Tag: Exit

Goals are like leaders. Everyone knows they can be powerful parts of success, but because the term is used in such broad ways, vagueness can surround the term. Have you ever heard a one word definition of leader? John Maxwell says leadership is simply “influence.” This may not be a sufficient definition for some, but for me it was very clarifying. I’d like to share a similar epiphany I had when I thought deeply about goals.

Let’s start with a few semantics. To become financially free is what many people would consider to be a “goal” in life. It’s not mine. I want to become financially free so that my wife can stay at home with the kids, I can pursue my desire to coach full-time, and we can live a lifestyle that supports health, happiness and peace.  These are huge motivating forces in my life.  They are what get me excited and help me persevere through hard times. But they describe my dream… not my goal.

What is the difference?

I want my goals to be something over which I have complete control. So my one word definition for goals is “steps.” Maybe it’s my competitive nature or my competitive nurture growing up in sports, but I like there to be a winner and a loser…a yes or a no…did I accomplish the goal or didn’t I? I typically ask my teams, “What are your goals for the season?” Many times they’ll say, “To go undefeated.” Then they lose the first game. Does that make them failures? Should they quit improving and stop trying because their goal can’t be realized? Sounds preposterous, but I’ve seen it happen all too often.

So their understanding of goals (or lack of understanding) actually prevented growth. They didn’t have complete control over their goal. They had no idea if the goal was attainable because they  couldn’t control how good their opponents were that season, who was going to get a season ending injury, etc. So why not call it a dream, not a goal, so it still has the purpose of motivation but doesn’t make you a failure if you don’t reach it? And here it is…the “certain aspect” that was so helpful to me in having goals play a meaningful part of success in my life: It is the fact that my goals are process oriented and not outcome oriented. Processes are actions by me that I can control.

The processes may be difficult for me to accomplish, but that is OK because they are completely within my control. Outcomes are not always in my control. For example: My goal is NOT 50 pips a week. That is where I want to be, but right now I don’t have the skill to accomplish it. So my goal for the week is to make all of my entries with a physical risk out. Because I don’t always recognize good entries or exits, because I don’t always measure from the right spot, because I trade emotionally, I don’t have 50 pips a week as my goal. But 50 pips will be an outcome of my behavior.

So if I’m going to improve my outcomes, I must improve my behavior as a trader. I must do things (take actions) that will improve my chances of positive outcomes. A high level trader, Billy Himan, looked at my screenshots and made the recommendation “never take a trade without a physical risk out.” So that has been my goal in the last 4 weeks. My trading has improved vastly. Only one of those weeks did I reach 50 pips, but I felt successful every week because I reached my goal and saw improvement. I am closer to my dream which is a great feeling! An addicting feeling actually.

And it was that simple goal or “step” that caused growth.

If you’re a new student don’t make your goal to get 10 pips this week. That is an outcome that you don’t have complete control over.  You don’t have the skill to do that yet. You may get lucky and get 50 pips, but that doesn’t make you a better trader or get you closer to your dream. Instead, make your goal, “I’m going to ask two questions of the instructor every day this week.” Or, “I’m going to see if I can sit and watch the market for one whole session and NOT make a single trade.” Or, “I’m going to get to the classroom three times this week.” These were all goals for me because even though they were difficult for me as a new student they were completely within my control.

For some of you more experienced traders you know that 50 pips a week is a great goal for you because you know the process you need to follow to get that goal. I would still make the case that you should make other goals that focus on the process itself. My guarantee is not that you will gain more pips this month but that you will learn and grow – so that dream of yours will become a reality much sooner.

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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

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In time, the four hour work week can be a reality for professional Forex currency traders, especially Forex365 Institute graduates.

Yes, the Forex365 Institute’s Market Maker Course supports a PIP business owner’s goal of capturing 50+ PIPs a week—a number that will allow strong and steady trading account growth and the rise of your PIP value to $100 and beyond.

Imagine, whether you’re an employee or a business owner, reducing your weekly work hours from forty  to sixty or more, down to fifteen (as a Forex365 Institute student), and then down to four (as a seasoned, veteran professional Forex currency trading Forex365 Institute graduate).

The four hour work week concept is simple—exclusively trade high news where we normally expect the most price action volatility and movement.  With smart (emotionally intelligent),  high probability trades using the full complement of Smart Money Profile tools (the Market Maker Course software package), capturing 50+ PIPs a week is exceedingly doable for all disciplined, responsible and determined (never day die—failure is not an option) students.

In the image above, my five-minute chart shows an example of high news trading.  In this case, it was on Wednesday, August 19, 2015 at 11:00 am PST—Federal Reserve FOMC meeting/minutes release.

I did five trades over the course of about two and a half hours.  The first three trades were shorts and the last two trades were long.  A quick summary of the five trades follows:

  1. This trade came before the news when the fifteen-minute chart printed a manipulation wick long and a turn short avoiding taking out a blue liquidity line.
  2. This trade came after a breath on the five-minute chart, also short and before the news hit.
  3. This trade came after the news hit and the momentum was still short—I exited as the price action approached a set of net lines.
  4. Now, the aftermath of the news shows the price action settling down and I took a quick long as the price action continued to move away from the same set of net lines mentioned in trade 3.
  5. This last trade (long) came after the price action moved away from a grid line and back through a five-minute chart dot.

The trading consisted of five trades for a total of 113 PIPs in a two and a half hour time frame.  To me, this is the ultimate in PIP business ownership as a professional Forex currency trader.  I still have a ways to go to do this consistently, but I’m on my way.  The good news is that this is available to all my fellow instructors and students at the Forex365 Institute.

 

-Ira Barnes

Fx365i Instructor

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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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Risk management really saved me from having a truly terrible week last week.  My win-loss record was only 3 wins vs 9 losses.  One of those wins was less than 3 pips.  Without solid risk management, I could have seen myself down a boatload of pips.  However, I managed to keep it together and was down a relatively modest 19 pips for the week.  Obviously I’m not proud of going 3 for 12 and being down for the week, but I sure am glad I kept my losses under control!

After trading for a year, I’ve heard some different theories on risk management.  Some people say you have to give a trade a fair amount of room.  Trying to decide just how much room is “fair” depends on where you “know you are wrong.”  I believe this is a concept that takes screen time to fully understand.  In order to avoid taking large losses with this theory, it is critical to have sharp, well-placed entries.  If you chase a trade, it can be a long ride down to find out you were truly wrong.  We’ll talk more about this in a minute.

Another theory I’ve heard is that as soon as a trade doesn’t behave exactly as you expected it to, get out of the trade.  The problem is this isn’t our business – it’s the market makers’ business.  If we knew exactly how trades were going to behave, we’d all be batting a thousand!  However, this concept certainly has a lot of merit.  As is so often the case, it’s the subtle nuances that make all the difference.  For example, in an SMP trade, if you get a market maker dot, and you expect price to hold below that dot, if price gets above the dot, Dump The Trade!  The same idea holds true for Wealth Smart traders taking a trade up against trend break.  It’s so tempting to just want to be right and let the it play out further… only to watch the trade go further against you.  To be successful, you must not only plan a trade, but you must then trade that plan.

I have also heard a theory that you should run a large stop, sometimes as large as 30 – 50 pips.  The thought behind this is that if you see that the trade is going against you, at some point it will take a breath coming back your way and allow you to get out without as big of a loss.  This is one theory that absolutely doesn’t work for me on multiple levels.  First of all, if you run a huge stop, guess what?  PRICE CAN HIT IT!  Ask me how I know.  Nearly every time I have taken a large risk on a trade, I have hit my stop.   Additionally, when it does start breathing back in your favor, guess what?  You don’t want to get out!  You feel like the trade is finally going your way and you decision to run such a large stop is paying off.  Until 10 seconds later when price snaps hard and stops you out.  To each their own, but that style of risk management is definitely not for me.

I truly believe you have to find your own style of trading and your own style of risk management.  I like to run a tight stop.  In fact, my stop is set at just 10 pips.  On most of my trades, I will almost immediately tighten my stop up even a couple more pips.  A huge part of the reason for this is that I am absolutely useless at clicking out of a trade when it is going against me.  Whether it is pride, ego, blind optimism, or just plain stupidity, I constantly find reasons to stay in the trade.  However, if I have moved my stop to  minus 6 or 8 pips, I no longer have to worry about it.

Now, I also believe setting my stop at a place where I know I was wrong about the trade.  In order to accomplish this, I truly have to focus on my entries.  For example, I frequently want to enter close to a market maker dot (if you are a Wealth Smart trader, think about trying to get in close to trend break).  Let’s say we’re trying to go long.  The further price moves above that dot, or above trend break, the larger the negative we would have to take before knowing we were wrong.  Why?  Because we would know we were wrong when price moved below the dot or snapped short through trend break.  If we entered the trade 10 pips above the dot or trend break, there is too much risk.  If we entered 2 or 3 pips above, we have managed our risk much more efficiently.

Well, I hope this is helpful to fellow traders.  Find your own style of risk management that makes sense to you.  As for me, I need to consistently stick with my risk management principles.  But to tell you the truth, I’m sick of talking about losing.  I need to be more patient and find better trades.  Hopefully over the upcoming weeks, we can discuss when to exit trades for profit!

I always love hearing from fellow traders.  Please reach out to me at pipaddict73@gmail.com.

Happy Pip Hunting!

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