Archives for January 2013

Walking away from a beautiful setup is hard to do!  Walking away from a setup that doesn’t meet one’s Reward to Risk ratio requires discipline.  Without discipline a trader will flounder, lose both consistency and confidence.

This beautiful setup required approximately a 25 pip stop loss to ideally net 54 pips.  This did not meet our 3:1 Reward to Risk ratio minimum.  It is always better to come back tomorrow than to break one’s rules and get stopped out.

I was taught by the largest currency trader in the world how to trade.  He is also one of the largest commodity traders in the world.  He will pass on a trade that is 2.9:1 Reward to Risk – that’s 2 point 9 to 1. That lesson is always foremost in my mind before I take a trade and ingrained in my students.

Back tomorrow.

Good luck with your trading.

Questions???  Michael@privateforexcoaching.com

A familiar pattern set up with the EUR when the UK session got underway.  Price came down and broke through the Asian session low, luring in breakout shorts.  Price pulled back twice before producing an acceptable entry for us.  Our minimum Reward to Risk of 3:1 to our Target 2 was met.  Price pulled back one more time testing our decision making for the short trade then dropped precipitously.

Price dropped through our Target 1 and pulled back hard producing a very wicky candle.  We close on the opening of the next candle to lock in our profits and avoid giving back any more of our profits.

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All in all a very profitable week.

Back Tuesday.

Questions  Michael@privateforexcoaching.com

No significant economic news until the US session got underway.  The GBP had attempted to move up but had no upside follow through as is evidenced by one wicky candle after another.

After the first round of US economic releases, the GBP fell back below the Asian session highs and gave us an entry short meeting our minimum Reward to Risk ratio of greater than 3:1 to our Target 2.  Price continued downward, but closed well above our Target 1 with a very wicky candle.  With the second round of US news 30 minutes away and the US stockmarkets opening, having given back a dozen pips already from the low, we close the trade at the opening of the next candle.

It continues to be a very good week.

Good luck with your trading!

Back tomorrow.

Questions  Michael@privateforexcoaching.com

A familiar pattern set up in the GBP overnight.  After a series of lower highs during the Asian session, the UK traders pushed price down luring in breakout sellers.  Price retraces and rises, and does not take out the most recent Asian session lower swing high.  Price reverses and begins to head lower.

Our Reward to Risk is greater than 3:1 to our Target 2 and we enter short.  The pattern of the of the reversal is a familiar one for my students and can lead to a symmetrical vertical move to the downside.  Price continues down tagging our Target 1, and one candle later price breaks through our Target 2 level.  We close on the next candle.

Excellent week so far.

Know your setups, know your targets,  know your Reward to Risk ratio and practice sound money management

Good luck with your trading!

Questions Michael@privateforexcoaching.com

EUR offered up a nice setup overnight.  I like to see a big move in the Asian session.  We wait for the news to pass and vigilantly look for an entry.

The UK traders began their session by retracing the Asian session’s move lower.  A wicky candle catches our attention as it creates a lower swing high.  We wait for further confirmation and enter short.  Our Reward to Risk meets our minimum of 3:1 to our Target 2.  Price promptly moves in our favour as the session trend is underway.  Price cuts through both yesterday’s low and the Asian session low without retesting either.  As price moves closer to our Target 1 we continue to move over “take profit” down.  Price briefly penetrates Target 1 which is an area where we lock in our pips to avoid  giving them back on a reversal. We close the trade as price moves back above Target 1 – locking in a large portion of the trending move.

It’s always nice to start the trading week with a large move.  Let’s see what the rest of the week brings us.

Good luck with your trading!

Questions  Michael@privateforexcoaching.com

Late in the session we catch a nice move to finish the week.  A lot of patience is required to be a successful trader.  We patiently wait for our familiar setups to present themselves and some days there aren’t any.  Last night our patience was rewarded.

(I forgot to mark the UK open and close on the chart today.  The UK open is the first candle after the blue channel.  We were out of the trade just as the US stock markets opened.)

A very bullish candle moved price up after the Asian session low was tested.  Although the candle closed right near the Asian session high, and a test retest of that level frequently occurs, the stop was still affordable and met our 3:1 Reward to Risk minimum to our Target 2.  Price moved well above the Asian session high and right through the critical level of 1.3307.  This allowed us to lock in profits in advance of the US Trade Balance release.  When you have profits, protect them.  If there is news pending, and the market reverses you can lose them…in a blink.  Always protect your profits and get the risk out of your trades as soon as possible.

After the entry, had price continued to test and retest the Asian session high as the News approached, it would have been better to take a small loss than risk a spike down to our original stop loss.  Fortunately price moved up in advance and the profits were locked in.  Price continued to our Target 1 but closed with a very wicky candle below it.  We close the trade the next candle so as not to give back pips after Target 1 has been achieved.

Overall a nice conclusion to the week, after remaining out of the market yesterday.

Have a great weekend!

Good luck with your trading.

Back Tuesday…

Questions  Michael@privateforexcoaching.com