Weekly Video News & Podcast
Technical Indicators – Do they really work?
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Technical Indicators – Do they really work?
In this Video:
00:16 An email from Arthur
01:11 Technical Indicators do not help make Money?
03:25 Combining Indicators for Greater Accuracy
Technical Indicators – Do they really work? Well, let’s talk about that and lot’s more, right now.
Hi Forex traders, it’s Andrew Mitchem here. I’m the owner of The Forex Trading Coach and today is Friday, the 27th of November and I’ve had an email here from Arthur, and Arthur said, “Andrew, on your next webinar, can you tell us about what indicators you use. Do you use lagging indicators like MACD and RSI or more support and resistant and pivot point indicators?”
So let me, first of all, share with you my story about technical trading because as you probably know, I am a technical trader but when I started trading, about eleven years ago, I was fascinated by technical indicators. I had never seen, really, much, you know, about them in the past. I was just amazed by how many there were, how good they looked; how varied they looked; how colourful they looked; you know they were a really exciting way of trading. And so, what I did is I studied them, I printed out information about them; I was looking online about them, trying to find out about all the different ways of using technical indicators.
The Truth About Technical Indicators
But what I then discovered over time and to my detriment is that I really didn’t make money by trading using technical indicators, the standard technical indicators that all charting packages have. I didn’t make anything. And then, over time, as things developed, I then realised there must be a way of using a certain combination of indicators to make money – has to be! So I had to find it. And I ended up using a great piece of software actually – I don’t use it today but I really did like it – it was called trade station, which I’m sure you’ve probably heard of, and trade station had the ability to have people write code for you and optimize different indicators and go back and back-test to some really good, accurate detail in various combinations. I was making an absolute fortune in my back-testing. I was, you know, making millions and millions of dollars every year through a certain combination and I was optimizing and tweaking and I’m sure you’ve done it. I’m sure you know exactly what I mean.
But anyway, the net result was, even though I had sort of, like, robots and bits of script and things written to automate the trades for me, using the optimized strategy, I still didn’t make money in real time. And so, the thing I realised then is that I needed to do something different so I started again with a blank chart and then got to study price action and added a few certain indicators onto that. But what I realised is that almost all indicators including candlestick patterns, which I absolutely love candlestick patterns, they’re a big part of my trading but even candlesticks are, really, lagging indicators. Because, if you, let’s say, have a one-hour chart on, all its doing is showing you what’s happened in the last one hour. And so, although they are the most, probably, up to date type of indicator, I use price action not just the, you know, “what’s happened” but I use the actual price itself. You know, when was the last time it bounced at that level? I use support and resistance levels, and round numbers and pivot points, which are kind of what I call leading indicators because they are there in advance of the market moving towards those levels.
Making Technical Indicators More Effective
So, to me it’s about using a combination of understanding price action, where the price has been, where it’s likely to move to and when and why. And when you have that combination put together, not only can it help you with your entry point but also, really, aid you in great detail with your stop loss and your profit target. And of course the best thing about this is not only does it work on any time frame and really any market but any currency pair – It’s not restricted to just a 15-minute chart or just the U.S./Japanese Yen (USD/JPY) for instance, and so really, I like those horizontal levels. Price respects horizontal levels, support and resistance, pivot points, etc. and using candle patterns, in combination with that. You can’t just use one indicator just by itself!
So really to answer Arthur’s question, almost all of their standard indicators I don’t use. I’ve tried them, I’ve been there in the past and done all that – don’t want to ever go back there because to me, almost all of them do not work, certainly not by themselves anyway! So, I hope that helps! One thing that I like to encourage people to do is when you understand price action, what you’re basically doing is learning an art form. It’s an art form of reading a technical chart. Just because we happen to be trading the Forex market doesn’t really matter. It’s understanding what the chart is telling us, looking at some historical data and then figuring out where the price is likely to move to and when and also potentially why. So, getting that combination is really important.
So, I hope that answers that question for you, Arthur!
One final thing I’ve got to let you know is that between the 15th and the 19th of December, I’m going to be holding a Christmas sale. It’s going to be a Christmas sale like nothing else I’ve ever held. It’s going to give a lot of people a really great opportunity to jump on board with my course.
I am not going to say too much more on this video but if you would like to be sent the link of knowing more about that, just drop me an email:andrew@theforextradingcoach.
So, once again this is Andrew Mitchem, from The Forex Trading Coach. Talk to you this time, next week!
Are You In Search of The Holy Grail of Forex Trading?
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Are You In Search of The Holy Grail of Forex Trading?
In this video:
00:23 In search of the Holy Grail of Forex Trading
01:47 Accepting the changes within your trading
03:37 There’s no good at buying a strategy that relies on you
Are you constantly in search of the Holy Grail of Forex trading? If that sounds like you; listen up because I’ve got some really good information to follow.
Hi traders it’s Andrew Mitchem here, the owner of The Forex Trading Coach. Today is Friday, the 21st of November and I want to talk about a subject that I get asked so often and I’ve had another couple of emails about just this week. It’s about people constantly searching for what I call and what everybody else calls the Holy Grail of Forex trading and that really is like the ultimate system that just never fails and people are constantly looking for that, you know, that “perfect” system. Unfortunately it doesn’t exist; there is no such thing. But people are always there looking for the next thing, adding indicators, whatever it might be to make a system and a strategy that’s probably perfectly okay into something that’s even better.
The other thing of course that a lot of people do is they constantly changing between one system and another, they’re adapting bits of one system over here putting it into another system. People buy robots, they’re made out to be just the most fantastic things, all at $97 you notice but, you know, they’re at there to solve everybody’s life problems by plugging and playing for $97. Hindsight and back testing looks fantastic, you put on a live account, it doesn’t work (in most cases) and then people there, they give up and never going to buy another robot.
Changing Market Conditions
Up comes another email on a month or so later, buy it again $97 on to the next system and that happens all the time. It doesn’t matter whether you’re attending webinars, whether you’re buying robots, eBooks, courses, strategies, whatever it is it just happens all the time. So, realistically as a trader you need to accept that the market is changing all of the time, it’s never the same.
Just to look at the Japanese Yen (JPY) over the last sort of few weeks. I’m not sure if you can see right behind me here, I’ve got the CAD/JPY (Canadian Dollar/Japanese Yen) just gone up and up and up and up and up. And the Yen (JPY) has done that against all of the weakness in the Yen (JPY); has just been a fantastic thing to trade. You know, there’s just been so much weakness on the Yen (JPY). There’s been an opportunity to continue buying it up and up. Likewise, there’s been an opportunity to wait for slight pull back to retracements and then buying another currency against the Japanese Yen (JPY). And it’s probably one of those times right now, the last few weeks with the Yen in particular against all currencies has been as good at time to be trading the Yen then it has for long time. Go back on your charts and look back to what it was doing earlier this year. “This did that”, did absolutely nothing, it was flat as a pancake. It was awful to trade the Japanese Yen (JPY) earlier this year. It was just, up one day down the next. Just a small movement, very small daily ranges.
The last few weeks and few months, has just gone crazy and it’s just been brilliant to trade. So accepting that condition are changing within your trading and the strategy needs to allow for that and cope with that and so do you because what happened back in the early part of this year, the conditions are different to now. So earlier or in the year you might be trading the shorter time frame charts to gain some profits out of the Yen pairs. Whereas today you might be trading the longer time frames, the weeklies, the dailies, the 4-hourly charts and make tremendous gains on the Yen pairs because the trends are there right now. So it’s constantly being aware of those changing conditions, trading the strength against the weaknesses and having a system and a strategy that suits you.
Buying A Strategy
There’s no good at buying a strategy that relies on you having to be there 3 o’clock in the morning because that’s when the strategy works or there’s no good at buying a strategy that works on just one currency pair because why restrict yourself to just one when there are so many pairs you can potentially look at. There’s no good at buying a strategy that relies on you scalping 1 and 5-minute charts if you’re the sort of person that just wants to look at your charts a couple of times a day.
So it just really depends on what suits you as a trader, having something that you understand. The problem with robots is most people have really no idea of what’s behind the strategy and the logic behind the robot. It doesn’t help you as a trader so it’s understanding, what works for you that makes common sense. That’s why I like price action. Price action makes sense to me. Support and resistance makes sense to me. Buying off of round numbers or using round numbers to your advantage as strong psychological barriers; that makes sense to me. It’s what the big institutions and banks are doing therefore I want to do the same. I’ve seen happen and work, candle patterns with support and resistance so many years now. I don’t need to change, I’m making great money and perfectly happy and understand the system that I trade.
So find what works for you, if you need my help just drop me an email andrew@theforextradingcoach.com. If you have any topics or anything you’d like me to discuss on future videos and podcasts like this which I make every single week just send me an email and I’ll do my best to answer those questions for you.
So once again this is Andrew Mitchem from, The Forex Trading Coach. Have a great weekend and I’ll look forward to talking to you this time next week.
The Benefits of Trading Longer Time Frame Charts
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The Benefits of Trading Longer Time Frame Charts
In this video:
00:49 Trading less can be more
02:25 The major benefit of trading longer time frame charts
05:06 An email from a non-client asking about swap
I’m going to explain the main reasons why I much prefer taking longer time frame charts as a Forex trader. So let’s get into that right now.
Hi Forex traders it’s Andrew Mitchem here and I’m the owner of The Forex Trading Coach.
And in this video and podcast I’m going to explain to you the main reasons why I much prefer to trade the longer time frame charts.
Now there’s nothing wrong with scalping the market, there’s nothing wrong with taking trades off 5-minute charts or 15-minute charts but for me personally I think there’s a huge amount of benefits for taking longer time frame charts. As a longer time chart I’m talking anything from 1-hour chart, 4-hour chart, 6-hour chart, 12-hour chart, daily charts, weekly charts, etc. So anything that’s not scalping really.
The main reasons are:
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Less Trade. Trading less can be more. Now it’s a commonly use “catch” phrase but in trading it really does apply. You see, you don’t need to be trading more and more often in order to make more money and people think that as a trader or as a full time trader or someone making their career out of trading you have to be settled what’s on the chart all the time; you don’t have to; it’s just a misconception. The important thing to do is to have something that works for you of course in terms of the time of day, the pairs, the type of trading style that you wish to use. But also you don’t have to be doing that all of the time and the great thing is for the longer time frame charts is you can plan your day around your trading.
For instance I don’t really look at the 1-hour charts until later on in the European session which is my evening here in New Zealand. If you happen to live in the U.S. you might look at the U.S. session just on the hour charts. If I have other things or now I go to the longer time frame charts like looking at the 4-hour charts every 4 hours as and when I can. Anything longer than that well I’ve got a great indicator that allows me to create 6-hour charts, 12-hour charts and of course then you can look at the standard daily chart or weekly chart.
So what that means is if you trade on the completion of each bar or look to trade on the completion of each bar, if you’re trading let’s say a 4-hour charts for instance. You know that you have 4 hours in between one chart closing and maybe taking a trade if you see something and then, any potential new trade setup you got 4 hours to go and do whatever you want, get away from the computer whatever it might be.
So that’s the lifestyle and keeping away from the screen is one major benefit.
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Higher Returns. The other of course is higher returns because generally on your longer time frame charts you generally get a higher reward to risk out of the trade. Spread becomes less of an issue and so you generally find that you’re able to achieve far greater returns from the longer time frame charts. I, very often achieve 2, 3 or 4 times my risk depending on what the charts setup is but generally on the longer time frame charts. It’s a lot harder to achieve those high returns on a 5-minute charts for instance. You’re going to catch a good run every so often but not only do you need to be there all the time. It’s a lot harder to gain a trade that’s let’s say got a 15 pip stop loss and a 60 pip profit and get that profit more often than not. It’s a lot harder to do that on a short time frame chart.
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High Reliability. The other thing with the high time frame charts of course is the high reliability. There’s a lot more data in there, a lot more information within that one candle of let’s say a 4-hour chart or daily chart than there is on a 5-minute chart, so a lot more probability as a technical trader.
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Less Stress. Also, if you trade the longer time frame charts, it takes away the influence of news and the fundamental news releases because you generally have big stop loss you can absorb any movements that should occur in a higher impact news announcement if you’re trading on a longer time frame charts so all that leads to of course less stress, less emotions involved. Put the trade on, walk away from your computer, you have your stop loss in place; you have your profit target in place. You know the very worse you can do. You know that if the trade works on your favor this is what I’m going to make out of the trade, so a lot of reliability there.
I was taking a webinar with my clients yesterday. A 2-hour live trading room webinar and at the completion of which was 11PM my time, we were able to trade the 1-hour chart, the 4-hour chart, the 6-hour chart and the 12-hour chart all because of the, all of those charts closing at the same time which is 5AM New York Time. Likewise at 5PM New York Time you can trade the 1-hour, the 4-hour, the 6-hour, the 12-hour and the daily chart. So it doesn’t mean to say you need to be coming back to your computer lots of the time throughout the day because a lot of times you find various time frame candles closing all at the same time of the day.
So hope that really helps you.
Lastly I want to just read out an email I had here from Ron in Torquay in Victoria in Australia asking if I can talk about swaps and Ron is not a client. He just emailed me through asking for me to discuss that particular subject.
Now really swap is the interest rates that are credited or deficit from your trading account if you have a trade open at 5PM Eastern Standard Time (EST) in New York. So if you do trade the longer time frame charts and you have a trade open at 4:59PM or 5 o’clock then really you then either credited with interest if you’re buying the currency that has the higher interest rate or if you’re selling the currency that has the higher interest rate then you’ll find that you’ll be debited an interest so you take money or your broker will take money from your account. So it only happens at 5PM Eastern Standard Time (EST) and you’re going to get paid some swap which is like a carry trade or interest or it’s going to be deducted from your account depending on what the currency pair is that you’re trading and whether you’re buying that pair or selling that pair. So it has all to do with interest rates of those various currencies.
If you’d like me to discuss any other topics like this on future podcasts and videos just send me an email andrew@theforextradingcoach.com. Have yourself a really good weekend and a fantastic trading week next week. I look forward to bringing you more information.
So once again this is Andrew Mitchem, the owner of the Forex Trading Coach. Bye for now.
Big Moves, Big Trends and Better Trading Conditions
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Big Moves, Big Trends and Better Trading Conditions
In this video:
00:40 Big moves on the USD/JPY
02:10 The importance of trading what you see and not what you think
04:19 The safest way to trade during Non Farm Payroll
We’ve seen some big moves in the Forex Market this week. Have you made money from those big moves?
Let’s talk about that right now.
Hi Forex traders it’s Andrew Mitchem here and I’m the owner of the Forex Trading Coach and there have been some huge moves on many of the Forex pairs this week.
I want to ask you a very simple question:
Have you benefited from that?
Have you profited?
Have you made money this week from those big moves?
Because over the last couple of years we’ve seen some fairly average and ordinary, difficult trading conditions when the market has been quite flat and it’s been up one day and it’s been down and up and down. It’s been quite difficult. But this last couple of weeks, we’ve seen some huge moves on many of the pairs especially the U.S. and also the Japanese Yen so question again:
Have you profited from that?
Because the setups have been there, there have been big moves, big trends and it’s been relatively; I don’t like to use the word “easy” but it’s been a lot better trading conditions for trading and making good profits when you get those big runs, it’s been across all time frames. So let’s talk about a few of those because the issue that people have; I’ll give you a classic example.
I was talking to a client of mine who lives in the U.S. this morning and he was saying, “Hey Andrew with this USD/JPY, you know you get to stay, “Do you think, can’t it get any further?” “No surely it can’t go further”. And the problem is then your mind set to start to take over and people over complicate things. They way that I like to trade is I see what’s happening on the chart and make a decision from there.
When the U.S. /Yen got up to 110.00 a lot of people are saying, “Well I can’t go any further.” You know it’s a big strong psychological resistance area. Big barrier 110, it’s not going further, it’s going to come back surely. And it hasn’t, it just continued to go through 111, 112, 113, 114. The next big barrier is 115 and right now as I’m recording this it’s around about 115.00 just to touch over.
The Importance Of Trading What You See
It could pull back today slightly but the 115 you know is not the end of the run? The charts will tell us that but it’s really important to then trade what you see on the charts not what you think and you don’t need to over complicate your trading. The charts say that the bullish run is lightly to continue. Look for buy trades on the U.S. /Yen on the daily charts or any other time frame charts that you wish.
Now , I’ve been calling buy trades for my clients for the last two weeks on the weekly charts because of the strong bullish nature of the U.S. /Yen. I’ve also on many of the days over the last couple of weeks been calling for not only the U.S. /Yen pair to look for buy trades but all round I’ve been looking for predominant strength in the U.S. Dollar (USD) and weakness in the Japanese Yen (JPY). The Yen and the U.S. have been at the strong and the weak pairs against a lot of other currencies as well. So it’s been plenty of really good opportunities there anything short against the U.S. with the U.S. strength and anything buying against the Yen with the Japanese Yen (JPY) weakness.
As I’ve said I’ve been calling those to my clients and also freely available in a slightly reduced form but freely available on my website on the News Tab and also on Forex Peace Army, Facebook, etc. like that.
Also the Gold and Silver has been affected a lot as well because the U.S. /Yen is now at a level not seen since 2007, Gold has a level not seen since 2010 and Silver is now at a lower not seen since 2009. So again when you see those pairs moving up or down whichever way they’re moving and you just think, “Well surely I can’t go any further but you know it can.” When you get on a big strong trend light this definitely an opportunity to ride that out and profit greatly from that because not all the time is the market quite as straight forward and quite as strong trending as it has been.
The Safest Way To Trade
So lastly, today is the U.S. Non Farm Payroll being the first Friday of the month so my advice there is just to make sure that you either manage your positions or close all your positions towards that news announcement. That’s probably the safest way to trade there. If you’re on longer time frame charts such as weekly or monthly charts, well probability is you can ride that through that high impact news announcement but anything shorter time frame that is best to either close that part of the position, maybe lock in some profit, move stop loss slightly or just close the position all together and call it quits for the end of the week.
So that’s it. Hope that you have a fantastic weekend.
If you do have any questions and topics that you’d like me to talk about on future videos and future podcasts like this just drop me a line, andrew@theforextradingcoach.com. Wish you well with your trading and I’ll catch you next week.
Bye for now.
Understanding Leverage, Margin and Risk In Forex Trading
Podcast:
Understanding Leverage, Margin and Risk In Forex Trading
In this video:
00:27 How leverage, margin and risk affect Forex traders
03:48 Different scenarios regarding pips
05:32 A really good month of October with +8.5% return
The Difference Between Leverage, Margin and Risk in Forex Trading
As Forex traders you need to understand the difference between leverage, margin and risk. So let’s talk about that right now.
Hi Forex traders, it’s Andrew Mitchem here, The Forex Trading Coach and in today’s video and podcast I’m going to be answering a question that I’ve had, emailed through to me from Tom and he said, “Hey Andrew can you explain about leverage and margin and risk and how it affects us as Forex traders.
And so if you have any questions that you would like me to answer along those type of lines, any topics that you have please do send me an email and I’ll do my best to answer those for you on future videos and podcasts.
So let’s talk about leverage to start with.
Leverage: Leverage really is how much of your broker’s money you can use and brokers can vary between 10-1, 50-1, 100-1, right up to about 400-1 leverage. Personally I’ve always used 100-1.
Now that if you’re in the U.S. of course you do have some restrictions but really leverage isn’t so much an issue if you have sensible low risk control trading approach. If you have ridiculously high risk then leverage does become an issue and having a low leverage such as what you can have in the U.S. does become more of an issue.
But really the way that I trade which is as a business and to treat trading seriously low risk; 100-1 leverage is absolutely ample.
Margin: The second thing – margin. Really what the margin is how much money is available in your account. So money that is not currently tied up in any open trades, how much do you left there to trade with. You don’t ever need to get into a situation where you have a margin call and that’s when you don’t have enough money left in your account to cover your open positions and your broker will close all your positions and generally that’s end of your account.
Now you really should never ever get to that situation. Again if you do, it means that you’re just gambling with your trading.
Risk: That’s really one thing that you can control yourself and it is s personal type of thing but it is really important to understand the risk properly. Now with the way that I personally trade and the way that I teach people to trade is I risk no more than half of 1% (0.5%) of my account on any one trade. Now that doesn’t matter what the time frame of the chart is, what day of the week it is, what currency pair is, whether will be a buying or selling, pending order or market order; it doesn’t matter. 0.5% is the maximum that I would trade on any one trade.
Sometimes it’s a quarter percent but if 1% is what you are comfortable with then use 1% but personally I think 0.5% is plenty. What it does is it helps you to take trades on any time frame charts and it also helps to keep your emotions under control within your trading because you know the very worse you can do is lose half of 1%. So it means that if trades happen to stay on why you’ve got to work while you’re sleeping or while you’re away from your computer that doesn’t really matter because you have your stop loss in place and you know that X numbers of Dollars or Pounds or Yen or whatever it is that’s in your account is the most that you can lose if that trade gets stopped out.
Now I’ve just came off a Skype call with a guy in Perth and I’ve just explained risk to him as well because to start with we were talking about pips and I was explaining why to me pips are not really that important.
Now I’ll give you the same scenario as I gave him a few minutes ago.
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Let’s say you took four trades on the 15-minute charts for instance and all four were profitable and they all made let’s say 15 pips each. That’s fantastic, you know, you’ve just made yourself 60 pips.
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Let’s say you also took another trade, your 5th trade was taken on the 4-hour charts or the daily charts; it doesn’t really matter but a longer time frame chart generally has a bigger stop loss.
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Let’s say that, that trade had a 70 pips stop loss and it got stopped out so here you are on one hand with four trades all profitable, they made really good money and you have one trade that got stopped out and you lost on that. So you’ve made 60 pips and lost 70. You’re -10 pips so if you start trading with X amount of dollars per pip and you trade that way which is the traditional way that most people trade, you’re now minus 10 pips (-10) so how many dollars that equates to.
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Whereas if you had controlled risk on each one of those trades, let’s say they will have the same risk to reward margin or return. Let’s say for the sake of ease of numbers they were all 2 to 1 trade. You now got 4 profitable trades making 2 to1 and you’ve got 1 losing trade loosing 1 part. So now you’re in huge profit because you’ve got away from the mentality of pips and you’re looking at return per trade and controlled risk.
So that’s a really important aspect of risk that we try to understand.
The other thing quickly to mention is that, personally I had a really good month and a lot of my clients had a really good month of October and with my personal account I’m up 8.5% for the month so very happy with that return with again low risk.
Lastly, don’t forget that the U.S. clocks change this weekend and so the daily charts still remain at 5PM Eastern Standard Time (EST) but for those of us not in the U.S. it means that your daily charts and the 4-hourly charts, etc., everything will now open and close so the new day opens 1-hour later than what it has done recently. So just bear that in mind if you’re trading on daily charts, the start of the week is 1-hour delayed for those of us outside of the U.S.
So hope you’ve got some really good benefit and really good information from this webinar. My name is Andrew Mitchem from, The Forex Trading Coach.
Have a fantastic weekend. Look forward to talking to you this time next week.
Currency Strength and the use of Bollinger Bands
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Currency Strength and the use of Bollinger Bands
In this video:
00:31 Currency strength and weakness analysis
03:22 Trading with Bollinger Bands
05:07 Identifying the right part of the chart
In today’s video and podcast I’m going to explain how I trade with currency strength and weakness each day and also I’ve got a question that I like to answer regarding the use of Bollinger Bands. So let’s get into that and explain more right now.
Hi Forex traders, it’s Andrew Mitchem here, The Forex Trading Coach. And I’d like to answer a couple of questions that I’ve been asked over the last couple of weeks from people and the first one relates to the currency strength and weakness analysis that I post each day on my website. I post also in a number of other sites such as Forex Peace Army where I’m one of the giants on that site. The way that I like to use that is if I’m seeing strength in a particular currency pair let’s say the Euro/U.S. Dollar (EUR/USD) as an example. Let’s say I’m seeing strength, I’m looking for predominantly buy positions.
What that means is overall, I’m looking for a lot of strength in the Euro currency and at the same time I’m seeing weakness in the U.S. Dollar (USD). Put that together, the Euro and the U.S. as the currency pair because of course we have to trade in pairs as Forex traders. That means that ideally I’m looking for the Euro against the U.S. to rise in the value over the next 24 hours.
The Practical Way Of Trading
So as a practical way of trading that, what that means is if I’m looking at the Euro/U.S. Dollar (EUR/USD) and I’ve identified that and I see buy trade setups on any other shorter time frame charts that day, that to me has to have a lot of extra strength and probability about those trades working and working in other words getting to the profit targets and in my favor.
Now that means that I have the longer time frame charts showing a likelihood of the Euro/U.S. Dollar (EUR/USD) moving up, it means that when I take my trade maybe it’s the 4-hour chart or the 1-hour chart or even down to a 5-minute chart whatever it is, if I see a buy trade I’m trading with that likely overall direction. So think about the probabilities because trading and technical trading does come down largely to probabilities. The probability is I’m trading with the main trend. If the setup is good enough and I have my stop loss and my profit target in place at correct technical levels therefore the trade has a high probability of working than taking sell trades on that day.
Let’s say that over the course of the day the Euro/U.S. Dollar (EUR/UDSD) just falls and falls and falls and I’ve said I’m looking for buy trades. What that means is the likelihood of me taking a buy trade is very, very small because I’m not likely to see any good setups if the currency pair has just fallen all day. So although it means that it’s not ended the day in the direction that I was ideally looking for, it means on the shorter time frame charts I probably haven’t lost anything because I haven’t taken any new trade setups. So there has to be; when you think about that a lot of benefits of identifying strength and weakness and trading in those directions for that day.
So that’s the first question.
The Use Of Bollinger Bands
The second question I’ve had, it has to do with Bollinger Bands and the use of Bollinger Bands (because I’m not sure if you can see behind me here on my screen), I do use Bollinger Bands. It’s one of the few standard indicators that I use. I don’t take it as such as, like to identify a trade setup as such. I’m not using whether it’s bounce up a Bollinger Band or hit it or move down and whatever it might be, I’m not doing that.
What I’m doing is I’m using Bollinger Bands to help identify what part of the chart the price is in right now. And when I’m looking at candle patterns I like to see whether it’s near the up of Bollinger Band, the middle band or the lower band and that can have a huge amount of benefit in identifying the type of trade that I’m looking for.
Am I looking for a reversal trade or am I looking at a continuation of a current trend?
And so Bollinger Bands have a great deal of accuracy in helping identify what type of trade we’re looking at. If I’m looking at a trade off the upper or lower Bollinger Band, the likelihood is I’m looking for a reversal of the current trend and a continuation pattern means that generally the price is bouncing at or around the middle Bollinger Band and it means that let’s say we’re in overall uptrend, we’ve had a slight retracement and then we get ourselves to great opportunity to bounce off the middle Bollinger Band and for the overall trend and direction to therefore move back up again.
Other Factors Involved In Forex Trading
So that’s what I’m calling a continuation pattern. Of course there still lots of other factors involved in everything that I use in my trading candle patterns and support and resistance, round numbers, etc. But the Bollinger Bands, that’s how I use them and that’s how I make money from having them on my charts. That’s why I used them on my charts because they can just identify the right part of the chart that the price is in right now. Take them off your chart and your charts suddenly become a little bit sort of a bare and it’s quite hard to identify what sort of area we’re in and likely to be moving into next. So that’s the reason I used them.
So I hope that helps as an answer to the two questions. If you have any questions that you’d like me to answer in these videos and podcasts that I make weekly, all you need to do is to drop me an email andrew@theforextradingcoach.com and I’ll do my best to answer that question for you really shortly.
So that’s it for now. Have a great weekend. I look forward to talking to you this time next week. Bye for now.
This is Andrew Mitchem from, The Forex Trading Coach.
Understanding How The Forex Market Works
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Understanding How The Forex Market Works
In this video:
00:12 Understanding the market
04:03 Profitable trades especially on the 4-hour charts
05:38 Really amazing trade on a gold trade
Understanding How The Market Works
Hi traders, in today’s video I want to explain the importance of being able to read and understand the market and then talk about the results that will surely follow once you have an understanding of how the market works.
Let’s get into that right now.
Hi traders, it’s Andrew Mitchem here, The Forex Trading Coach. Today is Friday, the 17th of October and I want to talk about the importance of learning to read the market and understand the market because it’s a common problem so many traders especially new traders have. Actually a lot of people that I talk to who have been trading for number of years though still do not really have a very good understanding of the market and there’s a number of reasons for that.
But one of the most common reasons is so many people use the standard indicators. When you look at any charting package, when you look at any online reviews or sites or whatever it might be, forums, etc., everybody’s talking about using the standard indicators. Yet when you think about it almost everybody gets the same results which are not good so there’s got to be some form of correlation there when you think of the logic behind that.
The problem is, that so many indicators whether they’ll be good or bad doesn’t really matter. The problem is they don’t really teach you how to read what’s happening in the market right now and to look at what’s happened previously and to make a judgment based on what’s happening right now. You see, the problem is with indicators is not only to most of them lag time and price really badly is that people get so focused on looking at where the line is, what’s crossing over something else, whether it’s overboard or oversold, you know, X crosses Y and ends up being something else, you know, it’s just a complete and becomes too much focused on the indicator rather than focused on the actual price. That also applies to people who trade robots and try to create systems that are automated, that happens as well because you don’t get to understand what’s happening in the market.
The way that I like to trade and also to teach my clients is to gain an understanding and read the market, read the charts, read the right hand side of the chart. Look at what’s happening right now in the market.
Are there more buyers in the market right now?
Are there more sellers?
Is the price being pushed up?
Is the price being pushed down?
And Why?
I’m looking at support and resistance level whether they be, previous swing highs or lows, or pivot points or round numbers, whatever it is let’s see the process moved up to this level.
Why is it moved up to there?
Is that a significant round number?
Is that a significant bounce?
Has the price bounced there previously in the past?
If it has and you see a good candle formation occurring at that same level then surely that has to add to the probability of that trade being a profitable trade because you’re taking a trade at a level for a specific reason based on what’s happened previously and you know that the price bounced there previously, you’re getting some indecision and then some confirmation whether it’s go long or short and then you’re taking your trade at a level that in the past you’ve seen this being a significant price action at that level.
What Really Counts
So it’s getting to understand that type of information within the market and also having the ability to do that from the right hand side of the chart what’s happening right now. Taking trades in hindsight you know back testing it’s all well and good for learning but it doesn’t make you money you know it’s sort of theory in some ways. Making money from the right hindsight of the chart is what really counts.
To give you some information about that, I held a 2 ½ hour live webinar for my clients yesterday and I showed the number of trades that I’ve taken especially on the 4-hour charts trade myself over the last couple of weeks. They’ve been really profitable. Had a few losing trades like everybody does but a number of really good profitable trades to learn from.
Live during the session I took trades on the 5-minute charts, the 1-hour, the 4-hour and the 6-hour chart trades so a lot of really good trades taken but the importance of the session for me was not only getting that information across and being helpful for my clients but also getting the feedback from clients and the results that they have been getting themselves and that’s what important to you. You know, after all you need to gain results yourself, it’s all well and good in saying every week that I did this and I did that but you need to be able to take those trades and see them and take them and profit from those same trades yourself in real time and by yourself because after all that’s what most people want, it’s to be an independent trader. It’s all well and good copying someone else but you need to be able to take these trades for yourself. That’s where I like to see my clients go so well.
Amazing Buy Trade On The Gold
Give you some example. I had a client on that webinar live yesterday to the 5-minute trade on the Aussie Yen. It was a sell position; he made a 1.7 to 1 risk to reward out of that trade. Only I think maybe about 20 minutes. So 1.7 return risking 1% on that trade made him a 1.7% gain on his account just on that one trade. Had a number of other people making successful trades and reporting trades that they’ve taken over the past couple of weeks and the really amazing trade was a gold trade; a buy trade on the gold on the 4-hour charts that a client told me about and we looked at the trade live on the webinar yesterday. He made an incredible 6 to 1 reward to risk on that trade. So if he was risking 1% of his account on that trade he made an amazing 6% return from just that one trade and we went to look at it. It was a really nice trade buying gold at a low and buying it back up. Wonderful trading, 6% return from one trade, that’s more than almost any bank in the world will pay you in one year and he took that on one trade.
So it’s great to see that people are reading the charts, they are reading candle patterns and are taking trades by themselves in real time and making great money from that.
So if you’d like to know more what I suggest to do first of all is to have a look at one of the free webinars that I hold twice a week. Jump on to one of those so I have them especially designed whether you’re a new trader or whether you’re a more experienced and frustrated ready to give up type of trader whichever suits you. Pop on to those webinars and learn from them. There’s a lot of information given away on those webinars. If you want to get further then great, you know, I’m here to help. If you don’t, just watch the webinars and see what you can gain from those.
So that’s it for now. This is Andrew Mitchem from, The Forex Trading Coach.
Have a fantastic weekend and a really good profitable trading week next week. Bye for now.
Why You Need A Backup Plan When Trading Forex
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Why You Need A Backup Plan When Trading Forex
In this video:
00:58 The Importance of computer backups
03:10 Having a VPS
04:32 A lot of success in 12-hour chart trades
Why You Need A Backup Plan In Forex Trading
Do you have yourself a backup if your computer crashes and everything goes wrong? Let me explain exactly what I mean right now.
Hi Forex traders, it’s Andrew Mitchem here and I’m the owner of The Forex Trading Coach and I want to talk about having a backup plan. Well we allu have plans in our trading and everything else that goes on but do you have a backup plan if the worse happens to your computer?
Now the reason why I want to talk about this is because I’ve had this exact the same experience myself just last week. I’ve had a number of issues with my computer, it wouldn’t start and I took it to the computer shop but luckily because I have a plan, first of all I’ve got a very reliable computer shop who look after me but also I have everything backed up.
Backing Up Your Information
Now it’s important that you have things like Google Drive or Dropbox, you have your computer, your software backed up to maybe a portable hard drive or even backed up incrementally offsite so it’s stored on another server elsewhere whatever it is, make sure that you have that in place.
Also if you are using a desktop all of the time for your main trading like I do when I’m trading here from my home;
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Make sure that you have a laptop and it’s up to date
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Make sure you have all your trading software on there
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Make sure that you have copies of if you’re using MT4 let’s say, like I do
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Make sure you have your indicators, your scripts, any robots, your profiles, your templates, everything backed up
So all you need to do is either download another version of the platform or get it straight off for the backup file whatever it is that you have. But it’s really important that you have everything ready to go.
The other thing also to consider of course is an Internet backup. Now personally if I ever not only do I have two separate connections one hard-wired and one wireless , I also have an iPhone hotspot if I ever need it and of course for travelling that’s just fantastic because it allows you to just trade off your laptop.
Do you have an iPad or tablet? Do you can or do you trade off your phone whatever it is make sure that you have a good number of reliable backup sources that prevents that whole panic from happening. Because when your computer does go wrong, you get a virus or something goes electrical fault whatever it might be. It’s never you know at the best time and there never is a good time. So you want to try to eliminate as much of that headache and stress as possible when that happens. Now this is especially true if you have trades open, now of course you need to potentially have your broker’s email address and phone number handy. Don’t make it something that’s a headache to find. All those things in place having a plan will really help you should the worse go wrong.
The other thing to consider also is a VPS, a virtual server so maybe like a shared virtual server so you can have your trading platform on there, which means that you can login at any computer anywhere and have your trading platform up and running without needing your own computer so it’s a really important point. It’s not something that a lot of people discuss but like I said when the worse happens and things go wrong make sure that you have a plan ready in place that doesn’t interrupt your trading at all.
Current Market Conditions
The other thing I want to talk about of course just the market conditions. I think the market conditions right now are pretty tough to be trading right now. On the longer timeframe charts I found the daily charts, one day the market’s up and it’s down and it’s up. The Yen for instance, go and look at the Yen on your charts for this past week. One day it’s been really strong, it’s been weak and it’s been strong, it’s been weak. It’s just been a nightmare to trade on the longer time frame charts. I’ve personally found that 4-hour charts have been fantastic this week. Had a lot of really good success on those but daily charts have been a lot harder to trade.
I’ve got some trades open on a lot longer time frame like the weekly and the monthly and I’ve also taken a number of trades on the hourly charts. Now the other thing that I’ve shared with my clients was I’ve had an indicator written that allows you to trade other time frames that aren’t available in MT4. I’ve had a lot of success trading 12-hour chart trades and today being Friday, I’ve actually taken a number of trades that are open right now in my computer beside me here on the 12-hour charts and I’ve shown a lot of good setups. A lot of them have been showing of potential strength coming into the U.S. Dollar (USD) as we head on to Friday so by the time you see this you will know whether that U.S. Dollar strength continued or not but right now it’s showing me that this potential U.S. strength for Friday.
So that’s it for now. A slightly different video and podcast this week as you can see behind me if you’re watching the video it’s now spring time here in New Zealand so really looking forward to getting outside and trading those longer time frame charts which means you can go and do other things, more enjoyable things than sitting and watching charts. Charts are great to watch but you don’t have to be trading all of the time. You can trade the longer time frames, the 4-hourlies, the 12-hourlies, dailies, weeklies, etc. which means that you’re not sat watching every single pip move up and down which unfortunately so many people do.
The Reality of Forex Trading
Trading is about having a great lifestyle and enjoying your trading and making it realistic. You can’t sit there for 8 to 10 hours a day watching charts five days a week and tell me that you enjoy doing that all of the time because it’s not just realistic even if you’re making a huge amount of money from it. It doesn’t lend itself to being practical all of the time which is why I much prefer to trade those longer time frame charts. So trade less, higher returns per trade when they’re profitable trades and do things like go outside here and enjoy the great outdoors.
So that’s it for this week. Have a great weekend and I look forward to bringing your more this time next week.
This is Andrew Mitchem from The Forex Trading Coach.
Why not looking at your account balance can be beneficial to your Forex trading results
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Why not looking at your account balance can be beneficial to your Forex trading results
In this video:
01:32 Having controlled low risk
03:15 Taking all the emotions out of your trading
04:13 Made a total of 2.3% on a 1-hour trade
05:18 The Lesson: Forget about making pips
In today’s video and podcast I’m going to explain to you why not looking at your account balance can be really beneficial to your Forex trading results. Let me share more details with you right now.
Hi Traders, it’s Andrew Mitchem here from, The Forex Trading Coach and today, is Non-Farm Payroll day. It’s the Friday, the 3rd of October so be really careful with your trading into the U.S. session today with that U.S. job employment data news coming out later.
Don’t Look At Your Account Balance
But the main point that I want to carry on in today’s video and podcast is why I think it’s really beneficial and how it can help you with your trading, with the emotional aspect of your trading and the psychology behind trading by not looking at your account balance when you’re taking trades.
Now, what I mean by that is, a couple of things depending on which side you are. If you have a relatively small account it becomes really quite easy in destracting and that a lot of people like to take too bigger risks.
You know they say, “Well, I’ve only got a thousand dollars, it doesn’t matter if I lose it therefore I’m going to take “x” amount of risk.” And it might be something that might be risking let’s say $100 on a particular trade. Now if you’re doing that you’re actually risking of course 10% of your account which is far too much. So rather than doing that I think it’s far more beneficial to forget what your account size is right now and look at trading an equal amount of risk per trade and having controlled, low risk. That’s the important thing.
So when I’m trading myself I trade at no more than 0.5% so half of 1% of my account risk on any one trade. That’s the maximum I can lose. I know that in advance but it doesn’t matter what the currency pair is, what the type of trade is, what the time frame of the trade is whether it’s reversal or continuation, it’s a breakout, whatever it is, it doesn’t matter how many pips the trade is risking. If it loses it doesn’t matter how many pips the trade loses because I know I have a set amount of risk, an equal amount of risk in every single one of my trades and that really helps you with the understanding, the psychology, the emotions of your trading.
Take it to the other extreme. If you’ve got a large account let’s say you had a million dollar account. The trouble is when you’re looking at your account balance all the time, is that, the emotions come into it in a different way and it makes you hesitant, it makes you really, “Well, do I take the trade, should I close the trade early?”. You become really hesitant because you could see it your account going up in hundreds or thousands of dollars up and down all the time and it’s very easy to want to take the trade in terms of taking the profits slightly early or meddling with the trade too much. Whereas if you know you have a set amount risk on that trade, again half of 1% (0.5%) then you become comfortable with the trade because you’re not looking at the dollars or the pounds or the yen whatever your currency.
You’re not looking at the amount you’re making, you’re looking at the percentage that you risk as opposed to the percentage that you make on a trade as a far better way of trading. It takes all the emotion out of your trading. So it’s a really important point there.
In terms of percentages we’ll I had a live webinar, (2 ½ hour live webinar) with my clients last night. I had a client who’s been with me for just over 3 years now. He lives in Canada, his name is Bo and he reported that last week he made +6.15% on his account just in that one week but trading 15-minute charts and I believe also a few 1-hour charts so just a fantastic result. Of course that does not happen all the time but it shows what can be achieved.
I took 5 trades last night on the 1-hour charts. I had 3 winning trades and 2 losing trades. The winning trades averaged at 2.2 to 1 reward to risk so therefore that meant with half a percent risk on each of those 5 trades, I made a total of +2.3% on my account. So it’s a pretty good return when you consider they were just 1-hour chart trades and I effectively lost 40% of those trades that I took but still made a +2.3% return with only a 0.5% risk on each of those trades so very low risk, fantastic reward to risk ratios. In other words, making a lot more than I’m risking and ended up with a fantastic account percentage return just on one live webinar over 2 ½ hours, so really pleased with that.
The other thing I was really pleased about was the performance that a lot of my clients were reporting in trades that they’ve taken over a past couple of weeks on all sorts of time frames. People were talking about hourly time frames right through to monthly time frames and everything in between and it’s just really exciting when people are taking good trades and gaining fantastic results on their account. So, really pleased with that.
The Lesson…
So overall, the lesson I suppose the point to take from this video and podcast is to forget making pips. Forget that. Have controlled risk on each trade, don’t look at your account balance, look at having controlled risk (high reward to risk trades). And also the important thing that most of my clients were reporting yesterday the ones that had profitable trades was they were taking their trades on a variety of different time frames. If you can, don’t just trade one time frame. Look to trade multiple time frames.
To give you an example, I’ve had a fairly average week this week on my daily charts yet my 12-hour charts have been tremendous and my 4-hour charts have been tremendous. So it just shows by having a variety of time frames, if you have like a losing week or a lesser quality week on one-time frame you generally find that if you trade 2 or 3 or 4 time frame charts you can make up for those loses plus a lot more by having profitable trades elsewhere.
So that’s it for this week, this is Andrew Mitchem from The Forex Trading Coach. Have a great weekend. I look forward to talking to you this time next week.
Bye for now.
Why Having a Good Forex Mentor is Critical to Your Success as a Forex Trader
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Why Having a Good Forex Mentor is Critical to Your Success as a Forex Trader
In this video:
00:24 A critical aspect of Forex trading journey
01:25 Where do you go for help?
02:17 My longest cross-country helicopter flight experience
Why Is It Critical To Have A Good Forex Trading Mentor
I want to talk about why having a good Forex mentor is critical to your success as a Forex trader. Let me explain more details right now.
Hi traders, it’s Andrew Mitchem here, The Forex Trading Coach. And I want to explain about why in my opinion having a good Forex mentor is such a critical aspect of your Forex trading journey.
Now we all know that Forex can be quite a lonely journey. It’s quite a lonely business. A lot of people really don’t understand what it is that we do. You might have a spouse or children or other relatives, friends, etc. who think that you’re doing something a little bit crazy – it might be a “Get Rich Quick” scheme. Some people might just describe it as gambling and so what that does is it puts you on your own and you don’t have (in most times) much of a backup community around you because most people really lack the understanding of what Forex trading actually is.
The other thing about Forex trading of course is it’s very difficult. Make note bones about it. It’s a hard business to be in. If it was that easy then, of course, every will be in it and everybody would be making money really straight forward and easily from their Forex trading and as we know that in reality that is not the case. It is a very difficult business to be in. So it’s lonely, it’s difficult.
Where do you go for help?
Well most people tend to go for help on forums and my opinion of most forums is not particularly high. You tend to find that they become very abusive or they become dominated by people who really don’t have a lot of genuine Forex knowledge. That is the problem with most forums and people tend to jump from one strategy to another and introduce a different indicator, etc. It goes on and on like that.
And so I personally believe that most people, who spend a lot of time in forums giving out advice, are probably not particularly good Forex traders and so taking advice from people like that can sometimes be to your detriment. It’s not a great thing to do although the advice at that time might sound good.
Let me tell you a story about something that I’ve experienced this week.
As you would know as you’ve been following my videos and podcasts, I’ve been learning to fly a helicopter since around mid-January of this year. And we are now at the end of September so you know I’m coming along fairly good.
On Tuesday I did my longest cross-country flight, it consisted of a 2 ½ hour flight. It was a real challenge. It was really difficult, but I had my instructor with me the whole way. I did most of the flying but he was there to guide me on the difficult bits. If I look back several months ago there was no way I could have even dreamt of getting off the ground all alone flying for 2 ½ hours and following maps etc. and being safe at the same time.
However, on the way home we struck a hill range that we knew we had to go over and there was some very strong gusty winds over 45 knots which you have any knowledge of aviation that’s fairly high strong winds and fairly dangerous winds to fly especially if you’re in a relatively small helicopter and especially if you don’t have a lot of experience and knowledge like myself. Now there was no way I could have done that by myself. It would have been too dangerous, probably wouldn’t be here talking to you today. However, I had my instructor with me and he guided me through. I think it was stage where he took over for around 15 minutes and flew completely by himself to help get me through the leeward with side of the hill and then across the hill to where the air was, although still windy, it was a lot calmer.
So the message there is that I couldn’t have done that by myself without my instructor. I couldn’t learn to fly by myself. I can’t just you know go on to a forum, although there are hundreds of forums on flying as well. I couldn’t go on YouTube although there are hundreds and thousands of videos about flying on YouTube. You couldn’t learn safely and properly from those other sources. I had to seek a qualified and a good, proven mentor.
And so I strongly believe that Forex trading is exactly the same. Helicopter flying is so difficult, so dangerous, potentially. Forex trading – although dangerous in a different way but also very difficult – both of them quite lonely in a way. Helicopter flying you’re up there by yourself. Forex trading is sat at home, in your office, in your laptop wherever it is, by yourself. And so you can see there the importance that I place in having a good qualified mentor and coach and instructor. Likewise, I firmly believe and my clients get huge amount of value out of having a fully qualified instructor and mentor and coach with their Forex trading. Someone who’s been there, someone that seen other people start from scratch and all the pitfalls that other people make.
So I’m there to able not only in the actual trading side of things on the daily basis by offering advice and guidance and then webinars and trade advice and indicators and things, everything that goes with my course, but I’m able to help people through depending on what stage or the process and the journey they are at right now. And that’s a really critical piece of information. People have got somewhere to go to a person to approach and to help them progress and everybody is going to have times where they go really well and they have times where they don’t go well and you’re feeling down and you’re not quite sure whether it’s going to work for you, whether you can actually do it or not.
Again, in helicopter flying I’ve had so many times like that but I’ve kept going and now things are going really nicely. Same with the Forex trading with the coaching side of things. If you’re having a rough time, there’ll someone there you can say, “Hey coach here are some trades I’ve taken. What do you think?”
You can watch webinars and go and watch the course again. Help and advice is always there. And, in the end, for those people that stick with that and take advantage of that, the results are usually very, very good.
So that’s all for now, have yourself a great weekend and a fantastic trading week next week. This is Andrew Mitchem from The Forex Trading Coach.