Showing posts with label forex myths. Show all posts
Showing posts with label forex myths. Show all posts

Forex Myths: Simple vs Complex Strategies

Since I started to learn trading, I heard a lot that "I should keep it simple!". Maybe all of you are familiar with this sentence, but what this really means ?

Based on a healthy trader plan, beginner or not, the right way to start trading a new strategy or system, is to test it on demo for a while, before jumping on the real money account.

So, lets say you are a beginner and learned already the "simple" tools like Trend Lines, Support/Resistances, Channels and Moving Averages. You started by paper trading (history), you tested it on live (but demo) and you decided it's working great. And you started real money account trading with these tools. And it's working. Whats the next step ? Are you gonna stay with this trading style ? From my personal experience, I don't think so.

First of all, it's human nature, to "complicate" things. Second of all, you can't use only the above mentioned tools, forever. Because you will notice is not working all the times. And you will start to wonder why. That is a crucial moment for a beginner trader, because they will jump fast to the  conclusion, that is not working so they will think of changing it completely, with something new and different. Which is wrong, sometimes. Maybe you didn't learn it well, so all you need is to stop trading it on real, go to demo again and don't come back to real, until you will find out what went wrong. Also, you can add other advanced tools to filter your fake signals.

Therefore it doesn't matter if your strategy or system will work or not, you will change/upgrade it, all the time. But the main question is still: How simple you should keep your trading style ?

For those of you that studied my course and/or attended my live classes groups, try to remember that time, when you joined advanced level class. You were starting demo trading for beginners lessons and tools, already, while you were doing paper trading (history) with the intermediate level tools and strategies. Also, when you completed the intermediate, you started to use those intermediate level tools, on live, but still demo. On the next step, you started to use, the advanced tools for paper trading again. But your live trading portfolio already contain beginners and intermediate level tools. And ofcourse, when you finished the advanced level class, you started to use on real, the beginners and intermediate level tools, while you were still practicing demo, the advanced ones.

If you will try to remember your basic charts, from the beginning, you will all notice those tools "looks too simple", for you, now. That is because, many of you are advanced traders right now. And probably some of you, already using the advanced tools, on your real money account.

This is the most logical cycle of learning: getting familiar with the basics, practicing it and using it profitable, in the end.  By working like this, after many years, you will notice a big difference in your trading style, because even advanced tools, are simple for you, today. 

The real problem is when you think, you already reached the advanced level, but you didn't took the right steps and you are using it wrong, even the basic tools. This could happen if you are having a lack of patience in your learning curve.

Simple vs Complex Strategies

By keeping your trading style as simple as can be (efficient), doesn't mean you should stop learning. In trading learning will never stop. It shouldn't. That doesn't mean, that you should try all the possible ideas of all the traders around the web, either. In my point of view it means you should always look for new ways of improving your systems or your trading style. Because you will try to maximize your profits. You want to be more efficient. And since there is no perfect system, you will always try to explain yourself those bad entries signals, exits, etc. This is why we keep the trading journal, right ? Those marks, chart examples and questions, will help us to become better traders, eventually.

Could you ever go back to your previous "simple" tools ? Should you ?

In my way of seeing it, it's not likely to do it. Because when I've decide it to go on real with that tool or system, it means I've tested it for months. So I had a good reason to proceed with it, on the next step: the real trading. Same steps, for upgrading it (adding new tools). So, there's no point for me, to make it simple than that, anymore.

Conclusions

I think this common saying "keep it simple!", is good, mostly for the beginners, due to human nature of complicating things, when they shouldn't. Because in that moment, many think a complicated chart is better. But is not, for them. That's why we say about their charts that looks like "Christmas Trees", when they add tens of oscillators and indicators, that will make them more confused, than helping them. That it is wrong, indeed.

But because some people will remember this sentence, later on, when they reached the advanced level, they will stop learning, thinking "Hey, I should keep it simple!". Which in my opinion is wrong, again. You will never become pro trader like this. You will remain a beginner forever.
(e.q. Remember when you saw my charts, initially ? Remember all you questions about ? How about now, when you already drawing it, almost like me ? Would you stop developing, now ? Would you go back to your "simple" charts, again ?)

Well, ofcourse depends on what do you expect from your trading activity. But don't you ever think, that using only few simple tools, you will have profitable results forever.

Therefore, I think this is a misconception, for most of the traders, beginners or not. In my opinion the right saying should be: "Keep it simple, according to your level!".  And as advanced level trader, don't you ever think "Simple is better!", as long as you know well and you tested properly your "complex" strategy or system.


Best Regards,
^^_Lord_Ice_^^

Forex Myths: Intraday vs Higher Time Frame (HTF)


After reaching a certain level of knowledge, the beginner trader look for a strategy or system, to start his paper trading. Here, in this stage he will take a decision that will haunt him for years. Some people realize it later, some people don't. And they will "run in this circle", for years.

So, this stage can be considered, the first huge mistake, that will change his trading activity for at least a long time, if not forever (Until he will quit trading or keep trying it, but with small results or none). His dilemma is:

Higher Time Frame or Lower Time Frame (Intraday) ?

Due to human nature, most of the people have a lack of patience. In this stage they want to start real trading soon. So they will chose a Intraday strategy for paper trading, then demo and in the end on real trading account. If the beginner would have proper knowledge he would still have to test this strategy for 3-6 months. But again, the lack of patience would make him to consider a shorter period of testing, before starting real trading. This combination of starting Intraday trading, combined with a short period of testing on demo is the most lethal, for the beginners. In my opinion, the fail is close to 100%. ( How many traders, even profitable ones, can say, that they started to have profits from the beginning ? I didn't ! ).

Like I said, the first mistake is choosing Intraday. And this is why I wanted to explain you why, in this article. There is another reason that will make the beginner to choose the Intraday trading (strategy), except his lack of patience for testing. That will be the sellers and all their promo materials. And since the beginners started to learn about trading from their materials, he will be influenced to chose this path.

Lets see...why! And let's take a close look at the real deal of the sellers in this area.


Brokers

As you all know, we can't start trading as a retail trader, unless we are trading using "the third party", the broker services. Also, as you all know, the main income source for the brokers, is the spread.

So, let's do an exercise and see what would be the best deal for a broker:

Let's say he would have a client, that trade on Intraday. Probably will make 10 entries + 10 exits/day at a spread of just 2 pips.

10 x 2p + 10 x 2 pips = 40 pips/client/day/pair

And in 1 month, lets say this client will trade all days, from Monday to Friday:

20 days x 40pips = 800 pips/month/pair

If we will consider this for 1 full lot and aprox $10 for 1 pip...and probably the client will trade many pairs, each day, that must be a good deal...for a broker.

Now, lets see how much will pay a client ( and will earn the broker ), if the client, will trade as a "swing trader" or a trend follower. By trading all month, on HTF, the client will not have more than 10 trades.

10 trades x 4 pips (entry +exit) = 40 pips/month/pair

So an Intraday trader would pay 800pips/month and a Swing Trader would pay...40pips/month (or a Trend Follower on HTF)

Now, what do you think is the best deal for a broker ? An Intraday trader ? Or a HTF trader?

That doesn't mean that a broker want his clients to lose money. They just don't have time for all their clients to learn after the initial contact (phone/e-mail) or to trade HTFs. That broker employee can't go to his boss and say:

"Hey...I've contacted few hundreds of potential clients, this month. They all agree with our services and they will start trading with us...in 6-12 months from now...when they will learn about trading!" If the broker would pay to that employee for 1 year...without having any new clients, he will ruin his business. Also, if they were agree for a monthly commission (from spread mostly), do you think that the broker employee would like to see you doing 10 trades/month, only, when he could have all his clients doing 10 trades/day...?

Imagine a broker that will earn so hard his clients, in months or years, since they practice and start to trade HTF (less profits for the broker) and then, to lose most of them, just because another broker have a new better services. This will ruin the initial example broker business, fast. So he must be able to sign faster the contracts with new clients, even if they will lose most of them in few months (because they'll blow their accounts), since the broker can have more new clients each month.


Introducing Brokers


There are IBs that receive a bonus for opening an account and some don't. But still, for both cases, the broker will pay the IB, a commission from their clients payed spreads.

Usually this commission is around 20- 25% from the payed spread (by the client as trader). So, from those 4 pips/ trade (entry +exit), 1 pip will be the IBs commission. Broker agree to pay this, because that IB, found him a client. The broker would of payed this 1 pip/trade commission to any of his employees.

Now, what do you think is the best deal for a IB since he get a % from the spreads? An Intraday trader ? Or a HTF trader?


Signals Providers

The signals providers charge a monthly fee, for providing to their clients trading signals for their activity. Usually these services fees are around $100-300, for one pair signals or more pairs.

Anyway, lets say you payed $300 and you wait for a signal. Lets say the Signal Provider, wont give you any signal for your payed pair, for...10 days. This could happen, if he would provide you these signals based on HTF analysis. How would you feel to pay a monthly service and to start with 10 days, with no activity ?

Not to mention that this Signal Provider, has the "money back" privacy (as marketing). If they would provide these signals on HTF, they would have tens or hundreds of e-mails/day asking for their payed signals that weren't received yet or money back. Doesn't matter how good are these signals

So, they have to provide you Intraday signals. Because in this way, they can "find" at least few possible entries, starting the first day. If 3 from these "signals" are wrong...they could say: "Hey, but 2 were good! We can't be right all the time! Wait for the next signals!".

They don't care about the quality of their signals. They can always say: "Hey, nobody can be 100% profitable!".  And as long as you receive it daily, you are happier than paying $300 for only 10 signals. And if they'll "ruin" their image...they will start over, under a new "brand" website, ID, etc.

That doesn't mean that a HTF Signal Provider, is good for you. Even if you are profitable with it, you will never know how they do it. So, you'll never learn and you will always be a "client". Not a trader...


EAs/Indicators sellers

Usually the EAs/Indicators are built for Intraday. For HTF are not suited, because you need to keep your trading platform on.

Imagine of keeping your trading computer ON for 2 weeks, just to find few HTF entries using an EA. Is not that comfortable.

Same for a very expensive, Indicator that was built for HFT. You just have to watch it everyday, for hours, hopping to find an entry "confirmation". And it could come for few times/month...


The same situation will be for Strategies Sellers, Trainers and Money Managers (that charge a monthly fee instead a % from profits ) and sometimes even book writers - personal websites with referral links - since all the sellers in this field start their services "portfolio" as a Introducing Broker (for a commissions from spreads), they will  promote Intraday trading. Because is in their best interest to do so.


Conclusions:

As a client, you need to see faster, the results (lack of patience), even if those results are not so good, initially or never.

And instead of promoting HTF (less money for them) for having a bigger % of profitable clients, the sellers prefer to "lose" some clients and replace them with new ones fast, each month.

I'm not saying that everyone will lose money on Intraday. Just, that all the sellers promote it, because Intraday = more money for them. Knowing this, you might wanna think about it, when you want to start you trading activity.

Remember, also, that Intraday "belong" to Institutional Traders ( Trading Companies with with hundred to thousands floor traders, that have way better internet connections than home users and fast news sources - before even posted on newspapers or websites ). You don't want to start your trading carrier here, in this area, as a retail trader (work from your home).

Beginners should start really HTF trading ( ideal Weekly). Then as they'll have better knowledge and experience, they can "lower" the TF. Personally, I found out that W to H1 is the "safest zone" for a retail trader (beginner or advanced one). Specially one that don't want to be +8h/day in front of his computers.


Best Regards,
^^_Lord_Ice_^^

Forex Myths: Seems that everyone is trading, today.

I'm sure everyone searches the web for the info related to trading. We started like this as beginners, in need of a strategy or system. We do it as advanced traders, searching for news, analysis, rapports, etc.

While we are surfing the web, we see a very aggressive advertising campaign, usually promoting services related to trading. We can say this is ok. This is how they look for their clients. Now, since social networking has exploded, we find many people promoting trading.

Some of them claiming they are "traders for living". This can make us believe that everyone is trading today. So who is behind this advertising around the web?  Usually these guys have the "I'm a rich person, I do this just for fun!" attitude, when they promote the "services" (claiming they are real traders).

Another problem starts when this kind of “trader" starts to combine these "services" presented down below and offer you a complete "portfolio" of services, from opening an account to managing it. You will never be a successful trader "working" with these guys. You will just fill the "more than 95% losers" in this field. 

You can spot many of them on Facebook, usually having a "sexy girl" as their profile photo (not more than 3 photos). Just try to read the comments on their photos: "wow, so hot!", "what a beautiful IB/MM, I have!", "thanks for being my friend...you are so sexy!”

First time you notice that, you will make a huge LOL, but if you will try to think more about it...you will start to cry. This is how many poor people are tricked and usually they lose all their money. Me, personally, I would never ever pay for something (service/product), just because a "sexy girl" presents me that offer, but I guess there are lots of poor men out there...

In my country there is a saying: "Is not a fool the one that ask...but the one that pay the ...****! I guess in this case these "traders", that need to sell services to “make a living” from trading, are right, but is this ethical? Is there anyone going to do something about it?

I'd like to believe that there are still fair people out there that promote these services, in an honorable manner. This should be the smart people’s business, not a scammer’s world.


Introducing Brokers
Introducing Brokers are usually promoting their referral links. If you click on these links and register to that broker, they will receive a commission (place your mouse on that link and you will see some strange digits and characters on your Add-on bar, bottom-left on your screen - if you have it activated on your browser) 

This commission can be paid one time only, either when you register as a client or a monthly % from spreads. Until now, it looks good. We can consider IBs as a sales mobile department of a broker, but what if this IB is spamming the web? (E-mail, facebook groups walls, "smart comments" on forums, etc).

Why should I choose this annoying person from all the others thousands of IBs, promoting the same broker? Is he/she going to present me the broker services in a fair way? Does he receive a proper training on how to present the broker services?
The answer is no! If you don't believe me, try to contact a broker that offers IB programs.

No market experience needed (if you mention you have it, is more than enough). No anti-spam policy explained (only mentioned in the contract, but nobody consider it if you report it for any IB), not to mention, no proper training for giving to their clients, proper consultancy.

You should consider it twice, if your brokers offer/allow this kind of promoting. For me, even if they will change their "policy" in the future, I won’t even consider talking with these brokers. (I receive phone calls, e-mails with "business" proposals, every week). There are a few of them that already "look big" on the web, because of this aggressive advertising from IBs.  Unfortunately, as brokers, they offer lousy services!!!


Signals Providers

These services, in my opinion, are the beginner trader’s worst nightmare. Being their clients, you will never learn how to trade. Being successful in this field means you will learn from your mistakes.

How can you learn if you don’t even know the reasons for placing that order on the market?
You will get feed on SMS, e-mail, social networks, with some "signal": buy here...exit there.  If they are right...you don't understand how. If they are wrong, you lose more than money: You will lose more than that. You will lose the opportunity to learn from that bad trade, not to mention, you will never "learn how to catch your own fishes". You will always depend on that "service" for as long as you will live...

Now, this "gang" is gathered on big websites that promote "performance links". This is another "trend" in this field. This is also a great IB business for the websites owners. To keep their "performances links" in place for more than a month, they have to open their real account on that website (referral link), yet, this is something that everyone forgets about:

"Past Results Do Not Guarantee Future Profits!"


And the worst part...I notice everyday, "known" traders around the world starting their own "signals services" business, instead of funding a company with shareholders, to invest on the market.
I find that so LAME...


Forums Traders


The beginning was great. I still remember those days, when there were few fair forums on the web. A nice place where you could talk, share your results, learn from advanced traders, and learn from their mistakes...

Those days are gone...and will never be the same again. Now forums have advertising contract and write articles for paid advertising, become IBs (sharing referral links) or started "performance links" business...

The forum traders now, are mostly beginners. They read a few things and tested it on demo and...Done. They are now "gurus" and teach trading! Every forum you might join, have thousands of threads opened...with different strategies and systems that had thousands of followers posting every day...charts, results...until eventually they stopped doing that and the thread was closed...Why ? Doesn't it work anymore?

Then the old followers become "gurus" and take the idea and start a new thread posting old links: "this is the original idea...and we are just improved it and end up with this...” And this...usually stop earlier than the original idea, because they don't have enough followers and expected results...

Then there is the "forum trader", thinking of starting his own "business"...by making his own forum. This is how all the forums around the web now have the same ideas (sometimes just copy+paste) from the FF Forum...the first great place...  This is how, learning from the web, today (for free), in 80% of cases is just a lost time...Sometimes money, too, if you open a real account without months of demo testing, before. And by testing all ideas shared on the web today...could really take you years...
So they thought: It is either you have time to get proper training in this field...or money to lose to buying other’s "experience". Sometimes it is both. I'm sure many of you, have a "deja vu" by reading this.

Advanced traders are no longer on the web, sharing for free, their experiences. They are "hidden", now, due to this "big noise" about the trading, everywhere.
Years ago, an advanced trader didn't have to "show" his statements. It was enough for us that he could answer all our questions, with lots of most logical details, for free. Also, when having lots of money in your account, you will start to think of personal security...so no real names, no other details.

Hey, have any of you seen the Warren Buffet "performance link”? How about his investor password? How about George Soros? Any other big trader's statements? :) I can assure you...you won’t see it! If a fair big trader what to share his results will build a company with shareholders, to invest on the market. (Like Warren Buffet did with Berkshire Hathaway Inc.)

Back then, when beginners were happy about results, they wanted to "show off" a bit and they were publishing their results (less than $ 50k). Now all beginners with few hundreds in their account "show off" with their statements to earn clients. Why? Their system is not working that good to "trade for living”?

This category represents that 80% noise...that will stop soon and they will vanish (when their "system" will stop working like on FF Forum, years ago). But new ones are coming...so watch out of these "show off" guys! They are not yet traders. They are just...beginners with some results. They are "forum traders"...


Strategies Sellers

If you can trade profitable, you can make millions, by starting with few thousands. Why should this trader allow this "stress" of having clients, for few thousands/month, only?
They are "forum traders" that had some results...but not enough. Why do I think this way?

It is simple: How much money can you make, by starting with $1 and having 100% profit (ROI), in 30 days?
Do the math for yourself. You don’t have to make 100% and you shouldn’t count days. Months or years will do, to have millions. Not to mention you don't have to start with $1...

So every time you meet a trader selling a strategy ask yourself this:

If it is that profitable, why does he/she sell it?
And why is it so cheap?

Would you sell a strategy that can get you millions?
How much money would you ask for it?


The web is full with these "successful strategies" with only $ 99.9! And when it comes to results...the monthly profit is between 99.9%-999999999% :)

So they built "good looking" websites and sell you the success in "just one click". Also, they have great reviews (fake ones) as comments (or now the upgraded versions of advertising it: many small websites around the big one, with fake communities, reviews, etc)

"What are you waiting for? Get it now with $99!!!"

I'm sure that many of you have a "deja vu", again... :)


EAs/Indicators Sellers

Ohh...what sweet memories. These products started few years ago, when if you were visiting a forum and you dare to talk about your strategy, the first comment would have been "Sounds great man! Can you share with us the EA? Please, please, please...” If you didn’t have one...you should have felt ashamed of yourself as a trader and run away crying to look for a programmer to build it fast :)
Today, we must agree automated trading is the best, but since you dont have a bank/hedging company EA to buy...why bother? All the other products on the market are just...
Why? Remember this?

If it is that profitable, why does he/she sell it?
And why is it so cheap?

Would you sell a EA that can get you millions?
How much money would you ask for it?

This product is also sold by beginners or unprofitable yet traders. Most of them are not only claiming they are traders. They say they have 10y market experience. This is how they got the strategy and worked really hard to build the EA. If you ask them how old they are...25 seems their lucky number :)
(So they started trading at 15y)


Book Writers

There are good books in this field. But also some that will make you to waste your time...and money.

By searching the eBay for some good new books, I wanted to know more about the writer of that "good book" I was watching, for sale $20 or something. I’ve checked the reviews...lots of positive ones. The good part came when I clicked on the writer ID to see other books he writes about. He turned out to writes good books also, about: cooking, gardening, paintings, sculpting, travel, etc....and trading.... :)

Also, if you will check some "great writers" books at the bibliography of book you will find out their "source" was many other good books. So nothing new...copy+paste like on forums (ofcourse edited with his own words - copyrights laws).

Therefore to find a good and helping book about trading, today, is really a challenge. Me personally, I've read thousands...and I must say less than 20% were good. The rest  were such a waste of good night's sleep...

That's why I can call trading "books selling" just the upgraded version of the "forum trader", when some beginners think they can "make some money fast", while advanced traders, use the marketing tricks to "write a new book", that doesn't necessary share something new or unwritten until now. So, most of them just "sell" their personal brand, not the books value...And I am really disappointed about my old "idols"...new books.


Trainers

You know how they say: "If you can't trade...teach!"

So, why should you pay for a trainer ...in trading? For his spent time with you?
Shouldn't he consider this as something to "give back to this field”?

And if his lessons are free around the web...and he can't trade successfully...what am I actually paying? Probably they think they teach you "how to do it". Yet, they fail to do it...for themself...if they charge you for this.

Some say that they like ...to travel. So this is the best way to travel for free...When I hear this "starting joke" at some courses...meetings, I leave immediately. To think of it, to say it in front of other people, when you pretend you are a trader...This is so LAME, again...

Yet, there are lots of "gurus" around the web. Usually they claim they are successful traders...And have some brilliant description "Best trainer in the..." or "The most beloved trainer in the ..."
Who gave him this ...title? Himself!

But I have to agree, there are some great courses out there. But how many of you payed some courses...that didnt helped you at all, as trader? "Deja vu", again? :)

I've attended many courses in my life. Few related to trading. And I must admit, most of them didn't offer me new knowledge. Mostly, these courses can be helpful for your...moral. But for this you shouldn't pay hundreds or thousands of dollars...

Finding a good course can be again, a challenge. All websites have payed "advertising": articles, forum comments, social networks, etc. So, finding decent reviews is hard. I started to think that friend’s reviews are the most trusted opinion. But this also turned out to become a "referral" business, (like in MLM "businesses" that made friends avoid contact with other friends that already "joined the system", because they can't stop "recommending it"...for a commission...).


Money Managers

By the book, a MM is a person that manages their client’s accounts. And yes, these MM should be traders. The problem is that every one is claiming around the web that he/she is a Money Manager.

I'm sure that my follows already know the TV Show (best documentary) "Million Dollars Traders!" produced by BBC. The purpose of the documentary was to find out if some persons with no previous knowledge about the market can become traders. Why? Because the Fund Manager, used to hire people with "experience" and not all of them...were profitable. They admitted that finding good traders is hard, because good ones trade for themself. And those that are willing to join don't come for a monthly salary, but for a big commission...which is not that good for their business. So they tried over the years to train traders. Again, after teaching them to trade profitable, they were leaving for building their own business...or carrier. :)

So if a big trader, does he chose to not become employee but decided to work for himself, as trader (or for his own company), why does he need clients?

Today, people are mistaken a MM with a "signal provider" that share his trades with a "trade copier" software.

In my opinion the definition by the book for MM, should be for institutional traders, only.

And a Private MM, should be able to teach you a strategy/a system (without being a strategy seller), then to be able to guide you (without charging for teaching) and then to become your mentor when you start to enter on the market (not to "share" his own trades using a "trade copier" or to sell you signals). And yes for this he might charge a monthly commission, when you have profits.

Why?  Well, he tells you how to do it...shows you how to it...and you are doing it, eventually, with his help. Working like this with a good MM, can help you become a trader yourself, eventually, in 1-2 years, but after that, you can trade for yourself, without paying thousands of dollars for books, courses, etc.  So this can save you money and ...time.

But finding again a good MM, is really a challenge. Especially now with these "performance links" websites, that claim they show you MMs. Yet, they are nothing but, signal providers.  They won’t teach you how; they will just "share" their trades with you...as long as you will pay for it. And even if you find a good one, if he will stop, someday, you must search all over again. Because you wont be able to trade for yourself. Not to mention not using their money, doesn’t represent a guarantee. They can fund their account with $100 and they can have $1 mil from their clients. If he loses that $100, he will just make a new account :)

That's why, I also agree with good traders, as MM, that builds their own company using shareholders as long as they can fund 51% from the trading budget. People that can't trade, they can be partners on a trading company that uses their money for trading on the markets- like a Hedging Company. If the MM is not good enough he will lose his money too (as an extra guarantee).


Conclusion:


As you can see, there are many sellers in this field, on the web. Not all are traders. I think there are more sellers than traders. Is hard to make this statistic, because I don't think all of them will admit it.

I let you to be the judge of that. Just watch the posts on trading groups on Facebook, forums, etc. And tell me who is really sharing something for free. How many of these free services do you consider useful and how many can be consider "marketing tools" for these services. Not to mention that I know good free sources on the web that aren't free...anymore.


Best Regards,
^^_Lord_Ice_^^

What type of trader should I be ?

There are many types of traders and because of confusions I see everyday on the web, I've decided to write an article about it. Also, I will try to explain in details, the differences between them.

Because I've been involved in management and this has become "my second nature", I can't help myself not to show you the SWOT Analysis for all the types of traders. Hopping with this, you will think twice, when you will chose your path in this field.


Trader - is a person that buy and sell financial instruments, expecting for profits.


Day Trader ( Intraday Trader ) - is a person that trade intraday. That means he will open and close positions in the same day. Because there are many TFs in the intraday ( from M1 to H1 charts ), traders in this category can be scalpers or higher TFs traders ( M30, H1 ).


Day traders can be retail traders ( work for himself ) or institutional traders ( work for an institution ).

Because of this, we can consider intraday trading, the biggest "battlefield" on the financial markets.
That's why I've always said, that trading intraday, specially on lower TFs, is not for the beginners. Yet, many people start trading like this ( first on demo, then on real money accounts ), because they don't have patience. They think they don't have time to "wait" a position to be in profit on higher TFs, so they start intraday trading.

Trade fast = lose money fast, if you don't know what you're doing. Or if you don't have time...you should have money...to lose, in order to learn ( by practicing ).

This wrong idea of starting your trading carrier is influenced also, by many sellers in the field ( from brokers/ IB to strategy sellers and EA sellers ). They can't wait for you to "test" the markets for months. They need to "sell trading to live", even if some of them claim they are "traders for living". And they want their commission "yesterday" if possible...And because of this, probably the most common sentence you've heard was: "You saw the profits with these few trades....Let's start to make some money...!!!" And we wonder why 95% lose money in this market ?


Swing Trader - is a person that keep opened positions longer than a day, but less than a Position Trader. On Forex keeping a position opened longer than 2 weeks, might not be profitable, because of the swap points ( except long positions ).



I'm a swing trader ( and a bit trend follower trader ) for few years now and even if I've started like many others on intraday, I must say nothing compares with trading H4, Daily and Weekly charts. Setting up my charts, dont take me more than 1h/few days. And even if I'm watching my positions daily ( mostly for managing the opened positions and that's possible because I'm full-time trader, now ), that is not even necessary every day. So for this type of trading , max 1h/day is enough for taking care of your business. So, you can be part-time trader, as well. That's why I don't understand why people that have a day job, try to trade intraday, in their free time, always complaining they lost good trades because of their job and lose money because they can't trade in the "right" session.

Also, higher TFs are not that much influenced by daily news release ( need several days of bad news for a pair to chance the direction ).


Position Trader - is a person that keep his opened position longer time: from months to years ("buy and hold" - for Forex ). This term has been introduce first time for the traders that trade Future Contracts, because they are taking a "position" ( buy or sell ) for a financial instrument and keep it for months ( usually 3, 6, 12 months - for future contracts ).


In this category there are hedgers and speculators. But for me this is the definition for a person, that try to keep his savings, while making some profits, on the spot or the future market, as well.

For example, lets say you want to keep your money in the bank. Lets say you have 100,000 euro. First of all, keeping money in a bank deposit/account, even if will give you an interest, that doesn't mean you've made profits ( usually interest < inflation ). Ofcourse you should keep it, in a bank, in case you'll need it fast ( liquidity ). But what if you know you wont need it for 1 year or 2 years? ( savings/loans ). In which currency will you keep your money in the bank ? How do you know which currency will give you a higher interest ?


For a person with no financial education is hard to understand the process and most of them are just guessing ( gambling with their savings/loans and always hopping they'll be ok ). They are Position Traders, without even knowing it.

A position trader, unlike the other types of traders, can hedge his contracts ( or his savings/loans ). Let's say you have those 100,000 euro in your bank account ( or a loan ). That will be your "spot" position. In that moment you could "protect" your currency "position", by using margins and taking the opposite position with Future Contracts. And that is possible, using a margin of only 1% to 5% from your deposited/borrowed money ( only 1,000-5,000 euro ). Doing this even if lets say the value of your 100,000 euro is decreasing by inflation, the "loss" is compensated by the profits from the Future Contracts ( in this situation your bank deposit interest is sure profit ). And ofcourse if your bank account will increase the value of your money, this will be lowered by your loss from the Future Contracts ( but this second situation is rare ). So, hedging your position = "keeping" the value of your money.

A speculator can do that for profits, by using hedging and market arbitrage, for spot and/or future market.

In both sub-categories, a Position Trading, means: profits and protecting profits, on a longer period of time ( If the hedging necessity is for a period shorter than 1 month, Forex market might be a solution, as well, specially for long positions, when receiving swap points - since Future Contracts starts from 3 months period and you must pay a commission/contract ).

Conclusions:

While Position Trading can be considered investment with "sure" profits ( 80% of traders in profit ) and Intraday Trading is very risky ( less than 5% of traders in profit ), Swing Trading might be the best solution for you, after learning the basics of trading ( 15%-20% of traders in profit ).

This is how we end up to trading, right ? We wanted to make money, then we tried to keep it, while making more. And then we found out there are ways to put the money to "work for us" ( not us, working for money ).

So beginners, should start with Position Trading ( Weekly charts ) and after learning basics, they can successfully start Swing Trading ( Daily, H4 ). Intraday Trading is the "final level" in case we want to consider our trading activity, as a job. But I prefer to consider trading a profession, a business. And I want to invest less time with maximum results. That's why Swing Trading for me, is a way of living from trading !



Best Regards,
^^_Lord_Ice_^^

Personal Life Money Management as trader ( or the real "Holy Grail" in trading )

Being a trader ( full-time), you need to know that without a good Personal Life Money Management System, you can't trade profitable on a long run. Not even if you have a good strategy, a good MM Rules or even if you have a good Open Positions Management.

Let's start with the beginning. Why do you want to be a trader ?

Im sure many of us, started trading to get rich faster, more than "keeping" our economies. Being a trader, we thought we will have faster ( few years ), lots of money to buy houses, cars, expensive holidays, etc.

So the temptation was big. Still is. Think of this: you started to trade profitable, you quit your job ( or other income sources ) and reached $ 100,000 in the last 5 hard years.
How's your life improved with this money ? Would your life, still be the same with this big trading account ?

If you withdraw money from your account could be better. But if you do that ( or started to do that earlier, month by month ) you don't have the same big account for your main income source. And even if you still continue to earn money from trading, by withdrawing it each time for improving your life, you will never be a rich person...Not to mention that someday or from time to time, your trading is not working like it did before...and you "must" withdraw part of it, because you already saw something to buy...a new car...a new house or to pay an expensive holiday you always dream of.

We all know that having "goals" while trading will add negative emotions and will make us to take bad decisions while trading ( "today I have to make $ 1,000" or " by the end of the month I have to pay...$ 3,000 bills" or " by the end of the year I want to buy a new house " ). So we still do it. Is in our human nature to wish more or to dream of. And by doing this we forget the initial purpose of becoming traders: a beautiful and comfortable profession, working from home or in holidays using a laptop, never have employes or clients and earn more money that a regular job or profession. And in the end...becoming rich...and have a totally independent life.

So we must have a balance, an equilibrium. And this is so hard to get. And that's why this lack of patience of becoming a wealthy person while "living your life" and spoiling yourself with what you think you need, make most of the new traders to blow their accounts away. ( " If you buy things you don't need, soon you will sell things you need!" - Warren Buffett ).

The first "battle" is not won, when you started to become profitable, but when you trade and no matter if you earn money, or not,  you still keep your lifestyle! And that's the most important thing you should understand, when you want to become a trader and intend to remain "on the market"
( "Being a wealthy person equal the period of time of keeping the same lifestyle, without earning more money - R.T Kiyosaki )

Therefore, there are some good Personal Life MM Rules:

1). Don't start trading, with borrowed money. ( Use economies + investments income from your economies, only )
2). Don't start trading using money, you can't afford to lose.
3). Don't start trading if your life or your family life, depends on the profits unearned, yet. ( monthly goal )
4). Don't start trading with a $ goal in your head, like a "new car" ( "Trade what you see, only" )
5). Withdraw profits initially, only to deposit it in a bank. ( increase "backup money" ). You can keep it into your trading account, if is not tempting you to increase no of lots, without MM Rules.

Also, you must understand that in this profession, you either have initial money to start trading big ( when you are prepared ) or you have time to start it with a small amount and have patience ( years ) to end up "trading for living". If you start with less than $ 1,000, you need years to become full time trader. ( or you can live a cheap life until then - like being student and living with your parents ).

Just to have it in mind: a healthy profit / month = 10-15%. You can make more...or less. But don't expect 100% / month. If you like gambling ( or need it to become rich faster ), better go to a casino and use all your money on a single roulette number. You have more chances, mathematically, to win, than trading  Forex with a bad MM. You can have "luck" to trade profitably like this, few months, but you can't have luck each month...to make $ 100,000 faster.

So how can you start trading ?

I can show you how I did it, after many loses that almost made me quit trading in my beginning years:

1). Build a strategy for trading. ( specific signals/confirmation for entry + exit rules )
2). Build the MM Rules according your strategy statistic ( SL, TP, lots, account's exposure %, account's % loss for stop trading )
3). Trade it on DEMO few months ( at least 3, ideal 6 months or better 1 year )
4). Remember profits on demo does not guarantee profits on a real account. ( different emotions )
5). Establish the amount of money you can afford to lose. ( economies )
6). Deposit 50% to bank ( backup money ) and 50% to a Forex account.
7). If you lose the established % from account balance, stop trading, go demo and don't come back to real trading until you found out, what went wrong ! Refill the account using the backup money and start over.
8). If you are profitable, don't double the no of lots until the account balance is doubled, as well ( or withdraw profits and deposit to bank account to increase backup money ).
9). If still in profit after 1 year, you can add 50% from backup money to you trading account to double or triple no of lots, using the same MM Rules and keep withdraw profits to bank deposit for building backup.
10). If still in profit after 2 years, you can fill your account with all backup money and you can upgrade your MM to the next level ( from 1% to 2% risk/trade and exposure from 15% to 30% ). Start again to build your backup money deposit, using monthly profits.

You think this is "too much" ? Yet, you go ( or went ) to school more than a decade plus 4-5 years in a college, to start a "normal" profession, followed by 2-4 years of practice ( doctors, engineers, IT programmers, architects, teachers, etc ). Why did you thought that becoming a trader is easy ? If this would be easy...then we'll all be rich and happy. Right ? :)

Still think you can start a trading account with less than $1,000 and in less than 1 year become full time trader ( "trading for living" )?

Good luck, then ! And send me an e-mail in 1 year, to tell me how you did it. Or better, build a website and let us all know about it ! Maybe there are few that done this, with less than $ 1,000 in less than 1 year...But what if you will be on the other 99% that risked all to achieve this in less than 1 year...


Best Regards,
^^_Lord_Ice_^^

Open Positions Management ( or cut the losses and let your profits run )

Besides Money Management, the Open Positions Management is another way of making any strategy, a profitable one ( or more profitable ).

You can use PA's highs and lows or other tools, like Fibonacci Levels ( or Fibonacci Confluence Areas ) and move the initial SL, while PA is moving in the direction of your forecast, using the next formulas:

Initial SL = Previous High/Low ( Fibonacci Confluence areas )

New SL = Entry ± Spread ± few pips

*
Next SL = High/Low ( or Fibonacci Levels ) ± Spread
± few pips*

*few pips = 5p for 4H chart, for example.

And so on, until PA will form a bigger pullback and hit the SL ( in profit ). This technique is also known as Break Even ( BE ).


This strategy will increase most of your profits/trades, in no of pips, but sometimes will change the statistic for the whole strategy. Why ? Well, let's say your strategy have a statistic of 7/10 trades in profit. Using this way of changing the initial SL, might cause it to be hit near entry, most of the times, with few pips in profit ( or the next swing with a small amount of profit ), before continuing the initial direction forecast by you.

So, your initial strategy, could have 5/10 trades in profits, only. But, if you consider that those 5 trades in profit, might have more than 3 x SL as R:R Ratio, you might like it. ( Imagine you can catch the whole trend or 80% of it / trade ).

This way of managing the open positions, might help you to add new trades / same trend, since all open trades are running in profit ( ONLY if your MM Rules allow you to open more positions ).

For example, I use initial confirmation of the new trend, by entering with 1 lot ( for "testing the waters" ) and when this is in profit and I receive the second confirmation, I add 5 more lots. On the next high/low confirmation ( or Fibonacci Confluence Areas ) I add a new trade of 5 lots and so on until I'll find a "possible wave 5" ( Elliot Wave ) or an important Fibonacci Confluence Area on higher TF. In that moment I look for exit for all positions ( or move the SL, closer to the PA and let this last SL to be hit, eventually ).

Now, let's do the math:

- initial entry lot = for example, 80% from the whole new trend
- next entry lots = for example, 50% from the whole new trend
- next entry lots = for example, 30% from the whole new trend


And since I trade on higher TFs ( H4, D charts ) and trends could have from hundreds to thousands of pips...hope you understand, now, why I like to name this: " milking the pips" ( or "cut the losses and let your profits run" )


Best Regards,
^^_Lord_Ice_^^

Money Management ( or how to make money using any strategy )

Money Management ( MM ) is one of the most important thing you should know about trading, yet is not always on the front page of the courses, books, etc.

There are lots of ways of using MM in your favor. The problem for many traders, beginners or not, is how to stick to it.

Everyone knows the basics, yet, not everyone understand it: "Never risk more than 2% from your account (SL), never invest more than 30% from your account (opened positions)". For beginners, I would recommend risk = 1% / trade and max investment/trades = 10-15%. This will not make you rich fast, but will give you the change to grow constantly. ( MM for real accounts trading is completely different from MM for the contests accounts, where you must use a much higher exposure and a much higher risk to be in the top 10 traders - but still, you must stick to it, from the beginning to the end of the contest ). To find some MM examples, check Lesson #8 from my Free Course.

Trading is about chances. By opening any position, buy or sell, on any financial instrument, you have 50% to be right ( price can go up or down/swings, even if the swings might have same highs and same lows - range market ). Because of this, you need a strategy, that will increase your chances to be right. Here is the catch: many people think of it and search for the "holly grail" of trading. The problem is they never quit searching...and they become "testers" of all the possible strategies around the web, for this. ( sometimes their lack of patience for testing it on demo, makes them testing it on real account, when their initial strategy failed them ).

Finding a good strategy might take you time, but it's either you have time ( for testing on demo ), either you have money to lose, to find it, this way. Sometimes, you don't have time for testing and you don't have money...to lose either.
And after first loses, you start to "search" a new strategy that might make you rich. That's one of the most common mistakes, that will make you blow, one account after another...

After my first 2-3 years, while searching and testing all possible strategies, around the web, I found out that is useless to search for a "better strategy" ( any mistake you will mention it to me, remember, "I've been there and I've done that!" - that's why taking bad choices = experience for me, now ). The secret is related to the MM and R:R Ratio ( TP = 3x SL, for example ), besides Opened Positions Management and Personal Life MM. ( articles to come ).

Let's have an example of good MM and a very bad strategy with only 3/10 trades in profit ( yes, a very very bad strategy ), using a TP = 3 x SL :

- 7 negative trades ( 7 SLs hit)
- 3 profitable trades ( 3 TPs hit )

Lets say your MM Rules allow you a SL = 30p, that means your TP must be at least 3 x SL = 90p.

- 7 negative trades ( 7 SLs hit ) = 7 trades x 30p loss = 210p loss.
- 3 profitable trades ( 3 TPs hit ) = 3 trades x 90p profit = 270p profit.
____________________________________________________
TOTAL: 10 trades ( 3 positive and 7 negative ones ) = 270p - 210p = + 60p in profit.

Can you imagine now a medium strategy with at least 7/10 in profit ? Can you imagine what means using it with strict MM Rules and a R:R 1/5 or 1/8 ( using harmonics and Positions MM, your TP could reach up to 20 x SL my moving your initial SL and your initial TP ).

Lets see the math behind using the same MM Rules example  with SL = 30p and TP = 3 x SL = 90p:

- 3 negative trades ( 3 SLs hit ) = 3 trades x 30p loss = 90p loss.
- 7 profitable trades ( 7 TPs hit ) = 7 trades x 90p profit = 630p profit.
____________________________________________________
TOTAL: 10 trades ( 7 positive and 3 negative ones ) = 630p - 90p =  + 540 in profit.

Hope now is clear for everyone, that your MM Rules must be nailed on your wall, on your monitor and what's most important, in your head. And if you trust your strategy and keep the same data for your MM, while trading it, you should be in profit.

But, do you trust your strategy ? Did you made the statistic yourself ? Or you just use this strategy because someone claim is 7/10 profitable ?

Considering other people statistic is not enough. I also like to use 100 trades not just 10. So my statistic, could be: 80/100 trades in profit, for example. Why ? Because I need to see it on a long run and because math behind must show me if the "chances" are proven facts. ( do the math: how many consecutive loses can be possible , until 1 trade will make the profits )

We all know, trading is about emotions. To control emotions, we need rules. And we must stick to it, no matter what. That's why a 7/10 strategy, that will give you 5 consecutive loses, make you stop trading it and start to use another one. But what if the math was right, and you will see it as 70/100 trades ? That means you must be there for 30 loses...why to stop using it after just...5 negative results, consecutive or not ?

Ofcourse you should use MM Rules and:


n1. You must know, your SL and TP.
2. If your account reach -30% from initial balance, you should stop trading and go demo again!
3. Don't come back to real, until you'll find out, what went wrong !
4. Refill your account ( you need back up money always - Personal Life MM )
5. Keep the same rules and increase your trading lots ONLY if your account is double !

n
So, if your limit of loses is 30%, that must be the bottom line. You just need a system that allow you as many possible consecutive loses. If your MM Rules allow you ONLY 10 possible loses until this limit, not even the best strategy in the world, can't offer you profits !!! ( or if you have profits 1 month, means you are just... lucky )


Best Regards,
^^_Lord_Ice_^^


 



Fibonacci Tools & Strategies.

Fibonacci is one of the most powerful tool for trading. There are many fibonacci tools in trading platforms: Retracement, Expansion, Fibonacci Fan, Fibonacci Arcs and Fibonacci Times Zone.

The beauty of this toll is that work in every markets conditions and on every TF. Ofcourse like all trading strategies, works better on higher TF.

Before I'll start to tell you about strategies using these tools, I want to make sure you will use correctly Fibonacci Retracement:

1. Always draw this tool in the direction of the trend ( we want to see how much the PA will retrace, before continue the main trend - we want to know the possible end of the counter trend ).
2. If trend is short, click top, drag while keep pressing click, until bottom and release click.
3. If trend is long, click bottom , drag while keep pressing click, until top and release click.

Now the chart should look like this:



The HH level used for drawing is not actually HH, but it's a previous High ( LH ). You can use only the previous swing's High for measurements. 

For the importance of Fibonacci you might wanna look this article too: Fibonacci Retracement.

1. Fibonacci Retracement + TL BO.

This is one of the most used strategy using fibonacci retracement. But before we continue, you must look at TL BO Strategies.



Drawing a TL ( on counter trend ) offer us a great entry possibility to enter the market when:

1. PA failed to BO the 61.8% fibonacci retracement level ( golden ration ).
2. BO of the TL
3. Tight SL, previous High, before BO occur ( or 61.8% fib level + spread + 5 pips ).
4. TP is 0.0% fibonacci retracement level ( the start of the counter trend - here PA is possible to fail to break further )

2. Pending Orders on Fibonacci Retracement Levels.

 This is one of the most profitable fibonacci strategy because you always trade with this in the direction of the trend only. ( "the trend is your friend " ).
For this, we will use same example as the previous strategy chart. This strategy works better from H1 to Weekly chart.


1. Draw the fibonacci retracement from top to bottom ( since our chart has main trend short ).
2. Put pending Sell Limit Orders on 32.8%, 50% and 61.8% ( we expect PA will return to short trend at one of those levels ).
3. As SL use 61.8% or 78.6% level ( if PA BO the 61.8% from the big main swing, we might have a change of the trend, from short, to long, in our example ).
4. For our first TP, we will have 0.0% level ( or the LL - we expect this to be BO or rejection from it, when PA will fall down )
5. For the next 2 levels of TP, we can use Fibonacci Expansion. 100% and 161.8% ( drawn same as retracement tool - click top, drag bottom, then click and adjust the retracement line to the correction end - near 50% retracement level, in our example - the red dotted line ).


At this strategy you might wanna consider this:
a) If only 1 pending order hit ( first 32.8% ) and PA follow the main trend down, delete the other 2 pending orders. As TP use TP 3. ( 161.8% - expansion tool red ). If counter trend was so weak to touch only this level, that means stronger main trend down coming ).
b) If 2 pending orders were hit ( 32.8% and 50% ) delete the 61.8% pending and as TP you can use TP 1 for 50 %, TP 2 for 32.8%.
c) If all 3 pending orders were hit, you can use TP 1 for 61.8%, TP 2 for 50% and TP 3 for 32.8%.
d. Also you can use Trailing Stop or move SL manually after each BO, to the previous HL until BE.

3. Fibonacci Retracement on multi Time Frames.

Another profitable way of trading fibonacci is to draw it on a higher time frame and look for entry on lower TF. For example draw fibonacci on Daily chart and look for entries on H1.
For this you need all fibonacci levels for retracement added in the "Properties". To go there, use this way. Here you should have all those levels: 23.6%, 38.2%, 50%, 61.8%, 70.7%, 78.6%.

1. Draw Fibonacci Retracement on Daily chart ( same as previous example ).
2. Lower the TF to H1 and look trades on every level ( buy counter trend or sell correction over ) like Trend Lines Strategies or Support/Resistance Lines Strategies. Careful attention on 32.8%, 50% and 61.8%. In those area correction should end. In case correction is only 32.8% a fast down trend usually occur.
3. TP = next level / opposite TL BO / Trailing Stop.
4. SL = next level / opposite TL BO / Move SL manually on previous HH/LL.




Best Regards,
^^_Lord_Ice_^^