“Years ago, when I began trading (before the days of PCs,
when all you had was a chart service that came once each week) the only way you
could make any money was to trade the trend.” - Joe Ross
There’s no end in sight to the current economic problems the
world over. The fact now is that as the economic woes worsen, central banks
simply turn out more currency, but the more they do this, the grimmer the
economic woes. However economic woes have little effects on successful traders,
and perhaps you could be one of them. If you aren’t meticulous about chart
reading and trading signals, but meticulous about trade management, trading
would be a better experience. You can control many things while trading, save
for the market itself. You can control your positivity and negativity. Ideally,
if loss trades are smoothed when they reach some negative territory that isn’t
too dangerous to your portfolio, your mean negativity won’t be dangerous to the
existence of your portfolios.
The crosses analyzed aren’t the only instruments traded with
the type of analysis used. Below you’d find some pairs and crosses on which I
opened positions on a monthly basis. Personally, this is what I do, not what’s
recommended that others should do. Below are 7 of my open trades. I opened only
5 positions this month, because of some directionless instruments and
consolidation in the markets. The maximum duration for each trade is one month,
and we should note that the orders have been running before this article was
written.
1. Instrument: EURCAD
Order: Buy
Entry date: October 1, 2012
Entry price: 1.2670
Stop loss: 1.2470
Take profit: 1.3260
Status: Open
Profit/loss: 86 pips
2. Instrument: GBPCHF
Order: Sell
Entry date: October 1, 2012
Entry price: 1.5030
Stop loss: 1.5230
Take profit: 1.4539
Status: Open
Profit/loss: 121 pips
3. Instrument: AUDJPY
Order: Sell
Entry date: October 1, 2012
Entry price: 80.85
Stop loss: 82.85
Take profit: 74.87
Status: Open
Profit/loss: 70 pips
4. Instrument: NZDJPY
Order: Buy
Entry date: October 1, 2012
Entry price: 64.60
Stop loss: 62.47
Take profit: 70.47
Status: Open
Profit/loss: -33 pips
5. Instrument: NZDCHF
Order: Sell
Entry date: October 1, 2012
Entry price: 0.7775
Stop loss: 0.7554
Take profit: 0.8354
Status: Open
Profit/loss: -181 pips
The position sizing is 0.01 lots for each $2000 (thus making
it 0.05 lots for each $10000). When an order goes positive by 70 pips, I move
the stop to breakeven. From 200-pip profit upwards, I use 50% trailing stop.
Success has nothing to do with generating as many trades as possible. Rather,
we could filter our trading methods and have fewer signals with higher hit
rate.
Conclusion:
Meanwhile, as chart reading is very much useful, we tend to pay to much
attention to it. There are reasons behind this. We want to be right in our
trading activities, as it means we can predetermine our fate in the markets.
Predetermining our fate as traders or predicting the markets with stunning
accuracy means that we’re trading geeks. Traders seek confirmed predictability
in an unpredictable arena. We long for confirmed predictability. Using as many
indicators as possible makes us feel that we can predetermine our fate. Why?
It’s a consensus in the currency markets that analysis paralysis makes sense.
Yet, in reality, simple speculation methods can yield decent returns.
This article is concluded with the quote below:
“One must always realize that traders aren’t paid on the
quantity of trades, but on the quality of our trades. I would rather place 5
trades a month to earn 200 pips than 50 trades to earn the same 200 pips!” - Rick Wright
Your questions and opinions are highly welcome.
Thank you.
With best regards,
Azeez Mustapha
Forex Signals Strategist, Funds
Manager &Coach
For more articles at FXempire.com, go to:http://www.fxempire.com/author/mustaphaazeez/
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