What you need to know about the G20 Meeting (Infographic)

G20 is a group of finance ministers and central bank governors from the 20 major economies (19 countries + the European Union). Which includes members of the G7 nations.
According to wikipedia the G20 group accounts for 80% of the gross world product, 80% of the world trade and 67% of the world population.
While its not an institution, the initiatives from the G20 could have a large impact in the currency market.
Anyway, our friend from FxStreet made this cool infographic of everything you need to know about the G20 and its members.

Let me know what you think about it!
Source: straightforex

How to trade Forex: The 4 fundamental questions that will show you how to trade forex

It’s easy to get lost in forex.
There are tons of technical indicators, systems, methodologies, frameworks, etc. No wonder why it is so difficult to come up with system/strategy you feel comfortable with…
Comfortable? Why do I have to feel comfortable with my system/strategy?
Your job as a trader is to be consistent right? Well, in order to be consistent you need to trade with discipline, and believe me, there is no way to trade with discipline if you don’t feel comfortable with  your trading.
Makes sense?
Ok, now to the important stuff…
As I said, there are plenty of tools we can use to trade forex, some of them are easy to use, but most of them are complicated and difficult to understand.
All these information, strategies, indicators, etc available make us forget about what our main goal is, which is to make money (not to use the last indicator/Strategy, etc).
We need to go back to the basics, and to do this you need to ask yourself these 4 fundamental questions:

• When to trade and when to stay away from the market
• What currency pairs to trade
• When to cut your losses
• When to let your profits run

The answer of each one of them will give you a fresh perspective of the market, a new and simpler way to trade forex.
So, do me a favor and just for a few minutes, forget about your strategy, your system, and everything about your methodology to trade forex.
Lets focus in the answers to these questions with no bias.
Are you with me?
Alright…

When to trade and when to stay away from the market

You want to trade forex when the market is clear, when you have good opportunities, when the odds of the market going one way are higher than going the other way.
You cant just open your 5 minute chart and take your trade regardless of what other timeframes are doing.
So you need to do your analysis, and determine what is the market likely to do. Analyze different timeframes and if all they agree, then go ahead a take your trade. If you have conflicting signals, just let it go, I’ll guarantee you’ll get more opportunities.
By doing this you will get rid of the 2 most important mistakes in forex:

• Trading a currency pair that should not be traded
• Not trading a currency pairs that should be traded

You see what I mean?
Key takeaway: do your analysis and trade only when the market has a clear condition, when it has clear support and resistance levels. On the other hand, when it is not clear that the market is likely to do, just forget about it, you’ll get more opportunities, its not like the market will stop giving trade opportunities for ever.

What currency pairs to trade

A common mistake traders are likely to make (specially beginners traders) is to focus in just one currency pair.
If you focus on just one currency pair, you will force yourself to take trades when the market is not ready to be traded.
And believe me, it doesn’t matter what system you use, you could have the best system in the world, but if you trade the wrong currency pair, you are not going to make it.
I mean, when you are just starting out with your trading career, it’s all right to focus in one currency pair, so you don’t get overwhelmed with all the information.
Just make sure to add more currency pairs as you get more experienced.
Also make sure you are selective about the currency pairs, you also need to get to know the personality of each one of them, for instance: the AUD and NZD are slow currency pairs (you cannot expect big intraday movements), GBP and CAD are the ones that react the most to their fundamentals, and so on.
Key takeaway: Focus on more than one currency pair and trade the one that has clearer market conditions, clearer levels, etc.

When to cut your losses

There is a common saying: take care of your losses, your profits will take care of themselves.
I couldn’t agree more with that. You need to take care of your losses, cut them fast, and forget this way of thinking: the market will eventually turn around…
When the market doesn’t behave as you expected it to behave, the best thing to do is to cut your losses, run and focus on other opportunities.
And the million dollar question is: Where should I set my SL level?
There is no generic answer, every trade is different, every system is different, heck even trades within the same currency pair are different…
But there is a general rule you can follow: close your trade once the primary reason you entered is no longer existent.
You see what I mean?
So we need to adapt and see the nature of your trade, then decide when to get out of the market.
For instance:
For a breakout trader: if you trade breakouts, you should place your SL level below/above the breakout level. If the market breaks back that level again, the primary reason you entered is no longer valid.
For retracement traders: if you like to trade retracements, focus on the retracement level, and place the SL level below for longs and above for short those levels, if the market breaks back those levels, the primary reason is no longer existent.
For MA crossover traders: if you like to trade MA crossovers, well a crossover on the opposite direction will signal to close the trade.
These are just a few examples, if you need any help with your specific strategy, please leave a comment below.
Key takeaway: set your SL levels at a level the primary reason you entered the market is no longer existent.

When to let your profits run

This the most difficult of them all and probably the second most important of them all.
Traders (I mean all human beings) have a natural tendency to close positive trades as soon as possible because we think that the amount of pips is already ours (it happens to be just the opposite when the market goes agains us, we have a tendency to believe that it is not ours and the market will eventually turn around, so we hold them).
Do you agree with me?
How many times you have closed your trades for a small gain, only to see the market continue in the same direction for many many pips?
We need to stop that. And I have a way to do it with only two simple steps:

• You need to have a clear plan - You need to have a well defined plan, and follow it! You know its the only way to get consistent results.
• See what the longer timeframes are up to- Try to spot the market swings in a longer timeframe, if you find it clear, set it based on that timeframe.

Another possibility is to trail your stop loss level, but please make sure to give your trade enough room to trade ok?
Key takeaway: Use longer timeframes to help you determine your take profit levels. Also consider trailing your stop loss level.

Your Turn

Which one of these fundamental questions do you think is more complicated?
Do you think are other fundamental questions I didn’t address?
What other techniques do you use to handle these four question?
Leave a comment below.

Source: straightforex

Top 7 reasons why you are losing money trading (and how to stop losing it)

Take a look at your charts, plug in whatever indicator you like the most and ask yourself this question:
If it looks that easy, why am I still losing money trading?
I mean look at this chart (which is the AUDUSD daily chart by the way):

What can you do with this chart?
Kind of easy isn’t it?
The strategy here would be:
When the market gets close to the top of the range it gets rejected, so I’ll start looking for rejection signs and then look for short opportunities. Likewise, when it gets to the bottom of the range it gets rejected, so I’ll look for rejection signs and then look for long opportunities.
All we have to do here is create a plan and be ready to trade when the market is ready to move.
If it is that easy, why is it that we struggle to make a profit?
Let me tell you why:
Because we are all humans, and humans make mistakes.
Luckily for you, I’ve tracked some of the most common mistakes traders are likely to make along with the solution.
Here we go.

You don’t have a system/plan

It doesn’t matter how much money you made the previous month. What really matters is whether or not you are going to be able to replicate those results.
This is why I don’t recommend to trade the news announcements, because the market always reacts in a different way, and there is no way to know in advance the reaction of the market.
The same happens when you don’t have a system: you went long because you felt like that, some other day you followed someone else’s advice, the next day because indicator X told you to do so, etc.
Lets say you get a killer month, you made 1000 pips.
How on earth are you going to be able to replicate those results if you don’t even remember why you traded yesterday.
What if something goes wrong?
Let say you are down 300 pips…
How on earth are you going to fix it if you dont even know what went wrong?
You see what I mean?
If you are serious about trading, you need to trade based on a system. This way you’ll know what to fix when things dont go as you expected them to go, and replicate the things that you did well.
What kind of a system do you need?
This deserved its own article, but here are a few tips:
Make it simple. KISS remember? Look, there are tons of indicators and strategies available, and I’ve always learned that the simpler ones perform better (by large).
As clear as water. It needs to be clear when you get your signal. Eliminate all confusing aspects of your system.

You are not adapting to the market condition

Its not the strongest the one that survives, but the one that adapts to the market conditions.
Look, market conditions change form time to time.
Sometimes the market is fast and really moves, it takes only a few hours to move from an important level to the other, etc.
And some others it moves in slow motion, it takes for ever to move from one level to the other.
Some other times the market is difficult to trade, it gets rejected from random levels, therefor its difficult to trade.
There are other times that the market trades in a very smooth way, it goes from one level to the other, gets rejected at the exact level and moves forward to the next one.
See what I’m talking about?
Look, if you are waiting for the market to adapt to your trading style or strategy? Keep waiting… because that is never going to happen.
You need to learn the different phases of the market, and adapt your trading style and your strategy.

You don’t feel comfortable with the system you are trading with

I know you’ve hear two of the most common problems for traders are: discipline and patience.
You need to be discipline to get consistent results and by discipline I mean following your system to a 100%.
But you also need to be patient, which is somehow related to discipline, because you need to wait for the right time to trade the market (but if you are disciplined, you are also waiting for the right time right?).
Anyway…
The only way to be discipline and patient (and therefore being a consistent trader), is by using a system you feel comfortable with.
This is the reason two traders using the same system get different results.
Every trader is different, they think different about risk, some of us like to trade the short term charts, some others focus on the long term charts, some trader use technical indicators, others just use price action…
You get the point right?
The idea is that you need to trade a system that suits different aspects of your trading including:
Risk profile: how many/much pips/money you are comfortable risking at any moment? per trade?
Trading style: are you comfortable with indicators, price action, Fibonacci?
Trading personality: are you a short term trader, or would you rather focus on the long term charts?
Time disposal: How many hours are you going to be able to monitor the market?

You are not using multiple timeframes

I know… some of you would say: why would I monitor the long term charts if I’m a short term trader?
Or long term traders might think they don’t need the short term charts…
Ohhh men. I used to be that way, but not anymore.
Here is the deal:
For short term traders:
Even if you like to trade off the short term charts, it always pays to trade in the direction of the trend of the market.
It doesn’t matter what happens on the short term charts, the market will alway be likely to move in the direction of the trend of the market.
That’s it! You don’t need more explanation, do you?
Imagine what the impact could be to your trading account of trading only in the direction of the market condition?
Pretty large isn’t it?
Hey, wait a minute, what If I only trade one pair?
Well…expand your horizon, find a pair that has a bullish market condition and look for long opportunities, and find another one in a bearish market condition, and look for short opportunities.
Makes sense?

For long term traders:

Even if you only use the long term charts to do your analysis, etc. You could always switch over to the short term charts to pin point your trades.
Yes, yes, yes… I know what you are going to say: you don’t care about short term swings.
It’s not about short term swing, this is about profitability.
Lets say that based on your analysis, you plan to buy AUDUSD. You just plan to go long at the end of the day.
However if you look at the short term chart, you could spot different levels that could help your trade.
For instance, the market is just trading below an important resistance level in the short term charts, so instead of going long at the end of the day, you’d be better off setting a order to go long once the market breaks the resistance level.
Makes sense?
Listen… This tip alone could be the difference between a profitable trader and a struggling trader (at least, that was my case).

You don’t manage your trades (Trade Management)

Ok, you open your trades and then what? What do you do?
There are traders that like to open their trades and leave them alone. I used to trade like that, but I don’t do it anymore.
I stop doing it because the market has changed… A few years back the market used to move in a smoother way… market swings were less volatile, just a few retracements here and there, and then the market moved in the intended direction.
Today it’s different though, so you need to make sure you take some profits out of the market when possible.
And I don’t mean to take profits just for the sake of taking profits, use sound techniques to do it (i.e. when the market gets close to an important level).
Taking partial profits is just part of the equation, there are more things you can do to manage your trade:
Partial profits (or losses): close a portion of your trade (i.e. half of your trade) when it meets certain criteria.
Pyramid in: Increase your trade size as the market moves on your favor. I’ve benefited from this more than any other technique around. Make sure your trade is large when the you are in the right side of the market.
Trailing Stop: move your stop loss as the market keeps moving on your favor. You need to be careful though, place your stop loss too close to the market and you’ll get stopped out. Give your trade enough room to breath.
I guess trade management is about being an opportunist.
When the market moves on your favor, do what ever is in your hands (following your risk management rules) to increase your trading size. Make it as large as possible.
And when the market moves against you, make it as smaller as possible.
Makes sense?

You don’t use risk and money management

Many traders get confused about these two terms and to make sure we are in the right track, here you have what each one of them helps us with:
Risk management – Helps us determine how many pips to risk on each trade
Money management – Helps us determine the trade size of our next trade.

Risk Management

You can’t use a fixed amount of pips as your stop loss level, you need to use sound techniques such as:
Support and resistance levels
Deviation indicators (Bollinger bands and the like)
Indicator reading (MA crossover, RSI below 50, etc.)
And more…

Money Management

There are two main benefits of using money management:

• As your account grows, money management allows you to increase the trade size allowing you to take advantage of the geometric growth of your account.
• Likewise, when you are not that accurate, and your account diminishes, money management helps you decrease the trade size.

All these makes sense right? When your system aligns with the market, you’ll make more profits, therefor you need to increase your trading size.
And when the market is out of sync with your system, you decrease your trading size because losses are likely to happen.
There are a few money management techniques that you can use (all anti-martingale):
One contract for every $XXXX. Increase the trade size for every $1000 gained.
Fixed Fractional trading. Risk a certain percentage on every trade (i.e. 1%)
Fixed Ratio. A little more complex technique (very aggressive by the way). For more info about this check out this FREE Advanced course.

You are not comfortable with losses

If you are a trader or want to be a trader you need to know something:
You are a risk-taker
And how do you define a risk-taker?
Someone who is taking risks for the possibility to get something else (perhaps something more valuable) in return.
For traders, we are risking an amount of pips, to get another amount of pips right?
Ok, now think about this:
Why would you feel uncomfortable when you get stopped out?
For one reason: Because you are not comfortable with losses.
Once you feel comfortable with losses, trading will become much easier, you’ll start seeing things that you were blocking before.
How do I become more comfortable with losses?
Accept the fact that each trade has the possibility to move against you. Train yourself to think in that way, and eventually you’ll see the difference.

Your Turn

What do you think about these 7 mistakes? Do you make any of them?
Do you think there are other common mistakes?
Let me know in the comment section.
Source: straightforex

EURUSD Breakout signal and complete forex trading plan

Look, I’m going to be straight to you, there is no other way to get consistent results but having a trading plan.
Seriously…
You can get a thousand pip killer trade, but if you have no way to replicate the same results in the future, it wont help much in the long run.
Having a trading plan makes your life easier, helps you trade with less stress, which is what we all are looking for, aren’t we?
Having a trading forex trading plan is probably the most important factor to get consistent results.
It’s like having complete roadmap: where you need to go, what you need to do, where you need to stop, everything you need. This way, everything becomes much easier.
See it for yourself, what would be easier to you: to know exactly what you need to do, where to set your stop loss levels, where to take profits, etc. or to decide at the heat of the moment?
Which one will give you better results?
The first one right?
Ok, in this article, I’m going to show you how I create my own trading plan.

Step 1 – Trend of the market

The first thing you need to do is to determine the trend of the market. Once we know the trend of the market, everything becomes easier, because the only thing we need to do from there is to trade in the direction of the trend.
The best way to get it is by looking at the long term charts.

In the EURUSD weekly chart it’s clear that it was rejected from an important resistance level around 1.3417, so the EURUSD is likely to continue its way down.
Ok we are done, let’s get to trade… hehe, I’m kidding. There is plenty of work left to do.
Now we need to confirm this.

Step 2 – Analysis Confirmation

You can use the 4H or daily chart to confirm your analysis. Sometimes I use the 4H charts, some other the daily, I have no special preference.
Here is the daily chart:

In this chart its clear that the market is trading at an important support level around 1.3063.
Ok, so we know have two pieces of the puzzle:

• The market is likely to continue its way down
• Right now it is trading at an important support level

So we still need to answer: What the heck are we going to do with the EURUSD?
We know we are going to be looking for short opportunities (because it is in a downtrend, based on the weekly chart), but when?
We are going to answer that questions with the next chart.

Step 3 – Entry rules

To determine when start looking for short opportunities, we need to look at the short term charts.
Here is the hourly chart:

Ok, now everything makes sense.
I see that there is a very important short term support level at 1.2968. So I’m not going to look for short opportunities until the EURUSD breaks that level down.
What a minute, what did I just said?
I’ll look for short opportunities once the EURUSD breaks the bottom of the range… hey that is exactly what I was looking to answer right?

Step 4 – Forex Trading Plan for the EURUSD

Since the EURUSD has a bearish market condition, I’ll be looking for short opportunities.
I’ll start to look for short opportunities once it breaks the bottom of the range.
I’m going to use a breakout signal, but you can use what ever entry system or indicator you feel comfortable with.
Short order: 1.2944
SL: 1.2984
TP: Open

Your turn

Do you always trade with a trading plan? If you do, do you do something similar?
What do you think about my EURUSD trading plan? What about my breakout signal?

Source: straightforex

Rules to determine the trend of the market using price action & support and resistance

Have you ever wondered whats the best way to determine the trend of the market?
There are plenty of tools, indicators, etc including:

• Technical indicators such as RSI, MACD, Momentum, etc
• Fibonacci retracements and extensions
• Elliot Waves
• Gann cycles
• Other tools

You name it… Some of them are pretty subjective, and some other techniques are good.
But the question remains, among them all, which one is the best?
I don’t know about you, but I think trading is not a game, and I rather use something objective…
So to determine the best tool, I’d recommend you to take the following considerations. Make your strategy:

• As objective as possible (there will always be a certain degree of subjectivity)
• As simple as possible (KISS principle)

Once your strategy (or system) these two characteristics, you’ll have a system with a very good profit potential 
Ok, so now, want to know what my take on this? What is as objective and simple as possible?
You guessed it.
Support and resistance levels plus price action. 
In todays article, I’m going to show you how you can use support and resistance levels plus price action to make a chart talk to you, to show you how to convert a chart like this one:

Into actionable and reliable trading advice.

Like gold for traders

From my point of view, using support and resistance levels plus price action is the best strategy to determine the direction of the market, its simple, objective and reliable.
And guess what? That is exactly what our job is as traders: knowing what the market is likely to do its like gold to us. With this information we are able to:

• Determine what currency pairs to trade
• What direction to trade them
• Where to set your SL and TP levels
• When you are going to stop looking for trades
• and more

Quite important isn’t it?
Now, have you noticed I haven’t talked about the entry system or entry signal?
The reason for it its because it doesn’t matter what strategy you use to find your entries. Seriously.
As long as you have a good strategy to determine the trend of the market, you can use what ever you like the most as your entry system: now you can use technical indicators, Fibonacci, Elliot Waves, etc.
See my point?
It is more important to know what the market is likely to do, than the entry system.
Ok, as every post, I try to show you what I mean with actionable advice, so I’m going to build a case to trade the AUDUSD…

Support and resistance levels

Support and resistance levels are objective because there is no guesswork to do.
It’s not like: “I think there is a resistance level right here.” it’s more like, there is an important level or it isn’t and important level, as simple as that.
Here are the rules to draw perfect support and resistance levels:
1 – The market needs to get rejected at least twice from the level
2 – The more rejections the level has, the more important it becomes
3 – Most recent rejections are more important than less recent rejections.
As clear as water?
Since we are trying to determine the direction of the market, we need to focus on the long term charts.
You can use the 4 hour charts, the daily chart or even the weekly charts. (If I was trying to find my entry level I’d focus on the short term charts, right?).
Here is the AUDUSD daily chart

Clear support and resistance levels huh?
So, what can you say about the above chart?
Support and resistance levels are showing us exactly at what levels the market might change direction.
It doesn’t matter what happened before though… The real question we need to answer is this one:
What can I do right now with this information?
Ok, since the market has been rejected from this level before, the market might get rejected again. Could be because of the same reason or not. I don’t really care, what really matters is that the market is likely to get rejected again from the support level around 1.0173
You see?
This is the type of actionable advice you need to get from this analysis.
But it doesn’t stop there, support and resistance levels can tell you more valuable information.
For instance… lets say the market gets rejected from the support level (1.0173) and it continues its way up.
For how long would I hold my trades or for how long would I keep looking for long opportunities?
Until the market reaches the next LT resistance level which is at 1.0573.
Ok, so you now have a lot of actionable information about the AUDUSD:

• You know it is likely to get rejected from the support level
• You’ll look for long opportunities until it reaches the next resistance level

And, what if the support and resistance levels aren’t as clear as the chart above?
Of course you’ll find that sometimes aren’t as clear as this one, but that’s the point. We are doing this whole thing to determine: what currency pairs to trade right?
So if it is not as clear as this one, just forget about trading it, and try to trade some other chart (currency pair) with clearer support and resistance levels.
Our job as traders is not to trade the same pair every day, but to trade the pairs where you have a clear idea of what they are likely to do.
Makes sense?
If it doesn’t, feel free to leave a comment below.

Price Action

Now, lets isolate price action and see what the market is actually telling us:

See those green square?
Well, on each one of them, the is some kind of pressure, upward pressure around the bottom of the range, and downward pressure around the top of the range.
Lets see what the green blue square is telling us so you know exactly what I mean by pressure:

It looks like the market didn’t like the level it was trading before, and reacted with a strong upward move.
So the market first goes down [candlestick 1] (sellers take control over the market) but then at some level, it starts to move up [candlestick 2] (buyers take control over the market) with even more strength then the downward movement.
This means a lot to the market. It means that the market is not yet ready to trade at lower levels, once the market gets at those levels it attracts plenty of buyers (or just a few with deep pockets) making the market turn around.
Now again… What can I do right now with this information?
Well, if the market it’s not ready to go down, it only has two possibilities left: either it stalls around there, or it goes up.
So you know that “if” you are going to do anything with the AUDUSD, it is going long. I say “if” because we need to confirm this with the short term chart to start your trade.
And this takes us to…

Using both S&R plus price action

This chart is worth a thousand words:

So you now have clear support and resistance levels plus well identified levels with upward and downward pressure.
Support and resistance levels tell me when the market is likely to change direction
Price action tells me when the market might be ready to change direction.
If we combine both analysis, we get to a very interesting conclusion:
The market is likely to change direction right now. 
Now, you need to remember something, we are not talking about market entries right now, that is out of the scope of this article. But I’ll address it in the coming weeks.
So what this analysis tells me is that the AUDUSD is ready to go up, now I only need to confirm this with the short term charts, and find my entry.

Your turn

What do you think about using price action and support and resistance levels to determine the direction of the market?
What other methodologies you use to determine the trend of the market?
What do you think about the AUDUSD? Are you bullish already?

Source: straightforex

Is understanding risk the holy grail of trading?

It might. You tell me (after reading this article).
Have you had a chance to think about risk? I mean, really think about what it is for traders? How can we use it on our favor, is it possible to eliminate risk?

If you haven’t, please do so … because once you understand what it really is (and accept it), you’ll trade with ease, you’ll trade with more confidence, you’ll be more disciplined and patient… and at the end, you’ll trade with better results.
I can guarantee it…
And you know something, in some cases, you might have already experienced what it is to accept and embrace risk (even unconsciously).
Oh men, when this happens, almost every trade goes on your favor, you get out of the market just when it starts to go against you, you take profits just at the right time, you trade the right trade-size, etc, etc, etc.
Everything is just right!
Have you gone through a phase like this?
I think every trade with enough experience has… And it’s a very very pleasant feeling!
You see, all these happens because you don’t block any type of information (more about this in a minute) that you’d block if you didn’t embrace risk.
Now the question is how can you get to trade like that every day?
Well, that’s what this article is about, you’ll find out when you are done with it.
Heh, there is no free lunch buddy!
Ok, we talked about accepting and embracing risk… but what happens when you don’t accept it?
If you don’t accept and embrace risk, things will get complicated, I can also guarantee you that. 
Unfortunately, there are also periods where every decision you take seems to be the wrong one, it would be something like the inverse-Midas touch.
These are the sort of the things that tend to happen when you dont accept risk:

• Taking profits too early
• Trading with no stop losses
• Getting out of the trade to soon
• Getting in to trades too soon
• Taking larger trades than you are supposed to
• Chasing the market
• Letting the market go against you when in profits

When you make these mistakes over and over, it’s a very very unpleasant feeling.
Ok, So now, you got 2 scenarios:
A pleasant feeling: When you embrace risk
An unpleasant feeling: When you don’t accept risk
Which one would you choose?
Looks like an easy answer right? But then why is it that we keep making the same mistakes over and over?
So maybe you have not fully embraced risk?
Think about it, specially think about how you can improve your trading results once you embrace risk.
Every trade would be like the first scenario, over and over. You’d take profits at the right time, you’ll be choosing the right currency pairs to trade, you’ll be trading the right trading size, etc.
Like this scenario?
Ok, then keep reading

There is just one way to get rid of risk

That’s right, there is just one way to get rid of risk on your trading, and it is:
Quit trading.

I suspect though that since you are reading this article, you want to keep trading, so I will not consider that quit trading is a possibility for you. Or is it?
So please, stop wasting time and resources trying to eliminate risk (aka looking for a system that is right 100% of the time), because it is just impossible to do.
Risk is what defines us as traders, it’s part of what we are, it’s our identity.
What do we do as traders?
We risk an amount of money to get another amount of money.
risk money + get more money = Trader
That’s the equation that defines us, that’s what we are. We are risk takers.
We need both sides of the equation, we need to risk money to get more money, there is no  way around it.
Let me ask you another question: when you open a trade, do you really accept the fact the market has the possibility to go against you?
Let say you open a trade, you use a 30 pip stop loss and a 50 pip take profit order.
Do you accept the fact that the market could move against you? The possibility of getting stopped out? The possibility that you took the wrong decision?
Or you just think about the profit side, about how much time it will take the market to get there, that once your TP gets hit, you are going to be +5%, etc?
Of course we all want the market to move on our favor, but that it is just one possibility, there also the other possibility, the market could move against you.
There is no way we can get rid of any part of the equation, so think about it, when ever you open a trade, two things can happen:

• The market moves on your favor, or
• The market moves against you

It doesn’t matter what trading system you use, what market you trade, what currencies you choose to trade, anything. We’ll always have these two possibilities and you need to learn to live with it.

Why fear makes you block information

Our brain is wired in a way that it tries to avoid all information that is painful for us, that’s just the way it works, whether we like it or not, it’s human nature.
How is this related to trading?
Think about this, if you fear something like: losing a trade. How would this affect you?
For obvious reasons you want to win this trade, and so does your brain. So as an effort to “not experience” a losing trade, your brain will start to block any information that tells you that the market will go against you.
This mechanism is triggered automatically, you don’t have to consciously think about this to trigger it.
So your brain blocks the information that would had helped you to get out of the trade (i.e. a reversal signal), but for you its impossible to see it because your brain doesn’t want you to experience a losing trade.
This is why everything becomes so clear and apparent once everything is over. Why I didn’t see this? Why I didn’t see that? The market was obviously going against me, why I didn’t close my trade sooner.
Well, the answer is that your brain was blocking this information from you.
Since there is no way to have “the serious talk” with your brain to stop blocking this information from you, you can approach this through a different angle:
Not being afraid.
If you are not afraid (i.e. of getting stopped out) your brain wont block any information from you.
And the only way to the rid of fear is by accepting and embracing risk.
Are you still with me?

Accepting and Embracing Risk

These are some of the most common fears in trading:
Taking profits too early
What is feared: When you take profits too early, you fear that the market will go against you and everything you have earned in that trade will get vanished.
Accept risk: When you analyzed the market and decided to take that trade, you also thought about the stop loss and take profits order. Why would you take profits now in the heat of the moment, if you had a well structured trading plan?
Remember, the best trading decisions are always taken before your trade takes place.
To take full advantage of the market swings, you need accept the fact that sometimes the market will go against you. Just accept it.
What’s good is that most of the time, the market will continue in your favor.
Trading with no stop losses
What is feared: When you trade with no stop losses you are only taking in consideration part of the equation (the “get more money” side) and blocking the fact that the market has the possibility to move against you.
Accept risk: Accept the fact that the market has the possibility to move against you. Once you train your brain to think like this, you will force yourself to use stop loss orders.
What is sad about not using stop loss orders is that if the market goes against you by the right amount of pips, you are going to blow out your account.
Is it worth it? To risk your complete account just because you are not considering losing one trade?
By the way, mental stops are just the same thing as no using stop losses at all.
Getting in to trades too soon
What is feared: That you are going to miss out an opportunity to trade.
Accept risk: It’s impossible to take advantage of every market swing.
Yes, sometimes the market will move without you, there is just no way of capturing every market move.
Just focus on the ones your system signals, only then is when you have a real opportunity, a low risk trading opportunity.
You never know before the fact if your signal is going to get triggered. Patiently wait for the right moment.
Taking more risks than you are supposed to
What is feared: You are not going to get the results you hoped for, to make up for it, you start taking more risks.
Accept risk: You need to be patient.
You need to know that every trade has the possibility to move against you, so if you start risking more capital and the market goes against you, you’ll be in a very unfavorable position.
It’s always better, to risk what you are supposed to risk according to your plan, nothing more.

Trading in the Zone

Mark Douglas in his book Trading in the zone puts it as clear as water:

Accepting risk means accepting the consequences of your trades without emotional discomfort or fear. This means that you must learn how to think about trading and your relationship with the market in such a way that the possibility of being wrong, losing, missing out, or leaving money in the table doesn’t cause your mental defense mechanisms to kick in and take you out of the opportunity flow. It doesn’t do you any good to take the risk of putting on a trade if you are afraid of the consequences, because your fears will act on the perception of information and your behavior in a way that will cause you to create the very experience you fear the most, the one you are trying to avoid

Then he adds:

This is where professional traders really separate themselves from the crowd. When you accept the risk the way the pros do, you wont perceive anything that the market can do as threatening. If nothing is threatening, there is nothing to fear .If you are not afraid, you don’t need courage. If you are not stressed, why would you need nerves of steel?

What do you think?

Your Turn

What are your thoughts about risk? Do you think its an important aspect of trading? Even more important than the strategy, entry system and the like?
What do you do to accept risk? Please share any strategy that could help other traders deal with risk.

source: straightforex

You Can Generate A Living In Forex Trading. Study On To Learn How

People who realize that knowledge is definitely the key to smart investing are definitely the individuals who are rich from investing. The some people who go broke investing, well, they’re the folks who thought they could study the proverbial tea leaves and ended up feeding the accounts from the knowledgeable few. Make sure you side with all the very few and avoid the fate with the quite a few by reading these guidelines.
Ignore people news shows that pretend to deal with finances. These shows are all concerning the bells and whistles and mostly cope with Wall Street-based stocks anyway. You’d be surprised at just how some people watch these religiously and consider that they will somehow miraculously translate to Forex knowledge.
Study the long term trends inside the Forex industry. While there is certainly constantly a chance of a substantial shakeup in currency values, in most cases the long term trends are steady. If you are wondering no matter if to find out of the market or not, understand exactly what the pattern is for that currency and make use of that as a guide.
In some circumstances in life, not consuming action at all will be the top doable action to take. This can be particularly real in forex. If you do not see something which stands out as being a doable reward, you do not need to take a position on it at all. Standing aside and waiting it out is most absolutely a position when dealing with forex.
Fundamental analysis is studying the way the Forex sector is impacted by genuine-world politics and economic. These events would be the cause of rising rates of interest and imminent bank malfunction. Making use of fundamental evaluation aids you track these factors and analyze their influence so that you can predict sector modifications and pick your trades accordingly.
When trading inside the foreign exchange industry, trade for that present, not to the future. The market in its existing state may not be the same since the market in the future, so concentrate on currency pairs in the existing moment. Also, don’t add to positions which are inside the red.
When you are trading in foreign exchanges, like a rule of thumb you should never risk more the 2-3% of your entire trading account. You need to manage to survive even when the industry problems are unfavorable. You will do that by producing many little trades instead of risking losing huge chunks at a time.
Why do so a lot of people fail at investing? They possibly get bad facts or they feel they know some thing the rest of us don’t. Perhaps way, malfunction is failure and which is something you want to steer clear of. Utilize what you’ve learned above if you want to steer clear of failure and in fact win some trades with forex.
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