The 3 C’s of life: choices, chances and changes.

You must make a choice to take a chance or your life will never change.

Face 2011 with this attitude and you will be fine.

Also remember this…

“If you do what you always done you will get what you always got”

I have taken a hard look at what I have done in the past versus what I plan to do this year and I am really excited for what lays ahead.

I believe that you need to do the same, especially if you have struggled with results of late. You can’t expect to get different results if you keep doing the same thing.

So what choices do you need to make right now?

Here are a few suggestions from my side…

Trade with discipline or don’t bother to trade at all, and leave the emotions at home

The fact is, the unsuccessful trader is most likely using the same indicators and techniques that the successful trader is using. Yet only one of them gets consistent results. So why is this then? The unsuccessful trader, not realising it at the time, is trading those same indicators emotionally and fearfully.

That’s really all there is to it!

The unsuccessful trader doesn’t realise this though, because they are looking in all the wrong places. After all, if they acknowledge this simple reality, then it means that they need ‘fixing’; and it’s a lot easier to fix a combination of indicators on a chart, then to take a hard honest look at themself.

So begin the year by taking a good hard honest look at yourself and your recent trading results.

If you want to achieve different results, then you need to do something differently this year.

Did I mention not to get emotional?

It’s not about YOU.  It’s about price movement. Something that you have absolutely no influence or control over, so stop getting all emotional each time you trade. Your only job is to analyse the ‘probability’ then apply a ‘trading strategy’, consistently and with discipline.

Do the job right and you will make money – it really is as simple as that. Do it wrong though – bring your emotions and ego to the party – and you simply have no chance at all.

Trading is a simple numbers game. When you mess with the odds though and don’t let the dice roll out each play, then you simply have no chance of letting the numbers work their magic.

Although most traders will admit that The Traders Mindset is key to winning in the long-term, most believe they can simply ‘handle it’ when things go wrong.

Too late!

The truth is that once emotional, you become irrational, and simply will not make rational decisions – so forget it – prepare properly so you know what to do when required and you do so unemotionally – or be prepared for large losses.

Speaking of losses then…

Take your losses like a ‘man’

Or a wo(man). Seriously though, we need to man up and accept that losses are simply part of the deal – I mean really accept this.

Be warned now. More traders fail from their inability to accept losses then any other single factor. We have to leave our egos behind when trading. It really cannot be about us if we are to have any chance of success.

Remember.

To win the War you need not win every battle!

I know that you all recognize this reality. But I also know that most of you still struggle with it.

Work on your approach – Your mindset. Prove to yourself that this is in actual fact the case.

So how do you do this in 2011?

Well you need to take a 2-3 week period and be totally committed, not to the overall trading results in the context of pips gained or lost, but rather to the process itself, of staying committed to the trade parameters, and to letting those loses simply happen without any attempt to prevent them from occurring at the time.

Look long term – forget short term.

The focus must be on ‘testing’ the theory more then testing the outcome. By committing to this strategy – your focus now becomes less results orientated and because of that, the process is less emotional. Now your sense of failure will no longer be measured in terms of pips earned or lost – but rather in how well you managed to stay the course and leave those trades alone, in attempting to prove or disprove this theory.

Now your ego is not fighting you on each and every individual loss.

Turn your knowledge into experience this year.

Make a choice to make a change.

All the best,

Chris.

EURUSD:

Update: Incredibly, the Euro has rallied almost 400 pips in the past two days in an impressive rally from 1.3000. It seems likely that we will move higher before the weekend, with the weekly reversal level at 1.3450 in near sight. We have also closed well above the last Fibonacci resistance level (the 78.6% level), which means there is only minor resistance at 1.3380/3400 above us. Still, strange things do happen in financial markets and it’s still possible that we may resume the downward weekly trend today or tomorrow. Watch and wait for a G7 entry signal, but be aware that selling into this powerful reversal is very risky.

GBP/USD:

Update: Sterling hasn’t been quite as impressive as the Euro, but we’ve still had a strong rally out of the choppy holiday range. Unfortunately, we haven’t had a chance to buy, as retracements have been shallow. We’ll continue to look for chances to buy into dips, with new support levels now at 1.5870, 1.5700 and 1.5640. The next few days will be VERY interesting, and may well determine the direction for the first trend of 2011 (we are overdue for a major trend)

Jan12th

IMPORTANT: This free report is not an express or implied recommendation, guidance or proposal that any particular Forex analysis or trade is appropriate to the particular investment objectives, financial situation or particular needs of any recipient.

EUR/USD

Weekly Trend direction:
Bearish

Weekly trend reversal level: 1.3450

Key G7 resistance levels:
1.3000, 1.3050/80, 1.3150/80, 1.3220, 1.3300

Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today’s trade suggestion:

After a long decline in the Euro during the holiday weeks, the weekly direction has turned bearish. This means that we are looking to sell the euro into rallies this week, whilst below the weekly reversal level at 1.3450. First resistance is at 1.3000, roughly where the price is currently hovering. However, there are no clear signs of reversal at this stage. Watch and wait over the coming hours. If 1.3000 doesn’t hold, expect the euro to move higher to 1.3050/80 and higher before reversing. As always watch for clear signs of reversal and a G7 entry trigger before selling. First target for short positions is 1.2850.

Summary:

Sell rallies to resistance levels after a clear G7 entry signal. Target 1.2850 and then 1.2700

GBP/USD

Weekly Trend direction:
Bullish

Weekly trend reversal level:
1.5350

Key G7 resistance levels:
1.5540, 1.5500, 1.5460/30, 1.5400/20

Counter-trend opportunities:

Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal

Today’s trade suggestion:

Last week, the pound formed an “inside week” in comparison to the previous week. This is viewed as a continuation pattern, which means that we remain bullish. This pair has really made a meal of it over the holiday weeks, with random fluctuations within a large range, making it difficult to identify clear support levels. Nevertheless, we have penciled in several black lines and a Fibonacci analysis and determined rough areas of support which we will be watching this week. Continue to look to buy into dips, but be aware that the chart is messy and potentially misleading. It is possibly better to remain sidelined until we see cleaner patterns and more direction on the chart. Support levels are listed above.

Summary:

Buy dips to support levels after a clear G7 entry signal. Be somewhat sceptical of the pounds intentions this week!

Read more

Trader R asked…

Chris,

Thanks for taking the time to reply. I guess I will have to bite

the bullet, and go to 1hr; know it makes sense, and most use it, but

always thought in the past, of huge stops.

Many thanks for your help,

Trader R.

So basically Trader R was just commenting that he traded 15min charts because he felt the 1 hr stops were ‘more expensive’ then the 15min charts…

I replied…

“What you can do Trader R is trade off the hour chart but once the set up has been confirmed then go to a 15min to look for a nice tight stop etc. That is a practical option  to attempt to get stops in as tight as possible whilst trading off the one hour chart still, but the norm is to be behind the last low (or high) on the hour chart anyway so you end up seeing much the same picture most of the time.

The thing to remember about stops is that as long as they are in ratio to what you hope to gain then there is no greater risk involved to trading on any timeframe.

Most of our stops on the hour chart are around 30 pips and we aim for 60-90 pips to retain at least a 2:1 Risk/Reward ratio.

Taking 15-20 pips at a time off the hour chart is a little more difficult then the 15min chart if you want to keep the R/R ratio in place. Therefore rather stay on a 15min chart if this is your aim.

Also remember that if you are used to scalping then trading off the hour chart is going to be quite an adjustment as you will have to get used to seeing the trade come back on you a few times and eat away from your already gained profits, before you eventually hit your profit target, and this takes some getting used to if you have predominately been a scalper to this point.

Scalpers generally get out on the first push and don’t have to live through retracements and therefore don’t get into that emotional quandary of – should I take what I have now or should I trust my system and wait it out

This  switch over will take quite a lot of emotional control and a very disciplined trading approach and you definitely need a decent trade planner to help you ‘stay the course’ and not interfere when it looks like it might retrace.

I have some useful examples of what a trade planner needs to have on my Freeforex4all site – just search for ‘trade planner’ or use this link http://www.freeforex4all.com/?s=trade+planner “

Kind Regards,

Chris.

www.the-traders-mindset.com

admin@the-traders-mindset.com

Ok as I indicated yesterday I want to try this for a while and see how it goes. Some questions may be pertinent to you at the time others perhaps not. We can always do with a reminder though from time to time

“Hi Chris

Writing to you in desperation! I generally follow James’ G7 system, so entry points have become very clear to me. The part that I’m battling with is when to exit a trade. I’ve had so many instances when I have held on to a trade only to find it turn on me and worst case scenario hit my SL. So now I’m afraid to stay in trades. I always seems to get out of beautiful big winning trades (in hindsight of course!) way too early!

I understand aiming for fibs/ S/R lines etc but still battle to stay in trades and let price go to these areas. As soon as I think the trade is looking dodgy I close it for a small profit only to kick myself later when I see I could have attained 100+ pips. I always trade with a SL and I always set a reasonable and logical TP. How do I know when to let the trade run to TP and when to bail? Another thing……….do you only ever manually close your trades/check your trades at the top of the hour? How do you manage your trades? Please help!!

Trader C.”

My reply was…

Hi C, you must not beat yourself up to much. If you watch James in the charter group, he does this himself all the time – BUT – you don’t notice because he doesn’t mention it. The reason is that, as with predicting anything, one cannot predict an exit anymore then you can predict any other aspect of trading. So, you have to learn to take what you get, as long as you have done your best to figure out the best possible and most logical exit areas, and aimed for those, then there is simply nothing else to do. Whatever ‘actually’ happens during the trade then is not your doing and therefore nothing that you need stress about.

James for example, is comfortable with his trading and understands these variables better then most – so he takes what he gets and moves on – he doesn’t waste any energy on “what if” scenarios.

There are various options available, but it sounds as if you are familiar with most so I won’t go into them, but purely for a reference point think of some of these scenarios and I bet that you can identify with them all.

If you were to use a trailing stop for example – you will find that quite often you are just stopped out by just a few pips by a slightly bigger retrace then normal, and the price does then eventually hit your profit target. If you wait for a retrace and hide behind the next low, then you can quite often find the market actually reverse and you are way down on profit before you realise that maybe that was a reversal candle and so perhaps you should have gotten out at the top near that resistance area. Quite often it simply does not get to the next level at all. More often then not, it does though, and so just take the ones you get and move on from those that you don’t get.

Can you see the conflict? It really is not a science at all. You need to try the various options available to you and then monitor which gives you better results, knowing full well that at times, another strategy might have given more. You need to find the exit strategy that you are most comfortable with and simply stick to that. Or, if you are experienced enough, then depending on the market conditions, you may want to use a different strategy at times under different market conditions. The last point though is not advisable unless you are experienced and quite comfortable with the outcome. If you attempt this too early in your trading career then once again you will find yourself questioning whether that was the right decision at the time – as you are doing now.

Rules are rules and variables are variables – just remember this. There is nothing wrong with placing a 20 pip stop loss today and a 50 pip tomorrow. As long as you have applied your rules of the stop being within the same ‘risk parameters’…in other words if you need a larger stop then adjust your number of lots traded so that you are within the same risk exposure parameters as laid out in your rules…but the variables of actual ‘size of stops’ – that is always dependent on market conditions (last obvious low etc).

I hope that this enables you to start accepting the inevitable – that you cannot be right all the time – and that you cannot control the outcome – ever!

Just learn to go with the flow more this year – accept the outcome and move on – take the good ones and along with those – learn to take the bad ones as well

Cheers,

Chris.

P.S. Remember the basic rules of exiting a trade…

1. Firstly, an effective initial stop should be place where you don’t expect the market to go (behind the last low etc) and if it does, then the premise of the trade is over and you should rather exit the trade with a small predetermined loss.
2. Never move stops once in a trade to attempt to stay in a trade longer…once past your initial stop, then market conditions have now changed to a point where your original analysis now no longer applies, hence, neither do your original trade parameters.
3. Next a decent exit strategy is required to ensure that you do not react emotionally to a trade once you are in it. That is why they are critical to determine before you actually enter your trade. Their main aim is to strike a balance between protecting open profits as much as possible and to prevent you from exiting the trade too soon (normally an emotional decision at the time). Which exit strategy you decide to use will depend on your actual trading system.

Today’s report is in a pdf format…

Daily Report 13th Dec

Enjoy

EUR/USD
Weekly Trend direction: Bearish
Weekly trend reversal level: 1.3780
Key G7 resistance levels: 1.3120-3160, 1.3200, 1.3280, 1.3350-3380
Counter-trend and scalping opportunities: 1.2960-2980

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today’s trade suggestion: The euro has marched relentlessly lower, amidst turmoil in Europe and some calling for the euro’s demise. This has ensured a bearish weekly direction for this week, and we’ll continue to look to sell into rallies as we have been doing for the past month or so. Resistance levels are a long way above us, starting at 1.3120, so we’ll need a significant counter-trend rally this week before getting a chance to sell. Right now, there is a chance to buy the euro on a counter-trend play off key support and very oversold conditions. The target for this long trade is 1.3100-3120, where we’ll watch and wait for a G7 sell signal.

Summary: Sell rallies to resistance levels listed above after a G7 entry signal. Try small longs from 1.3000/2908, targeting 1.3100

GBP/USD
Weekly Trend direction: Bearish
Weekly trend reversal level: 1.6080
Key G7 resistance levels: 1.5650, 1.5720-50, 1.5780-5800, 1.5850
Counter-trend opportunities:
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal
Today’s trade suggestion: Like the euro, the pound remains bearish this week, after a dramatic bearish candle last week.
We’ll look to sell into rallies to resistance levels, with the first key resistance at 1.5650. We’ll need to be patient and wait for the setups to form, which could take another day or two.
Summary:
Sell rallies to resistance levels listed above (starting at 1.5650) after a G7 entry signal.

Here is the ‘Probability Trade Planner’ that goes along with my recent ‘Simple Trading’ Video I sent out a few days back.

Thanks for all the great feedback on this- glad it helped so much.

I have placed them both on the same page so you can watch the video again before you put it into action.

Tradeplannersimple

Cheers,

Chris.

P.S. Just a quick heads up – you have less than an hour to get the TFD alert service. James is very close to full so Join the Forex TFD program now!