‘The consistent application of an edge, even a small one, can make all the difference between trading success and failure (or mediocrity).’’ – D.R. Barton, Jr.
Hello:
It should be noted that I use pending orders mostly for my long-term trades. Pending orders hardly suffer slippage – only running the risk of not being filled. Instant executions are almost always filled but one can get filled away from the price one had in mind. A pending order also acts as an additional filter of potentially bad trades. With a long-term trading outlook, one mayn’t need to be bothered with some serious market gaps (caused by volcanoes, earthquakes, landslides, oil leaks, fraud, assassinations, terrorism, geo-political unrest, etc). Bad news is more likely than good news.
As you already know, taking a high probability trade implies common sense. You must always think of how much you are willing to lose provided you’re wrong. Whatever the amount is, simply multiply it by three, and based on what your charts are telling you, you then decide if you could achieve that kind of profit. If not, please forget about that trade.
You risk management parameters must be sound, for we all get caught occasionally; and that’s trading. Trading isn’t about the avoidance of losses; it’s all about making more money than you lose. Moving ahead in a week by 10 pips is far better than going backwards by -10 pips. Like what great Mr. Koala likes to say (aren’t you familiar with him on the FXInstructor’s blog?), “Hope you end your trading week in the green.” Kermit the Frog sang: “It’s hard to be green.” I’m happy when traders are in plus territory. May all your trades be green!
Here are my trading results last week:
Long-term Strategy
EURCAD
Order: Buy
Status: Open
Profit/Loss: 987 pips
AUDJPY
Order: Sell
Status: Closed
Profit/Loss: 0 pips (breakeven)
EURAUD
Order: Buy
Status: Pending
Profit/Loss: N/A
Short-term Strategies
Order: Sell
Status: Closed
Profit/Loss: 135 pips
Order: Buy
Status: Closed
Profit/Loss: -107 pips
EURUSD
Order: Sell
Status: Closed
Profit/Loss: -40 pips
EURUSD
Order: Sell
Status: Closed
Profit/Loss: 120 pips
EURUSD
Order: Buy
Status: Closed
Profit/Loss: 120 pips
USDCHF
Order: Sell
Status: Closed
Profit/Loss: 120 pips
My article this Friday would feature intriguing questions from my potential and existing subscribers, with detailed answers. These questions are in the mind of certain traders and the answers to them are supposed to help traders greatly. On October 22, 2010, my article would discuss the reasons why some respected bankers say they don’t believe in retail Forex trading, why some have developed strong hatred for Forex and whether their opinions are correct or not. On October 24, 2010, the past results on my GBPJPY strategy would be displayed while the concept behind the strategy is explained. On October 29, 2010, my article would highlight MT5 and its new features in contrast with MT4. As from next week, my subscribers would start enjoying trading signals based on the EURUSD-USDCHF strategy, in addition to the ones at hand right now.
Should I Take NFP Serious?
While fundamental analysis explains the causes of price movements, it is not easy to be used to identify exits and entries (an area in which technical analysis is by far superior). I used to have a fear of Non-Farm Payroll, but I saw that it did not improve any statistics on my portfolio. There are other news items that are nearly more powerful than NFP. I sometimes tried to close running positions to avoid NFP; only to regret seeing it pushing the market in my forecasted direction. I know some traders who avoid NFP, and still lose their sweat and socks to other market factors. At times, NFP would merely cause insignificantly temporary counter-trend or trend-following effects.
The Non-Farm Payroll shouldn’t be seen as a culprit for traders’ margin calls (by calling it ‘a margin call NFP’). Margin calls are usually a result of traders’ poor trading decisions. NFP or no NFP, trading risk managers could always survive all market conditions whereas gamblers couldn’t. For gamblers, it’s double or nothing. This has nothing to do with NFP, since it’s not only on NFP days that traders are at risk.
My aim is to trade only what I see, following the present sentiments of the markets, and not giving myself a headache about the unknown. I don’t want to idolize NFP, since it has only 50% chance of moving in my direction. Risking a very small amount of my account per trade has made it easy for me to be indifferent and unemotional about an individual trade. If a top trader like George Soros was happy with 40% returns per annum, why shouldn’t I be content with even 5% per month?
The quote below concludes this article:
“In the world of professional trading, I have found that the majority of the time, less choices often equate to better profits.” – Sam Evans
Your questions and opinions are highly welcome.
Thank you.
With best regards,
Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach
Senior Analyst
FX Instructor, LLC
Email: amustapha@fxinstructor.com
Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal
And my past articles are also available at: www.ituglobalforex.blogspot.com
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