November 2015

I was asked if I would blog about my experiences as a New Student at 365 Forex and thought it would be helpful for those of you who were wondering what it would be like to enroll. I also think it would help my learning to put down what I am learning and feeling.

 

A little history first…..I was looking for a way to create additional income. I am currently a Certified tax preparer and really busy for 3 months. During the rest of the year I do business consulting with an organizational called Catapult Leadership. That contract is for 1 week a month. The rest of the month—-my time!!!!

I am very interested in the financial markets and have always been extremely passionate about what is happening with the economy and how I could use my knowledge to my advantage. I saw an ad for a company called “online trading academy” and went to a presentation. I was so excited to learn something new and make $$ doing what I love— leveraging the market to my advantage. The presentation was very professional and informative however they only really wanted to manipulate me into purchasing additional education modules. I was disillusioned and disappointed. I read some of their reviews and realized there as a large group of folks like me that were also “duped”.

I wasn’t going to give up though! I did my homework and found another online trading company 365 Forex and went to tour their facility. The experience there was profound. No high level sales manipulations, no ridiculous high-priced commitment. Their business model made sense to someone who is a business consultant. They make their money when we make money. So for only a 5000 investment for their education modules and daily online sessions.  I could learn what I need to learn to supplement my income.

Signing up was the easy part. Now it is up to me to learn. At this point I have watched the modules….I have traded using the “fake account”….I have funded my real account……and I am ready to start trading. However I am stuck….I am taking this experience seriously and don’t feel I have done my job in the education process. There are still areas I don’t understand and need to learn. The folks have been there to support me but I am not “supporting me”. I want to understand what I am looking at…I don’t want to make a trade for the sake of making a trade….I don’t want to approach this experience like I am going to a “slot machine” and hoping that luck will get me through.

I have met a lot of people using this software and watching the daily sessions and they are making great money “doing this”…quite frankly I envy them. I know they know something I don’t and that bothers me. As you follow my journey to “learning this” I will do my best to provide you with a template to also “learn this”. Right now I am frustrated with myself that a “tax accountant/calculus major” – who “thought this would be easy” is finding it’s not!! I guess the old adage “if it was easy everyone would do it” holds true. My next step…..going to make a plan to “get there”….guess I should’ve done that first…..

 

Andrew Bisaha

Here are some terms used focused around Forex Market Manipulation in the FX365I culture:

 

Accumulation: A range of Price that the Market Makers have stalled the Market at in order to collect orders, and set up a pending Market Move. Accumulation comes in two varieties for purposes of what you are looking for: Short term & long term. Short term accumulation will influence short term direction and quick manipulation moves, whereas long term manipulation will influence the overall direction of the Market.

Average Price: A price that Market Makers and Retail Traders have entered into trades. Average Price is represented by a bright green line on the 1HR and 4HR charts.

Bounce: When price hits an Average Price Line, Dot, Top/Bottom of Box perfectly then moves the opposite direction following.

Box: A light blue square or rectangle found on your 1HR or 4HR chart. This is how Smart Money Profile Software defines Accumulation on a larger time frame.

Breath: While the Market travels Long or Short, it will often temporarily stall and retrace slightly before continuing.

Candles: Price movement as represented by a bar shape on your charts (MarketScope). They will show you where price opened and closed, as well as where price moved within a given time frame.

Closed Positions: The section inside of your Trading Station where you can view your profit and loss of each trade that you have closed out.

Dot: A Bright green dot found on your 5M, 15M, and 1HR charts. These represent short term Accumulation and can be used for a variety of purposes.

FX365i/Forex 365 Institute: Your new Forex Educator. We provide Software and Education only

FXCM (Forex Capital Markets): The Broker that you will be using as a FX365i student. FXCM will be processing your orders when you decide to go into trades. They also provide the trading platform that enables you to watch the Market on your Computer (See Trading Station & MarketScope).

Grid Line: A series of reactive price points.

Indicators: Tools that retail traders rely on to make decisions regarding future price movement.

Limit Order: An order, placed automatically or manually, that closes your trade in the direction you have placed your trade in.

Liquidity: A large amount of money at an area in the Market. Also high volume times in the Market.

Liquidity Line: Blue and yellow lines that appear on your 1HR, 15M, and 5M charts. They represent liquidity and belief levels in the Market.

Liquidity Swap: A manipulation of price meant to change the overall direction of price.

Long: When the Market is moving up, or a Buy Order that you have placed.

Manipulation: When Price is deliberately moved by the Market Makers in order to stop-out Retail Traders, or to build a belief of a certain direction in Retail Traders.

Market Makers: The Financial Institutions that manipulate the Market.

Marketscope 2.0:  FXCM’s program that displays your charts and candles. Also where you are able to add in Indicators to lay over top of the candles.

Net: An area that consists of two Grid Lines.

News: Financial information pertaining to a certain currency pair. Can come in high, medium, and low volume varieties.

Pip (Point In Percentage): A measure of a currency pair’s movement. More simply though, a pip is what we in the Forex would consider a “point” for calculating profits and losses.

Price Alert: A user added line that draws infinitely across all charts on MarketScope in a specified pair.

Price Line:  The blue line (once you have properly set your colors up) that represents the live Exchange Rate between the two currencies you are watching.

Profit Release: A stage in the Market Makers Business Model. This stage takes place following sufficient accumulation and manipulation.

Pullback: Interchangeable with Breath – While the Market travels Long or Short, it will often temporarily stall and retrace slightly before continuing. This is usually a chance to place a trade of your own.

Push: Price has traveled long/short in a relatively short amount of time. Usually consists of 1-5 candles.

Range: The prominent highs and lows set by price in any given time period.

Advanced Rate Indicator: The “Flashing lights” inside of Trading Station. The tool we usually use to enter and exit a trade.

Retail Trader: Any Trader/Investor that does not work for a Hedge fund, or an Investment Bank. These Traders trade their own accounts.

Rotation: Interchangeable with “bounce” – Price nearing a resistance/support point, and turning the opposite way.

Run: Generalizes a gradual large movement of price. Can be characterized by multiple pushes, with multiple pullbacks.

Short: Selling the pair you are watching, or Price traveling down.

Slippage: When the broker is not able to place your trade at your specified price (Usually happens during high news events such as; GDP, Non-Farm Payroll, Rate Decision, etc.)

Smart Money Profile: The name of the software used in the Market Makers Course.

Snap: A quick, medium to large movement of price.

Stop Order: An order used to automatically take you out of your trade to manage your risk.

Stop Out: An outcome of manipulation by the Market Makers. Hitting masses of Retail Trader’s Stop Orders.

Traders Prison: The metaphorical “Prison” that many technical Traders land in by constant system development, usually through technical indicators.

Trading Journal: A means to properly track your trades on a day to day basis.

Trading Station: FXCM’s platform that allows you to view currency pairs, and manage positions, as well as your trading account. This is what FX365i Software is installed into.

A couple of weeks ago I noticed that there were some very specific bad habits beginning to frequently occur as I was trading. Each time these habits would come up I would think “Wow that was stupid, I definitely won’t do that again.” Then guess what, I did those things again, and again, and again.

So I decided that I needed to take some time to dissect these specific issues and find out why I kept repeating these mistakes. It has been really beneficial, and I plan to do the same thing with any recurring bad habits in the future. This is what I wrote.

 

The Issue

After seeing considerable profit in a trade, I tend to ride it negative. I have caught myself doing this fairly frequently. This happens due to the overconfident belief that price will go where I expect it to go. Most of this journal entry is written from the perspective of being in a trade, so most of the following observations apply to my mindset while in a trade.

 

Why does this happen?

A) I believe that price “has to” go places.

B) I stick to bias too rigidly, failing to take in new information.

C) I look at obstacles as “springboards.”

D) I tend to forget that breaths are normally larger than anything I want to ride through.

E) I stay in trades too long in hope of eventual profit due to the fact that I am limiting my trades.

F) I get greedy. After seeing a decent profit, often times 10-20 pips, I still expect more.

G) I am too excited to think logically.

 

A) Belief that price “has to” go somewhere

Price does no have to go anywhere. I can call directional bias, and set a profit target, but more often than not, price does not go all the way there. And if it does, most of the time it does not go straight there. Movement is only semi predictable.

To help with this issue I think that I need to remember that I don’t need to get all of the pips all of the time, anytime the market moves. Even in a predictable and unsurprising profit release it should be my goal to grab some pips out of the middle, maybe catching one of the two ends of the move, but I should never expect to get every last pip. To reinforce this, I should remind myself that 10 pips is a good trade. 10 pips is 25% of my current weekly goal. That’s not bad for one trade, yet often times I find myself turning up my nose at these profits, expecting more, and believing that I will get more.

One thing that I am realizing is that I need to treat my profit targets more like a maximum. I tend to just think that price will go to my target, and that’s that. So instead of saying, “there’s my target, that’s where price is going and I’m staying in this trade until it gets there,” I should be saying, “I could see price possibly going here, so I will stop myself just before there if price were to go that far in my favor.”

 

B) Sticking to bias too rigidly

This is almost the same as issue A, and the many of the same fixes apply. I need to be open to new info. I also feel like I need to feel the market to some degree. When price is moving strong in a direction and then it slows or stalls, it may not be a bad idea to get out with some profit. Usually I will find some content to back this up, often times though it is found after the fact. My point is that I should pay attention to stalling in price and look for clues as to why it may be stalling, instead of sticking to bias or belief that may not be true.  I always need to be looking for clues while in trades.

 

C) Looking at obstacles as “springboards”

Frankly, this issue is just dumb, but it is something that I have caught myself thinking.  Sure sometimes things such as dots or average prices will cause a slowing or some kind of rotation but to think that this will be followed by an acceleration in the original direction is just unfounded. It is purely imagination. I suppose where this came from in my mind is the fact that liquidity lines can fuel price movement, which, as I have learned, does not apply to dots or average prices in the same way.

To fix this issue, I should be treating obstacles as obstacles, and not imagining a magical propulsion of price in as a result of them. Perhaps instead I should imagine price rotating off of them into a breath, whereupon I would be stopped out with -20. This is a good scenario to remind myself of the reality of what may actually happen. I know this reality because I’ve been there and done that, and it ain’t fun and it sure ain’t cool.

I should also be looking at these obstacles as targets (maximums). Instead of setting a target far away on the other side of prominent dots or average price lines, perhaps I can use these points of interest as targets, or just play it by ear and watch closely how price reacts to them. This ties into what I said in the last section about feeling the market. Basically, if I see some funky stuff about to go down, maybe I should just get out of the trade, especially if I’m up in the trade.

C) The Sense of Having a Quota

This is most definitely one of the biggest factors in what causes me to switch from being precise and patient to being a loose cannon. I feel as though I have to pull some pips, often lowering standards for trading habits in hope of getting lucky and getting a few pips. This is by far most noticeable after losses. After I have lost, I feel as though I need to “get my pips back,” which most of the time leads to losing more pips. This is a variation of that sense that there is a quota to be met, or a target that I need to reach.

This “quota mentality” ties in to the “target mentality” that I have been working on lately. It seems that in the same way I can set a pip target while in a trade, and often ride it negative while waiting for price to reach my target, I can also have a pip target for the day, or some idea that there is a number of pips that I should end up with. Such targets or quotas can be dangerous if we treat them as a minimum that we must reach. One thing that helps me be consistently profitable in trades is the idea that the target should be treated more like a maximum. I think this mindset can be applied to the issue of having a daily or momentary quota also, so that I look at my quota for the day as a maximum, with the minimum being dependent on opportunity.

Regarding this issue as it relates to losses, I believe that I need to just learn to be okay with losses. Most of the time this is not an issue, but when I am not closely monitoring my emotions, that sense that I need to get my pips back can creep in, and lead to all sorts of ugly trades. I haven’t thought of a name for this yet, but it is the close relative of the Big Bad FOMO Monster. I need to keep in mind that having some pips and losing them does not mean that I have to get them back, most of the time this ends badly, and leads to out of control desperation trading.

I have noticed these problems at high news events, which often times seem harder to trade, perhaps due to the fact that emotion can quickly take over. I’ve had a couple of bad high news days that have gone something like this: I get in based on FOMO, I get stopped out once or twice, then I get back in because I am frustrated by the fact that I am losing money instead of getting paid like we are all “supposed to” on high news days. Then I make another trade or two, all within a few minutes, trading both ways, with no clear directional bias, or complete disregard for bias if I had actually established one. Then I leave even more frustrated than I already was, with the question, “What just happened?” resounding in my mind. These are the kinds of days that I want to avoid.

 

Some good habits to avoid the quota or target mentality:

  1. Look at any target, quota, or variation thereof as maximum, and not something that must be reached at all costs, and do not disregard risk for the sake of a quota.
  2. Welcome losses as the price of doing business, view them as a piece of the puzzle in my trading career, do not become emotional from losses, they are normal and should be expected. It is my job as a trader to limit them however, which means that I need to be in control and constantly observe my emotions.
  3. Exercise extreme caution during high news events.
  4. Get comfortable with smaller profits in each trade, for each day, and even for the week. Try to take some 10s in each trade, or for the day, and remember that all I need is 35-40 pips per week

 

Conclusion

Most everything in trading ties together, and the product of all of these aspects of my personality, style, and habits defines who I am as a trader. All of these rules or habits to help me stay on course do not work by themselves, so focusing too much on one rule may lead to oversight in other aspects of trading. These good habits have a synergistic effect, producing exponentially better results when combined. I must learn to ingrain all of these habits into my identity as a trader in order to succeed and become a consistent, disciplined and profitable trader. I am confident that with time, and constant introspection I will be able to do this.