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Popular Forex Trading Questions

Sep 22, 2014

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Popular Forex Trading Questions

In this video:
00:25    Fantastic feedback from last week’s video and podcast
01:58    There are no prizes for trading more
03:36    Stick to one strategy
08:00    Why trade Forex
 
Hi, traders. It’s Andrew Mitchem here, the owner of The Forex Trading Coach.

In today’s weekly video and podcast, I’m going to be discussing five more very popular questions that I get asked on a regular basis. So let’s get into that right now.

Hi traders.  Well, following on from the fantastic feedback that I’ve received from last week’s video and podcast, I’ve got five more questions that I’ve been asked, and I get these on a regular basis.  So, I’d like to go through those, because, as I said, the feedback from last week’s was just tremendous, so it’s helping so many of you which is really good feedback, and I’m very pleased to do that.  You know, that’s the aim of these, is to help people progress further with their Forex trading.

So let’s get into the 1st point.

A lot of people say to me, “Hey, look, Andrew, I have a full time job.  I just don’t have the time to dedicate to Forex trading. How can I get into trading with family and life, and children, and sports, and hobbies, etc. How can I get into Forex Trading because I really don’t have a lot of spare time?”

Well, quite simply the answer is this: you don’t have to be trading all of the time. I’ve got a client over in Canada who’s a full time Forex trader, and he trades no more than 4 ½ hours in a week total. That’s it. So you don’t need to be spending hours and hours and hours watching charts, watching every pip move up and down. In fact, I would suggest that you get away from those charts if you are currently looking at those, because so many people spend so much time watching the short time frame charts. Now, it’s really good if you can trade those charts and if you like to trade those and you have the personality to trade those, but I really don’t suggest that most people start at those charts.

There’s a phrase that I use all the time and it’s called, “There are no prizes for trading more.” When you think about that, it’s so true. You don’t have to be trading all of the time in order to do really well, because if you do that you’re going to burn yourself out, you probably not enjoy your trading, and all you’re doing is feeding your broker’s pocket which you don’t want to be doing.

So, my suggestion if you have a full time job and you don’t have a lot of time to dedicate to trading is get to the longer time frame charts. Look at the 4-hour charts or the daily charts or the weekly charts or even out to the monthly charts. You know those longer time frame charts show some fantastic trading opportunities with very high reward to risk trades, and it just means you put the trade on and basically walk away and leave it for a number of hours, a number of days. You don’t have to be there watching the charts all of the time. So please try and get away from the, a lot of people had the mentality, because it’s out there on the Internet, on forums, that you have to be trading 5-minute charts and 15-minute charts.  You don’t.  You don’t have to do that. Get to the longer time frame charts. So, I hope that helps.

Another question: “Andrew I keep jumping from one system to the next system. Help me.”

Look, I used to do that as well, so I have full understanding and appreciation of the draw out there in terms of emails that you get all the time, new systems and strategies, forums telling you, starting new threads, someone’s found the latest greatest robot EA, you know it’s out there all the time.

What I would suggest you do is you either stick to one strategy or you develop your own strategy.  If you want to buy a course or a strategy such as mine, that’s fine. There are several good ones out there, not many, but there are few. But regardless of that, I’m not just saying come and buy mine because I have one. Mine suits me, and it suits a lot of traders like me. Likewise with other courses out there, you know, there are people that trade news, there are people that trade the combination and all sorts of people that scalp, there are people that look at this indicator crossing over that indicator, whatever it is make sure it suits you as a trader. Make sure it suits your trading personality. Make sure that it’s something that’s not restricted to certain pairs or certain time frames or only works at certain times of the week, because you can highly predict that if they do have restrictions they probably are not very good trading strategies. So what I would suggest is if you do end up investing in education or a course, whatever it might be, give it a good go. You know, if it’s proven to work for other people, give it a chance.

I say to a lot of people who look at my course, give it two or three months. Don’t expect to suddenly become this super fantastic trader after one week of studying the course. It’s certainly possible to be making some really good money after few weeks, but don’t expect that to happen to everybody all the time. Give it time.

If you were to invest in your education and go to a college or university, you’re giving yourself years and years of education before you’re ready for the workplace. In some ways trading, yes, it’s condensed because it has a lot more information readily available, but it still has the same philosophy.  Give it time to work and for your eye to look for the setups and your mind to understand the strategy. So don’t rush into things, but try not to jump between system to system and adding bits of an old system to a new one thinking you’re suddenly going to re-invent the wheel, because likelihood is you’re going to end up with the same problem in a few months time, back to yet another strategy.

Another question, and I suppose I’ve already answered it in some ways, because some people say to me, “How long does it take to learn your strategy, my strategy?”

You know it does take time. Everything that you learn takes time. I’ve mentioned on many of these webinars and podcasts that right now I’m learning to fly a helicopter. It takes time. I’ve been going for eight months. I’ve gone solo. I’m still far from being any good, but you know, it’s taking me a lot of time, a lot of dedication, a lot of investment in myself as time and monetary investment, and a lot of education, a lot of learning new things. But it’s getting there, and that’s the same thing with the trading strategy. It’s getting there.  Don’t expect it to solve all your life’s financial problems and your trading problems overnight. But give it time, and over time, if you stick to the rules, then the money from trading won’t become an issue. It just will happen.

The next question: “Andrew do you trade the news?”

Well, not really, is my answer. I know that there are people out there that do trade news, and that’s absolutely fine. I just chose to be a technical trader. I’m aware of the news, and that’s one of the great things with Forex. You can look on Forex Factory and other calendar sites and see when the news is coming. I’m aware that tomorrow is the Scottish Referendum results coming out. I’m aware that this weekend in New Zealand we have the General Election. I’m aware that the clocks change here in New Zealand next week and the week after in Australia and in November they change in America. And so, things like that.  I’m aware of the FOMC meetings. I’m aware of GDP figures. I’m aware of employment data. I’m aware of all those things that are coming out and news events, but I don’t specifically chose to trade the news. The reason being is I like to look at the charts, and I see the likely results of that news announcement, of most announcements, already factored into the market by looking at the charts.

The last question: “Andrew, why Forex? There are so many other markets out there, why did you choose Forex?”

Well, for me there are so many reasons. When the market is open, it’s open 24 hours a day. That’s a great thing. You have weekends off. Another nice thing.  You don’t have to be doing it seven days a week. You don’t have to know a huge amount about what’s happening in terms of; I can be aware of 7 or 8 different currencies and economies around the world and know what they’re doing and that covers the most of the Forex pairs. I don’t need to be aware of which CEO resigned or which company and who’s bringing on a new product and things like that like you do in stocks and shares.

I love property also, but unlike property I can use leverage from my broker. I don’t need to go to bank in terms of applying to have big debts and loans and mortgages. So you can use your broker’s money to your advantage as leverage. Of course leverage is a double edged sword. There’s good things and bad things with leverage like all types of leverage but if you know what you’re doing leverage and Forex can be a fantastic asset to have.

Other things: low cost to entry. I’ve got a computer and four screens here behind me. You don’t have to have four screens. You can work off a desktop or a laptop. Very, very low cost entry. Get yourself educated, give yourself a few months and you can be making some really good money from trading. So there’s a lot of good things there. You get no gaps in the Forex market, apart from maybe a weekend opening gap. It’s not dependent on the U.S. time zone. There’s many, many things other that just make Forex, in my opinion, the best market to trade.

So, I hope that you’ve gained a lot of good information from those five tips. If you have anything that you’d like me to discuss on future webinars and podcasts just email me: andrew@theforextradingcoach.com. It will be interesting to see what happens with Scottish Referendum, personally I think that the “No’s” will probably win it, again, by looking at the charts and what I’m seeing out there. As for the New Zealand general election, I’m anticipating and I’m hoping that the National Party get re-elected for a 3rd consecutive term, as our economy is absolutely booming over this side of the world.

So, that’s it for now. Have a great weekend. I look forward to talking to you this time next week. This is Andrew Mitchem from The Forex Trading Coach.

The Top 5 Forex Questions That I Get Asked

Sep 14, 2014

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The Top 5 Forex Questions That I Get Asked

In this video:

00:27   The most regular question I get asked

03:20   The possibilities to make money from Forex trading

05:40   The logic and common sense behind my trading strategy

 

I’m going to give you the answers to probably the top 5 questions that I get asked on a regular basis. So let’s get into that right now.

 

Hi Forex traders, it’s Andrew Mitchem here and welcome along to my latest weekly video and podcast. I want to explain or give you the answers to the top 5 questions that I get asked very regularly.

 

Let’s start with the probably the most regular question which is:

 

  1. What is the best indicator to use?

 

I get that on a regular basis. People say, “Hey Andrew you know I’ve been trading for a while or I’m brand new to trading, I’ve been searching this forum and what is the best indicator or the one indicator for me to use in order to become a profitable Forex trader?”

 

And quite simply, if you’re looking at the standard indicators as a technical trader, there is no one indicator can solve all your Forex money making problems and you know that’s just the truth of it. Most indicators, in fact almost all indicators (the standard indicators) lack time really badly so all they really do is form some combination or average of what’s already happened in the past and they’re very sort of ordinary and not great at telling you what’s likely to happen in the future.

 

So traditional indicators, I would stay clear of almost all of them. The important thing in my opinion to read is candle patterns and price action because that’s what happening in the market right now and that gives you an idea of the sentiment.

 

Are there more buyers? Are there more sellers in the market right now?

 

So regardless of the time frame chart you’re looking at, in my opinion, candle patterns give you the best information possible out there in the market. But most lagging indicators don’t put them on your charts.

 

  1.  How many pips do I make personally?

 

And again, a lot of people asked me that question. I honestly have no idea. I don’t measure pips. To me they don’t matter. I can’t go down the shop and buy something with pips. It’s not relevant at all. The most important part of understanding money management is, understanding how much you risk on a trade as suppose how much you make on a trade.

 

When you take the mindset away from making pips, it allows you to trade multiple time frame charts. It also helps you with the emotions involved in trading especially when you start trading on real accounts because whether I have a, let’s say as an example a daily chart trade with a 70 pips stop loss and 200 pip profit target or I may have a 5-minute chart trade with the 7 pip stop loss and 20 pip profit. Both of them make equal amounts of money or they lose equal amounts of money. So the actual amount of pips that you make really has little importance in your overall trading. But unfortunately, most get cord up into the hype of the internet of having to judge their trading performance on how many pips they make. Honestly it really does not matter.

 

  1.    Can you make money from trading Forex?

 

You know, I suppose the common thought is out there that 90 or 95% of Forex traders do not make money and that is probably true. But I’m here to tell you, yes, you can make money. You know, I’ve got so many clients all around the world that make really good money from Forex trading. It’s not easy, it’s like anything is good. If it was that easy, everybody will be doing it. But it does take time and dedication and understanding and perseverance and hard work and everything like that does go into it. But yes, it’s definitely possible to make money from Forex trading.

 

  1. Kind of it relates to the last one in some ways but people say to me, “Hey Andrew, how long do I have to give it? Can I become a full time Forex trader? You know give up my job, throw it all away and make my full time career out of Forex trading.

 

And again the answer is a bit like the last one. Yes it’s possible. I’ve had clients who have taken my course and after a couple of years they then not in their employment any longer and they’re full time trading. Again, it’s possible. Not everybody wants to do that, not everybody can achieve that but yes it’s definitely possible. It comes down to treating your trading as a business. Don’t go gambling with it. Treat as any other investment. It’s a business. It’s there to be treated seriously but there’s absolutely no doubt at all if you have the correct mindset and you have the strategy and ability to carry out a strategy on a regular basis. You’ve got the ability to take draw downs and losing trades which we all get. You have the ability to control your emotions. Put all that together, absolutely you can become a full time Forex trader if you wish to.

 

  1. A lot of people say to me, “Hey Andrew, what makes your strategy different to any others? Why do you think that your strategy is so successful?

 

I suppose really, I’ve taken that strategy and built it up from the ground upwards. I’ve started with just buying charts with nothing on it whatsoever just candle patterns only and I built up a strategy that suits me and is now proven to suit so many other people.

 

Why it works? I suppose well it has a lot of logic and a lot of common sense behind it.

  • It’s not difficult

  • It’s not overly complicated

  • It works across multiple time frame charts

  • It works across all currency pairs and that I suppose is one of the important issues of it

  • It is highly based on price action and it’s also based around horizontal levels

 

I don’t really get into indicators as I mentioned in point #1 but I do like horizontal levels, support and resistance levels, round numbers, etc., previous bounce levels that type of thing. Yes I use an indicator but it’s really just to back up what I can already see there on the charts.

 

So it works across all time frames. I definitely have a strong emphasis on money management; I’m controlling risk on each trade that I take. I also like to include the sentiment and the daily strength and weakness within my trades because I believe it helps me to eliminate losing trades and it helps me to stay on the right side of the likely direction for the market for the next 24 hours.

 

If you’d like to know more please drop me an email andrew@theforextradingcoach.com and I look forward to bringing you another video and another podcast this time next week.

This is Andrew Mitchem from The Forex Trading Coach. Have a fantastic weekend and a great trading week next week.

It’s Bad News for Savers and Good News for Forex Traders

Sep 7, 2014

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It’s Bad News for Savers and Good News for Forex Traders

In this video:
00:42   European Bank Drops Interest Rates
02:10   A really good feedback of 2.5% returns just on one trade
03:24   Forex trader’s advantage in saving and investing

Today, I’ve got a really bad news for you if you are a saver but exceptionally good news for you if you are a Forex trader like me.

So let’s talk about that right now.

Hi traders, it’s Andrew Mitchem here, The Forex Trading Coach. Today is Friday, the 5th of September and as I’ve mentioned I’ve got some bad news for you if you are a saver but some really good news for you if you are a good Forex trader.

The bad news first, yesterday, the European banks decided to drop their interest rate yet again and the Euro is now are at a level that’s lowest against the U.S. for over one year. I’ve done a little bit of research because here in New Zealand our interest rates are some of the highest in the world. But even so, around a 4% on a term deposit is about as high as you can realistically wish to get right now.

I’ve done a bit of research and I found that in Europe, most savings (banks savings) rates are now under 1% and that’s per year (1% return/year). The highest I could find on a 1 year fixed-rate in the U.K. was 1.4% and the highest that I could find in the U.S. for 1 year was 1.1%.

So some pretty misely depressing kinds of returns there if you have money in the bank or term deposit as a savings. And really when you think about the realistic day to day goings on there you add inflation into that and it means you’re actually going backwards by having your money in a bank.

For us as Forex traders, of course we have the potential to make substantially far greater returns than that.

And I’ll give you a few examples:

Just yesterday, I held a live 2-hour live trading room session with my clients and I had an email from one of the clients who’s just joined only a few weeks ago. He said, “Hey Andrew I really enjoyed the webinar, I needed to let you know that I’ve made 2.5%.” –  On a trade that he mentioned he was taking while we were on the webinar yesterday.

2.5% return just on one trade, so really good feedback there.

I personally took 3 trades during that session, all on the 1-hour charts and 2 of them made profit and 1 lost. I was risking 0.5% of my account on each of the 3 trades. I had a trade on the Euro/U.S. Dollar (EUR/USD) that made a 2.4 reward to risk, a trade on the British Pound/Canadian Dollar (GBP/CAD) that made a 1.7 return to risk. Both of those two were profitable.

I also had a 1-hour chart trade which I took on Gold which lost. Put all that together, 2 profitable trades, 1 losing trade with only 0.5% risk on all 3 of them, on each of them, that gave me a +1.55% return on my account just while I was talking to my clients trading live in front of them on a webinar.

Now out of all the lists I’ve got here, I can’t find anybody in terms of a bank in the U.K., Europe or the U.S. that can make more than that 1.55% in an entire year on my savings. I’ve made that just in 3 trades whilst on a live session.

So it just shows the advantage that we have as Forex traders over the more traditional forms of investing or savings. So I just needed to let you know that in terms of what great returns can be made providing of course you have the usual things in your favor. You need to trade on the time frame that suits you or multiple time frames that suit you. You need to have a strategy that’s proven and a strategy that you understand and it works favorably for you. You need to have very low risk per trade which is why I have a maximum 0.5% of my account myself on any one trade, and you need to have a high return from your trades.

So those 2 trades that were profitable, one of them had a 2.4 reward to risk. The other had a 1.7 reward to risk. So in other words on the EUR/USD, if I was risking 1% of my account it meant that I made 2.4% return. I was risking half of 1% (0.5%) therefore I made a 1.2% return on that one trade.

So keep your risk very low, have high returns per trade, have a strategy that works for you, have a time frame that you like or a multiple group of time frames that works practically for you. Put that together and your Forex trading will way out do the traditional forms of investing. And don’t forget that to be a good Forex trader you do need to treat your trading as an investment. It’s not a gamble, it’s not a high risk; it’s an investment (a longer term investment).

Do that. You’ll do extremely well.

Talk to you next week.

This is Andrew Mitchem from The Forex Trading Coach.

7 Reasons Why I Only Take a New Trade at the Completion of Each Candle

Sep 1, 2014

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7 Reasons Why I Only Take a New Trade at the Completion of Each Candle

In this video:
00:29   Reason #1 – helps you plan around your trading
02:57   Stop from over trading
05:03   What’s really happening in the market

I want to talk about the 7 reasons why I only look at taking a new trade at the completion of each candle. 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 today’s video and podcast I want to explain to you the 7 really important reasons why I only consider a new trade at the completion of each candle.

So let’s get into those right now.

Okay, reason number:

1. It helps you plan around your trading. If for instance I’m trading on the daily charts, I know that I just need to look at my charts once per day at the completion of the daily chart which is at 5pm Eastern Standard Time (EST), New York. If I was trading 4-hour charts, I know that I don’t need to look at my charts until 4-hour chart closes so if that just happened I know that I’ve now got another almost 4 hours before I need to go and look at my charts again. If I was looking at trading the 1-hour charts for instance I know that until the candle closes at the top of each hour, I don’t need to look at charts again. So put that together; in basic terms it means that I can plan everything else – my day, my family whatever it is I need to do around my trading and it allows you to set that up as a structured plan.

2.  It keeps you away from your charts. I don’t know how many emails I get from people saying, “Andrew I’m just stuck at my charts all day, just frightened to leave my charts, worried about each pip”. You know, you don’t need to do that. If you were to trade daily charts, you look at your charts once a day; don’t go near them until the next day. If you’re trading 4-hour charts, don’t go near them until the next 4-hour chart closes, etc. So you can see how by trading only on a close of a bar, how it keeps you away from looking at this thing being glued to the charts all day long. That’s not what your trading is all about. Good trading means taking a chart setup and making a decision placing your trade, leaving it, walking away. So get away from your charts.

3. The third reason is it takes the emphasis of way from indicators and so many people that caught up in technical indicators when A crosses B and this line crosses over that dots of line and something else happens, you know, it’s just ludicrous. You don’t need to be trading like that relying on those lagging indicators. If you look at candle patterns as a technical trader then it helps to shape the market and help you to understand what’s happening in the market. You don’t need to be relying on an indicator crossing over something else that could happen at any time of the day or night and that’s why people start trading too often which then leads on to point #4

4. By understanding candle patterns, by trading and looking at the candles on the close of each candle. It stops you from over trading. And again it’s something that so many people get caught up within the wrong way. It’s that they think that they make more money. By trading Forex you have to take more and more trades – that simply is not the case. If you over trade all you’re going to do is become really, really trigger happy and you’re desperate to take new trades, you’re searching for new trades all the time; you don’t need to do that. So get away from your charts and take less trades but take high quality trades and again that’s what understanding candles can help you with.

5. It helps you with your trade management. You see why look at closing part positions at 23 minutes past two (2:23) as an example. If I’m trading the 1-hour charts and I have a trade open I don’t make any management position in terms of: Do I move my stop, Do I close part of the trade; whatever it is I want to do. I don’t do that until the close of the next 1-hour chart. Same as on the daily charts if I’m still in a trade on to the next day I’ll then look at the completed candles day chart, look at it, see what it’s looking like, is it still looking like it’s in my favor (yes or no) and make a decision then. So it helps you with your on-going trade management.

6. It allows you to trade on any time frame chart. I’ve mentioned three. I’ve mentioned the dailies, the 4-hourlies, and the 1-hourly. They just happened to be my personal favorites but if you wanted to trade 15-minute charts then look at your charts once every 15 minutes on the completion of the bar. If you wanted to go longer term of that onto let’s say weekly charts, just look at the charts just once a week and make a decision on that. So you can trade anytime time frame chart that suits you and of course it still needs to be showing the good quality setup. But it allows you trade, a range or whatever it might be one particular time or if it’s short or very long or combination whatever it is that suits you.

7. Lastly, candle patterns allow you to gain an understanding on what’s really happening in the market. But you can only make that decision on the close of that completed candle. If the candle has a big long tail when it closes bullish that tells me that there’s been a lot of sellers in the market at some stage during that formation of that candle. The price is going all the way down, it has formed a bounce level, an indecision, it has formed the support level and the then the price has been pushed up and up and up by the buyers in the market so by the completion of this candle, the buyers are firmly in control. That’s what you would see for instance in a bullish pattern with a long tail and you’re getting indecision candles where either the buyers or the sellers are in control and you get a doji style candle and indecision candle within the formation of that particular time frame so whether it’s a bullish candle or a bearish candle, an indecision candle whatever it is; the candles can really give you a picture, a mental picture of what’s actually happening out there in the market. Are there more buyers, are there more sellers, are the buyers pushing the market up? But hey now, it’s reached a  certain level because if you look back across several hours or several days ago the price hit that same level and it went down again. So likelihood is we’ve reached that level again as a resistance and the candle pattern then looks the bounce off that level, we could be heading down again so candle patterns really do help you to gain an understanding of what’s happening in the market.

So there are 7 really important reasons there that I’ve given you and shared with you of why I believe it’s important to only trade if you’re looking at candles and buy charts etc., if looking at that as a technical trader only trade a new position or open a new position or make a decision on any open trades that are already opened.

Why it’s Important to Stick to a Set of Rules when Trading Forex

Aug 17, 2014

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Why it’s Important to Stick to a Set of Rules when Trading Forex

In this video:

 

00:50   Writing down a set of rules and sticking to them
02:35   An experience that I’m currently enjoying
03:25   “Life Advantages” in Forex Trading

 

The Importance of Setting a List of Rules in Forex Trading. 

Sticking to a set of rules would definitely help you to become a formal profitable Forex trader. Let’s talk about that right now.

Hi Forex traders it’s Andrew Mitchem from The Forex Trading Coach and today is Friday, the 15th of August and I want to talk about the importance of setting yourself a list of rules. 

 

You see trading obviously is such an emotional business. We’re trading with real money, you’re making money, you’re losing money, you’re making it again and it definitely affects the way that you feel and emotions can become such a big part of your trading. It’s very important to try and keep that under control.

 

There are many ways to go about that. I use low risk per trade and I’ve talked about that many times on these videos and podcasts. But also today I want to talk about writing down a set of rules and sticking to them but they need to be set of rules that work for you. Because when you have a set of rules, it may be an entry rules setup, it may be an exit rule decision; whatever it might you’ve got to be able to be comfortable with that and to stick with it.

 

You know we have rules as guidelines. It helps us in making stupid decisions, emotional decisions, it takes as much of the emotion away from our trading as possible. So I want you to have a think about that and set a group of rules and list of rules, pin it on the wall next to your computer,  whatever it might be and go through that list of rules every time you’re thinking about taking a new trade. Do it every day before you start to take trades.

 

  • Analyze that market

  • What are you looking for?

  • What setups are you looking for?

  • Are you looking at trading with the daily strength?

  • Are you looking at reversal trades?

  • What percentage of your account are you looking at risking per trade?

  • How many trades would you have open at once?

If you saw a really good setup on let’s say the Euro/U.S. Dollar (EUR/USD) to sell it and you had a setup on the daily chart, the 4-hourly chart, the 1-hourly chart and then the 15-minute chart comes along, show us a good setup.

Are you going to take that where it might be your 4th or 5th trade on the same pair and the same direction?

 

You might do it. If that’s your rules then go for it but you need to have that written and down in advance.

What happens if you get really close to your profit target?

Are you the sort of person that gets a bit itchy and watch the start/closing part of your trades?

Do you like to move your stops to break-even?

 

You know are you sitting there staring at your charts you’d say, “No, I’ve got my profit target for a reason. I’m going to walk away and leave it.” What is it that suits you? So have that set of rules.

 

Now, to bring that back to an experience that I’m currently enjoying is, as you probably know I’m learning to fly a helicopter right now and about an hour ago I’ve just returned from a flight. The same thing applies in helicopter flying; I have a set of rules:

 

  • I take off at the right speed

  • I go at the right height

  • I have the right pressure on the engine

  •  I have  the right forward momentum

  • I have the rotors going at the right speed

 

Whatever it might be there are set of rules for a reason. When I’m come in to land, I come in to land at a certain angle. I have radio calls for a reason. It’s all to do with safety and rules. And so the difference is:

 

  • In helicopters – if you get it wrong you might not get another chance.

  • In Forex Trading – you can get it wrong and have another chance, another trade.  You might even blow your account but at least you can have another go.

 

So Forex Trading does have some “life advantages”.

 

Now talking of sticking to the rules I want to share with you a text here and I’ll just quickly find that a client of mine sent through to me last weekend. Here it is. It’s from Bruce. Bruce said:

 

Hi Andrew I had an 8% return this week on my live account with 15 out of 16 wins. 0.5% risks, each trade (too bad it couldn’t happen each week). Have a great weekend! Bruce – from down in Christchurch in the South Island

 

So thanks for sending that through, Bruce. It just goes to show what can be achieved when you stick to the rules. Now like Bruce has said to me many times before he’s not stuck to the rules, he had loosing weeks obviously like we all do but this time, well, last week he stuck to the rules, made a great return and it just shows what can be achieved when you apply those rules. Have them written for a reason and apply them.

 

The other thing I want to talk about my own trading this week. It’s been a lot slower week this week in terms of less market movements. I’m up 1.2% for the week so far so still okay, still reasonably good but not, certainly not like Bruce’s 8% last week. But it’s still a reasonable return for the week.

 

Lastly if you have any topics, any questions that you would like me to discuss on these weekly videos and podcasts please do email me andrew@theforextradingcoach.com –  Send through anything you’d like me to talk about – any problems that you’re having with your trading, good things, bad things whatever it might be, any questions about either the way I trade or how I can help you. Please do send through those questions and I’ll do my best to answer them in future weeks for you.

 

So that’s it for this week. Have yourself a fantastic weekend and I look forward to talking to you this time next week.

 

Bye for now.

Which Currency Pairs I Trades and Why

Aug 10, 2014

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Which Currency Pairs I Trades and Why

In this video:

00:49      Tips on filtering out which pairs to concentrate on and why
02:35      The right setup for your trade plan                             
03:46      Trading in the direction of daily trade analysis

 

I want to explain which currency pairs I trade and on which time frames and why. So let me explain more right now.

Hi traders it’s Andrew Mitchem here The Forex Trading Coach and today is Friday, the 8th of August.

I’ve received an email that I’ve printed out here from Ahmer who follows me on my website and also on my daily posts on the FOREX Peace Army review site.

The question says, “Andrew, you know I’ve been following you for quite a while now; understanding how you trade. Can you make a video explaining about the currency pairs that you trade and why”.

Because Ahmer is saying that he finds that he’s paying some large spreads on some of the cross pairs and exotics and so he’d likes some information and tips about filtering out which pairs to concentrate on and why. So thank you for that question Ahmer.

 

So for me in general if I’m trading the longer time frame charts (so I’m talking: the monthly charts, the weekly charts, the daily charts), it doesn’t really matter which currency pair I’m trading because the stop loss and the profit targets are usually very large on those pairs because of the longer time frame nature of the trades. Therefore really the spread doesn’t become an issue.

 

Selecting Currency Pairs

 

  • If you’re looking at let’s say for example the British Pound/New Zealand Dollar (GBP/NZD) which can have sometimes a higher spread. Let’s say the spread is 6-7 pips, well, that’s absolutely fine and it doesn’t affect my trade. If the profit target happens to be 150, 250, 300 pips wherever it might be base on the time frame of the chart I’m trading. So therefore, the spread that you pay is such an insignificant amount because the profit target you’re looking at is such a large amount.

 

  • However I wouldn’t be looking at trading, let’s say, the British Pound/New Zealand Dollar (GBP/NZD) if the spread was let’s say 7 pips on a 5-minute chart trade and the profit target may happen to be somewhere 15, 20, 30 pips whatever it might be. So when you trade the shorter time frame charts you need to be quite selective in which currency pairs you’re selecting to trade; you’re choosing to trade. Of course it still needs to have other reasons why you’re taking those trades such as the actual setup you’re looking for whether it’s a chart pattern or indicators or fundamentals whatever it is that you’re using you still need to have the right setup for your trade plan, you still need to be able to get the reward out of the trade so the risk to reward ratio of the trade so all of that still needs to be factored in. So generally the shorter the time frame that you trade generally the smaller the stop loss and generally the smaller the profit target on the trade. Therefore the spread whatever the spread amount is, it becomes a bigger and bigger proportion of that trade so that’s why on the longer time frame charts really it doesn’t matter to me. I’m just looking at the right technical setup base on everything that I’m looking for within my own trading patterns regardless of the currency pair itself.

 

  • When it comes to the next time frames down like the 12-hour, the 6-hour or 4-hour charts, again, the spread on most of those trades is quite an insignificant amount due to the bigger ranges of those longer time frame charts.

 

  • When it comes to anything shorter than that from my own trading of a 1-hour chart or below then I prefer to be trading in the direction of my daily trade analysis. So if for example today being Friday I’m looking for short positions on the Australian/U.S., the Australian/Yen there is some Aussie news announcement in a few hours from now but right now I can see that the Aussie weakness from the employment data like yesterday which is bad for Australia is likely to continue – the technicals and the fundamentals are suggesting the Aussie Dollars looking to weaken today being Friday. So that means that if I’m trading the 1-hour chart below, I’m preferring to look for short positions. If the news announcements comes out and goes completely bullish then that doesn’t really affect me. It just means that I’m not likely to see many sales setups therefore I just don’t take any trades on those shorter time frame charts and when it comes down to those shorter time frames again so 15-minute and less than that so 15-minute charts, 5-minute charts or even 1-minute charts.

    Realistically it is to going to be those major pairs which are dominated by the U.S Dollars. So the Euro/U.S., the Pound/U.S. the U.S. Franc, Aussie/U.S. etc., and some are the Yen pairs as well like the Euro/Yen, the Aussie/Yen. You’re looking for currency pairs that not only have the candle patterns, not only in the direction of your longer term view but also those that have spreads of let’s say 2 pips or below.

  • You really wouldn’t want to be trading a pair that has let’s say 4 or 5 pips spread if you’re trading on a 5-minute chart for example. Because again all you’re doing is paying your broker so much as a percentage of your trade. So it does become significant the shorter the time frame that you’re trading.

So I hope that helps you with selecting currency pairs. Try not to get too sort of caught up in which currency pairs you’re trading in terms of – if you live in Britain don’t worry about having to trade the British Pound (GBP); if you live in the U.S. don’t worry about having to trade the U.S. (USD) and the same for me here in New Zealand, just because I live here it doesn’t mean to say that I’m predominantly looking at New Zealand Dollar (NZD) pairs – it doesn’t matter. I’ve got to be trading with an independent open mind and looking at the extra technical setups because I’m a technical trader regardless of what the currency pair is. So it’s just a really important point to get across there.

 

So I hope that helps you. This is Andrew Mitchem from The Forex Trading Coach. Have yourself a fantastic weekend and I look forward to bringing you some more trading information tips and advice this time next week.

 

Bye for now.

Why Do We Need Volume and Volatility in the Forex Market?

Aug 3, 2014

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Why Do We Need Volume and Volatility in the Forex Market?

In this video:

00:24    The importance of volume within the market
02:38    7.9% gain in one day – just an exceptional return
05:20    How to trade for yourself the way that I trade

The Importance of Volume and Volatility in the FOREX Market

Why do we need volume and why do we need volatility in the FOREX markets to help us as FOREX traders? Let me explain more about that and a lot more about results that I’ve been achieving right now.

 Hi traders, it’s Andrew Mitchem here the owner of the FOREX Trading Coach. Today is Friday, the 1st of August.

 In today’s video and podcast I want to explain to you the importance of volume within the market.

 It’s not something we can measure as such but when you have a lot of activity, a lot of volume in the market, a lot of traders trading in the market;

  • It gives volatility

  • It gives big moves within the market

And that’s really what most of us need in order to be really profitable. You can be profitable in tight range-bound markets but for most systems to work you need that extra volume and volatility and that’s luckily what we’ve seen come back into the market in the last week or so. You would recall that on my video and podcast last week I was talking about how I’ve made 6.7% in the week and that was an exceptional return considering that July is traditionally a low volume, quiet month of the year due to the Northern Hemisphere holiday season.

7.9% Gain in One Day

But this week I’ve gone even better. On Wednesday of this week, I made 7.9% on closed trades in one day.

Now, that of course is not something that I achieve very often (if only). But reality is that doesn’t happen very often but it just goes to show what can be achieved if you stick to your system and you don’t change the rules and you have some volatility in the markets that aids you but of course you need to be on the right side of those trades and you need to have the strategy upfront to be able to identify those trade setups. And of course, you also need to have the confidence within your system and your strategy to take those trades before the market makes those moves.

It’s no good in saying, “Uh, I would have made 7.9% in a day if I had done this or if I had done that.” Because the – I would have, could have, should have; means nothing on your bottom line and your bank balance.

The reality is: “I did make 7.9% in a day because I’ve got the strategy in place; I’ve got the confidence in the system. I see the trade, I take the trade, I have very low risk per trade, I was trading at a quarter to a half of 1% per trade depending on which of the trades I took. But a 7.9% gain in one day is an exceptional return with very low risk.

Now, that leads onto something else. As I’ve explained several times over the last six months or so, this year has been a very hard year for trading. It just has been. It’s been, not a huge amount of movements in the market. The volatility and the volume have been low.

2014 BarclayHedge Rankings

What I have here is a printout of the Barclay Hedge Rankings which ranks the Top 10 currency hedge funds within their world or at these guys rank which is pretty much all the top ones. This is for July so this goes up until the end of May, so up until the 31st of May – this is published in July, just out. Now for all those companies trading more than $10million combined funds, the highest return for the month of May was +4.67% and the highest out of those top 10 in the whole of 2014 is +15.31%.

Now on that list there are only 4 out of the 10 who’ve got positive figures for that overall performance for 2014. One of them has a -11.77% return for the year. And I’ll read the list -2.7, -11.77, +15, +9, +1, -1, -7 etc., it goes on like that – so not tremendous returns. Now I’m not knocking any of these guys because I don’t know who they are and I’m not saying that they’re bad. I’m just saying that the conditions have not been favorable for most systems as currency traders.

Go to the bottom half of the table. Those trading between 1 and 10million – there’s one at +18% for the year and the rest are -8, -2, 0.47, 1.47, -2, -4, -2 etc. So again it doesn’t matter whether these guys are trading millions and millions of dollars or trading just 1 or 2 million dollars. A lot of those bigger companies are finding this year very tough so when I come back and  I look at the results of +6.7% for last week and +7.9% just for Wednesday this week, it just goes to show what an awesome (in my opinion) – an awesome strategy I have. I’ve been trading for 10 years now. It’s not something that’s just plucked out of the sky, this has been worked and developed and evolved over time.

Free Webinars

If you’d like to learn how to trade for yourself the way that I trade, what I strongly urge you to do is to jump on to one of the free webinars that I hold each week. If you’ve been on one before then I see no need to jump on them again because they’re the same webinar, just held a couple different times of the week to allow you to jump on to whichever of time zone that suit you.  But I hold webinars for brand new people to trading and I also hold webinars for what I called the “frustrated” trader which are someone who’s been trading for 6 months, 12 months or couple of years and still not cracked it and still not making money because my aim as a coach is to help my clients overcome that hurdle of being either a “beginner” or “frustrated” and to become profitable traders in their own right.

Of course there are some backups and some guidance initially especially from myself. A lot of help and guidance given upfront but overall my aim as a coach is to have my clients and my students trading for themselves, by themselves and taking good care of their own financial future because ultimately that’s what almost all of us as currency traders want. We want, obviously, the lifestyle it goes with trading, the ability to trade from home, if you wish, the ability to travel – we all know those potential benefits but there needs the monetary benefit as well and so results are really what counts and results are what I aim for my clients to achieve.

So this is Andrew Mitchem from The Forex Trading Coach.

Don’t forget non-farm payrolls, today being the 1st Friday of the month. Look out for any open trades at that time. Have yourself a fantastic weekend. I look forward to bringing you a lot more FOREX tips and information and advice this time next week.

Bye for now.

6.7% Gain and The Importance of Trading Forex with a Broker Who Has a 5pm EST (New York) Start of Day

Jul 27, 2014

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6.7% Gain and The Importance of Trading Forex with a Broker Who Has a 5pm EST (New York) Start of Day

In this video:

00:42     6.7% gain just this week
02:00     Don’t just trade for the sake of trading
03:30     “Sunday Candle”- the problem with lots of brokers
05:51     Highly recommend 5pm Eastern Standard Time brokers

 

The Importance of Trading FOREX with a Broker Who Has a 5pm EST (New York) Start of Day

 

In today’s video and podcast, I want to discuss with you some fantastic trading results from this week plus also to stress the importance of why you should be trading FOREX using a broker who has a 5pm Eastern Standard Time (EST) start of day.

Let me share more with you right now.

 

Hi Forex traders, it’s Andrew Mitchem here from the Forex Trading Coach and today, is Friday, the 25th of July. There are two main topics for this video and podcast.

  1. As I mentioned, some fantastic results.

  2. The second is the importance of the correct charts.

 

Fantastic Trading Results

 

So firstly, let’s look at the results. Well, for me personally this week I’ve had a 6.7% gain on my account – just this week. Now that’s been helped by several longer timeframe charts closing, some trades on the monthly charts and also weekly charts. But also I’ve had a good week in terms of the daily charts and a few 1-hour charts as well. That’s been quite an interesting week because, you see, traditionally July is generally a very quiet month. A lot of the Northern Hemisphere public and summer holidays starting up and the market generally gets a bit thin. However, this year we’ve seen that throughout most of the years so far we’ve had a very difficult trading year with a lot of flat sideways, range-bound markets. And that continued even into the beginning of this week.

 

But then a couple of the days this week we’ve also seen some really good moves and of course that has really helped to close out some of those longer timeframe charts especially looking at Euro shorts and also looking at some Aussie longs as well. It has really helped with the trading results for this week. But it also goes to show that when the market is active and there’s a lot of price action, lots of opportunities; take them. The flip side of that is when the market is pretty quiet and there’s not a lot happening – “Don’t just trade for the sake of trading.” You don’t have to trade if there’s not much showing; don’t feel force to have to be trading in the conditions that aren’t suitable.

But as we’ve seen in the couple of days of really good price action, we can hope that, that continues into the rest of this month and into August and onwards later in the year. So that’s a great week considering market conditions.

+6.7%  : I’m very happy with that.

 

FOREX Charts

 

The second thing I want to talk about and this affects all of us as FOREX traders. Please ensure that you use a broker who has the 5pm Eastern Standard Time, that’s New York time start of day on their FOREX charts and it’s very, very important. Unfortunately, most brokers don’t understand how important it is. If you have a 5pm Eastern Standard Time start of day, it means that the week, the new week opens at 5 o’clock (5pm) New York time on a Sunday evening and it continues right the way through until 5 o’clock in the afternoon, 5pm on a Friday – New York time; that’s Eastern Standard Time. When you have that, go and look at your daily charts and you’ll notice that your day charts, there are five complete candles or five complete bars within the course of the week. They all represent 24-hours each so they’re all equal length of time, equal value.

 

The problem with the lots of brokers is they have what I call, “Sunday Candle”. It has six days (the extra days) so they have six days within the week on their daily charts. What that does is it completely distorts your charts in any indicator that you use because as far as the charts are concerned, if you have a Sunday Candle that lasts somewhere between let’s say 1 and 3 hours. The chart thinks that that’s a complete day because it’s comparing apples with oranges, let’s say. If you have the correct charts, you’re comparing apples with apples because every day, every bar within that daily chart for the week has 24-hours in it. With the incorrect brokers you’ve got 5 by showing or all 4 complete bars showing 24-hours and 1 showing maybe 3-hours and maybe the Friday one showing 22-hours. So they’re not completely accurate.

What is also does is if you are the person who trades the 4-hour charts, you have distorted charts and they look different. When I’m looking at my charts; my charts go from 5pm-9pm, 9pm-1am, 1am-5am, 5am-9am and continue like every 4 hours. 

If you use a broker let’s say that starts at 8pm (New York) time your charts on the 4-hour charts are going to go from 8-12, 12-4, 4-8 and etc. like that round the clock. So that means that your 4-hour charts will look different to mine. And of course if you are looking at candle patterns and where a candle closes and if it breaks through a pivot point or whatever it might be that you’re looking at. You’re comparing two completely different looking types of candle patterns.

So it’s really important in my opinion that you use a broker who starts their new week and every single day at 5pm (New York) time throughout the entire year. If you don’t have that, maybe it’s time to start looking for a different broker at least in terms of looking at your charts. You may still wish to continue with your existing broker for placing the trades but for actually setting up your charts and setting up your entries and exits, etc.

 

I highly recommend 5pm Eastern Standard Time brokers.

So that’s all for now. Hope that that’s been a really valuable lesson for you and I look forward to talking to you this time next week.

Bye for now.

 

Exceptional Return of 1% per Day

Jul 20, 2014

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Exceptional Return of 1% per Day

In this video:
01:03    A client with exceptional return (1% per day)
02:41    Weekly chart trade on the Euro/U.S. Dollar (EUR/USD)
04:52    A lot of strength in the Japanese Yen (JPY)

I’ve just been talking on the phone with a client of mine who’s making 1% return per day on his account. Let me share that and more details with you right now.

Hi traders it’s Andrew Mitchem here, the FOREX Trading Coach and today, is Friday, the 18th of July.

I’ve just got off the phone about half an hour ago with a client of mine who’s only been with me for just over one month and he’s based here in New Zealand and he’s really excited to share his trading results. I’m not going to mention names on this particular video and podcast but if you would like to find out more I’m sure he’ll be more than happy for me to pass on his details but he wanted to tell me that he spent a quite bit of a time initially when he bought the course studying it full time. The last couple of weeks he’s been trading, (he’s been trading since he started) but the last couple of weeks he’s been trading on a live account and he’s making 1% on average per day.

He did tell me his account size on a live account; I’m not going to divulge information but let’s just say he’s making more per day than most people on wages would be making per week. He was just really excited to share that information with me and just to let me know, obviously, one, he’s very happy with his own trading and the returns he’s getting and how much the course has helped him to develop from being a break-even type of trader to already this quickly making a really good return on his own trading and also of course gaining huge confidence from his trading.

FOREX Trading Strategies

  • Now he was telling me that he uses my daily analysis that I post for my clients each day and the strength and weakness analysis that I also post and looking at different currencies; some are strong some are weak for the day. So what he’s doing is he’s trading in those directions going down to the shorter time frame charts. He suggested that he’s looking at mostly the 15-minute time frame for refined entries but doing extremely well (1% per day) is just an exceptional return.

 

So I just wanted to share that information with you and just show you what is being achieved and what can be achieved by just having a really good strategy and place that suits you and that gives you confidence within your trading.

 

  • The other thing that also just happened about he hits a really good hour. Actually the last 30 minutes I was talking to him and just before I started this video. I’ve had a trade (weekly chart trade) on the Euro/U.S. Dollar (EUR/USD). It’s been open for two weeks so I took it on the 9th of July and it’s just closed for full profit – 4.6 to 1 reward to risk trade so that’s a pretty incredible return there. If you were to trade let’s say 0.5 of 1% on that trade which I did – that was a 2.3% return on my account just from that one trade.

 

Yes it took just over two weeks to hit the profit target but it didn’t take any more work and that’s the important thing to realise. It was taken on a weekly chart so I have to expect that it’s going to take 1, 2, 3 or 4 bars. In this case, it’s been weeks to come through the full profit.

 

  • If I was taking that same type of trades set up on the 15-minute charts, I might expect the trade to take 1, 2, 3, or 4 bars – in other words, at maybe from 15 minutes through to an hour or so to hit full profit. It really doesn’t matter what time frame chart you take your trades on. If you have a good strategy the actual candle patterns and the set ups, the technical setups are exactly the same. It just depends on the time frame that you’re trading at that time when you see that setup. So I’m really pleased with that trade – a really nice profit there on the Euro/U.S. Dollar (EUR/USD) selling that.

Elsewhere the New Zealand Dollar (NZD) has weakened quite a lot this week. Now you might recall that this time last week I was talking about how strong the New Zealand Dollar (NZD) has become and still is but I did say also just to be aware of a likely retracement because of the levels that it was hitting those new highs, it was hitting against the U.S. Dollar (USD). And I said at the end of that video and podcast this time last week just to be aware of a retracement, a pullback likely to occur and that has actually been the case this week and the New Zealand Dollar (NZD) has dropped quite a lot against most of the other currencies.


The Way I trade – Looking for JPY Strength

And today being Friday, I’m looking for a lot of strength in the Japanese Yen (JPY); a lot of strength yesterday (Thursday) and looking for that to continue into today. So what that means is really if I see a currency pair setups that let’s say the Euro/Japanese Yen, the GBP/JPY, the NZD/JPY, the AUD/JPY. I’m looking for short positions on those because I’m looking for the Japanese Yen (JPY) strength to continue.

So it just gives you an idea of the way I’m thinking regarding my trading on the day by day basis. It helps you to trade in the likely overall direction for the day. It doesn’t mean to say that on the daily chart, the currency is going to close higher or stronger or weaker. It’s saying that for today let’s say the New Zealand Dollar/Japanese Yen (NZD/JPY) I’m preferring short positions because my overall opinion is for the New Zealand Dollar (NZD) is showing weakness right now, the Japanese Yen (JPY) is showing strength. Put the two together and short positions when they show, if and when they show, are likely to have a high probability of success than long positions. So it just gives you an understanding of the way that I’m looking at my charts.

That’s it for now, this is Andrew Mitchem from the FOREX Trading Coach.

Have yourself a fantastic weekend and I look forward to talking to you this time next week.