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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