FX Club

[Papsak]

My 2c on the gb/us

I pulled out early on the way up (classic newbie mistake ), so just got 34 pips on the way up out of a do able 74 - although at this stage any win is gratefully received. Will be placing an order pretty much at market with a small 20 pip stop an a TP 1.4066 entry 1.4138 sl 1.4158

 

[Revelator]

By my calculations you need at least R 5mil to trade full time.
You NEVER trade with your full amount of savings, I say R5mil because you need a big portion of
it in other investments. Trading with ALL your cash will kill you emotionally (been there lost the T-shirt).
I traded a system that made over a 100% per annum and still didnt get it right due to incorrect capital management.

If I had R5mil, I would be more than happy with my current 12% growth per year.
What exactly went south with you capital management? Not to impose, I realise those must not be some of your favorite moments, but I think it could be valuable information to those uneducted / inexperienced in the world of trading.

Now I focus on making sure my bills are always covered first and trade with the rest.

This is probably the best advice. Luckily I have zero debt. Only expenses I have are normal things no-one can get arround. Food, rent etc.

Which leads me to...do you realize you have a skill that you can use?
If youve got some good experience with writing code for EAs have you thought of using that skill?
Ie selling your time to build EAs for others and charging them for your time.

Being in the information age, this market is relatively saturated. The supply outweighs the demand at this stage. I think I would do better with trading than developing anyway. Speaking in terms of time invester per rand income.

My big point that Im trying to get across is that trading must always be with an account thats
a small % of your net asset value, so (eg) if your worth R 100,000 then you can only trade with R 15,000
Getting a 10% return per month every month is very good result, so that equates to R 15k * 10% = R 1,500 per month

If your account is too large you will withdraw too much from your "emotional capital" and you will lose it all
in the end, guaranteed.

If I could get a 10% return on 15% of my capital each month, that would still be 32% a year on my total worth. Much more than my current 12%. Not to mention the other 85% still in ETFs.

But from reading and seeing guys on you tube - 4/5% per month is achievable without being glued to your monitor 24/7 and never risking more than 2% per trade and doing 1 -3 trades per week.

I'd be perfectly content with 4-5% per month. Using 15% of my total worth and making 4-5% of that each month for a year would push my total growth to 20% (up from 12%), should I leave the other 85% in ETFs.

I guess I better open a demo account and start trading.

I do realise I'm not supposed to calculate things like that. It's never that certain.

Thanks for the replies. Thoroughly appreciate it.

EDIT:

What are your thoughts on AutoTrading?

 

[FxJalarupa]

The gift that keeps on giving...

Do you SEE what I SEE? (That song annoys me so much, but it's forever ringing in my head)

Momentum Break price pulls back toward Momentum break or the origin of the breakout... Price fails to close beyond momentum candle (can be a fail at the 50% retrace or even the OPEN)...

What is price doing but then returning to MOMENTUM?

This phenomenon forms a wick... Price trading into MOMENTUM is fair game for trades with MOMENTUM... Low risk high reward...

I could keep doing this ***** all day long till I get bored and want to spice things up with something stupid and completely unnecessary like complexity...

Simplicity is at the heart of all the great strategies... There is nothing more simple than trading away from a straight line in the direction of MOMENTUM... But we don't want to hear that! We feel that because our competition are highly educated, paid and proven that we somehow need to play the game their way... Well that's what they want... They want you to rely on moving averages and stochastic oscillators, they want your focus firmly on what the little squiggle on the chart says... Instead of what PRICE says... Because if we started to trade like rational individuals then who would be left for them to fleece... *Baah!*

 

[Papsak]

Makes a lot of sense.

Been running around quite a bit this week - but did finally open an account with xm. Nice to be able to finally trade on MT4 and not on GT247. And, although way to earlier to pass judgment, results are a hell of a lot better.

 

[FxJalarupa]

Lesson 5 - The Hook

LESSON FIVE

This next lesson is one of my favorite technical chart anomalies...

And what many of you following my lessons and charts closely will soon realize is that a lot of this stuff is the same thing but seen in a different way...

Such is the nature of Technical Analysis... Especially Naked Charting Techniques... many of the things I show you is so that you may develop sight for what Price is telling you... remember behind each tick is a real actual physical ORDER that moves the market... and FX is a zero sum game... meaning that if you are in profit, there is some other account that is currently bleeding pips into your account and vice versa...

This next bit of chart p0rn consists of chart pattern called "THE HOOK" because it looks like a "Hook"

But to go deeper into the why it looks the way it looks and what is it actually telling me is of most importance and will hopefully lay the foundation into the next chapter of TA the Failed Hook or Failed MB...

For all those haters out there, who are secretly reading this thread and refining their own trading skills... This post is dedicated to you!

So let's try quantify the dynamics of the hook...

It occurs most often when there has been a Momentum Break and "the hook" is actually the price action formed when price hooks back into MOMENTUM only to be pushed away with Momentum

Let's consider the order flow dynamics of a Hook...

Assume you are sitting in a tight ranging market and some news flow comes (NFP, CPI, PMI, ZEW, etc) out to push sentiment and therefore Momentum out of the range... Imagine you are a large institution who is trading that move...

Price spikes you are now in a healthy profit... BUT something happens to your profit... it starts to fade as price hooks back to the origin of the break out... This happens due to large position liquidations (Supply/Demand Zones) as well as trailing stop losses and weaker hands like your typical novice breakout traders getting out early or at break even...

This hook is therefore like a liquidity suction vortex of sorts that is created on a strong momentum move where (AND GET THIS) there are unfilled orders wanting to trade with that momentum move... in other words the move was so great that price moved so fast that not ALL the large institutions orders were filled - so price hooks back towards these prices in order to get filled (taking weak hands and amateur breakout traders out at a tiny profit, breakeven or a loss... (Seeing it this way has helped me tremendously to understand order flow a little better - because as you will SEE what happens around these price levels is "**Strange**") All the while, while they set the stage for the LARGE MOVE (More about this later)

Why does this matter?

Because not all the orders are filled... which means that when price eventually gets back there... THERE ARE ORDERS LEFT OVER TO FILL... and price then gets supported or resisted... and you can profit...

Let's see a Hook in action to establish exactly what is it we are looking at?

Point to Note!

Time is a Fractal SOOOOOO these little buggers are found at EACH and EVERY TIME FRAME on EACH AND EVERY PAIR - Please tell me again how I cherry pick this ***** to fool you?!

DO you SEE them? Hiding in Plain Sight!?

NOW!? - LOOK CLOSER...

BOOM!

This is on a LARGE TIME FRAME which means it takes TIME for stuff to turn... which doesn't matter as long as I am right, IN PRICE and I have staying power!

People tell me this ***** is hard... no-one can win, its a game of chance, its a gamble...

I say you are blind, deaf and dumb...

 

[FxJalarupa]

Welcome to the conversation and thank you for your enthusiasm to try again!

I outlined a bit more about my story a few post down...

I'll answer your questions as requested...

1) I have a day job in finance that affords me the opportunity to trade without being told that I am doing something that is contrary to my job... Which is great because when I view the market and trade, I am actually getting better at my day job, so its something that works at the moment...

2) On the weekends I do my markups for the week coupled with price alerts... I have a server running that saves all pairs in D1 and H4 and W1 charts to Dropbox, which download as my background on my tablet, so I'm always look at price during the day when an alert triggers or when I have a spare moment on my tablet... Most of my trading gets done after hours... unless i log into my account on my mobile phone to action a trade after an alert gets pinged or a level spotted... If you trade larger time frames then you can allow the market to breathe and get in numerous times as long as your levels are sound and just...

3) The money management I teach is teaching you how to treat your trading like a business, so it all depends on how much you have to 'invest' in your business... my goal is so that you never lose more than 0.5% per trade... (initially for beginners) and 1.5% per trade (for advanced) traders... So if 0.5% is not much to write home about in terms of cash money then maybe you have too little money...

In order to make a living from FX you need to have serious cash or have an utter detachment to you money (which by the sounds of things you do not have - and scared money never wins)... You can be wildly successful with $10 000 but know that you will be betting the farm in many cases to get where you want to get... if you think about $2500 representing R30 000 that's 1 quarter your capital.... so you definitely need lots of money because my way of trading you will never bet the farm... although your position may be worth a farm or two (but more on that later)

I hope that things stay well for you... Should you want to fast track your progress talk to me and let's see what we can do...

 

[DemonKnight]

Hi All

What forex brokers do you use?

I was with FXCM but need another broker that uses Metatrader. Do any South African based companies support Metatrader?

 

[FxJalarupa]

Hi All

What forex brokers do you use?

I was with FXCM but need another broker that uses Metatrader. Do any South African based companies support Metatrader?

Hi, I use Tickmill for MT4 accounts due to their spreads, execution, ease of payment and transactions... Just a very good broker...

I also have accounts with Dukascopy but they use a platform called Jforex

I personally believe that most brokers are useless bar a few... (it was extremely hard to settle on the two that I have)

I think even less of South African brokers... I have yet to see one that is credible and anything more than a bucketshop masquerading as a credible institution...

 

[DemonKnight]

Thanks. I will have a look at Tickmill and keep an eye on this thread

Whereabouts are you based?

 

[FxJalarupa]

As a rule you would increase your odds of being correct by trading off a large time frame extreme...

Think back to the very nature of PRICE over TIME...

It has an OPEN a HIGH a LOW and a CLOSE...

Group these time series together and you will see price make a HIGHER HIGH and a LOWER LOW...

Look far enough to the LEFT and price may even make its HIGHEST HIGH or LOWEST LOW!

Price moves THOUSANDS of pips in a YEAR, HUNDREDS of pips in a MONTH...

If you think about it logically, you just need to get your direction right by trading from supply to demand and vice versa... And position yourself at the HIGHER LOW of the MONTHLY CHART in the DIRECTION of MOMENTUM (if trading long of course) and you set yourself up for massive easy gains...!

No indicator necessary, no system, just common sense to trade away from exhausted order flow in the direction of momentum...

That is what it means to trade off of an extreme... You get staying power, knowing the market has to work incredibly hard to take you out...

Take a while to ponder this in its simplicity...

 

[FxJalarupa]

Bringing it all together... into something workable

Right so let's look at a way in which we can apply some of the stuff we have covered...

So above is an interesting look at Momentum breaking out of a yearly high (HH) only to pull back to the origin of the breakout... Price then forms a small tight range and we get another Momentum event that pushes price past the top of the range... Price then pulls back and unleashes the fury of bid momentum pushing the USDJPY to multi decade highs!!!

These highs obviously represent Supply on a VERY LARGE SCALE and have provided wonderful selling opportunities as we trade back towards Long Term Demand...

Look at where we ultimately find Long Term Demand...?

The HOOK created by the pullback into Momentum(2 years ago) allowed for a price level where price stopped pretty much on a dime!

And what are we seeing but a return of Momentum!

As you can see price given us great Breakout Momentum (MB) and is now looking to slowly start coming back towards the origin of the breakout - taking the poor souls that are still holding onto their gains to ZERO!

But as any good analyst, we need to ask the right questions like...

The answer to this question forms the basis of our next lesson

I hope that what is being presented here is making sense, and that you can see that it has real world application across all markets (NOT JUST FX)

I'm going to ask the question now...

Are you ready to move on or should we tackle some of the concepts covered in more detail to address any confusion out there?

 

[FxJalarupa]

Hey FxJalarupa, I sold GJ & AN in the week made about 950 pips. TP Friday just before the market closed (I Like closing my books weekly). Sold EU @1.1450 SL 1.1500. Bought me a R5 ice cream cone at Steers for all my hard work

PM me, I'm looking to sell XAUUSD / XAGUSD this week also buy AN

Welcome to NFP Week

That's fantastic Snoop!

I was watching the GJ on the weekly, but was rather preoccupied by Cable...

The GJ was the perfect short... you can see a Hook (top Line) as well as a Price Momentum Candle Open (MB)

Beautiful Trade...

Remember a few weeks ago we were trading GA short... Look where and WHY it stopped... Same reason that GJ stopped... LONG TERM PRICE LEVELS hold the greatest weight...

Your EU trade is also spot on the money from my analysis (although I'm also eyeing a massive supply level at 1.1560, and the momentum going into your level has me a little spooked... Whats your secret for picking your levels...?

In terms of your planned shorts on metals, I hope you are planning on a well timed entry... With the Fed's language for last weeks FOMC means that Rate Hikes are back on the cards (possibly June)... One would think this is bad for Gold but the short term may not prove to be so... I watched a very interesting interview with Jim Rickards - You may wanna give it a hit...

[video=youtube;wxow1Jowos0]https://www.youtube.com/watch?v=wxow1Jowos0[/video]

 

[FxJalarupa]

You mean their clients lost... It's a well known fact that Goldman trade against their clients...

 

[FxJalarupa]

Ironic seeing as Yen, Euro and Yuan have gone bid of late...

 

[FxJalarupa]

This has been happening for years... everyone does it... even the ECB... I remember clearly seeing the markets move BEFORE Draghi gave his famous "at all costs" speech...

The game is rigged... and you are not party to their information... HENCE you need to learn to trade in such a way that they cannot defeat you...

 

[FrankieK]

Not FX related but my star performer recently:

 

[FxJalarupa]

FxJ how is your long ACHF trade doing?

my position is Sound... Solid like a rock...

I'm looking to add at the first sign of support... (momentum and return to breakout)

Remember just because someone is in one position, it doesn't mean that their bias is only one direction... We hold onto good positions and we use profit held in those positions to scale other strategies...

Trading is all about managing risk at the end of the day...

If I make 300 pips and my stop was 100... I now technically have 400 pips... At the same risk % That my initial 100 pip stop loss trade was positioned as (hope you following this)

So if you now have 400 pips you have profit that you can use in your next trade to maintain risk relative to your initial tolerance for risk, whilst scaling your next trade to use profit to your advantage... This is called gearing profit while keeping risk relative

So I now take this 400 pips and compress it into 100 pips and use that lot size in my next trade...

I can do this with profit taken or profit held... Or I can double my initial position (if the market is still moving in my initial direction) and halve my original stop loss amount relative to my new average entry price...

Trading is all about options... Not blind faith... If you see different then you do different...

 

[Ciscodarkie]

Evening speculators , Say my first deposit will be +-2k, i'm a newbie with about 3 months demo trading experience.

I have been researching the Brokers recommended in this thread and others online, i need to know which leverage to use to suit my risk.
I understand the purpose of leverage but which to use is were i get stuck.

 

[brucem]

Evening speculators , Say my first deposit will be +-2k, i'm a newbie with about 3 months demo trading experience.

I have been researching the Brokers recommended in this thread and others online, i need to know which leverage to use to suit my risk.
I understand the purpose of leverage but which to use is were i get stuck.

In my opinion their advertised max leverage is irrelevant, as you should trade well within that. If you're anywhere close to their max, you're not trading, you're coin-flipping

 

[FxJalarupa]

A note on RISK...

You can gear your position size to max risk ONLY by reinvesting gains (profit) treat your trading business like a real business to leverage your profit...

This gets done via the mechanism of STOP LOSS Size...

If you increase your STOP LOSS SIZE then you are decreasing your position size... if you decrease lot size then you are increasing position size...

If you trade 1 lot and you make 100 pips... You now have 100 pips at 1 lot worth of risk...

If you wanted to gear this position, it can be quiet simply done by doubling your lot size and halving your profit... Now you are trading 2 lots for a 50 pip stop... or 4 lots for a 25 pip stop...

We are literally taking money made and creating a multiplier effect from it... In other words, we remove attachment and fear of loss by reinvesting and gearing other peoples' money...

at 4 lots at 100 pip gain you now have 4 times the reward for the same amount of risk...

Think of the charts as a chess board... each tile is a piece of the battle ground either lost or gained... your lot size determines the size of the tile relative to your whole regiment (account size) if you gain 3 tiles then you have three tiles that can be placed behind your next position to protect you from an attackers onslaught...

Cutting lot size mid trade increases the size of the tiles so if I were trading 3 lots at 3 tiles risk... and I halve my position I then give myself another 3 tiles... so now I have 6 tiles for the same risk amount...

Trading is 90% position sizing... getting this right creates all the difference...

When one starts out, one should BUILD profit and inject this profit into your trades for a greater multiplier effect... This keeps risk relative...

So we risk 1.5% on a trade @ an account of $1000

0.015 x 1000 = $15

$15 @ 30 pips 15/30 = 0.5 Lots

So if you gain 30 pips you gain 1 tile on the chess board... 60 pips gives you 2 tiles... 90 pips gives you 3 tiles...

30 pips = $15
60 pips = $30
90 pips = $45

Should you take 90 pips from the market you have now created $45 of other peoples money...

Should you want to place that $45 of other peoples money to work...

Then you can just repeat the above equation...

$45/30 pips = 1.5 Lots

30 pips = $45
60 pips = $90
90 pips = $135

IF you make another 90 Pips you have now made $135 + $45 = $180 (all for risking an initial amount of $15)

If your Stop gets hit you go back to risking 1.5% of your account and reinvesting that money...

OR if you made $180 you can readjust your risk to 1.5% of $1180 = $17.7 / 30 = 0.6 Lots and start again trying to grow your profit of Other peoples money and letting their losses compound your gains...

This is a very simplified form of the current money management strategy that I employ to leverage gains to great effect...

Some rules with regards to this...

NEVER ADD TO A LOSING POSITION
NEVER TAKE A FULL LOSS (Scale out of a position / or terminate before your full loss can get realized)
CONSERVE YOUR PROFIT (talks to the rule above)