How Often Do You Do It?
Posted on August 29, 2009.
How Often Do You Do It?
Is it 12-15 times a day? Or just 3-4 times a day?
Maybe just once a day, once a week or once a month?
One of the things that attracted me to Forex was hearing about the acquaintance of a colleague who quit his job, moved into trading Forex full time after several years of trading successfully part-time. His seed capital for full-time trading was $10,000. His position size never varied. His average return was $30,000 per month. He took the excess out as self-payment, put it into other investments, and continued to trade with his $10k seed capital only in play. Smart man.
One of the great joys of Forex is that just a little goes a very long way. A trade well-timed, well-executed, on the cusp of a wave, is all it takes to keep your account balance looking healthy and growing daily. Just a 5% return per day builds up in a hurry. Over the space of one month, using the same position sizing for each trade, your return on investment is 100%.
Establishing a profit percentage per day target, whether it?s 2%, 5%, 10% or more (let?s try not to be greedy), is one means of helping to focus your attention on the task. When you reach your profit % target, put your tools down and go home, enjoy life, your job is done for the day. Tomorrow is another ?work? day, there?s always another train leaving, another wave coming tomorrow.
Choosing the right time of day and the right set of circumstances to execute a trade is important. Riding the wave in and out at market?s most liquid times, the moments of greatest potential velocity, helps. This occurs at the beginning of the Europe session (from 6am London time), the beginning of the US session (from 7am US ET), the overlap of the Europe/US sessions (when the Dow is trading) and as the US session closes.
Exercising the discipline to only trade when the deck is stacked as much as possible in your own favour, matters. One way to help with this is to write up a trade entry check-list, print it out in large letters, and stick it in plain view right next to your trade station. Before you hit the trigger, have you met your entry criteria?
This is a sample checklist below (the one I use for my trading style and signals, design your own to suit).
Trade Entry Checklist
1. Oscillator on floor or ceiling across 15M, 5M and 1M time frames.
2. Candles have good supporting evidence (wicks, hammers, engulfing).
3. Is price at Support/Resistance? Check fibs (daily and hourly).
4. Check Futures data (red or green? Price going up or down?)
5. Check News data due.
6. Check USD/JPY fibs and oscillator.
7. Check USD/CHF fibs and oscillator.
8. Check 50% retracement levels.
9. Review of daily, hourly candles.
10. Review of EMA?s.
11. Check time of day.
This post was written by:
Jade Gate - who has written 14 posts on Forex District.
Independent Analyst / Trader ? All copyrights reserved. Permission required.
Contact the author
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Bill [Moderator] 1 month ago
We all know this is not possible even for the most seasoned trader. Some days is just sideways and no money can be made. The correct philosopy (for those who want to earn and keep money) is:
Take what u get, not what you deserve.
You think u deserve 5% a day from forex trading? Be my guest. You might leave empty handed, or worse, lost your hands.
Take what u can get, not what you think you deserve
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Jade [Moderator] 1 month ago in reply to Bill 1 person liked this.
Hi there Bull,
Sounds like you might better focus attention on the stock market if what you are looking for is small returns. Forex is for venture risk capital only, not the bread and butter earnings of the stock market or cash interest rates.
If a trader, once through the apprenticeship, cannot pull a minimum of 2% per day out the Forex market, something is wrong. Most days I reach my 5% profit target with ease (some days more, some days a bit less), after which I then trade other instruments. This is my reality, day in, day out. I take out of Forex whatever realistic and safe trading opportunities it provides, as do other successful traders. Arriving at the point of trading competence in Forex is not simple or easy. One needs to work hard at it.
Happy and safe trading.
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Rene [Moderator] 1 month ago
THANKS VERY MUCH FOR SHARING ALL THE VALUABLE INFO. I HAVE READ SEVERAL OF YOUR ARTICLES AND I HAVE FOUND A GREAT DEAL OF VALUE IN THEM. COULD YOU ELABORATE ON THE FUTURES AS INDICATOR (EX. WHICH PAIRS WILL BE INFLUENCED BY FUTURES) I KNOW EUR JPY IS INFLUENCED BY DOW JONES.
THANK YOU.
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Jade [Moderator] 1 month ago in reply to Bill
Hi Rene, glad to hear the info has been of assistance. All the currencies are affected by the futures data. The futures sit on the cutting edge of risk appetite, as does the currency market. Forex currencies are an inter-connected system within themselves, and a system which is itself closely inter-related with other market instruments.
The pair most affected by the Dow is the AUD/USD - this often (but not always) trades in lock-step with the Dow and the S & P futures.
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Tunji [Moderator] 1 month ago
Jade,
I?ll have to agree with Bull. Forex is just like every other investment vehicle ? regardless of the leverage opportunities, you still need to be respectful of the market and don?t force it to dance to your tune. Expecting a 5%, 2%, or even any percentage of profit at all cost per day seems to me that you go into trading everyday believing the market has to obey you. That, to me, is suicidal for a trader/investor committed toward growing and sustaining his/her wealth for a long time.
Forex is profitable, but it still goes by the rules of ?NO HOLY GRAIL? and smartly ?CUT LOSSES & LET PROFITS RUN.? Patience and Discipline cannot be overemphasized in a successful trading career.
However, you made this statement I agree with: ?Exercising the discipline to only trade when the deck is stacked as much as possible in your own favour, matters.?
Enjoy your week.
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Jade [Moderator] 1 month ago in reply to Bill
Hi Tunji, One of the benefits in establishing a profit % target is that it focusses the trader's mind on the job - making money. Some traders get very hooked on attempting to capture all of a move, the market ends up "owning" them, instead of the other way around, i.e. the market exists to serve you and your income generation needs. How much an individual trader can extract out of the market is contingent upon timing and opportunity. As mentioned elsewhere, market will do it's own thing regardless of what we as traders might expect or want. What matters is positioning yourself to capture the opportunities that it does provide, on a daily basis. Some days I reach my % target and can see that there is a lot more to come, so I may stay in longer than usual. Other days, scraping 2% is a struggle. The good thing is that market doesn't "own" me the way it used to. I "own" it, and work it for my own benefit.
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Pete [Moderator] 1 month ago
Hi Jade,
What do you mean by 50% retracements, number 8.
Are those Fibo measures? or retracement of the moves
Thank you
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Jade [Moderator] 1 month ago in reply to Bill
Hi Pete,
Yes, they can be measured by using the fib indicator. Plotting both daily and hourly fibs (updating the hourly as the session progresses). You can also simply do the math, subtract high from low, divide by 2 and watch what happens to price around this level.
One trading technique that uses the 50% retrace for entry/exit signals is Median Line Forks. The premise is that price will either exhaust itself around the 50% mid-point or cross over the mid-point in which case, price generally continues in that direction until it hits the next line in the fork.
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Hercs [Moderator] 1 month ago
Hi Jade,
Why is the JPY and CHF Fibs and Oscillators important if I trade the Cable for instance?
Would appreciate your reply.
Best regards
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Jade [Moderator] 1 month ago in reply to Bill
Hi Hercs,
USD/JPY and USD/CHF matter because these two currencies are the primary drivers of price action on all the others. EUR/USD is very closely tied to traffic on USD/CHF (they are the mirror image opposites of each other, price moves on the Swissy and the Euro/Usd immediately follows suit.) GBP/USD is also influenced by traffic on the Swissy, but also by traffic on the USD/JPY. GBP/USD (also known as Cable) is also influenced by the EUR/GBP cross, especially when Europe is in session before the US begins work for the day. Checking all 3 before you trade Cable helps to eliminate the error rate.
Traders buy the USD/CHF and buy the Yen (i.e. sell USD/JPY) when risk aversion kicks in. Sometimes price can reach a support/resistance level on GBP (or EU) but because price has not yet reached support/resistance on the related Swissy or Yen currencies, Cable or Euro may not respond (or price may overshoot before recovering.) Checking USD/CHF and USD/JPY is one means to further "cover" yourself before hitting the trade entry trigger.
There are times when the Euro and Cable do respond at their own support/resistance levels regardless of what is going on with the Swissy or Yen, but checking these first just gives you a better handle on some of the variables influencing price action on the other majors.
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zade23 [Moderator] 18 hours ago
Hi Jade, thanks for your excellent advice and strategies used in trading the Forex Market. Further to your comment about
"USD/JPY and USD/CHF matter because these two currencies are the primary drivers of price action on all the others"
what effect does this have on the cable? is it a mirror opposite just as the EUR/USD?
Thanks
Zade