How to Become a Professional Forex Trader

How to Become a Professional Forex Trader (Step By Step Guide)

I am pretty sure you have seen those traders on the Internet who claim Forex has indeed worked for them, how it made them rich overnight; those traders who will use every opportunity they get to show off the lifestyle forex trading afforded them.

If you want to know how it works or you want to know the steps required to start trading then this article will teach you everything about Forex trading.

Why people are interested in Forex

You can work from home on your pajamas, or anywhere you want, you can simply just open your laptop or cell phone and log in to your trading platform and start trading.

The primary reason most people are so interested in Forex is money. I love money and I’m sure you do too, that’s why you are here, right? Otherwise, you wouldn’t be here on my side reading this post. It’s true, professional traders to make money, a lot of it.

Traders like Bill Lipschutz make millions of dollars in profit every year. You can too. However, like any other career, forex trading is not easy and most defiantly not a get rich quick scheme.

What is Forex trading?

Forex is an acronym for foreign exchange – The largest and most liquid financial market in the world with a daily currency trading volume of more than $5 trillion, yes more than $5 000 000 000 000 is traded daily, at least $200 billion is traded per hour.

What is traded?

When people say they trade Forex, they simply mean they buy and sell different types of currencies through online brokers or banks since currencies are traded in pairs this means you simultaneously buy and sell currency pairs.

Forex currency pair quotes

Currencies are always quoted in pairs, like EUR/USD, NZD/USD, CAD/JPY, etc…

The reason for this is because in any Forex transaction you are simultaneously buying one currency and selling another. Below is an example of a Forex rate for Euro vs. US dollar (EUR/USD)
The first listed currency on the left before the slash mark is called a base currency, while the second currency after the slash mark is called a quote/r currency In the example above.

If you were to buy the EUR/USD pair, this means you would be buying the base currency (euro) and simultaneously selling quote currency (USD).

By buying this pair (EUR/USD) means you believe the Euro will strengthen against US dollar and if this is true, you would then make money.

The opposite is also true if you were to buy this pair but then USD strengthen, you would then lose money.

You would buy this pair is you believe the base currency will go up relative to the quote currency or sell this pair if you believe the base currency will lose value relative to the quote currency.

When buying, the exchange rate tells you how much you need to pay in units of the quote currency to buy 1 unit of the base currency.

In the example above, you have to pay 1.16685 to buy USD when selling, the exchange rate tells you how many units of the quote currency you get for selling 1 unit of the base currency .in the example above, you will receive 1.16685 USD if you sell 1 euro  

The Base currency is the basis for the trade.

If you buy EUR/USD you are buying euro’s (base currency) and simultaneously selling dollars (quote currency).

if you sell   EUR/USD you are selling euro(base currency) and simultaneously buying a dollar (quote currency) so basically, this means whether you sell or buy a currency pair, it’s always based upon the first currency in the pair called the base currency.

This can be confusing in the beginning but once you start learning about Forex you will see how simple it is.

Who Participates in the forex market?

·         Banks

·         Governments

·         Corporations

·         Brokers and other related financial institutions

So, what about us? Individual traders like me and you are called retail traders, and in orders for me and you to participate in the Forex market we must first register through Forex brokers or banks

How do Forex traders decide when to buy or sell?

There are two ways to go about buying and selling currencies the first one is called “fundamental analysis” The second one is called “technical analysis”.

Fundamental traders use economic reports, social and political forces that drive supply and demand. Such as interest rate, inflation reports, employment growth, etc to make trading decisions Price move primarily based on supply and demand whereas technical traders only use charts and indicators.

Both of these strategies are taught here on this side. You will find all the information you need to trade profitably.

Which one is batter, fundamental or technical analysis?

Both fundamental and technical analysis is important. Both options will make you money if you take your time to learn them. However, in my humble opinion, I find technical analysis to be the easiest, this way I don’t have to keep up with the rest of the world and read news all the time, it is just not my style.

I like to keep things simple. The only thing I am concerned with is reading the price on a chart. That’s me though. Like I said earlier, every trader is different.

There are many trading strategies out there, also on this website, just find the one that you prefer and like.

What is the best time to trade Forex market?

The Forex brokers market operates 24 hours a day. This is established through the 3 major trading sessions:

1.      Tokyo session,

2.      London session and

3.      US session

The fact that the forex market operates 24hours from Monday to Friday doesn’t mean it’s always busy all the time. Below is a table of the open and close times for 3 major sessions

If you look at the table you will notice that in between each session there is a period of the time where 2 sessions are open at the same time.

The best times for Forex trading are those times of overlapping money center trading? From 2am to 4 am EST. both Tokyo and London sessions overlap and from 8 am to 12pm EST.  both the London and US overlap.

These are the busiest times during the market because there is more movement between the currency pairs when two sessions are open at the same time. Also, the European session is the busiest session compared to other sessions.

Are these sessions important to you as a retail trader?

My simple answer is yes and no

If you’re a scalper or a day trader then yes these sessions are important because when you trade, you only hold a position for few minutes or hours so you want to trade when there is volatility otherwise you would be wasting your time and money trading when there is no movement in the market.

NO, if you are a swing trader like me, I don’t really care much about volatility and sessions because I hold my trades for days, week or even months.

What are the best days to trade the Forex market?
 

As you can see:  from Tuesday till Fridays afternoon is where the most movement is seen. Mondays are usually slow and Fridays are usually busy until 12:00pm EST. Based on this information, if you’re a scalper or a day trader, it’s best to trade when 2 sessions are overlapping also during the week from Tuesday until Friday afternoon.

How to become a Forex trader

1.      The first thing to know about Forex is that it takes money to make money. You must be willing to risk your money. If you hate to risk your money, you probably want to stay away from the Forex market.

2.      You must know that you will not get rich overnight. You have to learn and master the financial market, the basics, the behavior of the price, trading strategies and that will not happen overnight

Step by step guide to learn the fixed market

Step 1: learn the basics

The first step toward Forex trading is education.   If you are interested in Forex trading, you got to learn first. Research online, you can buy e-books and read if you want, find a mentor to teach you (if you can afford one).

Know different types of markets that can be traded. Understand fundamental analysis. Learn about technical analysis and decide which one you prefer.

Master your trading platform.

The best part is that all the information you need to trade successfully can be found online. Heck, all the information can be found here on this site for free.

Read the following articles to get started

Don’t rush to open a live trading account and start trading with your money. These things take time to learn, believe me, fortunately, all the information you need to know before you can start trading can be found online for free. Heck, you can find a lot of free information from this side too.

Step 2: choose your trading style

Do you want to be a scalper, day trader, or swing trader? What trading strategies do you like most? Do you want to trade Forex full-time or part-time? These are some of the questions you need to ask yourself before choosing a trading strategy.

I don’t know about you but I like to keep things simple that is why I use trading strategies like support and resistance, trend lines, channels, and patterns.

There are thousands of trading strategies out there. Make sure you find the ones that work better for you and follow them. Don’t try to move from one strategy to another.

More trading strategies can be found in the strategy category.

Step 3. Choose a reliable Forex broker

Now that you have become somewhat familiar with how the Forex market works, you know the rules you should follow no matter what, the trading strategies, and whatnot. It’s about time you choose a Forex broker to test everything you have learned so far as a Forex trader. 

Step 4:  Open a demo account with your recommended broker

Demo trading is an important step in the Forex trading learning curve. Sadly, most traders do not take demo trading serious.

There is a lot to learn from the demo accounts. Demo trading is a bit like the flight simulator in aviation. It is a test of the real thing. Therefore, traders should take every aspect of demo trading seriously, In fact, the first and most important rules of a demo account are to treat it like a live account.

You can trade with real conditions but not your own real money, because it is absolutely risk-free.

Demo trading is the best way to get to know the ins and outs of trading and to put your trading strategy to the test. You can discover your strengths and weaknesses as a trader and also master your trading platform.

·         If you can’t afford to open a $50, 000 live accounts, don’t open a $50,000 demo account.

As a demo trader, your job is to simulate the real thing, to create an account with the same starting balance that you would start with when you begin live trading.

Problem with big demo accounts like 50,000 is that you will make a lot of profit, sometimes you will make $10,000, $15,000 or even more per trade then once you go live you  open a $1,000 account and expect to make the same profit you made on demo then you start using bigger lots sizes. This is the best way to blow your account.

·         Trade as you would trade in a live account. Do not open trades for the heck of it.

·         Apply position sizing on each and every trade you place on your demo account.

·         If you’re a fundamental trader, trade the news the same way you would trade a live news event on a live account.

·         If you’re a technical trader, apply the same rules you would use on a live account.

·         Have a trading plan and follow it as you would on a live account.

·         Trading with a demo account before trading with a live account is crucial for new traders.

Step 5: Going live

Now you have practiced all your trading STRATEGIES on a demo account, you know the things you shouldn’t do

·         You know how to calculate position sizing.

·         You have a trading plan and follow it no matter what.

·         You know how to use your trading platform, how to place your orders, how to change your templates and whatnot.

·         You have chosen a reliable broker you can trust with your money.

Now that you know the important things you should know, it’s time to deposit your money into your trading account and start trading.

Ideally, your first live account should not contain more than $2000. Starting with $2000 or less in a live account is a pure delusion. Practice emotional control with your first small deposit. Feel what it is to win and lose trades with your own money.

By the time you have gained some measure of experience in this regard, as well as a few other things that you can only learn by live trading, if you can double or triple your money without breaking any of your trading rules you can then confidently step up your trading capital knowing that you can handle it.

Going live is the most difficult part in currency trading. Most people can make money on a demo account but once they start trading real money everything changes.

I know a lot of traders that have been trading Forex for years yet they can’t make money consistently- they keep making money here and there but end up giving it all back to the market because they can’t control their emotions, they get greedy, they want to get rich quick, etc…

These are the reasons why I decided to create a private room to help both new and advanced traders to trade profitably

Forex Trading Rules You Should Never Break 

1. Understand the game before you play it

New traders rush to open live trading accounts without understanding how the forex market works because they heard how it will make them rich fast.

Don’t be that person who rushes to open a live trading account and start trading without understanding how the Forex market works. You will lose all your money!

Invest your time and money in learning. There are a lot of learning materials out there. In fact.

2. Find your own trading style

There are millions of trading methodologies out there. Find the one that is right for you and stop moving from one strategy to another.

  3. Stop searching for “holy grail”. 

Most people think that there is some magic strategy. They honestly believe that there is a strategy that will make them not to have losing trades, therefore, they constantly move from one strategy to another, trying to discover the so-called “holy grail”. You never go to find it because such secret doesn’t exist.

4.  Use position sizing

Most traders are risking way too much, they take 5- 10% risk on a single trade when they should be risking 2% or less per trade.

5.  Use stop loss all the time.

Using a stop loss goes hand in hand with position sizing.

Your stop loss represents the level that, if reached, you are forced to get out. Make sure you master position sizing and use it all the time.

6.  Cut your losses short and let your profit run.

This sounds obvious but you will be surprised how many traders get this one wrong.

Most trades hold on to their losing trades for too long and hope that the price will soon reverse, but they are way too fast to take profit on a winning position.

This strategy is completely the opposite of what trades should be doing.

7.  Choose your broker very carefully

If you are going to trade, you need a brokerage account, there is no other way. Unfortunately, some brokers are after your money.

Your loss is their profit so be very careful when you open a trading account. Here I wrote about the important things you should look for when you open an account with a broker.

8.  Know your risk vs. reward ratio

I personally don’t take a trade unless the risk-reward is 1:4 or more

If you don’t know what risk: reward ratio I, this post will help you understand the importance of risk: reward ration.

“If you don’t have a competitive advantage, don’t compete.

9.  Trade with a plan

A well-conceived plan is a set on rules that determine when to enter a trade when to exit, how much you willing to lose on that trade, how much you’re going to make.

Every trade needs to have a trading plan otherwise they will not last very long. If you not sure what a trading plan is all about then make sure you read this article below.

10 Don’t revenge trading

Revenge trading is when you increase your lot size after taking a few losses because you want to bring back the money you have lost in your previous trades

Revenge trading can turn a $100 loss into $1,000 loss

11.  Be patient

Be very selective when it comes to your trades. Being selective means you are patient enough to wait for higher probability trades.

Just because you’re a trader doesn’t mean you should be trading all the time.

12. Protect your money

Your primary goal is to make money, not to lose it. The only way you will ever be able to protect your money is to use rule #4.always!

13.  Know where to get out before you get in

You should know where to put your stop loss, and where to place your take profit target before you take a trade.

That allows you to define your maximum possible draw-down. This is why I strongly recommend price action trading.

14.  Keep it simple

A lot of people (including myself at one stage) think that in order to trade successfully, you must use complex strategies. This is far from the truth.

Keep it simple and trade with price action.

15. Focus on high time frames

The shorter your time frame, the less money you will make.

The price can only move so far in 5 minutes chart than it can move further in 15 minutes chart, even more, and lot more in a daily or a weekly chart. It takes time to grow your profit.

16.  Keep a trading journal

A trading journal is a collection of your trades: you’re before and after trades, the reasons why you took the trade, how much did you risk, how much did you lose/ win.

A trading journal will enable you to see at a glance just how discipline you are in your trades. That way you will be able to see the mistakes you make and learn from them

17.  Trade with an edge

An edge is all about how you trade, the trading strategy you use, the time frames, risk-reward ration, how you carefully select your trades, how you make your trades, etc.

18.  Accept loses as part of the game

It’s very important that you learn to accept loses as part of trading.

The trick is to lose less and win more-cut your losses short and ride your profit. If your trade goes against you, get out as soon as possible.

19.  Learn from your mistakes

Most trades spend thousands of dollars donating to the market and the worst part is that most of these traders know exactly what they should be doing to avoid losing their trading accounts, yet they keep committing the same mistakes over and over again.

20.  Maintain discipline

This is it- the most important and very difficult thing to master.

You can have the best trading strategy in the world, but if you are not disciplined, you never going to be able to achieve success in the long run.

Forex trading success has a lot to do with your emotions, If You can master that, and success will come chasing you.

Trades like Richard Dennis, Paul Tudor Jones, Josh Brolin, and Louis Bacon, to name just a few. These trading legends were able to succeed through discipline while learning from their mistakes and managing intense psychological pressure. You too can make it.

There you have it folks-Forex trading rules you should never break.

“IF you can, help others; if you cannot do that, at least do no harm to them.

10 Important Question to Ask Your Forex Broker

Finding the right online Forex broker you can trust with your hard-earned cash is not easy and requires some real work on your part. It’s crucial that you choose a reliable broker.

Here, we look at the most important things to check before you can open a Forex trading account with an online broker.

Finding a reliable online Forex broker is vital, you need to a choose a broker that will meet your individual needs as a trader. If you don’t know what a Forex broker is, here is a short explanation.

What is an online Forex broker?

A broker is a company that buys and sells orders according to the trader’s decisions.

They act as the link between you and the Forex market or any financial market for that matter.they provides you with all the tools you need to trade online. Brokers earn money by charging a spread or a commission for their services.

 Your Forex broker has a very important role in your success. So, it’s important that you choose a reliable broker to avoid troubles 

Here are the things you should look for when choosing a Forex broker:

1. Is the broker regulated?

When choosing a prospective Forex broker, make sure you choose a regulated broker.

A regulated broker means by law your funds are held safe.

Unregulated brokers can do as they want with your money. Some brokers can even block your account after you have deposited your money.

This is definitely something that you want to check first before anything else.

So, make sure you safe and go with a regulated broker.

2.  How long has the broker has been in the business for?

If a broker has been around for more than 5 years, that means they have customers and that means they are good at what they do.

I am not saying you shouldn’t open an account with new brokers and they can’t be trusted but if you are going to open an account with a new broker you must be extra careful.

3.  How is their service?

Forex is a 24-hour market; therefore a 24-hour support is a must!

To test their services send them an email and see how long it takes them to reply. If they take more than 24 hours, you might want to stay away from them. Your broker’s support needs to be available from when the Forex market opens 5:00 pm EST. Sunday through 4:00 pm EST Friday.

Having a reliable broker means knowing your brokers is always there to help you should you need them.

4.  Online Trading Platform

Every trader is different, I enjoy trading with meter trader 4 (MT4) platforms, and unfortunately, not all brokers offer this platform. Therefore, I wouldn’t choose a broker that doesn’t offer this platform.

Also, I don’t only trader currencies; I also trade commodities, shares, indices. So if a broker doesn’t offer all these things then I won’t choose it.

Make sure you choose a broker that has all the tools you need. The broker you choose must have a wide range of products.

5.  Do they have micro and mini Accounts?

If you are a beginner, it’s probably best to start off small with a micro account until you’re sure you know what you’re doing. Unfortunately, some brokers do not offer micro and mini accounts.

These little accounts are a great way to get started and test your trading skills and strategies to gain experience. If a broker doesn’t offer micro account don’t open an account with them.

7.  Minimum deposits

How much can you afford to deposit into your trading account?

This question is also important because minimum deposits differ from one broker to another.

8. Do they offer low spreads and commissions?

In Forex trading the ‘spread’ is the difference between the buy and sell price. That’s what you pay your Forex broker each time you place a position.

Now, I don’t know about you but the primary reason why I trade Forex is to make money, therefore it’s only important that I keep my costs as low as possible.

6.  Instant automatic execution of your orders.

This is also important when choosing a Forex broker, especially for scalper and day traders. Don’t settle with a broker that doesn’t invest heavily in infrastructure.

8.  How easy it is to withdraw your money?

For your benefit and convenience, it is important to choose a Forex broker that offers quick and easy deposits and withdrawals. Some brokers are very quick to take your money but when you have to withdraw it takes forever. Withdrawing should be quick and easy too.

They must also have multiple ways to fund and withdraw money from your account.

10.  Are they reliable?

It is very important that you choose a broker that meet your needs and most importantly, choose a broker that is reliable. When opened a trading account make sure you go with a well-established broker.

Read online reviews to find out what other traders are saying about that particular broker, deposit small funds and see how long it takes, how much they charge for spread and commission, how quickly your orders get filled, how easy it is to withdraw your profit, etc…

What Is Correlation Of Pairs And How You Can Use It In Your Favor

 Currency correlation

If you have been trading Forex for a while and paying a closer look into how currency pairs move, you will notice that most of the currency pairs are related to each other somehow.

In this article, I want to focus on currency correlation: what is it, and how you can benefit from it.

It is essential that I start by explaining what currency correlation is, then later in this article you will learn the importance of currency correlation and how can it help you to make your trading decisions and avoid making the same mistakes most traders do.

Let’s get started…

What is currency correlation?

Currency correlation is a relationship between two or more currency pairs that either move in the same or different direction at the same time.

Currency correlation is divided into two groups: positive and negative correlation.

  

Positive correlation

Currency pairs that move in the same direction at the same time are called positive correlation.

For example, EUR/USD and GBP/USD tend to move in the same direction most of the time

Meaning if EUR/USD goes up, GBP/USD will also go up, just the direction and level slight differ, otherwise they both move in the same direction, therefore they positively correlate.

Negative correlation

 Currency pairs that move in the opposite direction at the same time are called negative correlation.

For example, EUR/USD and USD/CHF:

When EUR/USD goes up, USD/CHF takes the opposite direction, and vice versa.

Understanding currency correlations can help you avoid making careless mistakes that can cause you to blow up your trading account.

When I was novice trader, I didn’t know what currency correlation was and I would sometimes sell or buy EUR/USD and USD/CHF at the same time not knowing that these two pairs negatively correlate.

One pair would be in profit and the other will lose and I would end up with a negative in my account because I have to pay spread as well.

Even worse, I would sometimes take multiple trades that positively correlation each other and if one pair goes against me, they all end up doing against me and end up with a huge loss in my Forex account.

How the correlation of pairs can help you

Currency correlation can also help you predict the direction of currencies. How?

We already know that if EUR/USD and GBP/USD go up, USD/CHF and USD/JPY will take the opposite direction or vice versa. So if you see a sell signal on EUR/USD and on GBP/USD, you can also check USD/CHF and USD/JPY, if they both also show a buy signal too, then your analysis is more reliable.

However, it’s advisable to not take them all at the same time because if you take all 4 of them and 1 go against you, the other pairs are most likely to go against you as well.

By so doing you’re putting your account at risk, you could end up losing more than you intend to. However, if you’re correct on 1 pair, you are most likely to be correct on the other pairs too.

Currency correlation doesn’t stay the same

Currencies are very dynamic, they change over time. Pairs that strongly correlate today might change tomorrow, next week, or few months, or even next year.

Because correlations of pairs tend to change, you might think you will grow your account fast by investing in different pairs, not realizing that most trades correlate. If you like trading multiple trades at the same time, it’s prudent that you learn to calculate currency correlation yourself.

What’s the Best Way to Grow Your Trading Account

Most novice traders think that to constantly make money in the market you must have a trading strategy that produces winning trades all the time but that isn’t true.

In fact, most professional traders make money on only 30-40% of their trade. Most traders have more losing trades. That’s a fact!

I also have more losing trades than wins.

To put this in perspective. Out of 10 trades I place, 6 of them are losses, only 4 wins…however my trading account keeps on growing. How is that possible? Well, you are about to find out!

Here, I want to show you something that most novice traders are not aware of. Something called the risk/reward ratio.

WHAT IS RISK/REWARD RATIO?

Risk/reward ratio is about how much you risk per trade versus how much you can make in profit if you are right.

For example, if you risk $200 to make $800 then your risk: reward ratio would be 1:4. You risk $200 to make 800 returns.

Let’s assume you have $10,000 account and you decide to risk only 2% per trade you take, meaning you risk $200 per trade.

For the sake of this example, let’s say you have a risk/reward ratio of 1:4 (for every dollar you risk, you stand a chance to make $4) but your winning rate is 40%.

So, out of 10 trades, you have 6 losing trades and 4 winners...

Let’s do the maths and see how much you will make/lose after 10 trades…

·         You place your 1st trade and it goes again you, you lose $200.

·         2nd trade, It hit your stop loss and you’re out with another loss of $200 loss 

·         3rd trade, it goes as anticipated and you make $800 profit.

·         4th trade, another Loss of $200.

·         5th trade, you make a profit  $800

·         6th trade makes you another profit of $800

·         You now place you 7th trade, you lose $200

·         8th trade, lose  $200

·         9. Lose again $200

·         10th trade, you Make $800

You took 10 trades: 6 were losing trades and 4 were winning trades.

This means your percentage win ratio is 4/10 or 40%.

Now, let’s look at how much you are left within your terminal:

Total Loss = $200×6 = $1,200

Total Gain = $800×4 = $3,300

Net gain = $3 200 -$ 1 200 = $ 2000

In this example, you can see that even if you only won 40% of your trades, you would still make a profit of $2,000. Just remember that whenever you trade with a good risk/reward ratio, your chances of being profitable are much greater even if you have a lower win percentage.

Now, imagine how much you could make in a long run as your account keeps on growing. Let’s say after a few months you are able to double your account to $20, 000 and decide to risk 2% of $20 000 meaning you now risking $400 per trade. Few years down the line you will be making a killing.

In this example, you can see that even if you only won 40% of your trades, you would still make money. This proves that you don’t really need to be right most of the time to make money.

Risk reward ratio is a very good approach. A trader can be wrong 10 times in a row and cover all the losses in 1 or two trades.

“It’s not whether you’re right or wrong that is important, but how much you make when you’re right and how much you lose when you’re wrong.

I’ve included one live example (before and after) of a short trade I took a few months ago on NZD/JPY before I wrote this post to show you the beauty of risk: reward ratio

I was anticipating a down move from 83.685 to 73.904 meaning I was expecting to make +900 pips should the price go my way.

Let’s see what happened after…

As you can see, the price went as I expected. However, I was stopped out with only +610 pips.

Here is the interesting thing though about this position:

When I entered this trade I placed a 30 pips stop loss so this means I risked 30 pips to make 600 pips meaning my risk: reward ratio was 1:20.3

-this is possible if you’re disciplined enough to use position sizing all the time and Learn to let your winners run and cut your losses short.

By now I hope you understand the risk/reward ratio.


When Is the Best Time to Move Your Stop Loss?

One of the best things I like about forex trading is that it allows us to set a stop loss for each and every trade we take to help us minimize our losses should the market price go against us.

In this article I focus on stop loss, where should you place it when you enter a trader when you should move it to break even and also when you should move it to lock in some profit

Even been in a trade where your stop was hit just right before the price turn and go in your anticipated direction? Well, I have, many times that I even lost the count.

I have been in a lot of trades where price hit my stop loss then reversed and moved in my direction for hundreds of pips

This trade was based on the trend line. I placed a 40 pips stop loss in return for +700pips (1:17 risk: reward ratio)

Let’s see what happens next…

The price moved in my anticipated direction for +200 pips right after I took the trade.

So I decided to lock in at least 100 pips by moving my stop to 0.98842. Guess what happened next?

The price reversed and hit my stop loss and I was out with only 100 pips (1:2 5 rations)

After my stop loss was hit, market price dropped +650 pips from my entry point.

Look at the chart below to see what I am talking about.

This is why it is very important to understand the behavior of the market.

Make sure you read this post before you continue with this one.

Understanding the market structure will make things much easier for you.

 Back to this one…

Why did I move my stop loss too soon?

Well, why did I move my stop loss too soon? Was it because I didn’t understand the market’s behavior? It must be that, right?

Wrong, not even close. I’ve known a long time ago how the market move.

There are 3 reasons why I moved my stop loss too soon: discipline, fear, and greed.

You see, I wasn’t disciplined enough to use money management in the first place, so  I got greedy and used a bigger lot size.

If you use bigger lot sizes, even a small move against you will cause you to lose a lot of money.

fear will also cause you to make careless mistakes – I’ve been in a lot of traders that went in my anticipated direct + 100 pips or more only to reverse later and hit my stop loss and leave me with a  negative balance. So when this happens to you, you become more cautious and try to avoid it next time by moving your stop loss too soon.

So, how do we make sure we don’t get stopped out prematurely

When is the best time to move your stop loss? The only best way I know to avoid this problem from happening is to use peaks and troughs.

Let’s look at the downtrend movement

For a market in a downtrend, use swing lows for protective stops.

Let’s look at the AUD/CAD example one more time to see how I should have moved my stop loss.

In this example, even though my take profit target wasn’t hit, I would have still made a lot of money, at least 490 pips instead of 100 pips.

For a downtrend movement, the best way to place your stop is to wait for the market to form a peak, and then use that peak to place your stop.

Ideally, as soon as you enter a sell position, place your stop loss 20-40pips above your entry level.

Don’t move your stop loss until the market reverse and form peaks then continue to move up. Continue to move your stop loss to recent peak until your take profit target is hit.

Usually, when market price reserve and pass the previous peak, this could be an early warning that the trend is about to change.

Uptrend movement

For a market in an uptrend, wait for a pullback to form before you can move your stop loss.

Basically, as soon as you enter a buy position, don’t move your stop loss until the market reverse and form a trough then continue to move up. Continue to move your stop loss to recent peak until your take profit target is hit.

Break out of a previous trough could be an early signal that the trend direction has changed.

See the chart below.

Trading Strategies Dan Zanger Used To Turn a $10,775 Into $42 Million In 2 Years

Up to this day, Dan Zanger still holds two world records for the largest annual stock market return. Here in this article, I want to show you how Dan Zanger trades the market but before I show you the trading strategies he used to turn a $10,775 account into $42 million in two years here is a short summary of who Dan Zanger is.

Who is Dan Zanger

Zanger grew up in the San Fernando Valley area of Los Angeles. He started college but dropped out to snow ski for a few years in Colorado and Idaho. Had a few odd jobs, such cab driver and prep cook to support himself during his early twenties.

Eventually, he moved back to LA and started working for a landscape company and eventually got his California contractor’s license. 

He ventured into pool building in Beverly Hills as an independent contractor where he made a modest living from then.

His mother Elaine loved the stock market and Dan would often watch the business channel with her. One day in 1978 Dan saw a stock explode across the ticker tape at the bottom of the screen hitting $1. He made his first purchase and sold the stock a few weeks later at over $3. From that sale on, he falls in love with the financial market and started trading part-time.

After blowing his trading accounts 3 times, 1997, Dan decided to sell his Porsche for approximately $10,775 to have the necessary capital to trade the market full-time.

In just 18 months, he parlayed that $10,775 into $18,000 000, after 23 months his account was already seating at $42,000 000. That’s record-breaking of 29000% in 12 months and 164000% profit in 18 months periods, respectively.

With this success, Dan Zanger was able to become a full-time trader and leave contracting behind.

Dan Zanger’s trading strategies

Dan turned $10,775 into $42,000,000 in about 2 years using nothing more than chart patterns, price, and volume- the very same trading patterns available on this website.

He combines chart patterns with fast-growing companies that boast great earnings and revenue growth. These stocks then go on to yield big returns of sometimes a few hundred percents or more.

Dan uses reversal chart patterns like the Head and Shoulders, Double Patterns, Triangle Chart Patterns, and other famous patterns.

These are some of the simplest but very powerful and reliable patterns. If you want to trade these patterns make sure you learn and master them. You will thank yourself one day.

 If you can’t wait for good setups, you will be ready for them with less cash to trade – Dan Zanger 

What can we learn from Dan Zanger

Dan Zanger’s story teaches us that trading doesn’t really have to be complicated as most novice trader believes that to trade successfully one must have a complex trading strategy. This is one of the reasons why I love pure price action trading.

Dan blows up his account 3 times but he never changes his trading strategies or gave up because he believed in his trading strategies and learned from his mistakes. Unlike what most novice traders do-keep changing strategies.

Dan might have made a lot of money in a very short period of time but he spent ±20 years studying every type of chart pattern formation imaginable. New traders should invest their time in learning to trade and not rush to open live accounts.

One Trade Explain What Confluence Is

By the end of this tutorial you will know what is confluence, why is important and how to use it in the financial market. Without wasting any time let’s get straight to it!

What is confluence?

Confluence means a coming together of things

In the financial market, Confluent occurs when 2 or more technical strategies or indicators are combined together and intersect each other, thus forming a confluent point in the market.

So, basically, when we look for confluent areas in the market we are looking for areas where two or more levels are intersecting. I’ll show you what I mean by that. Keep reading!

Over the past few weeks, I took a long trade on GBP/USD that made me write this article.

This one buy position on GBP/USD reveals what it means to trade with confluence. Here, you will get to see how I mixed 3 of my favorite price action strategies to give me one higher probability trade.

Below is a buy position on GBP/USD I am talking about.

Looking at the chart carefully can you really tell why I took a long position?

Here is why…

1. TREND-LINE

I first drew a rising Trend-line then waited to see if the price would retrace back to touch the rising Trend-line for the 3rd time. See the picture below.

2. Support and resistance levels

As I was waiting to see if the price will retrace and touch my rising Trend-line, I also noticed that the same level acted as a support level, that’s when I introduced my second trading strategy: a support and resistance level. See the picture below.

Notice price has tested this level more than 5 times in the past?

After drawing my Trend-line and support and resistance level, indeed the price retrace to the level where both strategies “meet”.

At this level, I had two different trading strategies, both showing a buy signal.

3. Candlestick confirmation

At the same level (confluence point) where these two trading strategies met, a Dido candlestick signal was formed. See the picture below

In my personal experience, there is no better indicator than candlesticks.

They are the best and most reliable signals when you combine them with some other Trading strategies like I did here.

Here I used a dildo as my confirmation to enter this trade

4. Mt4 indicators

I am not a fan of indicators but for some traders who prefer to use a combination of price action and indicators, one could have simply added the RSI or stock on the chart as the 4th additional confirmation, which happened to show oversold at that time I took this trade. See the chart below

You can also use other trading strategies/indicators like moving averages or Bollinger but you really don’t have to combine a lot of trading strategies, 3 strategies are more than enough.

Now, the point or level where I entered this buy position was where all these strategies met. That level is called “confluence level”

How this position worked out?

After a dido was formed that was my confirmation to execute a buy trade.

I risked 30 pips for this position and my profit target was 640 pips as you can see on the charts. Fortunately, the trade went as I anticipated and I managed to make 640 pips profit a few weeks later

Of course, trading with confluence doesn’t guarantee you a 100% win rate, that’s a fact. There are no guarantees that confluence will result in profitable trades but confluence can give you higher probability trades.

When you combine trading strategies, and if they come together in the same direction then there is a very good chance that the market will move your way.

You will most likely get less trading opportunities, but you also end up with a higher probability trades.

Should have this GBP/USD position went against me, I would have only lost 30 pips.

This is one of the best things I like about confluence-when confluence emerges, a rather tight stop can be placed with a favorable risk: reward ratio.

Fundamental Trading: Important Things You Must Know Before You Can Decide To Trade News Events

3 important things to know before you can trade the major news events

If you have traded or watched the market during the high impact news events release like NFP or fed speeches You will relate to some of the things you are about to read here.

Don’t forget to share and leave you to comment after reading this post. Enjoy…

#1. Spread increase

Just before or during the high impact news events like spread tend to increase dramatically; you will see a 1.5 pips spread turn into a 15 pips spread in a matter of seconds.

Why spread increase dramatically during the major news events?

Well, Spread increase because some traders like trading the news events, therefore, they will place too many orders during the news, therefore, Forex brokers and inter-bank's will receive too many orders within a very short period of space.

Also, some Forex brokers increase their spread, they do that because they know many traders will be trading, therefore, they want to make more money In a short period of time through the spread.

This is why it’s very important to choose your Forex broker very carefully when you open your live trading account.

#2.Market noise increases during major news events 

During the news release the market price tends to move up and down very fast, it can move 20-70 pips in  a matter of seconds causing too much noise and making it very risky to trade during the news and this causes traders, especially inexperienced traders to lose a lot of money or even worse blow up their trading accounts.

Again this happens because some traders avoid trading during the major news events so they exit and wait till the noise has settled down

While others enjoy trading the high impact news events because it makes them a lot of money in a short period of time.

#3. Pending orders

Ever placed a pending order during high impact news release even? Notice what happen?

If you place a pending order during the major news release, sometimes it will not be triggered or it will be filled at a different price.

Your entry point will differ from the level you set, plus you still have to pay for the spread.

This happens because Market price moves way too fast and pass your entry level, so fast that your broker doesn’t get enough time to fill your order at the exact level. Also, the volatility increases so much that it can skip your stop loss level and cause you to lose even more.

Even though I consider myself as a 100% pure price action trader I still check the economic calendar right before I place a trade due to the bad experience I had in the past that nearly cost me to lose half of my trading account but I don’t let news dictate me when I trade because even those news that is regarded as high impact news- those that are expected to move the market, only a few of those are important and the rest will not move the market reasonable enough if not at all.

Don’t worry too much about the news rather focus on charts-They are your best friends-learn to communicate with your charts, they will tell you where the price want to go and news is only there to help the price get there fast.

I hope that this article has shown how simple it is to combine your trading strategies to give you high probability trades.

BY: OWONIKOKO YUSUF OLUWATOBI

A.K.A: EMRYS