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05 Dec 2011

Message to newbies..

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I’m just gonna throw this analogy out there. Just something I randomly came up with just now..

People spend 4 yrs (or more) to get a degree (or multiple) in order to get into the career that they want. If you want trading to become your career, you gotta spend the time (and money) to learn how it works then you’ll succeed eventually. There’s no easy / prefect way to get there in one go, it takes time and effort.

I’ve now been exposed to the markets for 2 years, but I’ve only had about 4 months of collective trade time. I don’t watch the markets constantly, day in and day out. So I’m not suprised at my progress speed. I know and admit I don’t spend the time like some people do. I don’t have the time to do that, given that I’m a full time student + part time job + business + blog etc. So, don’t be too hard on yourself if you don’t understand something overnight or over the course of a few weeks. This is a long journey, if you’re persistent to make it into a career, it won’t matter. Because you’ll enjoy spending the time and effort to get thru it.

PS: I’ve only taken 1st yr summer off, then from 2nd yr onwards, I’ve been in school constantly. I only started stocks Mar/Apr 2010 which was the end of 3rd yr university.  So I’ve always been pre-occupied with something else, either school, business or whatever it was. I’ve never once woken up and the only thing on my mind was trading. I would love for that to happen, then I could fully focus on perfecting my trading skills but I don’t see it happening anytime soon. So, until that day comes, trading remains to be a side hobby which at times provides additional income for me :) .

19 Sep 2011

Forex – Price Gaps = Fake!

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Early morning posts ftw lol, kinda bored, not really trading or prepping since I prepped last night. Wanna talk about a pressing issue for newbie FX traders or FX watchers in general.

There’s no such thing as a “gap”. As you should’ve noticed already from looking at my charts. I never have gaps in mine, why? Because Oanda trades pre-market (3pm-5pm EST), other brokers open around 5-6pm. So they don’t show the price action between 3pm till the time they open. Hence this is a “gap” on their client’s charts.

Think about it, does the forex market really close on the weekend? No!

What do international businesses do? How do they have business transactions with each other? Foreign exchange as we know it, always happens. It’s just the question of whether or not, it’s open to retail traders. Classic example is your credit card company. I’m in Canada, if I were to buy something in USD using my visa card, they’re the agent to exchange CAD for USD on my behalf to buy the goods. But that’s besides the point of this post, just wanted to say, that forex is 24/7 in reality unlike stocks. You can’t trade stocks (or that I know) off the market.

Back to gaps, gaps don’t exist. In that pre-market time, Oanda provides clients the ability to trade “the gap” that’s forming for other people lol.

This is a simple topic, nothing really to elaborate on, just know that, there’s no “gap” and that there’s no need to “fill the gap” as the expression goes. Newbies think “oh, it gapped down in the open” like EUR/USD did this weekend. They think it’ll go back up to Friday’s close then start to trend again, there’s nothing to back this up. Companies don’t see that gap, they may have gotten a price deal inside that gap for all we know.

I’m just going on and on, repeating the same thing over and over by now. Bottomline: Gaps do not exist and they do not need to be filled!

29 Jul 2011

FX – How to scalp/trade channels

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As promised, here’s my “how to” post on trading channels. This works better for channel ranges of 20-40 pips, any wider and you better be patient as a hermit because the cycle would take forever to finish. Smaller channels of 5-15 pips are riskier for binaries but still do-able for FX with tight SLs incase of huge swings against you. So, basically the range of the channel is proportional to the time spent waiting for trades to play out.

Order types 101

If you don’t know the order types, you shouldn’t even be in the game right now, this is like the first thing I’ve ever read on investing… Not to say that my definitions will be correct, but this is my perception and how to use them

Buy (Sell) Limt: Price you’re willing to buy (sell) something for
Buy (Sell) Stop: Max you’re willing to buy (sell) something for

What’s the difference?

The difference depends on where the price is currently at, if the price is at $10, and you’re only willing to pay $9, you place a buy limit at $9 since you’re only willing to pay $9. If the price is at $10, and the max you’re willing to buy this for is $11, you place a buy stop at $11. Vice versa for sell orders. Each has it’s uses in different scenarios, the buy stop order is used in the strategy below to get back into the trade after being stopped out incase the channel still plays out, so you don’t miss the trade. See the scenario below to understand better:

I will be using a channel of 28 pips on EUR/USD during london session, so this is backtested obviously, not real time. This would be one of those perfect channels unlike the channels that I posted in the Live trades post with binaries.

Blue vertical lines signify entry into the channel range
Green horizontal lines signify the channel range (drawn from S/R/Channels of previous days/weeks) = 28 pips
Blue horizontal line signify 7 pip SL outside of the range, which is 25% of the range. I like 25%, you can adjust based on your MM, R/R or tha current PA of the channel
Red horizontal line signify the inner 14 pip channel in the latter half of the channel after action momo subsided

Regarding the buy stop, the RR is still good because if you get stopped out again, you lose 14 pips total, but you could potentially gain 28 pips. Depending on how you trade this channel, potential gains of 100-150 pips within 6 hours of scalping, all done with considerably good RR. 1/4 for the most part, up to 1/2 on the buy stop order, and maybe 1/1 on the red channels depending on your risk level.

Now, I haven’t researched this so I’m not sure if there’s an EA out there to trade channels for you, but that would probably be better than manually entering the trades for 5.5 hours cuz I’d get tired after a while of staring at this shit lol. The chart should be simple to read and understand the strategy, works great for binaries as well.

Have fun with this strategy!

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