Things I've learnt as a Trader

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Some things I have learnt:

By Tom

  • Levels are not lines drawn in concrete, they get broken. You see, the more a level is tested multiple times, sooner or later it will get broken. From my observations, 2-3 times is the average, after that, expect a breakout of the level.
  • Don’t listen to analysts.  They can stuff up your decision making process and cloud your judgment.  For example: I see a sell setup on my chart but because I’ve read the analysts report that says he is bullish on this currency pair because of this and that reason, I hesitate to pull the trigger . Later, I check the chart and see that if I had sold, I would have made money. So use your own independent judgment based on what you see on your charts.
  • Find your best timeframe to trade. Your personality, work circumstances etc. may dictate what timeframe you can use. For me, I can trade from the 4hr, 1hr down the 5 & 1 min charts because I use multi-timeframe trading.
  • Yes, there will be people that will say “You are crazy to be trading in the smaller timeframes like the 5min and 1minute because there’s too much noise in the smaller timeframes.” Yes, I know that… The whole point of me switching to lower timeframes is this: to get better trade entries. You don’t have to do that, that’s my style. That’s what I like.
  • If the bus leaves you, don’t chase the bus! In other words… don’t chase trades. If you are late to get into a trade at an optimal entry point and realized  that  you  might  “miss  out”,  then  back  off  and  wait.  There will always be another opportunity or wait for a retrace/retest/pullback etc and then enter.
  • Be patient for the right trading setups to form.
  • If you are suffering from losing streaks, take a break. Take a week off from trading to clear up your mind then come back with a clear mind to trade.
  • If you have winning streaks, don’t get overconfident* and risk more. You streaks of losses may be just around the corner. (edited)

I'm going to share some frequently asked question that I've received from student through the years.


FREQUENTLY ASKED QUESTIONS

#1: HOW MANY TRADES SHOULD I BE TAKING EACH DAY?

The number of trades you take each day must depend on your trading plan and your risk appetite. I suggest you should look for 1-3 opportunities each day. However if you are only starting out and still have to get the experience I will say that the numbers will make the difference.

#2: WHAT RISK % PER TRADE SHOULD I USE?

I suggest you stick to the 2% rule. If you plan to take 2 trades each day, then maybe consider risking 1% for each trade. Or if you decide to take 3 trades a day, then you could increase your risk to 3% per day and so allocate 1% risk to each of the 3 trades you will take for that day.  Remember, it is quite easy to get 1:10 risk: reward ratio with my strategies. So if you risk 1%, though you think it is small, you can end up getting 10% on just one trade. Don’t rush, be patient. My goal is 15 pips profit for any trading day, then let the winners run and compound the profits over time. 

#3: WHAT ARE THE BEST TIMEFRAMES TO DRAW TRENDLINES?

The monthly, weekly, daily, 4hr and 1hr timeframes. Use them to draw trendlines. They are much more reliable.

#4: WHAT ARE THE BEST TIMEFRAME FOR ENTRIES?

The 1hr or the 4hr timeframes would do. They are more reliable than smaller timeframe  entries.  In  the  smaller  timeframes,  there  is  usually  too  much “noise”.  But  remember  also  that  you  can  get  good  setups  on  smaller timeframe entries so you also need to keep an open mind on this. You can still trade in smaller timeframes and still be very profitable.

#5: DO YOU RECOMMEND ANY GOOD FOREX BROKERS?

“Good” can mean a lot of things but these are some good forex brokers you can check out:

  • GT247 (South Africa Rand trading)
  • AVA FX - AvaTrade
  • eToro
  • Alpari UK
  • FXCM UK
  • OANDA

#6: WHAT LEVERAGE SHOULD I BE USING?

My leverage with my broker fluctuate between different sectors. If you are following proper risk management as it pertains to stop loss size, you really don’t have anything to worry about leverage.

#7: WHAT CURRENCY PAIRS ARE SUITABLE FOR TRADING FC TRENDLINE TRADING STRATEGY?

Any. You also need to consider the spreads though. Some currencies have huge spreads.

#8: HOW MANY PAIRS DO YOU ANALYSE FOR TRADE SETUPS?

I analyze all of them. But I don’t take all the setups I see.

#9: SHOULD I SET TAKE PROFIT TARGET OR USE TRAILING STOP TO LOCK MY PROFITS?

Your choice. If you want to ride the trend, then use trailing stop loss as described as this will allow you to make more profits if the market continues to move in the direction of your trade compared to setting a take profit target.

#10: I AM STRUGGLING TO DRAW TRENDLINES, I NEED HELP.

Read the section on drawing trendlines in the Forex College trading course again. You need to PRACTICE the skill. Go over your charts and draw trendlines on past price data and see how it works out.

#11: STOP LOSS ON 1HR AND 4HR ARE HUGE... I CAN’T AFFORD TO PLACE A 60 PIPS STOP LOSS.

Reduce your bet per pip sizes or switch to smaller timeframes to time your entries.

#12: WHAT IF I AM IN A PROFITABLE TRADE AND THE MARKET APPROACHES AN OPPOSING TRENDLINE OR HORIZONTAL SUPPORT OR RESISTENCE LEVEL?

The market can make a reversal so you need to protect your profits. You can do any of these 3 things:

  1. Move stop loss tighter and lock profits
  2. Take some partial profits off and move stop tighter to lock remaining profits or move stop loss to break-even
  3. Or you can decide to take all your profits off but then if this is a temporary reversal, you will miss out on a good move.

#13: DO YOU CONSIDER NEWS WHEN USING TRENDLINE TRADING STRATEGIES?

Yes. I avoid entering trades when major news is due to come out soon.

#14:  IF I HAVE ANY QUESTIONS REGARDING THE STRATEGY, OR NEED SOME FURTHER HELP, CAN I CONTACT YOU?

Before you do that, make sure you not asking me regarding things I have already covered in our channels or the e-Learning course.  I get so many emails asking me of things I have already covered. But, yes. You can contact me. If I don’t reply soon, just be patient ok? I might be on holidays and don’t forget the different time zones (I might be...zzzzzz) but I will definitely reply.

#15: DO YOU PROVIDE ANY TRADING SIGNALS AND ALERTS

No, with respect you're missing the point if you're after this type of blind trading service. Forex College course is geared towards showing you how to trade for yourself, using your own analysis and placing your own trades at your own time. The Forex College Community contains regular in-depth analysis and trade ideas backed up by the techniques we'll be teaching yo as guide line to profitable trading.

#16: DO YOU USE ANY OTHER TRADING STRATEGY APART FROM TRENDLINE TRADING STRATEGY?

Yes, I have used other trading strategies before.  Ok, sometimes, it takes a lot of testing out different forex strategies before you can come to a strategy that you’d like and that fits your personality. Only after trying a lot of strategies would you be able to come to that point but I hope you don’t and you will stick to the strategies you learn at FC once you begin to see how powerful it is when you use it correctly.

#17: CAN YOUR STRATEGIES BE USED EFFECTIVELY IN RANGING MARKETS?

I prefer trading in the direction of the trend and stick mostly to trend line strategies. However a ranging or sideways market do have horizontal trend lines indicating support and resistance areas and can just as easily be traded with small tweaks to most strategies. Buy at support Sell at resistance, Buy/Sell a breakout, and buy/sell on a pullback.

Start your training today www.forexcollege.co.za

Happy trading.



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