Author: csidhwa

One of the rules I have for entering a trade is, “I understand the set up for the trade that I am about to enter.”  Despite this rule, I realize that I have never taken the time to actually write down exactly what those trade set-ups and entries look like on the SMP platform.  Wow, that’s pretty shocking.  How have I not done this yet?  I should be doing this on an ongoing basis.  So that settles it: my mission over the coming days and weeks is to specifically write, diagram, and (hopefully!) screen-shot successful trades that exemplify exactly what I’m looking for in trades.  My hope and belief is that as I write out more and more of these set-ups, I will recognize them better when I see them, I will stay OUT of trades that don’t fit the criteria, my approach towards each of the trades will be refined, and my overall trading will improve dramatically.  Today I am just going to start with one very simple trade.

Disclaimer: This blog only represents my opinion.  Although my opinions are based on what I have learned at Fx365i, none of this necessarily represents the official views of the institute.

Bounce Off Average Price:

  • Entry:
    • When this trade works out, it can lead to awesome trades.  Very simply, if price has moved significantly away from an accumulation area and then reaches a larger average price line, if it appears to be bouncing cleanly off that average price, I believe you must GET IN QUICKLY!
    • If you wait too long, and the bounce is aggressive, then all of a sudden there are 15 or 20 pips of risk.  To use our bus stop analogy, if you get on quickly, you’re along for the ride.  If you wait too long, you’re either a) going to take a big dumb risk and try and jump on the back bumper of the bus (chase the trade), or b) get left at the bus stop sucking fumes as the bus takes off.
    • One key to entering this trade is keeping up with measuring.  It is not every day that we see a perfect 90 pips between the dot on the hour that price just rotated off and an average price line.  More frequently, we will be somewhere in the 90 pip ballpark.  Maybe we’ve only run about 82-85 from the dot, but if you measure from the high to the average price, it’s 108 pips.
    • As such, I believe that once we’ve run 90’ish pips and are possibly getting an exact bounce off average price, you can’t hesitate to get in.  The worst case scenario is to take a small negative (stop should be no more than roughly a pip off average price).  If you have 5 pips of risk vs a 30 pip profit target, that’s an outstanding 6:1 ratio.  On top of that, a clean bounce off average price can often result in a much larger run, so you may even have better than a 6:1 ratio.  Pretty awesome!
  • Exit:
    • I’m trying to refine my technique for when to exit this trade.  The image above is shows a trade I was in recently where I got solid entry off average price.  I got in 4 pips from the bottom (which was exactly at average price).  My current rule is that if it doesn’t give me a strong initial bounce, then if I see a small positive, I’m getting out.  On that trade, I took a +5 because price did not move much for the first couple of minutes after I entered the trade. Then, on the same 5 minute candle, the trade ran 20+ pips.  After an 11 pip breath to begin the next candle, price pushed up to the point where I could have taken a 40+ pip trade (in less than 10 minutes) based on my entry.
    • One reason I got out quickly on this trade was because we had already tested that same daily average price 1 day earlier.  This made me believe we might be ready to blow through it this time.
  • Refinement:
    • One reason why I’m somewhat willing to get out with these small positives is I’m concerned about the market just taking a minuscule breath and then smashing hard through average price before breathing back.
    • On one hand, I need to realize that if we have run 90 and are now hitting a significant average price, there is a great chance we will see at least a 30 pip breath. As I mentioned earlier, a 6:1 or better reward to risk ratio is incredible.
    • On the flip side, from an overall money management viewpoint, if I end up taking a fair number of +5’s along with a few -5’s – and put those together with the occasional +30 or more, that’s a long-term winning recipe.
    • I have to admit though, it’s really stinks to get out of a trade just to watch it run straight to my profit target 30 or 60 pips away when I hadexcellent entry into the trade.
    • I’m trying to decide whether it’s better to a) play it more conservatively by taking the little +5’s and dealing with the risk that I’m about watch the market run 60 pips in my direction, or b) be more aggressive and let the trades play out while sticking my stop right under the average price so that I KNOW that I was wrong in the trade. I would take more negatives, but I would also see more 20+ pip trades.  I’m really torn on figuring out which way to play this.

Well, “Bounce off Average Price” is the first trade I have mapped out like this.  Hopefully there will be several more to come over the coming weeks.  As always, all traders’ thoughts and comments are tremendously appreciated.  Please feel free to contact me at pipaddict73@gmail.com – I’d love to hear from you.

 

-Cyrus Sidhwa

Fx365i Student

Smart Money Profile Trader

Hi guys.  This is a very simple post.  I’m just sharing my completely unedited personal journal entry with everyone today.  I’m hoping that reading it might help others start working on making better decisions day in and day out.  The screen shot above is my screen shot for the day.  If you read the notes in the screenshot about my lousy trading session, you’ll get an idea of where I was at by the end of session.  About 30 minutes later, I wrote the following:

What can I take away from today?  How I can open my mind, have a growth mindset, and use today to make me a better trader tomorrow.  HERE IS WHAT I MUST TAKE AWAY FROM TODAY IF I’M GOING TO A) BE BETTER TOMORROW THAN I AM TODAY, AND B) STEADILY MOVE UP THE LOT LADDER:
1.Days like today – specifically days when there is an overwhelming, strong and clear DB – are the only days I should take trades.  I am not some ninja trader and I’m nowhere near a good enough range trader to be able to pull some pips here and there when there is no overwhelming DB.  We had such an clear and overwhelming DB today that when I finally got good entry into the trade, I had very little anxiety about needing to get out when I was up about 10 and the market stalled before the oil news hit.  I was 95+% sure that when the oil news hit, it was going to push the market considerably long.  That is exactly what trading should feel like: You feel like you absolutely KNOW the direction and then you just search for and do everything you can to absolutely NAIL a great entry.  This is the first time in a long time I’ve had that feeling and it reminds me how trading should feel.

2. An old lesson proves to be true yet again: DON’T CHASE TRADES.  There is too much risk.  If I miss my entry, then maybe I’ll get another chance later in the run to get solid entry.  Maybe the opportunity won’t come until later in the week, or maybe not even until the week after that.  It doesn’t matter.  Making the turn from being a terrible trader to a consistent winner who moves up the lot ladder and creates an amazing financial life is a matter of CONSISTENTLY, SESSION AFTER SESSION AFTER SESSION AFTER SESSION AFTER SESSION AFTER SESSION AFTER SESSION, ALWAYS MAKING NON-EMOTIONAL, GREAT / SOUND DECISIONS.  Chasing is a weak-minded loser, FOMO mentality.  Not only did it cost me 25+ net pips on two trades, but those trades then somewhat forced me to take profit prematurely on the +25.  I had great entry on the winning trade, but because of the large losses, I had to take profit as soon as it started breathing – even though I was quite confident it would continue to run.  Obviously I want to cover 25’s, so I have to make sound decisions about banking profits, but this was one trade that seemed highly likely to keep running.

I don’t know exactly why, but I hope / feel like this little nugget might resonate and help a couple of my fellow traders out there.  If it does, or if you have anything you’d like to discuss, please reach out to me at pipaddict73@gmail.com.

Yours in trading,

-Cyrus Sidhwa

In my last post about my prolonged summer slump, I discussed the importance of finding the right balance between trading too large and too small of a lot size. In reality, Forex trading is very much like walking a tightrope 500 feet in the air with winds swirling in all directions.  Choosing the right lot size is like a tightrope walker choosing a pair of shoes that fit properly.  Sure, it’s important, but there’s a heck of lot more work to be done.  Here are 12 competing interests that Forex traders have to balance against each other at all times:

 

Versus Table

 

 

If you have been trading for even a month or two, I’m willing to bet you have run into most, if not all of these dilemmas we face on a daily basis.  Heck, we could easily add a ton more examples to the table.  We could spend hours discussing the nuances involved discussing the different issues we must balance in our trading.  For now, I think it is important to remember that becoming a successful trader is not a matter of pulling a huge trade or having a great week where you’re up 100+ pips.  Yes, of course you have to be able to read the market and pull positive trades.  However, a truly successful trader is someone who repeatedly and consistently makes great decisions day in and day out.

When you consider the dozens of subtle twists and turns that we must successfully navigate during every session, it is no wonder that most people fall off the tightrope and never get back up.  However, we have some tremendous advantages over the general public.  Unlike 99% of retail traders:  we are taught to understand and follow the market makers’ business model… we have the virtual classroom at our fingertips… we receive incredible support from the Fx365i instructors… we are welcomed and encouraged by the community development team… and of course we have great support from our fellow traders at the institute.   As someone who has been struggling mightily as of late, I am taking a deep breath and focusing on making great decisions.  As long as I’m still up here on this tightrope, I’m going to keep working on becoming more nimble in my decision making and stabilizing my balance.

 

I absolutely love hearing from my fellow traders.  Please reach out to me at pipaddict73@gmail.com if there’s ever anything you’d like to discuss.

-Cyrus Sidhwa

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I am once again mired in a long deep slump.  Strangely it started right around the time Fx365i made the switch away from WealthSmart to Smart Money profile.  I had been trading reasonably well on the Smart Money platform for the 6 weeks prior to the switch.  I don’t think it’s a coincidence, but I can’t explain it either.  Part of me thinks it’s an ego thing: I thought I would be able to come in and help people, but instead I suddenly don’t know how to get in a positive trade to save my life.  So, how bad is my slump this time? Out of my last 77 trades, I have only been positive on 25.  Yea… 25-52. Damn.  Additionally, out of my last 42 trades, only 2 (2!) have been for more than +10 pips.  Wow. Talk about sorry.  What’s that?  You think pathetic is a better word?  Yea, I can’t argue with that.

!@#$ %^&* ()!@!@#$ !@#$ %^&* ()!@!@#$ !@#$ %^&* ()!@!@#$ (pardon my French).

So what am I going to do about it?  Well, #1, I have already lotted way down.  I’m only trading at about 20% of the lot size I was a couple of months ago.  Part of this has been forced by the margin requirements, but I have lowered my pip values considerably further than that.  According to my account balance, I could be trading at more than 3 times my current lot size, but why on earth would I?  With a good sample size to look at, I can see I’m only right on about 1/3 of my trades over the past 6 weeks.  On top of that, the winning trades are small winners, so why would I trade the max?

On the flip side, I could actually trade an even smaller lot size, but I believe that would be counter-productive for a couple of reasons.  First of all, everything in trading is a balance.  When it comes to lot size, you don’t want to trade such a high amount that you’re a) either scared of how much money you could lose, or b) constantly on the verge of being forced to lot down.  However, you also don’t want to trade too small of a lot size that it just becomes a video game.

I always want to be skill-focused and content-driven (this is why we don’t trade with our pip counter up).  One of the problems I had when I first lotted way down a couple of weeks ago was that I started getting loose and sloppy in my trading.  I found myself thinking I could run a larger stop because if the pips are worth less than half of what they used to be, then I could take a bigger hit without really feeling it.  This was pure stupidity on my part.  After all, if you get crap entry and are now risking 15 pips instead of 7 pips at the higher lot size, guess what?  You are still losing roughly the same amount of money.  Even more importantly, at least as far as long term trading goes, I want to continue to work on really nailing excellent entries in order to control my risk.  When you lot down as far as I have, you have to be extremely cognizant of focusing on the skill and content of the market.  If you allow yourself to focus on the money, it’s a recipe for continued disaster.

OK, so what else am I doing to figure out how to get out of this rut?  Well, I am turning in daily screen shots and my trading report at the end of the week.  Although I haven’t been perfect about doing this, moving forward I intend to do it every single day I take a trade.  Fx365i student Todd Carson wrote a great blog post about turning in your screen shots and staying away from a fixed mindset.  It’s a fantastic read and it really opened my eyes to some of my personal flaws.

As you probably know, Shane responds to most of the screenshots that are submitted.  He pointed something out to me the other day I hadn’t even noticed.  He mentioned that I have been over-trading (shocking, I know).  I had actually been taking no trades for the first 2 hours of the session and then as soon as I took a loser, I was in 3-4 trades in the next 5 – 20 minutes.  I knew I had been letting myself get emotionally beat up, but somehow I hadn’t identified the obvious over-trading.  I have been able to use this to my advantage this week.  On Monday, I actually made the exact same stupid move that I just described.  I remembered the feedback Shane had given me and I have not made that same mistake since.  I have now set a new rule:  While an ideal week will involve 3-5 trades, under no circumstances will I take more than 10 trades in a week. Sending in screenshots and avoiding over-trading are two keys to breaking out of this damn slump.

Getting back into blogging is another tactic I am using to dig myself out of the hole I am in.  One of the main reasons I started blogging in the first place was to try and fight out of a previous slump.  I believe some of my best posts actually started out as personal thoughts in my trading journal.  For some reason, although I consistently take notes about individual trades, I had stopped keeping a journal of my trading thoughts.  This makes me realize that blogging on a consistent basis will be a lot easier if I spend time writing out my thoughts.  Writing out my thoughts will bring clarity to my trading. Of course I trade better when I have more clarity (who doesn’t?).  You get the idea.

Another strategy I am going to use to start improving my trading is that I am going to get back into the virtual classroom.  Wade and Shane have put a tremendous amount of effort into that classroom and it’s an amazing resource.  It is unacceptable, lazy, undisciplined, and loser / spoiled brat behavior for me to not delve into the classroom.  I’ve got this incredible resource at my fingertips.  Why on earth am I not taking full advantage of it?  I’ve been trading like crap, can’t find my way into a seriously positive trade… and I’ve got a resource created by great traders that I can access 24/7.  This is a no-brainer.

Outside of trading, I am working on two things.  Number one, just this week, I finally started working out again.  I haven’t really worked out since April.  Exercise is well known to be the best stress-reliever available.  I have a 24 hour fitness less than 2 miles from my house.  There are a couple of dog-friendly trails within a couple of miles of my house.  My Jack Russell Terrier loves the trails.  I’m sick of having a fat and unhealthy gut.  Hmm, maybe I should be working out.  Another no-brainer.

The other thing I am working on as of the last day or so is to really try and let go of all the negative energy I have been carrying around.  When I trade this bad, especially this far into my trading career, the frustration is through the roof.  I mean it makes me want to slam my head through a wall (good news: so far I have only resorted to banging my head into my desk!).  On top of that, my performance at work has been subpar.  I believe this is partly caused by my horrendous trading affecting my energy and self-view.  This weekend when I get into the classroom, I am going to take a deep breath and make sure I’m studying from a place of positivity and learning rather than having an angry clenched fist in my heart.  Interestingly, writing out my thoughts, blogging, holding myself accountable with screen shots and weekly reports, and exercising will all help towards letting go of the feelings of self-loathing, depression and anger I am dealing with.

I’m really curious to hear what you do to get out of a slump or rut in your trading.  Maybe you’re an athlete or a coach and you have ideas about how to help people bust out of slumps.  Maybe you’ve learned some slump-busting techniques as a parent or a supervisor.  Whatever the case is, I’d love to hear your thoughts on what you do to get out of a rut.

 

-Cyrus Sidhwa
pipaddict73@gmail.com

The value of patience and discipline in Forex trading cannot be overstated.  In order to be a successful trader, you must possess these two traits with unwavering consistency.  As I have gone through various phases of learning, failure, and success over the past 17 months, I have had moments and weeks where I have been extremely patient and disciplined.  However, maintaining that unwavering consistency has been one of the biggest challenges in my trading.

Lately, for a little over a month now, I have finally started to exhibit some reasonable level of self control.  I realize I have not yet absolutely mastered these essential survival skills.  Even during the past month, I experienced back to back days where I allowed myself to over-trade (the only two truly bad trading days I have experienced since mid-May).  As such,  I am constantly seeking new thoughts and inspirations for how and why to maintain steadfast patience and discipline.  I believe I am starting to turn the corner.  I find that I am no longer easy prey for the market.  I now lie in wait and take quick small bites out of the market.

So, what has been working?  What is helping me maintain my patience and discipline?  I go through a routine before each trading session.  The first thing I do is look at the lot ladder.  I must warn you, without the right mindset, this can be a double-edged sword.  The lot ladder allows you enter the number of pips you expect to average per day (along with some other variables) and then see how much money you will be making each week if you climb the lot ladder one rung at a time.  The reason this is so dangerous is that you can make the mistake of raising your daily pip goal so that you can make huge money so much faster.  This is completely counter-productive as it leads to over-trading, not covering profits, etc.

However, I have set my daily pip goal at the Fx365 Institute’s long-time suggestion of just 7 pips a day.  Once you have been trading on the Smart Money Profile platform for some time, you know this is truly a modest goal.  Before any trading session, I look at where this highly obtainable goal can take me.  Here is a screen shot of what one part of my lot ladder looks like:

 

I take a few moments to really focus on the truth that averaging just 7 pips day turns a $1,000 account into a $20,000 a month income in a ridiculously short time frame.  I mean, this is incredibly powerful stuff.  It helps me cover smaller trades rather than trying to swing for the fences.  I still need to get better at not caring if the trade runs another 30, 50, 100+ pips.  It’s tough knowing that I could have made my whole week on one trade, or hearing that someone else pulled a 40 when I had better entry and only pulled a 10 or 20.  However, I come back and look at the lot ladder again and realize I only need 2-4 of my modest winners a week.  I have to always remember, trading is a long-term race.  By taking those smaller positives, I avoid taking negatives that make it harder to reach my goal.  Then, at the end of the week when I have made my goal and am moving up the lot ladder again, I am one week closer to the financial freedom that $20,000 a month brings.  Isn’t that the whole idea?

My other monumental struggle has been to avoid over-trading after taking a negative.  Now, although I am making significant progress towards trading at indifference, there are still times when I take a negative trade and literally feel the stress prickling through my body (what a horrible feeling).  When this happens, I absolutely must exhibit tremendous discipline and STOP TRADING until I have calmed down.  If I look at where I want to be by the end of 2015, I ABSOLUTELY CANNOT ALLOW MYSELF TO DAMAGE MY ACCOUNT.

At those crucial moments, I lean on something Fx365i’s Head Trader Wade Guth once told me.  He asked if I was planning to trade tomorrow.  I said yes.  He asked if I was planning to trade next week.  I said yes.  Next month, next year, etc?  Yes, yes, and yes.  So he asked me, “Why on earth would you get worked up about one trade or one negative day?”  I also reflect on Shane Guth recently telling me that the biggest thing he NEVER wants to do is let one bad day cause him to lose his buying power.  Live to fight another day!

Over this past month, I have also started telling my wife how my trading went each and every day.  She has believed in me and allowed me to stay on this journey despite several months without positive results.  Believe me, it is not easy to tell her when I am down for the day.  However, when I have taken a couple of wrong trades and walked away with relatively small losses, I can proudly tell her I kept my discipline and didn’t throw money out the window like an idiot.  Knowing I will have to report to my wife on a daily basis helps me maintain steadfast discipline and patience in my trading.

One last thing I think about is basically a lesson from Rhonda Byrne’s famous book, The Secret.”  The Secret teaches that if we want something, we have to hold it in our mind’s eye, believe we have already obtained it, and be fully grateful for having received it from the universe.  So yes, I am thankful for my huge trading account.  More importantly, I am thankful for being a highly successful trader with tremendous patience and discipline.  I know I did not get to this point by getting emotional and overreacting at every unexpected twist and turn in the market.  I am thankful for the self control and confidence that made me the trader I am today.

I realize the lot ladder may not help everyone.  Of course everybody is not married or willing to discuss their daily results with their significant other.  I also know that not everyone has the same view of The Secret as I do.  That is not the point.  What is important is that I have found ways (and will continue to seek and find new ways) to exhibit patience and discipline in my trading.  If you are struggling with patience and/or discipline in your trading, maybe you can use one of my tools.  Some of you will have to come up with something totally new that works for you.  The key is to find something that truly resonates with you – something powerful enough to give you the internal fortitude to do the right thing in the face of strong negative emotion.  Once you find ways to be patient and disciplined, you will be much more likely to survive in the unforgiving Forex jungle.

Two quick notes:

1) One other thing that has helped is writing this blog.  Thank you so much to everyone who reads it and especially to those of you who reach out to discuss your own trading experiences with me.  Thank you, thank you, thank you!

2) In regards to the 7 pips, you may be saying, “Well what about the commission?”  On my personal spreadsheet, I subtract 1.5 pips from each trade to come up with what I call “net pips.”  This number will vary depending on the pair you trade and whether you are in a micro account.  I can help you figure out the exact number if you need help with this.

As always, please feel free to reach out to me at pipaddict73@gmail.com.  I LOVE hearing from fellow traders!

-Cyrus Sidhwa

Smart Money Profile Trader