November 2014

I hope you had a terrific Thanksgiving.  I absolutely have an incredible lot to be thankful for, not the least of which is finding the Forex market and Fx365i this year.  My goal for this last month of the year is to really focus like it’s the new year.  Everyone is always highly motivated in January because we all want to get the new year off to a great start.  I’m thinking that our prior thoughts and actions bring us to where we are today, so if I expect to have a great start to 2015, I MUST focus intensely now.  Without a doubt, one of my biggest goals for 2015 is to become a great Forex trader.  As such, I absolutely must focus now in order to accomplish this goal.

So what does it take to become a great Forex trader?  This is a topic that anyone who has invested any significant time learning to trade will eventually ask themselves.  The answer will not be the same for everyone because everyone is going to have a different definition of what makes them a great trader.  One person might say you have to pull 35 pips a week to be a great trader.  Someone else may believe they need to pull 150 pips a week to be great.  Yet another person may believe a great trader is someone who is right on over 80% of their trades.

Although we all have our own definition of what makes a great trader, I think we can all agree that trading is a long term endeavor.  After all, does pulling a 100 pip trade make you a great trader?  Certainly not.  If you can’t continue to pull positive trades, what is that one trade going to do for you next week or next month?  Not much….

What about someone who has a ton of knowledge about the intricacies of different indicators?  Are they a great trader?  Not necessarily.  Now don’t get me wrong, someone who has developed a deep understanding of the platform they are using definitely has improved their chances of becoming a highly successful trader.  However, all the knowledge in the world doesn’t mean anything if you can’t execute in the moment.  I know traders who clearly have a deep understanding of the market, but can’t ever seem to pull the trigger to get into the great trades they see on the screen.  Others struggle to admit when they are wrong and end up unnecessarily taking huge negatives.  It takes more than just knowledge to become a great trader.

So what does it mean to me to be a great trader?  In my mind, being a great trader means being able to consistently execute a winning and highly profitable trading plan week after week, month after month, and year after year.  In order to be a great trader, you must be great at consistently:

  • Getting great entry
  • Having fantastic risk management
  • Taking profits at the right times (it’s not what you see, but what you bank)
  • Moving up the lot ladder to be able to successfully trade larger amounts of money

In order to accomplish those things, I need to consistently be:

  1. Technically Sound
    • In order to be technically sound, you must constantly be educating yourself on how the market works.
    • At the same time, you can’t try and incorporate too many different trading methodologies, or you will spin yourself.
    • Every pair moves differently.  It is my belief that you should find a pair you like and stick with it.  Unless the pair basically stops moving for an extended period of time, don’t even look at another pair.  If you haven’t mastered your first pair, why are you going to jump around and look at multiple pairs that you don’t thoroughly understand?
  2. Emotionally Intelligent
    • Do you have the patience and discipline to consistently NOT TRADE until the moment is just right and the trade just comes to you?  Most highly proficient traders I know have gone through a period of over-trading.  Every one of them has said that learning to take less trades is one of the biggest steps they took when they made the turn to become a consistently profitable trader.
    • When it finally is time to get into a trade, do you consistently have the guts to get into the trade with sharp, decisive entry?  Or do you wait too long and end up chasing the trade?
    • Do you have the smarts to consistently get out of trades when they give you new information and start to go against you?  Or do you get married to the trade and start moving your stop… and end up taking unnecessarily large losses?
    • Do you have the ability to consistently “plan your trade and trade your plan?”  Can you stick with it?  For example, on the Smart Money Profile platform, if you have a target liquidity line 30 pips from your entry and you are up 15 pips and the trade starts to breathe back, what do you do?  Is your plan to move your stop so you have no risk and then stay in the trade, or is your plan to get out as soon as it starts to take a breath?  There’s no right or wrong answer, but the real question is can you consistently stick with that plan in the heat of the moment?

 

You may have noticed one recurring theme in the points above:  Consistency.  I have a saying on my personal trading tracker:  CONSISTENCY x (PATIENCE + DISCIPLINE + RISK MANAGEMENT + GREAT ENTRY) = MILLIONAIRE.  I’m getting there.  I hope you are too!  I have had moments where I have done all of these things to a tee, and moments when everything has gone out the window.  Not surprisingly, when I over-trade, chase trades, or exhibit poor risk management, my trading results suffer.  However, as I’m learning to control myself more and more, I know I’m on my way to becoming a CONSISTENT and, I believe, GREAT TRADER!  After all, isn’t that what we all want for ourselves?

I hope your trading is going well.  If you ever want to talk about any of my posts, or anything about your own trading, please email me at pipaddict73@gmail.com.

So if you have been poking around our website, or are a student with us, you may be starting to think that the Forex Markets are manipulated…And you would be COMPLETELY RIGHT!

Understanding that Forex Markets are manipulated is the first step. Learning to actually profit from it is a completely different animal. Smart Money (aka the Market Makers) have got an entire playbook of different ways that they can whip a retail trader out of the profit. They can simultaneously use a news announcement to knock out short term traders, using the generated liquidity to move the market completely against the trend and collect stop orders from long term positions several hundred pips away. The list goes on an on in the different ways it can play out.

At the core there is a rather simple process that drives each play: Create a belief; challenge the belief; release profit.

Below is a graphic that FX365I created to illustrate this process in Oct 2013. Beneath it is a screenshot taken of the GBP/AUD on 11/14/2014.

 

The market today basically did the most basic manipulation that is possible. Understand the graphic is explaining a long scenario, today happened to be short though.

To expand further; the market entered into an accumulation phase (The range area whipping back and forth). After accumulating a sufficient amount of orders the Market Makers began their planned manipulation move. By driving the market down they were able to get any stragglers to jump in while also opening up a sizable number of OCO orders. Once the direction was set, they then whipped it the opposite direction to take out the cloud of liquidity found in retail traders stop orders. Once they were able to use this liquidity to fill their own positions, it triggered an automatic reversal from the swap. The market then pushed the direction everyone thought it was going to, except with the retail trader getting stopped out right before it happened.

This happens time and time again. If you do not understand their methods, I would encourage you to look into them as much as possible, as they will lead to truly understanding when and where money changes hands.

Thanks for the read and be sure to subscribe if you’d like more info on their methods!

 

-Shane Guth

I was shocked by the news yesterday when I heard that the banks manipulate the Forex market.

HAHAHAHAHAHAHA!

Yes, that was an attempt at a little currency trading humor….  It actually was really funny watching non-traders who heard the news come up to me throughout the day and ask what I thought about this terrible manipulation of the banks.  When I tried to explain that the Smart Money Profile (SMP) software actually tracks the market maker’s manipulations, and that our entire trading methodology is based around understanding their manipulations, I was met with many blank stares and looks of confusion.  I am eternally grateful to Wade and everyone involved in creating SMP.  It is an absolutely amazing tool.

By the way, before we get to the main topic of the day, I want to say that I was fortunate enough to have the opportunity to sit down and pick the brains of someone who I would venture to say is well on his way to becoming one of the best traders in the world.  The funny thing is, most of you already know him.  I’m talking about Ira Barnes.  Being the humble person that he is, Ira does not frequently toot his own horn, but you should know that for several weeks now, Ira has been averaging hundreds of pips per week.  Yes hundreds.  Week after week.  These pips are all pulled by using information found exclusively on Fx365i’s incredible Wealth Smart trading platform.    In one of my next posts, I look forward to sharing with you some of the wisdom that Ira shared with me.

Well, on to the main topic for the day…

Over the past couple of weeks, I have found myself in a bit of a spin cycle caused by some serious over-trading.  This is very disappointing to me because I have been at this long enough now to know much better.  Hell, one of my first blog entries was about how over-trading got me into an epic slump.  Fortunately I did not enter those horrific levels of deep abyss this time around and I am bound and determine to control myself.  All I want to do is create sustainable winning trading habits and profitably move up the lot ladder.  Nothing else matters.

As such, I have created a new set of trading rules for SMP.  There are no earth shattering concepts here… just good trading habits and common sense.  I have pasted them below exactly as I have written them out for myself.  The real challenge of course is not in just writing them, but in following and LIVING them every single day.  That said, I am extremely glad I wrote them down because it gives me a reference point and something to live by.  I imagine the rules will continue to evolve, so I would love to hear any feedback about them.  Is there anything you would change?  Do you have your own rules written out?  If you’d like to share them, or any other thoughts, please email me at pipaddict73@gmail.com.  Happy Trading – I’ll see you soon!  Here are my SMP trading rules pasted directly from my Evernote:

These rules are not made to be broken.  They must be followed.  If you follow these rules, you will create an amazing financial life.
 
  1. LET THE TRADES COME TO YOU
  2. ONLY TAKE TRADES YOU UNDERSTAND
  3. LET THE TRADES COME TO YOU
  4. ONLY TAKE TRADES YOU UNDERSTAND
  5. PRACTICE OUTSTANDING TIGHT RISK MANAGEMENT ON EVERY SINGLE TRADE
    • You will be wrong on a decent amount of trades
    • If you keep those negatives averaging 8 or less pips, you can win big with the SMP software because you will hit a good amount of 20 pip trades and also hit some much bigger trades
      • Tight risk management is an INCREDIBLY important element in long term sustainable profitability.
  6. BE PATIENT

    • Wait for something you understand
    • Everything else is gambling.
      • You are not here to gamble, you are here to profitably interact with the market makers business model
    • Until you have new information, stick with your directional bias 
      • Do not get bored / sloppy and start trading both ways
  7. DON’T OVER-TRADE
    • Only enter trades that you believe have at least a 15 pip potential.  Ideally, look for 20+ pip opportunities.
    • Wait for what you believe is the real entry.  If you happen to miss it, so be it.  There will be many many more trades.
    • Don’t shoot all your bullets at one opportunity.  If you are wrong once, twice at the most, wait for more information.  If it happens to go and you miss it, it’s OK… there will be many more great trading opportunities.
      • Not over-trading is another INCREDIBLY important element in long term sustainable profitability.
  8. GET GREAT ENTRY
    • When you see a set-up you understand, be decisive and act quickly in order to get great entry.  
      • For example, if you are getting in because price is going through a dot, get in as soon as price goes through the dot, don’t wait for 5 pips of confirmation.
      • This allows you to maximize profit potential and run very tight risk management
  9. DO NOT TRY TO CALL THE TURN!
    • Only trade in the direction of your directional bias
  10. EXIT TRADES WITH SOUND REASONING
    • If you are up in a trade and the trade stalls / reaches a decision point / reaches a point where it is likely to take a breath:
      • Move your stop so you have zero exposure.  This means setting your stop at +1.5 pips so you are able to pay your commission and still walk away with no loss.
      • Once you have moved your stop, decide if you think it is likely that price will move back to reach your stop.  If you think there is a decent likelihood, then take your profit before it starts to breathe against you
      • If you believe you are just dealing with a breath in what can potentially turn into a much bigger trade, and that price is unlikely to come back to your stop, stay in the trade.  If you are wrong, you take a zero.  If you are right, this is how you pull huge trades.
        • NOTE: Do NOT get out just because price action is making you uncomfortable or you will be minimizing your profits.  Do NOT watch the trade stall, decide you’re going to stay in the trade, let it back up 10 pips, and then get out.  Either let the trade play out, or get out at the stall, but don’t let the market makers manipulate you into giving up 10-20 pips and then get out just when the market is about to turn back your way.
        • IMPORTANT: If you get new information that tells you you are more likely to be wrong, then get out of the trade with as much profit as possible – there is no reason to let it go back to your stop if you have new information
    • If you did not get great entry in a trade and it is stalling at a decision point, you did not earn the right to stay in that trade.  Take the profit and get out.
      • The only exception to this is if your intuition strongly tells you that the trade will keep going your way.  Make sure your stop is in a place where you have very little to no exposure.
  11. USE YOUR INTUITION
    • If it makes sense, but something tells you it’s not right, don’t take the trade.  Be patient.  There will be tons of great trading opportunities over the coming days, weeks, months, and years.  Let them come to you.  If you miss a trade, you miss it… so what?  There will be tons more trades.
  12. LET THE TRADES COME TO YOU
  13. ONLY TAKE TRADES YOU UNDERSTAND
  14. LET THE TRADES COME TO YOU
  15. ONLY TAKE TRADES YOU UNDERSTAND
  16. LET THE TRADES COME TO YOU

Manip Article

Our new Smart Money Profile software is built on the premise and belief that the big banks and institutions control and manipulate the financial markets to suit their trading interests.

After a relatively short amount of time, anyone who starts trading with Smart Money Profile will soon start to see and experience this manipulation, first hand, and really start to grasp the depth of this insider dominated market.

Every so often there comes a news release showing how the traders at these big banks trading antics have caught up with them and blowing their cover wide open. Check out these excerpts from this story released today.

Manip txt

After reading this excerpt you can see how this manipulation was a coordinated effort by traders who work for the 6 major banks who combined, control about 49% of the daily traded volume in the Forex market.

This kind of activity happens on a daily basis. These traders just happened to get caught this time.

The CFTC even released and example of their chat room conversations they were having as they manipulated the Forex market. Take a look.

Manip chat room

This is just more proof showing that the Forex Markets are manipulated to provide benefits for the few who are in the know. The good news is that there is software like SMP out there designed to track this type of activity so that retail traders can have a chance to capitalize on these manipulated markets.

If you are already trading with SMP software then you’re in the right spot. If you want to learn more about it then skim through www.fx365i.com. It could be an eye opening experience.

-Wade