In the world of investing, foreign currency can often times be viewed as the Wild West. In general, people from the ‘financial planning’ world who often use, and promote long term investment instruments that use trends and dollar cost averaging, generally have a scornful view of the FOREX market.
While this can be understandable, usually it is as a result of a general misunderstanding of how the FOREX market works and why it is different. Approaching it with the same strategy as say the S&P 500 is akin to showing up to a horse race with a greyhound dog.
The ‘ah hah’ moment for most comes when they realize and understand that the FOREX market is unregulated, and as a result, is a completely manipulated market. Manipulation scares most because it creates a level of perceived unpredictability, until they realize that manipulation occurs systematically. It occurs systematically because the people who manipulate the market are those with enough buying power to temporarily affect price direction, which causes fear amongst the general public, which then causes them to close their temporarily losing position. The ‘Market Maker’ can take the other side of that same position and now go and win with it.
Anybody who has ever dabbled in FOREX trading likely has 1st hand experience with market manipulation. They are sitting in a winning position for hours, maybe even days… Slowly their profits are increasing, and then suddenly (usually in conjunction with an economic news event,) the market races against their position and takes them from profit to loss, sometimes even hitting their stop loss.
Above is an hourly chart from the EUR/USD that illustrates several examples of market manipulation. You can see that there is a clear trend to the short side. The circled candles are manipulation ‘snaps’ that occurred inside of an hour, probably in minutes, that took out hours upon hours of previous areas that retail traders were likely entering trades short.
What is important to know about market manipulation and how to successfully trade it, is exactly what we teach to our student traders at www.forex365institute.com.
Once you learn the step by step formula that the ‘Market Makers’ use repeatedly week in and week out to make money, you can now wait for manipulation to take place, and take your positions with confidence along side of the big banks because you will know how and why they are doing what they are doing to make money.
‘It’s not what you don’t know that will get you, it’s what you think you know for sure, that just isn’t so.’
Until Next time, Happy Pipping!
By Payton Parnegg
Society has us trained to believe there is only one way to make money. We have to get up early, and come home late. Miss our kid’s soccer games, and save up our vacation days to take a 3 day vacation an hour away from home and even then, we need to bring our laptops just so we don’t get too behind on our work load. I am happy to announce, this is only one way (and unfortunately the most common way) to make money. But it isn’t the only way. We don’t all have to be stuck in the same routine. If you want to travel the world, do it! And if you don’t feel well, take the week off! Forex Trading is a great way to make money. You can work while traveling the world or while your kids are in school. As long as you have a computer and access to the internet, you’re in business. This is why Forex Trading is becoming more popular, because it gives you the opportunity to live without having those work strings attached. You have freedom and control over your entire schedule. Sounds dreamy right?
So how do you get started? If you want to start your journey to being a professional trader, you should start at FX365i. The environment is very welcoming and open and the staff is very knowledgeable and experienced. They have an awesome classroom and daily live virtual feed for their students and if you look at their business model, you’d know they want their students to succeed.
Of course, I am speaking from an outside perspective. I am not a professional trader, in fact have not even started my course at FX365i. But, I have been interning for the company for a few months now and can confidently confirm that this institute is a community of genuine people who love what they do. Every time I walk into a room to someone I don’t know, they are more than eager to reach their hand out and have a conversation. What a great environment right!? That’s the kind of environment you want to be in to learn. One where people are friendly and where you feel comfortable to ask questions. And let me tell you, this is the place that meets all those criteria!
I am planning to go through FX365i after I finish school. I cannot wait to finally understand what a pip is and to really understand the market, and, of course I cannot wait to find out why everyone makes a big deal out of the psychology behind trading! I can tell from reading the blogs it’s going to be a long journey full of learning and hard work. But by keeping my goals in mind, hopefully one day I’ll be able to live the dream everyone is talking about!
Good Luck Traders!
What to expect as a new Trader
In this blog I want to explore the topic of actually trading. Imagining the glamour of what it means to do is definitely the easy part; the freedom and money. Strategies aside; what are you actually doing while sitting there watching the charts?
When you sit down to start your trading session, it usually involves quite a bit of mental preparation along with some self-talk. A positive ritual to get into the right frame of mind is essential for profitable trading. For me personally, I usually review my own personal reasons for trading (which is just a simple list of why I need to the best job I can). This is then followed by a purposely quick look (around 30 seconds) at what price has been doing over the last 48 hours. If I am unable to form a coherent understanding of what this means for future price action then I step away for 30 minutes or so and then reevaluate. Wash, rinse, repeat.
Next comes the real analysis of price. This usually includes a lot of measuring and in depth looks at past movement in relationship to current price. By far the most important piece of this is being truly subjective and not convincing yourself of some outlandish trading plan. You have got to devise a trading plan that has got a reasonable entry, stop, and limit, and you have to stick with that. It can be very easy to convince yourself that you’re at a turn, but 9 out of 10 times this simply is not the case. If you’re able to fight off the urge to immediately jump into a trade, then the real test of a trader comes into play… Waiting.
Waiting is what you are going to spend the majority of your time doing as a trader. Nobody told me it could be so boring when I started. Your income is directly tied to your ability to wait so that your timing is good as a result. For those that have not traded before this may not seem like much, but waiting while being intently focused on a moving target can be pretty tricky business. Your mind will constantly be fabricating a less than optimal reason to just jump into the market. At some point of the endless waiting there comes a moment, that given the understanding and screen time, you are presented with an actual entry.
Depending on a few different variables (news, volume, overall movement, etc.), this entry opportunity can last anywhere from 10 seconds to around 20 minutes. It’s typically on the lower side though. This is a fork in the road. Sometimes despite all that patience, you still can’t make yourself get in only to be upset with yourself for the rest of the session. In the event that you do take the trade, you’ll most likely find that for the next while you are going to be hyper sensitive to any movement in the market. This is called “anchoring”, and something you really want to avoid while trading.
After the initial tension of clicking into a trade is over, it is surprisingly followed by a numbness to the price action (especially if you are drastically positive in the trade). Yet again this is a thought process that you will want to avoid. When a trade is working out well, a trader’s risk tolerance is prone to also go up. This is usually how a seemingly competent trader may see a massive profit only to ride through and turn right into a meager profit. That money is not yours until the position is closed and it is sitting in your account.
Now that you have closed your position out for better or worse, you are faced with another challenge; avoiding overtrading. Overtrading is one of the top account killers in Forex. If you have ever had an experience in a casino that ended in a personal resolution to never go back, you might have experienced something similar to overtrading. As much as many (myself included) wish it wasn’t the case, there is usually only 1 good opportunity per session with about 2 far less optimal variations on that same trade. Taking more than 1-2 well thought out trades in a session is a surefire way to dramatically increase the risk you take on. Needless to say it usually doesn’t end well for anyone but the Broker and Bank.
While this all may seem very daunting for someone that has never traded before, rest assured, pulling off a great trading session is one of the most rewarding feelings that you can experience. The wins (and losses) are yours and yours alone. Getting to the other side of learning to trade is an eye opening experience that forces you to look at yourself and become the best that you can be.
Thanks for reading and be sure to subscribe for more emotional and technical analysis of Forex Trading.
Here’s what happened in today’s Market.
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Have you asked yourself yet, ‘what is a PIP anyway and why should I care?’
Great question! A pip is an increment of measurement in the FOREX market. It stands for ‘point in percentage’ and depending on what currency pair you are trading, typically is 1/100th of a penny.
This is important to you for 2 reasons. The first layer of importance lies within the Fx365i methodology that we teach at the institute. And the second, is eventually going to be important to your bank account.
First of all, the ‘Market Makers’ (mainly the big banking institutions), follow a repeated pattern of business in the market. They accumulate the market to soak up liquidity (retail trader’s money), then they manipulate the market to knock said retail traders out of their positions (often times the majority of retail traders are correct in their market speculation, but not before the market swiftly moves against them to take them out of their position,) before ultimately taking the market where they need it to go to profit heavily. This is all measurable in PIPs, which is good news for us because knowing some of the measurements these guys use, we can increase the affectivity of our speculation dramatically so that we can trade for profit.
The second reason that this is important, is because by knowing how the market reacts at certain prices, based off of repeated measurements, we can have a specific place of entry for our trades. This increases probability, and more importantly, allows us to more effectively manage risk. If you buy a currency low, and it moves upwards in pips, you can sell the position you are holding and however many pips make up the difference between where you bought and sold, or sold and bought again (trading short,) are now yours to keep. Simple enough right? Even better, the market moves 100’s of pips ALL THE TIME…yes, like every day!
Oorah you might be saying to yourself. But wait! It gets better.
Pips are pips, and if you learn the skill set of capturing pips consistently, you can literally write your own income. How you ask? Not by capturing more and more of them, but by assigning a higher and higher dollar amount to them.
This is the magic of FOREX. Once you learn how to safely capture PIPS, you can give yourself a 50% raise overnight. You can do that over and over again. Imagine walking into your boss right now and saying, ‘I am going to produce the same amount that I currently do, I am going to work the same amount of hours I always have, and I want you to pay me 50% more!’ Now imagine doing that again next month, and then the month after that, in perpetuity.
No job I’ve ever had works like that, which is one of the many reasons it might be worth your time to learn how to safely and effectively trade the FOREX for profit with us!!!
Until next time, live happy and pursue your passion.