Three Step Plan for Escaping Dependency and Information Overload
The response from Bill’s blog post from yesterday was so positive, I asked if he would be so kind as to delve deeper into the topics of escaping dependency and dealing with information overload. Please enjoy the article and comment below and feel free to check out Bill’s site here.
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I want to thank everyone who commented on the previous discussion about the challenges facing traders today, especially forex traders.
In that recent posting I was talking about the Black Hole of dependency that has a strong hold on forex traders right now – but I didn’t really take enough time to delve deeper into that subject and broaden it enough to help struggling traders.
Today, I want to follow along that path.
“Weird” Events Are Frustrating Forex Traders
Frequent guest blogger, Bill Poulos, presents his latest article below which looks deep into a number of major issues within the Forex markets, as well as provides a number of excellent tips for you to use on a daily basis. Please check out Bill’s site here, and as always he’s excited to read and respond to your comments so let’s not let him down.
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Recent events have brought the dollar back into focus – both as it continues to slide, and as it made an unusual, event-related rebound last week. Because of that, many traders, my students included asked me for my take on why Forex traders are struggling right now.
I believe there are three reasons that are deeply affecting traders of foreign currencies. They are:
• Overexposure on trades
• Little or no attention to risk management
• Stuck in a black hole cycle of dependency
Let me elaborate:
Holiday Giveaway
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Happy Holidays! Please enter our Trader’s Blog Holiday Giveaway for a chance to win one of the 12 prizes below.
We will be selecting 1 winner every Monday, Wednesday, and Friday starting on November 30th through December 25th via phone call from the prize entries we receive. The winner will select their choice of prize from the list below. Once a prize as been selected, it will be crossed off and the remaining prizes will be up for grabs for the next winner. Over $4,000 in prizes!
We will be accepting entries until the last prize has been selected (December 25th).
Enter The Holiday Giveaway Here
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By selecting this prize, you’ll receive a copy of John Bougearel’s acclaimed book Riding The Storm Out and receive a free year subscription to his Structural Logic Newsletter. This newsletter, written by John, will provide research and risk management tool for clients to overlay with their own risk management strategies and investment goals. |
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—a A *With the exception of MarketClub and INO TV, the other prizes are provided by a third party. The comments, claims, and opinions expressed therein are not necessarily those of INO or MarketClub and we are not responsible for the support of the third party products. Your contact information will not be given to the third party sources listed above.
Why losing traders look for methods that win 80% or more of the time
I’ll get right to it…this post from Bill Poulos from Profits Run is excellent! We’ve all been in this situation, where we look for a great methodology for our trading style, look at published winning percentages, and then cry when it completely blows up your account…yes we’ve ALL been there! In Bill’s new article he helps you figure out the solutions. Bill’s expertise really comes through in this article and he’s just released his “Risk Eraser” technique video so check it out today!
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While doing research on the current state of the Forex trading landscape, I discovered something surprising.
Losing Forex traders appear to be enamored with ‘winning percentages’ when selecting a forex trading method.
The irony in that statement should be obvious — if the ‘winning percentage’ of the forex method is so important, how can these traders still be net losers?
Because, I believe, winning percentage is the wrong concept to focus on. In fact, I find winning forex traders look for methods that have winning percentages closer to 50-60%. And, they also have one more ’secret’ that losing traders DON’T have.
Why Trading Forex Now Beats The Stock Market
Today’s post is from an old friend, frequent blogger (see previous posts), and trading expert Bill Poulos from Profits Run. With Bill focusing a ton of his time on Forex, and with the Forex market getting so much attention, I wanted to ask Bill to come and give us some of his latest insights into what he’s found. The article below is a great one, and if you have time I’d highly recommend checking out his new “Risk Eraser” technique video!
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You’ve likely heard the term Forex lately — it continues to be the hottest trading trend today. That’s a trend I believe will continue but today, I wanted to take a few moments to point out why as well as how you can best take advantage of trading foreign currencies without being taken advantage of.
Just a couple of years ago, the foreign exchange markets were dominated by the big brokers and major banks around the world. Today, the ‘little guys’ have gotten in on the action — and the growth in currency trading has increased from $1.9 trillion to nearly $3 trillion in that short space of time (that’s the average daily turnover in the markets - a 50% growth in turnover).
But why should you trade Forex?
Forex markets: Day trading versus End of Day trading
At MarketClub.com, we cover the Forex markets with real-time streaming data, but trader’s blog members often ask which is better: Day Trading or End of Day Trading the Forex markets. To help answer that question and answer ANY other Forex questions you might have is Bill Poulos. Bill’s developed an amazing Forex Income Engine 2.0 course (goes live at 10am today), and has decided to give us one more post and clear his schedule to answer any and ALL questions you might have for him! Please comment below with your own thoughts on which is better for Forex trading and your own personal experiences!
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Forex traders often ask: “Is it better to trade the Forex markets on an end of day basis (with daily charts) or a day trading basis (with 5, 10, 30, etc minute charts)?”
There is no right answer to this question, as I believe it depends on your individual circumstances, preferred style of trading, amount of starting capital, and volatility in the markets.
Let’s take these one at a time.
Forex Trading: Fundamental versus Technical Analysis
Bill Poulos didn’t get the response from everyone that he expected so he asked if he could come back and “really teach people what I know”. So this time around he’s talking about Fundamental versus Technical Analysis in the Forex markets. I also wanted him to give away some more free stuff so he’s agreed to give away the chance to win a free copy of his soon to be released Forex Income Engine 2.0 course, enter here for free!
So please try to win a free copy of his course, and give him a warm welcome with the comments!!
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Forex traders have today a wealth of information from which to evaluate and select potential trades (some would argue too much information). These markets are moved by two primary forces: Fundamental forces (balance of trade data, money supply, interest rates, economic and financial reports, etc.) and Technical forces.
While many traders advocate fundamental analysis-based trading, it should be argued that this style of trading is very difficult especially for people who have little time to trade (less than an hour a day), or who are new to trading Forex.
Fundamental analysis traders tend to be ‘always on’ — or, day trading because it requires PRECISE timing to move with the markets. If you can’t get to your trading platform the minute a ’surprise’ report hits the newswire, you’ll be too far behind the action to respond to it.
Why Do Most Forex Traders Fail: Risk Management
I’d have to say that EVERYTIME Bill Poulos is a guest blogger, he gets almost as many comments and attention as Adam…ALMOST. Today should be no different. I called Bill and asked him to write an article on risk management in Forex. I read the article and it delivers, so you won’t be disappointed. This article focuses on the method he uses and he’s produced two videos (Flexible Forex Discovery VIDEO ONE…..Flexible Forex in Action VIDEO TWO) so check out the videos, enjoy the article, and let the comments fly as I told him he’ll have to teach in the comment section!
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When trading anything, risk management is first and foremost. Without it you will lose, period. When trading the Forex markets or any highly leveraged market, you must have a risk management plan that accounts for that leverage.
Forex broker’s are fond of touting the fact that they provide 100:1 or even 400:1 leverage, but the truth is, if a trader ever takes on position sizes that take full or even partial advantage of that leverage, the account will soon be wiped out. That is because the maximum % of one’s account size that could be risked on each trade allowed by the broker, would lead to excessively large position sizes and levels of risk far beyond what a good risk management system would allow.
Why Patience and Rules are necessary in forex trading
Today I’d like everyone to welcome back Bill Poulos from ProfitsRun. Bill is launching a new forex product, Forex Profit Accelerator, and to put him to the test I wanted him to come and teach us a little more about the necessary patience needed to be a successful, yes SUCCESSFUL, forex trader. Your comments are ALWAYS welcome and needed as you help us learn more about our guest bloggers. So take a look at the article below, let the comments fly, and check out this video by Bill and let him know what you think in the comment section! See streaming video.
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Today I want to talk about the necessity of both patience and rules when trading the forex. Trading without rules (or without a trading method) is frequently a key factor in the failure of many forex traders. Without rules, a trader has no boundaries, and while at first glance the idea of ‘freedom’ from boundaries may seem a good thing, I believe that it is not.
Here are a few examples why I say that.
Without a clear set of rules to follow, the forex trader must make every ‘call’ or every decision throughout the trading process. This creates an immense amount of pressure on the trader to get every decision correct – whether it’s identifying a trade opportunity, getting in on the trade, protecting a trade position or exiting a trade.
In addition, a forex trader may find themselves frustrated or angered by a market that moves against him, or by the lack of perceived opportunities in the market, or by a trade which, once exited, runs on to create ‘lost’ profit.
The heart of the problem for the trader like this is not having a clear set of rules to help guide their trading. And the mistakes that most often occur out of this occur from a lack of patience and failing to follow their rules (one leads to the other) are:
- Traders whose trading rules do not yield ‘daily’ trading opportunities
- Traders without patience who rush to enter or exit a trade
I believe most traders overtrade the Forex market. They need the action – it’s almost like a drug – and without a daily trade to be taken, they seem to suffer withdrawal. But to capture longer term moves in the forex market requires patience and timing (not timing the market, mind you, rather, timing in terms of when to enter a move). Without that patience to wait for a trend to develop, traders are rushed to find ‘any’ position – this frequently leads to breaking the rules of their trading method and bad trades.
Similarly, many traders, relieved to have a trade turn ‘profitable’ will rush to the exit doors with their small gain – only to watch the market continue in an uptrend. Although I will never tell a trader they’ve made a mistake taking a profit, I will always point out the better ways under which they can take profit and potentially profit even more. But in this case, the lack of patience to draw maximum pips from the market is frequently caused by not having a set of rules to follow when exiting the market to maximize profit potential.
Let me share a recent trade experience, and show how having patience and following the rules of your trading method can help you to defeat the emotional side of trading and grab the most potential profit from the market.
Recently a trade developed in the EUR/USD pair, which was picked up by one of my own trading methods called the Pip Reversal method. The trade would have triggered a buy position on this currency pair on March 6th at approximately the 1.2575 mark.
On March 6th, that trade would have turned profitable by nearly 200 pips – in just one day – but the trading rules of this method are what I want to focus on for you today.
In most cases, what I would see are traders exiting their position completely and taking their profit – and that’s certainly not a bad thing. But what many traders miss would be what I call “mega-moves” in the forex markets – and when traders don’t adhere to the rules of their trading programs, they typically will miss these moves.
An Exit Strategy that I use calls for exiting ½ of the position at a pre-determined price level equal to 1 ATR. On March 6th, that would have yielded 179 pips. But my strategy then calls for letting the second ½ of the position run, in the event the market is involved in a major move, and then capitalizing on the move with trailing stops. Keep in mind, many different exit strategies exist, and it’s very important that you find one that works best for your style of trading. In my case, I prefer to let a part of my position run as long as possible once I’ve been able to take some profit out of the market. What happens, however, is most traders would exit their ENTIRE position at this point – and that’s ok – but as we’ll come to see, these traders can often times miss out on substantial moves because they don’t have the patience to let the market run, or they fear giving back a strong gain for an even stronger gain.
By running an increasing level of trailing stop losses, however, this particular trade, which took nearly two weeks to complete, would have culminated in an unusual, but substantial move on March 18th, amounting to nearly 900 total pips.
At this point in the trade, I have a whole new set of exit options: I can take complete profit or, I can set a new level of trailing stops.
Either way, the potential gain in this trade for any trader was substantial – but many would have missed it because on previous days, when the markets had smaller moves, or backtracked, here’s what I see most traders doing:
- They panic and exit the trade too early
- They set their stop losses so tight, they virtually guarantee they’ll be stopped out
This is why the rules of any trading method are so important. Traders make such mistakes because they allow their emotions to get the better of them, rather than letting the ‘rules’ of their method define their trades.
So stick to the rules of your trading method – whether it’s how to identify a trade opportunity, when to get in on a trade, when to get out, or how to protect your trade – your method should guide you in all aspects of your trading opportunities and instill the patience and discipline that you undoubtedly need to succeed in the markets today.
Bill Poulos
Why the market rebound may be slower than the pros think.
One thing that I’ve been paying attention to more and more is the Forex markets. Honestly, over the past few months my attention has landed pretty squarely on Forex and how Forex reacts with the ebb and flow of the general stock and futures markets. Now one guy that I’ve been paying a ton of attention to (other then Adam as he’s the published author and successful Forex trader) is Bill Poulos from ProfitsRun. I’ve been following him for a while personally and professionally, and can say without a doubt that he is the second best resource I have for Forex related questions! Yes SECOND best!
Regardless of that, I asked him to do two things for me today. First I wanted him to give away (for free) the Forex kit I paid for a while back. I was able to glean a TON out of information and again I paid for the “Forex 4-Pack” pack that he’s agreed to give away for free.
Second I wanted him to explain why Forex is so hot and how we can benefit from the huge flow of liquidity thats moving into Forex. Check out the article below and get the Forex 4-Pack.
Please feel free to comment as Bill will be responding to ALL questions and comments!
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If you’ve followed the stock markets (and really, who hasn’t?), you’ve likely wondered where the buyers are when stocks are now at their lowest levels in decades.
One place money has been flowing to has been the Foreign Exchange (or Forex) — which has grown rapidly in the last several years and is fast gaining wide popularity among traders.
Forex alone now accounts for more than $3 TRILLION in average daily turnover and shows little sign of slowing down.
What does this mean to you, the trader?
It spells opportunity. This is one of the best times I can recall to learn to trade and to start trading the enormously popular and potentially profitable Forex markets.
Why?
Because with the world’s financial markets in turmoil, mega trends in the Forex markets have seldom been better. The pressures causing disruption in the stock markets around the world are also causing awesome trading opportunities in the Forex markets.
Keep in mind that with Forex, you don’t need to wonder when the market will stop going down or when it will recover, or how long it will take. With Forex, the six major pairs are almost always up or down in what I call mega-trends, providing trading opportunities right here, right now.
The problem I see is that too many traders aren’t sure how to take advantage of those opportunities, or how to spot those trades they could be making. Or, if you have never traded the Forex markets, people are wonder how they can participate? Still others worry about controlling risk or being able to capture a ‘free’ trade situation when trading these markets.
As of this writing, the U.S. Dollar has rallied against most major currencies. The continued economic fallout from the housing, banking and credit crises, major unemployment explosion and the ongoing recession have forced the U.S. government into unprecedented spending. That spending creates incredible inflation risk for the dollar, and could well send the dollar into a significant reversal. Regardless, the Dollar will continue to provide great trading opportunities versus the other major currencies time and time again.
Simply put — as governments across the globe scramble to provide liquidity to credit markets and inject cash into their money supplies to refloat their economies, they will directly impact the value of their respective currencies as they relate to one another. This then acts to drive the six major currency pairs up or down, in very recognizable and tradable trends.
At the end of the day, economists and media gurus are all predicting what will happen to the economy, when the recession will end, when the stock market will “bottom” and recover — but here’s the thing: Forex traders don’t have to wait for a recovery. Nor do they care, necessarily, when a recovery will come.
And because of that, I believe we are seeing more capital flight to Forex, which in turn is creating longer, stronger trends and better trading opportunities.
So, if you’re already a Forex trader, you should recognize the impact all of this has had on trading currencies and focus on key trading elements:
- Risk Management
- Trend Identification (beginning and ending)
- Optimal Profit Strategies
If you’re interested in Forex, but not yet trading it, or, not yet succeeding in it, you should take this time to LEARN to trade Forex with a solid trading method that teaches you:
- Why Forex is different
- How to trade
- Entry and Exit rules
- Risk Management and Capital Preservation
I think right now is one of the best times to begin trading or to learn to trade in the Forex markets because of the trends being driven by the economic turmoil around the world.
And that turmoil creates trading opportunities every day. If you’ve been missing those market-moving opportunities, don’t miss another one!
Bill Poulos
Get the FOREX 4 PACK as I told Brad I’d give it away!
