Monthly ArchiveDecember 2018

Price Action Trading – The Most Adaptable Forex Trading Method

In order to consistently profit in the Forex market you need a trading method allows you take advantage of ever-changing market conditions. Whether range bound or trending, the Forex market is a dynamic and sometimes volatile market to trade. If your method to trade this market mainly involves indicators such as stochastics, MACD, RSI, or any host of others you are probably putting yourself in the worst position possible to take advantage of Forex price movement.

The problem with such lagging indicators is that they react with latency to price movement; meaning after a movement has setup and moved a substantial amount then the lagging indicator will give you a signal to enter. Often times these indicators give a signal to enter long just as the market is about to correct to the downside, or vice versa. When you trade the Forex market using pure price action strategies there is no latency, either the price setup is there or it is not. There are a handful of great price action patterns that can tip you off to impending Forex price movements as they happen, not a substantial amount of time after the move has started.

Another problem with most trading methods is that they require the trader to cloud up his or her chart with a bunch of fancy indicators that do nothing more than give you a visual representation of what has already occurred in the market. The ironic part here is that everything you need to know about price movements in the Forex market is already reflected on a naked price chart via price action analysis. All indicators do is cover up this raw price data and make it more difficult to discern. However, because most traders have a false belief that trading is inherently difficult and should be technically complicated, many of them fall into the trap of using lagging indicators and over-analysis.

Trading using price action analysis is much more conducive to the relaxed and objective mindset that is required to prosper in the Forex market than any other method you will find. This is because when your method is adaptable to all market conditions and makes logical sense within the context of the market there is no second guessing your self before you enter or spending large amounts of time over analyzing numerous lagging indicators.

Trading forex with price action allows you to trade on any time frame you want, and even becomes more accurate the higher up in time frame you go which allows you to spend as little as 20 – 30 minutes a day looking over your daily Forex charts for price action setups. Many people get into trading because they want more freedom or are just tired of the daily grind and working for someone else. Often these same aspiring traders lose sight of their original intentions and allow their trading to control them and forget that part of the allure of Forex trading is that it allows you to spend minimal time analyzing charts while providing for maximal personal time. Price action analysis rewards the trader who is disciplined in their approach and does not over trade, it is entirely possible to use this extremely adaptable method and make a full time living trading off daily and weekly charts alone, thus freeing you from the daily rat race and giving you the best gift of all; time.

Why Forex is the Best Market to Trade

1. Forex is the largest financial market in the world.

The Forex market has daily volume of over $3 trillion per day, dwarfing volume in the equity and future markets combined. Such a huge amount of daily volume allows for excellent price stability in most market conditions. This means you likely will never have to worry about slippage as you would when trading stocks or commodities. The price you see quoted on your trading screen is the price you get.

2. Trade whenever you want; 24 hours a day 6 days a week.

There is no opening bell in the forex market. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST. There are 3 distinct trading sessions for you to take advantage of in the U.S., Europe, and Asia which allows you to trade on your own schedule and respond to world-wide breaking news. While it is possible to trade some stocks and commodities in the after hour electronic session, the liquidity is often very low and this makes prices extremely uncompetitive.

3. Commission free trading and overall low transaction costs.

A stock trade will cost anywhere from $5 to $30 for an online stock broker and typically up to $150 per trade for a full service broker. Futures brokers generally charge between $10 and $30 round turn, this means you pay between $10 and $30 to enter and exit every trade. Most forex brokers offer little or no transaction fees, they are compensated through the bid/ask spread of each currency pair. Typically these spreads are as little as 1.5 to 5 pips, depending on the broker and currency being traded. So essentially the only fee associated with a forex trade is that you start out being a few pips negative on every trade due to the bid/ask spread.

4. Market transparency and Instant execution.

Market transparency is much greater in forex than in stocks or commodities, this means it is easier to analyze the inner workings of the market and figure out what is driving it. For example, economic reports and news announcements that drive a country’s economic policy are widely available and accessible for anyone interested. Whereas an individual company’s accounting statements are much harder if not impossible to obtain. Instantaneous order execution is another great advantage forex has over other markets. Retail forex trading is generally done over the internet on all electronic platforms. The forex market has no central exchange, no open-out cry pits, no floor brokers, and was designed to be this way to facilitate large banks and allow for instant execution of transactions, this means no delays for you and extreme ease of execution.

5. Low margin requirements.

Forex margin requirements were recently raised in the U.S. but at a maximum of 1:100 this is still much higher leverage than you will get in the futures or equity markets. This means you can control 100,000 worth of currency for only 1,000, or 1%. To compare, in the futures markets traders must post margin equal to between 5%-8% of the contract value while stock traders typically must post at least 50% margin. Leverage can be a double-edge sword however, as an increase in leverage leads to an increase in risk but also in profit potential.

6. Price movements are highly predictable in the forex market.

Due to its highly speculative nature forex price movements tend to over shoot and then correct back to the mean. This means there are a number of repetitive patterns that are easily recognizable to the trader who is trained in price action analysis. Forex currency pairs generally spend more time in very strong up or down trends than other markets, this is also a huge advantage because it is generally much easier to trade a strongly trending market than a chaotic and consolidating market.

7. Equal opportunity to profit in rising or falling markets.

The forex market has no structural bias as do most stock markets. For example, most stock markets have a bullish bias, this means traders tend to like the long side or upside of the market more and as a result of this it is actually more difficult and generally requires more margin to sell short in a stock market. This is not the case in the forex market. As an inherent feature of the structure of the forex market it is equally easy to buy or sell at anytime and there is never any increased fee for selling short. In fact, each time you buy a currency you are simultaneously selling another, and vice versa. The ability to buy or sell at any time with no penalties is another advantage the forex trader has over those trading other markets.

8. No constraints on the number or type of transactions.

The futures market sometimes will have what is called a “limit up” or a “limit down” day, this means when the price moves beyond a pre-determined daily level traders are restricted from entering new positions and are only allowed to exit existing positions if they desire to do so. This is meant to control volatility, but because the futures market for currencies follows the spot forex market the next day at the futures open their sometimes will be large “gaps” or areas where the price has adjusted over night to match the current spot forex price. Now, if you were holding a futures position over night it is entirely possible that your stop got gapped around, in which case you would get filled at the next best price, which often will be extremely damaging to your trading account. Due to the 24 hour nature of the spot forex market even in extreme market volatility traders generally don’t have to worry about gaps and can almost always get out at the exact price they want.

9. Mini and micro accounts make it easy to get started.

There are many forex brokers that are easily accessible on the internet. Unlike futures or stock markets it is not going to benefit you much if at all to have a full service broker in forex. Most of the bigger forex brokers all offer tight spreads and very similar price feeds, they also all offer demo accounts that let you test out your trading ideas before risking real money. Another great thing about the forex market is that you can get started with as little as $250. Micro accounts allow you to trade position sizes as small as 1 cent per 1 pip movement. This means you can effectively control your risk even if you are not starting with much money. In the futures or stock market not starting with at least $10,000 is a big factor in why people lose so often.

10. Forex price movement lends itself wonderfully to price action setups.

Due to the speculative and contrarian nature of the Forex market prices tend to continue in one direction for a decent move and then revert back to the mean or value-area. More often than not these big moves are tipped off with a price action signal. If you are trained by a professional trader in the art of price action analysis you can design an entire trading plan around a few simple yet effective price action setups. Some of these patterns re-occur on a regular basis on the 4 hour and daily charts and can be extremely accurate. Due to the inherent high volume and large price movements, Forex is the best market to trade using price action analysis.

Why Use Forex Price Action Analysis?

price actionI have tried about every trading method you can imagine, and after all the frustration, time, and money that I wasted earlier in my career, I ended up realizing that the best way to trade any market is just by analyzing a ‘naked’ price chart. When I say ‘naked price chart’ I mean trading off the pure price movement or of the market; in other words, you are trading primarily off the natural price dynamics of a market and not off of indicators, robots or expert advisors.

My unique way of trading using price action setups is a result of many hours of screen time spent analyzing price movement and price action patterns. Trading is a process of trying different methods and tweaking them and eventually ending up with your own unique trading method. I don’t believe in rigid and Forex trading systems that force a trader to trade in a mechanical fashion or when it gives them an automatic signal. The markets are dynamic and constantly changing and ebbing and flowing.  I firmly believe that the only way to make money in this type of environment over the long-run is to employ the discretion and intellect of the human mind. Trading off the natural price action of the market is the best way to do this.

Why Trade Forex with Price Action?

The Forex market is a highly liquid and sometimes fast moving market that lends itself wonderfully to the trading method of price action analysis. Price action analysis is the identification and implementation of specific price action signals or setups in the market you are trading. Forex is a great market to use price action analysis on because it is open 24 hours a day 5.5 days a week and this means there are more price action signals for you to take advantage of. The Forex market also boasts dense liquidity and good trends, these are just a few of the advantages of trading Forex.

Successful Forex trading is both an art and a skill. Whilst you can manufacture trading signals by aligning lagging indicators together, you really need to trade in harmony with the Forex market and follow the raw price trail as it unfolds. Once you learn to effectively interpret this price trail or “price action”, you will have the potential to become an extremely accurate Forex trader and have an edge that many other traders are lacking. You have probably already experienced the frustration of entering a trade only to see it move against you immediately, this is often what happens when traders strictly use lagging indicators to trade the market, it’s a habit I try to encourage all my students to kick. The message is clear – “Stop Using Indicators!” The reason is that since these indicators “lag” behind price, they naturally give you an entry or exit signal just as price is about ready to move in the opposite direction, or in other words, they are “late” signals. In my view, the only true way to become an accurate Forex trader is to learn how to interpret the dynamic price trail (raw price data) as it plays out each day in the Forex market. Your new goal should be to learn to trade with price action trading strategies.

Price action analysis works very well in the Forex market because it is such a dynamic and active market. The beauty about price action analysis is that it is an inherently flexible approach to trading that gives you a perspective on the market that allows you to make sense out of what is happening at any given time. I have been profitable by concentrating on just 2-3 good price action strategies that have proved profitable again and again for me. If you learn how to read what the chart is telling you and focus on just 1 to 3 setups that you like, eventually you will master these setups / patterns, allowing you to have a better chance of  making  make money from your trading. Where people go wrong is using indicators and other overly complicated methods and then constantly jumping from one technique to the next (BIG MISTAKE). You have to find a truly consistent edge in the market and then just concentrate on that until you get it down, remain in the one frame of mind, focus and master those setups first, then you can maybe add more tools to your trading arsenal.

Trading is difficult enough without having an overly complicated method that tells you to look at multiple indicators when you could just be looking at a simple price chart. Probably the best reason to trade Forex using price action is that any indicator you use on your chart to analyze market movement is derived from price and is just showing you the same thing price is showing you but in a less vivid format. Some people like indicators because they give you buy and sell signals when lines cross or whatever and thus they eliminate most of the thinking that a trader needs to do and should do. The thing is, trading is not a ‘get rich quick scheme’ and you need to think and use your brain to be a successful Forex trader, just like you have to do this to be successful in any other profession.

Why Trade with Price Action Instead of Indicators?

Just because your charts come with a hundred different indicators doesn’t mean they are going to help you trade better or make you money in the markets. We are trading financial markets here, so the core of what we are doing is trying to profit off of price movements. Thus, why people would not primarily make their trading decisions off of pure price movement is beyond me. I promise you that if you simplify your trading method and concentrate on using price action strategies you will wonder how you ever traded any other way.

Look at the two charts below. The important thing to notice here is that the chart with all the indicators contains many more variables for you to analyze…other than price. Also, note how adding all these indicators onto your charts actually decreases the amount of screen area that the price action takes up…in other words it distracts you and takes your focus off the price action and puts it onto indicators. Indicators are derived from price action, they are simply a less precise and alternate way of viewing price movement…but why would you want to view price movement in any way other than it’s natural form? It is like trying to drive a car at night with your headlights off…sure you CAN do it, but just because you can do something doesn’t mean you should, and it also doesn’t mean it makes what your trying to do easier or better. Trading with indicators all over your charts is like trying to drive a car in the dark with your headlights off…it makes the same task much more difficult than it needs to be, as well as more dangerous.

A chart with just pure price action and the key support and         The same chart full of some popular indicators:
resistance levels drawn in:

Learning to Trade with Price Action will Only Make You a Better Trader

Finally, perhaps the best reason to learn how to trade with price action is that no matter what strategy or system you ultimately end up trading with, knowing how to read and trade off the raw price action of a market will only make it better. Price action is the foundation of any trading method, whether you are using an indicator-based system or a software-based system, the signals that systems generates are ultimately derived from the raw underlying price movement. Therefore, having a thorough and practical knowledge of how to trade off of price action will help you understand your trading method much better than if you don’t.

Whether you decide to use price action in conjunction with another trading method or as a stand alone trading strategy, learning how to trade off of it is only going to make you a better trader. This is a realization that typically takes most traders a while to figure out as they struggle with mechanical indicator and software based systems. Once you learn how to trade with price action it will be like turning on the lights; you will instantly gain a clearer and more effective understanding of how the markets move. If you want to learn more about how to read and trade off of the raw price action of the market, you should checkout my price action trading course and members’ community.

Overcoming Fear in Forex Trading

The Oxford Dictionary defines fear as ‘an unpleasant emotion caused by the anticipation of danger which leads to feelings of dread, anxiety and apprehension’. Fear is about the expectation that something detrimental could happen and constitutes a crucial physiological and cognitive mechanism functioning to aid our survival by causing us to either anticipate and avoid potentially dangerous situations, or, if we so chose, to face and confront them with a heightened state of alertness and focus. From an evolutionary perspective, fear leads to the instinctive ‘fight or flight’ response. Adrenalin floods the system and we are prepared for battle or to flee. Thus, all traders feel fear at some level because they are exhibiting an innate reaction to an unpredictable environment – the precariousness of the market and the risk of potentially life-changing losses.

Fear is not always our friend. Whereas successful forex traders are in control of their fear, others can become controlled by it and eventually become apprehensive, anxious and unable to make decisions. The ‘entering’ and ‘exiting’ of a trade becomes a nightmare. For successful traders the heightened state of arousal induced by fear leads to sharp concentration and awareness before entering a trade. But for those who have become its captive, the adrenaline rush leads to feelings of panic and fear which cloud the mind and impair judgement.

To become a successful trader, it is essential to make fear our ally, to harness it and flow with it in order to reap the benefits such a survival mechanism has to offer. Traders need to understand how the different facets of fear can influence trading behavior in a negative or positive manner. Fear is unavoidable and is processed partly on a subconscious level, but when fully understood, it can help you improve your trading performance.

Fear can be broken down into three categories:

1. Fear of Loss
2. Fear of missing good trades
3. Fear of being wrong

Fear of Loss

Trading is like any other business in that losses are a part of the game. But losing over and over again can lead to psychological scarring that can paralyze and fill the trader with dread when approaching the trading table. As Mark Douglas explains in his classic book ‘The Disciplined Trader’, fear of losing actually leads to losing. Stops are placed too tight, instead of giving the price action room to breathe. Trades often pull-back after entry which causes the fearful trader to panic and exit with a small loss to prevent a larger loss. A series of small losing trades will eventually empty the account.

The focus should be on avoiding large losses not on small ones. If you cannot cope emotionally with a small loss, you will miss out on potential large moves because every trade you enter has the risk of turning against you. It is vital to know how much you are prepared to lose in any trade. Another catastrophic action is hoping a losing trade will retrace to exit at breakeven. So often however, this leads to even greater losses.

When fear of loss prevents the execution of trades, the trader’s focus may be largely on results rather than following the forex trading plan. This causes doubt about the reliability of the trading plan which gets in the way of pulling the trigger. And thus, a vicious cycle of self-doubt develops.

To combat the fear of losing, demo trading or trading with small amounts enables you to concentrate on execution of your trading system rather than profit and loss. I advise the latter, for if you trade with small amounts of real money you will experience the emotions of the market but at a lower level, and you can gradually accustom yourself to them. The money you put up is money you can afford to lose, and can be viewed as the cost of education, like a college degree. Pure demo trading does not pull up emotions as nothing is at stake.

When you can trust yourself to execute your trading plan without exception and when you can enter and exit the market with decisiveness and without hesitation, then you can consider going live.

Fear of missing good trades

nervous traderFear of missing ‘good’ trades can be dangerous because it will often cause the trader to join the market at any price. Excitement and euphoria overrule the trading plan with little thought to potential downside risk. This fear of missing out on trading opportunities is something you will have to eliminate if you want to become a successful trader, because if you don’t, it will cause you to over-trade.

As I discuss  in my article on low frequency vs high frequency trading, the frequency of trades is not what you should be concerned with, what you should be concerned with is the quality of the trades you are taking. What you should be afraid of is trading too much, not trading too little! Over my 10+ years of trading and helping other traders, the number 1 problem that I see amateur and struggling traders making is that they simply trade WAY too much. The market is not going anywhere, there will always be another day to trade so don’t worry about missing out on a trade setup or two. It’s better to be cautious and miss out on a trade than be frantically trying to force trades when there really isn’t anything worth trading.

Fear of being Wrong

Focusing on being right rather than making money comes from the traders’ ego. It is the ego that equates the trader’s net worth with his/self-worth which leads to profits being taken too quickly or to exit at break-even.

Trading throws up many issues regarding one’s relationship to money. An internal conflict with making money or needing to be perfect can make it difficult to exit a trade at a loss because it damages your self-image of perfection. Or you may have grown up feeling guilty about having money so you subconsciously find a way to give it back to the market. To avoid self-sabotage, the ego has to stop protecting these versions of the self.

Trading is a probability game and there will always be losses. Being a perfectionist is only setting oneself up for failure. If you cannot take a loss when it is small because you have to be perfect, then this loss will often grow and grow into a much larger one.

Making mistakes has different effects on individuals. Bad grades might have caused parental disapproval and you felt small and worthless. We are so susceptible to the feedback from others. When we are children, feedback can have long-lasting and unforeseen consequences. Many of us never fully recover from the emotional effects of being punished for making mistakes. Neural pathways become ingrained in the brain which attach emotions to learning experiences. When these emotions are negative, they interfere with our ability to learn in a healthy and constructive manner.

Understanding and controlling your fear in the market

free yourself from fearYour trading plan must account for the emotions you are likely to experience, particularly those related to fear. As a trader you must move from a fearful, apprehensive mindset to one of confidence, one which enables you to learn from your mistakes. You have to believe in your ability to make more money than your losses. That makes it easier to continue to place trades after a string of losing positions.

Successful forex trading is about overcoming the major fears you face as you trade the market, gaining confidence in your trading method and even more confidence in yourself. If the different manifestations of fear can be understood, the trader is well-equipped to turn fear from a destructive force into one of our most vital assets when operating in the market.

Article by Nial Fuller Learn To Trade The Market.

How to Become a Full-Time Forex Trader

Becoming a full-time or ‘professional’ Forex trader is something that almost every trader wants to achieve but that very few ever do. If you want to have a realistic chance at making a full-time living from the markets you are going to have to approach your trading with a disciplined and patient mindset, that is perhaps the single most important piece of insight I can give you. Also, you need to understand that there are no “magic-bullets” or “Holy-Grail” trading systems, despite what you have probably read  on other Forex websites.

I teach traders how to trade with simple yet high-probability Forex price action setups on this website. There are no guarantees and no promises of trading from the beach next month while making a million dollars a year. If you want honest and relevant education on how to trade the markets, then continue reading, if you are looking for a “quick-fix” then I suggest you leave now.

Here are some of the critical steps you’ll need to take if you want to make your living trading the markets:

1) Be realistic and honest with yourself

The first thing you need to do if you want to make a full-time living trading the markets is to simply be realistic and honest with yourself about what is possible at the current moment given the size of your trading account.

For instance, if you’ve got a $2,000 trading account, you’ll have to set your sights a little below ‘full-time trading’ right now, and just aim to supplement your income each month via your trading. You have to learn as soon as possible that you can’t ever risk more than you are comfortable with losing per trade, and if your trading account is relatively small you have to expect to trade smaller position sizes to accomplish this. A small account means trading small position sizes to properly manage risk, at least until you’ve built your account up over time. So, the first step to full-time Forex trading is to simply sit down and say “OK, I have this much money in my account, realistically I am emotionally OK with losing this much of my account per trade, so this is what my position size will be”, then you have a starting point.

You can’t worry about getting rich quick or fret over making less money than you want. Focus on being a good trader whilst your account is small and I promise you the money will follow later. Traders who put too much emphasis on the money in the beginning of their career are the ones who end up losing and quitting.

2) Make sure you know the basics of Forex

This step is sort of a no-brainer, but I’m always surprised at how many traders email me saying they’ve lost a bunch of money and based on the comments in their email it’s apparent they don’t even have a basic education on Forex or Forex trading. So, make sure you understand what the Forex market is, why it exists, and basic trading styles BEFORE you start trading with real money, you can take my free forex beginners course here.

3) Master an effective Forex trading strategy

You only need to master one trading setup to be a consistently profitable trader. Screen time will allow you to master one setup. After you have mastered one setup and “own it” you can add another setup. This can be an ongoing process developing your own style.

The best price action setup to begin with is the one that you see and understand easiest. If you are forcing yourself to learn a setup because you believe another person is successful using it you may be taking the longer route to profitability. We are all different. Our brains and personalities will gravitate to different setups. This is also true of exit techniques. Most traders I hear from lengthen their road to profitability by trying to apply too many concepts before owning the first one. They have studied a myriad of techniques but have yet to master any. This allows them to talk about trading but they are unable to consistently trade profitably.

The first decision to make is; do you desire to be a counter-trend trader or a trader who trades with the trend? Eventually, you can be both. At the beginning, or at a new beginning perhaps, you will do best by choosing to master trading one setup with the trend. If you have been at this game for awhile and are not yet consistently profitable you know what I am saying is correct.

This site contains trading techniques and setups with the intent that it will aid you in creating your own personal trading style. My personal trading style is a combination of various styles and setups. I trust this website will be an exercise in my personal understanding of my own style allowing all to benefit. So, learn what I teach here and then “make it your own”, every trader will trade price action a little bit differently, there’s nothing wrong with that as long as you keep it simple and remain disciplined.

4) Make a Forex trading plan (and use it)

Next, you need to solidify your mastery of your trading strategy by creating a Forex trading plan around it. If you learn from me you are going to learn my price action strategies, thus you’ll need to build a price action Forex trading plan before you start trading the markets. It’s really not that difficult to make an effective forex trading plan, click on that link to the left to learn more.

A trading plan is a critical element to becoming a full-time Forex trader because it acts as a guide for you to follow and as a constant reminder of how to trade your strategy. This helps you to stay focused and disciplined and helps you to avoid over-trading, over-leveraging your account or generally trading emotionally. Emotional trading is the reason why most traders lose money in the markets, and by creating and using a Forex trading plan you can give yourself  a much better chance at avoiding turning into an emotional trader.

5) Make a Forex trading journal (and use it)

You also need a Forex trading journal so that you can track your trades and see your trading performance over time. The reason I said “and use it” in these last two sections, is because many traders create a Forex trading plan and forex trading journal and never use them, or they use them for a day or two and then upon their first losing trade they forget about them. You’ve got to have more discipline than that, understand and accept that you aren’t going to win every trade and you’ll have a far easier time sticking with your plan and using your trading journal religiously. Don’t treat trading as a game, because it isn’t, it’s a business, and if you’re trading with real money you need to treat it like a business. Businesses have plans and they track their costs vs. their profits, you need to do the same with your trading business.

6) Demo-trade

After you have mastered an effective trading strategy and forged a trading plan around it and have your journal ready, you can start practicing your trading strategy on a demo account. Do not blow-off demo trading as something you don’t need to do, because you most definitely do need to do it. Demo trading allows you to get familiar with your broker’s platform if nothing else, and this is important because many traders make silly trading errors just because they aren’t familiar with how to input or close orders, and when trading with real money this can cost you dearly. I suggest any serious trader practice their trading strategy on a demo account until they are consistently profitable for 3 months or more before even thinking about trading with real money. It’s true that there is a difference between demo trading and live trading because there’s no emotion involved in demo trading, but if you treat your demo trading like a live account it will do a good job of preparing you for real-money trading, which can save you tons of money and time.

7) Risk Management

Managing risk should be seen as your number 1 priority if you want to become a full time forex trader, because if there’s one thing that full-time Forex traders do exceptionally well, it’s manage risk effectively. Simply put, you CANNOT become a full time or professional Forex trader if you don’t properly manage your risk. Managing risk properly means NEVER risking more than you are comfortable with losing per trade as well as never funding your account with money that you aren’t truly OK with losing.

You need to understand the power of risk reward and you need to also understand position sizing, as these two things are crucial components to correctly managing your risk in the Forex markets. Amateur and struggling Forex traders by definition do not manage their risk properly, and it’s one of the main reasons why they don’t make consistent money, not because they haven’t found the “perfect” trading system yet. No trading strategy or system will work if you don’t use it in conjunction with an effective risk management strategy.

8) Trading Psychology

Finally, the fundamental difference between beginning / struggling traders and professional / full-time traders, is that full-time traders think differently about trading. Struggling traders tend to gamble in the markets whereas professional traders view trading as more of a business and take calculated risks. It’s very easy to become over-confident after a winner or a few winning trades in a row, and it’s also very easy to become vengeful after a losing trade and want to jump back into the market to try and make back the money you just lost. However, when you have these feelings, you must understand they are not logical and they are not part of your trading plan. Indeed, it is HERE that your Forex trading plan comes into effect. After every trade you take, whether a winner or a loser, you should go and read your plan to make sure you stay focused and don’t jump back into the market for an emotional reason. Check out this cool article on developing the proper Forex trading mindset for more, and if you want to learn more about learning price action trading strategies and how to formulate them into an effective trading plan, checkout my price action Forex trading course and member’s community.

How to Make a Living From Full-Time Forex Trading

Making a living trading from home is the dream of just about every trader and active investor. However, don’t be fooled into thinking that Forex trading is a get-rich-quick scheme, because it takes discipline, effort, and planning to become a successful trader and to be able to trade for a living from home. Indeed, there are no ‘short-cuts’, but if you do the things that other full-time Forex traders do, you will have a very good chance at becoming one yourself.

If you are ready to open your mind and put aside all your preconceived notions of what full-time Forex trading is all about, then read on as we discuss some of the most important aspects of making money as a full-time Fx trader.

How to become a full-time Forex trader

While there is no ‘magic formula’ to becoming a full-time trader like many other websites would lead you to believe, there are some things that define almost every full-time Forex trader.

Be realistic – Perhaps above all else, full-time traders are realistic. They do not have overly-high expectations; they don’t expect to win on every trade and they don’t expect to become a billionaire overnight. If you aren’t realistic about what is possible given the size of your trading account, you will end up risking too much per trade and (or) over-trading. It’s very critical you remain realistic about Forex trading and don’t become greedy or too anxious to make money. If you have a small trading account you will have to trade relatively small position sizes in order to properly manage your risk per trade, this means it will take you longer to become a full-time trader. It won’t speed up the process by over-leveraging or over-trading your account, in fact it will only slow it down.

So the first thing you need to do in order to become a full-time trader is to get your expectations in-line with reality, and this means making sure you are managing your risk properly on every trade you take and never getting upset when you hit a losing trade.

The daily routine of a full-time Forex trader

Daily routine – A full-time trader has a trading routine…even if it’s not something they explicitly look at everyday, a full-time trader has performed his or her routine for so long that it becomes a habit, and all full-time traders got to that point because they did have an explicit plan that they followed.

Have a trading plan and trading journal – In order to develop proper trading habits and to keep emotional trading demons at bay, it’s critical to have a trading plan and a trading journal…that you actually use. Don’t be one of the many traders who make a trading plan and journal and then never use them. Religiously using your trading plan and trading journal is paramount to your longevity in the markets and to your ultimate success or failure as a trader.

Daily / Weekly chart analysis – To get into the routine of making sure your daily chart analysis is meaningful, it’s best to create your own daily chart commentary and keep notes in a trading diary or simply in notepad on your computer. Doing this at the start of each week will give you a weekly guide to follow each day as you do your chart analysis. You should also make a daily commentary before you enter any trades; go through your favorite markets to trade and mark the key levels, market conditions and any price action setups you see. Depending on where you live in the world, you will trade during the best forex trading hours for your location, which tend to be during the London and New York trading sessions. Remember, plan ahead…be anticipatory instead of reactive, full-time traders essentially know what they are going to do in the markets before they enter any trades…they make as few decisions as possible in the heat of a live trading moment.

Habits – The end result of a consistent daily trading routine is proper trading habits. Habits are formed after doing something over and over, until it becomes almost a part of your personality. If there is one definite difference that is very obvious between struggling traders and full-time Forex traders, it’s that a full-time trader has developed positive trading habits as a result of following a positive daily trading routine each day, whilst struggling traders typically have all wrong / negative trading habits.

A full-time Forex trader’s office

Setting up your trading office – Your trading office is basically a decision of personal taste and preference, but you will be hard-pressed to find a full-time home-based Forex trader who doesn’t have a dedicated area for their trading. They will probably also have this dedicated area / office be an organized one. You do not get to the point of full time forex trading from being an unorganized and out-of-control impulsive trader; indeed, being organized is a trait that is one that comes from forging the proper trading habits like we discussed above.

Full-time Forex traders are master’s of their trading edge

tradingconfidenceBelieve in your trading method – A necessary component to attaining confidence as a trader is believing in your trading method. If you do not fully understand and believe in your trading strategy, you clearly will not do very well in the markets. Full-time Forex traders obviously believe in their trading method and they do not doubt themselves or any trade that they take. If you want to learn more about removing the doubt and fear from your trading, checkout this article: Can’t Pull The Trigger on Your Trades?

‘Master’ your trading strategy – Do not jump into a real-money trading account if you have not fully mastered your trading strategy yet. Many traders make this fatal mistake and they end up guessing when to enter the market simply because they haven’t truly mastered their trading strategy yet. Full-time Forex traders trade their edge with confidence; they do not chicken-out and then sit there looking at the market take off in their favor without them on-board. Similarly, they do not regret any trade they take, even if it goes against them, because they have mastered their trading strategy and they already accepted that not every trade will win.

Money management is the key

Managing capital is the key – The most basic thing a full-time Forex trader does that struggling traders do not, is win big and lose small. Sounds pretty simple, but if you do not follow the other points discussed in this article you will not achieve it. Proper risk management is perhaps THEE defining factor of a successful full-time trader. Beginning traders and struggling traders typically fail to realize that risk management is the most important aspect of trading. You should NEVER risk more than you are emotionally comfortable with losing on any one trade.

Full-time Forex Trading Psychology

Manage yourself properly – If you don’t control yourself in the markets and control your emotions, you will end up doing stupid things like trading when your edge is not present or risking too much per trade. You need to always be consciously aware of yourself as you trade and ask yourself “Am I trading logically or emotionally?” The biggest reason that Forex traders fail to make money is because they do not have the proper Forex trading mindset. To achieve the proper trading mindset, you need to be realistic and have a structured trading routine like we have already discussed, this will forge proper trading habits which will then forge the proper trading mindset. If you do these things it will only be a matter of time before you become a full-time Forex trader.

What you will NOT find on this website:

What you won’t find is mathematical formulas, complex technical indicators, heavy charts, or elaborate software demands. What you will find is a simple, straightforward approach to home-based trading that can be used by virtually anyone, anywhere. Unlike most ‘experts’ teaching traders today, Nial Fuller has actually made it as a home-based trader. In his Forex trading course, Nial outlines his simple price action trading strategies and explains how to use them to trade Forex and futures markets–his preferred vehicles.

Forex Fundamental Analysis: What You Need to Know

Forex fundamentals and Forex news are essentially economic variables that can be thought of as catalysts for price movement in the Forex markets. The school of thought known as “Forex fundamental analysis” essentially says that a trader can predict future price movement of a market based on a market’s fundamentals or news data. Whilst it seems perfectly logical to assume you can study the economic fundamentals and news of a market and make predictions about it’s future direction based on this data, it’s not quite that simple.

Have you heard the old saying “Buy the rumor, sell the fact”? There’s a reason this saying has been around on Wall Street for hundreds of years, it’s because when market data comes out, it typically has already been factored into the market and it’s impact will thus be minimal once it finally is released. Traders and investors tend to operate on expectations of what might happen in the future, based on some news data or fundamental analysis, that’s where the ‘buy the rumor’ part comes in at. The tricky aspect of this is that we can never know for sure exactly how much of any piece of impending economic news has already been acted upon / factored into the market vs. what will actually happen when that data is released. For these reasons and more, I give very little attention to upcoming Forex news data and fundamental analysis in general. Everything that affects a market, from Non-Farm Payrolls to GDP to interest rate decisions to natural disasters and political unrest, can all be seen much more clearly and effectively by analyzing the price action on a raw price chart.

Price action reflects all variables that affect a market

Perhaps the most important thing you should take away from this lesson is that the raw price action of a market is a direct reflection of every variable that caused that market to move. In fact, one daily bar on a daily price chart is the end result of all the day’s thousands of economic variables that influenced the market. There are literally thousands of variables that can cause any one market to move on any given day, but just because these fundamental and news variables are the catalysts for price movement in a market, does not necessarily mean trying to analyze them is useful or even relevant for short to mid-term Forex traders.

Most of the time, when a big economic news event is on the horizon, like an FOMC policy meeting or Non-Farm Payrolls, traders and investors are already speculating on what its outcome will be for weeks or months before it actually happens, and the end result is that the actual event itself is already factored into the market when it occurs, and so it’s really more of a non-event. There will usually be increased market volatility during these big news events, but being focused on the higher time frame charts like I am, this intra-day volatility is really nothing I am concerned about. If there’s a strong daily chart trend in place, I am much more concerned with that, and I will actually use any counter-trend retraces that occur as a result of the news to look for price action signals in-line with the daily chart trend; this is the essence of how I ‘trade the news’, so to speak.

In the chart below, we can see a GBPUSD daily chart and that on December 18th the market surged higher shortly after the FOMC meeting announcement. Now, the important point to consider here is that traders and investors had been discussing this announcements “potential” for weeks leading up to it, and that the GBPUSD was ALREADY trending higher for a long time before this. The announcement itself was actually somewhat positive for the U.S. dollar as the Fed announced they were scaling-back their bond-buying program, but what happened? The trend continued as usual. The point is that you can’t stop a freight train…there are very strong reasons why market’s trend, and one single news event is very unlikely to change the course of the trend. Thus, this is why I ignore the news except maybe to note when the volatile reports are coming out so that I can look for a nice entry in-line with the daily chart trend…

gbpusdfomcday

How important is economic news?

By trying to analyzing all the economic news variables that affect a market each day, you are probably going to stress yourself out, second-guess your ‘gut’ trading feel and generally cause confusion and frustration where it doesn’t need to exist. Many traders believe that all the economic data swirling about each day on their favorite financial news channel or on the internet is important, after all, if so many ‘experts’ are talking about these news events they must be important right? Not so fast. The financial news industry is a huge industry that employs thousands of people, but whether or not most of the actual economic data is useful or pertinent to you as a trader is a much different story.

As we discussed in the previous section, the price action in a market truly does give you all the information you need to know about that market. News reports and fundamentals are all absorbed into a market and reflected via its price action, so you really can stop reading economic reports and listening to news pundit’s “expert views” on the market…they simply don’t matter. If you want to start learning how to interpret and use the raw price action in the market , checkout my price action trading course for more information.