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Tag Archives: trading

I Told You We Would See Fireworks

Fireworks I promised and fireworks we got.

Yesterday was a lovely day for trading. Obama got re elected as i expected, and the dollar weakened as i expected, but then strengthened again. So we had some good trading opportunities.

First trade of the day was Cable short at 16034 down to 16010 for 24 pips.

Second trade of the day was Euro short at 12851 down to 12822 for 29 pips.

Third trade of the day was AUD short at 10463 down to 10421 for 42 pips.

Fourth trade of the day was EJ long at 10193 up to 10216 for 23 pips.

We could have had a lot more pips if we had held our short trades, but as i always say we enter and exit our trades with high probability, and take what the market gives us. Our trading style is all about logical entries and exits. If we get another opportunity to get back into a move we have exited we will take it.

Four trades 4 winners 118 pips. 🙂

If you want to learn how to trade please consider my Forex training and mentoring program here.

Risk Reward In Forex Trading

What is risk reward in Forex trading and how can it help you become a more profitable trader?

Well first off i will explain what is meant by risk reward.

When you are looking for trading opportunities it is important to calculate your potential risk against your potential reward. For example if you are entering a trade with a 20 pip stop loss on a risk reward of 2 to 1, your profit target should be at least 40 pips. If you are entering on a 3 to 1 risk reward ratio your profit target should be at least 60 pips, and so on.

Now if you are using a min risk reward ratio of 2 to 1, you can lose 50% of your trades and still be a profitable trader. If you are on 3 to 1 risk reward ratio you can lose 70% of your trades and still be a profitable trader. If you are losing 70% of your trades though you are doing something wrong, but i am just giving you an example of how risk reward can help in making you a more profitable trader.

Now that is what the books and all the other so called Forex experts say regarding risk reward. What do i say about risk reward? I say its a good method in theory, and you can use it if you are comfortable trading that way, but i look at risk reward in a slightly different way.

If i enter a trade and my logical exit gives me 10 pips i will take them. I will not say, well my stop loss is 20 pips so i need to get at least 40 from this trade because i am trading on a risk reward of 2 to 1. It makes no difference to me about a 2 to 1 or a 3 to 1. Pips are pips at the end of the day, profit is profit. If the market gives me 10 pips i will take them, if the market gives me 20 i will take them, if the market gives me 22.6 i will take them. I enter a trade logically and i exit a trade logically. Whats the point in waiting for 40 pips if you get to 20 and the market turns around and stops you out? You have just let a nice winning trade turn into a losing one. Who wants to use a 2 to 1 risk reward strategy, and feel good about losing 50% of your trades? I certainly don’t. I want all my trades to be winners. I don’t want any losers thank you very much.

Some traders say that losing is all part of Forex trading and you should not feel bad about losing. Well i do feel bad about losing. If i lose a trade its my fault, i have done something wrong, i have made a mistake. I have been too greedy, or i have entered a trade at the wrong point. Or my stop loss has been in the wrong place etc etc. I agree that you should not feel bad to the point where you revenge trade, but you should not feel good about losing trades. All losing trades are losers because of something you have done wrong. Occasionally you will get some unexpected news come out that will kill a trade, but more often than not you lose a trade because you have done something wrong, and you should be able to recognize what you have done wrong, and try not do it again.

I am a perfectionist, and my ultimate goal is to have trading perfection. 100% win rate all of the time. I firmly believe that this is possible, if you have a complete understanding of what the chart is telling you, and you are patient enough to wait for the high probability trades. This is what i do. I trade high probability set ups. Risk reward does not play a significant part in my trading. I understand risk reward completely, but i also understand price action and i can enter and exit the market with precision. I take what i am given and i look for another trading opportunity. This in my opinion is the way you should trade Forex. You enter with high probability, you take your pips and you exit, and move on to the next trade. I certainly do not want to be babysitting a trade all day long waiting for my risk reward to get hit. 🙂

If you want to learn how to trade Forex like the pros, please consider my Forex training and mentoring program here.

Trading Update For Yesterday And Today.

Just a quick update.

Yesterday we took 2 trades. Euro short at 13019 down to 12987 for 32 pips.
We also took AUD short at 13098 down to 10375 for 23 pips.

Today we took euro long at 12926 up to 12963 for 37 pips.

Not much movement over the last few days so trading has been quite hard.

I think we will see some decent moves tomorrow though. Hoping for some nice trades early on.

Trading Update.

We did not take any trades yesterday as we did not see any decent set ups. If we do not see a high probability set up we do not trade, its as simple as that. I am not going to trade just for the sake of trading.

The object of what we do is to take as much profit from the market as possible when the odds are in our favor.

Having said that we did miss a Euro long trade by around 3 pips which was annoying, but we don’t chase trades so we let it go. We enter trades at the best possible entry point to enable us to make as much profit from the move as we can.

Some of these high probability trades will only give us around 10 pips, so we do not want to run the risk of chasing after a trade when its missed our entry by 3 or 4 pips just to try and make 5 pips. If the move reversed on us we would be playing catch up, and that’s not the way we trade.

Today was a better day. We took 2 short trades one on AUD and one on Euro, and banked 24 pips. Trades are below.

DEAL 30/10/12 Spot FX EUR/USD DFB 12971.5 12960.2 +11 pips
DEAL 30/10/12 Spot FX AUD/USD DFB 10381.8 10368.9 +13 pips

The market was not particularly good trading today. The US had very limited trading because of the hurricane Sandy, so volumes were pretty light. I don’t think this week is going to be a very good week for trading at all with the US problems. We set ourselves a weekly target of 100 pips profit. We should easily do that but i will be surprised if we get over 200 this week. We only trade 4 pairs so we are limited on what we can achieve.

I am considering adding another couple of pairs to mix, or maybe some commodities. I will keep you posted on that.