Pimpology Lives On - Intensive Care for Newbies - page 4
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eur/usd
Hello Zak,
Can we talk more about correlation...You mentioned how to trade gbp/jpy
What about eur/usd?
When we wont to trade eur/usd what all pairs should we check before we take a position. I know that negative correlation is usd/chf...what more.
Pimp please tell us more
best regards
TF question
Ok, I am looking at trading just the M5 window, when the MA's are in line and the cci are in the proper direction. Do I need to look at the H1 window for MA's as resistance or support. That is the hard part for me because it seem when the M5 tf lines up, the H1 window pricing is in a traffic jam.
In addition, the usdjpy got me for 32 pips because everything was going good and the H1 had free air for a long, price bounced off the 160. 20 over 60 over 240 yet the 160 in the way. So my lesson I just paid for, They all have to be in line.
One of the biggest forex "secret" revealed !!!....
maybe 2 lessons today because of the absence of yesterday's lesson ?? please
best regards
Thanks for this
Thank you Zak for the information thus far. Please keep up the good work as these lessons are so helpful.
Pivots
Good morning all.
sorry for the absence of yesterday's lesson.
Today let's talk about pivot points.
I use the daily, weekly and monthly pivots and they are a great way of reading these charts with relative ease.
They are also a good tool for identifying possible support and resistance and also for ascertaining when a market is oversold or overbought.
Very much like the moving average lesson these pivots can work in a very similar way. what I mean by this is that when stacked neatly in correct order and in close proximity they can be very powerful indeed.
Also very much like the 'box' play that some of you may be familiar with with the averages, the pivots can be played in a similar way.
I will cover the 'box' in the lesson avbout different types of trade we look for but let us begin by calculating the pivot.
The pivot is a very simple calculation, based on open, close, high, low price of a given 24hr period and simply divided by 4.
the FX markets don't officially open or close during the week so those two figures are derived from midnight usually.
Take a look at screenshot 1.
The daily pivot is in pink (like me most weekends)
The weekly is olive green
The monthly is dark green
See what happens when the daily is just below the weekly which in turn is just below the monthly. This move went 2500 pips in under a month !!
It's important you get a grasp of how these indicators work so please backtest just this theory on your own charts.
Now take a look at a longer term chart with just the weekly and monthly pivots.
Whilst the monthly is headed down with weekly below the trend will continue.
Once the weekly has crossed back up through the monthly and then we see the monthly move up, that's when we see the reversal and as long as the weekly then remains above the monthly, this new trend will continue.
Try this out for the time being. I don't want to bombard you with too much information and will cover each lesson in greater detail later on after I have completed the 12 lessons.
Patience is a big thing in this game. Learn it well and you will find it hard to fail!
Next I will cover Money Management and Psychology, which plays more of a role in trading than reading charts so pay attention !!! lol
Watch GBPJPY go 2000 plus pips now !!!
One of the biggest forex "secret" revealed !!!....
It's all about sharing the pips & sharing the love, my friend !
Give the man a break, patience is the key word
Money Management & Psychology
Good afternoon all. I hope you've been doing your homework and everything is soaking in well.
I notice that there is demand for more more more of this stuff and it will come, I promise.
There is a distinct reasoning behind my taking it slowly on here.
As someone quite rightly pointed out, 'patience' is key in this game and this is one of the topics I am going to cover today.
Those who want to rush into the biggest financial market on the planet WILL - I repeat, WILL get burnt, along with 95-97% of all other wannabee traders.
I've done it, the people that taught me have done it and we've all blown a few accounts up in our time.
the reason I write this is because you don't have to experience the hardship and mental torment as I have if you follow these lessons carefully, diligently and professionally.
It's not like having five pounds each way on the grand national this, it really isn't. It actually does matter, no matter how much cash you have in the bank, if you want to succeed and have the financial freedom you have always dreamed of.
So without further delay lets first begin to talk about money-management.
Money management is all about controlling your risk and minimising your losses whilst maximising profits.
It's a long-winded subject so I will try my best to hit the essential points.
You UK based guys who can spread-bet can simply divide your bank into 2000 equal parts and then use that as your per-pip-stake.
So if you start with 1000 pounds you must play with 50p a pip until you have 1200, where you'd increase stake size to 60p, 2000GBP allows your stake to increase to 1 pound and so on.
this way, regardless of how big or small your stake is you are always guaranteed to be risking a certain % of your total bank.
If your stops are always 50 pips away then you are always risking just 2.5% of your bank.
As for those not so fortunate to be blessed with spread-betting then you need to weigh-up how much one lot is then work out lot size accordingly.
So, one lot is usually $10 a pip.
based on that we know that 0.1 lot is approximately $1 a pip.
For every $2000 profit made you can increase your lot size by 0.1 in the same manner as before.
A $1000 account divided by 2000 is 50 cents a pip. Knowing that 0.1 lot is $1 a pip you would need to stake 0.05 lots if that is possible and increase 0.05 for every $1000 profits made.
By following these easy instructions you are giving yourself every chance to make a lot of money quite quickly by compounding profits consistently without every increasing risk and this is a very important factor.
whether 10 lots or 0.1 lot it's always the same % of risk and this is how you should think.
This is what gives you peace of mind as a trader and helps alleviate the pain experienced by some when seeing the account -$7800 on just one trade.
I recently went long on GBPJPY at 142.10 just to see it go 145.00 then falling back to 136.00.
Had I looked at my account with pound signs on my mind I would have closed the trade having been some 600 pips down (long-term-book)
but because I knew that my overall risk in this market was only 2% I didn't care if it went wrong. I could make the same mistake time and time again and still not blow my account.
Now GBPJPY is back up to 147.00 and I am back in profit some 500 pips !
Imagine playing $500 a pip. Pretty scary for a newbie hey?
However, imagine playing with just 1 cent a pip. you really wouldn't care if it went tits-up would you?
Again, this is the attitude to have. It's all about %'s
Think like this and you will succeed.
This brings me on to the next part of the lesson, psychology.
As humans we have many feelings but the main ones associated with trading are fear and greed.
There are others, but these are the two I want to focus on.
Fear stems from not knowing the outcome of a given event. like a journey into the unknown.
I could walk out in the road and be hit by a car, a plane could crash through my house or I might get caught up in some yardie gang-war crossfire whilst on holiday in Jamaica but am I going to bury myself in a concrete bunker for the rest of my days or stand up and crack-on with this thing they call 'life' ?
Exactly, the future is unknown but we try to convince ourselves that everything will be alright.
This is what you need to do with this strategy and any strategy.
If you are unsure then don't trade but if you like the set-up then risk your 2.5% and just throw one on. It can only go 3 ways, so even the worst technical analyst in the world will get it right 33% of the time.
If his losing trades are only 50pips but his winners go 500pips he will ALWAYS win in the long-run!
If you are scared to trade then you are not ready. Keep your money in a bank account until you feel confident enough on a demo account then take it easy on a live account with small stakes but with the same detatchment of feeling.
Greed is like being blind sometimes with this. We can see a pivot point as resistance, we can see a moving average as resistance, we can see a previous high as resistance yet we still hold the long position.
Why is that?
We want more is the simple answer.
How many of us have turned a winner into a loser, then taken a revenge trade, lost on that too and then become a compulsive gambler until we have done every last penny in our account?
Most of us who started young I would guess.
The way to get around this is to scale out of trades, reducing exposure in the market but maximising potential returns with the last portions of the posisition.
It begins with closing all the trade with 20 pips just to see it go another 300.
That leads us to believe that every trade will go 300, which is not the case.
Simply take out 50% of the position at a support or resistance target level.
Move your stop loss (covered in next lesson) closer to your entry and run it a bit further to the next support or resistance level where you can close another 30%.
This means you have locked in profit with 80% of your initial stake.
Now put your stop to breakeven plus 10 pips and run the remainder until it reaches the next support of resistance level and keep moving your stop loss until it finally gets hit.
Yes, maybe this is being a bit greedy, but it's also being very shrewd and an important factor of keeping a calm head.
Try not to get too excited about your winning trades whilst remaining positive about losers. No one wins every time!
Learn how to meditate and do some yoga. It will help you keep a level head.
Will improve your patience & discipline and will reduce your greed and fear.
Overall you will take these new learnt skills into every other aspect of your life.
Tomorrow we'll talk about stop-losses, then we'll get to the good stuff, the types of set-ups and trades to look out for and finally targets/exits.
Please bear with me. I am doing all I can and WILL make you a successful trader.
Remember, the Lord never helped those who couldn't help themselves ! lol