listen up, I've got some great news.

Hi Forex Traders, Andrew Mitchem here, the Forex Trading Coach Video and Podcast number 272.

Calculate your lot size easily

I'm going to explain how you can accurately and easily calculate the lot size or the position size that you need to place on each and every one of your trades in order to help you trade better, to help you with your psychology, and to help keep your risk per trade low and equal regardless of the trade, the size of the stop loss, or the timeframe. So I'm sure you'd like to know how to do that.

Many traders misunderstand the importance of this

Well, before that I'm just going to read an email that came through here and it said, “I loved the video that you did on the risk calculator, but could you explain more? I think it's a massive misunderstanding amongst many traders, and the way you explain it makes so much sense to me. Can you make another video so I can get a better understanding?” That's quite interesting that the person says that most people have a massive misunderstanding, and I think it's absolutely true. That is a big, big problem amongst Forex traders.

Every trade has an equal and known risk

So the way that I trade is every single trade that I take has an equal and known risk. So people get too worried about what the stop loss needs to be and how many pips that is; it doesn't really matter. By getting your mentality away from thinking about making profit or loss in pips, what it does is it gets you thinking like a professional trader who thinks in terms of your risk to reward, win rates, and controlling risk per trade.

Every single trade that I take has the same amount of risk; the same percentage of my account at risk regardless of what currency pair it is, what the timeframe chart is, whether it's a longer term trade, a short timeframe trade, doesn't matter. They all have equal risk. That helps me to trade with less emotions. All the trades I've got going behind me here, every single one of them, is controlled.

How to calculate your risk – there are many factors

So if a number of them go wrong it doesn't really matter, because I have the risk controlled and I know that on my profitable trades I have high reward to risk.

So how do you do it? Well, as you would likely know, and if you don't you soon will, each currency pair pays out a different amount per pip. So the manual, old fashioned way of doing this is quite slow and it's quite difficult and it takes a fair bit of calculation. Because it also depends on what your account is denominated in. So as an example, if you have a US dollar account or a British pound account or an Aussie or a Kiwi dollar account, whatever it might be, the amount that you get paid per pip of movement up and down is different depending on your account.

Get my Calculator for free

So I have an amazing lot size calculator; it's freely available and I have placed … Or will be placing, a link below this video and podcast so you can download it for free.

Let me explain how it works. Rather than going through that whole complicated calculation, you don't need to do any of that. All you do is you drag the script, it is a script not an indicator, so when you download it and you start coming back to me going, “Andrew it doesn't work,” it's a script. Don't put it under indicators. So you drag the script onto the chart that you're about to trade. So let's say you're about to trade the Euro/US dollar. You drag the script onto a chart which has the Euro/US dollar on it.

You know your stop loss that the trade needs to have, and the script is automatically defaulted to risk half of one percent. You can change that to a quarter of a percent, or one percent. Whatever you want to risk on that. All you do is enter one number, and it's the stop loss for that particular trade, and press okay. The calculator will then tell you the lot size or position size needed for that particular trade. So it knows your account denomination, it knows your account balance, and it also knows because you dragged it onto this particular chart, what the currency pair is that you're about to trade.

So it works it all out for you and it gives you a number. If you enter that number as your position size with a stop loss that you've calculated, and the trade goes against you, you will lose the risk that you have calculated. So in my personal case half of one percent. Real simple, real easy to use.

Changing your thought process

It helps to change your mentality and your thought process, and it then allows you to take trades with controlled and known risk, rather than going, “I lost 100 pips on this trade, but I gained 20 pips on that trade, therefore I'm still negative. I'm still minus 80 pips.” That is not how you take position sizes, and that's not how you trade. If you have equal risk on every trade, that will massively help you.

So use that calculator. It's freely available here on this site; I'll put a link below this video. It works on the MT4 platform. You will love it, I know you will because it's been downloaded so many … tens of thousands, I think about 30,000 times at the last look. People all around the world have used it for years and years. Use it on every trade you take, it will help you massively.

So, I hope that helps. This is Andrew Mitchem, the Forex Trading Coach. I'll see you this time next week.

Click here to download my Lot Size Calculator

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#271: Why Round Numbers Work

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Why Round Numbers Work

In this weekly video:
00:33 – What is a Round Number?
01:10 – People move to the market
01:45 – The NZD/USD chart example with the price at 0.7000
03:54 – The EUR/AUD reacts at 1.6000
04:30 – Get my Round Numbers indicator – Link is on this page

I'm going to talk about why round numbers work in the Forex market. They just do. Let's find out more about that right now.

Hey Forex Traders, Andrew Mitchem here. The Forex Trading Coach video and podcast number 271. This is all about the importance of round numbers, how to use them, and why they work. Really, really important video so listen up.

What is a Round Number?

Round numbers, what are they? Well I call a round number a price level that ends in a 00 or a 50. Two very powerful levels. Think about it this way, when you go to a shop you will buy something for $19.95 or $19.90, but you won't buy at $20.00 or $20.05. You're buying a house, you're looking at a nice big house. Would you a pay $1,500,000 for it or would you pay $995,000 for it? It's all about that strong level. When the price gets to a certain level, people react.

People move to the market

Because after all the market is moved by people and emotion and reactions, whether it be to news events or price levels. It's people that move the market. Even with algorithms in the market, of which there's an enormous amount, they're still coded to look for certain events and certain reactions. You can look through your charts, all over charts, and see how round numbers react; or the price reacts at round numbers, I should say. It's more that way around. The price stalls or changes directions at round numbers.

The NZD/USD chart example with the price at 0.7000

I'll give you an example. I had a phone call this week, on Wednesday my time, from a client who lives locally … I'm sorry from a contact, not a client. He wanted to become a client. He lives locally. He said to me, “Hey Andrew, you're talking about Strength and Weakness and daily directions and all this sort of things. How do you pick them?” I gave him an example and because he lives in New Zealand I said, “Look, go have a look at the New Zealand dollar against the US dollar.”

You can do the same right now. Have a look at last week and the Kiwi dollar's been falling for quite a while against the US. By the way that fall started at a round number, it was 74, 0.7400. I said to him, “As the price is falling, everybody's going to be selling the New Zealand dollar but,” I said, “be careful because strength and weakness. Yes it's falling but be careful of the next big round number of 0.7000, the $0.70 level.”

Go have a look at your charts. Right now the price came down to just below that level, it hit a perfect high, which by the way was from the 9th of November, just below the 70 level, so it took out a whole heap of stops, got people in on sell trades going further down, and it's reacted at around that 70 level and right now it's pulled back. Right now, as I'm recalling this being Friday here in New Zealand, it's at 70.50, so 0.7050. It's now stalled at the next round number. No surprises there for me because these numbers are so powerful.

I was able to say to him, “Yes, Strength and Weakness says the Kiwi's dropping, definitely.” But be careful. Look at where it is in the chart, look it's at bottom Bollinger Band area. It's at a previous support and resistance level and it's at a very, very strong psychological bounce level. Do not just sell it because you're going to sell it. Think of reasons why, look for proper reasons to sell it. Don't just go ahhh, the Kiwi's weak, I'm just going to sell. That's not going to make you money. Look at where the price is. Okay, it's at 70, oh it's bouncing. Okay, well maybe it's going to retrace back now, maybe it's completely reversing. But 70 is holding right now.

The EUR/AUD reacts at 1.6000

Paul, over in America, he gave a great example on my US webinar yesterday of the Euro Australian and how it reacted at 1.6000, this week. There were some great trade set-ups. He was explaining to clients the perfect set-up on the one hour chart. They had a down trend, a pull back to 160, it was at middle Bollinger Band, there was a trend line break, there was divergence, there was everything we're looking for. And guess what happened? It reacted there, price fell away beautifully. Use round numbers in your trading. They're very, very powerful.

Get my Round Numbers indicator – Link is on this page

If you'd like to get a copy of my indicator that plots those on your charts, just download my free Engulfing Candle course and there's an indicator there called Round Numbers. Really simple. It just plots all the numbers ending, the price levels ending in 00 or 50. It's very, very useful. Like most good things, they're quite simple, but they're useful. It's important that you use these additional tools as part of your trading because it dramatically will increase your profitability. Absolutely no doubt about that.

This is Andrew Mitchem, the Forex Trading Coach. I'll see you this time next week. Bye for now.

Click here to register for the Free Course (The #1 Forex Trading Strategy)

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#270: Why The Longer Time Frame Charts Can Help Your Trading

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Why The Longer Time Frame Charts Can Help Your Trading

In this weekly video:
00:38 – Being able to trade and travel
01:05 – Interview with a Full Time Forex Trader
01:43 – Trading the Longer Time Frame Charts
02:22 – Trade in a way that allows longevity
04:18 – Do the professionals trade 5 minute charts
04:45 – Celebrating 9 years of The Forex Trading Coach helping traders
06:12 – Now it’s your turn to join us

I'm going to explain to you why I love trading the longer timeframe charts and how they could help you in so many ways. Let's get into that right now.

Hi, Forex traders. Andrew Mitchem here, The Forex Trading Coach video and podcast number 270 coming to you from beautiful Queenstown in the South Island of New Zealand. School holidays here in New Zealand and we're at our holiday home here in Queenstown having a great time.

Being able to trade and travel

Just got me thinking about so many things to do with trading because part of trading is being able to travel. It's being able to not be glued to your computer. It's being able to do things like this, come to places like this and still continue to trade. I love trading. I don't want to stop trading. I trade every day. But while I'm here, I don't want to be glued to my charts all day. It will mad. There's just no point in being here.

Interview with a Full Time Forex Trader

It also got me to think about last week when I interviewed Imre Gams, who's a client of mine in Canada, who's now a full-time Forex trader, and Imre was looking at the longer timeframe charts and going down from the weekly charts and matching the strengths and weaknesses of the weekly charts with the data charts, et cetera, and basically pulling things together to give a higher probability chance of success, and that is what the longer timeframe charts give you.

Before you start thinking, “Andrew, I can't trade the longer timeframe charts because my account is not big enough.” That's not actually quite true, but we'll talk about that on another video.

Trading the Longer Time Frame Charts

The longer timeframe charts are available for anybody to trade, regardless of your level experience or your account size. In fact, the newer you are to trading, I'd actually suggest that you just look at the longer timeframe charts anyway, because everybody gets involved in wanting to look at the shorter timeframe charts, looking at every pit movement up and down, scared to miss trades, being glued to their charts. Yes, while you're learning, understanding how the charts move and how price moves is really good. It's very important, and we've all been there, been really excited to see our account move up and get disappointed when it moves down. But long term, that's not a good way of trading.

Trade in a way that allows longevity

Long term, it's got to be something that's practical, that it's something that's enjoyable, and when you think about it, the bigger the higher timeframe chart you trade, the more information is contained within that one candle or that one bar. Therefore, the more reliability that candle or that one bar has. That's why I like trading … See, this week I traded the weekly charts on Monday. I've taken six trades on the weekly charts. I took two trades on Monday on the daily charts, one yesterday Tuesday, and one today Wednesday. I'm recording this bit early, because I'll be on a plane on Friday when I'm normally recording the weekly videos. So far, those daily trades have worked beautifully, and a couple of the weekly chart trades are in as well.

On top of that, I look at the 12 and 6 hour charts just twice a day and that's it. You can do that from being on holiday, and that's the great thing about it. It's all about having something that's reliable. The bigger the timeframe chart, the more reliable the information and the data within that timeframe. Just think about it, logically. You can't have a five minute chart having equal strength as a daily chart. It's just impossible. Look at those bigger pictures. Look at the longer timeframe charts. They're certainly more reliable. They also have higher reward to risk and of course the amount of time that you need to trade them is considerably less. So put all that together, why would you trade shorter timeframe charts?

I trade 30 minute charts and one hour charts, but I've got robots I've created that do that for me. I don't want to be sitting there 24 hours a day watching every 30 minute chart or every one hour chart change over. Why would you if you can create a robot or expert advisor to do that for you? That has those shorter timeframes covered as well. Manual trading, definitely get onto those bigger picture, longer timeframe charts.

Do the professionals trade 5 minute charts

How many full time traders do you know of, ever heard of, that trade five minute charts? Probably, I can't actually name any, but probably not very many. Think about what the professionals do. Think about what the people who have been trading, like myself, 15 years. What do we do? We trade bigger picture timeframes because that's why we're still trading today. It works and it's far more enjoyable.

Celebrating 9 years of The Forex Trading Coach helping traders

That leads onto another thing. Next week I'm holding a 12 hour sale to celebrate the 9th birthday of the Forex Trading Coach. It's going to be 12 hours and that's it. I'm really, really proud of our longevity, of the amount of people that we've helped, people like Imre last week, who I interviewed. Full time Forex trading, given up working. He's worked for Google and Apple, I think it was. Now, working from home as a full time Forex trader. How good is that? And from my point of view, how incredibly rewarding that is, that someone who's taken my course, and there's a number of people like Imre who are now full time trading. Others are just increasing their passive income and their enjoyment of trading. Some are full time. It's a good mix of achievements, but from my point of view, massively, massively rewarding to have so many people, and to help so many people globally, over the last nine years.

Nine years after starting, we're still here helping traders throughout the world every day. That's massively rewarding from my point of view. We've got an incredible group of traders that attend my webinars and on the forum site, and just really, really pleasing. Go back and have a look at how many companies, whether they be brokers, education, signal providers, whatever they might be in the Forex market. How many of them were there nine years ago? Not very many, will be the likely answer.

Now it’s your turn to join us

If you'd like to join, I'm going to put a link to that 12 hour sale below this video, on this post. It would be great to have you on board with us and to share with you what we do. If you'd like to join the … This is your opportunity. Obviously, being a birthday sale, it's a once a year thing. Don't miss out. It's going to be 12 hours and that's it, but you need to register first in order to get notified of the sale next week.

I'm off to enjoy this amazing place called Queenstown. If you've not been here, South Island of New Zealand, it's absolutely stunning. One of the most amazing places that I've ever been to. We're here many times a year. Absolutely love it here. To do things like this, get onto those longer timeframe charts. They really will help you in so many ways. It's not funny how many ways the bigger picture trades can help you.

Once again, this is Andrew Mitchem, the Forex Trading Coach, off to enjoy this amazing place called Queenstown.

Thanks again, and hopefully I'll see you after you join the birthday sale next week. Bye for now.

Click here to register for the 9th Birthday Sale Interest

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#269: Becoming a Full Time Forex Trader

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Becoming a Full Time Forex Trader

In this weekly video:

00:25 – Living the dream and becoming a full time Forex trader
01:10 – Client becomes a full time Forex trader after seeking a mentor
02:10 – A lot of dedication and back testing to prove the system to himself
02:52 – Making 5% return on trading account per week
03:46 – Watch the interview with Imre
04:21 – Be realistic about your trading expectations
05:25 – The hard work pays off

Would you like to quit your job to become a full time Forex trader? If the answer is yes, this video is for you.

Hey, traders, Andrew Mitchem here, the owner of The Forex Trading Coach, video and podcast number 269. Got some really exciting news to share with you.

Living the dream and becoming a full time Forex trader

Would you like to live the dream? Would you like to work from home and work from anywhere, quit your job, become a full-time Forex trader? Because that's what most people who get into Forex want, don't you? That's what most people really aim for. And it can be done.

Now, I know it can be done because I've had many clients do that, but just this week I've interviewed another client who has taken that step to becoming a full-time Forex trader. He's quit his job, his name is Imre Gams, he lives in Toronto in Canada, a real, nice, smart, intelligent, young man. He's worked for Google, he's worked for Apple, so he's right up there with being a very smart guy.

Client becomes a full time Forex trader after seeking a mentor

He took my course back in August of 2017, some eight months ago, and I interviewed him, and I asked him what the process was that he went through. He's been through Brazilian jiu-jitsu, he's been a fencer, as in the sport fencing, he's done many things in his life that he's always sought a mentor for, because he's seen it as a shortcut to success with a good mentor.

So, he did some reviews, he found my course a while ago, joined last August and basically has been very thorough with everything he's done. You can hear the interview. It's on my homepage. I'll put a link below this video. It's 38 minutes long. It is highly, highly recommended if you watch the entire thing. There is so much you can learn from that video, even if you just want passive income from Forex, but just watch the entire video. Take your time, grab a coffee or a cup of tea or something and sit and watch the whole thing.

A lot of dedication and back testing to prove the system to himself

Imre started back in August 2017, went through the course, he's been dedicated, he's asked questions, et cetera, like a lot of people. But he's done extensive backtesting on the course, he had huge confidence after doing extensive backtesting, and then a few months ago he decided to quit his job and go live.

Now, a few weeks ago he started sending me emails of some of the money withdrawals he's taken from his account, from his live trading. Very, very, very impressive figures. Not going to reveal how much. That's private information for him. But it's well into the six figures that he's withdrawn just this last quarter.

Making 5% return on trading account per week

And as he said to me, “I've made more in the last quarter than I made in the entire last year.” And he's now, as he said, living the dream. He's working from home, he's making around 5% return on his account per week with very low-risk trading, very low drawdowns, and only about one hour of actual trading per day.

He is spending more time with his continued learning, his self-development, his self-education. His whole knowledge-base is constantly growing, and he puts time and dedication into that. He's spending a lot of time each day with backtesting, looking at different ways of trading my strategy, different timeframes, et cetera, so he's constantly learning, constantly evolving, but actual trading no more than one hour per day. A 5% return per week on average. It's quite outstanding.

Watch the interview with Imre

So I highly recommend you watch that because the whole approach, the mental approach, the dedication, the commitment, all these things that you need to put in if you want to become either a good trader or an excellent trader or a full-time trader, people that just sort of rock up thinking they're going to put in no effort and no time commitment and just press a few buttons and make a fortune, it's not going to happen. It really is not going to happen. Don't kid yourself that that's going to happen.

Be realistic about your trading expectations

I had a guy just today who called me and he said, “Your trader copier, it's only making about 3% return per month. Why would I do that when there's others that are claiming to making thousands of percent per year?” And I said, “Well, go join them. Don't take my trade copier, go join these other ones.” But I said, “The problem is is that you don't know what their risk is, you don't know what their drawdowns are, and I can almost guarantee that you're going to blow your account with them.”

So you've got to compare apples with apples when you're doing these types of things. It's not just about the end result for no effort, it's about putting in the hard work, the hard yards, the dedication upfront and then the results will come. That's what you do if you want to become a good trader. If you just want to pay $97 for some random expert advisor, it's probably going to end up like all, when I say all, the vast majority of market expert advisors. It's not going to end well.

The hard work pays off

So, coming back to Imre, here's a guy who sought out some mentorship, some dedication, sought help, has done the work, continues to do the work, and now is just, as he said, in his words, he's “living the dream”. He's trading Forex full-time. Only eight months ago he started my course. Wow, what an investment that is in himself and in his future for a guy that's made six figures, withdrawn six figures from his live account in the last three months. Have a think about that. It can be done.

I'm going to put a link to Imre's video on this post and you can go and watch it. I strongly suggest that you watch that whole interview. So if you'd like to become another success story, then get in touch with me and I'll be glad to help you.

This is Andrew Mitchem from The Forex Trading Coach. I'll see you this time next week.

Click here to watch the full interview with Imre Gams

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