Is Forex Trading a Waste of Time? Only if You Break One Simple Rule

Is Forex Trading a Waste of Time? Only if You Break One Simple Rule

I have been totally guilty of this. But the first step is admitting the problem…right? 

But at some point, all traders have done this. Chalk it up to human nature, the get-rich-quick-itch, or too much coffee.

I’m talking about taking trades that you have no business taking because you have not tested the system and don’t have confidence in it.

Oh wait, there is supposed to be a system?

Yeah, you know the trades I mean. When you take these trades, you lose money and that makes you wonder: “Is Forex trading a waste of time?”

But on top of the money you are losing, these trades are costing you much more than you think.

By taking these trades, it means that you are taking time away from things that are way more important. You may not realize how much time a trade takes up or how important the other things you could be doing are.

But they are super important. Don’t believe me?

I don’t blame you. All I ask is that you keep an open mind when you read this…

Why Traders Waste Time “Trading”

Let’s say that you take a trade in the EURUSD with a half-assed plan. You don’t even get that crazy, you only risk 1%.

(Imagine if you risked 25%, like some beginning traders do)

Maybe you convince yourself that you have a plan because Greece will probably leave the Eurozone, so you will short the pair…or some shit. In reality, it’s half-baked, at best.

But now you are checking that trade every couple of hours. You can’t get your mind off the fact that you may make or lose money.

Even if you only have $5 at risk, your life can revolve around that trade, until you close it out.

Why do traders do this? I won’t lie, it can be fun. 

It also gives you something to do. Checking your phone breaks up the monotony of your job. It gives you one more reason to wake up early.

In other words, you have something to look forward to.

Since you don’t have a plan, the outcome is also random. It’s like the lottery, you never know what will happen.  But just like the lottery, your chances of winning are very, very small.

On top of this, your behavior is actually costing you more than the few bucks that you think you have at risk on the trade.

Let’s take a closer look…

You Have More Important Things to do

I’m sure that you have heard the fable of the two brothers who had to choose between getting $2 million now or a penny doubled every day for a month. Yeah, of course the penny wins.

If you are the brother who chose the penny option, you end up with something like $10 million at the end of the month and you look like freaking genius because you know how to use a calculator.

But the point of the story is that tiny, insignificant things can become huge things.

So if you are taking random-ass trades, you are not testing a solid trading method on a new currency pair. You are not spending time with your friends and family. You are not…fill in the blank.

…and those things add up.

Better Trading

If you spent your time testing a real trading method on a new currency pair, you would haveanother profitable trading method that you could add to your money-making arsenal, instead of playing the guessing game. Chances are also pretty good that you wouldn’t stress out so much about that trade either, because you actually have a plan.

The next time you take a trade, you will be investing your time and money. So before you click that mouse to take a trade, think about the penny story I mentioned earlier and how seemingly minor things can add up to something huge.

Better Living

When you aren’t focusing on crap trades, you have more time to do other things. You can take your spouse out on a date. You can go out to a local Meetup event and make some new friends. You can cross things off your Heroic List.

…and these things add up.

Big time.

If you have heard stories of people who wake up one day and wonder why they are fat, their marriage blows, they hate their job and their kids never talk to them…we all know the answer. It all started with the small daily choices that they made over the years.

At the time, each choice seemed insignificant:

• Skip date night…just this week.
• Skip your kid’s soccer game…just this once.
• Skip looking for a better job…just for today.

Skip enough of those things and you are skipping out on your life. I’m not saying that all these things happen because of taking bad trades. But my point is that there are so many moreimportant things that you could be doing instead of “trading.”

As a side note, that is why I love swing trading. It allows me to make trading fit my schedule…not the other way around.

Think About it

I’m serious, drop everything right now and think about this for 3 minutes. Imagine watching yourself trade. Like if you were watching the footage from a security camera by your computer.

What are you wasting your time on? Are you engrossed in a trade that really doesn’t have a plan? What else could you be doing?

It’s only 3 minutes, you can spare that. Yes, throw up a timer on your phone and really examine what you are doing when you trade.

…I’ll wait right here for you…

…do it now.

Welcome back! What did you discover? If you found that you do waste a lot of time in the trading process, let’s do something about it.

This is how you can maximize your trading time…

How to Make Trading Worthwhile

As my friend Walter Peters says, trading should be boring. That may not seem like much fun, but I hope that you aren’t trading for entertainment…

I hope you are trading to make cash money. 

If you have made it this far, then that is probably the case. So how do you prevent yourself from taking terrible trades?

In reality, I don’t think that there is a way to completely eliminate them. We will all take bad trades from time-to-time. That’s just human nature.

But the best way that I have found to keep random trading under control is to give yourself enough reasons not to do it.

Since you will be tempted to take bad trades, burn into your mind the things that you are giving up by taking bad trades.

• Imagine how disappointed your spouse is whenever you are too focused on trading.
• Picture yourself sitting at your trading desk, five years from now, still losing money.
• Think about how many opportunities you are missing out on because you don’t have the money to do them.

Whatever triggers an emotional response from you to stop taking random trades and actually test your systems, before you risk any money. The trigger will be different things for different people, so find out what your trigger is.

Write it Down

Finally, write it down and post it somewhere that you will see it everyday. What you write is up to you, but if you need an idea, you can use this template:

I will only trade systems that I have tested and have confidence in because that gives me the freedom and income to travel and work in Europe.

Or it could be something like:

I want to make my wife the happiest woman in the world and only taking trades that are on my approved systems list gives me the time and income to deepen our relationship.

You get the idea. A couple notes on this:

• Be sure to make your statement positive. Focus on what you do want, not what you don’t want. Positive attracts positive and the same for negative.
• Also word your statement as if it has already happened. This will plant the seed in your subconscious that you really do have the power to get this done. Because you do.

Conclusion

Before I end this post, I just want to clarify one thing. I’m not saying that you shouldn’t spend time on learning to trade.

If you really want to become a great trader, you have to hone your craft. You must put in the time and get educated.

But I’m saying that taking trades that don’t have a solid plan behind them is a waste of money and more importantly, your life. That is time that could be spent: learning, backtesting or updating your trading journal and more!

 A Trader Monitor Setup – Why You
Need a Huge Screen For Trading

Anyone who tells you that size doesn’t matter is lying to you. At least when it comes to your trader monitor setup.

You see, I have tried it all….

• Just a laptop
• Four small screens on a PC
• Two computers and 6 small screens
• My laptop and one small external screen

The one that worked best was my laptop + a small external screen. For awhile, at least.

But I recently went to Los Angeles to meet up with pro trader Rudy Leder. I wanted to see how he trades and get some tips for my Trade for a Living Challenge.

Sorry to scare you there. I know, my head is frickin’ huge. 

Anyway, I got some great tips from Rudy and one of them was to get at least one big monitor.The reason is that you can see more price history with a larger monitor. 

That means more support and resistance zones. You might miss this on a smaller monitor. 

Before my new monitor, I was working with this…

Just for fun, you can compare it to other trading stations from around the world, on this page. 

So let’s take a look at what I got and if it really makes a difference or not. 

The New Trader Monitor Setup

Here is the new setup. As you can see, my laptop got smaller and my external screen got much larger  

The Review

For starters, yes, I can see so much more price history with the larger monitor. It is almost ridiculous how much more I can see.

This picture might not give you the full effect of how much more I can see, but trust me, it’s a lot.

I really like this TV because it has two HDMI ports. That allows me to keep both my Apple TV and my computer plugged in at the same time.

A Few Pointers

A few pointers, if this is what you want to do too.

First, I would recommend going with a TV that has a 1080p resolution.

If you get a 720p TV, the picture might look funky when you push the resolution up to 1080p. It can be usable, but not ideal.

Get anything over 1080p, like a 4K, and your graphics card might not be able to handle it, so you are just wasting your money. If you want to get a 4K for movies, then that’s fine.

But just for trading, it’s kind of a waste.

Next, I would recommend getting a desk mount for your trader monitor setup. This keeps your new monitor off your desk and gives you a lot more desk space. I love mine and highly recommend it.

If you want to get one, I have a dual mount. I may want to get another monitor one of these days. It is similar to this one.

This monitor actually required special mounting screws because the metal part where the screws actually screw in, is recessed quite a bit from the surface. But getting the screws from Amazon was easy. They are 3/4″ screws.

Finally, I needed a Thunderbolt to HDMI cable to connect my Macbook Air to the HDMI port.

That was it! I just plugged it in and it worked.

5 Reasons You Should Attend One Trading Conference a Year (Minimum)

5 Reasons You Should Attend One Trading Conference a Year (Minimum)

Yes, I admit it…

I have never been to a trading conference before.

Why?

Well, I have been to a lot of real estate investing seminars and they are all pretty similar. I have also helped organize a real estate conference.

So I know what goes on behind the scenes.

They do give you some good education, but they are mostly there to pitch you on courses from the speakers.

…and they pitch hard.

I felt that this blog has given me access to enough resources and traders, so that I didn’t have to subject myself to a pitch-fest. But at the same time, it isn’t that easy to meet other traders in my area and it is really hard to get in-person access to the best traders in the world.

Trading can also make you feel a little isolated.

So at the beginning of this year, I made it a goal to attend at least one trading conference. It was one of the best decisions that I have made for my trading, this year.

In this post, I will show you which conference I went to, what I thought of it and why I feel you should make the effort to got out to at least one a year too.

The Market Doesn’t Matter

Before I begin, I think that it’s important to mention that you don’t have to only attend Forex related conferences. Learning about options, stocks, futures and even bitcoin, can actually be a refreshing experience.

Sometimes, we get too comfortable in our little Forex world and we forget that there is a lot more out there. I’m not saying that you should jump into these other markets blindly. But there may be trading concepts that you can use.

That’s why I went to the Trader and Investors Summit, put on by Tim Skyes. It was primarily a penny stock conference. Here are the top 5 things that I benefited from.

Maybe they can help you too…

1. The Live Trading Session

It wasn’t all penny stocks, but that was the majority of the content. There were also speakers who talked about how hedge funds invest, bitcoin, Forex and futures.

It was a really good mix of different markets, trading styles and opinions. Tim Sykes did a great job of providing a wide range of viewpoints and education.

I also liked the fact that there wasn’t much hard selling.

There has to be some selling, that is just how it works. Otherwise, it doesn’t make sense for the speakers to come out.

But in this case, I felt that it was very tastefully done.

There was a ton of value, especially the live trading session with Tim. Understanding the thought process of a professional trader, in real-time, is worth the price of admission.

In this session, he took one trade and made about $500. The biggest lesson was to stay out of the market, if you don’t see anything, or you are tired.

A great lesson for a trader at any level. 

Others in the crowd made $4,000…but who knows how much risk they took and how big their account was. It was actually a lot of fun to see people in the crowd making money.

2. Get New Trading Ideas

Good trading is good trading. The markets are a little different, the strategies might be a little different, but at the end of the trading day, it is all about making money.

If you get just one good idea or learn a new way to improve your trading, it could be worth the price of admission. Sometimes all it takes is hearing something you have heard before, in a different way.

3. Learn the Successful Trading Mindset

For me, this was the biggest benefit. When you hear about what these successful traders had to overcome and where they are now, that reminds you that you can do it too. 

These speakers can also reinforce things that you know you should be doing in your trading, but maybe aren’t. For me, that was keeping better records of my trades. For others, it may have been to do more backtesting.

So don’t underestimate the transformative power that seeing a great speaker can have on your success. It might sound cheesy, but once you have experienced it, you will want more.

4. The 5% Show Up Too

Let’s face it, most of the people at trading conferences haven’t placed a trade yet, or are still in their first year of trading. That’s just the nature of the beast.

Want to know how to tell a newbie at a conference? They have an exotic car as the wallpaper on their laptop. 

Click to tweet

Give it a try and see how it works. Now you know who NOT to sit next to.

This seems to be pretty similar across the board. Regardless if you attend a conference for trading, real estate, online marketing or whatever, the fact is that most people are there to kick the tires and “see what this _____ thing is all about.”

…and as we know, 95% of those people will fail.

But that’s OK.

Hopefully, they will move on to something that really excites them and they will succeed at.

So why should you spend a bunch of money to go to a conference, only to talk to newbies? Well, guess what?

The ballers show up to these conferences too.

500 people signed up for this summit. So if the 5% success rate is is applicable to this event, then there were about 25 legit traders in attendance.

There were about 10 speakers there, so that would leave about 15 people in the audience. One of the speakers asked how many people traded for a living and I would say that about that many people raised their hands.

Some of then may have been full of shit, but there were some legit traders, for sure.

My point is that you will have access to significantly more successful traders than you will have access to in your real life. It is a tremendous opportunity to meet professional traders.  

5. Change Your Environment

Sometimes it helps to get out of the house.

…or your state.

…or your country.

We can get stuck in a rut sometimes and a change of scenery might just be the thing you need to start making some progress. Having the same routine every day can get boring.

Shake things up a little and you might be surprised at what happens. 

Conclusion

So if trading is getting a little lonely and you feel like you are stuck, going to a trading conference just might be what you need to kickstart your trading mojo again.

Obviously, not all trading conferences will be good, some might really suck. But if you start going to one or two every year, you will learn to pick out the good ones and they can be a lot of fun.

If you can’t find a trading conference near you, a Meetup group could be the next best thing. I hope to see you at one soon!

A Forex Price Action Trader’s Guide to Outside Bars

A Forex Price Action Trader’s Guide to Outside Bars

To a beginning trader, making sense of the price fluctuations throughout the day can be a strenuous mental exercise. By identifying specific price patterns that have a better than average chance of success, we can increase our profitability.

One of they ways that we can do this is by using Japanese Candlesticks. They were popularized by the Japanese during the 1700’s to summarize the trading activity and price fluctuations of rice.

It offers price action traders a highly efficient and informative summary of a given day’s trading. A candlestick pattern summarizes the day’s price activity by providing the opening price, the closing price, the day’s high and low and whether the currency pair closed higher or lower than it opened.

The end result of these price points are rectangles of various heights, with vertical line protrusions on the top and or bottom, to indicate a high and/or low that is different than the open and close trading prices.

Color summarizes whether the pair closed higher or lower on that day.

When the candlesticks of several days are compared, predictive indicators, in the forms of well known patterns, to which traders should take note, emerge.

In this article, we discuss the use of candlestick outside bars in Forex trading and its use as a powerful price predictive indicator.

Definition

An outside bar candlestick pattern occurs when the candlestick of a given trading session is larger than the prior trading session’s, creating an engulfing candle pattern. The reason the candlestick is larger is because the price activity range was greater than that of the session(s) to which it is being compared, increasing the height dimension of the candlestick rectangle.

How Traders Use Outside Bars

The specific relationship of the outside bar to the prior trading session(s) determines how the pattern should be interpreted by an trader looking to make a trading decision.

A bar that is close to the center indicates that of the bullish and bearish traders throughout the day, neither was able to dominate the session. These are ignored by traders and are seen as signs of indecision.

A candlestick bar which occurs on the outside of the prior day’s bar, however, shows that there was a market attempt to restart a prior price trend, which failed, and as a technical trading indicator, predicts a considerable market retrace of the current price.

Outside bars, which appear in retracing patterns against trends which were already strong, point to a continuation in the trending direction.

For example, a bullish outside bar, as indicated by a candle which has a higher closing than opening price, that retraces a bearish trend is a strong indicator that there will be a further price retrace. Briefly explained, the day’s activity began as bearish, extending below the previous bar, which would encourage bearish traders to increase short positions to further benefit from the prior bearish trend.

The market reversal, however, that caused the bearish momentum disappeared, leaving bearish traders stuck with covering their open short positions.

This is a buying opportunity for bullish traders to increase their investment, buying into the trend. The bears will be looking to cover their position(s) to mitigate the large losses sure to follow in such a bullish trend.

The same concept applies relatively, though in inverse relationship to bullish traders looking at a bearish outside bar candlestick. Therefore, a bearish outside bar that retraces a bullish trend indicates a reversal of the the bullish trend as bullish traders are stuck in unfavorable long positions which they will attempt to mitigate their losses from.

How to Find this Price Action Pattern

At this point, you are probably interested in how to make strategic use of outside bars.

Intra-day candlestick patterns can be checked every few hours for the day’s price movement and for an overview of the day’s type of candlestick patterns at that given point in time.

An easy to use alert indicator with customizable parameters can be configured to send notifications alerting to the occurrence of the outside bar.

Additionally, many trading platforms that have tools which let traders create candlestick charts, providing drop down list boxes to select currency and granularity parameters. As you probably know, I use Oanda as my broker and Metatrader 4 for charting.

Conclusion

The outside bar is one of the patterns that you should keep an eye on and learn how to trade. It provides important buy and sell clues and is therefore a useful technical setup.

Staying on top of the signals using an alert indicator, checking the candlestick(s) throughout the day and using website candlestick tracker tools are critical means by which you can stay on top of price action and the outside bar engulfing candle patterns.

Essential Elements Of A Successful Trader

Essential Elements Of A Successful Trader








Binary Options and Forex trading are very risky yet highly profitable ways to make money. If you are a newbie and don’t know the essential elements of a successful trader, then continue reading. This will help you to have some idea about strategies and tricks to yield maximum profits.

Courage Under Stressful Conditions When the Outcome is Uncertain


All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.



You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.


However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you’re taking.


Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.


Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.


The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.


For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a ‘hold on until it comes back’ strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.


The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).


So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.


Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?


If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus


Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.


To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.