NZD/USD Daily breakout inside bar pin bar setup forms.

The NZD/USD daily charts have thrown up an inside bar, pin bar breakout continuation setup.

To recap we look to see a breakout of a strong key level, which can be seen on the charts by the big bearish candle(mother bar) and then a retest of the key level, shown by the inside bar pin bar. If price breaks the low of the mother bar we could see this continue lower.




Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Heads Up 02/02/2014

Hi traders,
Its been a slow first month of the year, although the markets have been moving nicely back into key levels, they have just not been giving me the price action signals I require to trigger an entry. This is just how the markets work sometimes and learning to accept this is important and will help you from entering trades just for the sake of trading.

 So the pairs I'm following this week are below:
 

 


Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

How to Deal with Losing Trades in the Forex.

Can we avoid losing trades?

The simple truth about trading the forex markets is that there is no way any trader can go without experiencing a losing trade. Getting to grips with this fact will hopefully mean we are able to learn to accept that trades can fail and in doing so should prevent them from having any adverse reaction on our trading. There is no magic formula out there to remove them from trading and so learning to let them become a part of our trading business is the first step we need to take.

The results a trader achieves in their career will never be as a result of any kind of luck, or having a lucky mascot sat on their desk. The forex markets must be viewed as an untameable beast and so trading boils down to a very simple game of probability and learning to find and take the high probability trades is the aim of the game.

The reasons for losing trades.

Trying to trick ourselves into thinking losing trades don’t exist or are a bad habit we can remove from trading is not realistic. Yes, we want to remove the poorly chosen trades and focus our attentions on only taking the very best trades. However, removing them from trading completely is an impossible task and being able to accept losing trades is just a must if we want to move on.

Losing trades can be caused by many different reasons, sometimes they can be due to human error, like taking a trade from a weak level or using a weak price action signal, etc…. but other times the trades that look great, which tick all the boxes, still result in a failure. This can confuse traders because when they spot a great setup they automatically see a winning trade rather than a trade setup that yes may look great and have a high chance of working out but still understand that there is a chance although much lower, that it could fail.

The forex markets are all about playing the probability game and learning which trades have a high chance of being successful and which have a lower chance of being successful and then using this information to give us our edge.

No trade should be looked at as a “certainty”.

How to deal with losing trades

Understanding that losing trades are just another part of trading that we need to deal with, allows us to cope with the losses much more professionally. The reaction to a losing trade should be the same as for a winning trade, the only difference being the outcome. If we enter trades using strict rules and from key levels then the trades we take should be consistently very similar. Remember every trade we take is just another trade in a long list of trades and this should help to give us perspective and realise that we have to take the losing and winning trades equally as well.

The biggest hurdle is to de-personalise the forex markets and removing the emotion from trading, emotions can be very easily added to trading but this can cause a whole heap of bad habits.
If the losing trades leaves a bad taste in your mouth and the winning trades make you feel on top of the world. You are trading with emotion, its fine to feel proud of your achievements but letting the trade results impact on your trading is very unprofessional. We need to keep a cool head at all times.

The markets are not a tool to be used to make you feel good about yourself. If anything they have the power to do the opposite, any weaknesses we possess will be exposed I guarantee.

It’s impossible to know before entering any trade what the outcome of each trade will be and wasting our time on guessing how it will play out is pointless. The simple fact is that the markets are able to do what they like at any point, irrespective of what we think. Once we enter a trade the markets are in control and all we can do is manage the trades to our best ability.

The biggest reason traders can find themselves riding a losing streak, is because they let the first losing trade affect their trading to a point where they start to trade with emotion, these emotions can cause problems like,  a fear of trading or trading to get back the money lost are very destructive indeed and a habit we don’t want to get into.

A losing trade can do all kinds of detrimental things to a trader mind-set, for example, they can lose faith in their technique, or over analyse trades and simply end up just going round in circles. What’s scary is that this downward spiral of over thinking and trade paralysis can happen very quickly and be caused by just one losing trade.

If we experience the feelings that the markets are out to get us or against us in some way after a losing trade, we really need to reassess our mind-set for trading.

Learning to live with the losses.

The fact is we have to learn how to deal with losing trades and accept them as part of being a trader. No single trader will trade without them and so letting the losers come and not allowing them to affect our overall trading style is the big challenge.

If you are unable to stomach the losses then trading is going to be an even bigger struggle. The ability of a losing trade to raise questions about our whole trading technique really highlights if a trader does truly believe in themselves or if they are not really that confident in their trading style of choice.

The best advice I can pass on, is to learn how to draw a line after each trade and start a fresh, trying not to dwell too much on the previous trade and let it affect our overall trading. Each trade is just a number in a long list of trades you will take.


Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Heads Up 26/1/14

Hey traders, the markets are definitely getting a lot more active, which is great news. There are lots of levels to watch over the coming week after some strong moves last week.

A point I'd like to mention and this is directed at the newer traders to the forex,  when we get a strong move and a level gets broken, its very tempting to look for trades setups to trade back into these key levels. This is not something I would recommend to begin with. The counter trend trades are for the more experienced traders.

My advice is to start off waiting for key levels to be retested and then price action setups at the key levels, using the current daily momentum to get back on the trend.

So where am I looking to get into trades this week, see below:

The Key Ingredients Required to Produce a Valid Price Action Setup.

The Key Ingredients Required to Produce a Valid Price Action Setup.

What key ingredients do we need to differentiate between a good price action setup and a below par price action setup? There are a few important areas I will discuss in this article and try to explain why I feel they are very important and need to be taken into consideration.

Location location location.

First, we need to ask ourselves, where would be the best place to start hunting for price action setups? From any old level on the charts or from very important key levels that have produced strong reversals. Well, to me it makes sense to use the latter and trade from the important key levels.

Next, we must decide on what time frame to trade and for beginners I recommend the higher time frames, like the daily charts. The reasons why the daily charts are a better starting point is because they produce more accurate candles and the charts contain less noise to interfere with our analysis.

If however you are more experienced, then lower time frames maybe an alternative but be warned trading the lower time frames is not that simple.

Either way we must try to look for trades to form in areas that have shown themselves to be very important and strong levels that have resulted in turning the market aggressively. I find the best charts to use to find these important key levels is by using the daily charts. It will make you trade from the best areas and avoid trading from weak levels that I like to call “no man’s land” where price can go either way.

Trading from important key levels means we have a better chance that other traders will see the same thing and produce strong moves. It’s important to note that trading back into these key levels is very risky, indeed.

We always need to trade away from important key levels.

Remember, Forex traders can use many different strategies but for trades to move in the desired direction we need other traders to agree with us. Using important key levels to trade from increases the chances that other traders will agree with our analysis.

Below is a chart with the important key levels marked in red using a daily chart. These will be the good hunting areas to look for trades. The space in between the red levels is what I call “no man’s land”.

What triggers us to get into trades.

The first thing we have established is that we need to find the correct levels to trade from. Now we need a way to analyse if these important key levels are holding and are producing a rejection to turn price around. For this I use price action setups, the two main price action setups that I use are:
1)      The Pin bar reversal
2)      The Engulfing bar reversal

So if we see one of these price action setups forming at an important key level I have my second criteria fulfilled.

The structure of the price action setup must meet my own strict rules, the main criteria being that the size of the price action setup must be large in size and not small, large candles indicate strong momentum and power.

Which markets are active?

Forex trades can be executed pretty much 24/7 as it’s a global business, so we should consider which markets are open or closed when looking to trade a particular pair.

Say we were looking to trade a forex pair like the EUR/GBP on the 4hr as an example.  Would it be wise to enter a trade going into the Asian markets when the markets that have the most influence, being the UK and European markets are closed?

No, not a good idea!

With no news releases for those currency pairs, the markets are more likely to just go sideways with little direction or momentum to move price.

Now I don’t what to discuss news related trading in depth as I don’t actively trade from the news.  Yes, the news does of course effect the forex markets, but I prefer to use simple price action charts as I expect the news will get filtered into the charts, anyway. Removing the need to watch and study news releases etc….

Too much information can cloud our judgement and focusing on lots of different sources of information to analyse the markets rather than just using one technique is where traders can make it too complicated.

Using pure technical analysis and trading with price action charts, gives me all the information I need to analyse the markets in a very accurate manner.

Summary.

The main thing I want to get you to understand and incorporate into your trading, is to try to increase your standards on what makes a valid trade setup. The location from where you trade from is so important.

Learning to hunt for trades from the best locations and using large price action setups as triggers to get you into trades does require patience. Remembering, the price action setups are used to get us into the trades but only if they form first at important key levels.

It’s not rocket science but it’s a very powerful technique and by using important key levels to go hunting for trades will increase the odds in our favour.

Improving our standards of where to trade from, improves the chances of trades moving in the desired direction.

Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Overtrading the Forex Markets

How do we know when we are overtrading the forex markets and why is it such a big problem?

Most traders are unaware they are actually guilty of overtrading but it is a habit that can cause many traders problems. If you find you are making profits but end up giving them all back, you may be falling foul to this common problem.

So what is overtrading?

Overtrading can manifest itself in a few variations, the main types being:

1)      Taking too many trades and not being strict enough on what criteria a trade setup should have. 

2)      Trading without a plan, resulting in over analysis and altering trades once opened.

3)      Over exposure, by this I mean holding two or more trades at the same time containing the same currency pair. This is very dangerous and increases our exposure to levels which are unhealthy.

Overtrading in general describes the process where a trader finds themselves too active and impatient in the forex markets. They over complicate trading by over analysis and are unable to refuse entering weaker trades due to a lack of discipline. Once in trades they have no set plans and so lose all hope of getting consistent results.

Reasons for overtrading

The main culprit that causes overtrading is very simple- lack of discipline and rules.

The patience required to trade is usually an area over looked by many traders and instead they focus their attentions on being as active in the markets as possible. It’s that feeling of not wanting to miss out on a trade and so even if a trade does not quite fit in with their rules, they have to take it.

This type of mind-set results in traders finding extra reasons why they should enter a trade below par. They are hell bent on being a trader and feel the only way to justify themselves as traders is by being in the markets as much as possible.

It’s like these traders are addicted to chasing the forex markets, rather than letting the markets come to them.

This habit can not only be very destructive but a tricky thing to break. If you think back and analyse your trades, I guarantee there will be a few standout trades I bet you wish would form all the time and some questionable trades that you probably felt were riskier trades but still took. If this does rings true, by the end of this article I hope you will have a better idea of how to solve overtrading and remove it completely.

Traders who can’t seem to make consistent gains are usually not bad traders themselves but are the traders who take too many trades, because they are unable to hold their nerve and wait for the best trades.

Solutions to help remove overtrading

The problem of solving this habit is quite simple and it boils down to having a consistent trading discipline with set rules. However, this is not necessarily that easy to fix if a trader is not used to following rules.

Rules, help us form a discipline required to trade consistently. We need rules to cover every aspect of trading, from where to look for trades, to what makes a valid signal, etc……

The rules we choose help us decide what trades we can take and how they should form. They have to be very detailed and leave no margin for movement. If a trade doesn’t meet the correct criteria we must learn to let them pass by and wait for the really solid trades.

Once we have these rules in place and follow them with an iron fist we must also introduce a trade plan to manage our live trades. The trade plan will set out exactly how we plan to manage a trade and this again must be detailed enough to reduce you from interfering with live trades. Trade plans must also be written up before entering any trade.

To prevent exposing ourselves to unhealthy risk levels, we need to make sure we do not open more than one trade for a particular forex pair at the same time. This is very important because opening two trades with the same currency can result in doubling our exposure.

Another valid point to remember is to always risk the same amount per trade and not adding more risk on one particular trade just because it looks too good to fail. No trade is guaranteed and we have to recognise this. Getting ahead of ourselves is why traders get cocky and forget what got them into a position of making consistent gains.

Remove the bad apples from your trading

If you can learn to remove the bad apples from your trading, the results will speak for themselves. The knock on effect of this though is it will reduce the number of trades you take and this is something that takes time to get accustomed to. Again installing discipline into your trading is what will get you through this and eventually you will start to enjoy the hunt and waiting for the standout trades to from.

Overtrading is not such an easy process to solve but once you are able to recognise this is a fault in your trading and introduce proper rules and discipline, you will find profits become more constant over time.

Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

USD/CAD breaks through key resistance level.

The usd/cad has recently broken through a key level and I will now be hunting for a retest of the level and a price action setup to indicate this resistance level is now acting as a support level. Very simple stuff .

I will be using the lower time frame 1hr and 4hr to see what happens. Remember these can result in false breaks and the market could trap traders long and then decide to go lower. The key here is to use the price action to confirm the level is holding.

Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.