Do You Have Your Trading Year Planned Out?
In this video:
00:45 – Making sure you have 2017 planned now
01:48 – Trading Goals – What are your goals?
02:15 – 2 recent examples to help you
04:10 – Make your trading realistic to do – what makes my course successful
07:05 – Write down your goals now
Have you got your trading year planned or not? Let’s talk about that and more right now.
Hi, Forex traders. Andrew Mitchem here, The Forex Trading Coach. This is video and podcast number 209 and the first video and podcast for January of 2017.
Welcome back. I hope you’ve had a wonderful Christmas and New Year break. I know I’ve certainly had a great time. Summertime this part of the world here in New Zealand and we’ve had a great few weeks off trading doing lots of things, family things, flying, swimming, et cetera, doing all sorts of really cool things, but now back into trading.
Making sure you have 2017 planned now
What I wanted to talk about today was making sure that right now at the beginning of January you have your 2017 planned because we all know how quickly time disappears and, all of a sudden, it’s the next weekend, then next weekend, then it’s halfway through the year. It can disappear on you really quickly. My suggestion is that you start right now today. As soon as you’re listening, or watching this video or podcast, get a pen and paper and write down right now all the important things that you want to achieve both trading and personal in 2017. Do it now. Write it down. Grab a pen and paper. Stick it on your wall next to your computer and look at it all the time. Then ask yourself each day: what am I doing today to help knock off some of these goals, to achieve some of these goals, personal goals and/or trading goals?
I can’t really help you so much with the personal ones apart from I can honestly say that if you have a goals list, and you look at it, and you try and achieve it, you do achieve them, and it’s amazing how much of that list you do get through.
Trading Goals – What are your goals?
Trading goals, I can definitely help you with. You need to decide a few things like what type of trader are you, what timeframe charts do you want to trade, what pairs, what directions? Is it continuation, reversal patterns? Do you want to trade the news? Do you want to trade technicals? How many hours a day do you want to trade? Do you want to trade maybe just a few times a week? What is it that realistically suits you? It’s really important to get the part of what suits you and make it real.
2 recent examples to help you
I’ll give you a couple of examples. Just today I’ve had two emails come through my inbox this morning, two different people. One of them said, “Hey, Andrew. Look, I’ve enrolled in a course and it’s all about volume. It’s about trading volume in Forex.” They’re just questioning how that can be. I said, “Well, from what I understand, that volumes are really hard to me in the Forex market because, of course, there’s so many different brokers, different feeds, et cetera, coming in.” You can’t really truly measure volume in a Forex market and this person was not happy with the course they bought. They said it’s just not working for them.
The other person wrote to me and said, “I’ve also started a course. I’m just finding it really complicated. It just revolves around being involved, watching charts all the time, waiting for certain things to happen.” They said they’re just finding it crazy that in the last month they’ve been looking at this course, and it’s just taking up so much time.
The other thing that was really interesting, which I don’t agree with, is they said that as part of a course they were told to use backtesting information and go and review trade setups using lots of backtesting. Now, that in theory is okay. In reality, it’s not that great because you’ll soon get to realise that the hardest part of trading is seeing the charts right now, right there behind me here, looking at the right-hand side of the chart and making an evaluation and an opinion of what to do right now.
You see, the danger with backtesting is you can scroll through and your eye just automatically scans to the really good setups, and you ignore the setups that would have been okay and didn’t work, so you don’t have emotions when you’re backtesting. None of the realtime emotions come into it. In realtime, you know whether it’s 2 o’clock in the afternoon or 2 o’clock in the morning. Realistically, who wants to be trading at 2 o’clock in the morning. You have to find a system and a strategy that works for you in realtime.
Make your trading realistic to do – what makes my course successful
In reality, you’ve got to make it fit in around other things that you’re doing in your trading day and in your life in general. I’ve said to both of these people, “Look, there’s lots of good things that, in my opinion, makes my course very good and makes clients who have taken it very successful.” Just to name a few, I only look at a trade on the close of the candle. If you want to trade just once a day, just look at the daily charts. Very easy to do. It doesn’t matter where in the world you live. You can look at the daily charts at some stage in that day and make an opinion on the call. If that’s too much for you, go to a weekly chart.
If you want to go short of timeframe chart, then I’ve got a great software that works on charts like 6, and 8, and 12 hour charts that are nonstandard MT4. If you want to sit in front of the computer and watch the charts for maybe let’s say like one or two hours a day and you want to trade 5, 15, 30 minute charts, then that equally works well. It depends on what works for you. It’s important to have that. Write it down as a trading plan and some goals. That’s how I went back to people. That’s the first thing.
The second thing is everyday I post on the membership site daily trading suggestions, specific trades taken in advance of the market moving. You can see what I’m looking at and why. Now, of course, not every time do those trades work. Last year, they made almost 35% return for clients but not everyday will that be winning trades and that’s just part of trading.
What you do get to see is that candle pass and setup, the technical setup that I’m looking for and why with the reasons explained, the exact entry, the exit levels again all taught in the course but all written down so you can follow them. You can basically earn while you learn. Not only that, you can then adapt that same principle because I’m writing this off at the daily chart. You can take that same principle and trade it on a four hour chart, let’s say, or a one hour chart, or whatever it is that suits you. The thing is that this is written in advance of the market moving. It’s not to say, hey, yesterday I might have done this or only show you the good ones and just happen to eliminate the bad trades. None of that is all realtime trading.
The other thing and the third thing that really makes the course wonderful and people succeeding is a forum site. Clients are interacting with other clients and they’re posting images, screenshots of trades that they‘re taking in realtime. It really also helps people to highlight in your eye what other people are looking at and why, seeing whether this trade was a good trade or not a good trade. Actually look at the trade setting up in realtime. It really is one of the hardest things to do. If you have those three different methods there … Of course, another one that I have failed mention is my live webinars where I’m trading in realtime on a live account in front of people. All these ways of actually trading and seeing the charts moving and making a decision in realtime, it really is one of the biggest keys that makes the difference between being a good successful trader and someone who cannot trade.
I hope that helps. Get 2017 off to a really good start.
Write down your goals now
Do it right now. Write the trading plan, or your personal goals, or your trading goals. Write it down. Look at it. Review it, and stick to it, and you’ll have a great year in 2017.
I look forward to talking to you this time next week. Have a wonderful weekend and a great start to the trading year. This is Andrew Mitchem, The Forex Trading Coach.
How Long Should You Leave Trades Open?
In this video:
00:22 – Last video and podcast for 2016
00:35 – Trader asks about leaving trades open overnight
01:45 – Other markets often have opening gaps
02:45 – News announcements don’t often create gaps in the FX market
03:55 – Daily trades have made clients +35% account gain this year with low risk
04:40 – Client makes +27% gain since June with a 3% drawdown
05:30 – Spend some time to review your trades
06:05 – I start trading again on Monday 9th January 2017
06:40 – Thanks for watching and listening to my weekly videos
How long should you leave your trades open in the market? Let’s talk about that and more right now.
Hello Forex traders, it’s Andrew Mitchem here, The Forex Trading Coach. Today this is video and podcast #208.
Last video and podcast for 2016
It’s the last video on podcast for the year of 2016. What an amazingly quick year it has been, but more about that shortly.
Trader asks about leaving trades open overnight
The subject of today, and it comes about as a result of an email I had from a follower of mine on Forex Peace Army, a guy called Ray. Ray said, “Andrew, I love your podcast. Can you do one about the possibility of an overnight gap jumping right past your stop-loss? What’s the possibility of a flash crash while you are sleeping? How do you deal with that? Is Forex more immune to this than other markets?”
Ray goes on to say that he used to trade futures where gaps were always a possibility. How do I trade the longer time frame charts? The great news is Ray is that the Forex market doesn’t really have gaps, being a 24 hour market from its open to it’s close; you don’t really get gaps. You can occasionally get a gap from the market closing at the end of the week until the beginning of the next week, and that can sometimes happen. It generally doesn’t become an issue for most people the way that they trade. If you’re trading a longer time frame charts then the gaps generally, if you leave your trades open over the weekend, don’t become too big of an issue. If you’re trading shorter time frame charts, so for me anything from a daily chart and lower, I always close them at the end of the week or before the end of the week anyway. If we get a gap open at the beginning of the next week, it’s not really a big deal.
Other markets often have opening gaps
What you’re referring to, Ray, being a futures trader or a previous futures trader, is that you get gaps of say between the market opening and the marketing closing on most of those other markets you look at commodities et cetera. Most Forex brokers now offer far more options available to us, different markets, than just the currency markets like they used to. You can trade things like coffee and soy and different markets as well on most Forex brokers. When you look at those, they are largely dependent around the market times that they open and close and they’re certainly not 24 hour markets, most of them. Most of them are dependent on the US. If you’re not in the US then they become really difficult markets to trade.
For me over here in New Zealand, most of those US markets open somewhere between two and four o’clock in the morning, and I certainly don’t want to be up looking at charts at that time of the day, but you do get gaps on those markets.
News announcements don’t often create gaps in the FX market
Even in the Forex market when you get news announcements and the announcement’s massively better or worse than expected and you get some decent price action, very rarely do you actually get gaps in the market.
Ray, to answer your question, to leave your trades … when you say overnight, it depends again where you live in the world. If you’re talking between the close of the day which is 4:59PM New York time and leaving it open through to the next 5PM New York time and into the next day on the Forex charts, then most times it’s not generally an issue. That’s one of the great things. If you are still concerned about it, then of course you can go and you can day trade, scalp trade, and that’s absolutely fine; that works extremely well. It just depends on what suits you. If you’re the sort of person that wants to be in and out of a trade all the time within a few minutes or a few hours, then I suggest you go down to shorter time frame charts.
Honestly, I’ve been trading Forex for 13 years, and I’ve never really had apart from maybe one or two occasions where you see an unexpected gap. Very, very rare do you get that.
Daily trades have made clients +35% account gain this year with low risk
As I mentioned in the beginning, we’re at the end of 2016. It’s been a fantastic year. I’ve helped heaps of traders around the world; had a really good year myself. My daily trade suggestions that I post to my members on the membership site, if you did nothing else and just followed those for this year, only half of 1% risk for each trade, you’d be up over 35% on your account. That’s without even compounding. Now you add on top of that the trades that I post on weekly and monthly charts, trades that I take on my live webinars, trades that I post and other clients post on my forum site, plus of course trades that people take themselves, you can see what an exceptional year we’ve had.
Client makes +27% gain since June with a 3% drawdown
In fact, I’ve just received another email this morning from a client called Paul who joined me in June, and Paul said that he’s had a 27% return on his live account since June, with only a 3% draw down. So it’s exceptional trading, and that’s just taking a few of my trades plus his own trades. A 27% account gain, and he’s only joined me in June. I don’t know when Paul started trading, it may have been right at the beginning or he may have taken a few weeks first, but either way that’s an exceptional return with only a 3% draw down.
It’s all well and good saying, “I’ve made a 200% return,” and that’s great, but not much good if you’ve had a 50% draw down at the same time. Statistics are really important to actually analyse them further than just look at the performance result and go, wow, that’s either really good or really bad.
Spend some time to review your trades
You have to look further into it and see what draw downs were, what risk per trades were, and all those sort of things to give yourself a bigger perspective picture on that.
The thing you can do, at the end of the year, go and review your trades. Go and have a really good look through the trades that you took, the ones that were profitable, the ones that were not, and try and analyse why the good ones were good. Why did they work? Why did the losing trades lose? Is there anything you could have done differently? Have a look through that and analyse the markets. Go back through your charts; analyse your account history. Really take some time over the next few weeks while the markets are pretty quiet … time really.
I start trading again on Monday 9th January 2017
I‘m stopping trading today, being the 16th of December. I’m not even looking at charts or starting until Monday the 9th of January.
If you do follow my posts … The freely available posts on my website, or Forex Peace Army, or Twitter or Etoro, wherever you see them, they won’t be starting again until Monday the 9th of January. There’s just no point in trading when the market’s that sort of potentially either very volatile or very quiet. We don’t know of course in advance which it’s going to be, but I prefer to have a decent break and then start again when the majority of the market is all back in action, 9th of January onwards.
Thanks for watching and listening to my weekly videos
That’s it for me this year. Thank you for watching my videos, thank you for listening to my podcasts. I hope you’ve really enjoyed them. I hope you’ve learnt a lot. The people who have joined my Christmas sale this year, the fantastic feedback already from people who have joined this week. If you’ve missed that, well there’s been plenty of opportunity to jump on and you’ll have to wait until next Christmas. There’s been plenty of opportunity for people to join.
If you need any trading help, just send me an email [email protected] Replies may take a little bit longer over the next few weeks, because I also want to enjoy Christmas and do plenty of flying and family things and barbecues and beaches; don’t forget it’s Summer this side of the world at Christmas time.
That’s it for me. Have a great Christmas, great New Year, and a happy, safe, prosperous 2017. I’ll see you in January, bye for now.
Good Forex Trading Does Not Need To Be Complicated
In this video:
00:27 – Traders send me their complicated Forex charts
00:58 – Initially you think that the indicators tell you the answer
01:55 – You need to look at the price and remove the clutter
02:57 – Only look to trade upon the completion of a candle
03:30 – Don’t get overwhelmed with news events
04:31 – My Christmas sale is now live – see the link below this video
Good Forex Trading does not need to be complicated. In fact, the more simplified approach you have, the cleaner your charts, probably the better you’ll do. Let’s talk about that and more right now.
Hi, Forex Traders. Andrew Mitchem here, The Forex Trading Coach. Today is video and podcast number 207.
Traders send me their complicated Forex charts
I want to talk about an issue that so many people have. You see, people come to me and they show me screenshots of the way they’re currently trading. It kind of just blows me away in terms of how difficult people make their trading, and unnecessarily difficult. We’ve all been there, haven’t we? I know when I started trading I was looking at all sorts of different indicators. I was printing out, reading about them. It was just … The indicators were everything.
Initially you think that the indicators tell you the answer
They look really impressive, especially when you’re new to trading, and you kind of think that they tell you the answer. Little do you realize that all they’ve done is made an accumulation of previous price action and plotted it on a graph somewhere, so they all lag time pretty much.
It’s a real hard thing to get your head around, especially when you’re new to trading because they do look really impressive. You think that your trading needs to be complicated. You think you need lines and arrows and stars and filled in bits all over the place. What you end up over time is realizing that, one, it doesn’t work and what you also do is get a headache because you get confusion. You have different charts telling you different things and you really, you get the analysis paralysis, you know what I mean. Just Google complicated Forex charts and it’ll be lines and squiggles all over the place.
The problem is that when you have more of these lines and squiggles you can’t actually see the real important thing. That’s what’s happening in the price right now.
You need to look at the price and remove the clutter
Look at the candle patterns, look at the price that they are at. That’s the important thing. Get rid of the spaghetti, all the lines and complicated stuff, it doesn’t help you, believe me. Start with the basics, look at the price. What’s the price telling you? What part of the chart is that in right now? Is that looking like a trend’s going to continue? Is it looking like trends are back to reverse? Has it hit a prior support and resistance level? When it the price it’s at now, like, a long time ago or more recently, what did it do then? Did it hit that level … Let’s say it’s in a up trend. Did it hit that level and then continue up? Did it hit that level, form a reversal bar, and then head down again?
Look at what’s happening in the market right now. Look at what happened at that same price level a little while ago. Put that together and you’ll really help yourself with your trading. You don’t need to complicate your chart. Simplify your chart, simplify your trading, simplify your life, it means you will enjoy your trading a whole heap more.
Only look to trade upon the completion of a candle
The other tip that I will give you is make sure that you only look at taking a trade on the completion of a candle. If you’re trading a daily chart, for instance, wait until the daily chart closes and then make your analysis.
If you’re trading a one hour chart don’t look at 20 past the hour and say, “I’m going to take a buy trade here,” because a lot could happen in the next 40 minutes until that candle closes. Only look at candle patterns and price on the completion of a candle. The other thing when you think about … That’s technical trading I’ve been talking about.
Don’t get overwhelmed with news events
The other thing that people get really overwhelmed with is the fundamental trading. You see people thinking that they need to be in a professional trading room with CNBC going or they need to have financial magazines and papers and read financial news online. All this sort of price feeds and scorps and things coming in. Again, it’s overkill, you don’t need that.
If you’re a fundamental trader then yes, be aware of what’s happening in the news. For me as a technical trader I know what’s coming up in the news. I know the major impact announcements. I know what currency they’re likely to affect, if any. When the news has come through I’ll look to see what the result was just so I’m informed. It doesn’t really affect my trading because my own trading is what’s on the chart right now. What are the charts telling me is actually happening right now in the market and that’s how you make your money out of trading. That’s how you make your decisions in real time.
My Christmas sale is now live – see the link below this video
I hope that’s helpful. Don’t forget that between Monday the 12th and Friday, the 16th of December I’m holding a Christmas sale. It’s my annual Christmas sale. Three great ways to get on board with my course, three different payment methods. If you’re looking to make 2017 the year when you become a successful and independent Forex trader than jump on to the Christmas sale. Three great ways to join, three very different ways to join. Have a look at the link below this video. Remember, the sale is between Monday the 12th and Friday, the 16th of December. It also gives you time over Christmas and New Year to study the course and really get familiar with the way that I trade, really for trading in 2017 and beyond.
Why Quitters Will Never Win
In this video:
00:31 – A true sporting story showing why you should never quit
02:05 – It shows the power of the mind – both belief and doubt
02:45 – It’s no different as a Forex trader – don’t quit if it’s something you really want to do
03:45 – Stick at it and follow the basics
04:30 – Christmas sale 12th – 16th December
I want to talk about why quitters will never win, so let’s talk about that and lots more right now.
Hi, forex traders. Andrew Mitchem here, The Forex Trading Coach. This is video and podcast number 206. I want to talk about a subject and tell you a story that happened this week. I want to talk about why quitters will never, ever win.
A true sporting story showing why you should never quit
I’m a big cricket fan, so let me start by saying if you’re in the US and you don’t know what cricket is, just imagine it’s like baseball, as an example. If you do know what cricket is, fantastic. You’ll understand the story.
This week, I went to watch New Zealand play Pakistan in Hamilton, my local cricket ground. As I mentioned, I’m a huge cricket fan, and I’m a big New Zealand cricket fan. On the last day, New Zealand needed to bowl Pakistan out to win the game, and Pakistan also had a chance of winning so there could’ve been a win to Pakistan, a win to New Zealand, or a draw. All three options were definitely on by the last day of the game. However, by the T Break, New Zealand had taken only one out of the 10 Pakistan wickets and Pakistan were on the way to potentially winning the game.
At that stage it would’ve been very, very easy for New Zealand to quit, but they didn’t. They stuck out their game plan and in a dramatic last session in the afternoon, New Zealand took the further nine wickets and won the game. It was an absolute thrilling, amazing game. Whatever sport you’re interested in, you just imagine when you have that complete reversal and that comeback from behind sort of situation. The thing was, we never ever quit. We didn’t give up, and spirits for a lot of teams at that stage, at the T Break, would’ve been quite low, I would imagine, but we kept going, kept going. All the conditions were in Pakistan’s favor, really, but we just kept going, kept at it.
It shows the power of the mind – both belief and doubt
And it shows also the power of the mind, because as soon as we took the second wicket, we then started getting even more confidence and trying even harder, and as Pakistan started to fail then the self-doubt came into it and they then crumbled and we excelled. Completely opposite to the previous five hours of play on that day.
Amazing result for New Zealand cricket, but it showed me how quitters never win. We kept at it, kept going, and in the end we won and had an outstanding victory. Exactly the same as a forex trader.
It’s no different as a Forex trader – don’t quit if it’s something you really want to do
You know, I’ve had people come to me who have been trying to trade various markets, not just forex, for 10 years. They’ve come to me and said, “Look, I need to make this work. I want to make this work, but I’ve not quit,” and this particular person who I’m thinking of is now one of my very best clients. He’s doing extremely well, but I’ve got a number of people like that and when you find the people who end up being the most successful and the most profitable, not always do they start the best and it’s a very common occurrence.
The people who jump in and go, “Yeah, I want to do this and I’m going to double my count and make a fortune.” They generally don’t make it very far because there will be something that will happen, the next shiny object or something will happen, the trades won’t work out quite so well as they planned, and those people tend to be the people who give up and quit.
Stick at it and follow the basics
However, the people that stick at it and ask questions and attend my webinars, log in to my membership site onto the forum site, ask questions again, post trades, may not always be very successful to start with but they stick at it. They don’t give up, they follow the methodology and the basic principles of what I teach. Those are the people who long-term are in almost all cases the most successful traders.
You can see the correlation there. Not always is the path easy, but the people who stick at it and trust in the system and trust in themselves and seek help, they are the ones who do the best in the end. It’s a very true story for not only the sport of cricket or trading, and in life in general.
Christmas sale 12th – 16th December
That’s the story and the message for this week. Just one final thing to let you know, between the 12th and the 16th of December I’m holding a Christmas special. Christmas sale. There are going to be three very different and unique ways of joining the course that will be available to you. If you would like to know more, all you need to do is click on the link below this video, register your interest, and I’ll be sending you some emails and also links to that sale when it starts on Monday the 12th of December.
Have a great weekend, look forward to seeing you this time next week.
#205: Sticking with the Basics is the key to success
In this video:
00:35 – Danger – We all want the instant fix – but be patient
01:15 – Most Forex traders will go through this stage
01:33 – The foundations and basics are crucial
02:35 – Live webinar with clients proved that the basics are so important
04:24 – I post daily trades and hold webinars to enforce the basics
05:09 – Wait for the high quality setups
As with most things, sticking with the basics is absolutely key to your success, and it’s no different in Forex Trading. Let’s talk about that and more right now.
Hi, Traders. Andrew Mitchem here from The Forex Trading Coach. Today is video and podcast number 205, and I want to talk about getting back to the basics, and how very, very important that is for your long-term success as a Forex Trader.
Danger – We all want the instant fix – but be patient
Now, as people, as Forex Traders, whatever it is we do, we all what that instant fix these days. No one’s patient. No one can wait. Everybody wants the answer. In trading, so many people want the get rich quick scheme. It won’t happen. Everybody’s sort of wanting to pay for an answer.
No one’s prepared to work at things, and it’s a big, big issue. We all want the shiny object. We want the next thing. We want our quick fix. If it doesn’t work, we’re onto the next thing. We scrap that. We’re on to the next forum, we’re onto the next robot, the next indicator, whatever it might be. You know what I mean, don’t you? Because, I know you know, because I’ve been there and done it myself.
Most Forex traders will go through this stage
If you’re in that learning stage as a Forex Trader, I can almost be certain that you’re doing that or going through that process right now. If you’re not, then you’re probably going to be. It’s a big danger to get into those, so if you haven’t reached that stage so far, stop what you’re doing right now, listen to this video and podcast. It’s really important.
The foundations and basics are crucial
Reasons being whatever we do in life whether it be raising a child, building a family, building a house, flying a helicopter, learning to trade Forex, whatever it is, it’s all about the basics and there’s so many aspects of life that that is so important in. Another thing that I, personally, do apart from flying is I’ve been practicing Karate for, oh, probably ten years now I think. Somewhere around about that. Karate is exactly the same. It’s all the basics. It’s repetition. It’s doing these things hundreds and thousands of times so that you get them right and any shortcut, whether it be with your grounding, your footwork. If you don’t get that right, like the foundations, the building blocks, everything else falls to pieces. You think about building a house. If you don’t get your foundations, you don’t get your groundwork, don’t get your plans, all those type of things right, the building falls to pieces. Exactly the same is Forex Trading, you have to have those basics
Live webinar with clients proved that the basics are so important
Now with that in mind, the reason why I want to bring that subject up is just yesterday, I held a live two and a half hour trading room webinar with my clients. Clients from all around the world on the webinar. I’m trading on my screens behind me here. People can view my screens, hear me talking about different trades that I’m taking. Now the market was pretty quiet during the session. I had just took two trades, and so in amongst answering questions and answers for people, I showed a lot of trades that people have been posting on my forum site. Now I have a great forum site for my clients that they can go on, and share trades, and look at trade setups, post screenshots, et cetera.
There’s been a huge number of really good trades posted over the last couple of weeks on that site, so I shared a lot of those trades on the webinar, and discussed them with my clients. Now there was a huge high correlation between the successful trades that people posted that had a lot of the basics in place, and some of the trades that people posted that didn’t work out. Now the old one was a good technical setup that just didn’t work. That’s the nature of the market. Nothing’s one hundred percent. Never has been. Never will be, but where people have posted trades that didn’t work, that failed to get to that profit target, or got stop out too soon. In most cases, the basics were not there.
If the basics are not there, and the foundation of technical analysis was not there, then in most cases the trades failed. With the trades that were profitable, the vast majority of them had some great technical setups in place, and people saw them. They waited. They were patient. They saw the trade. Took the trade, but waited for the right set up. When that right set up occurred, they took the trade and, in most of those cases, the trade was profitable.
I post daily trades and hold webinars to enforce the basics
It comes back to those basics again. Get the basics of the foundation. Whatever your trading strategy. I teach that over, and over, and over again. That’s why I post daily trades for my clients. That’s why I hold live webinars. That’s why I have the forum site. That’s why there’s lots of videos, questions, and answers, et cetera. It’s all about getting the basics right.
Sometimes when the market is not showing you very many set ups, then it can be quite hard just to say, “Well, I can’t take the trade right now. This trade’s reasonable, but it’s not really a great set up.” Then some cases, so many people want to just sort of push that trigger, they want to take that trade because they feel they should be trading.
Wait for the high quality setups
Whereas, the lesson is wait for those good high-quality set ups. When you see them, definitely take them. Don’t be scared on taking them when you see them. Have confidence in your system and faith in your trading ability and your trading strategy, but be patient and wait for those good set ups. It’s really, really important, so every time you go to trade, have a think about the set up. Is this really a perfect set up? Are all these things lining up in order? Are they showing at the same time? The confluence of events, you’ve probably heard that before.
If that is the case, it meets your criteria, it meets your reward to risk. It’s trading. The reversal trades, continuations, with a longer term trend, whatever it is you look for, if you see those things on your charts, don’t be scared to take the trade. If they’re not all showing, let the trade go, so I hope that helps. Basics are key to anything that you do. Any foundation. Any building a company. Like I said, building a building, construction, flying, Karate, raising kids, whatever it is. You do those basics right, you give yourself a high probability chance of success, so I hope that helps.
Once again, this is Andrew Mitchem, from The Forex Trading Coach. Have a great weekend. I’ll catch you this time next week.
#204: How Important Are High Reward:Risk Trades?
In this video:
00:25 – Should you aim for lots of small gains or target the homeruns?
01:05 – How do I get an 80% win rate?
01:46 – The solution is to trade higher time frame charts
02:28 – Place you stop loss for a reason
03:21 – Forget about making pips
05:00 – This shows how very important high reward:risk trades are to your trading success
06:12 – Black Friday 2016 sale
How important is it to look for high reward risk trades as a Forex trader and how does that impact your overall profit? Let’s talk about that and more right now.
Hi Forex traders, Andrew Mitchem here, the owner of the Forex Trading Coach. Today is video and podcast number 204.
Should you aim for lots of small gains or target the homeruns?
And, I want to talk about a really important subject. I’ve had an email come through here from Robert over in the US and Robert said to me, “Andrew look, I keep getting told to go for small incremental gains per day instead of hitting the home runs.” I can tell Robert’s from the US because he mentioned home runs and he said, “I apologize for not using cricket terminology.”
He said to me, “Look, I keep doing this and the problem is that where I put my stop loss, it doesn’t allow me a favorable reward to risk, so therefore I’m making lots of small gains and getting a few losing trades and of course the losing trades out do all the gains you made.”
How do I get an 80% win rate?
It’s quite a common problem. I get people who say to me, they say, “Andrew, how can I get an 80 percent win rate, a strike rate people like to call it, within my trading?” Well, why do you want to achieve an 80 or 90 percent win rate?
Yes, on paper it sounds fantastic to get all these winning trades, but the reality is, if you have a system like that, in most cases you’re going to find that if you have that one or two losing trades, especially if you get them back to back, that it wipes out all your gains that you just made and Robert was finding exactly the same problem from the advice that he was given. He said to me, “Hey Andrew, look can you give me some new advice, I suppose, or what’s your take on this? How do I overcome the problem?”
The solution is to trade higher time frame charts
To me the answer is generally to get onto the slightly long timeframe charts. I find that generally the higher the timeframe chart, the higher the reward to risk I can get off of those charts and off of those trades. There are several reasons. Spread really doesn’t pay much of a, it plays very little importance on a longer timeframe chart. Of course, if you’re taking trades all the time on five or 15 minute timeframe charts, spread can soon eat into your profits but if you were taking trades you know, like maybe one or two trades a day on a longer timeframe chart, spread really isn’t that sort of significant a factor really.
Place you stop loss for a reason
If you have a longer timeframe chart, you can generally place your stop loss for a safety level, at where it should be for a reason, not just because it’s X number of pips away. On most cases that is a very, very bad way of trading because if you pick 50 pips, as an example, 50 pips on the euro/US is completely different to 50 pips on the euro/yen or 50 pips on the euro/franc even. You get pairs that move a lot and you get pairs that move a little bit. Picking the same pip stop loss is not a great way of trading and of course different timeframes require different levels.
I like to say, let’s put your stop loss at a level that if that stop loss gets stop out, you accept you got the trade wrong, the market went against you, whatever the reason but you accept that you lose on that trade.
Forget about making pips
If you forget about making pips and make that a percentage of your account if it gets stop out, that also helps you. The important thing is to try and look for trades that have a safe level for a stop loss and also give you plenty of upside potential.
Now if I’m trading on four hour charts or six or 12 or daily or weekly, generally as I get higher timeframes then generally the reward to risk gets higher, but I like to look for trades that have a two to one reward to risk right through to some trades have up to a five to one reward to risk. Most would be between a two and a three to one reward to risk, most trades that I take, so that means that if I’m risking half of one percent of my account on any one particular trade, if I get stop out, I’ll lose half of one percent. If I have a two to one reward to risk trade, I make one percent if it hits the full profit.
If it’s a three to one, I make one and a half percent gain. If it’s a four to one reward to risk trade, I make two percent gain by risking half a percent. You can see in that case, with a four to one trade, I could lose let’s say three trades and I’d lose one and a half percent total, yet my fourth trade is a winning trade and I make two percent, so therefore I‘m net plus point five percent. That example is only with a 25 percent win rate. Now of course I like to get a higher win rate than that, but you can see in that example you‘re losing 75 percent of the time, but you’re still making money.
Yet you get people who win 75 percent of the time or higher, and they lose money.
This shows how very important high reward:risk trades are to your trading success
You can see how very, very important high reward to risk trades are. To answer your question Robert, it’s generally, a suggestion from me would be to go onto the higher timeframe charts. You see, you can’t trade a 15 minute timeframe and put a small stop on there and aim for this massive reward. Sometimes yes you will get there, but not that often because the shorter the timeframe, the more the noise, the more the up and down movement within the price.
To go and pick the absolute top or absolute bottom and have your stop loss at that perfect level and your profit target at that perfect level and get that perfect move, the shorter timeframes, it’s very hard to do that consistently. Whereas the longer timeframes you accept you’re in the trade for longer, you have news events going on, you have your trade in potentially overnight. You have all sorts of things happening within different trading sessions but because you’ve got a bigger stop loss, you give that trade and that overall longer term trend time to get to your profit target.
It’s a lot less stress involved, it’s a lot higher reward to risk, which generally means you make more money and ultimately that’s what we’re trying to do. I hope that helps answer your question there Robert.
Black Friday 2016 sale
One last final thing, this Friday I’m holding a Black Friday sale. If you’d like to get in and have access to my course at exceptionally low rate, click on the link below this video and I’ll have a link there that will take you through to the Black Friday page. It’s only a 48 hour sale.
It’s pretty much, I’ve been looking at just the US and Canadian traders because it’s, Black Friday is generally something that affects people from those countries but it’s available to anybody. Wherever you are in the world, if you’re interested in getting a great deal and having a Black Friday deal, a special way of getting on to my course at a massively discounted rate, click on the link below this video and it will be this Friday.
Have a great weekend, see you next week.