Lessons from the Pros


Thoughts of a Forex Trader

Some people I know love traveling around the world and seeing new places and meeting interesting people. I would class myself as one of those individuals as I personally find travelling a broadening of my horizons and a truly rewarding part of my own growth as a person and more importantly, it is usually a really good time! However, as with most positive things in life, where there are pros there are also the occasional cons as well. In my case, the con in question is flying.

At the time of writing this article, I am sitting on plane having just left London and making my way to Houston, Texas. This is the first stop on a tour of the USA taking me from West Coast to East Coast to talk trading, meet with friends and also take a little bit of a vacation as well. Yet the plane journey to me is by far the worst part of the process, basically a necessary evil required to get me where I really want to be. As usual, in the run up to my journey I was complaining to myself about the plane trip and the boredom I faced, when it occurred to me that I really needed to turn this negative into something positive and for once, make the plane journey a worthwhile time. The first thing I decided I would do then, would be to work on my article and get a head start. The only question was what to write about? Well that actually came easier than I originally anticipated.

Spending time alone with nothing but your thoughts (like sitting on a 10 hour plane journey) can be either a blessing or a curse. On one hand it gives you time to reflect but also too much time can give you an invitation to over think something in a counter-productive manner. While sitting here typing away it occurs to me that one’s thoughts can more often than not, be the biggest difference between failure and success.

In my own experience as a trader and mentor, I have found this fundamental dynamic so often overlooked by traders and the majority of market speculators who I interact with. They typically are far more concerned with finding the “Holy Grail” of Forex trading, be it a magical technical indicator they have never heard of before, a new book on the latest trading strategies or maybe a website tips service. By placing such a strong emphasis on finding the big trading “secret” externally, these traders overlook the simple fact, that the true secret as such, is that there is no actual “secret” at all! Mastery of your results in trading, comes internally and is really dictated by the actions you take, which in turn are created by what you think in the first place. This is a tricky concept for some and may even seem a little abstract but when you look at the act of trying to pick market turns consistently, isn’t that an abstract concept in itself?

Getting down to the most basic moving parts of this discussion, I would say that if you are hoping to take your results to the next level of progression, you need to firstly adjust your thoughts about the market and how it actually works and secondly, allow time and consistency to do its thing. The second part does require a level of patience, which can be a huge challenge for some but I can’t really stress enough how important it is to allow time to do its work. I decided to break these ideas down into three distinct categories for you, offering my own thoughts on how to tackle and implement these ideas into your own trading rules.

The Big Picture

In my article from two weeks ago which you can read by clicking , I talked about looking at the market from a much wider perspective and how objectively understanding the markets from a bigger picture perspective, is one of the true keys to making consistent gains in currency trading. I amazes me still how most struggling traders are so focused on using 5 minute charts for their analysis, sometimes going down as low as even 1 minute charts as well. When you ask them why, you usually get the answer that the smaller charts give them better entries and allow them to see the action more clearly. This is probably the most back to front idea you could have.

Here at Online Trading Academy, we teach our students to think and act like the most profitable financial institutions do. These institutions trade huge size positions, meaning that they have to use bigger charts for their entries. If this is good enough for them, they why would it not be good enough for us too? Our patented rules-based core strategy allows us to read the footprints of the biggest banks and funds and to see those footprints objectively, you need to understand the bigger picture. As my mentor once said me, if you use little charts, you will end up with little success. The big charts are where you get the bigger rewards.

News and Fundamentals

It drives me crazy when I hear people talking about one of the main benefits of FX trading being that we all get the news at the same time, thus making it a more transparent and fair market to trade. Do you really believe that the most connected and wealthy banks wait for the economic news like retail traders do? Do you really think that they don’t have connections to get information ahead of everyone else, even if it is due to their faster news feeds and servers? Even if you got the news a few minutes ahead of every other trader out there, how would that really help you anyway?

The FX markets are way too big for one person or bank to manipulate alone, so even if you could get the news ahead of the official release, you would then have to hope that every other speculator out there is thinking the same thing as you are for your trade to work. I was taught long ago that all markets exist for one reason alone: for people to make and lose money. Sure the fundamentals do have their place from time to time but as an active trader you really need to be able to separate the difference between the facts and the fiction out there, even if that means choosing to not follow the news at all. You may actually find yourself much better off in the end.

Why Do Markets Really Move?

No matter what you might think you know or don’t know about the currency market, understand this above all else: Market prices change due to imbalances between Supply and Demand. Demand is created by willing buy orders and Supply is the result of willing sell orders. If at any given price level there is an equal distribution of buyers and sellers, prices will stay static. If however there are more willing orders on one side of the equation, be it the buyers or the sellers, prices must move. That is simple law of Supply and Demand. There really is no getting away from it, no matter how hard we may try.

These imbalances are what tell us as objective traders where we should buy and sell ourselves and guess what? It is only institutional order low which shows up on the charts to give us these low risk, high probability trading opportunities, if you know what to look for. Of course there are a few things I will never know, like the reasons why people buy and sell at certain prices and of course, if my trades are going to work but that’s always taken care of with my stop loss order. I can accept that I will never know the “whys” but as long as I have a good idea of the “wheres,” which I can find on a price chart, then that’s enough for me every time.

In summary, I would encourage any active market speculator to consider that there comes a point where there is really little else to know about the markets. If you come at this from the right approach, you will always have more than enough information on the chart to tell you all you ever need to know. Struggling traders always tend to fall into the same trap of looking for more answers to questions they need not even be asking. Get the right education and then get your thought process in the right order and you may be pleasantly surprised at your results in time. I hope this was helpful to you and I would like to leave you with one of my favorite quotes to ponder over.

“The only source of knowledge is experience.” – Albert Einstein

Be well and take care,

Sam Evans

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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