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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.

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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.

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The Habits and Routine of a Successful Price Action Trader

Trading success is a result of discipline, and having a daily routine is a key component to becoming a disciplined Forex trader. It is so easy to fall off track and start making emotional mistakes as a trader, and you really need to consciously stop this from happening by having a daily routine that you go through every day. A daily trading routine will add a degree of order and stability to your trading, which is very important to your mindset and thus to your long-term profitability. If you do not currently have a set daily routine for your trading activities than you need to start developing one, trading absolutely cannot be a haphazard endeavor. The more objective you can make every aspect of your interaction with the market, the less likely you will be to commit emotional trading mistakes.

Avoid Short time Frame

The right trades at the right times Recognizing the “right” trade will mean that you know the difference between a good potential situation and ones to avoid. Too often, investors get caught up in the moment and believe that, if they watch the evening news and read the financial pages, they will be on top of what’s happening in the markets. The truth is, by the time we hear about it, the markets are already reacting. So, some basic steps must be followed to find .

Limit screen time to a certain period of time and time of day

The first task in developing a daily trading routine is to know what times during the day you will be analyzing the market. You will obviously need to work around other responsibilities such as your current job and your family duties. If you find that the only time you have for checking the market is an hour before you go to bed, than you must work with that time period. The best times to analyze the market are around 4-5pm EST (New York time), which is the New York closing, and then around 1-2am EST, which is just prior to the European opening. Now if you can’t stay up until 1 or 2am EST, that’s OK, just make sure you analyze the market at the same time each day.

Once you have decided on the time period you have available for market analysis you then will need to decide on how much time you want to devote to scanning for price action trade setups and(or) for monitoring any previous open positions you may have. Limiting your screen time to a specific time allotment is very important to your mindset and hence trading success. Trading off the daily charts is the best time frame to trade because it filters out the “noise” of the lower time frames while also providing you with some high-quality trade setups to trade each week. Once you become skilled in price action analysis you can scan each currency pair that you trade during your given time period each day. If there is no setup than you move on to the next pair, if you find no setups in any pairs than you are done for the day! Any further analysis beyond this point will only hurt your chances at Forex trading success. You will start to over-analyze the market and dig up reasons to enter a trade and enter low-probability trades; I promise you this will cause you to lose money over time.

Follow a Price Action Trading Plan

If you are a price action trader you know what setups you are looking for each day in the market. Since this is the case you should have a written out and clearly defined trading plan of what you are looking for each day during your given time period and allotted time. If you do not have a clearly defined and tangible trading plan than you need to get working on this right away. Keeping your trading plan “in your head” doesn’t cut it either, you need to read it, every day. A clearly defined trading plan should include entry signals, exit strategies, risk management plans, as well as long term goals; these are factors your forex trading plan needs to include at a minimum.

Following an objective trading plan will give you precise setups to look for each day, it will help you focus harder and give you a guide to follow each day while analyzing the market. Market analysis needs to be structured; most traders have no structure to their daily routine which is a result of not having a trading plan. How can you become a structured and disciplined Forex trader if you don’t even have a plan for what you are doing? Would a builder build a house without blueprints? No, of course not, it would fall apart, very fast. Yet, almost every person that attempts to become a forex trader approaches the market with no trading plan or sense of why one is necessary. Operating in a structured manner in the uncontrollable Forex market is simply a necessity to you making money on a regular basis. Luck will only reward you for so long before it punishes you, there is no room for luck in the consistently profitable trader’s vocabulary, simply put; professional traders do not need luck because they have a clearly defined trading plan.

Keep a trading journal

Keeping a daily trading journal is important for a number of reasons, but not for the reasons you might be expecting. Many trading books and other educational sources will mention trading journals briefly and say that you should write down the parameters of each trade you take so that you can analyze what you did right and what you did wrong. While there is some value in recording this information I feel that it misses the point. Forex trading success is almost entirely dependent on how well you manage your emotions. The real value that a daily trading journal can provide to you is feedback on how you are feeling each day about your trading activity as well as feedback on your day to day emotional state.

It is very important to right down how you feel before entering a trade and after wards. Write down if you won or lost on the trade and then write down how you are currently feeling. This will do two things; it will give you a task to do right after closing out a trade which will give you time to calm down from a big win or a loss so as to help keep you from jumping back into the market. Also, it will begin to paint a picture of how emotion is tied to trading success. If you are honest in this trading journal about how you are truly feeling before and after a trade, you will begin to see solid evidence that the degree to which you are emotional in the market is the degree to which you lose money.

The other helpful feature of keeping a daily trading journal is that you can write down (or type) your own daily forex market commentary. This will allow you to keep a running tab on market conditions and will generally just make you more aware of what is happening in the market. It is helpful to stay connected to Forex price movement each day and to have it take on some context in the broader market picture. If you are going to be away from the market for a few weeks don’t just come back and jump right into a trade. Give yourself a week or so to record daily market commentaries so that you can get a feel for the current ebb and flow of price movement, it’s important to stay in tune with the Forex market.

Cleanse your mind and body rather than putting extra time into market analysis

As I briefly stated earlier, too much time spent analyzing the Forex market beyond what you have previously allotted for yourself will usually work against you. A previous article I wrote called “Set and Forget Forex Trading” explains this concept in greater detail. If you find yourself with extra time on your hands and you start looking at charts or analyzing economic data outside of your allotted time slot than it’s time for a hobby. Starting working out regularly, any regular exercise will help you focus better on all of your daily life tasks; it will make you feel better both mentally and physically. Time spent exercising is much better than spending extra time analyzing the market; you can control your body and your mind but not the market. If you still have extra time after exercising, then read a book that expands your horizons on some topic, it doesn’t have to be trading related, it can be anything, reading exercises your brain and keeps your cognitive wheels greased. Remember that your daily routine is paramount to long term success in the market, don’t underestimate it. Forex trading is a business and should be treated as such, any successful business operates under strict routine, you should be no different as a Forex trader. For more information on the habits and routine of successful price action traders, checkout my price action trading course for more.

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The Truth about Forex and Futures Trading

Most people thinks that trading is a way to get rich quickly,But eventually they get to know that the wind is not controllable.Which make their account damage.In this below post we will discuss about the trading misconception and reality of the trading.

Get Rich Quick
Advertising has rapidly expanded the retail market in forex. This has brought many people into the arena who are on a quest to get rich quick (or with little effort). This unfortunately is very rare indeed. Trading takes patience and there is no final destination. Traders do not make some money and then walk away; rather they make trade after trade, even if there is time gaps in between. Therefore trading required consistency, not a gambling-throw-it-all-at a-couple-trades mentality.

Forex Is Just for Short-Term Traders
High leverage has made short-term forex trading popular, but this is not the way it has to be. Long-term currency trends are driven by fundamental factors, and these long-term trends are tradable. Long-term traders focus on the larger trend and are not concerned with everyday gyrations. It is arguable that taking a longer-term time frame may be beneficial to some traders as it will reduce the number of spreads paid (the equivalent of a commission) and traders are more likely to avoid short-term impulse trades. Currencies can also be used as an investment to diversify or hedge buy-and-hold portfolios.

The Market Is Rigged
Losing traders often point to a rigged market or a corrupt broker as the reason for their failure. While it is an easy assumption to make, forex is not a scam. The forex market is by far the largest in the world swayed by hundreds of thousands transactions and potentially thousands of inputs each day. This means it likely that if someone takes a non-businesslike approach to their trading, one of the other savvy participants will usually quickly notice – this is the way of all markets. (Forex scams are more common than you may realize. Know the signs before you throw your money away. Refer to Spotting A Forex Scam.)

You Can Be Right Every Time
Losses occur, and attempting to find a strategy that is right every time will either leave the trader on the sidelines indefinitely or will bring the trader into the market with an over-optimized strategy that will not adapt to new conditions. Accepting that losses occur and finding a strategy that gives a slight edge in the market conditions that are traded is enough bring in positive returns.

You Can Easily Make Money Trading News
In hindsight, seeing a move in currency after a high impact news announcement like the U.S. Nonfarm Payrolls (NFP) Report can make people salivate with thoughts of quick money. This is far from reality as news events can be extremely hard to trade in real-time. What the charts generally don’t show is that often there is no liquidity for much of the move that takes place in the first few seconds after the announcement, meaning traders cannot get into a favorable move once it starts, or get out of a losing trade once they are in it. Although it is possible to set up a trade before an announcement is made, execution requires analysis of the presented statistics in order to determine the likely effect on the market. This analysis must be conducted almost immediately as other traders are gauging the same indicators. Therefore, trading news takes a meticulous strategy, and consistently easy money is rarely found.

More Trades with More Pairs Is Better
While it would be nice to think that if a trader makes money trading once per day, that they can make 10 times as much trading 10 times a day, this is generally not the case. Trading less and focusing on a few currency pairs that the trader understands will be beneficial to most traders. Unless a trader is skilled and focuses on scalping strategies, the majority of traders will benefit from being patient, focusing on something they know and waiting for the best opportunities – few as they may be.

Predicting the Market Is How to Make Money
Attempting to predict can be the downfall of a trader, although it is what most novices attempt to do. Predicting can blind us, as it causes a psychological bias towards a position and can disrupt our rational judgement. Traders must be nimble, trade according to a system and take the losing trades with the winning ones. The market, which is constantly moving, should dictate the trades that are made. If a prediction is made, the trader should wait for the movement of the currency to confirm that the prediction is right.

The More Complex the Strategy the Better
Traders often begin with a simple strategy, and see a small return. They then assume that if they continue to tweak their system, taking into account a few more variables, that they will increase their returns. This is not usually the case. Instead of looking at simple things such as price movement (which is the final determinate in making a profit) and whether the market is trending or ranging, the trader attempts to determine exact reversal points and make more trades. Trading profits are made at the margin – even the best traders only win slightly more than they lose. Therefore, if a system makes money, stick with it and don’t change it; focus on money management instead.

Money Management Means Placing a Stop
Money management (MM) is arguably the most important factor in determining success once the trader has developed some skill in getting consistent returns. MM is not simply placing a stop order on a trade; rather it encompasses how much of the total account will be risked on each trade – this should generally be less than 1%. It will also look at how many trades can be open at a single time, and if multiple positions are open do they need to hedge each other or can they be highly correlated. By focusing on money management a trader takes their trading to next level, ignoring money management means immanent failure, even with the best strategy.

You Can Simply Follow What Others Are Doing
There is always lots of advice to be given on how to trade, what to trade and when trade. Yet ultimately it is the trader whose money it is, and will be the sole recipient of profits and losses. Therefore, since it is the trader’s money at stake they should make every attempt to develop their own skills and come to their own conclusions instead of purely relying on the advice of others. Experienced professionals can greatly aid new (or other experienced) traders, but all information should be filtered and scrutinized before the information is acted on. No one else has a vested interest in the profitability of the account like its trader; therefore the trader of the account should provide the largest input.

 

 

 

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Major Economic Events Can Affect Your Trading Account

Forex marketEconomic indicators are closely watched in the investment world, their release can have an immediate and volatile effect on the forex market. There are three main types of indicators; leading, coincident, and lagging. Leading indicators are believed to change in advance of changes in the economy, which can give you some idea of what might happen before it actually occurs. Coincident indicators reflect changes in the economy at about the same time they actually occur. Lagging indicators change after the overall economy changes and are of little use for prediction. Interest rates are a major driver of forex markets and each economic indicator is watched closely by the Fed as they decide on their monetary policy. For this reason many of these indicators can have substantial effects on the .In Major Economic Events Can Affect Your Trading Account we will tell you the most important events.

Gross Domestic Product (GDP)

The GDP report is the most important of all economic indicators. It is the biggest measure of the overall state of the economy. The GDP number is released at 8:30 am EST on the last day of each quarter and it reflects the previous quarter’s activity. The GDP is the aggregate (total) monetary value of all the goods and services produced by the entire economy during the quarter being measured; this does not include international activity however. The growth rate of GDP is the important number to look for.

Consumer Price Index (CPI)

The CPI report is the most widely used measure of inflation. This report is released at 8:30 am EST around the 15th of each month and it reflects the previous month’s data. CPI measures the change in the cost of a bundle of consumer goods and services from month to month.

The Producer Price Index (PPI)

Along with the CPI, the PPI is one of the two most important measures of inflation. This report is released at 8:30 am EST during the second full week of each month and it reflects the previous month’s data. The producer price index measures the price of goods at the wholesale level. So to contrast with CPI, the PPI measures how much producers are receiving for the goods while CPI measures the cost paid by consumers for goods.

Retail Sales Index

The Retail Sales Index measures goods sold within the retail industry, from large chains to smaller local stores, it takes a sampling of a set of retail stores across the country. The Retail Sales Index is released at 8:30 am EST around the 12th of the month; it reflects data from the previous month. This report is often revised fairly significantly after the final numbers come out.

Employment Indicators

The most important employment announcement occurs on the first Friday of every month at 8:30 am EST. This announcement includes the unemployment rate; which is the percentage of the work force that is unemployed, the number of new jobs created, the average hours worked per week, and average hourly earnings. This report often results in significant market movement.

NAPM

This report is called the National Association of Purchasing Management index and it measures conditions in the manufacturing sector. The NAPM index is released on the first business day of the month at 10 am EST and it reflects the previous month’s data.

Consumer Confidence Index

The consumer confidence index is released on the last Tuesday of the month at 10 am EST, the report measures how confident consumers feel about the state of the economy as well as their spending power. Consumer confidence is considered a crucial part of the economic picture, the more confident people feel about the stability of their income the more likely they are to make purchases.

Durable Goods Orders

The durable goods orders report gives a measurement of how much people are spending on longer-term purchases, these are defined as products that are expected to last more than there years. The report is released at 8:30 am EST around the 26th of each month and is believed to provide some insight into the future of the manufacturing industry.

Beige Book

The Beige Book report is part of the FOMC’s preparations for its meetings and is published 8 times per year. The report is released two Wednesdays before each Federal Open Market Committee meeting at 2:15 pm EST. The Beige Book report summarizes economic conditions in each of the Fed’s regions. This report is seen as an indicator of how the Fed might act at its upcoming meeting.

Interest Rates

Interest rates are the main driver in Forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy. The Fed can use the tools at its disposable to lower, raise, or leave interest rates unchanged, depending on the evidence it has gathered on the health of the economy. So while interest rates are the main driver of Forex price action, all of the above economic indicators are also very important.

Here are some more articles you might enjoy:

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How To Trade Forex Price Action

So you’ve decided you want to learn to trade Forex and have come across a trading strategy called “price action“, yet you have no idea where to start or how to begin trading with this method.In this post we will guide you the way by which you will get success in the forex trading.We will discuss the steps in details and we will provide you some basic understanding of how market works.

Step 1: Learn the basics of Forex trading

The first thing that you need to do in order to get started trading with Forex price action is to build a solid foundation on the core principals of Forex. If you don’t know exactly what the Forex market is, why it exists, or how it’s traded, you should first take my free beginners forex trading course. This will get you up to speed on the basic building blocks of Forex trading and it will allow you to make a seamless transition into learning how to trade with price action strategies.

Step 2: Take the ‘junk’ off of your charts

That’s right, the next thing you must do right now before you commence any trading is to strip off all your indicators; make your trading charts naked!

Indicators on forex charts are a complete waste of time, you are using second hand information, not first hand price action from the actual market itself. Its time that you completely rid yourself of complex and complicated trading methods. When you create a simple and logical forex trading plan and around the ‘core’ price action of the market, it will make your trading relatively stress free and this will work to influence positive trading habits.

Step 3: Learn simple price action trading strategies

When you trade Forex with price action, it means you are trading off the raw price movement of the market; no fancy systems or strategies, just plain vanilla price action on a clear and uncluttered price chart.

Of all the methods a trader could use to make money on foreign exchange market fluctuations, the most profitable are often the simplest and are usually widely overlooked or dismissed by the masses. Price action trading is one of those undiscovered gems.

Once you strip off all the confusing indicators and other ‘magic’ trading methods from your charts and  learn a few price action trading strategies, the simple visual price patterns and signals will start to ‘jump’ out at you with extreme clarity, so go ahead and clean up your charts now!

In the chart below, we can see a good clean example of trading one of my favorite price action setups, the pin bar trading strategy…

 

Don’t take my word for it, start to learn to trade forex today by downloading a forex charting platform, set up daily candlestick charts and keep it as simple as possible by learning to read the plain vanilla price that you see on the charts, and don’t cloud up the chart with complex methods and indicators; keep it basic and clean.

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How To Trading Price Action Using Your Intuition

Successful traders are not sitting at their computer desk waiting for a robotic trading system to give them a buy or sell signal. Nor are they rigidly waiting for 10 different indicators to line up on their charts providing them with an entry or exit signal. Successful traders have long since realized that these types of rigid and mechanical Forex trading systems simply do not work over the long-run. They don’t work because the market is a constantly changing entity; it ebbs and flows and virtually anything can happen on any given day.In this post we will discuss How To Trading Price Action Using Your Intuition.

Given these circumstances, it seems almost comical that so many people try to fully-automate or mechanize the process of Forex trading. The best traders and investors in the world like Warren Buffet, George Soros, and others, are not using mechanical trading systems that are called “Turbo Pip-Blaster 5,000” or something equally as silly. Instead, they use their brain, they use their ‘gut’, and they use their discretionary trading instinct or intuition to help them analyze and trade the markets.

What is trading intuition?

With all trading methods, no matter what the educators or sellers of the system say, there is always a degree of intuition and awareness that is taking place in our trading, and its time to learn to harness it correctly.

There are 2 main things to be aware of here:

1. The Forex trading strategy that you use – Clearly, you need an effective trading strategy like price action. But it’s not ONLY the strategy that decides whether or not you trade successfully, it’s HOW you trade it, which brings me to my next point:

2. Using discretion or intuition to trade your strategy – Part of trading is the psychological element, and the ability to read the market with “gut intuition and feel”. This aspect of trading is not easily taught, and it’s really something you need to develop through study and screen time and by getting ‘in-tune’ with how a particular market moves.

There is no mechanical approach that I am aware of that makes money long-term, all methods I trade and that others trade that I know of, use a basic set of guide-lines, and basic “trading plan conditions” that they use to find a high-probability entry into the market.

For example, a simple Forex trading plan may look like the following…

One might have 3 preconditions:

1. The chart shows a clear up trend over the last two or three weeks

2. The market has pulled back to a support point within the uptrend

3. The market then forms a “price action signal” after the retrace lower into support to confirm a reversal back in the direction of the overall uptrend, which may become the entry point.

These may be the general criteria in a trading plan, but how do we truly filter this and say, “OK I will trade this setup, but I won’t trade this one, because of X,Y or Z.” ?

As I say to all my students, the greatest traders are in fact people that can have a trading plan conditional element, but then use what I call the “gut feel element” and the “internal emotional filter”, or put simply; they use market experience and screen time to help make quick on-the-spot trigger decisions.

How to develop your price action trading intuition

As a price action Forex trader, I can only offer my personal trading insights and the things I have picked up over the years that have helped me with trading strategies and my general approach to reading charts…

I can not give you all of the “gut feel” qualities that are a larger part of the ingredient to long-term success, this market intuition and emotional element will only come with learning and trading experience. Nobody will want to tell you this though.

I am here to tell you that no matter what trading strategy you learn, it will require screen time, patience and absolute discipline to trade it successfully.

You will find that once you begin to follow your favorite markets and demo-trade price action strategies, you will start to get ‘intimate’ with the market, meaning you’ll get closer to it and understand how it moves better. Every market has its own dynamics, volatility, and different factors that influence it, thus every market moves a little differently than another. I suggest, you pick several of the major forex pairs and really get familiar with their price action and their dynamics; really focus intensely on just 3 or 5 markets at first, and become a ‘master’ of them. You will begin to see that you get ‘in-tune’ with the market, and you will develop a natural feel for reading its price movement, in other words, you’ll develop your price action trading intuition for the market, I also sometimes call this a “discretionary trading sense”.

Of course, the first step to developing your price action trading intuition is to get an education on price action trading strategies. Once you understand the theory of the strategies and how to trade them, you can begin to apply them in the markets, via a demo account at first and then later on a live account after you feel comfortable in your abilities. There is no exact amount of time that it will take any one trader to fully develop their trading intuition, as every trader is different and brings different mental variables to the table. However, it’s safe to say if you really commit yourself and you’re really passionate about becoming a successful price action trader, you can make it happen if you trade in a disciplined manner and put in the necessary screen time to develop your price action trading intuition.

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Why Profitable Trader Thinks Forex Trading Is as a Business

One of the biggest mistakes that many Forex traders make is that they don’t treat their Forex trading like it’s a business. Instead, they treat it like a trip to the casino, and many of them end up behaving like drunk gambling addicts instead of calm and calculating traders. If you want to succeed as a Forex trader, you have to think like Profitable Trader who Thinks Forex Trading Is as a Business, because it is.

There are costs to being a Forex trader, just like any other business. Your goal as a trader is to try and bring in more money through revenue (winning trades) than you have going out through your costs. If you can do this, you will make a profit. However, if you let your costs (mainly losing trades) get out of control, you will lose money and your Forex business will go under (you’ll blow out your trading account)

The cost of doing business in the Forex market

Just as you have costs in any other business, you have costs as a Forex trader. Your costs as a trader are the losing trades you have, the commissions and spreads you pay, computer and other office equipment, etc. No matter how hard you try to avoid losing trades, you are always going to have them, and they are the biggest cost that you have as a Forex trader. Sadly, many traders don’t think about trading like this, instead they think of trading either is a trip to the casino or they view it as something they can become “perfect” at and never have any losing trades.

The reality of being a trader is that you will always have losing trades, no matter how hard you try to avoid them, you will have them. So, that’s your number 1 cost of doing business in the Forex market. What you’ve got to do is what every other business does; make sure that your revenue offsets your costs enough for you to make a profit.

So, to clarify this situation, let’s list some of the main costs of having a Forex trading business:

* Losing trades
* Broker spreads or commissions
* Computer (hardware)
* Software
* Other office equipment

These are going to be the primary costs of running your Forex trading business, now there might be others, but these are the biggest ones for most traders. Your goal is to make sure that you make enough money from your winning trades (revenue) to cover all your costs and then some, so that you make a profit.

How to make your Forex trading business profitable

Now, there is quite a bit that goes into become a consistently profitable Forex trader. So, we aren’t going to go into ALL of the details in this short lesson. But, I am going to give you a general outline of what I feel is the most important piece of the puzzle of making your Forex trading business profitable.

As I mentioned above, you’ll have to make sure your winning trades are more than offsetting all your trading costs if you want to be a profitable trader. So, there are basically two ways to accomplish this:

1) Have a very high percentage of winning trades compared to losing trades

or

2) Aim to have winning trades that are significantly larger than your losing trades.

Most traders with a little live account trading experience would agree that it’s a lot easier to use option number 2. What we are essentially talking about here is risk reward. If we aim for a risk reward ratio of 1:2 on every trade we take, we only need to be right about 35 to 40% of the time to make a decent profit. Most professional traders are not winning a high percentage of their trades like 70 or 80%, instead they typically win somewhere around 40 to 60% of their trades. But, they understand that by making sure their winners outpace their losers by a substantial margin, they can reduce the burden of having to win a high percentage of the time.

One thing that’s especially important to remember is that you don’t have to be right to make money trading. What that means is that you can be wrong more than you are right and still make money in the markets. Given that it’s difficult to win a high percentage of the time in the markets, it’s far better to just use the power of risk reward and make sure your winning trades far out-pace your losing trades.

How trading differs from other businesses

In other businesses you find a market, you learn a skill or develop a product, and then develop that skill or product until it is better than other people in the same business or niche. Trading is the same – it is a business – and if you want to be one of the financially secure you will have to work at it, in the exact same manner as an astute business person. In conventional business you have to be patient, focused, disciplined, very committed, hard working, forceful, and in complete control of yourself and in control of your plans.

To be successful in your forex trading business you can’t be forceful or control the market, all you can do is identify what is happening and determine if your trading edge is present or not. That’s not to say that you can’t be confident with your trading, but you need to realize early in your career that you are not bigger than the market, and although you run a trading business within this large market, you are never truly in control of whats happening in the day to day forex market movements and events.

You can never be reliant on tips or one lucky trade to secure your future, nor can you build a trading business using a mechanical autopilot kind of system. You have to continuously work at it until you have developed a trading strategy, and even when you have developed that strategy, it will require ongoing effort and monitoring.

How to build your Forex trading business

Successful Forex traders know the main part of their trading business is the development of their trading skills, not continually looking for the ‘Holy Grail’. When you have a set of trading rules that suit you and you are happy with what you have, you need only improve your skills to implement them, this will take much of the stress and anxiety out of trading and it will become enjoyable. That’s right, trading can become enjoyable once you have faith in your rules and your method.

Once you have a forex strategy that works for you don’t keep messing around with it, try to remain very consistent and subject yourself to the trading opportunities it identifies. I have read in so many articles out there on the web that you should keep searching for a different method or system to improve your trading, and I respond to that by saying, ‘ this is complete rubbish’ … rather, I strongly suggest trying to stick with what you have and see it through, you need to give things a chance to work and prove themselves.

When you begin to remain consistent and disciplined with your thinking, and of course your trading plan/rules, then you can create a dynamic Forex trading business that will help secure your financial future or simply make your trading much more enjoyable and relaxing. If you want to learn more about an effective trading strategy that you can build a trading plan around for your Forex trading business, checkout my price action Forex trading course.

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Can Forex Commodity or Stock Trading Be Taught By A Trading Coach?

This article will explore the enthuse of whether or not a person can actually learn to trade Forex from a trading mentor or coach. So the question Can Forex Commodity or Stock Trading Be Taught By A Trading Coach?…can an aspiring trader be taught to trade Forex successfully or is it something that is more innate?

There are a lot of theories and arguments in the Forex industry about the ability of a person to learn  trading from a trading “coach” or mentor, and there’s a wide variety of responses. Based on my experience, here’s what I have to say about the matter:

First and foremost, I believe that it is very possible for aspiring traders to learn how to trade successfully if they are prepared to do what is necessary. When I say “what is necessary”, I am mainly talking about being realistic and learning an effective trading strategy. I will then add another layer which we could call “the psychology factor”, and this is the tricky part. I won’t delve into trader psychology too much in this lesson as I have other articles about that, but I will say that no matter how good a trading mentor is, the student’s mind and trading psychology play an important part in creating success or failure.

Nature or Nurture?

I do my best to teach traders the “psychology factors” and help them develop their thinking and discipline, but at the end of the day, it’s up to each individual trader to work on their mindset and develop necessary trading traits like discipline and patience. I will also add that most Forex traders fail because they simply over-trade and succumb to an addictive behavior with their trading, and this behavior quickly destroys trading accounts.

It’s true that trading does come more naturally for certain people, because some people have mentality  that is more in-line with what is required for trading success. Being disciplined, patient, having natural motivation to want to develop positive habits…these are all things that are heavily influenced by our brain chemistry, and some people just have more of the ‘right’ combination of brain chemicals for these things than others. So, whilst trading can be easier for some people, it certainly is not impossible for anyone. Indeed, with enough drive and passion, you can overcome any brain chemistry deficiency that you may have in regards to trading. So, the verdict on the “nature vs. nurture” debate in regards to trading is that nature can certainly help, but it’s nothing some solid “nurture” can’t over come…it just depends on how bad you want to be a successful trader and how committed you are to learning…

A trading experiment in nature versus nurture

The best example of how a good trading mentor can teach aspiring traders to trade successfully is Richard Dennis’s Turtles. The Turtles were a group of people who were taught to trade by Richard Dennis after a bet with his friend William Eckhart who said that trading could not be learned. They placed an advertisement in the Wall Street Journal and selected 21 men and 2 women of varied backgrounds. Some had a little trading experience, but most didn’t have any. Dennis’s requirements were a commitment to follow his trading psychology and the discipline to follow a trading system. After several weeks of training, each person started trading with amazing results and a second group was trained. Eckhart accepted that trading could successfully be taught if by an effective mentor and a willing and open-minded student.

Now, whilst the “Turtle Traders” system has no real world application in today’s markets, the idea that an aspiring trader can successfully learn to trade from a trading coach or mentor is still very true. Traders have been successfully educated in the past by mentors and coaches and that continues today. You have to ask yourself if you are going to go it alone or are you going to take some time and invest in yourself and your own trading education? To learn to trade, you have to be prepared to do what is necessary and develop an understanding of how the markets function and what is required to operate in them.

Successful VS. Unsuccessful traders

You can learn an effective trading method and all about trader psychology and money management, but there is always going to be the “gut feel” element that can heavily influence a student’s success or failure in the markets.

Successful traders do the things that unsuccessful traders are not prepared to do, or that they are maybe too lazy to do. The majority of traders want someone to give them a system that will make money for them when in reality it’s the trader that makes the money using a system or in my terms “a trading method”. A trader does this by learning his or her trading method inside and out…by really mastering it, that’s what the Turtle traders did with Richard Dennis’s system, and that’s what you’ll need to do with any strategy or system you choose to trade with.

Learning to trade successfully is like any profession, you have to spend the time to develop the skills required. No one is born a good trader (even if they have good brain chemistry for trading), just like no one is born a good pilot, doctor or anything else. We all have to spend the time and learn to be successful in our chosen profession.

The herds of educators and seminar companies in the Forex industry want you to believe that there are secrets and “Holy Grail” trading systems, but in the end, you just need to find an experienced and successful trader and learn as much as you can from them, and then develop your own abilities and trading style from what you’ve learned. To learn more about how to trade the markets, checkout my Forex trading course and members’ community.

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How to Trade Like A Hedge Fund Manager

You might be shocked to hear this, but there aren’t many differences between you and a professional hedge fund manager. The only real differences are the balance of your trading account and your ability to control yourself.  

The world’s top money managers all started on a path similar to yours; they had to learn how to trade just like you, they had to master their craft, fine-tune their strategy and learn to master their emotions and control their behavior in the market. Mastering one’s emotions and controlling behavior is probably the biggest thing that separates the pros from the amateurs. 

With enough screen time and experience, if you stick around long enough, just about anyone can begin to call a market quite confidently. But as many of you will all know by now, that alone isn’t enough.    

As I mentioned, what really separates the ‘men from the boys’, is the ability of the pros to treat each trade as just another execution of their edge, without little to no emotional connection to it. Trading multi-million or billion-dollar hedge funds is certainly no easy feat and definitely not for the weak-minded.  

The only way anyone could successfully trade these huge sizes and successfully trade for high net-worth clients, is by having complete and utter control of their minds and actions in the market.  

Remember, it’s just zeros.

The ability to change how you think about the money in your trading account is what you really need to succeed at this game.  

What professional hedge fund traders know and do, is think about the accounts they trade as score boards, keeping score in a giant world-wide game. The score is the trading account balance and to them, it’s nothing more than digits on a screen, the more zeros they rack up after the first couple digits the better they are doing. 

Imagine managing a billion dollar position the same as you would manage a $1,000 position? The only way to accomplish this is by remembering it’s all just zeros; it’s just digits on a screen. If you start allowing yourself to truly “feel” the power of the money, you have already lost.  

The ONLY true weapon you have as a small retail trader, is not allowing yourself to be affected by the money you have at risk in your account. This can be accomplished a number of different ways: 

  • Don’t trade with money you really can’t afford to lose. 
  • Know your overall net-worth, liquid money left over after debt. 
  • Risk a very small amount of your liquid money per trade.  
  • I like to do the “sleep test”; if you are able to sleep with your position on, then you’re good.

If you are doing all of the above, then the final step to trading your account like a hedge fund manager lies in how you think about the money you’re trading. 

I can tell you from personal experience, that the only thing more potentially nerve-racking than trading your own real money, is trading someone else’s money. Thus, a hedge fund manager needs to have ‘ice in their veins’ (discipline, self-control), otherwise they are not going to get above average returns for their clients. 

How do they do this? 

By thinking of the money in your trading account as “just numbers”, a trader with a really big “baller” sized account, can remove the emotion from their trading decisions. They are simply thinking about their money differently than you are, and as a result, they are able to function in the market essentially as if they’re trading a demo account.  

Have you ever traded a demo account successfully and then when you transitioned over to a real account you blew it out in a month? Why did this happen? Well, it’s simple; you were letting the money control you on the real account rather than you controlling how you thought about it (like you did on demo). Don’t let it affect you. You do this by following the 4 bullet points above and then remembering it’s just numbers, nothing more, just zeros on a computer screen.  

You have to take the power back from the money, don’t let the money control you, you control you and as a result, you control the money in your account.  

This might sound like some type of gigantic cliché motivational speaker type stuff to you, especially if you’ve just come off a bad streak of trading losses. But, I am telling you, from personal experience, that it’s a FACT that how you think about the money in your trading account directly influences whether or not you succeed or fail at trading.  

Whether you think you can or you can’t, you’re right. 

I don’t want to get all Tony Robbins on you (I do like him though) but your mindset really has everything to do with your trading performance. Whether you think you can become a successful trader or you think you can’t, you’re probably right. The first step in achieving anything in life is convincing yourself you can do it and really believing it.

In trading, you really have to “fake it till you make it” because that is the only way you will stay consistent and disciplined in your approach.  

Let me explain… 

Do you think a hedge-fund manager or simply a trader with a million-dollar account is sitting in front of his screens everyday, day trading? Would you do that if you had a large trading account?  

No, you wouldn’t, and here’s why… 

First, anyone who’s been around the trading world long enough knows that day-trading is the hardest way to make money and the most stressful. Put simply, there just aren’t a lot of high probability trading signals each week in the market to make a day-trading something that is more skill than gambling.  

Hedge-fund traders do a lot of research, they have access to information that regular retail traders do not. They take a macro view of events and then check for opportunities via the price action on the charts. They are not just diving in and out of the market all day because some line crossed over another line (sounds stupid because it is).  

The advantage that you have as a smaller retail trader, is price action is the great equalizer, the true footprint of money on the charts, it literally shows you what the hedge funds are doing. Then, you can combine that price action analysis with sickening self-control, consistency and discipline in your trading. This is literally the ‘recipe’ for retail trading success and the only way it’s possible, trust me, I know.  

Where does the “fake it till you make it” come in you ask? Simple… 

You literally have to trade your small trading account AS IF it’s a big account! How would a hedge-fund trade a big account? Slowly. Consistently. Masterfully. This is what I teach, this is how I trade.  

You aren’t looking for quantity, you’re looking for quality of trades. One or two good trades a month is all you really need. You may have to wait patiently like a crocodile for days or even weeks either for an ideal trade to form or maybe for one you entered to play out. Either way, this slow, methodical approach, is what works. Using price action and intense self-discipline is how you will make your money as a smaller retail trader. 

You aren’t going to ramp-up a tiny account into something you can live off of overnight. So, you have to fake it, until you make it. Trade that $1,000 account only risking $10 – $50 per trade for a year or two. Then, if you’ve proved to yourself you can do it, maybe you’ve doubled it. $1,000 profit may not sound like a lot over a year or two, but that’s a 100% return. Now, add a few zeros onto that $1,000 account and tell me if THAT amount matters?  

You see, if I can get brutally honest with you for a minute… 

Where most traders fail is in not understanding this simple point… 

Until you can trade a small account successfully over a significant period of time, you will not be able to trad a larger account successfully. Thus account size, simply doesn’t matter.  

Here’s what matters: 

  • Your ability to trade with discipline 
  • Your ability to trade with consistency 
  • You having mastered a simple yet highly effective trading method like price action 
  • Daily chart, end of day trading
  • Low-frequency trading 
  • Money management 

Bring it all together 

You know that dream you have in your head? The one where you are trading from a beach and making thousands of dollars per week without having to be stuck in traffic or talked down to by some a-hole boss? Don’t give it up. Don’t even think about it. I’m here to tell you, as living, breathing proof, that it IS possible. I have done it, and so can you.  

What you have to understand and truly believe, is that trading is a game that is almost entirely mental. This is why I don’t just teach you how to analyze price charts in my trading course and I am not just teaching a trade entry system. Whilst that stuff IS important, what you do with the trading method you use and learning how and when to implement it, is more important.  

What professional hedge-fund managers either instinctively know or have learned through much trial and error, is that the trade entry is not the hardest part of trading. The hardest part is what happens after that; how you process the feelings that come along with trading, your thoughts, your hopes and fears.  

I have spent the better part of my adult life being intimately connected with global financial markets, trading and investing is quite frankly my life-force. The lessons I share with you on this blog and in my trading course and members area, are literally what keeps me going. My entire existence and happiness is pinned to the idea of sharing my experiences with aspiring traders so that they can feel what I feel every day. The feeling of not having to be to work “on time” or having to answer to some boss who doesn’t really care about you, the feeling of being able to make money from a beach or from a coffee shop, that is what keeps me going. I want you to have that feeling and am telling you that it is possible if you simply change how you think about the money in your trading account and remember that you have the power to control how you feel and how you behave. Once you take that power back, you are on the right track.

What did you think of this lesson? Please leave your comments & feedback below!     

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