Trade Forex Tips and Technic

A Trading Plan To Reverse Trading Losses Into Consistent Profits

When Victor came to see me about his losses in trading the forex market, he was almost in tears. His initial capital of $50,000 was almost wiped off, and his account showed some trades that were obviously not performing well. Here was a forex trader who really need some help…and fast!

First, I cooled him down, getting him to sit comfortably and had a cup of the best “Ching Loong” (Green Dragon) tea a client had gotten for me from his previous visit along the silk route in China. Now, it was time to see what was wrong with Victor’s account and how how he could reverse his trading losses into consistent profits.

Firstly, Victor’s account showed he was over-trading. He was taking far too many trades than he could chew on. He wasn’t a full time trader, and yet he was taking every trade that seemed to present itself several times throughout the day. Clearly, all he needed to do was to cut down the number of trades, and take those trades that will give him much more profits - trades that will run on longer swings and are based on proven trade setups. When I told him this, Victor heaved a sign of relief, wiping some beads of perspiration on his forehead, and showed a slight smile on his face.

“Tell me about your trading method,” I asked him. He switched on his laptop which he carried with him, and showed me his charting interface that he had with the forex broker as his trading platform. He was using only one time frame for his charting, which was based on a one minute chart. On this chart, he had drawn in bollinger bands, RSI, stochastics, stochastics-rsi, MACD , fibonacci retracements, CCI and some other indicators. He explained he was trading any signal that showed the currency to be overbought or oversold from all the technical indicators. If a majority of his indicators showed it was oversold, he would buy- but he was a forlorn figure as he explained that he was often whipsawn. Whenever he opened a trading position thinking the currency was oversold, the trade would go against him with the price sliding down further..and further. Many times, his indicators were in conflict, leaving him bewildered. During those times, he would be brave and aggressive. He would go ahead and opened a trade. But bravery does not take you far in trading forex if you are in error. All it does is to deplete your account…and fast!

To get a clearer view, I told him to use at least two time frames for the trading charts that he used. Showing him how, I called up a chart based on a 5 minute time frame and another chart based on a 1 minute time frame. He could see how I could use the 5 minute chart as a trend indicator, and the 1 minute chart as the trigger chart to open a trade.

Victor’s smile turned into a wide grin now, as his face lit up as if he had received enlightment after a long period of meditation.

I explained to him that all he needed to do was to key off the highs and the lows of the swings in each currency pair that he was trading. He could use just time and price, and concentrate on the price patterns that recur consistently to give good profits. Throwing away 90% of his technical indicators, and concentrating on the price action would quickly and accurately give him a good perspective.

Victor left my office with a new resolve to trade the price outbreaks of a few selected currency pairs, and to spend time to learn more about trading price action. He promised to study a price action method that had been pioneered by a professional trader in order to learn more.

One month later, I received a call from Victor, seeking an appointment. This time, it was for a lunch appointment, as he wanted to share how he had been making profits from his trade consistently. He wanted to show his gratitude by buying me a lunch at the best Chinese restaurant in town. He sounded the happiest man in the world over the phone.

Forex Trading Tips, Green Dragon, over trading, proven trade setups, Trading Plan To Reverse Trading

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